verified cross complaintCal. Super. - 1st Dist.October 18, 20211 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 Jodi A. McDougall Pro Hac Vice Application to be Submitted COZEN O’CONNOR 999 Third Avenue, Suite 1900 Seattle, Washington 98104 Phone: 206.340.1000 Fax: 206.621.1783 Email: jmcdougall@cozen.com Teri Mae Rutledge (SBN 261229) COZEN O'CONNOR 101 Montgomery Street, Suite 1400 San Francisco, California 94104 Tel: 415.593.9619 Fax: 415.644.0978 Email: trutledge@cozen.com Deanna L. Johnson (SBN 198017) EMBROKER INSURANCE SERVICES LLC 24 Shotwell Street San Francisco California 94103 Tel.: 415.702.3083 Email: deanna@embroker.com Attorneys for Defendant and Cross-Complainant CLEAR BLUE INSURANCE COMPANY SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SAN FRANCISCO APOLLO BROKERS, INC., a Delaware Corporation; JOHN LOEBER, an individual; ALEX BECKER, an individual; and JOHN SHEA McNAMARA, an individual Plaintiffs, v. CLEAR BLUE SPECIALTY INSURANCE COMPANY, a North Carolina corporation, and EMBROKER INSURANCE SERVICES LLC. a Delaware limited liability company, and DOES1- 25, inclusive Defendants. CLEAR BLUE INSURANCE COMPANY Cross-Complainant, v. Case No.: CGC-20-588300 VERIFIED CROSS-COMPLAINT ELECTRONICALLY F I L E D Superior Court of California, County of San Francisco 02/10/2021 Clerk of the Court BY: RONNIE OTERO Deputy Clerk 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 APOLLO BROKERS, INC., a Delaware Corporation; JOHN LOEBER, an individual; ALEX BECKER, an individual; and JOHN SHEA McNAMARA, an individual Cross-Defendants. Cross-Complainant Clear Blue Specialty Insurance Company (“Clear Blue”) alleges as follows: I. INTRODUCTION AND NATURE OF THE ACTION 1. This cross-complaint asserts the following claims: (1) for a declaration that the Clear Blue Management Liability Program Directors, Officers, and Organization Liability insurance policy number AX01-1103-01 (“the Policy”) issued to Apollo Brokers, Inc. ( “Apollo”) is void ab initio on the grounds of material misrepresentations made by Apollo’s Chief Executive Officer, John Loeber, during the application for such coverage; (2) for a declaration of noncoverage that Clear Blue has no obligation to reimburse defense costs or indemnify Apollo, and its founders, Alex Becker, John Loeber, and John Shea McNamara (collectively, “the Apollo Defendants”), with respect to the lawsuit brought against them in San Francisco Superior Court, styled Coalition Inc. v. Becker, et al., Case No. CGC-20-584249 (the “Coalition Lawsuit”); (3) for concealment; and/or (4) for negligent misrepresentation. 2. The Apollo Defendants seek coverage from Clear Blue for the Coalition Lawsuit for their alleged breaches of contract and duties to Coalition Inc. (“Coalition”) by their formation of a directly competing company, Apollo. Before Loeber submitted his Application for Directors’ Officers’ and Organization Coverage to Clear Blue (“the Application”): a. Coalition terminated Loeber, Becker and McNamara without notice; b. Coalition specifically informed Loeber he was being terminated for cause for having violated his ”Proprietary Information and Inventions Agreement” with Coalition (“PIIA”); c. Coalition told Becker and/or Loeber that Coalition would sue them and Apollo if they moved forward with Apollo; 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 d. Upon information and belief, Coalition Chief Executive Officer Joshua Motta (“Motta”) and founder John Hering (“Hering”) demanded a share of Apollo if Loeber, Becker and McNamara persisted in moving forward with it; e. Upon information and belief, Hering said that Loeber and Becker “have declared a jihad” on Coalition; f. Motta accused McNamara, upon learning that Loeber, Becker and McNamara were developing Apollo, of stabbing him in the back; and g. Coalition advised Loeber, Becker and McNamara of their contractual obligations as to confidential, proprietary or trade secret information belonging to Coalition. 3. Despite these events described in ¶ 2, Loeber warranted in the Application that he knew of no circumstances likely to lead to a claim. In reliance on Loeber’s statements, Clear Blue issued the Policy to Apollo. 4. After learning of the misrepresentations in the Application, Clear Blue, through its agent, Embroker Insurance Services LLC, voided the Policy ab initio and returned premium to Apollo.1 Clear Blue seeks a declaration that the Policy is void and that it owes no other duty to the Apollo Defendants. 5. In the alternative, Clear Blue seeks a declaration of non-coverage under the Policy for the Coalition Lawsuit and the repayment of premium returned to the Apollo Defendants. 6. Clear Blue also asserts claims for concealment fraud and negligent misrepresentation against Apollo for its misrepresentations to Clear Blue that induced it to issue the Policy. 1 For accounting purposes, this was effectuated through “cancelling” the policy so that the premium could be properly accounted for and returned. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 II. PARTIES 7. Cross-complainant Clear Blue is an insurance company and existing under the laws of the State of North Carolina, with its principal place of business in Charlotte, North Carolina. Clear Blue does business in the State of California. 8. Cross-defendants Alex Becker and John Loeber are individuals who are, on information and belief, citizens of the State of California, the County of San Francisco. 9. On information and belief, Cross-defendant John Shea McNamara is a resident of Boulder County, Colorado. 10. Cross-defendant Apollo Brokers, Inc. is a corporation registered under the laws of the State of Delaware with its principal place of business in San Francisco County in the State of California. III. JURISDICTION AND VENUE 11. This Court has jurisdiction over this controversy under California Code of Civil Procedure section 1060. 12. Apollo has tendered the Coalition Lawsuit as a claim under the Policy. The amount in controversy claimed in the Coalition Lawsuit is more than $25,000; the amount in controversy here is therefore likewise more than $25,000 13. On information and belief, Defendants Becker, Loeber and McNamara have, at all times mentioned in this complaint, resided in the County of San Francisco. 14. Defendant Apollo Brokers Inc. is and at all times mentioned in this complaint was a Delaware Corporation doing business in California, with its principal place of business in the County of San Francisco. 15. The acts giving rise to this action occurred or occurred in substantial part in the County of San Francisco. IV. APOLLO DEFENDANTS’ APPLICATION FOR INSURANCE 16. On March 6, 2020, defendant Loeber completed an Application for Directors, Officers, and Organization insurance for Apollo. The Application solicited material information 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 required by Clear Blue before issuance of a policy of insurance. The Application was automated such that the Application would be rejected automatically upon certain responses. 17. A true and correct copy of the Application electronically signed by John Loeber is attached hereto as Exhibit A. 18. On the Application, Loeber was asked “To your knowledge are any of the following true: … I am already aware of a specific circumstance that is likely to result in a claim under the coverage I am applying for.” Loeber answered “No.” 19. Had Loeber answered this question affirmatively, the Application would have been automatically rejected. 20. The Application further provided the following “Warranty: Prior Knowledge of Facts, Circumstances, or Situations:” The undersigned authorized owner, partner, director, or officer represents and warrants on behalf of the Named Insured and all persons/ entities for whom insurance is being sought that to the best of his/ her knowledge and belief after diligent inquiry, the statements set forth herein and attached hereto are true. It is understood that the statements in this Application, including material submitted to or obtained by the underwriter, are material to the acceptance of the risk and relied upon by the underwriter. The Insureds further agree that in the event of any material misrepresentation or omission in the Application, including materials submitted to or obtained by the underwriter, this Policy shall be voided. Any fact, circumstance or situation not disclosed above shall be excluded from coverage. 21. Mr. Loeber signed the Application on March 6, 2020, immediately beneath the Warranty. 22. Had Mr. Loeber declined to warrant, per his knowledge and after inquiry, that his Application statements were true, his Application would not have been accepted and the Policy would not have issued. 23. The Application further provided under the title, “Fraud Prevention - General Warning:” The undersigned authorized agents of the person(s) and entity(ies) proposed for this insurance declare that to the best of their knowledge and belief, after reasonable inquiry, the statements made in this 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 Application and in any attachments or other documents submitted with this Application are true and complete. The undersigned agree that this Application and such attachments and other documents shall be the basis of the insurance policy should a policy providing the requested coverage be issued; that all such materials shall be deemed to be attached to and shall form a part of any such policy; and that the Company will have relied on all such materials in issuing any such policy. V. APOLLO DEFENDANTS KNEW OF CIRCUMSTANCES LIKELY TO CONSTITUTE A CLAIM WHEN LOEBER SUBMITTED THE APPLICATION 24. The Apollo Defendants knew of circumstances likely to result in a claim at the time Loeber warranted in the Application on behalf of all people and entities for whom insurance was sought that no circumstance likely to become a claim existed on March 6, 2020. The Apollo defendants have, in statements made under penalty of perjury to this Court, detailed this knowledge. 25. On August 26, 2020, the parties to the Coalition Lawsuit, including the Apollo Defendants, filed a Joint Case Management Statement in the Coalition Lawsuit. A copy of the Joint Case Management Statement, as obtained from the San Francisco Superior Court’s online docket, is attached hereto as Exhibit B. 26. The Joint Case Management Statement described, in a section called “Defendants’ Submission,” events between February 26, 2020 and February 28, 2020: During a February 26, 2020 meeting between Motta, Hering, Becker and Loeber, Hering “accused Defendants2 of building a business that would compete with Coalition if they were to offer their own cyberinsurance policy (which they do not).” During the same February 26, 2020 meeting, “Mr. Motta asked Defendants what percentage of their new company they would gift to Coalition (assuming they left Coalition and moved forward with their proposed business concept).” During the same February 26, 2020 meeting, Hering “personally threaten[ed] Defendants, claiming Defendants have declared “jihad” with the founders, and promising to use his influence to interfere with any fund-raising efforts Defendants might eventually undertake.” Finally, during the same February 26, 2020 meeting, “[o]nce he finished pounding the table, Mr. Hering reinforced that a positive outcome was still possible if Defendants offered him a piece of any company they’d start.” 2 The Joint CMC defines “Defendants” to mean Becker, Loeber, McNamara and Apollo. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 On February 28, 2020, Coalition terminated both Mr. Loeber’s and Mr. Becker’s employment. During exit interviews on February 28, 2020, “Plaintiff’s own lawyers claimed (mistakenly) that Defendants were prohibited from starting any company involving cybersecurity, insurance, or reinsurance.” 27. On September 15, 2020, John Shea McNamara filed a declaration in the Coalition Lawsuit opposing Coalition’s Motion for Preliminary Injunction. A copy of the McNamara Declaration, as obtained from the San Francisco Superior Court’s online docket, is attached hereto as Exhibit C. McNamara declared: 15. I understand that on February 21, 2020, my co-founders Alex Becker and John Loeber approached Coalition’s CEO, Joshua Motta, to disclose a business idea that we’d been discussing offline since mid-January. Mr. Motta called me shortly after that meeting, described how upset he was with me for “stabbing him in the back” (while expressing disappointment that we’d not included him in our discussions), expressed his opinion that margins were bad in the wholesale brokerage business, wondered if we knew what we were doing, and wished me luck. 16. He then informed me that Coalition was terminating my employment because he “doesn’t do break-ups well.” 28. On September 15, 2020, John Loeber filed a declaration in the Coalition Lawsuit opposing Coalition’s Motion for Preliminary Injunction. A copy of the Loeber Declaration, as obtained from the San Francisco Superior Court’s online docket, is attached hereto as Exhibit D. Loeber declared that: During the February 26, 2020 meeting between Motta, Hering, Becker and Loeber, Hering made “outrageous personal threats to dissuade us from competing with Coalition;” Although a “multi-week transition plan” had been contemplated for Loeber’s separation from Coalition, it instead “abruptly terminated my employment onFebruary 28, 2020.” Loeber bought an external hard drive on March 3, 2020, for, he avers, the purpose of moving Coalition files to it to return to Coalition. At the time he was terminated from Coalition, Loeber was already consulting with an attorney about his departure. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 29. On March 13, 2020, Darryl Woo of Goodwin Proctor LLP, counsel for Coalition, sent a letter to John Loeber. A copy of the March 13, 2020, letter true and correct in the form in which Clear Blue and its agents received it from John Loeber, is attached hereto as Exhibit E. This letter indicated that its purpose was to “confirm” a discussion between Loeber and Mr. Woo, counsel for Coalition, which took place on February 28, 2020, the day Loeber was terminated. The letter said that: On February 28, 2020, Woo and Loeber reviewed four sections of Loeber’s PIIA, the agreement governing his use of information owned by Coalition; On February 28, 2020, Loeber was terminated for cause because of his involvement with Apollo (“[y]our work in developing your start-up wholesale insurance brokerage, Apollo Brokers, during the term of your employment, was a breach of Paragraph 6 [of the PIIA], and a basis, among others, for your employment termination;” On February 28, 2020, Loeber was advised “of the need to preserve, and not alter or destroy, documents relevant to the mater of your development of competitive software using Company equipment, supplies, facilities, and/or trade secret information while you were employed by the company, and/or otherwise related to the Company or the business or demonstrably anticipated business of the Company.” 30. On March 13, 2020, Darryl Woo of Goodwin Proctor LLP, counsel for Coalition, sent a letter to Alex Becker. A copy of the March 13, 2020, letter true and correct in the form in which Clear Blue and its agents received it from John Loeber, is attached hereto as Exhibit F. This letter indicated that its purpose was to “confirm” a discussion between McNamara and Mr. Woo, counsel for Coalition, which took place on February 28, 2020, the day McNamara was terminated. The letter said that: On February 28, 2020, Woo and Becker reviewed four sections of Becker’s PIIA, the agreement governing his use of information owned by Coalition; On February 28, 2020, Becker was terminated for cause because of his involvement with Apollo (“[y]our work in developing your start-up wholesale insurance brokerage, Apollo Brokers, during the term of your employment, was a breach of Paragraph 6 [of the PIIA], and a basis, among others, for your employment termination;” On February 28, 2020, Becker was advised “of the need to preserve, and not alter or destroy, documents relevant to the mater of your development of competitive 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 software using Company equipment, supplies, facilities, and/or trade secret information while you were employed by the company, and/or otherwise related to the Company or the business or demonstrably anticipated business of the Company.” 31. On March 13, 2020, Darryl Woo of Goodwin Proctor LLP, counsel for Coalition, sent a letter to John Shea McNamara. A copy of the March 13, 2020, letter true and correct in the form in which Clear Blue and its agents received it from John Loeber, is attached hereto as Exhibit G. This letter indicated that its purpose was to bring Mr. McNamara’s attention to provisions in his PIIA, Technology Assignment Agreement and Stock Purchase Agreement. The letter indicated that Coalition owned inventions made or conceived during McNamara’ term of employment, including the Apollo Brokers start-up, which the letter indicated was revealed to Coalition on February 26, 2020. 32. Joshua Motta filed a declaration in support of Coalition’s Motion for Preliminary Injunction in the Coalition Lawsuit on September 28, 2020. A copy of the Motta Declaration, as obtained from the San Francisco Superior Court’s online docket, is attached hereto as Exhibit H. Therein, Motta declares that on February 26, 2020, he and Hering “made clear to Loeber and Becker that we thought they had breached their obligations to Coalition.” 33. Forensic consultant Matthew Schroeder also filed a declaration in support of Coalition’s Motion for Preliminary Injunction in the Coalition Lawsuit on September 3, 2020. A copy of the Schroeder Declaration, as obtained from the San Francisco Superior Court’s online docket, is attached hereto as Exhibit I. Therein, Schroeder avers that his review of John Loeber’s Coalition laptop shows that on February 21, 2020, Loeber performed a google search on his Coalition laptop for commands to delete data from that laptop. Loeber then executed a demand to delete two users from the Coalition laptop, along with the users’ data in the home directory, “permanently destroy[ing]” forensic evidence related to Loeber’s use of his Coalition laptop. Schroeder’s investigation of Loeber’s laptop showed that at 11:45 pm on February 26, 2020, hours after the meeting described by Mr. Motta in his above-described declaration and two days before he was terminated, Loeber copied data from an available 300,000 Coalition documents, many of them containing Coalition’s source code, to an external hard drive. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 Schroeder avers that Loeber executed deletion commands on the morning of February 27, 2020, and those commands were designed to find and delete all files with certain extensions. The delete command was the next command performed after Loeber’s copying of Coalition files to an external hard drive the night before. Schroeder avers that Loeber at other times copied Coalition documents to external hard drives. Schroeder states that one of the hard drives returned to Coalition is not the same hard drive to which Loeber copied Coalition’s files, meaning, ostensibly, that Loeber still possessed that hard drive, and Coalition’s files, as of September 3, 2020. 34. In August 2020, Coalition’s principal, Motta, indicated to Clear Blue’s agent, Embroker, that during the February 28, 2020 meeting during which Loeber was terminated, Coalition advised that if Loeber pursued the Apollo business, Coalition would sue them. VI. COALITION LAWSUIT 35. On April 27, 2020, Coalition Inc. filed suit against Alex Becker, John Loeber, John Shea McNamara and Apollo in the San Francisco County Superior Court, Case No. CGC-20 584249 (the “Coalition Lawsuit”). A true and correct copy of the Coalition Lawsuit Complaint is attached hereto as Exhibit J. a. The Coalition Lawsuit Complaint asserts causes of action for (I) violation of the Uniform Trade Secrets Act; (II) breach of contract (against individual defendants only); (III) breach of duty of loyalty (against individual defendants only); and (IV) intentional interference with contractual relations (against individual defendants only); (V) violation of Business and Professions Code section 17200; and (VI) declaratory judgment. b. Coalition alleges that Loeber, Becker and McNamara conspired during their employment at Coalition to form a directly competing entity, using Coalition equipment and as they were being paid by Coalition. It is alleged that they utilized the proprietary data model Coalition developed. It is alleged that they recruited other Coalition employees to work with the competing 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 company and pitched the venture to Coalition customers. It is alleged that this conspiracy began, as to Loeber and Becker, as early as November 2019. c. Coalition alleges that it learned about the conspiracy of Loeber, Becker and McNamara in February 2020, that Coalition terminated them at that time, and that Coalition demanded that Loeber, Becker and McNamara cease using Coalition’s proprietary information, technology, and trade secret information. d. Coalition alleges that before and after his termination February 28, 2020, Loeber transferred confidential documents containing trade secrets, including Coalition source code, to an external storage device, then attempted to erase evidence that he had transferred those documents, evidenced by his searches-on his Coalition-issued laptop-of data destruction techniques. e. Coalition alleges that after instructed that such actions were unlawful, Loeber, Becker and McNamara continued to pursue potential customers and business partners, and to continue their efforts to form Apollo. Coalition’s instructions included outside counsel’s provision of a highlighted copy of Loeber’s employment agreements with Coalition indicating the provisions he was breaching. f. Becker, Loeber and McNamara allegedly breached numerous provisions of their respective Proprietary Information and Inventions Agreements and Technology Assignment Agreements. 36. The Court granted Coalition’s Motion for Preliminary Injunction on October 5, 2020, ordering, among other things, that the Apollo Defendants refrain from using Coalition’s confidential information and trade secrets, and requiring them to allow Coalition to inspect personal devices and cloud-based storage accounts on which they have stored Coalition documents. A copy of the Court’s Order, as obtained from the San Francisco Superior Court’s online docket, is attached hereto as Exhibit K. The Court held that evidence existed that the Apollo Defendants 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 misappropriated Coalition’s trade secrets by their accessing and copying of Coalition’s documents before the termination of Loeber and Becker on February 28, 2020, and that Apollo’s business was intended to directly complete with Coalition. 37. The Coalition claims against Becker and Loeber have been ordered to arbitration, and the claims against McNamara have been stayed per an order of Department 304 of this Court filed on December 7, 2020. VII. THE CLEAR BLUE POLICY 38. The Clear Blue Policy as issued provided Directors Officers and Organization Liability Coverage in the amount of $1,000,000. 39. A true and correct copy of the Policy is attached hereto as Exhibit L. 40. The Policy includes the following Condition: XIV. Application You represent and acknowledge that the statements and information contained in the Application are true, accurate, and complete, and are the basis of this Policy and are to be considered incorporated into and constituting a part of this policy. This Policy is issued in reliance upon the truth and accuracy of the Application. If the Application contains misrepresentations or omissions that materially affect the acceptance of the risk or the hazard assumed by Us, this Policy shall be void ab initio and shall not afford coverage for any Insured who knew on the inception date of this Policy the facts that were not truthfully disclosed in the Application, whether or not the Insured knew the Application contained such misrepresentation or omission. For the purpose of determining coverage, knowledge possessed by: 1. Any Team Member shall not be imputed to any other Team Member; and 2. the Tech Startup’s Chief Executive Officer, functionally equivalent, or anyone signing the Application shall be imputed to all Insureds other than Team Members. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 41. The Policy defines “Team Members” to include Executives and Employees. 42. The Policy defines “Employee” to include any natural person whose labor or service was, is, or shall be engaged by the Tech Startup. “Employee” also includes volunteers, interns and independent contractors. 43. The Policy defines “Executive” to mean any natural person who was, is or shall be a duly elected or appointed director, officer, or member of the board of the managers or management committee of the Tech Startup. 44. The Policy defines “Tech Startup” to include Apollo. 45. The Policy also provides: XVII. Rescission We shall not have the right to rescind this Policy or any Coverage Part for any reason. 46. The Policy contains the following Insuring Agreements: I. Insuring Agreements A. Non-Indemnifiable Directors & Officers Liability We will pay Non-Indemnifiable Loss on behalf of the Insured resulting from a Claim first made against the Insured during the Policy Period or any applicable Extended Reporting Period and reported to Us pursuant to the terms of this Policy, for a Wrongful Act by the Insured. B. Indemnifiable Directors & Officers We will pay Loss on behalf of the Insured that such Insured has indemnified the Team Members resulting from a Claim first made against the Team Members during the Policy Period or any applicable Extended Reporting Period and reported to Us pursuant to the terms of this Policy, for a Wrongful Act by the Team Members. C. Entity Liability We will pay Loss on behalf of the Insured resulting from a Claim first made against such Insured during the Policy Period or any applicable Extended Reporting Period and reported to Us pursuant to the terms of this Policy, for a Wrongful Act. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 47. The Policy defines “Claim” to mean, in part, a “Written demand against the Insured for monetary damages or non-monetary or injunctive relief, including a written request to toll or waive a statute of limitations or engage in any alternative dispute resolution.” 48. The Policy defines “Wrongful Act” to mean: any actual or alleged act, error, omission, misstatement, misleading statement, neglect or breach of duty by: 1. A Team Member in their capacity as such or in an Outside Capacity; 2. A Team Member in their capacity as a Controlling Person or as a Selling Shareholder; 3. With respect to Insuring Agreement C, the Tech Startup; or 4. Any matter claimed against a Team Member solely by reason of their serving in such capacity, including service in an Outside Capacity. 49. The Policy excludes any Loss on account of that portion of any Claim made against Apollo: C. Intellectual Property For any actual or alleged infringement of copyright, patent, trademark, trade name, trade dress, or service mark, misappropriation of ideas or trade secrets, or unauthorized disclosure of or access to confidential information; provided however, that this exclusion shall not apply to any Derivative Demand, Derivative Suit, or any Claim involving the purchase or sale of securities of the Tech Startup and shall be applicable only to Insuring Agreement C. * * * H. Personal Profit & Illegal Conduct For any personal profit, remuneration, or financial advantage to which You are not legally entitled; or For any willful violation of any law, statute or regulation, or any deliberately fraudulent or criminal act, error, or omission committed by You; If evidenced by a final and non-appealable adjudication adverse to You in the underlying action. For the purpose of applying these Personal Profit & Illegal Conduct exclusions: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 1. the Wrongful Act, knowledge of, or facts pertaining to any Team Member shall not be imputed to any other Team Member; and 2. only the Wrongful Act by the Chief Executive Officer or functionally equivalent of any Tech Startup shall be imputed to a Tech Startup. VIII. NOTICE OF CLAIM TO CLEAR BLUE 50. The Apollo Defendants notified Clear Blue of the Coalition Lawsuit on or about April 29, 2020. 51. After investigation, Clear Blue determined that the Application contained a material misrepresentation and voided the Policy on that basis, among others. Attached hereto as Exhibit M is a true and correct copy of the July 21, 2020 letter written by Embroker Insurance Services, LLC (“Embroker”) to John Loeber, which communicated Clear Blue’s position as its agent. 52. Clear Blue returned the premium Apollo paid for the Policy by mail on or about July 22, 2020. 53. Loeber responded, writing a letter to Embroker on July 31, 2020. A true and correct copy of that letter, without attachments, is attached hereto as Exhibit N. 54. After review of information provided by the Apollo Defendants, Clear Blue withdrew its reliance on grounds other than the Apollo Defendants’ failure to disclose the circumstances surrounding their termination from Coalition in response to the Application question seeking to know whether the Apollo Defendants were aware of circumstances likely to result in a claim. Attached hereto as Exhibit O is a true and correct copy of Embroker’s August 12, 2020 letter to John Loeber withdrawing Clear Blue’s position regarding other grounds on which it voided the Policy. 55. Loeber responded to Embroker on August 20, 2020, and provided further information. A true and correct copy of his letter, without attachments, is attached hereto as Exhibit P. 56. After review of further information provided by the Apollo Defendants, Clear Blue reaffirmed its voiding of the policy by a September 15, 2020, letter from Embroker to John Loeber, a true and correct copy of which is attached hereto as Exhibit Q. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 16 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 57. Counsel for the Apollo Defendants sought information from Clear Blue via a letter dated September 28, 2020, a true and correct copy of which is attached hereto as Exhibit R. 58. After further review of information provided by the Apollo Defendants, Clear Blue reaffirmed its voiding of the Policy via an email from Embroker dated September 28, 2020 to the Apollo Defendants’ attorneys, a true and correct copy of which is attached hereto as Exhibit S. 59. Counsel for the Apollo Defendants demanded coverage again on October 5, 2020. A true and correct copy of the letter received by Embroker on October 5, 2020 is attached hereto as Exhibit T. 60. After further review of a preliminary injunction order in the Coalition Lawsuit, Clear Blue reaffirmed its voiding of the policy via a letter from Embroker dated October 15, 2020 to the Apollo Defendants’ attorney, a true and correct copy of which is attached hereto as Exhibit U. FIRST CAUSE OF ACTION - DECLARATORY RELIEF: CLEAR BLUE POLICY IS VOID AB INITIO 61. Clear Blue hereby incorporates and re-alleges the allegations in the foregoing paragraphs as if fully set forth herein. 62. There exists a genuine and bona fide dispute, and an actual controversy and disagreement, between Clear Blue and the Apollo Defendants with regard to whether the Policy is void from inception or whether it continues in force. 63. Loeber, Becker and McNamara knew of circumstances likely to lead to a claim on March 6, 2020, including but not limited to: a. Threats (even “outrageous personal” threats) by Coalition’s principals and counsel if Apollo were formed; b. Demands that Loeber and Becker give Coalition or its principals a cut of Apollo’s business if it were to be formed (as alleged by the Apollo Defendants in a Coalition Lawsuit filing); c. Reference to the dispute between Coalition and the Apollo Defendants as a “jihad” (as alleged by the Apollo Defendants in a Coalition Lawsuit filing); d. Reference to McNamara as “stabbing [Coalition CEO Motta] in the back”; 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 17 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 e. Loeber’s copying and deletion of Coalition’s confidential, proprietary and trade secret documents, including source code, in the days before his termination; f. Notifications that Loeber, Becker and McNamara were and/or would be in breach of their contracts with Coalition if they formed Apollo; g. Termination without notice of Loeber, Becker and McNamara; h. Termination of Loeber for cause and provision of a standard pre-litigation notification; i. Termination of Becker for cause and provision of standard pre-litigation notification; j. Loeber’s retention of an attorney to aid in his departure from Coalition; and k. Loeber being told during his February 28, 2020 exit interview that Coalition would sue the Apollo Defendants if they moved forward with Apollo. 64. Loeber, by indicating he was unaware of circumstances likely to result in a claim, misrepresented material facts in the Application. 65. Becker, by his own knowledge of circumstances likely to give rise to a claim, is bound to Loeber’s misrepresentation. 66. Upon information and belief, McNamara, by this own knowledge of circumstances likely to give rise to a claim, is bound to Loeber’s misrepresentation. 67. In reliance on the Application and upon Loeber’s statements and representations therein, including that he had inquired of Becker and McNamara of circumstances known to them, Clear Blue issued the Policy to Apollo, effective March 6, 2020. 68. The Application is part of the Policy. It provides that statements in it are material to the risk and relied upon by the Clear Blue underwriter. It further provides that “that in the event of any material misrepresentation or omission in the Application … this Policy shall be voided.” 69. Clear Blue voided the policy and returned the premium paid for the Policy. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 70. Accordingly, Clear Blue seeks the Court’s declaration that Clear Blue was entitled to void the Policy ab initio and therefore owes no contractual duties to Apollo, Becker, Loeber, McNamara or any other insured for the Coalition Lawsuit or any other claim or lawsuit that may be subsequently filed or asserted against Apollo, any other insured Organization, and their Directors and Officers. SECOND CAUSE OF ACTION DECLARATORY JUDGMENT-COALITION LAWSUIT 71. Clear Blue hereby incorporates and re-alleges the allegations in the foregoing paragraphs as if fully set forth herein. 72. There exists a genuine and bona fide dispute, and an actual controversy and disagreement, between Clear Blue and Loeber, Becker, McNamara and Apollo with regard to whether Clear Blue has any duty to them for the Coalition Lawsuit. 73. If the Clear Blue policy is not void, Clear Blue’s rights and obligations under the Policy with respect to the Coalition Lawsuit are subject to the terms, exclusions, and conditions of the Policy, including the Application, which is made part of the Policy by its terms. 74. Clear Blue is entitled to a declaration of noncoverage because Loeber was aware of specific facts, circumstances, and/or situations that were likely to result in a claim under the coverage he applied for on behalf of Apollo, and did not disclose them. 75. Further, Clear Blue is entitled to a declaration of noncoverage under Insuring Agreement C as to Loss on account of any Claim made against Apollo for any actual or alleged misappropriation of ideas or trade secrets, or unauthorized disclosure of or access to confidential information. 76. Further, Clear Blue is entitled to a declaration of noncoverage for Loss on account of that portion of any Claim made against Apollo for “any personal profit, remuneration, or financial advantage to which [Apollo] are not legally entitled”; or “[f]or any willful violation of any law, statute or regulation, or any deliberately fraudulent or criminal act, error, or omission committed by [Apollo]; if evidenced by a final and non-appealable adjudication adverse to [Apollo] in the underlying action.” 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 19 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 THIRD CAUSE OF ACTION CONCEALMENT 77. Clear Blue hereby incorporates and re-alleges the allegations in the foregoing paragraphs as if fully set forth herein. 78. The Apollo Defendants disclosed some facts to Clear Blue in its Application, but failed to disclose that a specific circumstance or circumstances likely to result in a claim existed. 79. But a claim was likely to result, or had already resulted from circumstances present at the time the Apollo Defendants made the representation. 80. The Apollo Defendants failed to disclose those circumstances, which include that: a. Threats (even “outrageous personal” threats) by Coalition’s principals and counsel if Apollo were formed; b. Demands that Loeber and Becker give Coalition or its principals a cut of Apollo’s business if it were to be formed (as alleged by the Apollo Defendants in a Coalition Lawsuit filing); c. Reference to the dispute between Coalition and the Apollo Defendants as a “jihad” (as alleged by the Apollo Defendants in a Coalition Lawsuit filing); d. Reference to McNamara as “stabbing [Coalition CEO Motta] in the back”; e. Loeber’s copying and deletion of Coalition’s confidential, proprietary and trade secret documents, including source code, in the days before his termination; f. Notifications that Loeber, Becker and McNamara were and/or would be in breach of their contracts with Coalition if they formed Apollo; g. Termination without notice of Loeber, Becker and McNamara; h. Termination of Loeber for cause and provision of a standard pre-litigation notification; i. Termination of Becker for cause and provision of standard pre-litigation notification; j. Loeber’s retention of an attorney to aid in his departure from Coalition; and 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 20 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 k. Loeber being told during his February 28, 2020 exit interview that Coalition would sue the Apollo Defendants if they moved forward with Apollo. 81. The Apollo Defendants intended for Clear Blue to rely on the representation that no circumstances likely to lead to a claim existed. 82. Clear Blue was not aware of the circumstance or circumstances that the Apollo Defendants concealed. 83. Had the Application question been answered completely and truthfully, Clear Blue would not have issued the Apollo Defendants the Policy. 84. Clear Blue’s reliance on the Apollo Defendants’ misrepresentation is a substantial factor in damages suffered by Clear Blue in an amount to be proven to the trier of fact. THIRD CAUSE OF ACTION INTENTIONAL MISREPRESENTATION 85. Clear Blue hereby incorporates and re-alleges the allegations in the foregoing paragraphs as if fully set forth herein. 86. The Apollo Defendants represented to Clear Blue that no specific circumstance likely to result in a claim existed. 87. But a claim was likely to result, or had already resulted from circumstances present at the time the Apollo Defendants made the representation. 88. The Apollo Defendants nevertheless warranted that such fact was true, even though they each knew of circumstances likely to lead to a claim when the representation was made, including that: a. Threats (even “outrageous personal” threats) by Coalition’s principals and counsel if Apollo were formed; b. Demands that Loeber and Becker give Coalition or its principals a cut of Apollo’s business if it were to be formed (as alleged by the Apollo Defendants in a Coalition Lawsuit filing); c. Reference to the dispute between Coalition and the Apollo Defendants as a “jihad” (as alleged by the Apollo Defendants in a Coalition Lawsuit filing); 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 21 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 d. Reference to McNamara as “stabbing [Coalition CEO Motta] in the back”; e. Loeber’s copying and deletion of Coalition’s confidential, proprietary and trade secret documents, including source code, in the days before his termination; f. Notifications that Loeber, Becker and McNamara were and/or would be in breach of their contracts with Coalition if they formed Apollo; g. Termination without notice of Loeber, Becker and McNamara; h. Termination of Loeber for cause and provision of a standard pre-litigation notification; i. Termination of Becker for cause and provision of standard pre-litigation notification; j. Loeber’s retention of an attorney to aid in his departure from Coalition; and k. Loeber being told during his February 28, 2020 exit interview that Coalition would sue the Apollo Defendants if they moved forward with Apollo. 89. The Apollo Defendants intended for Clear Blue to rely on the representation that no circumstances likely to lead to a claim existed. 90. Clear Blue did indeed rely on this representation; it issued the Policy, which it would not have done if the Apollo Defendants had not made the misrepresentation. 91. Clear Blue’s reliance on the Apollo Defendants’ statements, which were warranted to be true and material to the formation of any resulting policy, was reasonable. 92. Clear Blue’s reliance on the Apollo Defendants’ misrepresentation is a substantial factor in damages suffered by Clear Blue in an amount to be proven to the trier of fact. FOURTH CAUSE OF ACTION NEGLIGENT MISREPRESENTATION 93. Clear Blue hereby incorporates and re-alleges the allegations in the foregoing paragraphs as if fully set forth herein. 94. The Apollo Defendants represented to Clear Blue that no specific circumstance likely to result in a claim existed. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 22 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 95. But a claim was likely to result, or had already resulted from circumstances present at the time the Apollo Defendants made the representation. 96. The Apollo Defendants nevertheless warranted that such fact was true, even though they each had no reasonable basis on which to believe this statement was true in light of their knowledge that: a. Threats (even “outrageous personal” threats) by Coalition’s principals and counsel if Apollo were formed; b. Demands that Loeber and Becker give Coalition or its principals a cut of Apollo’s business if it were to be formed (as alleged by the Apollo Defendants in a Coalition Lawsuit filing); c. Reference to the dispute between Coalition and the Apollo Defendants as a “jihad” (as alleged by the Apollo Defendants in a Coalition Lawsuit filing); d. Reference to McNamara as “stabbing [Coalition CEO Motta] in the back”; e. Loeber’s copying and deletion of Coalition’s confidential, proprietary and trade secret documents, including source code, in the days before his termination; f. Notifications that Loeber, Becker and McNamara were and/or would be in breach of their contracts with Coalition if they formed Apollo; g. Termination without notice of Loeber, Becker and McNamara; h. Termination of Loeber for cause and provision of a standard pre-litigation notification; i. Termination of Becker for cause and provision of standard pre-litigation notification; j. Loeber’s retention of an attorney to aid in his departure from Coalition; and k. Loeber being told during his February 28, 2020 exit interview that Coalition would sue the Apollo Defendants if they moved forward with Apollo. 97. The Apollo Defendants intended for Clear Blue to rely on the representation that no circumstances likely to lead to a claim existed. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 23 CASE NO.: CGC-20-588300 VERIFIED CROSS-COMPAINT C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 98. Clear Blue did indeed rely on this representation; it issued the Policy, which it would not have done if the Apollo Defendants had not made the misrepresentation. 99. Clear Blue’s reliance on the Apollo Defendants’ statements, which were warranted to be true and material to the formation of any resulting policy, was reasonable. 100. Clear Blue’s reliance on the Apollo Defendants’ misrepresentation is a substantial factor in damages suffered by Clear Blue in an amount to be proven to the trier of fact. IX. PRAYER FOR RELIEF WHEREFORE, Clear Blue prays for relief as follows: 1. For a declaration that the Clear Blue Policy is void ab initio; and/or 2. For a declaration that Clear Blue owes no duties under the Policy to Loeber, Becker, McNamara, and/or Apollo; and/or 3. For a damages arising from the concealment and/or misrepresentation of Loeber, Becker, McNamara, and/or Apollo; and/or 4. For a damages arising from the negligent misrepresentation of Loeber, Becker, McNamara, and/or Apollo; 5. For all costs, attorneys’ fees, and disbursements; and/or 6. For all other cost and fees as permitted by law; and 7. For such other and further relief this Court may deem just and proper. Dated: February 10, 2021 COZEN O'CONNOR By: JODI A. MCDOUGALL TERI MAE RUTLEDGE Attorneys for Defendant and Cross-Complaint CLEAR BLUE INSURANCE COMPANY EXHIBIT A Page | 1 Embroker Inc. 1 844 436 2765 embroker.com 24 Shotwell St San Francisco, CA 94103 Management Liability Application Prior coverage information To help us find you the right coverage, please tell us if the coverages you elected are new or renewing. If renewing coverage, we'll also need to know the carrier, premium and expiration date. Directors and Officers I don't currently have this coverage In a few words, please tell us what prompted you to get coverage. It's going to be required as a consequence of raising venture funding. General information Company name Apollo Brokers, Inc. Address line 1 401 Harrison Street Address line 2 Unit 15B City San Francisco State California ZIP code 94105 Website Contact information Contact name John Loeber Contact e-mail john@apollobrokers.com Phone (917) 703-0739 Page | 2 Embroker Inc. 1 844 436 2765 embroker.com 24 Shotwell St San Francisco, CA 94103 Company profile Industry type Technology Sub-industry Software Year started 2020 Entity type Corporation Total payroll $1 Total number of employees 1 2019 domestic revenue $0 2019 foreign revenue $0 2020 domestic revenue $500,000 2020 foreign revenue $0 How does your company generate revenue? Providing software for salespeople to do their jobs more efficiently. We take a small cut. Locations No locations listed Your Business What is your company's main area of focus? Software Development Has your company raised funding? Yes What is the total amount of funding raised to date (including debt)? $3,500,000 Tell us about each fundraising round (you can round to the nearest million dollar). Based on your lead investor, you may qualify for a premium credit. 1 Fundraise date 03/2020 Money Raised $3,500,000 Lead Investor N/A Page | 3 Embroker Inc. 1 844 436 2765 embroker.com 24 Shotwell St San Francisco, CA 94103 Past claims To your knowledge, are any of the following true: Over the past three years, the company has been the subject of a lawsuit alleging a violation of any state, federal, or securities laws. Over the past three years, the company has filed a claim for the coverage I am applying for. I am already aware of a specific circumstance that is likely to result in a claim under the coverage I am applying for. The company has previously initiated a bankruptcy or anticipates going bankrupt in the next year. No Page | 4 Embroker Inc. 1 844 436 2765 embroker.com 24 Shotwell St San Francisco, CA 94103 Warranty: Prior Knowledge of Facts, Circumstances, or Situations The undersigned authorized owner, partner, director, or officer represents and warrants on behalf of the Named Insured and all persons/ entities for whom insurance is being sought that to the best of his/ her knowledge and belief after diligent inquiry, the statements set forth herein and attached hereto are true. It is understood that the statements in this Application, including material submitted to or obtained by the underwriter, are material to the acceptance of the risk and relied upon by the underwriter. The Insureds further agree that in the event of any material misrepresentation or omission in the Application, including materials submitted to or obtained by the underwriter, this Policy shall be voided. Any fact, circumstance or situation not disclosed above shall be excluded from coverage. The undersigned agrees that if the information supplied on this Application changes between the date of this Application and the effective date or the insurance; that he/she will immediately notify the Insurer of such changes, and the Insurer may withdraw or modify any outstanding quotations or authorizations or agreements to bind the insurance. Signing this Application does not bind the applicant or the Insurer to complete the insurance, but it is agreed that this Application shall be the basis of the contract should a policy be issued, and it will be attached to and become part of the Policy. Signed John Loeber This Application Has Been Digitally Signed by John Loeber CEO/President of Apollo Brokers, Inc., Date: 2020-03-06T13:57:24.887925-06:00 Date 2020-03-06 Printed name John Loeber Title CEO/President Page | 5 Embroker Inc. 1 844 436 2765 embroker.com 24 Shotwell St San Francisco, CA 94103 Fraud Prevention - General Warning The Applicant's submission of this Application does not obligate the Company to issue, or the Applicant to purchase, a policy. The Applicant will be advised if the Application for coverage is accepted. The Applicant hereby authorizes the Company to make any inquiry in connection with this Application. The undersigned authorized agents of the person(s) and entity(ies) proposed for this insurance declare that to the best of their knowledge and belief, after reasonable inquiry, the statements made in this Application and in any attachments or other documents submitted with this Application are true and complete. The undersigned agree that this Application and such attachments and other documents shall be the basis of the insurance policy should a policy providing the requested coverage be issued; that all such materials shall be deemed to be attached to and shall form a part of any such policy; and that the Company will have relied on all such materials in issuing any such policy. The information requested in this Application is for underwriting purposes only and does not constitute notice to the Company under any policy of a Claim or potential Claim. Notice to Louisiana, Maryland, Minnesota, New Mexico and Ohio Applicants: Any person who, with intent to defraud or knowing that he/she is facilitating a fraud against an insurer, submits an application or files a claim containing a false, fraudulent or deceptive statement is, or may be found to be, guilty of insurance fraud, which is a crime, and may be subject to civil fines and criminal penalties. Notice to Colorado Applicants: Notice to Colorado Applicants: It is unlawful to knowingly provide false, incomplete or misleading facts or information to an insurance company for the purpose of defrauding or attempting to defraud the company. Penalties may include imprisonment, fines, denial of insurance, and civil damages. Any insurance company or agent of an insurance company who knowingly provides false, incomplete, or misleading facts or information to a policy holder or claimant for the purpose of defrauding or attempting to defraud the policy holder or claimant with regard to a settlement or award payable from insurance proceeds shall be reported to the Colorado Division of Insurance within the Department of Regulatory agencies. Notice to District of Columbia, Maine, Tennessee and Virginia Applicants: It is a crime to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties may include imprisonment, fines or a denial of insurance benefits. Notice to Florida and Oklahoma Applicants: Any person who, knowingly and with intent to injure, defraud or deceive any employer or employee, insurance company, or self-insured program, files a statement of claim containing any false or misleading information is guilty of: a felony (in Oklahoma) or a felony of the third degree (in Florida). Notice to Kentucky Applicants: Any person who, knowingly and with intent to defraud any insurance company or other person files an application for insurance containing any false information, or conceals for the purpose of misleading, information concerning any material fact thereto, commits a fraudulent insurance act which is a crime. EXHIBIT B 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 JOINT CASE MANAGEMENT STATEMENT Case No. CGC-20-584249 1390220.v1 KEKER, VAN NEST & PETERS LLP BRIAN L. FERRALL - # 160847 bferrall@keker.com REID P. MULLEN - # 270671 rmullen@keker.com BENJAMIN D. ROTHSTEIN - # 295720 brothstein@keker.com MORGAN E. SHARMA - # 313863 msharma@keker.com VICTOR YU - # 325411 vyu@keker.com 633 Battery Street San Francisco, CA 94111-1809 Telephone: 415 391 5400 Facsimile: 415 397 7188 Attorneys for Plaintiff COALITION INC. SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SAN FRANCISCO COALITION INC., Plaintiff, v. ALEX BECKER, JOHN LOEBER, SHEA McNAMARA, APOLLO BROKERS, INC. and DOES 1-10, Defendants. Case No. CGC-20-584249 JOINT CASE MANAGEMENT STATEMENT Date: August 31, 2020 Time: 11:00 a.m. Dept.: 304 Judge: Hon. Anne-Christine Massullo Date Filed: April 27, 2020 Trial Date: None Set ELECTRONICALLY F I L E D Superior Court of California, County of San Francisco 08/26/2020 Clerk of the Court BY: ERNALYN BURA Deputy Clerk 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 JOINT CASE MANAGEMENT STATEMENT Case No. CGC-20-584249 1390220.v1 Pursuant to the Court’s order dated June 26, 2020, Plaintiff Coalition Inc. (“Plaintiff” or “Coalition”) and Defendants Alex Becker, John Loeber, Shea McNamara, and Apollo Brokers, Inc. (collectively hereinafter, the “Parties”) hereby submit this Joint Case Management Conference Statement in advance of the Case Management Conference set for August 31, 2020. I. FACTUAL AND PROCEDURAL BACKGROUND Plaintiff’s Submission The parties. Coalition is a first-of-its-kind insurance broker specializing in cyber, technology, and management liability insurance products. See Compl. ¶ 1. Defendants Alex Becker, John Loeber, and Shea McNamara (“Individual Defendants”) are former employees of Coalition who have started a new insurance venture, Apollo Brokers, Inc. See Compl. ¶¶ 1-5. The complaint. Coalition filed a Verified Complaint on April 27, 2020. Summons issued on May 27, 2020, and Coalition formally served Defendants immediately thereafter. As alleged in the complaint, the Individual Defendants started a competing insurance company while employed at Coalition, and they used Coalition confidential information and trade secrets, time, and resources to do so. And they improperly retained Coalition documents after leaving Coalition. Furthermore, in Defendant Loeber’s final days at Coalition, he transferred a trove of highly confidential Coalition documents, including Coalition source code, from his Coalition- issued laptop to a personal device. He then used that same Coalition-issued laptop to research data destruction techniques. Before leaving Coalition, he erased the system data on his laptop in an apparent attempt to conceal evidence of wrongdoing. Coalition alleges that all Defendants misappropriated trade secrets in violation of the California Uniform Trade Secrets Act and unlawfully, unfairly, and fraudulently competed against Coalition in violation of Cal. Bus. & Prof. Code § 17200. Coalition further alleges that the Individual Defendants breached their contracts with Coalition, breached the duties of loyalty they owed to Coalition, and intentionally interfered with Coalition’s contractual relations. Coalition seeks a declaratory judgment that the Individual Defendants have violated their contracts with Coalition and that Coalition owns all rights in Apollo Brokers, Inc. Coalition also seeks compensatory damages, exemplary and punitive damages, disgorgement, specific 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 JOINT CASE MANAGEMENT STATEMENT Case No. CGC-20-584249 1390220.v1 performance of the Individual Defendants’ contractual obligations, injunctive relief, interest, attorneys’ fees and costs, and any other relief the Court deems just and proper. Case status. On June 1, 2020, the Parties filed a joint application for complex case designation. The Court granted the application on June 26, 2020. On June 8, 2020, the Parties jointly filed a stipulation for electronic service of documents. On June 4, 2020, Coalition informed Defendants that it would soon serve a trade secret identification (“TSID”), pursuant to Code of Civil Procedure § 2019.210, and requested that Defendants agree to treat the TSID as “attorneys’ eyes only” pending the entry of a general Protective Order for the disclosure of confidential and highly confidential information in this action. On June 8, 2020, Defendants rejected Coalition’s request to treat their TSID as “attorneys’ eyes only” pending entry of a Protective Order. On June 19, 2020, Coalition served a TSID that had been stripped of highly-confidential business information pursuant to an agreement that Defendants would treat it as “confidential” (but not “attorneys’ eyes only”). Also on June 8, 2020, the Parties served their first sets of discovery requests. Coalition’s June 8, 2020 discovery requests consisted of the following: • First set of requests for production of documents to each Defendant; • First set of form interrogatories to each Defendant; • First sets of requests for admissions to Defendants Loeber and Becker; • Requests for inspection of forensic images of devices belonging to each of the Individual Defendants; and • First set of special interrogatories to Defendant Apollo Brokers, Inc. Defendants’ June 8, 2020 discovery requests consisted of the following: • First set of requests for production of documents to Plaintiff; • First set of special interrogatories to Plaintiff; • First sets of form interrogatories to Plaintiff (one set from each of the three Individual Defendants); and • A demand for compliance with C.C.P. § 2019.210. The response deadline for all of these requests was July 8, 2020. On that date, Coalition 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 JOINT CASE MANAGEMENT STATEMENT Case No. CGC-20-584249 1390220.v1 provided substantive responses and objections to the interrogatories served by Defendants and, in the absence of a general Protective Order, a document production of responsive, non-privileged, and non-confidential documents. Defendants objected to every one of Coalition’s requests on the ground that each request was “premature because the Court has yet to rule on Defendants’ Motion to Compel Arbitration and Stay Proceedings, filed on July 8, 2020.” Defendants provided no substantive responses to any form interrogatory, special interrogatory, or request for admission, and produced no documents in response to Coalition’s requests for production of documents. Prior to and apart from formal discovery, Coalition demanded, by letter dated April 15, 2020, the return of any Coalition proprietary documents that the Individual Defendants retained after their termination from the company. The Individual Defendants returned to Coalition hard- copy Coalition documents and electronic storage devices containing Coalition documents on multiple occasions between March and June 2020. The total number of electronic documents returned in this manner to date is in the hundreds of thousands. The Individual Defendants did not return to Coalition the original device media-i.e., the computers and external storage devices-on which they had stored those electronic documents. The Individual Defendants have represented that one of those external storage devices has been quarantined with a third-party forensics firm. On June 4, 2020, Plaintiff requested that the Individual Defendants sequester all devices from which they gathered Coalition proprietary documents until Coalition has the opportunity to perform a forensic inspection of those devices. On June 8, the Individual Defendants refused this demand. Following the service of Coalition’s requests for inspection on June 8, 2020, the Parties met and conferred regarding a protocol for forensic inspection of the electronic devices from which the Individual Defendants gathered Coalition proprietary documents. Before any agreement could be reached, however, Defendants filed their motion to compel arbitration (discussed below), after which Defendants refused to continue meeting and conferring regarding a forensic inspection protocol. To date, the Individual Defendants have not provided to Coalition a full accounting of the devices from which they gathered the documents returned to Coalition, nor have they provided a full accounting of which such devices have been sequestered by their vendor 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 JOINT CASE MANAGEMENT STATEMENT Case No. CGC-20-584249 1390220.v1 and which have been returned to their personal possession. It is Coalition’s understanding that Defendants still have access to at least some (if not all) of the devices or electronic storage media on which they found the Coalition information that they later returned to Coalition. Defendants have not provided any sworn declarations attesting that they returned and no longer have access to Coalition’s proprietary information. On June 29, 2020, Defendants informed Coalition that they believe Coalition’s claims are subject to arbitration. Coalition declined to assent to arbitration, and, on July 8, 2020, Defendants filed their Motion to Compel Arbitration and Stay Proceedings. On August 27, 2020, Coalition will file its Opposition to Defendants’ Motion to Compel Arbitration and Stay Proceedings. Defendants’ Reply is due on September 2, and the hearing is set for September 10, 2020. Defendants’ Submission To advance its stated goal of interfering with Defendants’ start-up/fund-raising activities, Coalition ignored its own mandatory arbitration agreement, filed a lengthy public Complaint filled with inaccuracies, and, in the process, has caused both Defendants and this Court to waste their precious limited resources. One of the central underpinnings of the public policy favoring the private arbitration of disputes is that the arbitration process should, in most cases, be a more efficient (and less expensive) forum for resolving disputes. For this reason, Defendants would have preferred to hold the initial case management conference after the Court rules on their Motion to Compel Arbitration (“Motion”), since the parties will then know for certain where this dispute will proceed (and, hence, which rules of civil procedure and evidence will govern, whether the arbitrator has set reasonable limits on discovery, etc.). Given the Court’s preference for holding the CMC before deciding the Motion, however, Defendants participated in the required meet and confer process conditioned on Plaintiff’s agreement not to argue such participation supported its argument that Defendants have somehow waived their right to arbitrate. As Plaintiff’s submission, above, resembles a discovery motion more than a summary of proceedings, Defendants provide their own relevant background below. Coalition is an insurance underwriter, offering exclusively its own brand of insurance 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 JOINT CASE MANAGEMENT STATEMENT Case No. CGC-20-584249 1390220.v1 products. Defendant Apollo Brokers, Inc. is not an insurance underwriter, and does not offer its own insurance products (rather, it is a wholesale insurance brokerage firm offering products from many underwriters). In late 2019, defendants Becker and Loeber began discussing ideas for starting a new business together. Of course, neither California law nor Defendants’ agreements with Plaintiff prohibited them from doing so because they used their own time, their own resources, and did not rely in any way upon Plaintiff’s trade secret information in kicking around potential business ideas in many industries. Their first idea concerned an international tourism company focused on low-cost dental treatments; another concerned offering high-yield health savings accounts to employers. After conducting some market research in commercial insurance, Messrs. Becker and Loeber also began in January 2020 discussing the prospect of forming a tech-enabled wholesale insurance brokerage firm and raised the idea with Mr. McNamara. Defendants’ preliminary due diligence on the wholesale brokerage concept was not an “invention” under their agreements with Coalition (or otherwise), nor did their due diligence progress beyond the initial planning stage while still in Coalition’s employ. In February 2020, ready to gauge external interest in this concept and confident they’d done nothing wrong, Defendants approached Coalition’s CEO, Joshua Motta, presented their idea to him, and invited him to be their first investor. Mr. Motta was intrigued during this initial meeting, offered his opinion that wholesalers are a dying market and don’t make much money, and conceded that Defendants’ business idea was not competitive to Coalition. While also sharing his belief that wholesale was not a particularly attractive option for his investment, Mr. Motta said he respected Defendants’ desire to build their own company, wished them luck, confirmed his support, and requested a follow-up meeting where he asked Defendants to present the concept to a board member (John Hering). Mr. Hering - admittedly skilled at using civil litigation to achieve his business goals - immediately took a decisively different tact than his CEO during this follow-up February 26 meeting. Despite Defendants’ stated desire to, as a brokerage, distribute Coalition insurance as their flagship product, Mr. Hering accused Defendants of building a business that would compete with Coalition if they were to offer their own cyberinsurance policy (which they do not). In this 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 JOINT CASE MANAGEMENT STATEMENT Case No. CGC-20-584249 1390220.v1 follow-up meeting, Mr. Motta asked Defendants what percentage of their new company they would gift to Coalition (assuming they left Coalition and moved forward with their proposed business concept). The train quickly veered off the track, with Mr. Hering personally threatening Defendants, claiming Defendants have declared “jihad” with the founders, and promising to use his influence to interfere with any fund-raising efforts Defendants might eventually undertake. Once he finished pounding the table, Mr. Hering reinforced that a positive outcome was still possible if Defendants offered him a piece of any company they’d start. Two days later, eschewing the measured transition plans discussed during this meeting, Coalition terminated both Mr. Loeber’s and Mr. Becker’s employment. During their exit interviews, Plaintiff’s own lawyers claimed (mistakenly) that Defendants were prohibited from starting any company involving cybersecurity, insurance, or reinsurance. Having been abruptly terminated for their lawful off-duty conduct, Defendants took their property return obligations quite seriously. Those obligations arose out of their respective Proprietary Information and Inventions Agreements (“PIIA”) with Coalition. Unlike more robust agreements common in the tech industry, the PIIA does not entitle Coalition to inspect any personal devices or accounts which departing employees had also used for business purposes, nor does it require that they execute “Termination Certificates” affirming their compliance with their ongoing obligations. Rather, the PIIA requires only that upon termination, former employees “promptly return” all items containing Plaintiff’s “Proprietary Information” and refrain from using or disclosing any such information moving forward. Following their abrupt terminations, and amidst the turmoil of the early phases of the pandemic, Defendants bent over backwards to comply - and have complied - with these obligations. Following their terminations, Defendants conducted a thorough search of their personal devices and accounts for Coalition-related materials which they had accumulated since joining Plaintiff in early 2017. Mr. McNamara populated a thumb drive with those materials which he gave to Mr. Loeber to return to Coalition (which Mr. Loeber did on March 16, six weeks before Plaintiff filed its Complaint). Mr. McNamara later discovered a work-related binder which he overlooked during his initial search, and he immediately shipped the binder to Plaintiff’s counsel. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 JOINT CASE MANAGEMENT STATEMENT Case No. CGC-20-584249 1390220.v1 Following his termination, Mr. Loeber also conducted a thorough search for Coalition materials in his possession, found a significant amount of such materials (nearly 60 GB), reached out to Mr. Motta to discuss the best method to return those materials, and purchased a new external hard drive on March 3 for the purpose of populating it and returning Coalition materials to the company (which he did on March 16, along with Mr. McNamara’s thumb drive). With additional guidance from counsel, Mr. Loeber later discovered some additional Coalition materials (including system cache files, photographs from a company off-site meeting, and notes he had taken on a personal iPhone) which he promptly returned to Plaintiff prior to this lawsuit. Mr. Becker also conducted a thorough search for Coalition materials and copied those materials to a thumb drive which he finally delivered to Plaintiff on April 27 (after failed delivery attempts on account of the pandemic and Plaintiff’s lawyers’ office being closed during the riots). Because of Plaintiff’s inherently conflicting demands, including that Defendants not only preserve all personal devices and accounts where they had stored Plaintiff’s information during the course of their employment, but also delete such files from their possession following their return, Defendants engaged a reputable third-party forensics firm to ensure compliance with those conflicting demands. Coalition was well aware of this fact and has received numerous assurances that Defendants have, indeed, returned all Proprietary Information in their possession and no longer have access to such materials. To date, Defendants have, collectively, incurred more than $20,000 in fees and expenses ensuring their compliance with their property return obligation. Coalition’s robust arbitration agreement requires arbitration “as the sole and exclusive means to resolve all disputes that may arise between” Coalition and its employees. Nevertheless, on April 27, 2020, Plaintiff publicly filed its Verified Complaint and Jury Demand containing numerous demonstrably false allegations (the filing of which has had its intended effect of deterring investors). For present purposes, suffice it to say Defendants categorically deny the Complaint’s material allegations and view this lawsuit consistent with Coalition’s stated intention of doing everything within Mr. Hering’s power to procure a piece of Defendants’ new company (short of actually investing, as Coalition was invited to do). Coalition’s refusal to abide by its own arbitration agreement compelled Defendants to file their Motion which, coupled with 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 JOINT CASE MANAGEMENT STATEMENT Case No. CGC-20-584249 1390220.v1 Coalition’s insistence on preserving its general “waiver” argument for its opposition brief, has ground these state court proceedings to a virtual standstill. There is nothing remotely ominous about Defendants’ property-return efforts, as they have been both transparent and diligent in returning the Coalition information they accumulated in the course of performing their jobs since 2017. Feigning distrust notwithstanding Defendants’ herculean efforts to comply with their obligation to return Coalition’s Proprietary Information, Coalition continues to complain about Defendants’ refusal to cede to its wholly unsubstantiated demand that they provide Coalition informal access to all of their personal accounts and devices that once innocuously housed Coalition’s “Proprietary Information.” Defendants have consistently expressed their opposition to such demands, explaining that: (1) Coalition filed a lawsuit and served the exact discovery it insists be provided “informally,” (2) Coalition’s informal inspection demands find zero support in their PIIA or California law, (3) the demands are overly broad and ambiguous, seemingly demanding unfettered access to Defendants’ personal email accounts to confirm that Defendants’ vendor has done a thorough job cleaning them out, and (4) such “discovery” is premature because Coalition failed to comply with Section 2019.210 and the parties had yet to finalize their protective order. II. ADDITIONAL SUBJECTS FOR CONSIDERATION Pursuant to Rule 3.750(b) of the California Rules of Court, the Parties hereby discuss their respective positions as to the following subjects for consideration at the August 31, 2020 Case Management Conference. 1. Whether all parties named in the complaint or cross-complaint have been served, have appeared, or have been dismissed. All Parties named in the Complaint filed April 27, 2020 have been served and have appeared. 2. Whether any additional parties may be added or the pleadings may be amended: Neither Plaintiff nor Defendants anticipate adding any additional parties or amending the pleadings, though both reserve the right to do so. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 JOINT CASE MANAGEMENT STATEMENT Case No. CGC-20-584249 1390220.v1 3. The deadline for the filing of any remaining pleadings and service of any additional parties: Not applicable. 4. Whether severance, consolidation, or coordination with other actions is desirable: Neither Plaintiff nor Defendants believe severance, consolidation, or coordination with any other actions is desirable at this time. 5. The schedule for discovery proceedings to avoid duplication and whether discovery should be stayed until all parties have been brought into the case: Plaintiff and Defendants each served discovery requests on June 8, 2020. Both Parties served responses and objections on July 8, 2020. The Parties have stipulated to extend the deadline to move to compel responses to these discovery requests to 45 days following the Court’s ruling on Defendants’ Motion to Compel Arbitration and Stay Proceedings. Plaintiff’s Submission Defendants provided no substantive responses, and instead objected to all requests as premature in light of Defendants’ Motion to Compel Arbitration. Defendants’ Submission Defendants also objected to many of Coalition’s requests as premature in light of its failure to comply with California Code of Civil Procedure section 2019.210. Plaintiff’s responses predominantly consisted of a promise to “meet and confer” regarding the specific requests (which was Plaintiff’s response to 58% of Defendants’ RFPs and 56% of Defendants’ special interrogatories), along with 36 total pages of printouts pulled off the Internet the week before Plaintiff’s production. 6. The schedule for settlement conferences or alternative dispute resolution: Coalition believes mediation is premature prior to resolution of Defendants’ Motion to Compel Arbitration and Coalition’s forthcoming motion for preliminary injunction. 7. Whether to appoint liaison or lead counsel: Not applicable. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11 JOINT CASE MANAGEMENT STATEMENT Case No. CGC-20-584249 1390220.v1 8. The date for the filing of any dispositive motions or other early motions: Plaintiff’s Submission Coalition’s position is that Defendants’ Motion to Compel Arbitration is without merit. Coalition never agreed to arbitrate any claims with the Defendants, as explained in its forthcoming opposition to Defendants’ motion. Coalition requests that the Court set this case for jury trial in September 2021 (or otherwise in fall 2021) and set deadlines for summary judgment briefing accordingly. Coalition also intends to move for a preliminary injunction to preserve the value of its confidential information and trade secrets and to prevent further use or disclosure of them. Specifically, Coalition intends to seek an order (1) permitting a forensic inspection of the personal devices or storage media on which the Individual Defendants stored or accessed Coalition documents during their Coalition employment or after their termination, (2) prohibiting the Defendants from using any such confidential information or trade secrets, and (3) requiring Defendants to return any such confidential information or trade secrets. Coalition has reserved a hearing date of September 28, 2020 for this motion. If the Parties are unable to reach agreement on the terms of a stipulated protective order (see below) prior to Coalition filing its motion for preliminary injunction, Coalition intends to move for an entry of an interim protective order so that it can serve its motion for preliminary injunction at or around the same time the motion is filed. Defendants’ Submission Defendants believe the Court should compel the arbitration of this case against the individual defendants, and stay the underlying case against Apollo Brokers, Inc. as the claims against it are 100% derivative of the claims against the individual defendants bound by Coalition’s agreement to arbitrate. Defendants’ threatened motion for a preliminary injunction appears to be an attempt to take full-blown discovery outside the CCP’s protection and a colossal waste of the parties’ (and this Court’s) time given the multiple, repeated assurances Defendants have provided that they have already returned all Coalition Proprietary Information in their possession, have forensically 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12 JOINT CASE MANAGEMENT STATEMENT Case No. CGC-20-584249 1390220.v1 preserved all such devices and accounts through their third party vendor, and no longer have access to any such information. Given these circumstances, Coalition cannot possibly demonstrate irreparable harm, let alone a likelihood of success on whatever claim forms the basis for its requested “obey the law” injunction. Given that Coalition’s motion promises to seek unfettered, full-blown discovery under the guise of confirming the accuracy of Defendants’ representations, the Court (or arbitrator) will also have to decide whether Coalition has described its alleged trade secrets with “reasonable particularity.” 9. The creation of preliminary and updated lists of the persons to be deposed and the subjects to be addressed in each deposition: The Parties have agreed to meet and confer regarding this and other discovery matters immediately upon the Court’s entry of an order resolving Defendants’ Motion to Compel Arbitration. 10. The exchange of documents and whether to establish an electronic document depository: As discussed above, the Parties have discussed, but have not reached an agreement on, the terms of a protective order in this case. Both parties believe a protective order is necessary to protect the Parties’ respective confidential and proprietary information, and one must be entered before either party provides the other (or their counsel) access to any of its confidential documents. The Parties do not believe this case will require establishing an electronic document depository. 11. Whether a special master should be appointed and the purposes for each appointment: At present the Parties do not anticipate this action would require appointment of a special master for any purpose. 12. Whether to establish a case-based Web site and other means to provide a current master list of addresses and telephone numbers of counsel: The Parties do not believe a case-based website is necessary at this time. 13. The schedule for further conferences The Parties agree that the Case Management Conference should remain on calendar as 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13 JOINT CASE MANAGEMENT STATEMENT Case No. CGC-20-584249 1390220.v1 scheduled on August 31, 2020. The Parties may request conferences and/or hearings during the course of this case, but otherwise leave the scheduling of such further conferences to the Court’s discretion. Dated: August 26, 2020 By: KEKER, VAN NEST & PETERS LLP BRIAN L. FERRALL REID P. MULLEN BENJAMIN D. ROTHSTEIN MORGAN E. SHARMA VICTOR H. YU Attorneys for Plaintiff COALITION INC. Dated: August 26, 2020 By: MOBILITY LEGAL P.C. David R. Burtt Attorney for Defendants ALEX BECKER, JOHN LOEBER, SHEA MCNAMARA, and APOLLO BROKERS, INC. EXHIBIT C MCNAMARA Case No. CGC-20-584249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DAVID R. BURTT, State Bar No. 201220 dburtt@mobilitylegal.com MOBILITY LEGAL PC 3464 Arivaca Ct. Reno, NV 89511 Telephone: 650-544-8090 Attorneys for Defendants ALEX BECKER, JOHN LOEBER, SHEA MCNAMARA, and APOLLO BROKERS, INC. SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN FRANCISCO COALITION INC., Plaintiff, v. ALEX BECKER, JOHN LOEBER, SHEA MCNAMARA, APOLLO BROKERS, INC., and DOES 1 through 10, Defendants. Case No. CGC-20-584249 DECLARATION OF SHEA MCNAMARA IN SUPPORT OF OPPOSITION TO PRELIMINARY INJUNCTION Dept.: 304 Judge: Hon. Anne-Christine Massullo Date: September 28, 2020 Time: 10:00 a.m. 2 MCNAMARA INJUNCTION Case No. CGC-20-584249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I, Shea McNamara, declare as follows: 1. I am a founder and Head of Sales of Apollo Brokers, Inc. ( Apollo I was one of Coalition, Inc. s ( Coalition first three people hired, a Founding Member, and I worked there, officially, from March 2017 through February 21, 2020, when Coalition terminated my employment without notice. I make this declaration to (1) correct some misstatements in Coalition s moving papers (and the negative inferences Coalition asks the Court to draw) and (2) explain the efforts I undertook to identify and return work-related files following Coalition s termination of my employment. My History with Coalition 2. argument that I be trusted because I a copy of the MGA Application, which document Coalition argues I was not entitled to have on my personal computer, is absurd. 3. In early 2016, I was employed by JLT Specialty when Coalition s CEO, Joshua Motta, started recruiting me to play an integral role in building the insurance arm of a company called Redacted. I had no interest in leaving JLT, at least not until Redacted presented a more coherent strategy and an official offer letter. However, I began advising Mr. Motta on how to build Redacted s insurance arm. In March 2016, I introduced an industry friend and managing general agent MGA expert, Mark Kawanai, to Mr. Motta, who hired Mr. Kawanai in September 2016 as the first member of the Redacted insurance team. 4. I continued to advise Mr. Kawanai to start building Redacted Risk (aka Bracket Risk), and I resigned from JLT at the end of 2016 with the plan of joining Redacted in the following weeks. At this time, I was working on building the MGA Application and business plan alongside Messrs. Kawanai and Motta through a Google Drive account set up by Mr. Motta. Since I hadn t joined Redacted yet, my only work computer was my personal iMac. At this time, other individuals, including Wilson Zhao and Shawn Ram, were also assisting Redacted Risk from their personal computers and Gmail accounts. 3 MCNAMARA INJUNCTION Case No. CGC-20-584249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5. In late 2016, Mr. Kawanai informed me that Mr. Motta specifically asked him to use one of his old client s MGA Applications as a model/template for Redacted Risk s MGA Application. 6. Mr. Kawanai declined Mr. Motta s request, as such files were confidential to his previous employer and clients. 7. I officially joined Redacted Risk in February 2017 and was issued a laptop and router to enable me to work from home. 8. Without going into details, in March 2017 Mr. Motta had a falling out with one of his Redacted partners which resulted in Mr. Motta spinning out the insurance arm he had been building into a new company known as Crucible Risk. 9. I followed Mr. Motta to Crucible Risk (now Coalition) but had to, once again, use my personal iMac because Redacted required that we return all of our Redacted company equipment upon leaving. Once again, we used a Google drive called Crucible to collaborate on work. 10. We were in the middle of completing MGA Application and proposal for Aon Benfield when I was tasked with the Lloyds of London application submission. This meant that I needed to complete many forms and documents as well as submit our MGA application. I downloaded various documents to submit to Aon and Lloyds as part of the application process. I later received a Crucible-issued Macbook. This is a very long-winded way of explaining why I had an early version of the Redacted/Bracket/Crucible Risk/Coalition MGA Application on my personal computer. 11. Given this history of which Mr. Motta is well aware, I m surprised that he has sworn, under penalty of perjury, that I was not authorized to have a copy of the MGA Application on my personal device. See Motta Decl., ¶15. 12. Regardless, I no longer have access to this document, I only accessed it during my Coalition employment (see Motta Decl., ¶9), I never reviewed it or accessed it for any purpose related to Apollo, nor would it even be remotely useful for Apollo as Apollo never has attempted to, nor do we intend to, duplicate entire business Id. 4 MCNAMARA INJUNCTION Case No. CGC-20-584249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13. As Mr. declaration makes clear, it is of paramount importance to Coalition s business that it is an MGA i.e., that it has the authority to underwrite certain insurance products on behalf of insurance carriers who assume the financial risk. 14. Apollo is not an MGA. Unlike Coalition, which only sells its own insurance products which it has designed and rated and priced, Apollo is a pure insurance brokerage, selling insurance products from a multitude of insurance firms to other insurance brokers. For the avoidance of doubt: Apollo does not underwrite its own insurance products, whereas Coalition exclusively underwrites its own products. My Property Return Efforts 15. I understand that on February 21, 2020, my co-founders Alex Becker and John Loeber approached Coalition s CEO, Joshua Motta, to disclose a business idea that we d been discussing offline since mid-January. Mr. Motta called me shortly after that meeting, described how upset he was with me for him in the (while expressing disappointment that not included him in our discussions), expressed his opinion that margins were bad in the wholesale brokerage business, wondered if we knew what we were doing, and wished me luck. 16. He then informed me that Coalition was terminating my employment because he doesn t do break-ups 17. Following my termination, I fully understood my obligation to return Coalition files in my possession and have done my best to comply with that obligation. 18. While I worked from home my entire time at Coalition, I rarely used my personal computer or email account for work purposes after receiving my company-issued computer and email. Nevertheless, following my termination I still searched my house for Coalition materials and in the first week of March 2020, returned a box of Coalition schwag which I had for distribution at trade shows (t-shirts, stickers, etc.) along with my company-issued laptop (which Coalition had already somehow remotely cleaned/re-set). 19. I also conducted a search of my personal devices and accounts for any Coalition Proprietary Information which I needed to return. This included searching my personal desktop computer which I had to use out of necessity in my early days at Coalition. 5 MCNAMARA INJUNCTION Case No. CGC-20-584249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 20. I located some old Crucible/Coalition files on my desktop including the MGA Application discussed above along with some early emails I had sent from my personal Gmail account ( Coalition I had those Coalition Materials in my personal accounts because, as described above, I hadn t yet received a Coalition computer or corporate email account at the time I started providing services to Redacted/Crucible/Coalition. 21. During the first week of March 2020, I copied the Coalition Materials to a thumb drive which I shipped to John Loeber so he could return these materials to Coalition, which I understand he did promptly along with his own materials. 22. In late April 2020, I began discussions with third-party forensics firm Epiq eDiscovery Solutions, Inc. about preserving my relevant devices and accounts so they could delete the Coalition Materials from my possession, as Coalition had requested. My new lawyer (Mr. Burtt) also provided me additional guidance on places to search. 23. Given the COVID-19 restrictions, I was unable to meet with Epiq s technicians in person. Nevertheless, in early May 2020, and in order to ensure we identified and returned all Coalition in my possession, Epiq guided me through searches of my iMac, Gmail/Google drive, back-up drives, and iPhone for any Crucible or Coalition documents or media. At direction, I performed case-insensitive searches for at least the terms Coalition and Crucible. 24. With assistance, I also identified a few additional work-related emails that I needed to return that were from different email domains like @cruciblerisk.com, @thecoalition.com, or @coalitioninc.com. 25. Some of the items we located were already on the original thumb drive I returned to Coalition via Mr. Loeber, but the thumb drive did not include the cloud-based items I located with Mr. and assistance. 26. On May 4, 2020, via remote connections, Epiq collected data from my relevant accounts and devices onto a hard drive now in possession. 6 MCNAMARA INJUNCTION Case No. CGC-20-584249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 27. On May 6, 2020, Epiq went through my relevant devices and accounts and permanently deleted the Coalition Materials from my possession. I have not had access to any of those Coalition Materials for more than four months. 28. On May 26, 2020, I was doing some spring cleaning and found a binder of Coalition business development reference materials that was provided to all salespersons in my closet. On May 29, I sent the binder to Coalition s counsels office in San Francisco via registered mail. 29. While the PIIA required only that I return any Proprietary Information to Coalition following my termination, I erred on the side of caution and returned anything remotely related to my Coalition work. 30. To the extent any Coalition materials containing Proprietary Information were in my possession between the time of my termination (February 21) and the time I returned such files to Coalition and deleted them from my possession with Epiq s assistance, I neither used such information for Apollo s benefit (or otherwise) nor did I disclose it to anybody. 31. I have thus abided by my post-termination confidentiality and property return obligations set forth in Section 4 of my PIIA. 32. I have expended significant effort and expense to comply with my obligation to return Proprietary Information to Coalition following my termination and am confident I have done so. Nevertheless, if I later discover any arguably Proprietary Information which I inadvertently failed to identify and return in my prior searches, I will immediately, via my counsel, return such information to Coalition s counsel (Ben Rothstein). I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on September 15, 2020, in Niwot, Colorado. _____________________________ Shea McNamara EXHIBIT D LOEBER DECL. ISO DEFS OPP N TO PLAINTIFF S MOTION FOR PRELIMINARY INJUNCTION Case No. CGC-20-584249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DAVID R. BURTT, State Bar No. 201220 dburtt@mobilitylegal.com MOBILITY LEGAL PC 3464 Arivaca Ct. Reno, NV 89511 Telephone: 650-544-8090 Attorneys for Defendants ALEX BECKER, JOHN LOEBER, SHEA MCNAMARA, and APOLLO BROKERS, INC. SUPERIOR COURT OF THE STATE OF CALIFORNIA COUNTY OF SAN FRANCISCO COALITION INC., Plaintiff, v. ALEX BECKER, JOHN LOEBER, SHEA MCNAMARA, APOLLO BROKERS, INC., and DOES 1 through 10, Defendants. Case No. CGC-20-584249 DECLARATION OF JOHN LOEBER IN SUPPORT OF DEFENDANTS OPPOSITION TO PLAINTIFF S MOTION FOR PRELIMINARY INJUNCTION Dept.: 304 Judge: Hon. Anne-Christine Massullo Date: September 28, 2020 Time: 10:00 a.m. 2 LOEBER DECL. ISO DEFS OPP N TO PLAINTIFF S MOTION FOR PRELIMINARY INJUNCTION Case No. CGC-20-584249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I, John Loeber, declare as follows: 1. I am a founder and Chief Executive Officer of Apollo Brokers, Inc. ( Apollo ). I worked for Coalition, Inc. ( Coalition ) from early 2017 through February 28, 2020, when Coalition terminated my employment without notice. I make this declaration to (1) correct some misstatements in Coalition s moving papers (and the negative inferences Coalition asks the Court to draw) and (2) explain the efforts I undertook to identify and return work-related files following Coalition s termination of my employment. Coalition s Misstatements and Unsubstantiated Fears 2. In its supporting declarations, Coalition takes issue with the work materials I stored on my personal devices and accounts, the fact that I made additional backups in February 2020, deleted files from my work computer, and did not return my personal backup drive. 3. I generally try not to rely too heavily on the fallible hard drive/operating system of an individual laptop. As such, I store most of my personal files (and often, many work files including backups) on an external drive namely, the WD Elements drive discussed in Mr. Schroeder s declaration. This physical drive is my property, not Coalition s, and it contains hundreds of gigabytes of personal, non-Coalition data. I have no obligation to turn over my personal drive (or data) to Coalition. To comply with my property return obligations, I purchased a new drive, moved my Coalition data to it, and returned the new drive to Coalition. 4. I often made backups for work purposes, including important files on my company-issued laptop (which was the case here). I intended to continue working for Coalition when I made these backups (in fact, that s exactly why I made them). 5. I had been experiencing a number of issues with my work computer (errant insertion of dots when I typed, desktop management didn t always work correctly on login, etc.), in my view because I hadn t cleared and upgraded my operating system in over two-and-a-half years. In February 2020 I made a complete/exhaustive backup so that I could install an upgraded operating system, reload those same files back onto my laptop again, and keep working. This backup had nothing to do with Apollo. Moreover, in both my meetings with Mr. Motta and Mr. 3 LOEBER DECL. ISO DEFS OPP N TO PLAINTIFF S MOTION FOR PRELIMINARY INJUNCTION Case No. CGC-20-584249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Hering, we explicitly discussed multi-week transition plans before leaving. Since I had no intention of leaving immediately, it seemed logical to fix my computer and update my software. 6. matters of fact. Crucially, on February 21, Mr. Becker and I met with Mr. Motta for ninety minutes, walked him through the Apollo business model in detail, and he expressed no competitive concerns whatsoever. In fact, he verbally confirmed his support for our project several times, though he questioned the economic viability of our market. It appears only that after Mr. Hering expressed competitive concerns, Mr. Motta changed his stance. Thus, Mr. claim that during the presentation, I realized that they intended to copy aspects of implausible: if that were the case, he surely would have already had that realization on February 21. Further, in the February 26 meeting, despite Mr. Hering s outrageous personal threats to dissuade us from competing with Coalition (to which we responded that we had no intent to compete with Coalition, but rather to partner up), Mr. Motta still laid out a multi-week transition plan for myself and Mr. Becker, and Messrs. Hering and Motta asked to schedule a follow-up meeting for Friday to negotiate for a slice of our company. At no point did either Mr. Motta or Mr. Hering indicate that they intended to terminate us. 7. Mr. Motta also claims in his declaration that there are more than 10,000 files/folders that I copied from my work laptop to my WD hard drive but which I have not yet returned. If Coalition were truly interested in confirming my compliance with my property return obligation, Coalition should have shared this spreadsheet with my counsel. The only specific filepath Mr. Motta provides in his declaration is a surprise to me; I was not aware of these particular files and certainly made no attempt to avoid returning them. Until I reviewed Mr. had no idea such filesystem artifacts even existed. In any event, any such files have not been in my possession since I concluded my return efforts. 8. Mr. Schroeder is more specific in his statement, at paragraph 31, that I ve retained, and not returned, files in an APW directory. Mr. Schroeder is correct. APW is shorthand for Accounts and Passwords, and such files are just credentials to authenticate with Coalition 4 LOEBER DECL. ISO DEFS OPP N TO PLAINTIFF S MOTION FOR PRELIMINARY INJUNCTION Case No. CGC-20-584249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 services or vendors usernames and passwords/authentication keys. I do not consider my credentials to be Coalition s Proprietary Information that I m required to return (nor do I want to give Mr. Hering any insight into my customary password protocols). I kept a copy of this file on the 2TB Western Digital Elements Drive as well as on an encrypted flash drive which is the USB drive that Mr. Schroeder makes note of in paragraphs 14 and 15 of his declaration. 9. Following my termination, such credentials should be useless to me, since Coalition requires VPN access to authenticate with company services (which access I no longer have). Moreover, I have not attempted to use any of these credentials to authenticate with Coalition services or vendors other than those which I m entitled to use post-termination (namely, JustWorks, the PEO that stored my employment/healthcare information, and Carta, which stores my certificates as a Coalition shareholder). 10. Regarding my deletion of the m and c user accounts on the morning of February 21: as with any laptop that s over two-and-a-half years old, various cruft (including user accounts) accumulates. In this case, these were accounts that I rarely used (and overwhelmingly for items unrelated to Coalition). I kept these separate from the main account ( v ) so as not to pollute that workspace with different installations of software, etc. I recall that in early 2020, some technical experiment had gone wrong and the c user ended up owning some files that I was trying to work on from my usual v user, which was disruptive. A simple remedy to fix the issue was to delete these unnecessary accounts. 11. Regarding the deletion of the SWP files on the morning of February 27: this was a totally routine procedure for me. I deleted SWP files so frequently that the very command used to delete such SWP files (as given in footnote 21 of Mr. Schroeder s declaration) had been, to the best of my recollection, saved as a shortcut ( swapclear ) on my machine for years. To elaborate: similar to how Microsoft Office creates lock files to save intermittent changes while you work on a Word Document or an Excel Sheet (such that you may restore your document should you accidentally close it), the text editor VIM creates SWP files to save such intermittent changes. The downside of this is that if you leave files open, and SWP files accumulate, then VIM will 5 LOEBER DECL. ISO DEFS OPP N TO PLAINTIFF S MOTION FOR PRELIMINARY INJUNCTION Case No. CGC-20-584249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 frequently prompt you whether you would like to restore some unsaved changes, which I consider a well-intended but disruptive feature. For that reason, I ran this command frequently. 12. Coalition s claim that I deliberately attempted to obfuscate my copying of Coalition s code is facile (if that were true, I would ve wiped a completely different set of files, if not simply the entire disk, which I could have done quite easily). 13. Mr. Motta s declaration offers useful detail regarding Coalition s business and helps differentiate what we re doing at Apollo. In my original, ninety-minute meeting with Mr. Motta regarding Apollo on February 21, he clearly expressed his support for Apollo and clarified that he did not view us as a competitive threat. While he now claims to have changed his mind, it continues to be my opinion that Apollo is not competing with Coalition. 14. Below are some things Mr. Motta declares with which I agree: a. [Coalition s] business model focuses on (1) technology that accelerates and simplifies the process for binding coverage of specialty insurance products; and (2) a specialized approach to risk-assessment that allows for more accurate and fair pricing of specialty insurance products [¶2]; b. The [rating model] is at the heart of Coalition s underwriting business and has made Coalition an industry-leading underwriter for certain specialty insurance products [¶6]; c. Coalition s MGA Application document lays out the company s entire business model, soup to nuts [¶8] (emphasis mine); d. In the insurance industry, a managing general agent ( MGA ) is a specialized type of insurance broker that has been granted authority by one or more underwriters to write insurance policies. Coalition is an MGA; it has relationships with certain insurance carriers which authorize it to underwrite its own specialty insurance products. (...) [The MGA Application] lays out Coalition s market analysis, marketing strategy, the risk-assessment model, and the design and function of Coalition s online platform [¶8]; and e. The MGA Application thus reflects all of the time and money that has been invested in making Coalition a successful business [¶8]. 6 LOEBER DECL. ISO DEFS OPP N TO PLAINTIFF S MOTION FOR PRELIMINARY INJUNCTION Case No. CGC-20-584249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15. Mr. Motta leaves no doubt that being an MGA is of paramount importance to Coalition s business. 16. Apollo Brokers is not an MGA. Unlike Coalition, which only sells its own insurance products, Apollo is a pure insurance brokerage, selling insurance products from a multitude of insurance firms. For the avoidance of doubt: Apollo does not underwrite its own insurance products, whereas Coalition exclusively underwrites its own products. 17. Mr. Motta s declaration also emphasizes the importance of Coalition s rating model and risk assessment capabilities. As Mr. Motta admits, such systems are indeed key to MGAs like Coalition. However, since Apollo is a pure brokerage and not an MGA, Apollo does not assess any risk. Apollo does not have a rating model or a risk assessment model, and it has no plans to develop either. As a pure broker, Apollo merely connects parties to facilitate transactions, and has no input on the pricing or risk assessment that an insurance underwriter like Coalition conducts. 18. It is also worth addressing explicitly the insinuations that Coalition code was used, or could be used, for Apollo s benefit. Not only has Coalition code never been used for Apollo, it would not even have been useful. 19. First of all, as is clear from Mr. Motta s declaration, Apollo is a significantly different business from Coalition and requires different software. Coalition is an MGA that exclusively underwrites and sells its own insurance products. As Mr. Motta writes, there are two focuses to Coalition s business model, one of which is a specialized approach to risk-assessment that allows for more accurate and fair pricing of specialty insurance products. Apollo is a pure insurance brokerage that does not underwrite anything and does not sell its own insurance products; rather, Apollo facilitates insurance transactions by connecting insurance brokers with a multitude of insurance underwriters. Apollo does not perform any risk assessment. 20. For that reason, many of Coalition s alleged trade secrets as described in the existing declarations are completely irrelevant to Apollo. Several examples below: 7 LOEBER DECL. ISO DEFS OPP N TO PLAINTIFF S MOTION FOR PRELIMINARY INJUNCTION Case No. CGC-20-584249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 a. Repository X :1 Coalition has developed an engine to scour the internet for thousands of data points pertaining to the risk faced by an applicant for insurance. Since Apollo does not underwrite or assess risk, Apollo simply does not do any of this. b. Repository Y : Coalition has developed a model to financially price the risk faced by an applicant for insurance. Since Apollo does not price any risks, Apollo does not have, or need, a rating model. c. Repository Z : Coalition has developed a system to create (from scratch) and issue .pdf insurance quotes and policies. Since Apollo does not issue insurance quotes or policies, Apollo does not have, and does not need such a system. 21. Moreover, contrary to the allegations in Coalition s Verified Complaint, we wrote no code for Apollo s insurance platform prior to my termination on February 28, 2020. 22. And for several months following my termination from Coalition, I was too busy with my responsibilities as CEO to contribute code to Apollo s insurance platform. Alex Becker was the sole author of Apollo s insurance platform during those months. My filesystem indicates that I first downloaded Apollo s insurance platform code on June 5, 2020, and that I made my first contribution to that codebase on June 22, 2020 (more than 3 months after I returned my Coalition backups, and about two months since I sent to Epiq, and removed from my possession, the last dregs of Coalition data I located in a more thorough search, with preservation copies now safely in Epiq s vault). 23. I have also reviewed the declaration of Mark Fussell who offers many opinions on the propriety of my having various types of code and files among my backups. Contrary to Mr. Fussell s views, there is nothing nefarious nor improper about how I did my job. Sparing the court a detailed rebuttal, at this stage I will comment that Mr. Fussell seems to lack a clear understanding of what work I did for Coalition, how my fellow engineers and I performed our jobs for nearly three years, and the breadth of my programming responsibilities. 1/ repositories. Out of respect for that request, 8 LOEBER DECL. ISO DEFS OPP N TO PLAINTIFF S MOTION FOR PRELIMINARY INJUNCTION Case No. CGC-20-584249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 My Work for Coalition and My Property Return Efforts 24. Using only my personal computer and Google mail ( Gmail ) account, I started providing services for Coalition in February of 2017 (other than a white paper on quantifying digital risk which I drafted for Coalition s benefit in 2016, which IP I later transferred to Coalition for some equity). In the early days, I used my personal email accounts to communicate because I was not yet formally employed by Coalition (formerly, Crucible Risk) and had no corporate email account yet. This was also true for a similarly early manager, Jason Kahn (kahnpsu@gmail.com), and my co-defendant Alex Becker (alcubecker@gmail.com). Coalition s founder and CEO (joshua.motta@gmail.com) also used a personal account to communicate with us. Coalition didn t set up my corporate email account until I formally began salaried work on March 20, 2017. 25. Coalition acknowledged that I performed substantive development before officially joining. In connection with my officially joining Coalition in March 2017, Coalition required that I assign my prior work product to Coalition in exchange for an equity grant (which assignment was accomplished via a Technology Assignment Agreement) ( TAA ). 26. On March 12, 2017 the same day I executed my TAA I also executed Coalition s Proprietary Information and Inventions Agreement ( PIIA ). The PIIA, attached as Exhibit 1, required that [u]pon termination of my employment, I will promptly return to Company all items containing or embodying Proprietary Information (including all copies). See PIIA, § 4. The PIIA also informed me that I have no expectation of privacy with respect to Company s telecommunications, networking or information processing systems . . . Id. 27. During my more than three years of performing services for Coalition, I often utilized my personal devices and accounts to perform my job. I was unaware of any company policy that prohibited such use. For the vast majority of Coalition s engineers, it was customary to use personal Github accounts, and no company-specific account use was mandated. 28. At the time of my termination, my personal devices which included Coalition files included my personal laptop (Lenovo ThinkPad T430s), phone (Apple iPhone X), a Western 9 LOEBER DECL. ISO DEFS OPP N TO PLAINTIFF S MOTION FOR PRELIMINARY INJUNCTION Case No. CGC-20-584249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Digital external hard drive, and a second Western Digital hard drive which contained a June 2019 backup of the first Western Digital hard drive. 29. At the time of my termination, my personal accounts which included Coalition files included my Gmail account (loeberjn@gmail.com) and my Trello (note-taking) account. My Gmail account included thousands of (unread) notifications for Github informing me that someone had responded to an open ticket item. 30. When I met with both Mr. Motta and Mr. Hering in mid- to late-February 2020 to discuss Apollo, I had no inclination that Coalition would terminate me for disclosing my business idea. In my meetings with Messrs. Motta and Hering in February 2020, we discussed a multi- week transition plan where I would transition my responsibilities to others before leaving Coalition. Notwithstanding those plans, Coalition abruptly terminated my employment on February 28, 2020. 31. I fully understood my obligation to return Coalition files following my termination and have done my best to comply with that obligation. 32. Following my termination, I immediately began searching for and organizing Coalition materials from my personal devices and accounts so I could return them to Coalition. On March 3, 2020, I purchased an external hard drive for the purpose of moving over my Coalition files to return to Coalition. On March 5, I moved my Coalition materials to the drive. 33. On Wednesday, March 11, I texted Mr. Motta to arrange a time to drop off the drive. He asked his assistant Bethany Poore to follow-up with me, which she did via email on Friday, March 13. Given Coalition s offices were closed on account of the COVID-19-induced lockdown, I arranged to personally deliver the hard drive I d purchased and loaded with my Coalition materials to Ms. Poore. Around 12:35 p.m. on Monday, March 16, I returned this external hard drive to Ms. Poore which included all the Coalition materials I d located by that point (more than 60GB), along with a USB flash drive that I delivered on behalf of Shea McNamara. 34. On or about March 28, I discovered a few old files lingering on my system that I hadn t caught on my first search and put them on a USB drive labelled Return to Coalition. 10 LOEBER DECL. ISO DEFS OPP N TO PLAINTIFF S MOTION FOR PRELIMINARY INJUNCTION Case No. CGC-20-584249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 35. At the time of my termination from Coalition, I was already consulting with counsel (Charles T. Graves of Wilson Sonsini) on advice concerning my departure. On April 15, 2020, Mr. Graves received a letter from Coalition s counsel which generally asserted that I still retained unspecified Coalition files in my possession. By this point, I had also engaged Mobility Legal as counsel and, in response to this letter, Mr. Burtt guided me through a follow-up search for any additional Coalition files I might still possess. During this follow-up search I located some additional Coalition-related materials (much of which is not confidential), including business cards, some notes I had taken on my iPhone s note-taking app, to-do lists I stored in an online account (Trello), the GitHub notification emails referenced above, work-related screenshots I had snapped, pictures from a company off-site, and resumes of candidates. On April 21, Mr. Burtt described these additional files to Coalition s counsel in a letter and requested guidance on how Coalition would like them returned. 36. On April 22, Coalition requested that I return these additional materials and confirm I no longer have access to them. Mr. Burtt responded on April 24 that the only way to return these additional materials and confirm I no longer have access to them (while simultaneously complying with my evidence preservation obligation) was to engage a third-party forensics consulting firm. By that point we had already begun negotiating a Statement of Work with Epic eDiscovery Solutions, Inc. ( Epiq ). 37. Given the COVID-19 restrictions, I was unable to meet with Epiq s technicians in person. In late April and early May, via remote connections, Epiq created forensic images of my relevant accounts and devices. The relevant devices and accounts have thus been preserved for later use in discovery in this case. I also physically shipped my Western Digital hard drives to Epiq for sequestering along with the thumb drive labeled Return to Coalition (I had intended to return it via my counsel at WSGR but thought it best to send to Epiq to include with the additional files I located with Mr. Burtt s guidance). Epiq still retains possession of these three drives. 38. Out of all the content in Epiq s possession, only a directory of username/password credentials has been returned to me (which happened in early June 2020). 11 LOEBER DECL. ISO DEFS OPP N TO PLAINTIFF S MOTION FOR PRELIMINARY INJUNCTION Case No. CGC-20-584249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 39. After Epiq created preservation images of my relevant devices and accounts, I assisted Epiq in locating Coalition-related files to return and delete. Epiq also conducted keyword searches to ensure thoroughness of these efforts. 40. On May 21, 2020, Epiq overnighted an encrypted hard drive to Coalition s forensic vendor, which drive was confirmed received on May 22. As far as I understand based on my discussion with Epiq, the drive contained all of the additional Coalition-related materials I discovered on March 28 and in my follow-up search. 41. Via letter from my counsel dated June 8, 2020, I confirmed to Coalition that I had already returned all items in my possession containing or embodying Proprietary Information. In this letter, we also offered to have an in-person meeting with Coalition and its own forensics expert where we would conduct targeted searches of my personal devices and accounts to demonstrate the completeness of [my] remediation efforts. I understand Coalition never accepted this offer. 42. While the PIIA required only that I return any Proprietary Information to Coalition following my termination, I erred on the side of caution and returned anything remotely related to my Coalition work product. To the best of my knowledge, I no longer have possession of, or access to, these materials. This has been the case for nearly six months for the vast majority of my Coalition files, as identified in March promptly following my termination. And this has been the case for nearly four months for the few remaining items identified in subsequent searches and returned. 43. To the extent any Coalition materials containing Proprietary Information were in my possession between the time of my termination (February 28) and the time I returned such files to Coalition and deleted them from my possession with Epiq s assistance, I neither used such information for Apollo s benefit (or otherwise) nor did I disclose it to anybody. Accordingly, I have abided by my post-termination confidentiality obligations set forth in Section 4 of my PIIA. 44. I have expended significant effort and expense to comply with my obligation to return Proprietary Information to Coalition following my termination and am confident I have done so. Nevertheless, if I later discover any arguably Proprietary Information which I 12 LOEBER DECL. ISO DEFS OPP N TO PLAINTIFF S MOTION FOR PRELIMINARY INJUNCTION Case No. CGC-20-584249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 inadvertently failed to identify and return in my prior searches, I will immediately, via my counsel, return such information to Coalition s counsel (Ben Rothstein). I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on September 15, 2020, in San Francisco, California. _____________________________ John Loeber EXHIBIT 1 ACTIVE/89918392.2 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT The following confirms and memorializes an agreement that Crucible Risk, Inc., a Delaware corporation (the “Company”) and I (______________________) have had since the commencement of my employment (which term, for purposes of this agreement, shall be deemed to include any relationship of service to the Company that I may have had prior to actually becoming an employee) with the Company in any capacity and that is and has been a material part of the consideration for my employment by Company: 1. I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict with this Agreement or my employment with Company. I will not violate any agreement with or rights of any third party or, except as expressly authorized by Company in writing hereafter, use or disclose my own or any third party’s confidential information or intellectual property when acting within the scope of my employment or otherwise on behalf of Company. Further, I have not retained anything containing any confidential information of a prior employer or other third party, whether or not created by me. 2. Company shall own all right, title and interest (including patent rights, copyrights, trade secret rights, mask work rights, sui generis database rights and all other intellectual property rights of any sort throughout the world) relating to any and all inventions (whether or not patentable), works of authorship, mask works, designs, know-how, ideas and information made or conceived or reduced to practice, in whole or in part, by me during the term of my employment with Company to and only to the fullest extent allowed by California Labor Code Section 2870 (which is attached as Appendix A) (collectively “Inventions”) and I will promptly disclose all Inventions to Company. Without disclosing any third party confidential information, I will also disclose anything I believe is excluded by Section 2870 so that the Company can make an independent assessment. I hereby make all assignments necessary to accomplish the foregoing. I shall further assist Company, at Company’s expense, to further evidence, record and perfect such assignments, and to perfect, obtain, maintain, enforce, and defend any rights specified to be so owned or assigned. I hereby irrevocably designate and appoint Company as my agent and attorney-in-fact, coupled with an interest and with full power of substitution, to act for and in my behalf to execute and file any document and to do all other lawfully permitted acts to further the purposes of the foregoing with the same legal force and effect as if executed by me. If I wish to clarify that something created by me prior to my employment that relates to Company’s actual or proposed business is not within the scope of the foregoing assignment, I have listed it on Appendix B in a manner that does not violate any third party rights or disclose any confidential information. Without limiting Section 1 or Company’s other rights and remedies, if, when acting within the scope of my employment or otherwise on behalf of Company, I use or (except pursuant to this Section 2) disclose my own or any third party’s confidential information or intellectual property (or if any Invention cannot be fully made, used, reproduced, distributed and otherwise exploited without using or violating the foregoing), Company will have and I hereby grant Company a perpetual, irrevocable, worldwide royalty-free, non-exclusive, sublicensable right and license to exploit and exercise all such confidential information and intellectual property rights. ACTIVE/89918392.2 2 3. To the extent allowed by law, paragraph 2 includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as “moral rights,” “artist’s rights,” “droit moral,” or the like (collectively “Moral Rights”). To the extent I retain any such Moral Rights under applicable law, I hereby ratify and consent to any action that may be taken with respect to such Moral Rights by or authorized by Company and agree not to assert any Moral Rights with respect thereto. I will confirm any such ratifications, consents and agreements from time to time as requested by Company. 4. I agree that all Inventions and all other business, technical and financial information (including, without limitation, the identity of and information relating to customers or employees) I develop, learn or obtain during the term of my employment that relate to Company or the business or demonstrably anticipated business of Company or that are received by or for Company in confidence, constitute “Proprietary Information.” I will hold in confidence and not disclose or, except within the scope of my employment, use any Proprietary Information. However, I shall not be obligated under this paragraph with respect to information I can document is or becomes readily publicly available without restriction through no fault of mine. Upon termination of my employment, I will promptly return to Company all items containing or embodying Proprietary Information (including all copies), except that I may keep my personal copies of (i) my compensation records, (ii) materials distributed to shareholders generally and (iii) this Agreement. I also recognize and agree that I have no expectation of privacy with respect to Company’s telecommunications, networking or information processing systems (including, without limitation, stored computer files, email messages and voice messages) and that my activity and any files or messages on or using any of those systems may be monitored at any time without notice. 5. Until one year after the term of my employment, I will not encourage or solicit any employee or consultant of Company to leave Company for any reason (except for the bona fide firing of Company personnel within the scope of my employment). 6. I agree that during the term of my employment with Company (whether or not during business hours), I will not engage in any activity that is in any way competitive with the business or demonstrably anticipated business of Company, and I will not assist any other person or organization in competing or in preparing to compete with any business or demonstrably anticipated business of Company. 7. I agree that this Agreement is not an employment contract for any particular term and that I have the right to resign and Company has the right to terminate my employment at will, at any time, for any or no reason, with or without cause. In addition, this Agreement does not purport to set forth all of the terms and conditions of my employment, and, as an employee of Company, I have obligations to Company which are not set forth in this Agreement. However, the terms of this Agreement govern over any inconsistent terms and can only be changed by a subsequent written agreement signed by the President of Company. 8. I agree that my obligations under paragraphs 2, 3, 4 and 5 of this Agreement shall continue in effect after termination of my employment, regardless of the reason or reasons for termination, and whether such termination is voluntary or involuntary on my part, and that Company is entitled to communicate my obligations under this Agreement to any future ACTIVE/89918392.2 3 employer or potential employer of mine. My obligations under paragraphs 2, 3 and 4 also shall be binding upon my heirs, executors, assigns, and administrators and shall inure to the benefit of Company, it subsidiaries, successors and assigns. 9. Any dispute in the meaning, effect or validity of this Agreement shall be resolved in accordance with the laws of the State of California without regard to the conflict of laws provisions thereof. I further agree that if one or more provisions of this Agreement are held to be illegal or unenforceable under applicable California law, such illegal or unenforceable portion(s) shall be limited or excluded from this Agreement to the minimum extent required so that this Agreement shall otherwise remain in full force and effect and enforceable in accordance with its terms. This Agreement is fully assignable and transferable by Company, but any purported assignment or transfer by me is void. I also understand that any breach of this Agreement will cause irreparable harm to Company for which damages would not be an adequate remedy, and, therefore, Company will be entitled to injunctive relief with respect thereto in addition to any other remedies and without any requirement to post bond. 10. I acknowledge receipt of the following notice under 18 U.S.C § 1833(b)(1): “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.” [Remainder of Page Intentionally Left Blank] ACTIVE/89918392.2 4 I HAVE READ THIS AGREEMENT CAREFULLY AND I UNDERSTAND AND ACCEPT THE OBLIGATIONS WHICH IT IMPOSES UPON ME WITHOUT RESERVATION. NO PROMISES OR REPRESENTATIONS HAVE BEEN MADE TO ME TO INDUCE ME TO SIGN THIS AGREEMENT. I SIGN THIS AGREEMENT VOLUNTARILY AND FREELY, IN DUPLICATE, WITH THE UNDERSTANDING THAT THE COMPANY WILL RETAIN ONE COUNTERPART AND THE OTHER COUNTERPART WILL BE RETAINED BY ME. Effective: _____________, 20___ Employee Signature Name (Printed) Accepted and Agreed to: Crucible Risk, Inc. By Name Title ACTIVE/89918392.2 APPENDIX A California Labor Code Section 2870. Application of provision providing that employee shall assign or offer to assign rights in invention to employer. (a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either: (1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or (2) Result from any work performed by the employee for his employer. (b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable. ACTIVE/89918392.2 APPENDIX B PRIOR MATTER EXHIBIT E ACTIVE/102621907.1 Darryl M Woo Esq. +1 415 733 6068 DWoo@goodwinlaw.com Goodwin Procter LLP Three Embarcadero Center San Francisco, CA 94111 goodwinlaw.com +1 415 733 6000 March 13, 2020 VIA EMAIL: loeberjn@gmail.com Mr. John Loeber 525 Stockton St. Apt. 404 San Francisco, CA 94108 Re: Coalition, Inc. (formerly, Crucible Risk, Inc.) Dear Mr. Loeber: This will confirm that during our meeting on Friday, February 28, 2020, you were provided with additional copies of certain documents you signed at the time of your hire by Crucible Risk, Inc. (now known as Coalition, Inc., referred to herein as the “Company”) in March 2017. These include a Proprietary Information and Inventions Agreement (“PIIA”); a Technology Assignment Agreement (“TAA”); and a Stock Purchase Agreement (“SPA”). We discussed these agreements with you, and reminded you of your obligations under them, including the portions to which we added highlighting for purposes of our discussion. We invited any questions you may have had and responded to them. In particular, you were reminded of certain representations and covenants you made with the Company in the PIIA, including your representation to the Company in Paragraph 1 of the PIIA that “I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict with this Agreement or my employment with Company.” Under Paragraph 2 of the PIIA, you also agreed that the Company shall own all right, title and interest relating to any and all inventions (whether or not patentable) made or conceived or reduced to practice, in whole or in part, by you during the term of your employment with the Company. All such inventions are assigned to the Company, including those you revealed to Joshua Motta and John Hering during the presentation of your start-up wholesale insurance brokerage, Apollo Brokers, on Wednesday, February 26, 2020. Paragraph 2 of the PIIA provides, in pertinent part: 2. Company shall own all right, title and interest (including patent rights, copyrights, trade secret rights, mask work rights, sui generis database rights and all other intellectual property rights of any sort throughout the world) relating to any and all inventions (whether or not patentable), works of authorship, mask works, designs, know- how, ideas and information made or conceived or reduced to practice, in whole or in part, by me during the term of my employment with Company to and only to the fullest ACTIVE/102621907.1 March 13, 2020 Page 2 extent allowed by California Labor Code Section 2870 (which is attached as Appendix A) (collectively “Inventions”) and I will promptly disclose all Inventions to Company. Without disclosing any third party confidential information, I will also disclose anything I believe is excluded by Section 2870 so that the Company can make an independent assessment. I hereby make all assignments necessary to accomplish the foregoing. As noted above, a copy of California Labor Code Section 2870 was attached as Appendix A to the PIIA and provides certain limitations, none of which are applicable to the situation here, where you and others made, conceived or reduced to practice Inventions during the term of your employment with the Company using the Company’s equipment, supplies, facilities, and/or trade secret information. Also, even if any Inventions or portion thereof were not made, conceived or reduced to practice using Company equipment, supplies, facilities, and/or trade secret information, it is our understanding that they related at the time of conception or reduction to practice to Company’s business, or actual or demonstrably anticipated research or development of the Company, and/or resulted from work performed by you for the Company. You furthermore have not disclosed any Inventions to the Company that you believe are excluded by Section 2870. Please note that notwithstanding the termination of your employment, you remain obligated to hold in confidence and not disclose or use any Company Proprietary Information. Paragraph 4 of the PIIA provides, in pertinent part: 4. I agree that all Inventions and all other business, technical and financial information (including, without limitation, the identity of and information relating to customers or employees) I develop, learn or obtain during the term of my employment that relate to Company or the business or demonstrably anticipated business of Company or that are received by or for Company in confidence, constitute “Proprietary Information.” I will hold in confidence and not disclose or, except within the scope of my employment, use any Proprietary Information. You are also reminded of your obligation under Paragraph 5 of the PIIA: 5. Until one year after the term of my employment, I will not encourage or solicit any employee or consultant of Company to leave Company for any reason (except for the bona fide firing of Company personnel within the scope of my employment). Under Paragraph 6 of the PIIA, you further agreed “that during the term of my employment with Company (whether or not during business hours), I will not engage in any activity that is in any way competitive with the business or demonstrably anticipated business of Company, and I will not assist any other person or organization in competing or in preparing to compete with any business or demonstrably anticipated business of Company.” ACTIVE/102621907.1 March 13, 2020 Page 3 Your work in developing your start-up wholesale insurance brokerage, Apollo Brokers, during the term of your employment, was a breach of Paragraph 6, and a basis, among others, for your employment termination (not that any cause was required for termination of your at-will employment). We further remind you that according to Paragraph 8 of the PIIA, you agreed that your obligations under Paragraphs 2, 3, 4 and 5 of the PIIA continue in effect after termination of your employment, regardless of the reason or reasons for termination. Repurchase of Company Stock By this letter, the Company is also notifying you of the exercise of its Right of Repurchase. Under the TAA at paragraph 1, you as “Developer” had assigned to the Company: exclusively throughout the world all right, title and interest (whether or not now existing) in (i) the subject matter referred to in Exhibit A (“Technology”), (ii) all precursors, portions and work in progress with respect thereto and all inventions, works of authorship, mask works, technology, information, know-how, materials and tools relating thereto or to the development, production, use, support or maintenance thereof and (iii) all copyrights, patent rights, trade secret rights, trademark rights, mask works rights, sui generis database rights and other intellectual property rights and all business, contract rights and goodwill in, incorporated or embodied in, used to develop or produce or use, or related to any of the foregoing ((i), (ii) and (iii) are collectively “Intellectual Property”). Exhibit A to the TAA in turn provides that the “Technology” includes: All technology, know-how, information, intellectual property and other materials for or relevant to cyber liability insurance, including without limitation, all business plans, technical plans, specifications, templates, demonstration versions, equipment, software, devices, methods, apparatus, product designs, and trademarks or logos relevant to the foregoing. As compensation for the above assignment, the Company provided you with 300,000 shares of common stock of the Company pursuant to the provisions of the accompanying SPA. However, the Restricted Shares (as defined in the SPA) are subject to the Company’s Right of Repurchase under Section 2 of the SPA during the “Repurchase Period,” defined as “a period of 180 consecutive days commencing on the date when the Purchaser’s Service terminates for any reason, including (without limitation) death or disability.” Section 2(d) of the SPA provides: (d) Exercise of Repurchase Right. The Company shall be deemed to have exercised its Right of Repurchase automatically for all Restricted Shares as of the commencement of the Repurchase Period, unless the Company during the Repurchase Period notifies the holder of the Restricted Shares pursuant to Section 9 that it will not ACTIVE/102621907.1 March 13, 2020 Page 4 exercise its Right of Repurchase for some or all of the Restricted Shares. The Company shall pay to the holder of the Restricted Shares the purchase price determined under Subsection (a) above for the Restricted Shares being repurchased. Payment shall be made in cash or cash equivalents and/or by canceling indebtedness to the Company incurred by the Purchaser in the purchase of the Restricted Shares. The certificate(s), if any, representing the Restricted Shares being repurchased shall be delivered to the Company. In light of the termination of your employment, the Company’s exercise of its right of repurchase of the Restricted Shares was automatic and has been completed on the Company’s capitalization management platform, Carta. You have received payment for the repurchased Restricted Shares through Carta. In addition, you were granted an option to purchase 15,152 shares of the Company’s Common Stock pursuant to the Company’s 2017 Stock Option and Grant Plan (the “Plan”, available on Carta). Pursuant to Section 1(c)(ii) of your Incentive Stock Option Grant Notice and Agreement as set forth in Carta, because you have been terminated for Cause (as defined in the Plan), your unvested options to purchase Common Stock were immediately terminated upon the date of your termination. Document Preservation Obligations We also informed you of the need to preserve, and not alter or destroy, documents relevant to the matter of your development of competitive software using Company equipment, supplies, facilities, and/or trade secret information while you were employed by the Company, and/or otherwise related to the Company or the business or demonstrably anticipated business of the Company. For the avoidance of doubt, “documents” that need to be preserved include hard copy and electronically stored documents, whether on computers, servers, handheld and tablet devices, storage media, or in cloud, email accounts, or other storage. The documents you are obligated to preserve include: 1. All documents and communications relevant to your employment with the Company; 2. All documents and communications relevant to your development of competitive software using Company equipment and resources while you were employed by the Company, including without limitation, all documents and communications pertaining in any way to Apollo Brokers; and 3. All documents and communications relevant to your startup business, including without limitation, Apollo Brokers, that you began planning and had worked on during your employment with the Company, including business plans, the presentation slide deck you showed Joshua Motta and John Hering, and your communications with other Company employees whom you solicited to join your efforts. You are not being asked at this time to turn over the above documents to the Company, but you must preserve and not alter any of them until further notice. ACTIVE/102621907.1 March 13, 2020 Page 5 Company’s Further Rights At your meeting on February 28, you were also notified that the Company retains the right to claw back for the period of your disloyalty to the Company, the compensation you were paid during that period, including but not limited to any shares vested. Such period includes November 11, 2019, to the date of your termination on February 28, 2020. The Company is not at this time exercising that right pending further evaluation of your abiding by the terms and conditions outlined above on a going-forward basis, but reserves all rights. Sincerely, Darryl M. Woo DMW:jmt cc: Joshua Motta, John Hering EXHIBIT F ACTIVE/102621908.1 Darryl M Woo Esq. +1 415 733 6068 DWoo@goodwinlaw.com Goodwin Procter LLP Three Embarcadero Center San Francisco, CA 94111 goodwinlaw.com +1 415 733 6000 March 13, 2020 VIA EMAIL: alcubecker@gmail.com Mr. Alex Becker 34 Joice St. Apt. 2 San Francisco, CA 94108 Re: Coalition, Inc. (formerly, Crucible Risk, Inc.) Dear Mr. Becker: This will confirm that during our meeting on Friday, February 28, 2020, you were provided with additional copies of certain documents you signed at the time of your hire by Crucible Risk, Inc. (now known as Coalition, Inc., referred to herein as the “Company”) in March 2017. These include a Proprietary Information and Inventions Agreement (“PIIA”); a Technology Assignment Agreement (“TAA”); and a Stock Purchase Agreement (“SPA”). We discussed these agreements with you, and reminded you of your obligations under them, including the portions to which we added highlighting for purposes of our discussion. We invited any questions you may have had and responded to them. In particular, you were reminded of certain representations and covenants you made with the Company in the PIIA, including your representation to the Company in Paragraph 1 of the PIIA that “I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict with this Agreement or my employment with Company.” Under Paragraph 2 of the PIIA, you also agreed that the Company shall own all right, title and interest relating to any and all inventions (whether or not patentable) made or conceived or reduced to practice, in whole or in part, by you during the term of your employment with the Company. All such inventions are assigned to the Company, including those you revealed to Joshua Motta and John Hering during the presentation of your start-up wholesale insurance brokerage, Apollo Brokers, on Wednesday, February 26, 2020. Paragraph 2 of the PIIA provides, in pertinent part: 2. Company shall own all right, title and interest (including patent rights, copyrights, trade secret rights, mask work rights, sui generis database rights and all other intellectual property rights of any sort throughout the world) relating to any and all inventions (whether or not patentable), works of authorship, mask works, designs, know- how, ideas and information made or conceived or reduced to practice, in whole or in part, by me during the term of my employment with Company to and only to the fullest ACTIVE/102621908.1 March 13, 2020 Page 2 extent allowed by California Labor Code Section 2870 (which is attached as Appendix A) (collectively “Inventions”) and I will promptly disclose all Inventions to Company. Without disclosing any third party confidential information, I will also disclose anything I believe is excluded by Section 2870 so that the Company can make an independent assessment. I hereby make all assignments necessary to accomplish the foregoing. As noted above, a copy of California Labor Code Section 2870 was attached as Appendix A to the PIIA and provides certain limitations, none of which are applicable to the situation here, where you and others made, conceived or reduced to practice Inventions during the term of your employment with the Company using the Company’s equipment, supplies, facilities, and/or trade secret information. Also, even if any Inventions or portion thereof were not made, conceived or reduced to practice using Company equipment, supplies, facilities, and/or trade secret information, it is our understanding that they related at the time of conception or reduction to practice to Company’s business, or actual or demonstrably anticipated research or development of the Company, and/or resulted from work performed by you for the Company. You furthermore have not disclosed any Inventions to the Company that you believe are excluded by Section 2870. Please note that notwithstanding the termination of your employment, you remain obligated to hold in confidence and not disclose or use any Company Proprietary Information. Paragraph 4 of the PIIA provides, in pertinent part: 4. I agree that all Inventions and all other business, technical and financial information (including, without limitation, the identity of and information relating to customers or employees) I develop, learn or obtain during the term of my employment that relate to Company or the business or demonstrably anticipated business of Company or that are received by or for Company in confidence, constitute “Proprietary Information.” I will hold in confidence and not disclose or, except within the scope of my employment, use any Proprietary Information. You are also reminded of your obligation under Paragraph 5 of the PIIA: 5. Until one year after the term of my employment, I will not encourage or solicit any employee or consultant of Company to leave Company for any reason (except for the bona fide firing of Company personnel within the scope of my employment). Under Paragraph 6 of the PIIA, you further agreed “that during the term of my employment with Company (whether or not during business hours), I will not engage in any activity that is in any way competitive with the business or demonstrably anticipated business of Company, and I will not assist any other person or organization in competing or in preparing to compete with any business or demonstrably anticipated business of Company.” ACTIVE/102621908.1 March 13, 2020 Page 3 Your work in developing your start-up wholesale insurance brokerage, Apollo Brokers, during the term of your employment, was a breach of Paragraph 6, and a basis, among others, for your employment termination (not that any cause was required for termination of your at-will employment). We further remind you that according to Paragraph 8 of the PIIA, you agreed that your obligations under Paragraphs 2, 3, 4 and 5 of the PIIA continue in effect after termination of your employment, regardless of the reason or reasons for termination. Repurchase of Company Stock By this letter, the Company is also notifying you of the exercise of its Right of Repurchase. Under the TAA at paragraph 1, you as “Developer” had assigned to the Company: exclusively throughout the world all right, title and interest (whether or not now existing) in (i) the subject matter referred to in Exhibit A (“Technology”), (ii) all precursors, portions and work in progress with respect thereto and all inventions, works of authorship, mask works, technology, information, know-how, materials and tools relating thereto or to the development, production, use, support or maintenance thereof and (iii) all copyrights, patent rights, trade secret rights, trademark rights, mask works rights, sui generis database rights and other intellectual property rights and all business, contract rights and goodwill in, incorporated or embodied in, used to develop or produce or use, or related to any of the foregoing ((i), (ii) and (iii) are collectively “Intellectual Property”). Exhibit A to the TAA in turn provides that the “Technology” includes: All technology, know-how, information, intellectual property and other materials for or relevant to cyber liability insurance, including without limitation, all business plans, technical plans, specifications, templates, demonstration versions, equipment, software, devices, methods, apparatus, product designs, and trademarks or logos relevant to the foregoing. As compensation for the above assignment, the Company provided you with 1,000,000 shares of common stock of the Company pursuant to the provisions of the accompanying SPA. However, the Restricted Shares (as defined in the SPA) are subject to the Company’s Right of Repurchase under Section 2 of the SPA during the “Repurchase Period,” defined as “a period of 180 consecutive days commencing on the date when the Purchaser’s Service terminates for any reason, including (without limitation) death or disability.” Section 2(d) of the SPA provides: (d) Exercise of Repurchase Right. The Company shall be deemed to have exercised its Right of Repurchase automatically for all Restricted Shares as of the commencement of the Repurchase Period, unless the Company during the Repurchase Period notifies the holder of the Restricted Shares pursuant to Section 9 that it will not ACTIVE/102621908.1 March 13, 2020 Page 4 exercise its Right of Repurchase for some or all of the Restricted Shares. The Company shall pay to the holder of the Restricted Shares the purchase price determined under Subsection (a) above for the Restricted Shares being repurchased. Payment shall be made in cash or cash equivalents and/or by canceling indebtedness to the Company incurred by the Purchaser in the purchase of the Restricted Shares. The certificate(s), if any, representing the Restricted Shares being repurchased shall be delivered to the Company. In light of the termination of your employment, the Company’s exercise of its right of repurchase of the Restricted Shares was automatic and has been completed on the Company’s capitalization management platform, Carta. You have received payment for the repurchased Restricted Shares through Carta. In addition, you were granted an option to purchase 6,061 shares of the Company’s Common Stock pursuant to the Company’s 2017 Stock Option and Grant Plan (the “Plan”, available on Carta). Pursuant to Section 1(c)(ii) of your Incentive Stock Option Grant Notice and Agreement as set forth in Carta, because you have been terminated for Cause (as defined in the Plan), your unvested options to purchase Common Stock were immediately terminated upon the date of your termination. Document Preservation Obligations We also informed you of the need to preserve, and not alter or destroy, documents relevant to the matter of your development of competitive software using Company equipment, supplies, facilities, and/or trade secret information while you were employed by the Company, and/or otherwise related to the Company or the business or demonstrably anticipated business of the Company. For the avoidance of doubt, “documents” that need to be preserved include hard copy and electronically stored documents, whether on computers, servers, handheld and tablet devices, storage media, or in cloud, email accounts, or other storage. The documents you are obligated to preserve include: 1. All documents and communications relevant to your employment with the Company; 2. All documents and communications relevant to your development of competitive software using Company equipment and resources while you were employed by the Company, including without limitation, all documents and communications pertaining in any way to Apollo Brokers; and 3. All documents and communications relevant to your startup business, including without limitation, Apollo Brokers, that you began planning and had worked on during your employment with the Company, including business plans, the presentation slide deck you showed Joshua Motta and John Hering, and your communications with other Company employees whom you solicited to join your efforts. You are not being asked at this time to turn over the above documents to the Company, but you must preserve and not alter any of them until further notice. ACTIVE/102621908.1 March 13, 2020 Page 5 Company’s Further Rights At your meeting on February 28, you were also notified that the Company retains the right to claw back for the period of your disloyalty to the Company, the compensation you were paid during that period, including but not limited to any shares vested. Such period includes November 11, 2019, to the date of your termination on February 28, 2020. The Company is not at this time exercising that right pending further evaluation of your abiding by the terms and conditions outlined above on a going-forward basis, but reserves all rights. Sincerely, Darryl M. Woo DMW:jmt cc: Joshua Motta, John Hering EXHIBIT G ACTIVE/102621912.1 Darryl M Woo Esq. +1 415 733 6068 DWoo@goodwinlaw.com Goodwin Procter LLP Three Embarcadero Center San Francisco, CA 94111 goodwinlaw.com +1 415 733 6000 March 13, 2020 VIA EMAIL: jsmcnamara@gmail.com Mr. Shea McNamara 8315 Greenwood Drive Niwot, CO 80503 Re: Coalition, Inc. (formerly, Crucible Risk, Inc.) Dear Mr. McNamara: This will confirm and bring to your attention certain documents you signed at the time of your hire in March 2017. These include a Proprietary Information and Inventions Agreement (“PIIA”); a Technology Assignment Agreement (“TAA”); and a Stock Purchase Agreement (“SPA”). In particular, you should be aware of certain representations and covenants you made with the Company in the PIIA, including your representation to the Company in Paragraph 1 of the PIIA that “I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict with this Agreement or my employment with Company.” Under Paragraph 2 of the PIIA, you also agreed that the Company shall own all right, title and interest relating to any and all inventions (whether or not patentable) made or conceived or reduced to practice, in whole or in part, by you during the term of your employment with the Company. All such inventions are assigned to the Company, including those that Alex Becker and John Loeber revealed to Joshua Motta and John Hering during the presentation of your start-up wholesale insurance brokerage, Apollo Brokers, on Wednesday, February 26, 2020. Paragraph 2 of the PIIA provides, in pertinent part: 2. Company shall own all right, title and interest (including patent rights, copyrights, trade secret rights, mask work rights, sui generis database rights and all other intellectual property rights of any sort throughout the world) relating to any and all inventions (whether or not patentable), works of authorship, mask works, designs, know- how, ideas and information made or conceived or reduced to practice, in whole or in part, by me during the term of my employment with Company to and only to the fullest extent allowed by California Labor Code Section 2870 (which is attached as Appendix A) (collectively “Inventions”) and I will promptly disclose all Inventions to Company. Without disclosing any third party confidential information, I will also disclose anything I believe is excluded by Section 2870 so that the Company can make an ACTIVE/102621912.1 March 13, 2020 Page 2 independent assessment. I hereby make all assignments necessary to accomplish the foregoing. As noted above, a copy of California Labor Code Section 2870 was attached as Appendix A to the PIIA and provides certain limitations, none of which are applicable to the situation here, where you and others made, conceived or reduced to practice Inventions during the term of your employment with the Company using the Company’s equipment, supplies, facilities, and/or trade secret information. Also, even if any Inventions or portion thereof were not made, conceived or reduced to practice using Company equipment, supplies, facilities, and/or trade secret information, it is our understanding that they related at the time of conception or reduction to practice to Company’s business, or actual or demonstrably anticipated research or development of the Company, and/or resulted from work performed by you for the Company. You furthermore have not disclosed any Inventions to the Company that you believe are excluded by Section 2870. Please note that notwithstanding the termination of your employment, you remain obligated to hold in confidence and not disclose or use any Company Proprietary Information. Paragraph 4 of the PIIA provides, in pertinent part: 4. I agree that all Inventions and all other business, technical and financial information (including, without limitation, the identity of and information relating to customers or employees) I develop, learn or obtain during the term of my employment that relate to Company or the business or demonstrably anticipated business of Company or that are received by or for Company in confidence, constitute “Proprietary Information.” I will hold in confidence and not disclose or, except within the scope of my employment, use any Proprietary Information. You are also reminded of your obligation under Paragraph 5 of the PIIA: 5. Until one year after the term of my employment, I will not encourage or solicit any employee or consultant of Company to leave Company for any reason (except for the bona fide firing of Company personnel within the scope of my employment). Under Paragraph 6 of the PIIA, you further agreed “that during the term of my employment with Company (whether or not during business hours), I will not engage in any activity that is in any way competitive with the business or demonstrably anticipated business of Company, and I will not assist any other person or organization in competing or in preparing to compete with any business or demonstrably anticipated business of Company.” Your work in developing your start-up wholesale insurance brokerage, Apollo Brokers, during the term of your employment, was a breach of Paragraph 6, and a basis, among others, for your employment termination (not that any cause was required for termination of your at-will employment). ACTIVE/102621912.1 March 13, 2020 Page 3 We further remind you that according to Paragraph 8 of the PIIA, you agreed that your obligations under Paragraphs 2, 3, 4 and 5 of the PIIA continue in effect after termination of your employment, regardless of the reason or reasons for termination. Repurchase of Company Stock By this letter, the Company is also notifying you of the exercise of its Right of Repurchase. Under the TAA at paragraph 1, you as “Developer” had assigned to the Company: exclusively throughout the world all right, title and interest (whether or not now existing) in (i) the subject matter referred to in Exhibit A (“Technology”), (ii) all precursors, portions and work in progress with respect thereto and all inventions, works of authorship, mask works, technology, information, know-how, materials and tools relating thereto or to the development, production, use, support or maintenance thereof and (iii) all copyrights, patent rights, trade secret rights, trademark rights, mask works rights, sui generis database rights and other intellectual property rights and all business, contract rights and goodwill in, incorporated or embodied in, used to develop or produce or use, or related to any of the foregoing ((i), (ii) and (iii) are collectively “Intellectual Property”). Exhibit A to the TAA in turn provides that the “Technology” includes: All technology, know-how, information, intellectual property and other materials for or relevant to cyber liability insurance, including without limitation, all business plans, technical plans, specifications, templates, demonstration versions, equipment, software, devices, methods, apparatus, product designs, and trademarks or logos relevant to the foregoing. As compensation for the above assignment, the Company provided you with 1,000,000 shares of common stock of the Company pursuant to the provisions of the accompanying SPA. However, the Restricted Shares (as defined in the SPA) are subject to the Company’s Right of Repurchase under Section 2 of the SPA during the “Repurchase Period,” defined as “a period of 180 consecutive days commencing on the date when the Purchaser’s Service terminates for any reason, including (without limitation) death or disability.” Section 2(d) of the SPA provides: (d) Exercise of Repurchase Right. The Company shall be deemed to have exercised its Right of Repurchase automatically for all Restricted Shares as of the commencement of the Repurchase Period, unless the Company during the Repurchase Period notifies the holder of the Restricted Shares pursuant to Section 9 that it will not exercise its Right of Repurchase for some or all of the Restricted Shares. The Company shall pay to the holder of the Restricted Shares the purchase price determined under Subsection (a) above for the Restricted Shares being repurchased. Payment shall be made in cash or cash equivalents and/or by canceling indebtedness to the Company ACTIVE/102621912.1 March 13, 2020 Page 4 incurred by the Purchaser in the purchase of the Restricted Shares. The certificate(s), if any, representing the Restricted Shares being repurchased shall be delivered to the Company. In light of the termination of your employment, the Company’s exercise of its right of repurchase of the Restricted Shares was automatic and has been completed on the Company’s capitalization management platform, Carta. You have received payment for the repurchased Restricted Shares through Carta. Document Preservation Obligations We take this opportunity also to remind you of the need to preserve, and not alter or destroy, documents relevant to the matter of your development of competitive software using Company equipment, supplies, facilities, and/or trade secret information while you were employed by the Company, and/or otherwise related to the Company or the business or demonstrably anticipated business of the Company. For the avoidance of doubt, “documents” that need to be preserved include hard copy and electronically stored documents, whether on computers, servers, handheld and tablet devices, storage media, or in cloud, email accounts, or other storage. The documents you are obligated to preserve include: 1. All documents and communications relevant to your employment with the Company; 2. All documents and communications relevant to your development of competitive software using Company equipment and resources while you were employed by the Company, including without limitation, all documents and communications pertaining in any way to Apollo Brokers; and 3. All documents and communications relevant to your startup business, including without limitation, Apollo Brokers, that you began planning and had worked on during your employment with the Company, including business plans, the presentation slide deck that Alex Becker and John Loeber showed Joshua Motta and John Hering, and your communications with other Company employees whom you solicited to join your efforts. You are not being asked at this time to turn over the above documents to the Company, but you must preserve and not alter any of them until further notice. Company’s Further Rights Please be advised that the Company also retains the right to claw back for the period of your disloyalty to the Company, the compensation you were paid during that period, including but not limited to any ACTIVE/102621912.1 March 13, 2020 Page 5 shares vested. Such period includes January 24, 2020, to the date of your termination on February 28, 2020. The Company is not at this time exercising that right pending further evaluation of your abiding by the terms and conditions outlined above on a going-forward basis, but reserves all rights. Sincerely, Darryl M. Woo DMW:jmt cc: Joshua Motta, John Hering EXHIBIT H 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CONFIDENTIAL DECLARATION OF JOSHUA MOTTA IN SUPPORT OF PLAINTIFF COALITION INC.’S MOTION FOR PRELIMINARY INJUNCTION Case No. CGC-20-584249 1390658 KEKER, VAN NEST & PETERS LLP BRIAN L. FERRALL - # 160847 bferrall@keker.com REID P. MULLEN - # 270671 rmullen@keker.com BENJAMIN D. ROTHSTEIN - # 295720 brothstein@keker.com MORGAN E. SHARMA - # 313863 msharma@keker.com VICTOR YU - # 325411 vyu@keker.com 633 Battery Street San Francisco, CA 94111-1809 Telephone: 415 391 5400 Facsimile: 415 397 7188 Attorneys for Plaintiff COALITION INC. SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SAN FRANCISCO COALITION INC., Plaintiff, v. ALEX BECKER, JOHN LOEBER, SHEA McNAMARA, APOLLO BROKERS, INC. and DOES 1-10, Defendants. Case No. CGC-20-584249 DECLARATION OF JOSHUA MOTTA IN SUPPORT OF PLAINTIFF COALITION INC.’S MOTION FOR PRELIMINARY INJUNCTION; EXHIBT A Date: September 28, 2020 Time: 10:00 a.m. Dept.: 304 Judge: Hon. Anne-Christine Massullo Date Filed: April 27, 2020 Trial Date: None Set Redacted-PUBLIC-REDACTS MATERIALS FROM CONDITIONALLY SEALED RECORD ELECTRONICALLY F I L E D Superior Court of California, County of San Francisco 09/03/2020 Clerk of the Court BY: JUDITH NUNEZ Deputy Clerk 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 CONFIDENTIAL DECLARATION OF JOSHUA MOTTA IN SUPPORT OF PLAINTIFF COALITION INC.’S MOTION FOR PRELIMINARY INJUNCTION Case No. CGC-20-584249 1390658 I, Joshua Motta, declare as follows: 1. I am the co-founder and current Chief Executive Officer of Coalition, Inc. (formerly known as Crucible Risk, Inc. and hereafter referred to as “Coalition”). I submit this declaration in support of Coalition Inc.’s Motion for Preliminary Injunction. I have personal knowledge of the facts set forth herein and, if called to testify as a witness, could and would testify competently as to those facts. 2. My co-founder, John Hering and I, founded Coalition in March 2017. Coalition is a first-of-its-kind insurance broker specializing in cyber, technology, and management liability insurance products. Its business model focuses on (1) unique technological innovations that accelerate and simplify the process for binding coverage of specialty insurance products; and (2) a specialized approach to risk-assessment that allows for more accurate and fair pricing of specialty insurance products. 3. Because Coalition is unique in the insurance industry, its business model and operations are highly confidential. Coalition’s business is built on a number of proprietary methods and technology innovations, which derive value from the fact that they are not known- i.e., replicated-by anyone else in the industry. Thus, Coalition considers as trade secrets certain aspects of its business, including its source code, database schema, platform design, risk- assessment and pricing methods, broker information, investor information, business plans and strategies, and financial information. A competitor who had access to any of these innovations would be able to copy aspects of Coalition’s business and undercut Coalition in the market. 4. Key among Coalition’s trade secrets is Coalition’s source code. Because Coalition’s business is run via computer programming, its unique innovations are contained in and executed by source code. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 CONFIDENTIAL DECLARATION OF JOSHUA MOTTA IN SUPPORT OF PLAINTIFF COALITION INC.’S MOTION FOR PRELIMINARY INJUNCTION Case No. CGC-20-584249 1390658 These repositories execute critical functions of Coalition’s business such as (1) offering a platform which enables brokers and companies to apply for insurance coverage and allows brokers to more easily place and bind coverage on behalf of their clients (which could be policyholders or other brokers); (2) using details entered by applicants to search the internet for thousands of data points relevant to their potential risk exposure and to reduce data entry requirements for insurance brokers and their clients; (3) storing and managing that data in proprietary databases; (4) applying the risk-assessment model to price a company’s risk; and (5) automatically generating the documents necessary to bind coverage. Coalition provided a more- detailed explanation of the functions performed by each repository in a Trade Secret Disclosure document served on Defendants on June 17, 2020, a copy of which is attached hereto as Exhibit A. Coalition designed, built, and optimized these source code repositories from the ground up, and they reflect a significant investment by the company in research and development, trial and error, and thousands of working hours. 5. Coalition keeps the source code in the repositories described in the preceding paragraph highly confidential. With the exception of that runs on the web browser of a visitor to Coalition’s website, the source code in these repositories is never shared outside the company. Further, employees are permitted to access these source code repositories only as needed. In addition, these source code repositories are secured via additional security measures, including strong employee passwords, VPNs, secure connections, 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 CONFIDENTIAL DECLARATION OF JOSHUA MOTTA IN SUPPORT OF PLAINTIFF COALITION INC.’S MOTION FOR PRELIMINARY INJUNCTION Case No. CGC-20-584249 1390658 and multi-factor authentication. If a competitor seeking to develop similar products as Coalition’s gained access to these source code repositories, it would be able to gain an enormous head start. 6. Another one of Coalition’s key trade secrets is its risk-assessment model. The risk-assessment model is a proprietary algorithm, which incorporates thousands of data points regarding companies seeking insurance coverage in order to accurately price their risk. The model stands in contrast to those used by others in the industry, who typically consider ten to fifteen data points when pricing risk. The risk-assessment model is what enables Coalition to accurately price specialty insurance policies that are tailored for each company seeking coverage. Thus, the model is at the heart of Coalition’s underwriting business and has made Coalition an industry-leading underwriter for certain specialty insurance products. Coalition designed this model itself and invested substantial time and resources into its development. Coalition’s risk assessment model is reflected in the rating model source code repository. 7. Coalition keeps the risk-assessment model highly confidential. The full model, which is set forth in internal company white papers and which is embodied in Coalition’s , is never shared with anyone outside the company. On the rare occasions that Coalition shares a high-level summary of the model, it does so only pursuant to a non-disclosure agreement. Further, employees may access documents discussing the risk- assessment model only as needed. In addition, documents discussing the risk-assessment model are secured via additional security measures, including strong employee passwords, VPNs, secure connections, and multi-factor authentication. If a competitor gained access to Coalition’s risk- assessment model, it would be able to offer the same specialized, accurate prices for insurance policies and thereby undercut Coalition in the market. And it would be able to do so without the time, effort, and expertise Coalition invested. Further, if a competitor incorporated insights from Coalition’s risk-assessment model into its own such model, it would be very difficult to separate out which variables, functions, and equations were derived from Coalition’s model. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 CONFIDENTIAL DECLARATION OF JOSHUA MOTTA IN SUPPORT OF PLAINTIFF COALITION INC.’S MOTION FOR PRELIMINARY INJUNCTION Case No. CGC-20-584249 1390658 8. Coalition’s business plans and strategies are also trade secrets, as are documents containing this information. One example of a trade secret document is the final version of Coalition’s Managing General Agent (MGA) Application, which sets forth Coalition’s business plan for its cyber and technology errors and omissions insurance program for small-to-midsized business, one of Coalition’s core product offerings. Exhibit B to Matt Schroeder’s declaration is a copy of this document, and I understand that the copy included with Mr. Schroeder’s declaration is among the documents returned by Shea McNamara. That document lays out the company’s entire business model, soup to nuts. In the insurance industry, a managing general agent is a specialized type of insurance broker that has been granted authority by one or more underwriters to write insurance policies. Coalition is a managing general agent; it has relationships with certain insurance carriers which authorize it to underwrite its own specialty insurance products. Coalition created the MGA Application to explain its business model to insurance carriers with whom it sought to form an MGA relationship. It lays out Coalition’s market analysis, marketing strategy, the risk-assessment model, and the design and function of Coalition’s online platform. Coalition is the sole creator of its business plans and strategies, and in particular the relationship it negotiates with carriers under which it becomes an MGA with the authority to underwrite its own specialty insurance products. The MGA Application thus reflects all of the time and money that has been invested in making Coalition a successful business. 9. Coalition keeps the MGA Application, and the information discussed therein, highly confidential. Coalition has only shared it outside the company with a small handful of insurance companies with whom Coalition was applying for authority to underwrite policies, and in those few instances only pursuant to a strict non-disclosure agreement. Employees may access the MGA Application and the information therein only as needed. Access to such information is protected by strong employee passwords, VPNs, secure connections, and multi-factor authentication. If a competitor gained access to the MGA Application, it would have a significant head start in duplicating Coalition’s entire business model. It would gain valuable insight into how to establish relationships with insurance carriers in order to become an MGA, as well as into 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 CONFIDENTIAL DECLARATION OF JOSHUA MOTTA IN SUPPORT OF PLAINTIFF COALITION INC.’S MOTION FOR PRELIMINARY INJUNCTION Case No. CGC-20-584249 1390658 Coalition’s risk-assessment model. The competitor would be able to substantially duplicate the entirety of Coalition’s business, without expending any time or effort to do so. Further, if a competitor incorporated insights from the MGA Application into its own business plan, it would be very difficult to separate out which insights and features of the business were derived from Coalition’s model. 10. More generally, Coalition takes additional efforts to protect its trade secrets. It requires all employees-including Defendants Loeber, Becker, and McNamara-to sign confidentiality agreements. It also limits access to Coalition’s platform to customers that have been vetted and signed non-disclosure agreements. It implements acceptable use policies, requires keycards to physically access Coalition facilities, and segments the company’s shared drive so access to sensitive information is limited to those who need it in order to work. It also requires the use of antivirus and anti-malware software and device encryption and conducts annual information security awareness training. 11. Defendants Loeber, Becker, and McNamara were hired as some of Coalition’s first employees, in March 2017. Loeber and Becker joined the company as engineers. In those roles, Loeber and Becker had direct access to and contributed to Coalition’s source code. They also had access to Coalition’s product design documents, including wireframes and database diagrams. Becker also helped develop the risk-assessment model and therefore had access to insurance rating models and other documents discussing the model, including a confidential white paper describing the model in its entirety. 12. McNamara joined the sales team. In this role, McNamara had access to summaries of Coalition’s extensive market research and broker interviews, as well as customer and client lists. In addition to the confidential information required to perform their jobs, as a result of their status as early hires of Coalition, Defendants had access to much of Coalition’s other confidential information, including its financial information and projections. Defendants also received Coalition-issued laptops. Becker’s Coalition-issued laptop was shipped to him on April 4, 2017. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 CONFIDENTIAL DECLARATION OF JOSHUA MOTTA IN SUPPORT OF PLAINTIFF COALITION INC.’S MOTION FOR PRELIMINARY INJUNCTION Case No. CGC-20-584249 1390658 13. On February 26, Loeber and Becker presented the Apollo business plan to me and John Hering, Coalition’s co-founder and a board member, in an attempt to persuade us to invest in Apollo. During the presentation, I realized that they intended to copy aspects of Coalition’s business model and products at Apollo and to compete with Coalition, and John Hering and I made clear to Loeber and Becker that we thought they had breached their obligations to Coalition. On February 28, Coalition fired Loeber and Becker. 14. After Coalition fired the Defendants, I learned that they had retained a substantial volume of Coalition electronic documents on their personal devices. In particular, it is my understanding that John Loeber copied significant portions of Coalition’s source code to a personal storage device, including , on the evening of February 26, 2020--after he made clear his intentions to leave Coalition and start a competing venture. Loeber would have had no legitimate business purpose at any time during his employment to batch-copy this volume of source code to a personal device, and certainly no legitimate purpose in doing so in the hours following our February 26 meeting and two days before the company fired him. 15. I am also aware that Becker returned to Coalition’s counsel certain Coalition documents, including Coalition’s source code, which he retained after his termination. The copies of source code that Becker returned included source code that did not exist as of April 2017, when Becker received his Coalition laptop. Further, I am aware that McNamara also retained Coalition information on his personal devices. Neither Becker nor McNamara were authorized to copy this information to their personal devices. 16. I have reviewed a spreadsheet listing the names of files that I understand Loeber saved from his Coalition-issued laptop to an external storage device, and that were not included among the files included on the devices returned by Loeber since Coalition fired him. This spreadsheet lists 10,687 individual file or folder names. Among these are a number of files that contain segments of Coalition source code ( ). 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 CONFIDENTIAL DECLARATION OF JOSHUA MOTTA IN SUPPORT OF PLAINTIFF COALITION INC.’S MOTION FOR PRELIMINARY INJUNCTION Case No. CGC-20-584249 1390658 I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on ______________, 2020, at San Francisco, California. Dated: By: Joshua Motta EXHIBIT A Redacted-LODGED CONDITIONALLY UNDER SEAL SUBJECT TO MOTION TO FILE RECORD UNDER SEAL MAY NOT BE EXAMINED WITHOUT COURT ORDER CONTAINS MATERIAL FROM CONDITIONALLY SEALED RECORD EXHIBIT I 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DECLARATION OF MATTHEW SCHROEDER Case No. CGC-20-584249 KEKER, VAN NEST & PETERS LLP BRIAN L. FERRALL - # 160847 bferrall@keker.com REID P. MULLEN - # 270671 rmullen@keker.com BENJAMIN D. ROTHSTEIN - # 295720 brothstein@keker.com MORGAN E. SHARMA - # 313863 msharma@keker.com VICTOR YU - # 325411 vyu@keker.com 633 Battery Street San Francisco, CA 94111-1809 Telephone: 415 391 5400 Facsimile: 415 397 7188 Attorneys for Plaintiff COALITION INC. SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SAN FRANCISCO COALITION INC., Plaintiff, v. ALEX BECKER, JOHN LOEBER, SHEA McNAMARA, APOLLO BROKERS, INC. and DOES 1-10, Defendants. Case No. CGC-20-584249 DECLARATION OF MATTHEW SCHROEDER IN SUPPORT OF PLAINTIFF COALITION INC.'S MOTION FOR PRELIMINARY INJUNCTION; EXHIBITS A-B Date: September 28, 2020 Time: 10:00 a.m. Dept: 304 Judge: Hon. Anne-Christine Massullo Date Filed: April 27, 2020 Trial Date: None Set Redacted-PUBLIC-REDACTS MATERIALS FROM CONDITIONALLY SEALED RECORD ELECTRONICALLY F I L E D Superior Court of California, County of San Francisco 09/03/2020 Clerk of the Court BY: JUDITH NUNEZ Deputy Clerk 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 DECLARATION OF MATTHEW SCHROEDER Case No. CGC-20-584249 DECLARATION OF MATTHEW SCHROEDER I, Matthew Schroeder, declare as follows: 1. The following facts are true and of my own personal knowledge, except where stated on information and belief, as to those facts, I believe them to be true. If called as a witness, I could and would testify competently to the facts set forth herein. I. BACKGROUND 2. I have been retained as a forensics consultant in this matter by the law firm of Keker, Van Nest & Peters LLP, in connection with its representation of the Plaintiff Coalition Inc. (“Coalition”). 3. I make this declaration in support of Coalition’s Motion for Preliminary Injunction (“Motion”). 4. My analysis in this matter remains ongoing and I reserve the right to amend, alter, or supplement my findings based on new evidence that may be uncovered. II. QUALIFICATIONS 5. I work as an Associate Director for Berkeley Research Group, LLC (“BRG”), a global consulting firm based in Emeryville, California. BRG assists clients in the areas of disputes and investigations, corporate finance, and strategy and operations. 6. I previously served as a Director, Forensics and Collections at Lighthouse eDiscovery, based in Seattle, Washington. Prior to that I held the same job title at Discovia, another forensics and electronic discovery consulting firm based in San Francisco, California. Lighthouse acquired Discovia in May 2017. Previously to Discovia, I worked for StoneTurn Group, a firm that provides expert witness and consulting services. I hold a B.S. in Information Science from Northeastern University. I maintain the EnCE, MCFE, and CCE computer forensics certifications, as well as a variety of technical IT certifications. I have completed training courses offered by Guidance Software, SANS, Blackbag, Magnet Forensics, and Cellebrite, all of which are recognized leaders in the computer forensics industry. 7. I have 12 years of experience performing forensic imaging and analysis of computer hard drives and other electronic storage media, advising clients regarding eDiscovery 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 DECLARATION OF MATTHEW SCHROEDER Case No. CGC-20-584249 and forensics issues, and providing expert testimony. I have conducted hundreds of computer forensics investigations (often involving numerous computers, devices, and massive amounts of data in a single case). These investigations have been in the context of a wide range of legal matters, including employment, intellectual property, trade secrets, and securities regulation. I have provided reports and executed affidavits and declarations describing my computer forensics analysis, and I have given both deposition and courtroom testimony. 8. My curriculum vitae is attached as Exhibit A. It contains a full description of my educational background, professional achievements, qualifications, and publications. III. MATERIALS CONSIDERED 9. For the purposes of this declaration, I have considered the following information produced to me by Coalition: i) John Loeber’s Coalition-issued laptop (the “Loeber Coalition Laptop”), a Lenovo T460P with serial number PF-0RDCU2. The device contained a 256GB Intel SSD Pro 5400s with serial number CVLT647504LC256H. BRG preserved the SSD with FTK Imager and confirmed that the MD5 of our image matched the MD5 of the source disk (a2b125fd9fc2ba64980899df5cfdc1ad)12. The Loeber Coalition Laptop contains roughly ten million files and folders. ii) Shea McNamara’s Coalition-issued laptop (the “McNamara Coalition Laptop”), an Apple MacBook with model A1534 and serial number C02S801MGTHX. My team preserved this device using MacQuisition and confirmed the MD5 hash of the output data matched the verification MD5 hash (E56D1897C35D1F89F47B14B2E0F2AEE9). The McNamara Coalition Laptop contains roughly 1.2 million files and folders. 10. I have also considered the following devices produced by the Defendants. 1 In computer forensics, examiners use cryptographic hashing algorithms like MD5 to establish a “fingerprint” of arbitrary computer data. If a single byte of the data were to change, the resulting MD5 would also change. During the imaging process, we compare the MD5 of the original source evidence (in this instance, the SSD in the Loeber Coalition Laptop) to the MD5 of the resulting image we created to confirm the fidelity of our image. 2 We also received an image of the laptop created by Coalition, which bears the exact same verification MD5 hash. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 DECLARATION OF MATTHEW SCHROEDER Case No. CGC-20-584249 i) A 16GB USB thumb drive supplied by Alex Becker (the “Becker USB Drive”) with printed serial number 121534769 and internal serial number 047729000000BEC8.3 My team preserved the Becker USB Drive with FTK Imager and confirmed the original and verification MD5 values matched (2c298958ee5c041d69bb158ab8d5a64e). The device contains roughly 18,000 files and folders. ii) A 32GB USB thumb drive supplied by Shea McNamara (the “McNamara USB Drive”), with internal serial number 07009B7D93CB5B94. The drive is labeled “NXT” and does not bear a printed serial number. My team preserved The McNamara USB Drive with FTK Imager and confirmed the original and verification MD5 values matched (21cd6b46afa36f2396c390430e72c806)4. The device contains roughly 100 files and folders. iii) A 1TB USB hard drive supplied by John Loeber (the “Loeber USB Drive”) with printed serial number WXP1AA8RR4ND and internal serial number 575850314141385252344E445. My team preserved the Loeber USB Drive with FTK Imager and confirmed the original and verification MD5 values matched (d13b67a04812a7c475bdf3aec62de1b7)6. The device contains roughly 500,000 files and folders. iv) A 1TB USB hard drive supplied by Epiq, the experts working on behalf of the defendants (the “Epiq USB Production Drive”) with printed serial number WXQ1A49PNC7S and internal serial number 57585131413439504E433753.7 My team preserved the Epiq USB Production Drive with FTK Imager and 3 USB drives sometimes have printed serial numbers on their casing, and generally have an internal serial number (or iSerialNumber, or firmware serial number). The internal serial number is presented to the host computer when attached and can be the same as or differ from the printed serial number. 4 We also received an image of the device created by Coalition, which bears the exact same verification MD5 hash. 5 These serial numbers represent the same value. 575850314141385252344E44 is the representation of WXP1AA8RR4ND in hexadecimal. 6 We also received an image of the device created by Coalition, which bears the exact same verification MD5 hash. 7 These serial numbers represent the same value. 57585131413439504E433753 is the representation of WXQ1A49PNC7S in hexadecimal. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 DECLARATION OF MATTHEW SCHROEDER Case No. CGC-20-584249 confirmed the original and verification MD5 values matched (19ed3b1a0f94d9ccd423a201f3f10fb7). The device contains roughly 150,000 files and folders. IV. FORENSIC ANALYSIS OF THE LOEBER COALITION LAPTOP REVEALS EVIDENCE OF DATA EXFILTRATION AND THE RESEARCH AND EXECUTION OF DATA DESTRUCTION TECHNIQUES A. Forensic Evidence Indicates Coalition Data was Copied from the Loeber Coalition Laptop to External Storage Drives, Including Immediately Prior to Loeber’s Separation from Coalition 11. Forensic examination of the Loeber Coalition Laptop shows that, on February 26, 2020 at approximately 11:45 pm-which I understand to be two (2) days before Loeber was terminated from Coalition-computer commands were executed to copy data from the Loeber Coalition Laptop to a connected USB storage drive called “Elements.” One of these commands copied the entire folder called “crucible-risk” to a directory called “C-Backup” on the external drive.8 The “crucible-risk” folder on the Loeber Coalition Laptop contains over 300,000 files which largely appear to be Coalition’s source code. Two other commands were also logged on that day to cause additional data to be saved onto the external drive from the Loeber Coalition Laptop from a folder called “clippy.”9 12. Three minutes prior to the execution of the earliest of these commands, forensic evidence reveals that an external USB drive, identified as a 2TB Western Digital Elements 25A2 drive (the Loeber 2TB Western Digital), serial number 575854314133374544354C38, was connected to the Loeber Coalition Laptop.10 This USB drive was not disconnected from the 8 This evidence is taken from the auth.log artifact, and the relevant entry reads as follows: Feb 26 23:45:29 v sudo: v : TTY=pts/21 ; PWD=/home/v ; USER=root ; COMMAND=/bin/cp -R crucible-risk/ /media/v/Elements/C-Backup/ 9 This evidence is taken from the auth.log artifact, and the relevant entries read as follows: Feb 26 23:10:34 v sudo: v : TTY=pts/21 ; PWD=/home/v ; USER=root ; COMMAND=/bin/mv -r clippy/ /media/v/Elements/clippy/ .... Feb 26 23:10:42 v sudo: v : TTY=pts/21 ; PWD=/home/v ; USER=root ; COMMAND=/bin/mv clippy/ /media/v/Elements/clippy2/ 10 This evidence is taken from the kern.log artifact, and the relevant entries read as follows: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 DECLARATION OF MATTHEW SCHROEDER Case No. CGC-20-584249 Loeber Coalition Laptop until over 20 hours later.11 I am confident that this drive is the one that received the data Loeber copied, as it was the only USB drive attached to the Loeber Coalition Laptop at the time. Further, according to the logs, Loeber copied the crucible-risk folder to a drive mounted “/media/v/Elements,” and the disk attached to the computer is an “Elements 25A2…Western Digital” device. 13. Without examining it, I cannot know the full extent of what data Loeber copied to the 2TB Western Digital Elements Drive. The Linux operating system on the Loeber Coalition Laptop does not exhaustively log the copy of files to external media. Rather, the evidence I discuss here is based on the fact that Loeber used “sudo”12 when copying the crucible-risk folder. If he used any method that did not involve “sudo” - such as the regular copy (“cp”) or move (“mv”) commands without sudo, or dragging and dropping using a file manager, it would not have been logged in auth.log. In paragraph 32 below I discuss how Loeber returned certain data not seen in auth.log, particularly a copy of Coalition’s “Coalition” Google Drive shared data. B. Forensic Evidence Indicates Loeber Copied Data to Another USB Drive That Was Not Returned 14. Forensic evidence also reveals that the Loeber Coalition Laptop had been used to copy data from the Loeber 2TB Western Digital drive to another USB drive. For example, on Feb 26 23:07:30 v kernel: [745972.400956] usb 2-2: new SuperSpeed USB device number 39 using xhci_hcd .... Feb 26 23:07:31 v kernel: [745972.422023] usb 2-2: Product: Elements 25A2 Feb 26 23:07:31 v kernel: [745972.422024] usb 2-2: Manufacturer: Western Digital Feb 26 23:07:31 v kernel: [745972.422025] usb 2-2: SerialNumber: 575854314133374544354C38 .... Feb 26 23:07:38 v kernel: [745979.589112] sd 4:0:0:0: [sdb] 3906963456 512- byte logical blocks: (2.00 TB/1.82 TiB) 11 This evidence is taken from the kern.log artifact, and the relevant entry reads as follows: Feb 27 20:11:26 v kernel: [821807.420286] usb 2-2: USB disconnect, device number 39 12 Sudo is a command in Linux that tells the operating system to run the command that follows as the superuser (i.e., “root,” or the most-privileged administrator user). The operating system records sudo usage details in auth.log. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 DECLARATION OF MATTHEW SCHROEDER Case No. CGC-20-584249 September 24, 2019, logs on the Loeber Coalition Laptop show that the folder “APW” saved on the Loeber 2TB Western Digital drive was copied to another external storage drive.13 15. Three minutes prior to the execution of this September 24, 2019 command, forensic evidence reveals that an external USB drive, identified as a General UDisk drive, was connected to the Loeber Coalition Laptop.14 16. I ran search terms across the Loeber Coalition laptop to try to find paths of files saved on external devices. Using those results, I am able to see the partial contents of the APW folder as it exists on both the General UDisk drive and the 2TB Western Digital Elements drive contains references to Coalition and Crucible Risk. For example, I found references to: a) /media/v/80aadf72-1810-48d8-b417- 43f15c9dfb66/APW/Coalition/coalition-mailchimp b) /media/v/Elements/APW/Coalition/coalition-AWS-IAM-jloeber c) /media/v/Elements/APW/Coalition/coalition-packagecloud d) /media/v/Elements/APW/Coalition/coalitionrisk-discord e) /media/v/Elements/APW/Coalition/cr-admin-github-recovery-codes(1).txt f) /media/v/Elements/APW/Coalition/cruciblerisk-aws g) /media/v/Elements/APW/Coalition/cruciblerisk-github-admin h) /media/v/Elements/APW/Coalition/cruciblerisk-slack i) /media/v/Elements/APW/coalition-invision 13 This evidence is taken from the auth.log artifact, and the relevant entry reads as follows: Sep 24 09:57:57 USER=root ; COMMAND=/bin/cp -R /media/v/Elements/APW/ /media/v/80aadf72-1810-48d8-b417-43f15c9dfb66/APW2-READ 14 This evidence is taken from the kern.log artifact, and the relevant entries read as follows: Sep 24 09:54:49 v kernel: [397862.558537] usb 1-4: new high-speed USB device number 62 using xhci_hcd .... Sep 24 09:54:49 v kernel: [397862.706974] usb 1-4: Product: UDisk Sep 24 09:54:49 v kernel: [397862.706977] usb 1-4: Manufacturer: General Sep 24 09:54:49 v kernel: [397862.706979] usb 1-4: SerialNumber: Љ (sic) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 DECLARATION OF MATTHEW SCHROEDER Case No. CGC-20-584249 C. The “Elements” Drive Used to Copy Data From the Loeber Coalition Laptop Is Not the Same USB Storage Drive Returned By Defendants 17. As noted above, the forensic evidence establishes that Loeber 2TB Western Digital - a 2TB WD Elements drive with an internal serial number 575854314133374544354C38 - was connected to the Loeber Coalition Laptop and used to save data from that computer. This USB drive is likely to have been physically imprinted with the serial number WXT1A37ED5L8, which is the ASCII representation of the drive’s hexadecimal internal serial number. Figure 1 shows additional details, including the drive’s capacity and model number, for this serial number.15 18. As also noted above, a 1TB WD Elements drive containing Coalition data was returned by Loeber. This drive has the internal serial number 575850314141385252344E44 and is physically printed with the ASCII representation of that serial: WXP1AA8RR4ND. Figure 2 shows additional details, including the drive’s capacity and model number, for this serial number.16 15 This screen capture was taken on August 19, 2020 from the webpage titled “Warranty Status | WD Support” at the URL https://support-en.wd.com/app/warrantystatus and entering the serial number WXT1A37ED5L8. 16 This screen capture was taken on August 19, 2020 from the webpage titled “Warranty Status | WD Support” at the URL https://support-en.wd.com/app/warrantystatus and entering the serial number WXP1AA8RR4ND. Figure 1: Device details for WD Elements, serial number WXT1A37ED5L8, per WD’s warranty webpage. Figure 2: Device details for WD Elements, serial number WXP1AA8RR4ND, per WD’s warranty webpage. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 DECLARATION OF MATTHEW SCHROEDER Case No. CGC-20-584249 19. To be explicit, the drive returned by Defendants is not the same USB drive that was used to copy data from the Loeber Coalition Laptop: the drives have different model numbers, different serial numbers, and different capacities. To my knowledge, the original WD Elements drive used to copy data from the Loeber Coalition Laptop has never been produced in this matter. D. Forensic Evidence Indicates, Shortly Before Loeber’s Separation from Coalition, the Loeber Coalition Laptop Was Used to Research Data Destruction Commands Which Were Later Executed to Delete Data 20. The forensic evidence uncovered from the Loeber Coalition Laptop shows that, within days of Loeber’s separation from Coalition, the user researched and executed commands to delete data from that computer. 21. For example, on February 21, 2020 at 8:40:01 am, the Mozilla Firefox browser was used to query Google with the search phrase “remove a system user and their data ubuntu.”17 22. A minute later, at 8:41:01, Firefox was used to query Google with the search phrase “list users ubuntu.”18 23. Approximately 30 seconds later (and again 10 seconds after that), a command was executed on the Loeber Coalition Laptop to delete the user “m” from the computer, along with all of the data in the “m” user’s home directory.19 24. Approximately 25 minutes after deleting the “m” user and the “m” home directory on February 21, 2020, commands were executed to also delete the “c” user from the computer, again along with all of the data in the “c” user’s home directory.20 17 This evidence comes from the artifact \home\v\.mozilla\firefox\26ez9j08.default\places.sqlite. 18 Id. 19 This evidence is taken from the auth.log artifact, and the relevant entries read as follows: Feb 21 08:41:35 v sudo: v : TTY=pts/14 ; PWD=/home/v ; USER=root ; COMMAND=/usr/sbin/deluser --remove-home m .... Feb 21 08:41:45 v sudo: v : TTY=pts/14 ; PWD=/home/v ; USER=root ; COMMAND=/usr/sbin/deluser --remove-home m 20 This evidence is taken from the auth.log artifact, and the relevant entries read as follows: 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 DECLARATION OF MATTHEW SCHROEDER Case No. CGC-20-584249 25. In addition, more data deletion commands were run a few minutes apart on the morning of February 27, 2020. This time, the commands were designed to find and delete all files of specific extensions, such as .swk or .swp, within the home directory for the user “v.”21 SWP files can be particularly relevant to forensic examiners because they can contain evidence of what actions a user has taken using the text editor VIM. 26. It appears from the forensic evidence that the command run on February 27, 2020 to delete, inter alia, SWP files from the computer was very next command executed on the Loeber Coalition Laptop after the command to copy the “crucible-risk” folder to the Loeber 2TB Western Digital drive late in the evening on the night of February 26, 2020. 27. As a result of these efforts to delete data from the Loeber Coalition Laptop shortly before Defendant Loeber’s separation from Coalition, forensic evidence related to Loeber’s use of his Coalition computer was likely permanently destroyed. Many of the findings I discuss in this declaration are based on logs that live outside the user folders, i.e., in /var/log, and therefore were not impacted by user deletion. However, the destruction of the “c” and “m” home directories would have destroyed evidence of usage in those user accounts, including document usage, data propagation or copying, web browser usage, and the actual contents of files stored for those users. V. COALITION DATA SENT TO COALITION BY DEFENDANTS AFTER LEAVING THEIR EMPLOYMENT AT COALITION 28. In the March - May 2020 timeframe, Defendants sent several USB devices containing Coalition data to Coalition. These Coalition files include the following: Feb 21 09:06:38 v sudo: v : TTY=pts/14 ; PWD=/home/v ; USER=root ; COMMAND=/usr/sbin/deluser --remove-home c .... Feb 21 09:06:54 v sudo: v : TTY=pts/14 ; PWD=/home/v ; USER=root ; COMMAND=/usr/sbin/deluser --remove-home c 21 This evidence is taken from the auth.log artifact, and the relevant entries read as follows: Feb 27 11:01:35 v sudo: v : TTY=pts/22 ; PWD=/home/v ; USER=root ; COMMAND=/usr/bin/find . -type f -name *.sw[klmnop] -delete .... Feb 27 11:07:36 v sudo: v : TTY=pts/22 ; PWD=/home/v ; USER=root ; COMMAND=/usr/bin/find . -type f -name *.sw[klmnop] -delete 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11 DECLARATION OF MATTHEW SCHROEDER Case No. CGC-20-584249 i) The Loeber USB Drive contains roughly 500,000 files. As discussed above, this device is not the Loeber 2TB Western Digital drive that Loeber originally copied data to from the Loeber Coalition Laptop; and yet, it contains a “C- Backup” folder with over 300,000 files from Coalition’s various source code repositories. Presumably, Loeber copied the data from the WD Elements USB Drive to the Loeber USB Drive. The C-Backup folder22 as produced contains: (1) Several copies of the “webserver” source code repository hosted at https://github.com/crucible-risk/webserver23. (2) Two copies of the “worker” source code repository hosted at https://github.com/crucible-risk/worker24. (3) A copy of the “rating-model” source code repository hosted at https://github.com/crucible-risk/rating-model25. (4) A copy of the “secondary-review” source code repository hosted at https://github.com/crucible-risk/secondary-review26. (5) A copy of the “admin-tools” source code repository hosted at https://github.com/crucible-risk/admin-tools27. (6) A copy of the “frontend” source code repository hosted at https://github.com/crucible-risk/frontend28. (7) A copy of the “front-end” source code repository hosted at https://github.com/crucible-risk/front-end29. 22 I also prepared a copy of the repositories listed below using EnCase and delivered it electronically to Mark Fussell. 23 As evidenced by \C-Backup\crucible-risk\webserver\.git\config, \C-Backup\crucible-risk\webserver- demo\.git\config, \C-Backup\crucible-risk\webserver-MASTER\.git\config, \C-Backup\crucible-risk\webserver- PRODUCTION\.git\config, \C-Backup\crucible-risk\webserver-STAGING\.git\config, and \C-Backup\crucible- risk\webserver-test-2\.git\config 24 As evidenced by \C-Backup\crucible-risk\worker\.git\config and \C-Backup\crucible-risk\worker- PRODUCTION\.git\config 25 As evidenced by \C-Backup\crucible-risk\rating-model\.git\config. 26 As evidenced by \C-Backup\crucible-risk\secondary-review\.git\config. 27 As evidenced by \C-Backup\crucible-risk\admin-tools\.git\config. 28 As evidenced by \C-Backup\crucible-risk\frontend\.git\config. 29 As evidenced by \C-Backup\crucible-risk\front-end\.git\config. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12 DECLARATION OF MATTHEW SCHROEDER Case No. CGC-20-584249 (8) Four copies of the “pdf-generator” source code repository hosted at https://github.com/crucible-risk/pdf-generator30. (9) A copy of the “data-loader” source code repository hosted at github.com:crucible-risk/data-loader.git31. (10) Two copies of the “servers_common” source code repository hosted at https://github.com/crucible-risk/servers_common32. ii) The Loeber USB Drive further contains over 100,000 files outside of the C- Backup folder, which appear to be largely Coalition-related. Three of the files - Coalition Share-20180724T093818Z-002.zip, Coalition Share- 20180724T093818Z-003.zip, and Coalition Share-20180724T093818Z- 004.zip - represent a copy of roughly 6,000 files downloaded from Coalition’s Google Drive service in 2018. The metadata on the Loeber USB Drive does not convey when Loeber duplicated the Google Drive ZIPs; instead, it reports that the files were copied on March 5, 2020 - after Loeber had left Coalition. I understand the Loeber USB Drive is an aggregation of data Loeber wanted to return to Coalition, and he copied Coalition data from personal devices or accounts to the Loeber USB Drive. The evidence of when the Google Drive data was originally copied out of Coalition would lie with the original device or account it was stored on. iii) The McNamara USB Drive contains roughly 100 files, including two ZIP files downloaded from Google Drive.33 These files include the following: (1) /Coal/drive-download-20200306T221713Z-001.zip/Bracket Risk MGA Application.docx 30 As evidenced by \C-Backup\crucible-risk\pdf-generator\.git\config, \C-Backup\crucible-risk\pdf-generator- MASTER\.git\config, \C-Backup\crucible-risk\pdf-generator-PRODUCTION\.git\config, and \C-Backup\crucible- risk\pdf-generator2\.git\config. 31 As evidenced by \C-Backup\crucible-risk\data-loader\.git\config. 32 As evidenced by \C-Backup\crucible-risk\webserver\servers_common\.git\config and \C-Backup\crucible- risk\webserver-MASTER\servers_common\.git\config. 33 /Coal/drive-download-20200306T221713Z-001.zip and /Coal/drive-download-20200306T221953Z-001.zip 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13 DECLARATION OF MATTHEW SCHROEDER Case No. CGC-20-584249 (2) /Coal/drive-download-20200306T221713Z-001.zip/Coalition MGA Application v6.pdf, a true and correct copy of which is appended as Exhibit B hereto. (3) /Coal/drive-download-20200306T221713Z-001.zip/Crucible Risk MGA Application v5 JSM.docx (4) /Coal/drive-download-20200306T221713Z-001.zip/Crucible Risk MGA Application v5.docx iv) The Epiq USB Production Drive also contains data from McNamara from at least three sources: an email account, a Google Drive account, and a smartphone. VI. DEFENDANTS MAY STILL BE IN POSSESSION OF COALITION DATA 29. I understand that Coalition is requesting the Court’s permission to conduct an inspection of the various computer devices (or complete forensic images thereof) and accounts of the defendants. This is the only way I would be able to develop a complete understanding of how Coalition data was copied and if it was used by the defendants around the time of their departure or thereafter. This is for several reasons. 30. First, the fact that Defendants only sent back to Coalition copies of the files they retained, and on device media that is different from the original personal devices and/or accounts to which they originally copied the information, I cannot determine where else the “returned” files may have been copied to or saved. Additionally, the process of copying the files to the returned device media altered metadata related to those files in a manner that prevents me from knowing the fully history of those files prior to Defendants sending them back to Coalition. For example, nearly all of the roughly 500,000 files on the Loeber USB Drive bear “creation” dates on March 5, 2020, indicating the time they were copied to the returned device. To understand whether they may have been accessed shortly prior to or after Loeber’s termination from Coalition, or to understand when they were copied from Coalition (except as to files copied using “sudo,” see paragraph 13 above), I would need access to the original devices. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14 DECLARATION OF MATTHEW SCHROEDER Case No. CGC-20-584249 31. Additionally, based on the forensic evidence available on the Loeber Coalition Laptop, I believe Coalition data was copied from that computer which was not returned by Loeber. As discussed above, I ran raw searches on the Loeber Coalition Laptop for files stored on external media. Some file or folder names that were historically present on external media and whose names indicate that they are proprietary to Coalition were not returned, such as: /media/v/Elements/APW/coalition-invision /media/v/Elements/APW/Coalition/cruciblerisk-slack /media/v/80aadf72-1810-48d8-b417-43f15c9dfb66/APW/Coalition/coalition-mailchimp 32. Further, there are indicia that suggest we do not understand the breadth of Loeber’s pre-termination activity. For one, Loeber destroyed two user profiles, which may have obfuscated copying activity. He also returned a wealth of data for which I did not have corresponding forensic evidence on the Loeber Coalition Laptop - for example, compressed ZIP copies of Coalition’s Google Drive data. The only way to create a comprehensive list of what was taken is to review defendants’ devices and accounts. Executed on this 3rd day of September, 2020, at Shoreline, WA. I declare under oath of perjury under the laws of the State of California that the foregoing is true and correct. _______________________________________ Matthew Schroeder EXHIBIT A Curriculum Vitae Matt Schroeder BERKELEY RESEARCH GROUP, LLC Seattle, WA Direct: 206.364.4843 mschroeder@thinkbrg.com SUMMARY Matt Schroeder is an Associate Director in BRG’s Discovery and Forensic Technology Services practice. He operates out of BRG’s San Diego office but is based in Seattle. Mr. Schroeder helps clients through complex investigations involving digital evidence, providing expert witness testimony in writing, deposition, and court. He focuses on issues surrounding trade secret theft, data destruction, incident response, and fraud. Mr. Schroeder advises clients on eDiscovery strategy and best practices, and can assist in vendor management and cost control. He excels at orchestrating large-scale investigations, managing teams of investigators and developing cost-effective and automated approaches to complex issues. Mr. Schroeder is knowledgeable on emerging technology and industry challenges, such as: - Collecting and analyzing data in enterprise cloud platforms, such as Office 365®, G Suite®, and Dropbox® - Building programs to address insider data theft protection, data privacy, cybersecurity data breach response and awareness, and other information governance initiatives - Forensic artifacts often overlooked or not well understood in the industry, particularly on Mac OS X® and Linux® systems - Analysis and processing automation - Programming languages, particularly C#® and SQL Mr. Schroeder holds EnCE, CCE, and MCFE forensic certifications, as well as a variety of technical certifications. His selected case experience includes: - Serving as an expert, he helped identify willful concealment of documents by custodians and efforts to evade eDiscovery data collection of relevant material, resulting in a large monetary award for his client. - Investigating the computers of individuals who had left his client for the same competitor, he established that the custodians had taken confidential materials with them and destroyed significant evidence when caught. - He has served frequently as a backstop to internal forensics groups inside large technology companies that have suffered data theft from departing employees. He has helped companies reclaim their data without requiring litigation. - He organized a collection from five hundred user endpoints in the US and Europe while minimizing disruption to working professionals. EDUCATION B.S., Information Science Northeastern University, 2009 2 PRESENT EMPLOYMENT Associate Director, Berkeley Research Group, 2018-present PREVIOUS POSITIONS Director, Lighthouse (formerly Discovia), 2012-2018 Senior Consultant, StoneTurn, 2008-2002 FORENSIC CERTIFICATIONS EnCase Certified Examiner (EnCE), 2010 Certified Computer Examiner (CCE), 2010 Magnet Certified Forensics Examiner (MCFE), 2020 EXPERT TESTIMONY (1) Patriot Environmental Services, Inc. v. Thomas Scranton et al. Superior Court of the State of California, County of Los Angeles Case No. BC716929 Provided a declaration in support of opposition to TRO (2) PeopleReady, Florida, Inc. v. Zandol Whited, Chartwell Staffing Solutions, et al. Circuit Court of the Fourth Judicial Circuit in and for Duval County, State of Florida Case No. 16-2018-CA-000787-XXXX-MA Provided an affidavit with findings in preparation for an evidentiary hearing. (3) Waymo, LLC v. Uber Technologies, Inc; OttoMotto LLC; Otto Trucking LLC United States District Court, Northern District of California Case No. 3:17-cv-00939-WHA Provided declaration in support of Motion for Jury Instruction Based on Spoliation. (4) Cobbs, Allen & Hall, Inc. and CAH Holdings, Inc. v. Epic Holdings et al. Circuit Court of Jefferson County, Alabama Case No. 01-CV-2014-904935 Provided hearing testimony, deposition testimony, affidavits, and expert reports. (5) Alan Franklin v. Sunil Gupta, M.D., LLC, d/b/a Retina Specialty Institute Circuit Court of Mobile County, Alabama Case No. CV-16-902495 Provided affidavit in support of Motion to Compel. 3 (6) Hooked Media Group, Inc. v. Apple, Inc. and Chandrasekar Venkatarman Superior Court of the State of California, County of Santa Clara Case No. 114CV265819 Provided a declaration, expert reports, and deposition testimony. (7) Lisa Lancaster and David Sundelson v. Rudy Leone et al. Superior Court of the State of California, County of Alameda Case No. RG 13 693269 Provided a declaration in support of Motion to Compel. (8) Larisa Piriyeva v. Sinai Memorial Chapel Superior Court of the State of California, County of San Francisco Case No. CGC-11-515049 Provided a declaration in support of Motion for Summary Judgment. (9) Mehrdad Elie v. Michael A. Fedoris et al. Superior Court of the State of California, County of Los Angeles Case No. GC046810 Provided a declaration in support of Motion for Termination and Monetary Sanctions. (10) BWE II et al. v. Bryan Hall et al. Superior Court of the State of California, County of Marin Case No. CV 1402561 Provided a declaration in Support of Motion for Expedited Discovery. EXHIBIT B HIGHLY CONFIDENTIAL - ATTORNEYS’ EYES ONLY Redacted-PUBLIC-REDACTS MATERIALS FROM CONDITIONALLY SEALED RECORD 1 Overview 2 2 The Opportunity 6 3 Insurance & Risk Management Platform 10 4 Target Insured Profile 20 5 Insurance Product Structure 21 6 Underwriting 34 7 Marketing Strategy 45 8 Claims Handling 47 9 Premium & Loss Estimates 49 Appendix A: Rating Model 53 Appendix B: Team 60 Appendix C: Investors 63 Appendix D: Advisory Board 64 Appendix E: Cyber Application Comparison 66 UNDERWRITING SUBMISSION Coalition, Inc. · 590 Pacific Avenue · San Francisco, CA 94133 · +1 415 735 3035 60 | Confidential (shared under NDA) APPENDIX B Team Joshua Motta, CEO, Co-Founder/Director Joshua is the CEO of Coalition. Prior to Coalition, Joshua was instrumental in the founding and growth of Cloudflare, a privately held $2bn security company, where he was the CXO and Head of Special Projects. Cloudflare has been recognized as the Most Innovative Networking and Internet Technology Company for two-years running by the Wall Street Journal, and a Technology Pioneer by the World Economic Forum. Prior to Cloudflare, Joshua spent over five years as an investor, quant and advisor in the hedge fund, private equity and banking sectors, including positions within Goldman Sachs’ London-based investment banking team, and at Francisco Partners, a US$10bn global private equity firm focused on technology. Joshua has a deep mathematical and technical background having worked in various capacities at the Central Intelligence Agency (information operations), Honeywell, Sprint and Microsoft, where he was the company’s youngest hire. Joshua holds an A.B. degree from the University of Chicago where he graduated Phi Beta Kappa. John Hering, Co-Founder/Director John is the Founder and Executive Chairman of Lookout, a global leader in cyber-security technology based in Silicon Valley. Lookout has been recognized as a Technology Pioneer by the World Economic Forum, and serves over 75 million users globally. John is widely recognized as a security industry leader and innovator. BusinessWeek named John a Best Young Tech Entrepreneur; Fortune Magazine named him a “Smartest Person in Tech;” the editors of MIT Tech Review dubbed John a 35 Under 35 entrepreneur; and Fortune Magazine included John on its list of 40 Under 40 entrepreneurs. John is a frequent presenter at mobile and technology industry events including RSA, Mobile World Congress, Black Hat Technical Security Conference, DEFCON, and Fortune Brainstorm. Shawn Ram, Insurance Lead Prior to joining Coalition, Shawn was the Executive Managing Director and Western Regional Manager leading California operations for Crystal & Company. In addition, Shawn had national responsibility for the company’s Technology Industry Practice. Prior to joining Crystal & Company, Shawn served as Managing Director and National Technology Practice Leader of Aon Risk Solutions, the world’s largest insurance brokerage, Confidential (shared under NDA) | 61 responsible for the growth, brokerage, product development and service of the firm’s technology customers. Mr. Ram has managed client relationships of Fortune 100 and middle market clients for over a decade. He has been quoted in many publications including the Wall Street Journal, Business Insurance, Property and Casualty 360, and World Risk and Insurance News. Shawn was named one of Business Insurance magazine’s 2013 ’40 under 40 Broker Leaders’. Shawn received his Bachelor of Arts in English from Brigham Young University. John Roberts, Product Lead John Roberts was previously the Head of Product at Cloudflare, where he oversaw the design and development of Cloudflare’s web performance and cybersecurity platform used today by over 6 million individuals and organizations. During his 6 years at Cloudflare, John also led the customer support organization, and served as the company’s Platform Lead. Prior to Cloudflare, John was the Vice President of product development at OpenDNS, which was recently acquired by Cisco Systems for $635mm. John holds a bachelor’s degree in history and literature from Harvard University. He also studied accounting and finance at Wharton School of the University of Pennsylvania. Jason Kahn, Engineering Lead Jason Kahn is a seasoned technologist that thrives on solving problems, organizing information, and building innovative products to solve existential problems. He has spent the last decade at the intersection of product and engineering management. He was previously the Director of Engineering for Ironnet, a cybersecurity firm founded by General Keith Alexander, former Director of the National Security Agency (NSA) and Commander of U.S. Cyber Command. Prior to Ironnet Jason served in various technical leadership roles at NSA where he supported national foreign intelligence requirements, military combat support, and the protection of U.S. national security information systems. Jason graduated with honors from Pennsylvania State University with a Bachelors in Computer Science and a Masters in Software Engineering. Alex Becker, Data Science Lead Alex Becker is a mathematician-cum-software engineer specializing in algorithm design and implementation. His mathematical interests include commutative algebra and dynamical systems. Prior to joining Coalition, Alex was a software engineer and data scientist at Google, where he worked on a number of applied problems across Google’s backend infrastructure, including the Google Knowledge Graph and high frequency ad serving platform. At Coalition, Alex is focused on computational underwriting and risk modeling. He holds a degree in Mathematics and Computer Science from the University of Chicago. 62 | Confidential (shared under NDA) Shea McNamara, Sales Lead Shea McNamara has 16 years of experience in the insurance industry focused on meeting clients’ needs and bringing insurers and insureds closer. He was previously with JLT Specialty, responsible for designing and growing its M&A practice in the U.S. and helping make JLT one of the fastest growing retail brokers. Prior to JLT, Shea served in several roles at Aon, including as a D&O broker in FSG New York and in its Mergers and Acquisitions Group in London, helping to build Aon’s M&A business across EMEA where he was continually a top producer. Prior to Aon, Shea was at AIG’s National Union in New York as an Underwriter of Management Liability (D&O, EPLI, Fiduciary, and Crime) for US F100 firms. Shea holds a BS in Finance from the University of Colorado at Boulder. Wilson Zhao, Finance/Business Development Lead Prior to joining Coalition, Wilson worked at Sift Science, a startup focused on utilizing machine learning technologies to detect and fight fraud. Before Sift Science, he was at Angel Island Capital (Golden Gate Capital credit affiliate), a multi-strategy credit investment hedge fund with approximately $3 billion of assets as a member of the Industrials and Business Services team. Prior to Angel Island Capital, Wilson worked at Francisco Partners, a US$10bn technology-focused private equity fund, and as an investment banking analyst at UBS. Wilson holds a Bachelor of Business Administration from the Ross School of Business at University of Michigan and an M.B.A. from The Wharton School at the University of Pennsylvania. EXHIBIT J 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 VERIFIED COMPLAINT KEKER, VAN NEST & PETERS LLP BRIAN L. FERRALL - # 160847 bferrall@keker.com REID P. MULLEN - # 270671 rmullen@keker.com BENJAMIN D. ROTHSTEIN - # 295720 brothstein@keker.com MORGAN E. SHARMA - # 313863 msharma@keker.com VICTOR H. YU - # 325411 vyu@keker.com 633 Battery Street San Francisco, CA 94111-1809 Telephone: 415 391 5400 Facsimile: 415 397 7188 Attorneys for Plaintiff COALITION INC. SUPERIOR COURT OF THE STATE OF CALIFORNIA IN AND FOR THE COUNTY OF SAN FRANCISCO COALITION INC., Plaintiff, v. ALEX BECKER, JOHN LOEBER, SHEA MCNAMARA, APOLLO BROKERS, INC., and DOES 1-10, Defendants. Case No. VERIFIED COMPLAINT AND JURY DEMAND 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 1 VERIFIED COMPLAINT Plaintiff Coalition, Inc. (formerly, Crucible Risk, Inc.) (“Coalition”), by way of its Complaint against Defendants John Loeber, Alex Becker, Shea McNamara, and Apollo Brokers, Inc. (“Apollo”), alleges the following: I. INTRODUCTION 1. Coalition is a first-of-its-kind insurance broker specializing in cyber, technology, and management liability insurance products. Founded in 2017 with the goal of meeting the growing need to manage risk associated with cyberattacks, cybersecurity breaches, and technology failures, Coalition assembled a team of technology and insurance experts to build a new way of providing insurance. Among its earliest employees were Defendants John Loeber and Alex Becker, computer programmers hired almost directly out of undergrad, whom Coalition’s founders invited to help implement their design. Loeber and Becker, working under the direction and close supervision of Coalition’s founders, coded significant portions of Coalition’s insurance platform-an on-line tool that revolutionizes how insurance brokers find and transact specialty insurance products-and Loeber and Becker helped develop the data models that Coalition uses to underwrite the insurance products it offers. Coalition hired Defendant McNamara to be its first salesperson. As Coalition grew, it entrusted McNamara with significant responsibility over Coalition’s critical relationships with the broker community. As a result, McNamara was familiar with Coalition’s business strategies and was responsible for executing them. 2. This case is a story of Defendants Loeber, Becker, and McNamara’s disloyalty to Coalition, but disloyalty only begins to describe their misconduct. Operating from positions of trust at Coalition, with access to the company’s most sensitive technical and commercial strategy information, they conspired to create and build a competitive venture. Their conspiracy was not mere talk. The individual defendants conducted research, mapped out a business model and product roadmap, filed company papers and prepared fund-raising materials for their competing venture, recruited other Coalition employees, pitched their venture to Coalition’s customers, formed an advisory board (that, on information and belief, now includes Coalition customers), and even began coding their competing product. Loeber, Becker and McNamara did these acts on Coalition time, while using Coalition equipment and receiving Coalition paychecks. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 VERIFIED COMPLAINT 3. Worse, in Defendant Loeber’s final days at the company, he transferred a trove of Coalition documents containing highly confidential and trade secret information-including Coalition’s source code-to an external storage device. Loeber then attempted to wipe clean from his Coalition-issued computer evidence that he had transferred these documents, along with evidence that he had used his Coalition-issued computer on Coalition’s time to develop Apollo. But Loeber’s attempt to expunge this incriminating evidence was not successful, or at least not completely successful, as data remaining on the computer reveals significant detail about Loeber’s efforts to misuse Coalition resources, steal Coalition trade secrets, and cover his tracks. This evidence of concealment shows that Loeber knew all along that his conduct was unlawful. Loeber possessed vast quantities of Coalition confidential and trade secret information well after his departure from Coalition, including information he had no reason to possess even when he was employed at Coalition. And to this day it is believed Loeber still possesses Coalition confidential information including source code. 4. Coalition’s executives finally learned of the individual defendants’ conspiracy in February 2020, months after it began, and terminated Loeber, Becker, and McNamara. Coalition also demanded that the individual defendants cease using Coalition proprietary information, technology, and trade secret information. But the individual defendants have continued to pursue potential customers and business partners, and now threaten to divert business away from Coalition and irreparably harm Coalition’s critical industry relationships. 5. Coalition respects the rights of employees to work where they choose and welcomes healthy competition that will advance innovation in the insurance market. Defendants, however, have chosen not to compete fairly. They chose instead to violate their commitments to Coalition, using Coalition’s confidential information and the safety of their Coalition employment as a launching pad to undermine Coalition in the market. II. PARTIES 6. Coalition is a Delaware corporation with its principal place of business located at 1160 Battery Street, in San Francisco, California. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 VERIFIED COMPLAINT 7. Defendant John Loeber, sued here in both his individual capacity and as a representative of Apollo, is a resident of California. 8. Defendant Alex Becker, sued here in both his individual capacity and as a representative of Apollo, is a resident of California. 9. Defendant Shea McNamara, sued here in both his individual capacity and as a representative of Apollo, is a resident of Colorado. 10. Defendant Apollo Brokers, Inc. is a corporation registered under the laws of the State of Delaware. On information and belief, Apollo provides and/or intends to provide insurance brokerage services for property and casualty insurance and surplus lines insurance. On information and belief, Defendants Loeber and Becker founded Apollo in San Francisco, CA. On information and belief, Apollo’s Chief Executive Officer (Defendant Loeber), Chief Technology Officer (Defendant Becker), and Head of Operations (Yoav Shaked) reside in San Francisco, CA, and Apollo’s principal place of business is in San Francisco. 11. The true names and capacities of Defendants sued herein as Does 1-10, inclusive, are presently unknown to Coalition, and therefore Coalition sues those Defendants by fictitious names. Coalition is informed and believes, and on that basis alleges, that Defendants Does 1-10 were in some manner responsible for the damages caused to Coalition by the actions alleged herein, and Coalition will seek leave of this Court to insert the true and correct names of any such Doe Defendants once their identities are ascertained. 12. At all times relevant to this Complaint, Defendants Alex Becker, John Loeber, Shea McNamara, Apollo Brokers, and Does 1-10, and each of them, were the agents, servants, employees, and/or alter egos of the other Defendants and were, as such, acting within the course, scope, and authority of each other Defendant. 13. Coalition further alleges that each Defendant conspired with and provided assistance to the other Defendants in connection with the unlawful conduct alleged herein, and that each Defendant ratified or agreed to accept the benefits of the conduct of the other Defendants. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 4 VERIFIED COMPLAINT III. JURISDICTION AND VENUE 14. Subject matter jurisdiction is proper before this Court because Coalition seeks equitable and legal relief, and damages and the amount in controversy exceeds $25,000. 15. This Court possesses jurisdiction over all parties because they are residents of the State of California, have consented to the jurisdiction of the Superior Courts of the State of California, have sufficient contacts with the State of California, are doing business in the State of California, and/or because the exercise of jurisdiction in this matter would be just and reasonable. 16. Venue is proper in this Court pursuant to California Code of Civil Procedure § 395(a) because San Francisco County is the county where, upon information and belief, Defendant Apollo has its principal place of business and where at least two of the three individual Defendants reside as of the commencement of this action. San Francisco County is also where the contracts at issue were entered into and to be performed, where Defendants’ obligation or liability arose, and/or where the breach of contract occurred. IV. FACTUAL ALLEGATIONS A. Coalition Developed Innovative, Proprietary Technologies to Revolutionize the Cybersecurity Insurance Market. 17. Coalition is an industry leader in the highly complex business of cyber and technology errors-and-omissions (“E&O”) insurance products and will soon launch management liability insurance products as well. Cyber insurance covers damage caused by data breaches and other cybercrimes and technology failures. Technology E&O insurance covers specific types of professional liability for technology companies. Management liability insurance covers directors, officers, managers, and business entities from risks related to corporate governance and management activities. Since Coalition’s founding in 2017, the company has disrupted the industry for these specialty insurance products with technological innovations that accelerate and simplify the sales and underwriting process, while simultaneously pricing the insurance products more accurately and fairly. 18. Transactions for these types of specialty insurance products typically involve at least the following parties: (1) the business seeking the insurance (the “policyholder”); (2) one or 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5 VERIFIED COMPLAINT 19. more insurance brokers who find policies that suit the policyholder’s needs; and (3) the insurance “carrier” who usually underwrites the policy, issues the policy, and ultimately pays claims for covered losses. When a policyholder seeks a specialty insurance product such as cyber, technology E&O, or management liability insurance (products that carriers “admitted” in the policyholder’s own state may not be able to underwrite) the policyholder’s broker often relies on another broker-one with subject matter expertise in the specialty product at issue and a “surplus lines” brokerage license that allows it to transact with non-admitted insurers and insurance products-to help find coverage. In this arrangement, the first broker is commonly referred to as the “retail broker” or “retailer,” and the second is called the “surplus lines broker,” “wholesale broker,” or “wholesaler.” 20. Coalition occupies a specialized role in this ecosystem. Coalition is an insurance broker licensed to transact property and casualty insurance products (the categories of insurance coverage that include cyber, technology E&O, and management liability), with an additional “surplus lines” license to transact non-admitted insurance products. Coalition often functions as a “wholesaler” in transactions for cyber and technology E&O products, but two features distinguish it from others in the industry. First, Coalition has underwriting authority from several major insurance carriers. That means Coalition doesn’t just find and transact specialty insurance products; it creates them based on the policyholder’s specific needs and attributes. Second, Coalition’s primary customers are other insurance brokers. This places Coalition further upstream than a typical insurance broker and enables it to service a broader set of both insurance brokers and policyholders with its subject-matter expertise. 21. Traditionally, the process of providing specialty insurance products was very cumbersome, particularly for wholesalers. Communications among retailers, wholesalers, and carriers would take place by phone and email, requiring wholesalers to engage in weeks of back- and-forth to gather and clarify information about the policyholder and its requirements, during which brokers manually complete an enormous amount of paperwork. Exacerbating these difficulties, state-specific regulations for insurance products can be extremely granular (e.g., 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 VERIFIED COMPLAINT 22. requiring specific font type and size for specific clauses in specific documents), workflows require that certain events and document signatures occur in a specific order to create binding coverage, and broker-specific business rules and operational preferences impact the terms of the ultimate insurance contract (such as including a “policy fee” to a wholesaler paid by the policyholder). These inefficiencies of the traditional insurance market limit the profit-generating capacity of wholesalers and the retail brokers they service. 23. Coalition uses its specialized position in this industry and its one-of-a-kind proprietary technologies to address these issues. Coalition’s technology offerings include the following: i) At the beginning of a specialty insurance transaction, Coalition provides a proprietary online platform that condenses and automates the process by which brokers apply for coverage. The platform incorporates artificial intelligence, designed and built by Coalition, that searches the internet for a broad set of information about the policyholder’s business and employees based on limited inputs from the broker, converts that information into thousands of data points, and populates that data into Coalition’s database. This proprietary platform transforms days of phone calls and emails, spent gathering an exhaustive set of information and manually entering it into a series of forms, into mere minutes spent by a broker on Coalition’s user-friendly web application. ii) After Coalition gathers policyholder information through its online platform, it uses a proprietary mathematical model, designed and built by Coalition based on extensive industry expertise, to produce policyholder risk assessments, coverage options, and prices. Coalition’s model is significantly more sophisticated than the logic applied by most underwriters (which assigns a “base rate” using only ten to fifteen data points and then multiplies that base rate by the amount of coverage requested). Coalition’s model instead integrates thousands of data points gathered by its online platform. As a result of this model, Coalition has emerged as an industry-leading underwriter for the specialty insurance products it offers. iii) After the policyholder chooses a coverage option, Coalition offers a document-generation engine, accessible to brokers via Coalition’s proprietary online platform. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 7 VERIFIED COMPLAINT This technology, also designed and built by Coalition, tracks and incorporates all 50 states’ insurance regulations, as well as specific business rules and preferences entered by brokers. It automatically generates signature-ready copies of numerous forms and presents them online in an automated workflow, all of which significantly reduce the time and effort needed to close the transaction after the policyholder chooses a coverage option. 24. Coalition spent years developing and optimizing these technologies at the direction of its founders, Joshua Motta and John Hering. Coalition launched the first versions of its online platform and underwriting model in November 2017. It has engaged in continuous research and development since those launches, gathered thousands of hours of feedback from customers in order to refine and enhance its products, and spent tens of millions of dollars on product development. Coalition has grown from five employees in 2017 to 105 today and has emerged as an industry leader for the insurance products it offers. B. Alex Becker, John Loeber, and Shea McNamara Were Early Coalition Hires and Now Possess Extensive Knowledge of Coalition’s Proprietary and Trade Secret Information. 25. Coalition hired Defendant John Loeber on March 20, 2017, and Defendant Alex Becker on April 17, 2017. Loeber and Becker were Coalition’s fifth and seventh hires, respectively, and its first two software engineers. Neither Loeber nor Becker had any previous professional experience in either the cybersecurity or insurance industries. In fact, Coalition hired Becker before he had even completed his undergraduate degree, and Loeber joined Coalition less than a year after graduating college. 26. Coalition hired Defendant Shea McNamara, a salesperson, on March 13, 2017. McNamara had previous experience working with large and non-specialized insurance brokers, but no previous cyber insurance experience and no previous experience serving as a wholesaler, transacting products with other brokers. 27. As early engineering hires, Loeber and Becker were entrusted to work on all aspects of Coalition’s core technological innovations. Since Loeber and Becker lacked previous industry expertise, they worked under the close direction and supervision of Coalition’s founders and its Head of Insurance, Shawn Ram, as they helped build out the first generation of Coalition’s 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 VERIFIED COMPLAINT online platform. As a necessary result of their central roles in technical product development, Loeber and Becker both had access during their tenure at Coalition to documents containing the company’s trade secret and other confidential information, including but not limited to: the source code for Coalition’s platform; product design documents such as wireframes and database diagrams; insurance rating models, including a confidential white paper describing Coalition’s underwriting model; future product plans and strategic roadmaps; and summaries of Coalition’s extensive market research and broker interviews. Loeber and Becker now both possess extensive knowledge of Coalition’s proprietary online platform, its user interface, its artificial intelligence, and its database schema. Becker, who has a mathematics background, also worked on Coalition’s proprietary data model for underwriting the insurance products it offers. 28. Coalition entrusted McNamara to develop Coalition’s relationships with the broker community through whom it sells. McNamara served as a primary point of contact at Coalition for many of Coalition’s largest and most important brokers. During his tenure at Coalition, McNamara, like Loeber and Becker, had access to numerous documents containing trade secret and other confidential information including broker/customer lists; future product plans and strategic roadmaps; and Coalition’s actual and projected financials. 29. Each of Loeber, Becker and McNamara worked at Coalition while they were developing their competing venture, Apollo, until Coalition discovered their misconduct and terminated them in February 2020. C. Loeber, Becker, and McNamara Built a Competing Venture-Apollo-While Still Employed at Coalition. 30. On information and belief, Loeber and Becker were competing with Coalition while employed at Coalition, beginning at least as early as November 2019. 31. On February 21, 2020, Becker disclosed to Coalition’s senior management that he, Loeber, and McNamara were leaving to pursue a separate wholesale insurance brokerage they had started. Coalition terminated McNamara that day. 32. On February 26, 2020, Loeber and Becker first revealed specifics about their wholesale brokerage to Coalition’s co-founders, Joshua Motta and John Hering. Loeber and 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 9 VERIFIED COMPLAINT Becker presented a slide deck explaining their business model and the Apollo product and attempted to interest Motta and Hering in becoming investors in Apollo. 33. On information and belief, Apollo is an insurance brokerage that is licensed, or seeks to acquire licenses, to transact property and casualty insurance and surplus lines insurance-i.e., the same licenses that Coalition has. Like Coalition, Apollo transacts or intends to transact cyber and technology E&O insurance products, and it has sold or intends to sell management liability insurance products of the same type that Coalition is on the verge of launching (as Loeber, Becker and McNamara know). Also like Coalition, Apollo positions or intends to position itself upstream of other insurance brokers. Apollo also has differentiated or intends to differentiate itself from other brokers acting as “wholesalers” by copying one of Coalition’s core technological innovations: an online platform that streamlines the information gathering and document generation phases of creating a binding insurance policy. And also like Coalition, Apollo aggregates or intends to aggregate data gathered through its platform and intends to underwrite its own insurance products based on that data. 34. Apollo’s business model and product, as disclosed by Loeber and Becker to Motta and Hering on February 26, 2020, is directly competitive to Coalition. Apollo seeks to replicate Coalition’s technological innovations, deploy them at a new firm in the same distribution chain, use them to sell the same products that Coalition underwrites and sells to Coalition’s customer base, and, eventually, occupy the same market space as Coalition. Specifically, Apollo seeks to use a data-driven model and a streamlined, online platform to underwrite and sell specialty insurance products. Loeber and Becker expressly confirmed at the February 26 meeting with Motta and Hering that Apollo will sell cyber and technology E&O insurance products, in addition to the same management liability insurance products that the individual defendants know are in Coalition’s near-term product roadmap. And Becker stated explicitly that Apollo would compete with Coalition. 35. On the same day that Loeber and Becker disclosed their business model and product for Apollo to Motta and Hering, Loeber told his supervisor (Coalition’s head of engineering, Leon Rishniw) that he and Becker conceived of the business model for Apollo 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 VERIFIED COMPLAINT several months earlier while attending Coalition’s November 2019 company offsite. The offsite is a biannual event at which Coalition employees meet with each other and customers to gather feedback on Coalition’s products and workshop future developments. Loeber and Becker never presented their business model and product as a business opportunity to Coalition. To the contrary, by the time they disclosed Apollo to Coalition management months later they had made their minds up to depart the company to run Apollo. Coalition terminated Loeber and Becker’s employment with Coalition on February 28, 2020. D. Loeber Misappropriated Coalition Trade Secret Documents Before and After Coalition Terminated His Employment. 36. Coalition recently discovered that Loeber copied an enormous volume of confidential and extremely sensitive Coalition documents to his own personal external storage devices and personal cloud-based storage services over a period of years, and up to and including the date of his termination from the company. For example, on July 24, 2018, Loeber created an archive of the Coalition file share (containing vast amounts of proprietary information) and subsequently copied it to a two terabyte Western Digital USB storage device (the “Western Digital” device). Loeber also copied Coalition’s codebase to the Western Digital device on multiple occasions. On each such occasion, Loeber captured Coalition’s then-current source code for Coalition’s products-including source code repositories that Loeber never worked on and that he had no legitimate business reason to possess, but that would be extremely helpful to a company trying to create products similar to Coalition’s, such as Apollo. Loeber’s extensive copying of Coalition documents and information violated numerous provisions in Coalition’s corporate information security protocols, including its Acceptable Use Policy, which provides: “You may access, use or share Company proprietary information only to the extent it is authorized and necessary to fulfill your assigned job duties[,]” and “Accessing data, a server or an account for any purpose other than conducting Company business, even if you have authorized access, is prohibited.” 37. Perhaps most troubling, in the brief window between February 21 (when Coalition terminated McNamara’s employment) and February 28 (when Coalition terminated Loeber and Becker’s employment), Loeber copied thousands of Coalition files to his personal Western 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11 VERIFIED COMPLAINT Digital device. Notably, on February 21-the same day that Coalition fired McNamara-Loeber used his Coalition-issued laptop to copy source code for Coalition products to the Western Digital device and to research data destruction techniques. He then erased system data from his Coalition-issued laptop-data showing the source code copying activity as well as Apollo work product that he had generated and saved on that laptop. But Loeber failed to destroy every clue, so his returned Coalition-issued laptop contains significant evidence of his eleventh-hour copying activities and his concealment efforts. 38. At the time Coalition terminated Loeber on February 28, 2020, Coalition’s outside counsel met with him, provided him a highlighted copy of his employment agreements with Coalition, and explained to him his ongoing obligations to the company. On March 16, 2020- after Coalition’s outside counsel sent Loeber a follow-up letter regarding his contractual obligations-Loeber returned a hard drive to Coalition containing approximately 510,000 Coalition files he had retained after leaving the company. But it turned out that (a) the returned drive was not the Western Digital device that Loeber copied Coalition files to during his employment (b) the first and only time Loeber copied any documents to the returned device was on March 5, 2020 (after Coalition fired him), and (c) the returned device did not contain the same set of documents and information that Loeber copied onto his personal Western Digital device using his Coalition-issued laptop. 39. Coalition sent another letter to Loeber on April 15, 2020, demanding the complete return of all Coalition proprietary documents remaining in his possession. On April 21, 2020, Loeber disclosed that he still remained in possession of Coalition proprietary information- including source code and software architecture diagrams-on devices that include his personal laptop, a personal external storage device, a personal Trello (cloud-based storage) account, personal phone, a personal tablet computer, and a personal back-up drive Loeber used in 2019. 40. In summary, Loeber copied to his personal possession thousands of Coalition files, including Coalition source code, that he had no legitimate business reason to possess and that would be extremely helpful to the individual defendants in developing Apollo. Loeber retained these files in his personal possession throughout the period of his disloyalty to Coalition and 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 12 VERIFIED COMPLAINT following his firing from the company. Loeber’s possession of these files violated Coalition’s information security policies and Loeber’s obligations to Coalition. Loeber wrongfully kept Coalition trade secret files in his personal possession during the entire period of his disloyalty to Coalition. Loeber then stole an enormous amount of additional Coalition trade secret information in his last week with the company. To this day, there is no accounting from Loeber as to the security or location of the Coalition confidential information and trade secrets he unlawfully took, and certainly no adequate assurance that he returned it all to Coalition. E. Loeber, Becker, and McNamara’s Development of Apollo While Still Employed at Coalition Violated Numerous Terms of Their Agreements with Coalition. 41. Each of the individual defendants violated numerous terms of their Proprietary Information and Inventions Agreement (“PIIA”) with Coalition (the terms of which are all identical). Loeber’s, Becker’s, and McNamara’s PIIAs are attached as Exhibits A-C to this Complaint (respectively). 1. Loeber and Becker Violated Their Non-Solicitation Obligation. 42. Loeber and Becker violated the non-solicitation obligation in paragraph 5 of their PIIA, which states: Until one year after the term of my employment, I will not encourage or solicit any employee or consultant of Company to leave Company for any reason (except for the bona fide firing of Company personnel within the scope of my employment). Exs. A and B at 2. Despite this clear and unequivocal language, Loeber and Becker encouraged and solicited McNamara to leave Coalition and work for them at Apollo while all three were still employed at Coalition. McNamara himself confirmed Loeber’s and Becker’s misconduct in February 2020, when he told Coalition’s Head of Insurance, Shawn Ram, that Loeber and Becker asked him to leave Coalition and join them at Apollo a month earlier. 43. McNamara knew that Loeber and Becker violated their employment contracts by soliciting him to leave Coalition, since McNamara signed an identical PIIA with an identical non- solicitation provision. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13 VERIFIED COMPLAINT 44. Defendants’ actions as described above also violated non-contract duties and obligations owed to Coalition, as alleged further below. 2. Loeber, Becker, and McNamara Violated Their Non-Competition Obligation. 45. Loeber, Becker, and McNamara violated the terms of their PIIAs by competing with Coalition while employed at Coalition. 46. Paragraph 6 of the individual defendants’ PIIA states: I agree that during the term of my employment with the Company (whether or not during business hours), I will not engage in any activity that is in any way competitive with the business or demonstrably anticipated business of Company, and I will not assist any other person or organization in competing or in preparing to compete with any business or demonstrably anticipated business of Company. Exs. A, B, and C at 2. 47. Apollo is competitive with and poses a clear and imminent threat to Coalition’s current and future business in at least three ways. First, on information and belief, Apollo sells or seeks to sell third-party cyber and E&O insurance products that are directly competitive with Coalition’s insurance products. Second, Apollo sells or will seek to sell management liability products of the exact same type that Coalition is on the verge of launching-as Loeber, Becker, and McNamara well know as a result of their access to Coalition’s confidential product plans while employed at the company. Third, on information and belief, Apollo uses or intends to use the data it gathers through its online platform to underwrite its own insurance products that compete directly with Coalition. 48. Loeber’s, Becker’s, and McNamara’s’ activities with respect to Apollo while employed at Coalition far exceed mere preparations to compete. They used Coalition’s confidential information, time, resources and facilities to develop Apollo’s competing business model and product while still employed by Coalition-in fact, they even used Coalition computers to write code (some of which they uploaded to online code repository “GitHub”) that, on information and belief, was intended for use in Apollo’s platform. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14 VERIFIED COMPLAINT 49. Becker and Loeber also used Coalition time to work on Apollo in competition with Coalition in other ways. For example, between November 2019 and February 2020, Loeber and Becker arranged numerous off-site meetings during business hours. The ostensible purpose of these meetings was to locate and evaluate potential employees for Coalition to hire, but they were suspiciously unproductive for Coalition. On information and belief, the true purpose of these meetings was to identify employees for Apollo to hire and/or to pitch and solicit feedback for Apollo. Additionally, Loeber and Becker used their Coalition accounts on Slack (an electronic messaging application) to recruit McNamara to leave Coalition and join them at Apollo. 50. On information and belief, McNamara also used Coalition resources to work on Apollo. Specifically, during Coalition work hours while on business trips paid for by Coalition, McNamara met with numerous wholesalers that work with Coalition to solicit testimonials for Apollo to use in its fundraising materials, and to gather information and feedback that could be (and on information and belief was) used to develop Apollo’s online platform. 51. During Loeber’s, Becker’s, and McNamara’s periods of disloyalty to Coalition, from at least November 2019 through their termination in February 2020, they prioritized their efforts to develop Apollo over their work for Coalition. Coalition assigned critical projects to Loeber, Becker, and McNamara during their final months at the company, including integrating a recently acquired company and leading efforts to support a new Coalition business initiative. The individual defendants made little or no meaningful contributions to these projects during the period of disloyalty, and the projects lagged substantially until Coalition terminated the individual defendants, all of which caused substantial harm to the company. After the separation of these employees, Coalition saw an immediate surge in progress on all these critical areas. On information and belief, the Defendants sought to undermine and cause harm to Coalition while building their own competing business during this period. 52. Loeber was contemporaneously aware that his conduct was unlawful and wrong. Loeber made extensive (but ultimately unsuccessful) efforts to destroy evidence confirming that he had used his Coalition-issued computer to develop Apollo on Coalition time. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 15 VERIFIED COMPLAINT 53. Defendants’ actions as described above also violated non-contract duties and obligations owed to Coalition, as alleged further below. 3. Loeber, Becker, and McNamara Violated Their Invention Assignment Obligation. 54. Paragraph 2 of the individual defendants’ PIIAs provide that: Company shall own all right, title and interest . . . relating to any and all inventions (whether or not patentable), works of authorship, mask works, designs, know-how, ideas and information made or conceived or reduced to practice, in whole or in part, by me during the term of my employment with Company to and only to the fullest extent allowed by California Labor Code Section 2870 . . . and I will promptly disclose all Inventions to Company. . . . Exs. A, B, and C at 1. And California Labor Code Section 2870, which is appended to the end PIIA, exempts the employee work product from this provision only if (a) the employee developed the work product “entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information,” and (b) the work product neither “relate[s] to the employer’s business” nor “result[s] from any work performed by the employee for his employer.” Exs. A, B, and C at Appendix A. 55. Pursuant to Paragraph 2 of each PIIA, the individual defendants were required to assign or offer to assign the Apollo business model, product (including the online platform they started coding at Coalition and on Coalition computers), and any other “inventions (whether or not patentable), works of authorship, mask works, designs, know-how, ideas and information made or conceived or reduced to practice, in whole or in part,” (referred to in the PIIAs as “Inventions”) associated with it to Coalition. The Apollo business model and product comprise inventions, works of authorship, designs, know-how, ideas, and/or information, and were reduced to practice in the form of a detailed investor slide deck and software code that Loeber and Becker began writing on Coalition computers while still employed at Coalition. These “Inventions” are not exempted under Labor Code Section 2870, for the independent reasons that (a) the defendants used Coalition’s resources to develop them; (b) they relate to Coalition’s business; and (c) they resulted directly from work the individual defendants performed for Coalition. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 16 VERIFIED COMPLAINT 56. Additionally, Defendants Loeber, Becker, and McNamara breached the Technology Assignment Agreements (“TAA”) they signed with Coalition (Exhibits D-F, respectively), which automatically assigns their rights in Apollo to Coalition. Section 1 of that agreement states: Developer hereby assigns to the Company exclusively and throughout the world all right, title and interest (whether or not now existing) in (i) the subject matter referred to in Exhibit A (“Technology”) . . . . Exs. D, E and F at 1. The “Technology” defined by Exhibit A to the TAA is: “All technology, know-how, information, intellectual property and other materials for or relevant to cyber liability insurance, including without limitation, all business plans, technical plans, specifications, templates, demonstration versions, equipment, software, devices, methods, apparatus, product designs, trademarks or logos relevant to the foregoing.” Exs. D, E and F at Exhibit A. Apollo’s business model and product and platform clearly relate to cyber liability insurance for the reasons described above. 57. Defendants’ actions as described above also violated non-contract duties and obligations owed to Coalition, as alleged further below. 4. Loeber, Becker, and McNamara Violated Their Confidentiality Obligation. 58. Loeber’s, Becker’s, and McNamara’s PIIAs and TAAs obligate them to maintain the confidentiality of Coalition’s proprietary information, and to use such information only within the scope of their employment for Coalition. Paragraph 4 of their PIIA clarifies that information an employee develops or learns while at Coalition is Coalition’s “Proprietary Information” and prohibits the individual defendants from disclosing such information outside of their employment with Coalition: I agree that all Inventions and all other business, technical and financial information (including, without limitation, the identity of and information relating to customers or employees) I develop, learn or obtain during the term of my employment that relate to Company or the business or demonstrably anticipated business of Company or that are received by or for Company in confidence, constitute “Proprietary Information.” I will hold in confidence and not disclose or, except within the scope of my employment, use any Proprietary Information. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 17 VERIFIED COMPLAINT Exs. A, B, and C at 2. Similarly, Section 4 of their TAA states: Developer will not use or disclose anything assigned to the Company hereunder or any other technical or business information or plans of the Company . . . . Exs. D, E, and F at 2. 59. The individual defendants breached their contractual confidentiality obligations by, among other things, using confidential customer information and feedback, received by them in their capacity as Coalition employees, to develop the Apollo business model and product. Specifically, McNamara engaged in numerous discussions with Coalition customers after he decided to join Loeber and Becker at Apollo but before Coalition fired him, during which he solicited market research information and, on information and belief, subsequently disclosed that information to Loeber and Becker and used it for the benefit of Apollo, not Coalition. Similarly, on information and belief, Loeber and Becker worked on their original business model and product for Apollo at a Coalition company off-site, the entire purpose of which was to gather feedback from Coalition’s customers and employees about improving Coalition’s products and services. 60. Additionally, Loeber, Becker, and McNamara included Coalition’s confidential financial information in a version of their pitch deck for Apollo, including Coalition’s valuation and its total fundraising. Loeber attempted to delete data from his Coalition computer showing that he had used it for Apollo business such as preparing this pitch deck. Upon information and belief, the defendants disclosed this version of their pitch deck to potential investors. 61. Loeber also violated his obligation to return all documents containing Coalition’s proprietary information. Paragraph 4 of each individual defendant’s PIIA states: “Upon termination of my employment, I will promptly return to Company all items containing or embodying Proprietary Information (including all copies) . . . .” Exs. A, B, and C at 2. As explained in greater detail above, Loeber copied an enormous volume of Coalition trade secret information to his personal possession continuously throughout his employment at the company, including during his final week at the company, and remained in possession of Coalition trade secrets for approximately two months after he was fired (and counting). 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18 VERIFIED COMPLAINT 62. Defendants’ actions as described above also violated non-contract duties and obligations owed to Coalition, as alleged further below. F. Coalition Undertakes Substantial Efforts to Protect Its Confidential and Proprietary Information. 63. In addition to violating the terms of their employment contracts, Loeber, and on information and belief Becker, McNamara, and Apollo, misappropriated Coalition trade secret documents and information. 64. Data models and confidential business forecasts that Loeber retained after leaving Coalition contain highly valuable and competitively sensitive Coalition proprietary information that constitute trade secrets. Coalition only shares its data models with third parties who are subject to a non-disclosure agreement and does not share its business forecasts outside the company at all. Additionally, Loeber, Becker, and McNamara knew and had access to an enormous amount of Coalition trade secret information by virtue of their broad range of responsibilities at the company and their status as early hires. This information includes: the source code for Coalition’s platform; product design documents such as wireframes and database diagrams; future product plans and strategic roadmaps; summaries of Coalition’s extensive market research and broker interviews; customer lists; and Coalition’s confidential financial information. 65. To preserve its trade secrets and protect its confidential information, Coalition undertakes a variety of protective measures, including the following: i) Binding employees to confidentiality obligations, as described above; ii) Limiting disclosure of trade secret information to third parties to a strictly as-needed basis and binding any third parties to non-disclosure agreements before providing any such information; iii) Limiting access to Coalition’s online platform to customers that have been vetted through an “appointment” process and signed a non-disclosure agreement; iv) Implementing acceptable use policies, which require employees to use company-issued equipment, networks, and email in a manner that protects Coalition information available from those resources; 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 19 VERIFIED COMPLAINT v) Requiring keycards to physically access Coalition facilities; vi) Requiring employees to enter login credentials before accessing company computers or email, and requiring the use of “strong” passwords for those purposes; vii) Requiring VPN, secure connections, and multi-factor authentication for vendor-hosted company services through which company trade secrets are accessible (e.g., Google GSuite, Slack, Amazon Web Services); viii) Segmenting the company’s shared corporate drive so that access to highly sensitive documents is limited to discrete groups of people on an as-needed basis; ix) Requiring antivirus and anti-malware software to be run on all company endpoints; x) Requiring that company devices are encrypted; and xi) Providing annual information security awareness training. G. Defendants Acted with Oppression and Malice in a Willful Attempt to Harm Coalition 66. At the time Coalition terminated the individual defendants’ employment, Coalition’s counsel met with each individual defendant, presented highlighted copies of their employment agreements, and specifically admonished them about their ongoing contractual obligations to Coalition. On March 13, March 31, and April 15, 2020, Coalition sent letters to the individual defendants reminding them of the contractual obligations described above and requesting them to cease Apollo’s operations and return any retained Coalition proprietary documents. The defendants have neither ceased operating Apollo nor returned all Coalition documents. 67. Consequently, and as set forth above, the individual defendants acted with intent, oppression and malice. They knowingly used Coalition’s time, equipment, and resources, solicited company employees, violated numerous provisions of their employment agreements, and disregarded their duties of loyalty-all in furtherance of creating a competitive product while still employed at Coalition. Additionally, Defendant Loeber’s concealment efforts show his 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 20 VERIFIED COMPLAINT contemporaneous awareness that his conduct was unlawful. On information and belief, Apollo authorized and ratified the individual defendants’ misconduct as described herein. FIRST CAUSE OF ACTION Violation of California Uniform Trade Secrets Act (“CUTSA”) (Against All Defendants) 68. Coalition repeats and incorporates by reference all prior allegations of this Complaint as if fully set forth herein. 69. Coalition owns and possesses certain confidential, proprietary, and trade secret information, as alleged above. 70. Coalition has taken reasonable measures to keep such information secret and confidential. 71. This confidential, proprietary, and trade secret information derives independent economic value from not being generally known to, and not being readily ascertainable through proper means by another person who could obtain economic value from the disclosure or use of the information. 72. Coalition’s confidential, proprietary, and trade secret information was made available to Defendants Loeber, Becker, and McNamara during their employment with Coalition under circumstances requiring them to maintain the information in confidence. Defendant Apollo acquired Coalition’s confidential, proprietary and trade secret information from or through the individual defendants and knew or had reason to know that the information was acquired by improper means. 73. Defendants misappropriated Coalition’s confidential, proprietary and trade secret information for their own benefit in the improper and unlawful manner alleged herein. On information and belief, Defendants remain in improper and unlawful possession of Coalition’s confidential, proprietary, and trade secret information, and products derived therefrom. 74. Further, on information and belief, Defendants have used this misappropriated information to develop Apollo, a business that directly competes with Coalition. 75. As a direct and proximate result of Defendants’ misappropriation of Coalition’s confidential, proprietary, and trade secret information, Coalition has suffered and, if Defendants’ 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 21 VERIFIED COMPLAINT conduct is not enjoined, will continue to suffer, irreparable injury and significant damages, in an amount to be proven at trial. 76. As a further direct and proximate result of Defendants’ misappropriation of Coalition’s confidential, proprietary, and trade secret information, Defendants have been or will be unjustly enriched in an amount to be proven at trial. 77. Defendants’ misappropriation of Coalition’s confidential, proprietary, and trade secret information was intentional, knowing, willful, malicious, fraudulent, and oppressive. 78. Coalition has been damaged by Defendants’ misappropriation of its confidential, proprietary, and trade secret information, and is entitled to its damages, in an amount to be determined at trial, as well as an award of exemplary damages and attorneys’ fees. 79. Because Coalition’s remedy at law is inadequate, Coalition is further entitled to injunctive relief to recover and protect its confidential, proprietary, and trade secret information and other legitimate business. SECOND CAUSE OF ACTION Breach of Contract (Against Defendants Loeber, Becker, and McNamara) 80. Coalition repeats and incorporates by reference all prior allegations of this Complaint as if fully set forth herein. 81. Defendants John Loeber, Alex Becker, and Shea McNamara entered into identical Proprietary Information and Invention Agreements (“PIIA”) and Technology Assignment Agreements (“TAA”) as part of their employment contract with Coalition. 82. Each PIIA and TAA entered into by the individual defendants is a valid and enforceable contract. 83. Coalition has at all times fully performed its obligations under the terms of the individual defendants’ employment at the company, including its obligations under each individual defendant’s PIIA and TAA. 84. As set forth herein, Defendants Loeber, Becker, and McNamara breached their non-competition obligation in their PIIA by competing with Coalition during the term of their employment with the company. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 22 VERIFIED COMPLAINT 85. Defendants Loeber, Becker, and McNamara also breached their invention assignment obligation in their PIIA and TAA by failing to assign or offer the Apollo business model and product (including Apollo’s online platform) to Coalition. 86. Defendants Loeber, Becker, and McNamara also breached their confidentiality obligation in their PIIA and TAA by using Coalition proprietary information in connection with developing Apollo’s business model and product. Loeber also violated his PIIA by taking numerous Coalition proprietary and confidential documents shortly before he was fired. 87. Defendants Loeber and Becker also breached the non-solicitation obligation in their PIIA by soliciting Defendant McNamara to leave Coalition and work for them at Apollo. 88. As a direct result of the individual defendants’ numerous breaches of contract, Coalition has suffered irreparable injury and significant damages, in an amount to be proven at trial. 89. Coalition will continue to be directly and proximately harmed if the individual defendants are not enjoined from further violating the terms of their PIIAs and TAAs. 90. Coalition is entitled to damages sufficient to compensate for the individual defendants’ breaches. 91. Because Coalition’s remedy at law is inadequate, Coalition is also entitled to injunctive relief to prevent irreparable harm to its legitimate business interests. Further, Coalition is entitled to specific performance by Defendants Loeber, Becker, and McNamara of their contractual obligations, including specific performance of their obligation under their TAAs to assign all right and title in Apollo to Coalition. THIRD CAUSE OF ACTION Breach of Duty of Loyalty (Against Defendants Loeber, Becker, and McNamara) 92. Coalition repeats and incorporates by reference all prior allegations of this Complaint as if fully set forth herein. 93. While employed by Coalition, Defendants Loeber, Becker, and McNamara owed a duty of loyalty to Coalition. Each of them had high levels of responsibility and was in a position of trust at the company. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 23 VERIFIED COMPLAINT 94. During their employment with Coalition, the individual defendants breached their duties of loyalty to the company by competing against the company while still employed there. Specifically, they breached their duties of loyalty by building a competing company while still employed at Coalition and by misusing Coalition company resources to do so. 95. The individual defendants also breached their duty of loyalty by failing to disclose and offer to assign Apollo’s business model and product (including Apollo’s online platform) to Coalition before usurping it for themselves, since Apollo’s business model and product are within Coalition’s line of business. 96. Coalition has suffered damages as a result of the individual defendants’ duties of loyalty and is entitled to damages in an amount to be determined at trial, including disgorgement of the individual defendants’ compensation received from Coalition during their periods of disloyalty, as well as an award of exemplary damages and attorneys’ fees. 97. This claim does not rely on Defendants’ misappropriation of Coalition’s confidential, proprietary, or trade secret information. FOURTH CAUSE OF ACTION Intentional Interference with Contractual Relations (Against Defendants Loeber, Becker, and McNamara) 98. Coalition repeats and incorporates by reference all prior allegations of this Complaint as if fully set forth herein. 99. Defendants Loeber and Becker were aware of, or should have been aware of, Defendant McNamara’s employment agreement with Coalition. 100. Defendants Loeber and Becker wrongfully interfered with the contractual relationship between Coalition and McNamara by soliciting McNamara to leave Coalition in violation of their own non-solicitation obligations to Coalition. 101. Defendant McNamara was aware of, or should have been aware of, Defendants Loeber and Becker’s employment agreements with Coalition, including the non-solicitation provision in their PIIA (which is identical to McNamara’s PIIA). 102. Defendant McNamara wrongfully interfered with the contractual relationship between Coalition and Loeber and Becker by encouraging and assisting them in breaching their non-solicitation obligation to Coalition. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 24 VERIFIED COMPLAINT 103. Defendants’ intentional interference with Coalition’s contractual relations was willful, malicious, and oppressive. 104. Coalition has suffered damages as a result of Defendants’ intentional interference with its contractual relations and is entitled to damages in an amount to be determined at trial, as well as an award of exemplary damages and attorneys’ fees. 105. This claim does not rely on Defendants’ misappropriation of Coalition’s confidential, proprietary, or trade secret information. FIFTH CAUSE OF ACTION Violation of Cal. Bus. & Prof. Code § 17200 (Against all Defendants) 106. Coalition repeats and incorporates by reference all prior allegations of this Complaint as if fully set forth herein. 107. Defendants Loeber, Becker, McNamara, and Apollo have unlawfully, unfairly, and fraudulently competed against Coalition by competing against Coalition while still employed at the company and by misusing Coalition’s resources; by breaching numerous provisions of their employment contracts, and by breaching their duties of loyalty. 108. Coalition is entitled to restitution of the amount that the Defendants unjustly enriched themselves by unlawfully, unfairly, and fraudulently competing against Coalition. 109. Coalition is also entitled to injunctive relief to prevent irreparable harm to its legitimate business interests caused by unlawful, unfair, and fraudulent competition from the Defendants. 110. This claim does not rely on Defendants’ misappropriation of Coalition’s confidential, proprietary, or trade secret information. SIXTH CAUSE OF ACTION Declaratory Judgment (Against All Defendants) 111. Coalition repeats and incorporates by reference all prior allegations of this Complaint as if fully set forth herein. 112. An actual controversy exists between Coalition and Loeber, Becker, and McNamara regarding their respective rights and interests under Loeber’s, Becker’s, and McNamara’s contracts with Coalition. Specifically, the parties dispute whether Coalition owns 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 25 VERIFIED COMPLAINT some or all of Apollo’s assets pursuant to the invention assignment clauses of Loeber’s, Becker’s, and McNamara’s agreements with Coalition, as a result of the individual defendants conceiving of and developing Apollo while employed at Coalition and using Coalition facilities and resources to do so. 113. As a result of this actual controversy, Coalition seeks a declaration from this Court that Loeber, Becker, and McNamara have violated their respective contracts with Coalition and that Coalition owns all right, title, and interest in Apollo. PRAYER FOR RELIEF WHEREFORE, Plaintiff Coalition respectfully requests the following relief: 1. Judgment in favor of Coalition and against Defendants on each cause of action alleged herein; 2. All damages caused by Defendants’ unlawful actions in an amount to be determined at trial, such damages to include actual loss and unjust enrichment; 3. Exemplary and punitive damages as provided by law; 4. Disgorgement of all proceeds Defendants have received as a result of their misappropriation of Coalition’s confidential, proprietary, and/or trade secret information; 5. A declaration of Coalition’s rights and obligations pursuant to its employment contracts with the Defendants Loeber, Becker, and McNamara; 6. Specific performance by Defendants Loeber, Becker, and McNamara of their contractual obligations, including specific performance of their obligation under their TAAs with Coalition to assign all right and title in Apollo to Coalition; 7. Pre-judgment and post-judgment interest on awarded damages; 8. Attorneys’ fees, costs, and expenses incurred by Coalition in investigating this misconduct and litigating this action; 9. Injunctive relief pursuant to which Defendants, and each of them, and their employees or representatives, and all persons acting in concert or participating with them are ordered, enjoined, or restrained, directly or indirectly, by any means whatsoever, from: i) Operating Apollo Brokers; 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 26 VERIFIED COMPLAINT ii) From making, testing, using, promoting, offering to sell, marketing, commercializing, or selling any products that utilize, embody, or were developed, in whole or in part, with the benefit or use of any of Coalition’s confidential, proprietary, and/or trade secret information; and iii) From further interfering with, or encouraging the breach of, Coalition’s contractual relationships with its employees and customers; 10. Injunctive relief pursuant to which Defendants, and each of them, and their employees or representatives, and all persons acting in concert or participating with them are ordered: i) To preserve and return to Coalition: (a) all copies of all Coalition documents and information, including without limitation any trade secret and other confidential or proprietary information acquired from Coalition; and (b) all copies of all materials (in paper, electronic, or any other form) containing any, or derived from any, Coalition information, trade secrets, or other confidential or proprietary information; and ii) To identify each individual and entity to whom or to which Defendants and any of them, and their employees or representatives, and all persons acting in concert or participating with them, disclosed: (a) any Coalition documents or other materials (in paper, electronic, or any other form); and (b) any of Coalition’s confidential, proprietary, and/or trade secret information; and iii) To turn over to the Court any proceeds Defendants have received from the misappropriation of Coalition confidential, proprietary, and/or trade secret information, which proceeds would be held in constructive trust until the conclusion of this litigation; and 11. Granting Coalition such other and further relief as this Court deems just and proper. JURY DEMAND Coalition demands a trial by jury on all issues so triable. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 27 VERIFIED COMPLAINT 1383260.v1 Dated: April 27, 2020 By: KEKER, VAN NEST & PETERS LLP /s/ Brian L. Ferrall BRIAN L. FERRALL REID P. MULLEN BENJAMIN D. ROTHSTEIN MORGAN E. SHARMA VICTOR H. YU Attorneys for Plaintiff COALITION INC. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 30 31 32 33 VERIFIED COMPLAINT VERIFICATION I, Joshua Motta, declare: I am the Chief Executive Officer of Coalition, Inc., the Plaintiff in this action, and I am authorized to make this verification on its behalf. I have read the foregoing Complaint and know its contents. I am informed and believe and on that ground allege that the matters stated in the foregoing Complaint are true. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed on April 27, 2020 in San Francisco, California. JOSHUA MOTTA Exhibit A ACTIVE/89918392.2 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT The following confirms and memorializes an agreement that Crucible Risk, Inc., a Delaware corporation (the “Company”) and I (______________________) have had since the commencement of my employment (which term, for purposes of this agreement, shall be deemed to include any relationship of service to the Company that I may have had prior to actually becoming an employee) with the Company in any capacity and that is and has been a material part of the consideration for my employment by Company: 1. I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict with this Agreement or my employment with Company. I will not violate any agreement with or rights of any third party or, except as expressly authorized by Company in writing hereafter, use or disclose my own or any third party’s confidential information or intellectual property when acting within the scope of my employment or otherwise on behalf of Company. Further, I have not retained anything containing any confidential information of a prior employer or other third party, whether or not created by me. 2. Company shall own all right, title and interest (including patent rights, copyrights, trade secret rights, mask work rights, sui generis database rights and all other intellectual property rights of any sort throughout the world) relating to any and all inventions (whether or not patentable), works of authorship, mask works, designs, know-how, ideas and information made or conceived or reduced to practice, in whole or in part, by me during the term of my employment with Company to and only to the fullest extent allowed by California Labor Code Section 2870 (which is attached as Appendix A) (collectively “Inventions”) and I will promptly disclose all Inventions to Company. Without disclosing any third party confidential information, I will also disclose anything I believe is excluded by Section 2870 so that the Company can make an independent assessment. I hereby make all assignments necessary to accomplish the foregoing. I shall further assist Company, at Company’s expense, to further evidence, record and perfect such assignments, and to perfect, obtain, maintain, enforce, and defend any rights specified to be so owned or assigned. I hereby irrevocably designate and appoint Company as my agent and attorney-in-fact, coupled with an interest and with full power of substitution, to act for and in my behalf to execute and file any document and to do all other lawfully permitted acts to further the purposes of the foregoing with the same legal force and effect as if executed by me. If I wish to clarify that something created by me prior to my employment that relates to Company’s actual or proposed business is not within the scope of the foregoing assignment, I have listed it on Appendix B in a manner that does not violate any third party rights or disclose any confidential information. Without limiting Section 1 or Company’s other rights and remedies, if, when acting within the scope of my employment or otherwise on behalf of Company, I use or (except pursuant to this Section 2) disclose my own or any third party’s confidential information or intellectual property (or if any Invention cannot be fully made, used, reproduced, distributed and otherwise exploited without using or violating the foregoing), Company will have and I hereby grant Company a perpetual, irrevocable, worldwide royalty-free, non-exclusive, sublicensable right and license to exploit and exercise all such confidential information and intellectual property rights. John Loeber ACTIVE/89918392.2 2 3. To the extent allowed by law, paragraph 2 includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as “moral rights,” “artist’s rights,” “droit moral,” or the like (collectively “Moral Rights”). To the extent I retain any such Moral Rights under applicable law, I hereby ratify and consent to any action that may be taken with respect to such Moral Rights by or authorized by Company and agree not to assert any Moral Rights with respect thereto. I will confirm any such ratifications, consents and agreements from time to time as requested by Company. 4. I agree that all Inventions and all other business, technical and financial information (including, without limitation, the identity of and information relating to customers or employees) I develop, learn or obtain during the term of my employment that relate to Company or the business or demonstrably anticipated business of Company or that are received by or for Company in confidence, constitute “Proprietary Information.” I will hold in confidence and not disclose or, except within the scope of my employment, use any Proprietary Information. However, I shall not be obligated under this paragraph with respect to information I can document is or becomes readily publicly available without restriction through no fault of mine. Upon termination of my employment, I will promptly return to Company all items containing or embodying Proprietary Information (including all copies), except that I may keep my personal copies of (i) my compensation records, (ii) materials distributed to shareholders generally and (iii) this Agreement. I also recognize and agree that I have no expectation of privacy with respect to Company’s telecommunications, networking or information processing systems (including, without limitation, stored computer files, email messages and voice messages) and that my activity and any files or messages on or using any of those systems may be monitored at any time without notice. 5. Until one year after the term of my employment, I will not encourage or solicit any employee or consultant of Company to leave Company for any reason (except for the bona fide firing of Company personnel within the scope of my employment). 6. I agree that during the term of my employment with Company (whether or not during business hours), I will not engage in any activity that is in any way competitive with the business or demonstrably anticipated business of Company, and I will not assist any other person or organization in competing or in preparing to compete with any business or demonstrably anticipated business of Company. 7. I agree that this Agreement is not an employment contract for any particular term and that I have the right to resign and Company has the right to terminate my employment at will, at any time, for any or no reason, with or without cause. In addition, this Agreement does not purport to set forth all of the terms and conditions of my employment, and, as an employee of Company, I have obligations to Company which are not set forth in this Agreement. However, the terms of this Agreement govern over any inconsistent terms and can only be changed by a subsequent written agreement signed by the President of Company. 8. I agree that my obligations under paragraphs 2, 3, 4 and 5 of this Agreement shall continue in effect after termination of my employment, regardless of the reason or reasons for termination, and whether such termination is voluntary or involuntary on my part, and that Company is entitled to communicate my obligations under this Agreement to any future ACTIVE/89918392.2 3 employer or potential employer of mine. My obligations under paragraphs 2, 3 and 4 also shall be binding upon my heirs, executors, assigns, and administrators and shall inure to the benefit of Company, it subsidiaries, successors and assigns. 9. Any dispute in the meaning, effect or validity of this Agreement shall be resolved in accordance with the laws of the State of California without regard to the conflict of laws provisions thereof. I further agree that if one or more provisions of this Agreement are held to be illegal or unenforceable under applicable California law, such illegal or unenforceable portion(s) shall be limited or excluded from this Agreement to the minimum extent required so that this Agreement shall otherwise remain in full force and effect and enforceable in accordance with its terms. This Agreement is fully assignable and transferable by Company, but any purported assignment or transfer by me is void. I also understand that any breach of this Agreement will cause irreparable harm to Company for which damages would not be an adequate remedy, and, therefore, Company will be entitled to injunctive relief with respect thereto in addition to any other remedies and without any requirement to post bond. 10. I acknowledge receipt of the following notice under 18 U.S.C § 1833(b)(1): “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.” [Remainder of Page Intentionally Left Blank] ACTIVE/89918392.2 4 I HAVE READ THIS AGREEMENT CAREFULLY AND I UNDERSTAND AND ACCEPT THE OBLIGATIONS WHICH IT IMPOSES UPON ME WITHOUT RESERVATION. NO PROMISES OR REPRESENTATIONS HAVE BEEN MADE TO ME TO INDUCE ME TO SIGN THIS AGREEMENT. I SIGN THIS AGREEMENT VOLUNTARILY AND FREELY, IN DUPLICATE, WITH THE UNDERSTANDING THAT THE COMPANY WILL RETAIN ONE COUNTERPART AND THE OTHER COUNTERPART WILL BE RETAINED BY ME. Effective: _____________, 20___ Employee Signature Name (Printed) Accepted and Agreed to: Crucible Risk, Inc. By Name Title Co-founder, CEO Joshua Motta 1703/12 John Loeber ACTIVE/89918392.2 APPENDIX A California Labor Code Section 2870. Application of provision providing that employee shall assign or offer to assign rights in invention to employer. (a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either: (1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or (2) Result from any work performed by the employee for his employer. (b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable. ACTIVE/89918392.2 APPENDIX B PRIOR MATTER Exhibit B ACTIVE/89918392.2 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT The following confirms and memorializes an agreement that Crucible Risk, Inc., a Delaware corporation (the “Company”) and I (______________________) have had since the commencement of my employment (which term, for purposes of this agreement, shall be deemed to include any relationship of service to the Company that I may have had prior to actually becoming an employee) with the Company in any capacity and that is and has been a material part of the consideration for my employment by Company: 1. I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict with this Agreement or my employment with Company. I will not violate any agreement with or rights of any third party or, except as expressly authorized by Company in writing hereafter, use or disclose my own or any third party’s confidential information or intellectual property when acting within the scope of my employment or otherwise on behalf of Company. Further, I have not retained anything containing any confidential information of a prior employer or other third party, whether or not created by me. 2. Company shall own all right, title and interest (including patent rights, copyrights, trade secret rights, mask work rights, sui generis database rights and all other intellectual property rights of any sort throughout the world) relating to any and all inventions (whether or not patentable), works of authorship, mask works, designs, know-how, ideas and information made or conceived or reduced to practice, in whole or in part, by me during the term of my employment with Company to and only to the fullest extent allowed by California Labor Code Section 2870 (which is attached as Appendix A) (collectively “Inventions”) and I will promptly disclose all Inventions to Company. Without disclosing any third party confidential information, I will also disclose anything I believe is excluded by Section 2870 so that the Company can make an independent assessment. I hereby make all assignments necessary to accomplish the foregoing. I shall further assist Company, at Company’s expense, to further evidence, record and perfect such assignments, and to perfect, obtain, maintain, enforce, and defend any rights specified to be so owned or assigned. I hereby irrevocably designate and appoint Company as my agent and attorney-in-fact, coupled with an interest and with full power of substitution, to act for and in my behalf to execute and file any document and to do all other lawfully permitted acts to further the purposes of the foregoing with the same legal force and effect as if executed by me. If I wish to clarify that something created by me prior to my employment that relates to Company’s actual or proposed business is not within the scope of the foregoing assignment, I have listed it on Appendix B in a manner that does not violate any third party rights or disclose any confidential information. Without limiting Section 1 or Company’s other rights and remedies, if, when acting within the scope of my employment or otherwise on behalf of Company, I use or (except pursuant to this Section 2) disclose my own or any third party’s confidential information or intellectual property (or if any Invention cannot be fully made, used, reproduced, distributed and otherwise exploited without using or violating the foregoing), Company will have and I hereby grant Company a perpetual, irrevocable, worldwide royalty-free, non-exclusive, sublicensable right and license to exploit and exercise all such confidential information and intellectual property rights. Alex Becker ACTIVE/89918392.2 2 3. To the extent allowed by law, paragraph 2 includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as “moral rights,” “artist’s rights,” “droit moral,” or the like (collectively “Moral Rights”). To the extent I retain any such Moral Rights under applicable law, I hereby ratify and consent to any action that may be taken with respect to such Moral Rights by or authorized by Company and agree not to assert any Moral Rights with respect thereto. I will confirm any such ratifications, consents and agreements from time to time as requested by Company. 4. I agree that all Inventions and all other business, technical and financial information (including, without limitation, the identity of and information relating to customers or employees) I develop, learn or obtain during the term of my employment that relate to Company or the business or demonstrably anticipated business of Company or that are received by or for Company in confidence, constitute “Proprietary Information.” I will hold in confidence and not disclose or, except within the scope of my employment, use any Proprietary Information. However, I shall not be obligated under this paragraph with respect to information I can document is or becomes readily publicly available without restriction through no fault of mine. Upon termination of my employment, I will promptly return to Company all items containing or embodying Proprietary Information (including all copies), except that I may keep my personal copies of (i) my compensation records, (ii) materials distributed to shareholders generally and (iii) this Agreement. I also recognize and agree that I have no expectation of privacy with respect to Company’s telecommunications, networking or information processing systems (including, without limitation, stored computer files, email messages and voice messages) and that my activity and any files or messages on or using any of those systems may be monitored at any time without notice. 5. Until one year after the term of my employment, I will not encourage or solicit any employee or consultant of Company to leave Company for any reason (except for the bona fide firing of Company personnel within the scope of my employment). 6. I agree that during the term of my employment with Company (whether or not during business hours), I will not engage in any activity that is in any way competitive with the business or demonstrably anticipated business of Company, and I will not assist any other person or organization in competing or in preparing to compete with any business or demonstrably anticipated business of Company. 7. I agree that this Agreement is not an employment contract for any particular term and that I have the right to resign and Company has the right to terminate my employment at will, at any time, for any or no reason, with or without cause. In addition, this Agreement does not purport to set forth all of the terms and conditions of my employment, and, as an employee of Company, I have obligations to Company which are not set forth in this Agreement. However, the terms of this Agreement govern over any inconsistent terms and can only be changed by a subsequent written agreement signed by the President of Company. 8. I agree that my obligations under paragraphs 2, 3, 4 and 5 of this Agreement shall continue in effect after termination of my employment, regardless of the reason or reasons for termination, and whether such termination is voluntary or involuntary on my part, and that Company is entitled to communicate my obligations under this Agreement to any future ACTIVE/89918392.2 3 employer or potential employer of mine. My obligations under paragraphs 2, 3 and 4 also shall be binding upon my heirs, executors, assigns, and administrators and shall inure to the benefit of Company, it subsidiaries, successors and assigns. 9. Any dispute in the meaning, effect or validity of this Agreement shall be resolved in accordance with the laws of the State of California without regard to the conflict of laws provisions thereof. I further agree that if one or more provisions of this Agreement are held to be illegal or unenforceable under applicable California law, such illegal or unenforceable portion(s) shall be limited or excluded from this Agreement to the minimum extent required so that this Agreement shall otherwise remain in full force and effect and enforceable in accordance with its terms. This Agreement is fully assignable and transferable by Company, but any purported assignment or transfer by me is void. I also understand that any breach of this Agreement will cause irreparable harm to Company for which damages would not be an adequate remedy, and, therefore, Company will be entitled to injunctive relief with respect thereto in addition to any other remedies and without any requirement to post bond. 10. I acknowledge receipt of the following notice under 18 U.S.C § 1833(b)(1): “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.” [Remainder of Page Intentionally Left Blank] ACTIVE/89918392.2 4 I HAVE READ THIS AGREEMENT CAREFULLY AND I UNDERSTAND AND ACCEPT THE OBLIGATIONS WHICH IT IMPOSES UPON ME WITHOUT RESERVATION. NO PROMISES OR REPRESENTATIONS HAVE BEEN MADE TO ME TO INDUCE ME TO SIGN THIS AGREEMENT. I SIGN THIS AGREEMENT VOLUNTARILY AND FREELY, IN DUPLICATE, WITH THE UNDERSTANDING THAT THE COMPANY WILL RETAIN ONE COUNTERPART AND THE OTHER COUNTERPART WILL BE RETAINED BY ME. Effective: _____________, 20___ Employee Signature Name (Printed) Accepted and Agreed to: Crucible Risk, Inc. By Name Title Co-founder, CEO Joshua Motta 1703/12 Alex Becker ACTIVE/89918392.2 APPENDIX A California Labor Code Section 2870. Application of provision providing that employee shall assign or offer to assign rights in invention to employer. (a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either: (1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or (2) Result from any work performed by the employee for his employer. (b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable. ACTIVE/89918392.2 APPENDIX B PRIOR MATTER Exhibit C ACTIVE/89918392.2 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT The following confirms and memorializes an agreement that Crucible Risk, Inc., a Delaware corporation (the “Company”) and I (______________________) have had since the commencement of my employment (which term, for purposes of this agreement, shall be deemed to include any relationship of service to the Company that I may have had prior to actually becoming an employee) with the Company in any capacity and that is and has been a material part of the consideration for my employment by Company: 1. I have not entered into, and I agree I will not enter into, any agreement either written or oral in conflict with this Agreement or my employment with Company. I will not violate any agreement with or rights of any third party or, except as expressly authorized by Company in writing hereafter, use or disclose my own or any third party’s confidential information or intellectual property when acting within the scope of my employment or otherwise on behalf of Company. Further, I have not retained anything containing any confidential information of a prior employer or other third party, whether or not created by me. 2. Company shall own all right, title and interest (including patent rights, copyrights, trade secret rights, mask work rights, sui generis database rights and all other intellectual property rights of any sort throughout the world) relating to any and all inventions (whether or not patentable), works of authorship, mask works, designs, know-how, ideas and information made or conceived or reduced to practice, in whole or in part, by me during the term of my employment with Company to and only to the fullest extent allowed by California Labor Code Section 2870 (which is attached as Appendix A) (collectively “Inventions”) and I will promptly disclose all Inventions to Company. Without disclosing any third party confidential information, I will also disclose anything I believe is excluded by Section 2870 so that the Company can make an independent assessment. I hereby make all assignments necessary to accomplish the foregoing. I shall further assist Company, at Company’s expense, to further evidence, record and perfect such assignments, and to perfect, obtain, maintain, enforce, and defend any rights specified to be so owned or assigned. I hereby irrevocably designate and appoint Company as my agent and attorney-in-fact, coupled with an interest and with full power of substitution, to act for and in my behalf to execute and file any document and to do all other lawfully permitted acts to further the purposes of the foregoing with the same legal force and effect as if executed by me. If I wish to clarify that something created by me prior to my employment that relates to Company’s actual or proposed business is not within the scope of the foregoing assignment, I have listed it on Appendix B in a manner that does not violate any third party rights or disclose any confidential information. Without limiting Section 1 or Company’s other rights and remedies, if, when acting within the scope of my employment or otherwise on behalf of Company, I use or (except pursuant to this Section 2) disclose my own or any third party’s confidential information or intellectual property (or if any Invention cannot be fully made, used, reproduced, distributed and otherwise exploited without using or violating the foregoing), Company will have and I hereby grant Company a perpetual, irrevocable, worldwide royalty-free, non-exclusive, sublicensable right and license to exploit and exercise all such confidential information and intellectual property rights. J Shea McNamara ACTIVE/89918392.2 2 3. To the extent allowed by law, paragraph 2 includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as “moral rights,” “artist’s rights,” “droit moral,” or the like (collectively “Moral Rights”). To the extent I retain any such Moral Rights under applicable law, I hereby ratify and consent to any action that may be taken with respect to such Moral Rights by or authorized by Company and agree not to assert any Moral Rights with respect thereto. I will confirm any such ratifications, consents and agreements from time to time as requested by Company. 4. I agree that all Inventions and all other business, technical and financial information (including, without limitation, the identity of and information relating to customers or employees) I develop, learn or obtain during the term of my employment that relate to Company or the business or demonstrably anticipated business of Company or that are received by or for Company in confidence, constitute “Proprietary Information.” I will hold in confidence and not disclose or, except within the scope of my employment, use any Proprietary Information. However, I shall not be obligated under this paragraph with respect to information I can document is or becomes readily publicly available without restriction through no fault of mine. Upon termination of my employment, I will promptly return to Company all items containing or embodying Proprietary Information (including all copies), except that I may keep my personal copies of (i) my compensation records, (ii) materials distributed to shareholders generally and (iii) this Agreement. I also recognize and agree that I have no expectation of privacy with respect to Company’s telecommunications, networking or information processing systems (including, without limitation, stored computer files, email messages and voice messages) and that my activity and any files or messages on or using any of those systems may be monitored at any time without notice. 5. Until one year after the term of my employment, I will not encourage or solicit any employee or consultant of Company to leave Company for any reason (except for the bona fide firing of Company personnel within the scope of my employment). 6. I agree that during the term of my employment with Company (whether or not during business hours), I will not engage in any activity that is in any way competitive with the business or demonstrably anticipated business of Company, and I will not assist any other person or organization in competing or in preparing to compete with any business or demonstrably anticipated business of Company. 7. I agree that this Agreement is not an employment contract for any particular term and that I have the right to resign and Company has the right to terminate my employment at will, at any time, for any or no reason, with or without cause. In addition, this Agreement does not purport to set forth all of the terms and conditions of my employment, and, as an employee of Company, I have obligations to Company which are not set forth in this Agreement. However, the terms of this Agreement govern over any inconsistent terms and can only be changed by a subsequent written agreement signed by the President of Company. 8. I agree that my obligations under paragraphs 2, 3, 4 and 5 of this Agreement shall continue in effect after termination of my employment, regardless of the reason or reasons for termination, and whether such termination is voluntary or involuntary on my part, and that Company is entitled to communicate my obligations under this Agreement to any future ACTIVE/89918392.2 3 employer or potential employer of mine. My obligations under paragraphs 2, 3 and 4 also shall be binding upon my heirs, executors, assigns, and administrators and shall inure to the benefit of Company, it subsidiaries, successors and assigns. 9. Any dispute in the meaning, effect or validity of this Agreement shall be resolved in accordance with the laws of the State of California without regard to the conflict of laws provisions thereof. I further agree that if one or more provisions of this Agreement are held to be illegal or unenforceable under applicable California law, such illegal or unenforceable portion(s) shall be limited or excluded from this Agreement to the minimum extent required so that this Agreement shall otherwise remain in full force and effect and enforceable in accordance with its terms. This Agreement is fully assignable and transferable by Company, but any purported assignment or transfer by me is void. I also understand that any breach of this Agreement will cause irreparable harm to Company for which damages would not be an adequate remedy, and, therefore, Company will be entitled to injunctive relief with respect thereto in addition to any other remedies and without any requirement to post bond. 10. I acknowledge receipt of the following notice under 18 U.S.C § 1833(b)(1): “An individual shall not be held criminally or civilly liable under any Federal or State trade secret law for the disclosure of a trade secret that (A) is made (i) in confidence to a Federal, State, or local government official, either directly or indirectly, or to an attorney; and (ii) solely for the purpose of reporting or investigating a suspected violation of law; or (B) is made in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal.” [Remainder of Page Intentionally Left Blank] ACTIVE/89918392.2 4 I HAVE READ THIS AGREEMENT CAREFULLY AND I UNDERSTAND AND ACCEPT THE OBLIGATIONS WHICH IT IMPOSES UPON ME WITHOUT RESERVATION. NO PROMISES OR REPRESENTATIONS HAVE BEEN MADE TO ME TO INDUCE ME TO SIGN THIS AGREEMENT. I SIGN THIS AGREEMENT VOLUNTARILY AND FREELY, IN DUPLICATE, WITH THE UNDERSTANDING THAT THE COMPANY WILL RETAIN ONE COUNTERPART AND THE OTHER COUNTERPART WILL BE RETAINED BY ME. Effective: _____________, 20___ Employee Signature Name (Printed) Accepted and Agreed to: Crucible Risk, Inc. By Name Title Co-founder, CEO Joshua Motta 1703/12 J. Shea McNamara ACTIVE/89918392.2 APPENDIX A California Labor Code Section 2870. Application of provision providing that employee shall assign or offer to assign rights in invention to employer. (a) Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either: (1) Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or (2) Result from any work performed by the employee for his employer. (b) To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable. ACTIVE/89918392.2 APPENDIX B PRIOR MATTER Exhibit D ACTIVE/89918453.3 TECHNOLOGY ASSIGNMENT AGREEMENT This Agreement is entered into as of ________ __, 2017 between Crucible Risk, Inc., a Delaware corporation (the “Company”), and John Loeber (“Developer”). The assignment and stock issuance hereunder is intended to qualify for tax-free treatment under Internal Revenue Code Section 351. 1. Assignment. Developer hereby assigns to the Company exclusively throughout the world all right, title and interest (whether or not now existing) in (i) the subject matter referred to in Exhibit A (“Technology”), (ii) all precursors, portions and work in progress with respect thereto and all inventions, works of authorship, mask works, technology, information, know-how, materials and tools relating thereto or to the development, production, use, support or maintenance thereof and (iii) all copyrights, patent rights, trade secret rights, trademark rights, mask works rights, sui generis database rights and other intellectual property rights and all business, contract rights and goodwill in, incorporated or embodied in, used to develop or produce or use, or related to any of the foregoing ((i), (ii) and (iii) are collectively “Intellectual Property”). 2. Compensation. The Company agrees to provide to Developer shares of common stock of the Company on the date of this Agreement pursuant to the provisions of a Stock Purchase Agreement of even date herewith between the Company and Developer. Such shares shall be the only consideration required of the Company with respect to the subject matter of this Agreement. 3. Further Assurances; Moral Rights; Competition; Marketing. 3.1 Developer agrees to assist the Company in every proper way to evidence, record and perfect the Section 1 assignment and to apply for and obtain recordation of and from time to time secure, enforce, maintain and defend the assigned rights. If the Company is unable for any reason whatsoever to secure the Developer’s signature to any document requested by the Company under this Section 3.1, Developer hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Developer’s agents and attorneys-in-fact, coupled with an interest and with full power of substitution, to act for and on Developer’s behalf and instead of Developer, to execute and file any such document or documents and to do all other lawfully permitted acts to further the purposes of the foregoing with the same legal force and effect as if executed by Developer. 3.2 To the extent allowed by law, Section 1 includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as “moral rights,” “artist’s rights,” “droit moral,” or the like (collectively “Moral Rights”). To the extent Developer retains any such Moral Rights under applicable law, Developer hereby ratifies and consents to, and provides all necessary ratifications of and consents to, any action that may be taken with respect to such Moral Rights by, or authorized by, the Company; Developer agrees not to assert any Moral Rights with respect thereto. Developer will confirm any such ratifications, consents and agreements from time to time as requested by the Company. ACTIVE/89918453.3 2 4. Confidential Information. Developer will not use or disclose anything assigned to the Company hereunder or any other technical or business information or plans of the Company, except to the extent Developer (i) can document that it is generally available (through no fault of Developer) for use and disclosure by the general public without any charge, license or restriction, or (ii) is permitted to use or disclose such information or plans pursuant to the Proprietary Information and Inventions Agreement (or Consulting Agreement, as applicable) by and between Developer and the Company of even date herewith. Developer recognizes and agrees that there is no adequate remedy at law for a breach of this Section 4, that such a breach would irreparably harm the Company and that the Company is entitled to equitable relief (including, without limitation, injunctive relief) with respect to any such breach or potential breach in addition to any other remedies and without any requirement to post bond. 5. Warranty. Developer represents and warrants to the Company that the Developer (i) was the sole owner (other than the Company) of all rights, title and interest in the Intellectual Property and the Technology, (ii) has not assigned, transferred, licensed, pledged or otherwise encumbered any Intellectual Property or the Technology or agreed to do so, (iii) has full power and authority to enter into this Agreement and to make the assignment as provided in Section 1, (iv) is not aware of any violation, infringement or misappropriation of any third party’s rights (or any claim thereof) by or in connection with the Intellectual Property or the Technology, (v) was not acting within the scope of employment by any third party when conceiving, creating or otherwise performing any activity with respect to anything purportedly assigned in Section 1 and (iv) is not aware of any questions or challenges with respect to the patentability or validity of any claims of any existing patents or patent applications relating to the Intellectual Property. 6. Miscellaneous. This Agreement is not assignable or transferable by Developer without the prior written consent of the Company; any attempt to do so shall be void. Company may freely transfer and assign this Agreement. Any notice, report, approval or consent required or permitted hereunder shall be in writing and will be deemed to have been duly given if delivered personally or mailed by first-class, registered or certified U.S. mail, postage prepaid to the respective addresses of the parties as set forth below (or such other address as a party may designate by ten (10) days notice). No failure to exercise, and no delay in exercising, on the part of either party, any privilege, any power or any rights hereunder will operate as a waiver thereof, nor will any single or partial exercise of any right or power hereunder preclude further exercise of any other right hereunder. If any provision of this Agreement shall be adjudged by any court of competent jurisdiction to be unenforceable or invalid, that provision shall be limited or eliminated to the minimum extent necessary so that this Agreement shall otherwise remain in full force and effect and enforceable. This Agreement shall be deemed to have been made in, and shall be construed pursuant to the laws of the State of California and the United States without regard to conflicts of laws provisions thereof. The prevailing party in any action to enforce this Agreement shall be entitled to recover costs and expenses including, without limitation, attorneys’ fees. The terms of this Agreement are confidential to the Company and no press release or other written or oral disclosure of any nature regarding the compensation terms of this Agreement shall be made by Developer without the Company’s prior written approval; however, approval for such disclosure shall be deemed given to the extent such disclosure is required to comply with governmental rules. Any waivers or amendments shall be effective only if made in writing and signed by a representative of the respective parties ACTIVE/89918453.3 3 authorized to bind the parties. Both parties agree that this Agreement is the complete and exclusive statement of the mutual understanding of the parties and supersedes and cancels all previous written and oral agreements and communications relating to the subject matter of this Agreement. SIGNATURE PAGE TO TECHNOLOGY ASSIGNMENT AGREEMENT IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above. CRUCIBLE RISK, INC. By: Joshua Motta, President Address: 590 Pacific Ave. San Francisco, CA 94133 DEVELOPER By: John Loeber Address: _____________________ _____________________ _____________________ San Francisco, CA 94108 525 Stockton St. Apt 404 ACTIVE/89918453.3 EXHIBIT A All technology, know-how, information, intellectual property and other materials for or relevant to cyber liability insurance, including without limitation, all business plans, technical plans, specifications, templates, demonstration versions, equipment, software, devices, methods, apparatus, product designs, and trademarks or logos relevant to the foregoing. Exhibit E ACTIVE/89918451.3 TECHNOLOGY ASSIGNMENT AGREEMENT This Agreement is entered into as of ________ __, 2017 between Crucible Risk, Inc., a Delaware corporation (the “Company”), and Alex Becker (“Developer”). The assignment and stock issuance hereunder is intended to qualify for tax-free treatment under Internal Revenue Code Section 351. 1. Assignment. Developer hereby assigns to the Company exclusively throughout the world all right, title and interest (whether or not now existing) in (i) the subject matter referred to in Exhibit A (“Technology”), (ii) all precursors, portions and work in progress with respect thereto and all inventions, works of authorship, mask works, technology, information, know-how, materials and tools relating thereto or to the development, production, use, support or maintenance thereof and (iii) all copyrights, patent rights, trade secret rights, trademark rights, mask works rights, sui generis database rights and other intellectual property rights and all business, contract rights and goodwill in, incorporated or embodied in, used to develop or produce or use, or related to any of the foregoing ((i), (ii) and (iii) are collectively “Intellectual Property”). 2. Compensation. The Company agrees to provide to Developer shares of common stock of the Company on the date of this Agreement pursuant to the provisions of a Stock Purchase Agreement of even date herewith between the Company and Developer. Such shares shall be the only consideration required of the Company with respect to the subject matter of this Agreement. 3. Further Assurances; Moral Rights; Competition; Marketing. 3.1 Developer agrees to assist the Company in every proper way to evidence, record and perfect the Section 1 assignment and to apply for and obtain recordation of and from time to time secure, enforce, maintain and defend the assigned rights. If the Company is unable for any reason whatsoever to secure the Developer’s signature to any document requested by the Company under this Section 3.1, Developer hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Developer’s agents and attorneys-in-fact, coupled with an interest and with full power of substitution, to act for and on Developer’s behalf and instead of Developer, to execute and file any such document or documents and to do all other lawfully permitted acts to further the purposes of the foregoing with the same legal force and effect as if executed by Developer. 3.2 To the extent allowed by law, Section 1 includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as “moral rights,” “artist’s rights,” “droit moral,” or the like (collectively “Moral Rights”). To the extent Developer retains any such Moral Rights under applicable law, Developer hereby ratifies and consents to, and provides all necessary ratifications of and consents to, any action that may be taken with respect to such Moral Rights by, or authorized by, the Company; Developer agrees not to assert any Moral Rights with respect thereto. Developer will confirm any such ratifications, consents and agreements from time to time as requested by the Company. ACTIVE/89918451.3 2 4. Confidential Information. Developer will not use or disclose anything assigned to the Company hereunder or any other technical or business information or plans of the Company, except to the extent Developer (i) can document that it is generally available (through no fault of Developer) for use and disclosure by the general public without any charge, license or restriction, or (ii) is permitted to use or disclose such information or plans pursuant to the Proprietary Information and Inventions Agreement (or Consulting Agreement, as applicable) by and between Developer and the Company of even date herewith. Developer recognizes and agrees that there is no adequate remedy at law for a breach of this Section 4, that such a breach would irreparably harm the Company and that the Company is entitled to equitable relief (including, without limitation, injunctive relief) with respect to any such breach or potential breach in addition to any other remedies and without any requirement to post bond. 5. Warranty. Developer represents and warrants to the Company that the Developer (i) was the sole owner (other than the Company) of all rights, title and interest in the Intellectual Property and the Technology, (ii) has not assigned, transferred, licensed, pledged or otherwise encumbered any Intellectual Property or the Technology or agreed to do so, (iii) has full power and authority to enter into this Agreement and to make the assignment as provided in Section 1, (iv) is not aware of any violation, infringement or misappropriation of any third party’s rights (or any claim thereof) by or in connection with the Intellectual Property or the Technology, (v) was not acting within the scope of employment by any third party when conceiving, creating or otherwise performing any activity with respect to anything purportedly assigned in Section 1 and (iv) is not aware of any questions or challenges with respect to the patentability or validity of any claims of any existing patents or patent applications relating to the Intellectual Property. 6. Miscellaneous. This Agreement is not assignable or transferable by Developer without the prior written consent of the Company; any attempt to do so shall be void. Company may freely transfer and assign this Agreement. Any notice, report, approval or consent required or permitted hereunder shall be in writing and will be deemed to have been duly given if delivered personally or mailed by first-class, registered or certified U.S. mail, postage prepaid to the respective addresses of the parties as set forth below (or such other address as a party may designate by ten (10) days notice). No failure to exercise, and no delay in exercising, on the part of either party, any privilege, any power or any rights hereunder will operate as a waiver thereof, nor will any single or partial exercise of any right or power hereunder preclude further exercise of any other right hereunder. If any provision of this Agreement shall be adjudged by any court of competent jurisdiction to be unenforceable or invalid, that provision shall be limited or eliminated to the minimum extent necessary so that this Agreement shall otherwise remain in full force and effect and enforceable. This Agreement shall be deemed to have been made in, and shall be construed pursuant to the laws of the State of California and the United States without regard to conflicts of laws provisions thereof. The prevailing party in any action to enforce this Agreement shall be entitled to recover costs and expenses including, without limitation, attorneys’ fees. The terms of this Agreement are confidential to the Company and no press release or other written or oral disclosure of any nature regarding the compensation terms of this Agreement shall be made by Developer without the Company’s prior written approval; however, approval for such disclosure shall be deemed given to the extent such disclosure is required to comply with governmental rules. Any waivers or amendments shall be effective only if made in writing and signed by a representative of the respective parties ACTIVE/89918451.3 3 authorized to bind the parties. Both parties agree that this Agreement is the complete and exclusive statement of the mutual understanding of the parties and supersedes and cancels all previous written and oral agreements and communications relating to the subject matter of this Agreement. SIGNATURE PAGE TO TECHNOLOGY ASSIGNMENT AGREEMENT IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above. CRUCIBLE RISK, INC. By: Joshua Motta, President Address: 590 Pacific Ave. San Francisco, CA 94133 DEVELOPER By: Alex Becker Address: _____________________ _____________________ _____________________ Mountain View, CA 94043 1973 Colony St ACTIVE/89918451.3 EXHIBIT A All technology, know-how, information, intellectual property and other materials for or relevant to cyber liability insurance, including without limitation, all business plans, technical plans, specifications, templates, demonstration versions, equipment, software, devices, methods, apparatus, product designs, trademarks or logos relevant to the foregoing. Exhibit F ACTIVE/89918445.3 TECHNOLOGY ASSIGNMENT AGREEMENT This Agreement is entered into as of ________ __, 2017 between Crucible Risk, Inc., a Delaware corporation (the “Company”), and Shea McNamara (“Developer”). The assignment and stock issuance hereunder is intended to qualify for tax-free treatment under Internal Revenue Code Section 351. 1. Assignment. Developer hereby assigns to the Company exclusively throughout the world all right, title and interest (whether or not now existing) in (i) the subject matter referred to in Exhibit A (“Technology”), (ii) all precursors, portions and work in progress with respect thereto and all inventions, works of authorship, mask works, technology, information, know-how, materials and tools relating thereto or to the development, production, use, support or maintenance thereof and (iii) all copyrights, patent rights, trade secret rights, trademark rights, mask works rights, sui generis database rights and other intellectual property rights and all business, contract rights and goodwill in, incorporated or embodied in, used to develop or produce or use, or related to any of the foregoing ((i), (ii) and (iii) are collectively “Intellectual Property”). 2. Compensation. The Company agrees to provide to Developer shares of common stock of the Company on the date of this Agreement pursuant to the provisions of a Stock Purchase Agreement of even date herewith between the Company and Developer. Such shares shall be the only consideration required of the Company with respect to the subject matter of this Agreement. 3. Further Assurances; Moral Rights; Competition; Marketing. 3.1 Developer agrees to assist the Company in every proper way to evidence, record and perfect the Section 1 assignment and to apply for and obtain recordation of and from time to time secure, enforce, maintain and defend the assigned rights. If the Company is unable for any reason whatsoever to secure the Developer’s signature to any document requested by the Company under this Section 3.1, Developer hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Developer’s agents and attorneys-in-fact, coupled with an interest and with full power of substitution, to act for and on Developer’s behalf and instead of Developer, to execute and file any such document or documents and to do all other lawfully permitted acts to further the purposes of the foregoing with the same legal force and effect as if executed by Developer. 3.2 To the extent allowed by law, Section 1 includes all rights of paternity, integrity, disclosure and withdrawal and any other rights that may be known as or referred to as “moral rights,” “artist’s rights,” “droit moral,” or the like (collectively “Moral Rights”). To the extent Developer retains any such Moral Rights under applicable law, Developer hereby ratifies and consents to, and provides all necessary ratifications of and consents to, any action that may be taken with respect to such Moral Rights by, or authorized by, the Company; Developer agrees not to assert any Moral Rights with respect thereto. Developer will confirm any such ratifications, consents and agreements from time to time as requested by the Company. ACTIVE/89918445.3 2 4. Confidential Information. Developer will not use or disclose anything assigned to the Company hereunder or any other technical or business information or plans of the Company, except to the extent Developer (i) can document that it is generally available (through no fault of Developer) for use and disclosure by the general public without any charge, license or restriction, or (ii) is permitted to use or disclose such information or plans pursuant to the Proprietary Information and Inventions Agreement (or Consulting Agreement, as applicable) by and between Developer and the Company of even date herewith. Developer recognizes and agrees that there is no adequate remedy at law for a breach of this Section 4, that such a breach would irreparably harm the Company and that the Company is entitled to equitable relief (including, without limitation, injunctive relief) with respect to any such breach or potential breach in addition to any other remedies and without any requirement to post bond. 5. Warranty. Developer represents and warrants to the Company that the Developer (i) was the sole owner (other than the Company) of all rights, title and interest in the Intellectual Property and the Technology, (ii) has not assigned, transferred, licensed, pledged or otherwise encumbered any Intellectual Property or the Technology or agreed to do so, (iii) has full power and authority to enter into this Agreement and to make the assignment as provided in Section 1, (iv) is not aware of any violation, infringement or misappropriation of any third party’s rights (or any claim thereof) by or in connection with the Intellectual Property or the Technology, (v) was not acting within the scope of employment by any third party when conceiving, creating or otherwise performing any activity with respect to anything purportedly assigned in Section 1 and (iv) is not aware of any questions or challenges with respect to the patentability or validity of any claims of any existing patents or patent applications relating to the Intellectual Property. 6. Miscellaneous. This Agreement is not assignable or transferable by Developer without the prior written consent of the Company; any attempt to do so shall be void. Company may freely transfer and assign this Agreement. Any notice, report, approval or consent required or permitted hereunder shall be in writing and will be deemed to have been duly given if delivered personally or mailed by first-class, registered or certified U.S. mail, postage prepaid to the respective addresses of the parties as set forth below (or such other address as a party may designate by ten (10) days notice). No failure to exercise, and no delay in exercising, on the part of either party, any privilege, any power or any rights hereunder will operate as a waiver thereof, nor will any single or partial exercise of any right or power hereunder preclude further exercise of any other right hereunder. If any provision of this Agreement shall be adjudged by any court of competent jurisdiction to be unenforceable or invalid, that provision shall be limited or eliminated to the minimum extent necessary so that this Agreement shall otherwise remain in full force and effect and enforceable. This Agreement shall be deemed to have been made in, and shall be construed pursuant to the laws of the State of California and the United States without regard to conflicts of laws provisions thereof. The prevailing party in any action to enforce this Agreement shall be entitled to recover costs and expenses including, without limitation, attorneys’ fees. The terms of this Agreement are confidential to the Company and no press release or other written or oral disclosure of any nature regarding the compensation terms of this Agreement shall be made by Developer without the Company’s prior written approval; however, approval for such disclosure shall be deemed given to the extent such disclosure is required to comply with governmental rules. Any waivers or amendments shall be effective only if made in writing and signed by a representative of the respective parties ACTIVE/89918445.3 3 authorized to bind the parties. Both parties agree that this Agreement is the complete and exclusive statement of the mutual understanding of the parties and supersedes and cancels all previous written and oral agreements and communications relating to the subject matter of this Agreement. SIGNATURE PAGE TO TECHNOLOGY ASSIGNMENT AGREEMENT IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year first indicated above. CRUCIBLE RISK, INC. By: Joshua Motta, President Address: 590 Pacific Ave. San Francisco, CA 94133 DEVELOPER By: Shea McNamara Address: _____________________ _____________________ _____________________ Louisville, CO 80027 541 W Cedar Pl ACTIVE/89918445.3 EXHIBIT A All technology, know-how, information, intellectual property and other materials for or relevant to cyber liability insurance, including without limitation, all business plans, technical plans, specifications, templates, demonstration versions, equipment, software, devices, methods, apparatus, product designs, and trademarks or logos relevant to the foregoing. EXHIBIT K EXHIBIT L Embroker Insurance Services LLC 24 Shotwell Street San Francisco CA 94103 embroker.com Embroker for Startups Management Liability Program IMPORTANT NOTICE: 1. The insurance policy that you have purchased is being issued by an insurer that is not licensed by the State of California. These companies are called “nonadmitted” or “surplus line” insurers. 2. The insurer is not subject to the financial solvency regulation and enforcement that apply to California licensed insurers. 3. The insurer does not participate in any of the insurance guarantee funds created by California law. Therefore, these funds will not pay your claims or protect your assets if the insurer becomes insolvent and is unable to make payments as promised. 4. The insurer should be licensed either as a foreign insurer in another state in the United States or as a non-United States (alien) insurer. You should ask questions of your insurance agent, broker, or “surplus line” broker or contact the California Department of Insurance at the toll-free number 1-800-927-4357 or internet website www.insurance.ca.gov. Ask whether or not the insurer is licensed as a foreign or non-United States (alien) insurer and for additional information about the insurer. You may also visit the NAIC’s internet website at www.naic.org. The NAIC-the National Association of Insurance Commissioners-is the regulatory support organization created and governed by the chief insurance regulators in the United States. 5. Foreign insurers should be licensed by a state in the United States and you may contact that state’s department of insurance to obtain more information about that insurer. You can find a link to each state from this NAIC internet website: https://naic.org/state_web_map.htm. 6. For non-United States (alien) insurers, the insurer should be licensed by a country outside of the United States and should be on the NAIC’s International Insurers Department (IID) listing of approved nonadmitted non-United States insurers. Ask your agent, broker, or “surplus line” broker to obtain more information about that insurer. 7. California maintains a “List of Approved Surplus Line Insurers (LASLI).” Ask your agent or broker if the insurer is on that list, or view that list at the internet website of the California Department of Insurance: www.insurance.ca.gov/01-consumers/120-company/07- lasli/lasli.cfm. 8. If you, as the applicant, required that the insurance policy you have purchased be effective immediately, either because existing coverage was going to lapse within two business days or because you were required to have coverage within two business days, and you did not receive this disclosure form and a request for your signature until after coverage became effective, you have the right to cancel this policy within five days of receiving this disclosure. If you cancel coverage, the premium will be prorated and any broker’s fee charged for this insurance will be returned to you. D-2 (Effective January 1, 2020) THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY. SOS CA 0616 Page 1 of 1 NOTICE OF SERVICE OF SUIT In the event you feel that we have failed to pay a claim according to the terms of the policy, you may start “suit” against us. We will obey the order of any Court of competent jurisdiction within the United States and will comply with all requirements necessary to give the Court jurisdiction, and all such matters shall be determined according to the law and practice of the Court. In any “suit” brought against us concerning your policy, we will abide by the final decision of the Court, including any appellate Court in the event of the appeal. Service of Suit may be made upon Clear Blue Specialty Insurance Company to our agent, C T Corporation System, 818 West Seventh Street - Suite 930, Los Angeles, California 90017. They are authorized and directed to accept Service of Suit on our behalf and/or provide written notice that we will appear in Court, if “suit” is instituted. Our agent so names is authorized as our true and lawful attorney for Service of Suit instituted by you, or on your behalf or on behalf of your beneficiary, in regard to your policy, and we have designated that such process should be mailed to Clear Blue Specialty Insurance Company at 200 South College Street, Suite 2250, Charlotte, NC 28202. All other terms, conditions and agreements remain unchanged. Policyholder Disclosure Notice of Terrorism Insurance Coverage For policies with no terrorism exclusion or sublimit. You are hereby notified that, under the Terrorism Risk Insurance Act (the “Act”), this policy makes available to you insurance for losses arising out of certain acts of terrorism. Terrorism is defined as any act certified by the Secretary of the Treasury of the United States, to be an act of terrorism; to be a violent act or an act that is dangerous to human life, property or infrastructure; to have resulted in damage within the United States, or outside the United States in the case of an air carrier or vessel or the premises of a United States Mission; and to have been committed by an individual or individuals as part of an effort to coerce the civilian population of the United States or to influence the policy or affect the conduct of the United States Government by coercion. You should know that the insurance provided by your policy for losses caused by acts of terrorism is partially reimbursed by the United States under the formula set forth in the Act. Under this formula, the United States pays 85% of covered terrorism losses that exceed the statutorily established deductible to be paid by the insurance company providing the coverage. Beginning in 2016, the Federal share will be reduced by 1% per year until it reaches 80%, where it will remain. However, if aggregate insured losses attributable to terrorist acts certified under the Act exceed $100 billion in a calendar year, the Treasury shall not make any payment for any portion of the amount of such losses that exceeds $100 billion. 10-02-1281 (Ed. 03/2015) If aggregate insured losses attributable to terrorist acts certified under the Act exceed $100 billion in a calendar year and we have met our insurer deductible under the Act, we shall not be liable for the payment of any portion of the amount of such losses that exceeds $100 billion, and in such case insured losses up to that amount are subject to pro rata allocation in accordance with procedures established by the Secretary of the Treasury. The portion of your policy’s annual premium that is attributable to insurance for such acts of terrorism is: $ -0-. If you have any questions about this notice, please contact your agent or broker. 1 Embroker Startup Program Declarations Embroker Insurance Services LLC 24 Shotwell Street San Francisco CA 94103 embroker.com 1 EMB-001-DEC-18 2 Declarations NAMED INSURED Apollo Brokers, Inc. 401 Harrison Street Unit 15B San Francisco, CA 94105 INSURER Clear Blue Specialty Insurance Company 200 South College Street Suite 2250 Charlotte, NC 28202 BROKER OF RECORD Embroker Insurance Services LLC 24 Shotwell St San Francisco, CA 94103 1844 436 2765 Policy Policy Number AX01-1103-01 Policy Period 12:01 AM 03/06/2020 to 12:01 AM 03/06/2021 Coverage Directors & Officers Coverage Part Premiums POLICY LIMIT OF LIABILITY $1,000,000 POLICY PREMIUM $4,515.00 PREMIUM ATTRIBUTABLE TO TRIA No Additional Charge SURPLUS LINES TAXES $135.45 SURPLUS LINES FEES $11.29 TOTAL PREMIUM $4,661.74 Optional Extended Reporting Period Run-Off Coverage Period OPTIONAL PERIOD One (1) Year Three (3) Years Six (6) Years OPTIONAL PERIOD 100% 125% 150% OPTIONAL PERIOD One (1) Year Three (3) Years Six (6) Years OPTIONAL PERIOD 100% 125% 150% EMB-001-DEC-18 3 Declarations Directors & Officers Coverage Limits of Liability: $ 1,000,000 INSURING AGREEMENTS A. Non-Indemnifiable Directors & Officers Liability Coverage B. Indemnifiable Directors & Officers Coverage C. Entity Liability Coverage D. Employed Lawyers Coverage SUBLIMIT OF LIABILITY Derivative Costs Crisis Costs Additional Non-Indemnifiable Limit for Directors and Officers Liability Coverage COVERAGE LIMIT $ 1,000,000 $ 1,000,000 $ 1,000,000 $ 1,000,000 $500,000 $25,000 $1,000,000 RETENTIONS For each Claim covered under Insuring Agreement A. Non Indemnifiable Directors & Officers Liability For each Claim covered under Insuring Agreement B. Indemnifiable Directors and Officers Liability For each Claim covered under Insuring Agreement C. Insured Entity Liability $ 0 $ 10,000 $ 10,000 EMB-001-DEC-18 4 Declarations Notices to Insurer SEND NOTICE OF CLAIMS, LOSS, CIRCUMSTANCES TO: Embroker Insurance Services LLC 24 Shotwell St, San Francisco, CA 94103 claims@embroker.com (844) 436 2765 SEND ALL OTHER NOTICES AND INQUIRIES TO: Embroker Insurance Services LLC 24 Shotwell St, San Francisco, CA 94103 success@embroker.com (844) 436 2765 Policy Provision: This Policy Declarations with the Policy Jacket, Policy Forms and Endorsements issued to form a part thereof, completes the policy as numbered on this Declaration Pages. Whenever your policy is modified, you will receive a dated revision of the Policy Declarations. In Witness Whereof: In consideration of your paid premium, Clear Blue Specialty Insurance Company is proud to extend to you the coverage offered by this insurance contract. ___________________________________________ President, Clear Blue Specialty Insurance Company EMB-001-DEC-18 5 Declarations Forms list Cover Page Surplus Lines Disclosure Notice of Service of Suit SOS CA 0616 Policyholder Disclosure - Notice of Terrorism Insurance Coverage TRIA Declarations Page EMB-001-DEC-18 General Terms and Conditions EMB-001-T-18-GTC Directors, Officers and Organization Liability Policy EMB-001-T-18-DO General Terms and Conditions Policy General Terms and Conditions Embroker Insurance Services LLC 24 Shotwell Street San Francisco CA 94103 embroker.com General Terms and Conditions 2 Throughout this Policy, the words “you” and “your” refer to the Named Insured shown in the Declarations. The words “we”, “us” and “our” refer to the Company providing this insurance. Other words and phrases that appear in bold print have special meaning. Refer to the Definitions sections in this Policy. This Policy, including the Declarations, General Terms and Conditions, elected Coverage Part(s), written endorsements, and the Application shall constitute the entire agreement between us and you regarding the insurance provided hereunder. In consideration of the payment of the premium and in reliance upon the statements made and information furnished to us in the Application, and subject to all of the terms and conditions of this Policy (including all endorsements attached hereto), we and you agree as follows: I. Terms and Conditions Except for these General Terms and Conditions or unless stated to the contrary in any Coverage Part of this Policy, the terms, conditions and limitations of each Coverage Part shall apply only to that Coverage Part. If any provision in these General Terms and Conditions is inconsistent or in conflict with the terms, conditions and limitations of any Coverage Part, the terms, conditions and limitations of such Coverage Part shall control for purposes of that Coverage Part. Any defined term referenced in these General Terms and Conditions and also defined in a Coverage Part, shall, for purposes of coverage under that Coverage Part, have the meaning ascribed to it in that Coverage Part. II. Definitions A. “Application” means all written materials and information, including signed applications and any information attached thereto, incorporated therein, submitted, or made available by or on behalf of you to us in connection with underwriting of this Policy. The Application is deemed attached to and incorporated into this Policy. B. “Claim” shall have the meaning ascribed to it in the applicable Coverage Part. C. “Coverage Part” means each Coverage Part designated in the Declarations as a part of this Policy. D. “Defense Costs” shall have the meaning ascribed to it in the applicable Coverage Part. E. “Debtor in Possession” means a “debtor in possession” as defined in Chapter 11 of the United States Bankruptcy Code or any similar law. F. “Domestic Partner” means any natural person qualifying as a domestic partner or party to a civil union under the provisions of any applicable federal, state or local law or under the provisions of any formal program you establish. G. “Employee” means any natural person whose labor or service was, is or shall be engaged and directed by the Tech General Terms and Conditions 3 Startup, including fulltime, part-time, seasonal, leased and temporary employees. Employee also means any: 1. Volunteers or interns of the Tech Startup in their capacity as such; and 2. Individual who is an Independent Contractor while performing services on your behalf or at your direction. H. “ERISA” means the Employee Retirement Income Security Act of 1974 (as amended) and any rules or regulations promulgated thereunder or any similar law. I. “Executive” means any natural person who was, is or shall be a duly elected or appointed: 1. Director, officer, or member of the board of the managers or management committee of the Tech Startup; 2. In-house general counsel of the Tech Startup; 3. Any duly elected or appointed advisory, supervisory, or scientific advisory board member; 4. Stockholders’ representative; 5. Natural Person General Partner; and 6. Any foreign or functional equivalent of any of the foregoing. J. “Independent Contractor” means any natural person working for the Tech Startup in the capacity of an independent contractor while performing services on behalf of you or at your direction. K. “Insured” shall have the meaning ascribed to it in the applicable Coverage Part. L. “Interrelated Wrongful Acts” means Wrongful Acts that have as a common nexus any fact, circumstance, situation, event, transaction, cause or series of causally connected facts, circumstances, situations, events, transactions or causes. M. “Loss” shall have the meaning ascribed to it in the applicable Coverage Part. N. “Plan” means: 1. Any Employee Benefit Plan, Pension Benefit Plan or Welfare Benefit Plan, as each is defined in the Employee Retirement Income Security Act of 1974, as amended, or any similar law, which was, is now, or hereafter becomes sponsored solely by the Insured, or sponsored jointly by the Insured and a labor organization, solely for the benefit of the Insured’s Employees; General Terms and Conditions 4 2. Any other employee benefit plan or program not subject to ERISA sponsored solely by the Insured for the benefit of the Insured’s Employees, including any fringe benefit, or excess benefit plan; 3. Any employee benefit plan or program otherwise described in Paragraphs 1. or 2. above while such plan or program is being actively developed, formed or proposed by the Insured prior to the formal creation of such plan or program; 4. Any government-mandated insurance program for workers’ compensation, unemployment, social security or disability benefits for the Insured’s Employees; 5. Any Voluntary Employee’s Beneficiary Association as defined in Section 501(c)(9) of the Internal Revenue Code of 1986, as amended, for which the purpose is to provide life, sickness, accident or other benefits for voluntary members who are Employees (including their dependents or designated beneficiaries). Plan shall not include any “multiemployer plan” or “employee stock ownership plan” as defined by ERISA, unless such plan is specifically included as a Plan by endorsement to this Policy. O. “Policy Period” means the period specified in the Declarations, subject to any cancellation prior to the scheduled expiration date. P. “Regulatory Body” means any federal, state, local, or foreign law regulatory body or other investigative, administrative, enforcement, or governmental authority, or the enforcement unit of any securities or commodities exchange or similar self regulatory organization. Q. “Related Claim” means all Claims arising out of a single Wrongful Act. R. “Subsidiary” means any entity that you: 1. Own more than fifty percent (50%) of the issued and outstanding voting equity securities of such entity; or 2. Control voting rights representing the present right to elect or appoint more than fifty percent (50%) of the directors or trustees of such entity. S. “Team Member” shall have the meaning ascribed to it in the applicable Coverage Part. T. “Tech Startup” means, collectively: 1. You; and 2. Any Subsidiary; including any such organization as a Debtor in Possession. U. “Venture Capital Sponsor” means any organization listed in the Application as equity investors in the Tech Startup. General Terms and Conditions 5 V. “Wrongful Act” shall have the meaning ascribed to it in the applicable Coverage Part. III. Limits of Liability A. Policy Limit of Liability The Policy Limit of Liability stated in the Declarations is the most We will pay under this Policy for all applicable Coverage Parts B. Coverage Part Aggregate Limit of Liability Subject to the Policy Limit of Liability, any Coverage Part Aggregate Limit of Liability stated in the Declarations is the most We will pay under each respective Coverage Part. C. Coverage Limits of Liability Subject to the Policy Limit of Liability and any Coverage Part Aggregate Limit of Liability, each Coverage Limit stated in the Declarations is the most We will pay under each respective Insuring Agreement. 1. Any Loss paid under one Coverage Part shall reduce the Policy Limit of Liability for all other Coverage Parts. 2. If multiple Coverage Parts apply to the same Claim, the limit of liability that applies to such Claim will not exceed the highest limit of liability available under any one Coverage Part that applies. 3. Defense Costs are part of, and not in addition to, the Coverage Part Limits of Liability and Our payment of Defense Costs reduces and may totally exhaust such limits of liability. D. Sublimits of Liability Each sublimit of liability, if any, stated in the Declarations the most We will pay for all Loss or other covered amounts that are subject to such sublimit. Any sublimit of liability set forth in any Coverage Part shall be part of and not in addition to, the respective Coverage Part Limit of Liability. E. Defense Costs Defense Costs are part of and not in addition to the limits of liability applicable to each Coverage Part, and the payment by Us of Defense Costs reduces such limits of liability. F. Limit of Liability Exhaustion and Payment If the applicable limit of liability under this Policy is exhausted by payment of Loss, Our obligations, including without limitation any duty to defend, shall be completely fulfilled and extinguished. Except with respect to these General Terms and Conditions (“Priority of Non Indemnifiable Loss Payments”), We are entitled to pay Loss as it becomes due and payable by You, without consideration of other future payment obligations. General Terms and Conditions 6 IV. Coverage Territory This Policy shall apply on a worldwide basis. All premiums, limits, retentions, Loss and other amounts under this Policy are expressed and payable in the currency of the United States of America. If judgment is rendered, settlement is denominated or another element of Loss under this Policy is stated in a currency other than United States dollars, payment under this Policy shall be made in United States dollars at the rate of exchange published in The Wall Street Journal on the date the final judgment is reached, the amount of the settlement is agreed upon or the other element of Loss is due, respectively. Any Loss that You incur in any jurisdiction other than the United States or any of its territories or possessions shall be deemed, at Your written direction, a Loss payable to You at the address shown on the Declarations. Any such payment by Us to You pursuant to this paragraph shall fully discharge Our liability under this Policy for such Loss. Any Loss incurred by a Team Member in a jurisdiction other than the United States or any of its territories or possessions and which is not indemnified or paid by You shall, to the extent permissible under applicable law, be paid to such Team Member in a jurisdiction mutually acceptable to such Team Member and Us. However, this Policy does not apply in any country, province or territory where it would be in violation of the laws of the United States including, but not limited to U.S. economic or trade sanction laws or export control laws administered by the U.S. Treasury, State, and Commerce Departments (e.g. the economic and trade sanctions administered by the U.S. Treasury Office of Foreign Assets Control). V. Retentions A. Our liability under each Coverage Part with respect to Loss on account of each Claim shall apply only to that part of Loss which is excess of the applicable Retention set forth in the Declarations. The Retention shall be uninsured under this Policy. The Limits of Liability will not be reduced by payment of any Retention. B. If a single Claim is covered in whole or in part under more than one Coverage Part, the applicable Retention under each such Coverage Part shall be applied with respect to coverage for such Claim under such Coverage Part, provided the sum of all applicable Retentions under all such Coverage Parts shall not exceed the largest of such applicable Retentions. C. No Retention applies to Loss that the Team Members are legally obligated to pay if such Loss is not indemnified by the Tech Startup. If the Tech Startup refuses or fails within sixty (60) days after a Team Member’s request to indemnify or advance covered Loss or if the Insured is unable to indemnify or advance covered Loss due to Financial Impairment, We shall pay such covered Loss without applying the applicable Retention. General Terms and Conditions 7 VI. Claims A. Single Claims All Claims under the Coverage Parts which arise out of the same Wrongful Act or Interrelated Wrongful Act shall be deemed one Claim, and such Claim shall be deemed to be first made on the date the earliest of such Claims is first made against the Insured, regardless of whether such date is before or during the Policy Period. In no event shall a single lawsuit or proceeding constitute more than one Claim. B. Related Claims If Related Claims are subsequently made against You and are reported to Us, all such Related Claims, whenever made, will be considered a single Claim and such Claim will be deemed to have been made on the date the first of those Claims was made against the Insured. VII. Extended Reporting Period A. Automatic Extended Reporting Period If any Coverage Part is cancelled by you or is not renewed by us or you, then solely with respect to such Coverage Part that was cancelled or not renewed, an additional ninety (90) days during which Claims may be reported under this Policy (an “Automatic Extended Reporting Period”) shall be made available, but only for Wrongful Acts that first occurred prior to the effective date of cancellation or nonrenewal. This Automatic Extended Reporting Period is not available if You purchase an Optional Extended Reporting Period, or if You obtain another insurance policy that applies to such Claim within such ninety (90)-day period. B. Optional Extended Reporting Period 1. If any Coverage Part is cancelled by you or is not renewed by us or you, then solely with respect to such Coverage Part that was cancelled or not renewed, You will have the right to purchase an Optional Extended Reporting Period to immediately follow the effective date of cancellation or nonrenewal. 2. The Optional Extended Reporting Periods and their respective additional premiums are stated in the Declarations. We must receive written notice of the Optional Extended Reporting Period elected together with payment of the applicable additional premium, within 60 days after the effective date of cancellation or nonrenewal. If We do not receive payment within such period, We will not be required to provide any Optional Extended Reporting Period. 3. If purchased, the additional premium for the Optional Extended Reporting Period shall be fully earned at the inception of the Extended Reporting Period. The Extended Reporting Period is not cancelable. General Terms and Conditions 8 4. There is no separate limit of liability for the Extended Reporting Period. No Extended Reporting Period reinstates or increases the Limits of Liability. 5. A Claim reported in writing to Us during any applicable Extended Reporting Period will be deemed to have been made on the last day of this Policy Period. VIII. Defense of Claims A. Duty to Defend 1. We do not assume any duty to defend. It is Your duty to defend any claim. 2. You have the right to tender the defense of the Claim to Us, which shall be exercised in writing by you on behalf of all Insureds to Us at the time notice of a Claim is first provided pursuant to the “Claim and Potential Claim Notices” section of this Policy. This right shall terminate if not exercised within forty-five (45) days of the date the Claim is first made against the Insured. 3. Further, from the date the Claim is first made against You to the date when We accept the tender of the defense of such Claim, You shall take no action, or fail to take any required action, that prejudices any of the Insured’s or Our rights with respect to such Claim. The assumption of the defense of the Claim shall be effective upon written confirmation sent thereof by Us to You. Once the defense has been tendered, You shall have the right to effectively associate with Us in the defense and negotiation of any settlement of a Claim; provided however, We shall not be obligated to defend such Claim after the Policy Limit of Liability or any applicable Coverage Part Limit of Liability has been exhausted. 4. If You do not tender the defense, then it shall be Your duty and not Our duty to defend the Claim covered under such Coverage Part. 5. When We have not assumed the defense of a Claim, We shall have the right and be given the opportunity, at Our sole expense, to associate Ourselves in the defense and settlement of any Claim that appears reasonably likely to involve this Policy. You shall give Us full cooperation and such information as We may reasonably require. B. Settlement 1. The Insured agrees to neither admit nor assume any liability, enter into any settlement agreement, stipulate to any judgment, or incur significant Defense Costs without Our prior written consent, which shall not be unreasonably withheld. We shall not be liable for or as a result of any offer to settle, settlement, Defense Costs, assumed obligation, admission or stipulated judgment to which We have not given Our prior consent. However, if You are able to settle all Claims (including Defense Costs) in an amount, not exceeding the General Terms and Conditions 9 Retention, Our consent is not required for the settlement of such Claims. If You tender the defense of the Claim to Us then We may make any investigation We deem necessary and shall have the right to settle any Claim; provided, however, no settlement shall be made without Your consent, such consent not to be unreasonably withheld. C. Advancement of Defense Costs We shall, on a quarterly basis, advance on your behalf of covered Defense Costs, which You have incurred in connection with Claims made against the Insured and covered Venture Capital Sponsor, prior to disposition of such Claim. Any advancement of Defense Costs shall be subject to the condition that such advanced amounts shall be repaid to Us by the Insured severally according to each party’s respective interests if and to the extent the Insured shall not be entitled to coverage for such Defense Costs under the terms and conditions of this Policy. IX. Claim and Potential Claim Notices A. As a condition precedent to coverage, the Insured shall give Us written notice of any Claim made against the Insured as soon as practicable after the Chief Executive Officer or functionally equivalent first learns of such Claim, but in no event later than (i) ninety (90) days after the expiration of the Policy Period or (ii) the expiration of the Automatic Extended Reporting Period, if exercised. B. If the Insured fails to provide notice of a Claim as soon as practicable as required by this policy, We will not constitute it as a coverage defense with respect to such Claim unless We establish it was materially prejudiced by such failure. C. You shall include with any such notice of circumstance a description of the circumstances, the nature of any potential Wrongful Act, the nature of the alleged or potential damage, the names of actual or potential claimants, and the manner in which the Insured first became aware of the circumstances. D. If, during the Policy Period or Extended Reporting Period, if applicable, You first become aware of a Wrongful Act or circumstances that could give rise to a Claim, and if written notice of such Wrongful Act or circumstances is given to Us during the Policy Period or Extended Reporting Period, then any Claim subsequently arising from such Wrongful Act shall be deemed to be a Claim first made at the time that We receive such notice. E. Notices to You shall be sent to You at the address specified in the Declarations. X. Cooperation With respect to all Coverage Parts, You and the Venture Capital Sponsor agree to provide Us with all information, assistance and cooperation which We reasonably request and agree that, in the event of a Claim, You and the Venture General Terms and Conditions 10 Capital Sponsor will do nothing that shall prejudice Our position or its potential or actual rights of recovery. The failure of any Insured to comply with this Section shall not be imputed to or create a coverage defense under this Policy with respect to any other Insured. XI. Allocation If the Insured incurs Loss that is only partially covered by this Policy because a Claim includes both covered and uncovered matters or because a Claim is made against both covered and uncovered parties, Loss shall be allocated as follows: 1. 100% of Defense Costs shall be allocated to covered Loss; and 2. Loss other than Defense Costs shall be allocated between covered and non-covered Loss based upon the relative legal and financial exposures of the parties to covered and uncovered matters and covered and uncovered parties. XII. Subrogation We shall be subrogated to all of the Insured’s rights of recovery regarding any payment of Loss under this Policy. The Insured shall do everything necessary to secure and preserve such rights, including, without limitation, the execution of any documents necessary to enable Us to effectively bring suit in the Insured’s name. The Insured will do nothing to prejudice Our position or any rights of recovery. We shall not subrogate against any Team Member. XIII. Changes in Exposure A. Change in Control If, during the Policy Period: 1. one of the following occurs: a. any person or entity or group of persons and/or entities acting in concert acquires securities which result in ownership by such person(s) and/or entity(ies) of more than 50% of the outstanding securities representing the present right to vote for the election of directors or equivalent positions of the Tech Startup; or b. the Tech Startup merges into or consolidates with another organization such that the Tech Startup General Terms and Conditions 11 is not the surviving organization, or c. The Tech Startup completes an initial public offering of securities registered with the Securities and Exchange Commission; and 2. You provide Us written notice of such Change in Control transaction as soon as practicable, but not later than 60 days after the effective date of such transaction, then coverage shall continue until the termination of this Policy, provided that such coverage shall apply only with respect to Claims for Wrongful Acts occurring prior to the effective date of such Change in Control transaction. No coverage shall be available for any Wrongful Act or Loss occurring after such Change in Control transaction. Upon such Change in Control transaction, the entire premium for this Policy shall be deemed fully earned. You shall give Us written notice of such Change in Control transaction as soon as practicable, but not later than 60 days after the effective date of such transaction. In the event of such transaction during the Policy Period, You shall have the right, upon payment of the additional premium set for in the Declarations, to an extension of coverage granted by the Coverage Part for the Run Off Coverage Period set forth in the Declarations, which shall commence as of the effective date of such transaction. B. Acquisition or Creation of a Subsidiary If, before or during the Policy Period, the Tech Startup: 1. creates or acquires a Subsidiary or a new Plan; or 2. merges with another organization such that the Tech Startup is the surviving entity, Then You and such newly created, acquired or merged organization or Plan shall be covered under this Policy solely for Wrongful Acts or covered Loss taking place after such acquisition, merger or creation. This section does not apply to, and no coverage shall be available under this Policy for any: (i) Wrongful Act or Loss of any new Insureds occurring before such transaction; or (ii) any Interrelated Wrongful Acts thereto. C. Loss of Subsidiary Status If, before or during the Policy Period, any organization ceases to be a Subsidiary, then coverage shall be available under this Policy for such Subsidiary and its Insureds, but only for Claims for covered Wrongful Acts occurring General Terms and Conditions 12 before such transaction. No coverage shall be available to You for any Wrongful Act or covered Loss occurring after such transaction. If before or during the Policy Period a Plan is terminated, coverage for such Plan under the Fiduciary Liability Coverage Part, if purchased, shall continue until termination of such Coverage Part with respect to Wrongful Acts taking place prior to the termination of such Plan. XIV. Application You represent and acknowledge that the statements and information contained in the Application are true, accurate, and complete, and are the basis of this Policy and are to be considered incorporated into and constituting a part of this policy. This Policy is issued in reliance upon the truth and accuracy of the Application. If the Application contains misrepresentations or omissions that materially affect the acceptance of the risk or the hazard assumed by Us, this Policy shall be void ab initio and shall not afford coverage for any Insured who knew on the inception date of this Policy the facts that were not truthfully disclosed in the Application, whether or not the Insured knew the Application contained such misrepresentation or omission. For the purpose of determining coverage, knowledge possessed by: 1. Any Team Member shall not be imputed to any other Team Member; and 2. the Tech Startup’s Chief Executive Officer, functionally equivalent, or anyone signing the Application shall be imputed to all Insureds other than Team Members. XV. Suits Against the Insurer No person or organization shall have any right under this Policy to join Us as a party to any Claim against You nor shall We be impleaded by the Insured in any Claim. XVI. Assignment No change in, modification of, or assignment of interest under this Policy shall be valid unless endorsed in writing by Us. This Policy and any and all rights hereunder are not assignable without Our prior written consent, which consent shall be in Our sole and absolute direction. General Terms and Conditions 13 XVII. Rescission We shall not have the right to rescind this Policy or any Coverage Part for any reason. XVIII. Named Insured’s Authority You shall act on behalf of all other Insureds regarding all matters under this Policy. XIX. Cancellation A. We may cancel this Policy only for non-payment of premium. In such case, We will mail or deliver written notice stating when, not less than twenty (20) days thereafter, the cancellation shall be effective. Cancellation shall not become effective if You pay such premium in full during such twenty (20) day period. Any notice of cancellation will state the effective date of cancellation. The Policy Period will end on that date. B. You may cancel this Policy by sending written notice of cancellation to Us. Such notice shall be effective upon receipt by Us unless a later cancellation date is specified therein. C. If this policy is canceled, We will return to You any unearned premium, calculated pro rata, but the return of premium to You is not a condition precedent to cancellation. XX. Bankruptcy The bankruptcy or insolvency of the Tech Startup or any of any Team Member’s estate will not relieve Us of Our obligation under this insurance. In the event of bankruptcy or insolvency of a Tech Startup, You shall waive and release any automatic stay or injunction in such proceeding that may apply to this Policy or its proceeds, and agree not to oppose or object to any efforts by Us or any Insured to obtain relief from any such stay or injunction. XXI. References to Laws Any statute, act, or code mentioned in this Policy shall be deemed to include all amendments of, and rules and regulations promulgated under, such statute, act, or code. Any statute, act, or code mentioned in this Policy that is followed by the phrase “or any similar law” shall be deemed to include all similar laws of all jurisdictions throughout the world, including, without limitation, any common law. General Terms and Conditions 14 XXII. Presumptive Indemnification You and any other Tech Startup agree to indemnify the Team Members, including the advancement of Defense Costs incurred by the Team Member to the fullest extent permitted by law, or the certificate or articles of incorporation, charter, by-laws or limited liability company agreement or limited partnership agreement, if applicable, of a Tech Startup, or the functional or foreign equivalent of any of the foregoing. XXIII. Priority of Non-Indemnifiable Loss Payments We will pay Loss and other covered amounts as they become due and payable under this Policy without consideration of other future payment obligations. However, if Loss exceeds the remaining applicable Limit of Liability or in the event of the Financial Impairment of the Tech Startup, we will pay Loss in the following order: first, pay Non-Indemnifiable Loss, then only after this payment; with respect to whatever remaining amount of the applicable Coverage Part Limit of Liability is available, pay such other Loss for which coverage is provided under the remaining coverage provided under this Policy XXIV. Determination of Jurisdiction for Punitive Damage Awards The insurability of such punitive, exemplary or multiple damages, civil penalties shall be determined under the internal laws of any applicable jurisdiction most favorable to the Insured, including without limitation the jurisdiction in which we, the Insured, this Policy or such Claim is located. With respect to: 1. Judgments in which punitive, exemplary or multiplied damages are awarded; 2. Fines, penalties or taxes incurred by Team Members under Section 2(g) 2(B) of the Foreign Corrupt Practices Act, as amended and Section 308 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246(a)); or 3. Any amounts which may be considered uninsurable under the law pursuant to which this Policy is construed, coverage provided by this Policy shall be determined under the internal laws of any applicable jurisdiction most favorable to the Insured, including without limitation the jurisdiction in which the Company, the Insured, this Policy or such Claim is located or has a substantial relationship. General Terms and Conditions 15 A. Changes This Policy shall not be changed in any manner except by a written endorsement issued by Us. B. Titles and Headings The titles of the headings of, and endorsements to, this Policy are for reference only. Such titles shall not be part of the terms and conditions of coverage. C. Premium You will pay the premium stated in the Declarations. As may be agreed upon by you and us or as otherwise provided in this Policy, the premium may be adjusted at any time during the Policy Period or any extensions of the Policy Period based upon changes in the provisions of this Policy. D. Choice of Law Any disputes involving this Policy shall be resolved applying the law of the state or jurisdiction indicated in the Declarations as the principal address of the Named Insured. Directors, Officers & Organization Liability Policy Directors, Officers & Organization Liability Policy Embroker Insurance Services LLC 24 Shotwell Street San Francisco CA 94103 embroker.com Directors, Officers & Organization Liability Policy 2 I. Insuring Agreements A. Non-Indemnifiable Directors & Officers Liability We will pay Non-Indemnifiable Loss on behalf of the Insured resulting from a Claim first made against the Insured during the Policy Period or any applicable Extended Reporting Period and reported to Us pursuant to the terms of this Policy, for a Wrongful Act by the Insured. B. Indemnifiable Directors & Officers We will pay Loss on behalf of the Insured that such Insured has indemnified the Team Members resulting from a Claim first made against the Team Members during the Policy Period or any applicable Extended Reporting Period and reported to Us pursuant to the terms of this Policy, for a Wrongful Act by the Team Members. C. Entity Liability We will pay Loss on behalf of the Insured resulting from a Claim first made against such Insured during the Policy Period or any applicable Extended Reporting Period and reported to Us pursuant to the terms of this Policy, for a Wrongful Act. D. Derivative Costs We will pay on behalf of the Insured any Derivative Costs the Insured becomes legally obligated to pay as a result of a Derivative Demand first received by the Insured during the Policy Period or any applicable Extended Reporting Period and reported to Us pursuant to the terms of this Policy, for a Wrongful Act. Our maximum liability for all Derivative Costs covered under this Insuring Agreement shall be the respective sublimit of liability set forth in the Declarations, which shall be part of and not in addition to the Coverage Part Limit of Liability. E. Employed Lawyers We will pay Loss on behalf of the Insured resulting from a Claim first made against an Employed Lawyer during the Policy Period or any applicable Extended Reporting Period, and reported to Us pursuant to the terms of this Policy, for a Wrongful Act. F. Crisis Costs We will pay on behalf of the Insured any Crisis Costs the Insured pays as a result of a Crisis first occurring and reported to us during the Policy Period or any applicable Extended Reporting Period. Our maximum liability for all Crisis Costs covered under this Coverage Part shall be the respective sublimit of liability set forth in the Declarations, which shall be part of and not in addition to the Coverage Part Limit of Liability. Directors, Officers & Organization Liability Policy 3 II. Definitions A. “Claim” means any: 1. Written demand against the Insured for monetary damages or non-monetary or injunctive relief, including a written request to toll or waive a statute of limitations or engage in any alternative dispute resolution 2. Notice of violation, notice of charges, indictment, arrest, or extradition warrant summons, civil or criminal complaint, demand for arbitration, request for injunction, order to show cause, or other similar pleading or charging document 3. Administrative, regulatory or criminal proceeding commenced by the return of an indictment, information or similar pleading; 4. Regarding Insuring Agreements A and B, Inquiry against a Team Member commenced by such Team Member’s receipt of such Inquiry (regardless of whether the law enforcement or government investigative authority conducting such Inquiry has identified the Wrongful Act being investigated); 5. Civil, criminal, administrative or regulatory investigation of an Insured by a government or regulatory authority or agency, which is commenced by the filing or issuance of a notice of charges, target letter, Wells Notice, an Insured’s receipt of a subpoena, formal investigative order, civil investigative demand, search warrant or other similar request or document identifying such Insured as a person or entity against whom a proceeding described in (2) or (3) above may be brought; or 6. Solely for purposes of Insuring Agreement D, any Derivative Demand. B. “Controlling Person” means a Team Member who allegedly controls the Tech Startup through stock ownership or pursuant to an agreement, including any such Team Member described in Section 15 of the Securities Act of 1933, Section 20 of the Securities Exchange Act of 1934, or any similar federal, state or local rule or regulation. C. “Crisis” means the publication of unfavorable information regarding the Tech Startup that is reasonably likely to lessen public confidence in the competence, integrity or viability of the Tech Startup to conduct business. D. “Crisis Costs” means the reasonable fees, costs, and other expenses of a public relations consultant engaged by the Insured and approved by us, such approval not to be unreasonably withheld, to mitigate reputational harm to the Insured as a result of a Crisis. E. “Defense Costs” means that part of Loss consisting of expenses, including attorneys’ fees and experts’ fees, incurred in the investigation, defense or appeal of a Claim. Defense Costs include the premium for any appeal, attachment or similar bond, provided that we have no obligation to issue such bond. Defense Costs does not include any compensation, benefit expenses, or any of the Insured’s overhead. Directors, Officers & Organization Liability Policy 4 Regarding any Claim that is an Inquiry, Defense Costs means Inquiry Costs only. F. “Derivative Costs” means reasonable and necessary expenses incurred in the investigation and evaluation of a Derivative Demand, provided that Derivative Costs shall not include compensation, benefit expenses, or any of the Insured’s overhead. G. “Derivative Demand” means a written demand by any security holder of the Tech Startup, in their capacity as such, upon the board of directors or managers of such Tech Startup to bring a civil proceeding on behalf of the Tech Startup against a Team Member for a Wrongful Act of such Team Member if such demand is made without the assistance, participation or solicitation of any Executive. A Derivative Demand shall be deemed commenced by the receipt by the board of directors or managers of such demand. H. “Derivative Suit” means any lawsuit against a Team Member for a Wrongful Act of such Team Member made on behalf of, or in the name or the right of, an Tech Startup by any security holders of such Tech Startup, in their capacity as such, if such proceeding is made without the assistance, participation or solicitation of any Executive. I. “Employed Lawyer” means any Team Member who was or is employed by the Tech Startup to provide professional legal services for the Tech Startup while such Team Member is a licensed attorney compensated by the Tech Startup through wages or salary. Employed lawyer does not include any Team Member who is employed by, under contract with or affiliated with a private law firm, other than as a sole practitioner. J. “Financial Impairment” means the status of an organization resulting from: 1. The appointment by any Regulatory Body of any receiver, trustee, examiner, conservator, liquidator, rehabilitator, or similar official to take control of, supervise, manage or liquidate the organization; or 2. The organization becoming a Debtor in Possession within the meaning of the United States Bankruptcy Code or similar legal status under foreign law. K. “Inquiry” means: 1. A civil, criminal, administrative, or regulatory investigation or inquiry of a Team Member commenced by the Team Member’s receipt of a subpoena, Wells Notice, target letter (within the meaning of Title 9, §11.151 of the U.S. Attorney’s Manual), formal order of investigation, civil investigative demand, notice of charges, order to show cause, search warrant, S.E.C. Form 1661 or 1662, or other similar document, or the functional or foreign equivalent thereof; 2. A written request or demand of a Team Member by a Regulatory Body for an interview, meeting, sworn testimony or documents in connection with the business of the Tech Startup, or in connection with such Team Member in his or her capacity as such; 3. A written request or demand of a Team Member by the Tech Startup (including its board of directors or any Directors, Officers & Organization Liability Policy 5 committee of its board of directors) for an interview, meeting, sworn testimony or documents in connection with: (a) a Derivative Demand, or (b) an investigation of the Tech Startup by a Regulatory Body. Inquiry does not include any routine or regularly scheduled regulatory or internal supervision, inspection, compliance, review, examination, production or audit, industry sweep, including any request for mandatory information from a Regulatory Body, conducted in a Tech Startup’s and/or Regulatory Body’s normal review or compliance process or any subpoena received by You as a non-party witness. L. “Inquiry Costs” means reasonable costs, charges, fees and expenses incurred by a Team Member in connection with the preparation for or response to an Inquiry. Inquiry Costs does not include any: 1. Compensation or benefits of any Team Member; or 2. Costs of complying with any formal or informal discovery request or production request seeking documents, records or electronic information that are in our possession or any third-party. M. “Insured” means: 1. With respect to Insuring Agreement A, Team Members. 2. With respect to all other Insuring Agreements B, C, D, E and F, the Tech Startup. N. “Loss” means the amount that an Insured is legally obligated to pay resulting from a Claim, including damages, settlements, judgments, pre- and post-judgment interest, Defense Costs, and Investigation Costs. Loss also specifically includes: 1. Any reasonable fees and expenses of any attorney representing any party who has brought a Claim against the Insured where such fees and expenses are awarded pursuant to a covered judgment against the Insured or a covered settlement (consented to by us, which consent shall not be unreasonably withheld or denied) to which you are a party; 2. Regarding Insuring Agreement A, damages under Section of the Securities Exchange Act of 1934, as amended; and 3. Civil fines or civil penalties incurred by Team Members under Section 2(g) 2(B) of the Foreign Corrupt Practices Act, as amended and Section 308 of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7246(a)). Loss, other than Defense Costs does not include: a) Fines, penalties and taxes, other than those set described in Subsection 3. of this Definition; b) The price or consideration paid or proposed to be paid for the acquisition or completion of the acquisition of Directors, Officers & Organization Liability Policy 6 all or substantially all the ownership interest in or assets of an entity is inadequate. Loss with respect to such Claim shall not include any amount of any judgment or settlement representing the amount by which such price or consideration is effectively increased; provided, however, that this paragraph shall not apply to any Non-Indemnifiable Loss in connection with such Claim; c) Social security benefits, employment termination severance payments, other than any such payments negotiated with and consented to by us as part of a settlement, commissions or employment related benefits of any kind, including any contributions to an employee benefit plan; d) Costs incurred by the Insured to comply with an order for non-monetary relief, including declaratory and injunctive relief, or with any agreement to provide such relief; or e) Any amount which is uninsurable under the law pursuant to which this Policy is construed; provided that we will not assert that the portion of any settlement or judgment in a Claim arising from an initial or subsequent public offering of your securities constitutes uninsurable Loss due to the alleged violations of Sections 11 or 12 of the Securities Act of 1933 as amended (including alleged violations of Sections 11 or 12 of the Securities Act of 1933 by a Controlling Person pursuant to Section 15 of the Securities Act of 1933). O. “Non-Indemnifiable Loss” means any Loss incurred by Team Members that the Tech Startup has not indemnified. P. “Outside Capacity” means the position of director, officer, trustee, or other equivalent executive position held by a Team Member in an Outside Entity if service in such position: 1. Takes place while such Outside Entity is not under Management Control; and 2. Is with Your express consent and knowledge. Q. “Outside Entity” means any for profit or not-for-profit entity. R. “Selling Shareholder” means a Team Member in his or her capacity as an attempted or actual seller of securities issued by the Tech Startup. S. “Team Member” means any: 1. Executive; or 2. Employee. T. “Wrongful Act” means any actual or alleged act, error, omission, misstatement, misleading statement, neglect or breach of duty by: 1. A Team Member in their capacity as such or in an Outside Capacity; 2. A Team Member in their capacity as a Controlling Person or as a Selling Shareholder; Directors, Officers & Organization Liability Policy 7 3. With respect to Insuring Agreement C, the Tech Startup; or 4. Any matter claimed against a Team Member solely by reason of their serving in such capacity, including service in an Outside Capacity. III. Coverage Extensions A. Spouses and Domestic Partners Coverage shall apply to a Claim made against the lawful spouse or Domestic Partner of any Team Members provided that: 1. Such Claim arises solely out of such person’s status as the spouse or Domestic Partner of a Team Member, or such person’s ownership of property sought as recovery for a Wrongful Act; 2. The Team Member is named in such Claim along with the spouse or Domestic Partner; and 3. No coverage shall apply to any Claim for a Wrongful Act of such spouse or Domestic Partner. Coverage for such Claim shall be on the same terms and conditions (including, without limitation, the retention) as apply to a Claim made against a Team Member. B. Estates and Heirs Coverage shall apply to a Claim made against a Team Member’s estate, heirs, assigns or legal representatives for a Wrongful Act of such Team Member shall be deemed a Claim made against such Team Member. No coverage shall apply to any Claim for a Wrongful Act of such estate, heirs, assigns or legal representatives. C. Board Positions on Other Companies Coverage shall apply to a Claim against a Team Member for a Wrongful Act in an Outside Capacity. Such coverage shall be specifically excess of any indemnification and insurance available from or provided by the Outside Organization in which the Team Member serves in an Outside Capacity. In no event, do we insure the Outside Organization. D. Venture Capital Sponsor If any covered Claim also alleges that your Venture Capital Supporter or any director, officer or employee of the Venture Capital Supporter is vicariously liable for a Wrongful Act committed by You, then Loss that the Venture Capital Supporter becomes legally obligated to pay for such Claim will be considered Loss incurred by or on behalf of You arising from such Claim, subject to all provisions in this Policy and the following additional conditions: Directors, Officers & Organization Liability Policy 8 1. The Claim must be made and continuously maintained against both You and Your Venture Capital Supporter for Your Wrongful Act. 2. If You do not tender the defense of the Claim to Us, You will appoint defense counsel that can defend both You and Your Venture Capital Supporter for such Claim, unless We permit otherwise. 3. If You tender the defense of the Claim to Us, We will appoint defense counsel that can defend both You and Your Venture Capital Supporter for such Claim, unless We permit otherwise. 4. There is no coverage for any Loss arising from any actual or alleged act, error, or omission by the Venture Capital Supporter. E. Pre-Claim Costs To the extent that You give notice to Us in accordance with Section 6 of the General Terms and Conditions of this Policy, of specific circumstances, complies with all other applicable terms of the Policy, and a Claim subsequently arises from such specific circumstances, Defense Costs shall also mean all reasonable legal fees you incur in the investigation and/or defense of any such specific circumstances that are incurred (i) on or after the date such notice is received by Us, and (ii) prior to the time such specific circumstances rises to the level of a Claim. IV. Exclusions For the purpose of determining the applicability of any Exclusion set forth in this Exclusions Section, the Wrongful Act or knowledge of any Team Member shall not be imputed to any other Team Member, and only the Wrongful Act or knowledge of the Chief Executive Officer or functionally equivalent of the Tech Startup shall be imputed to the Tech Startup. We shall not be liable under this Coverage Part to pay any Loss on account of that portion of any Claim made against You: A. Bodily Injury and Property Damage For any actual or alleged bodily injury, sickness, disease or death, mental anguish, emotional distress or humiliation of any person or damage to or destruction of any tangible property including loss of use of such damaged or destroyed property; provided this exclusion shall not apply to (i) Defense Costs incurred by a Team Member in connection with a Claim against such Team Member for a violation of the United Kingdom Corporate Manslaughter and Corporate Homicide Act of 2007 or any similar statute in any other jurisdiction, (ii) a Claim covered under Insuring Agreement A, or (iii) a Claim by one or more shareholders of the Tech Startup in their capacity as such. B. Prior Notice Based upon, arising out of, or attributable to any fact, circumstance, or Wrongful Act that, before the inception date of this Policy, was the subject of any notice given and accepted under any prior directors and officers liability or Directors, Officers & Organization Liability Policy 9 comparable insurance policy; C. Intellectual Property For any actual or alleged infringement of copyright, patent, trademark, trade name, trade dress, or service mark, misappropriation of ideas or trade secrets, or unauthorized disclosure of or access to confidential information; provided however, that this exclusion shall not apply to any Derivative Demand, Derivative Suit, or any Claim involving the purchase or sale of securities of the Tech Startup and shall be applicable only to Insuring Agreement C. D. Contractual Liability Based upon, arising out of, or attributable to any actual or alleged liability of the Tech Startup under any written contract or agreement, except to the extent that the Tech Startup would have been liable in the absence of such contract or agreement; provided however, that this exclusion shall not apply to any such Claim brought or maintained, directly or indirectly, by one or more securities holders of the Tech Startup in their capacity as such, shall not be attributable to any breach of contract or agreement specifying the terms of the Tech Startup’s engagement of an Independent Contractor and shall be applicable only to Insuring Agreement C. E. ERISA For an actual or alleged violation of ERISA. F. Insured versus Insured For any Claim brought or maintained by or on behalf of: 1. a Tech Startup; 2. a Team Member in any capacity; or 3. an Outside Entity arising out of an Insured’s service in an Outside Capacity; Provided this exclusion does not apply to: 1. Defense Costs covered under Insuring Agreement A; 2. Any Claim for a Wrongful Act involving the employment of a Team Member; 3. Any Claim by a Team Member for contribution or indemnity; if the Claim directly results from another Claim covered under this Coverage Part; 4. Any Claim brought by a whistleblower pursuant to any federal, state, foreign or local whistleblower law; Directors, Officers & Organization Liability Policy 10 5. Any Claim brought as a derivative action on behalf of the Tech Startup, by one or more persons who are not directors, officers, trustees, managers, or equivalent executives of the Tech Startups, and without the solicitation, assistance, active participation, or intervention of any Insured unless such solicitation, participation or intervention by the Insured is solely pursuant to or in compliance with a subpoena or similar legal process or is protected pursuant to any whistleblower statute, rule, or regulation; 6. Any Claim by or on behalf of a bankruptcy or insolvency receiver, trustee, examiner, conservator, liquidator, creditor’s committee or rehabilitator of an Tech Startup or Outside Entity or any assignee of any of the foregoing; 7. Any Claim maintained in any non-common law jurisdiction outside the United States of America; 8. Any Claim by a Team Member who has not served as a Team Member within one (1) year prior to the date on which the Claim is first made and who maintains such Claim without the active assistance or active participation of the Tech Startup or Outside Entity, or any other Team Member who is serving or has served as a Team Member within such one (1) year period; or 9. Any Claim against a Team Member solely by reason of their serving in such capacity, including service in an Outside Capacity. G. Publicly Traded Securities Based upon, arising out of, or attributable to any public offering of securities of a Tech Startup or the purchase or sale, or offer or solicitation of an offer to purchase or sell, of such securities subsequent to such public offering; provided that this exclusion shall not apply to any Claim in connection with the following: 1. A Wrongful Act in an offering of securities of a Tech Startup to any accredited investor in a transaction that is exempt from registration under the Securities Act of 1933 (“accredited investor” shall have the meaning specified for such term in Rule 501 of Regulation D of the General Rules and Regulations promulgated under the Securities Act of 1933); 2. Made by any security holders of a Tech Startup for the failure of the Tech Startup to undertake or complete an initial public offering of securities of such Tech Startup; or 3. For any Wrongful Act relating to a Tech Startup’s preparation for any public offering, including any road show presentation to potential investors or other similar presentation, made by the Tech Startup and its Team Members via any medium in connection with such public offering, if such offering does not occur. H. Personal Profit & Illegal Conduct For any personal profit, remuneration, or financial advantage to which You are not legally entitled; or For any willful violation of any law, statute or regulation, or any deliberately fraudulent or criminal act, error, or omission committed by You; Directors, Officers & Organization Liability Policy 11 If evidenced by a final and non-appealable adjudication adverse to You in the underlying action. For the purpose of applying these Personal Profit & Illegal Conduct exclusions: 1. the Wrongful Act, knowledge of, or facts pertaining to any Team Member shall not be imputed to any other Team Member; and 2. only the Wrongful Act by the Chief Executive Officer or functionally equivalent of any Tech Startup shall be imputed to a Tech Startup. I. Professional Services For the Insured’s failure to perform professional services for others for a fee; provided this exclusion shall not apply to any Claim by one or more securityholders of the Tech Startup in their capacity as such; provided however, this exclusion shall not apply to any Derivative Demand, Derivative Suit, or any Claim involving the purchase or sale of securities of the Tech Startup. J. Product Defect Based upon or arising out of any actual or alleged malfunction of any product or failure of any product to perform in any manner as a result of any defect, deficiency, inadequacy, or dangerous condition in such product or in its design, manufacture or labeling; except this exclusion does not apply to any Claim brought and maintained by one or more securityholders of the Tech Startup in their capacity as such. K. Employment Practices 1. Based upon, arising out of or attributable to any: 2. Wrongful dismissal, discharge or termination of employment, including but not limited to dismissal, discharge or termination resulting from a breach of an express or implied contract relating to employment, whether actual or constructive; 3. Harassment, including any type of sexual or gender harassment as well as racial, religious, sexual orientation, pregnancy, disability, age, or national origin-based harassment, or unlawful workplace harassment, including workplace harassment by any non-employee; 4. Employment discrimination of any protected status established under federal, state or local law, ordinance or public policy; 5. Retaliation; 6. Abusive or hostile work environment; Directors, Officers & Organization Liability Policy 12 7. Employment-related misrepresentation; 8. Wrongful failure to employ or promote, wrongful deprivation of career opportunity, wrongful demotion, wrongful discipline, or failure to grant tenure; 9. Negligent hiring or retention, negligent employee evaluation, or negligent supervision; 10. Failure to provide or enforce adequate or consistent corporate policies and procedures relating to any Wrongful Act; 11. Violation of the Uniformed Services Employment and Reemployment Rights Act or the Family and Medical Leave Act; 12. Violation of an individual’s civil rights if such conduct relates to matters described in paragraphs 1 - 9, including, but not limited to, any violation of the Civil Rights Act of 1866 or 42 U.S.C. Section 1983; 13. Employment related wrongful infliction of emotional distress, mental anguish, or humiliation; or 14. Libel, slander, defamation, false or wrongful imprisonment, invasion of privacy and other personal injury allegations; provided however this exclusion shall not apply to any Claim brought by one or more securityholders of the Tech Startup in their capacity as such. L. Other Violations of Law For any actual or alleged violation of the any of the responsibilities, obligations or duties imposed by: 1. The Consolidated Omnibus Budget Reconciliation Act of 1985, as amended, the Occupational Safety and Health Act of 1970, and as amended, and the National Labor Relations Act, as amended, or any similar provisions of any federal, state, local or foreign statutory or common law; or 2. Any law governing workers’ compensation, unemployment insurance, unemployment compensation, social security, retirement benefits, disability benefits, or any similar provisions of any federal, state, local or foreign statutory or common law. V. Additional Limit of Liability Additional Side A Limit The Additional Non-Indemnifiable Limit for Directors and Officers Liability Coverage is stated in the Declarations. If the limit of liability applicable to Loss covered under Insuring Agreement A under this Coverage Part is exhausted by payments by Us, then Our liability for any Loss covered under The Additional Non-Indemnifiable Limit for Directors and Officers Liability Coverage shall be in addition to and not part of the Coverage Part Limit of Liability, and in addition to and not part of the Directors, Officers & Organization Liability Policy 13 Policy Limit of Liability, provided that such limit will apply only after the exhaustion of all other applicable limits of liability with respect to all other valid and collectible insurance specifically written excess of the Insuring Agreement A. VI. Other Insurance Coverage under this Coverage Part shall apply only in excess of any other valid and collectible insurance, unless such other insurance is written specifically excess of this Coverage Part by reference to this Policy’s Policy Number. Regarding Loss attributable to the Wrongful Acts of a Team Member, this Coverage Part shall apply as primary insurance with respect to: (i) any venture capital management liability, general partner management liability, or other similar management or professional liability insurance maintained by any of Your direct or indirect shareholder; (ii) any indemnification which may be owed to a Team Member by any of Your current or former direct or indirect shareholders (or any affiliate or control person of such shareholder); or (iii) any personal umbrella or other personal liability insurance policy that may be available to a Team Member. Any coverage for a Claim in connection with a Team Member serving in an Outside Capacity for an Outside Entity shall be specifically excess of any indemnity and insurance available to such Team Member by reason of their serving in such capacity. EXHIBIT M EXHIBIT N July 31, 2020 Deanna Johnston, General Counsel, VP of Compliance Clear Blue Specialty Insurance Company 200 South College Street, Suite 2250 Charlotte, NC 28202 Embroker Insurance Services LLC 24 Shotwell Street San Francisco, CA 94103 By Email: RE: Insured: Apollo Brokers, Inc. Address: 401 Harrison Street, Unit 15B, San Francisco, CA Policy No.: AX01-1103-01 Policy Period: March 6, 2020 to March 6, 2021 Claims Reference No.: 2020685678 Dear Ms. Johnston, Thank you for your letter of July 21, 2020. I have provided a copy of the correspondence to the Apollo Brokers team and, on their behalf and my own, I wanted to provide some response to your correspondence. For the reasons that follow, we believe your position is incorrect and untenable. It is our hope that you reconsider Embroker’s and Clear Blue’s decision and begin to honor your contractual obligations to our company and individuals as well as your responsibility to act in good faith and fair dealing with Apollo Brokers and the individual insureds. More particularly, we believe your correspondence has incorrectly expressed a number of facts underlying the policy application and construction process, inaccurately applied the contractual language contained in the conditions and definitions of the policy, and has overstepped the appropriate application of exclusions contained therein. It is our hope that this letter corrects some of those oversights and, respectfully, directs Embroker and Clear Blue to a more objective coverage analysis in this matter. Embroker’s attempt to unilaterally rescind the policy is incorrect. Your letter of July 21, 2020 ultimately concludes that John Loeber made misrepresentations in the application for this policy and, accordingly, Embroker and Clear Blue is therefore entitled to unilaterally rescind the policy. In particular, you state: Given that multiple misrepresentations were made in Apollo’s Management Liability Application (the “Application”) which have not been clarified, we hereby provide notice on behalf of Clear Blue of its intent to void the Policy ab initio. A check in the amount of $4,661.74 representing the amount of premium for the Policy will be sent via FedEx to the address above. Your letter continues thereafter to suggest four different categories of misrepresentations upon which you suggest that unilateral rescission is warranted, namely: 1. The number of employees 2. Whether Apollo had raised funding 3. The amount of funding raised to date 4. Past claims In particular, you state that because either they, “[D]irectly relate to the pricing of the Policy. . . . These misrepresentations go to the underwriting process and impact the amount of premium to be charged. The failure to answer the questions accurately allows the Policy to be voided.” or “[W]ould have prevented Apollo from being eligible for the Policy in the first instance. . . “ In response, we strongly disagree with Embroker’s and Clear Blue’s position and instead believe that 1) The contract-by its terms-expresses a clear statement and undertaking that neither Embroker, nor Clear Blue will rescind the Policy; 2) No question in the application process was answered incorrectly-much less misrepresented-in the application; 3) after providing answers to each question, Embroker itself instructed Mr. Loeber to prescriptively answer questions to navigate the electronic algorithms to obtain coverage; and 4) even if Embroker could demonstrate a misrepresentation by Mr. Loeber (it cannot), it is not entitled to ascribe or “impute” any such statement or representation to other insureds-all of whom still retain a severable beneficial right to the coverage afforded under the Policy. First, the contract-by its terms-expresses a clear statement that neither Embroker, nor Clear Blue will rescind the Policy. The policy states, under Section XVII: “We shall not have the right to rescind this Policy or any Coverage Part for any reason”. This provision clearly indicates an explicit commitment and undertaking to not seek or otherwise pursue rescission. While we cannot speculate on your rationale for pursuing the remedy of unilateral rescission given this explicit statement, we hope that you will not suggest that Embroker’s complete repudiation of this promise is that this provision cannot be enforced because, in Embroker’s view, the contract was void ab initio and therefore not enforceable. While we disagree with that view and, as consumers, believe the provisions is an enforceable agreement, we also believe that the explicit statement in the policy that rescission will not be sought has two other important impacts. The contractual commitment to not rescind for any reason is an indication that application responses even if incorrect or arguably misrepresented (which are the only basis upon which rescission can be legally based) logically cannot be material to the risk assumed or the pricing. Additionally, the contractual commitment to not rescind for any reason also means that neither Embroker nor Clear Blue can sufficiently demonstrate reasonable or detrimental reliance upon any statement in the application as well. In each case, the attempt by Embroker or Clear Blue to unilaterally rescind its policy despite a clear, unequivocal statement to the contrary seems-at best-counterintuitive and, at worst, a demonstration of bad faith, unfair dealing, and deceptive and fraudulent conduct. More importantly, this language, we understand, was introduced into directors and officers policies so that allegations about misrepresentations (which often form the basis for directors and officers claims) do not themselves introduce unnecessary confusion and distraction from the fundamental obligation of insurers to financially support a defense of those same allegations facing the directors and officers. You have cited some of the allegations in the complaint as seemingly in support of some intent or indication of misrepresentation. While we shouldn’t have to, we remind you that allegations (even if, as you say, they are “verified”) are just that - allegations, not proof, and we are entitled to a defense under the policy to refute those same allegations. No question in the application process was answered incorrectly-much less misrepresented-in the application. You mention in your letter four questions or topical areas were misrepresented by Mr. Loeber, namely: 1. The number of employees 2. Whether Apollo had raised funding 3. The amount of funding raised to date 4. Past claims We wanted to take each of these questions or topical areas in turn. Number of Employees First, you state in your letter, “The total number of employees stated in the application is “1.” However, based on the Complaint and the request for coverage for all three (3) defendants, it appears that Apollo understated the number of employees by two (2).” First (and we restate this as a cardinal weakness in your position throughout), the allegations of the complaint cannot be taken as fact for purposes of determining coverage. Second, when Mr. Loeber provided this information, he was the only employee of Apollo Brokers. The other defendants were not yet employed by Apollo Brokers. They had not signed employment agreements and were not employees. Both Alex Becker and Shea McNamara’s first day of employment with Apollo brokers was April 1, 2020. They signed their employment agreements on March 23, 2020 and March 27, 2020 respectively. Please see the attached I-9s and agreements. The fact that the request for coverage for all three defendants is irrelevant to the question on the application, as the terms Team Member includes both employees and Executives. The Policy defines “Team Member” to mean: S. “Team Member” means any: 1. Executive; or 2. Employee The Policy Defines “Executive”, under the General Terms and Conditions, Section II. Definitions, I, as: I. “Executive” means any natural person who was, is or shall be a duly elected or appointed: 1. Director, officer, or member of the board of the managers or management committee of the Tech Startup; 2. In-house general counsel of the Tech Startup; 3. Any duly elected or appointed advisory, supervisory, or scientific advisory board member; 4. Stockholders’ representative; 5. Natural Person General Partner; and 6. Any foreign or functional equivalent of any of the foregoing. As the Policy clearly states, Executive includes a number of roles that are alternative to employees by Apollo Brokers. In short, while the complaint names them and describes them as employees, that is not relevant for purposes of the answer to the application question. Empirically, they were not employees at that time and Mr. Loeber answered the question correctly. Whether Apollo Had Raised Funding / Amount of Funding To Date Next (and this is responsive to the second and third closely related topical areas you mention in your letter). Your letter states that Mr. Loeber misrepresented the answer to the topical inquiry as to whether Apollo had raised funding. You state, Similarly, the “total amount of funding raised to date (including debt)” was answered as “$3,500,000.” However, at the time Apollo submitted the application on March 6th, Apollo had not, in fact, raised any money. As of April 28, 2020, Apollo was still fundraising with only a term sheet. It had not closed a funding round. 1 Additionally, you state later on the same page In the Application, Apollo answered “yes” to the question “[h] as your company raised funding?”. The wording of the question is in the past tense - raised, not in the future tense - raising. Based upon the available information, the answer should have been “no.” Had Apollo answered this question accurately, it would have been ineligible for the Policy. In fact, a “no” answer would have resulted in Apollo being directed to an entirely different application from the one that it filled out. Apollo could likely have obtained 1 The date of the application questions is misstated in your letter. Mr. Loeber submitted the application on March 5, 2020. insurance through another insurance carrier, but it could not have obtained coverage from Clear Blue. Apollo similarly misrepresented the amount it had raised. Apollo answered “$3,500,000” to the question “[w] hat is the total amount of funding raised to date (including debt)?”. Again, as of March 6th, Apollo had not raised any funding. Had Apollo answered accurately, the answer would have been $0.00. Respectfully, Mr. Loeber initially answered the question by listing that Apollo Brokers had not raised venture funding. This was immediately confirmed by Embroker’s Vice President of Inbound Sales, Amos Levy. Specifically, he wrote: In your application, you listed that your company has no venture funding. Unfortunately this means you are NOT eligible for our D&O program. I did see you mentioned you plan to raise capital soon, and D&O would be required. I would encourage you to redo the quote and enter the capital you expect to receive. If you answer yes to the “Has your company raised funding?” You will become eligible for our online program, and you should receive an instant quote. (emphasis added). It should be noted that the remainder of that quoted portion of the correspondence is of great concern and is discussed later in this correspondence. However, what is confirmed, is that Mr. Loeber supplied the correct answer to the question in the application and misrepresented nothing. He was thereafter corrected, redirected by Embroker to supply different information and did so. Past Claims Fourth, you indicate in your letter that Mr. Loeber misrepresented the topical inquiry about circumstances that are likely to result in claims. In particular, you state, “The final question in the Application asked about past claims and specifically asked whether the applicant is ‘already aware of a specific circumstance that is likely to result in a claim under the coverage I am applying for.’” You then state, “The Complaint makes clear that Mr. Loeber engaged in questionable behavior.” First, we remind you (we shouldn’t have to) that a Complaint contains allegations and is not, standing alone, factually dispositive. Such would obviate the existence of the entire U.S. legal system and its foundational principle: innocent until proven guilty. In contravention of this principle, the next three pages of your letter contain virtually verbatim recitations of the underlying complaint-accepted as fact-with the conclusion, ‘As of February 28, 2020, Mr. Loeber knew that the copying of thousands of Coalition files to his personal storage device was improper and a breach of his PIIA. Thus, at the time the Application was submitted on March 6, 2020, he was aware of “a specific circumstance likely to result in a claim under the Policy.” Each of the material allegations in the complaint is at issue and vigorously denied by Mr. Loeber and your other insureds under the policy. Additionally, you suggest that, “While Mr. Loeber might try to argue he didn’t realize his actions were inappropriate, this argument fails given that Coalition’s outside counsel met with Mr. Loeber on February 28, 2020 and “provided him a highlighted copy of this employment agreements with Coalition, and explained to [Mr. Loeber] his ongoing obligations to the company.” We fail to see what about that alleged discussion, in which someone reminded someone of a continuing obligation, would indicate that a claim was likely. Mr. Loeber rejects entirely the allegation (and your subsequent suggestion) that he did anything in contravention of these agreements. The suggestion by the Plaintiffs is factually and legally incorrect and, moreover, neither Embroker nor Clear Blue can reasonably utilize these allegations as forming a state of mind by Mr. Loeber of, “a circumstance that is likely to result in a claim” that would render his later response a misrepresentation. Reminders of this sort by executives to other departing executives are common. What is missing from the complaint provisions you cite, is a suggestion or statement by Coalition’s counsel that they informed Mr. Loeber of actionable conduct at that time . Surely, if this had occurred (it didn’t), the allegation in the complaint would had indicated as much and would be the key factor necessary for Mr. Loeber to form a belief that a claim was likely to occur. Mr. Loeber acted appropriately at all times and, though the allegations are indeed provocative, they have not been established as true. They cannot by themselves suggest a state of knowledge by Mr. Loeber and, accordingly cannot form the predicate for unilateral rescission by Embroker or Clear Blue. Critically though, even if they were proven true (they are not), they would be of no moment for the remaining insureds under the policy, who remain entitled to the benefits of the coverage regardless of any suggestion about Mr. Loeber’s knowledge. As stated previously, the policy is severable and, under the explicit terms of the Insurance Policy, the knowledge of Mr. Loeber-whatever that was- cannot for an appropriate basis for avoiding Embroker’s or Clear Blue’s coverage obligation to those individuals. This is addressed later in this correspondence. Embroker itself instructed Mr. Loeber to prescriptively answer questions to navigate the electronic algorithms to obtain coverage. It appears that you have not reviewed all the pertinent documents relating to the application process. If you had, you would have seen that Mr. Loeber supplied an accurate response to the capital-raise question in the application (as well as accurate responses to the other questions as well). Embroker then instructed Mr. Loeber to change his response to the question so that a quote could be provided. To more specifically detail that conversation, as you stated in your correspondence, on July 21, 2020, Mr. Loeber submitted his application online-answering each question accurately. However, On Thursday, March 5, 2020 at 5:44 PM, Embroker’s Vice President of Inbound Sales, Amos Levy, responded and wrote: In your application, you listed that your company has no venture funding. Unfortunately this means you are NOT eligible for our D&O program. I did see you mentioned you plan to raise capital soon, and D&O would be required. I would encourage you to redo the quote and enter the capital you expect to receive. If you answer yes to the “Has your company raised funding?” You will become eligible for our online program, and you should receive an instant quote. In immediate response, Mr. Loeber wrote (at 5:46 pm): Sounds good. I'll re-enter the quote and expect the amount of funding I expect to receive. I won't adjust any of the questions about assets/liabilities though, unless you think that would be the correct action to take. Thank you! John Next, Mr. Levy wrote (at 5:51 pm): Thanks for the response. Please do reenter it. When answering yes to the funding question you will receive a different much more streamline question set. The only kick outs after the funding question related to claims and bankruptcy’s. As long as you can answer no to those questions you should receive an online bindable quote. As stated previously, Mr. Loeber answered each question correctly. As you can see from the quoted exchange (which we have also supplied copies of the email thread to this correspondence), Mr. Levy intentionally directed Mr. Loeber to clarify his response with the expected capital. This request represents, at best, an amendment of the inquiry contained within the application. In any event, Mr. Loeber followed the instructions of Embroker in completing the application requests appropriately and has not made any misrepresentation in the application. Even if Embroker could demonstrate a misrepresentation by Mr. Loeber (it cannot), it is not entitled to ascribe or “impute” any such statement or representation to other insureds-all of whom still retain a severable right to the coverage afforded under the Policy. As you know, the Policy contains the following provision under Section XIV. Application: You represent and acknowledge that the statements and information contained in the Application are true, accurate, and complete, and are the basis of this Policy and are to be considered incorporated into and constituting a part of this policy. This Policy is issued in reliance upon the truth and accuracy of the Application. If the Application contains misrepresentations or omissions that materially affect the acceptance of the risk or the hazard assumed by Us, this Policy shall be void ab initio and shall not afford coverage for any Insured who knew on the inception date of this Policy the facts that were not truthfully disclosed in the Application, whether or not the Insured knew the Application contained such misrepresentation or omission. For the purpose of determining coverage, knowledge possessed by: 1. Any Team Member shall not be imputed to any other Team Member; and 2. the Tech Startup’s Chief Executive Officer, functionally equivalent, or anyone signing the Application shall be imputed to all Insureds other than Team Members. (emphasis added). As you know, this language ensures that the policy and the application is both severable and non-imputable. More specifically, even if Mr. Loeber misrepresented any information in the application of insurance (he did not), none of those supposed misrepresentations shall be imputed to Team Members. Accordingly, all the remaining defendants are still entitled to the full benefit of the policy’s coverage. Given this information, it is our hope (and our expectation) that Clear Blue and Embroker immediately retract its inappropriate attempt to rescind this policy or any declaration that it is void ab initio and immediately honor its contractual commitments for coverage for the named defendants in this matter. Of course, we remain interested in finding an amicable resolution to this matter and we are hopeful that you will immediately inform us of the rectification of your determination. As you can imagine, the prejudice to our defense in this matter to this point is considerable with this unresolved and we believe it only compounds day-by-day. Please let me know if you have any questions or would like to discuss further. Sincerely, John Loeber Enclosures: Email Thread I-9s Employment Agreements EXHIBIT O EXHIBIT P August 20, 2020 Deanna Johnston, General Counsel, VP of Compliance Clear Blue Specialty Insurance Company 200 South College Street, Suite 2250 Charlotte, NC 28202 Embroker Insurance Services LLC 24 Shotwell Street San Francisco, CA 94103 By Email: deanna@embroker.com RE: Insured: Apollo Brokers, Inc. Address: 401 Harrison Street, Unit 15B, San Francisco, CA Policy No.: AX01-1103-01 Policy Period: March 6, 2020 to March 6, 2021 Claims No.: 2020685678 Dear Ms. Johnston, Thank you for your letter dated August 12, 2020. This letter confirms its receipt, and provides a response that we hope will not only create further clarity, but will move you to begin to honor your contractual obligations to us, as well as your responsibility to act in good faith and fair dealing with Apollo Brokers and the individual insureds. Your withdrawal of your previous positions. We are pleased to see that you have withdrawn your position regarding the alleged misrepresentations in the application as relating to (1) the number of employees and (2) Apollo’s fundraising activities. As to item (2), your withdrawal of that as a predicate for your attempts at rescission of the contract is encouraging, but we are struck by this reversal since the materials we provided were already in your possession (indeed, in Embroker’s own email response). It is difficult to interpret the shift in your emphasis now to the “past claims” question and discussions between Mr. Loeber and Coalition as anything but an opportunistic refocus to other alleged (unproven) irregularities to lean on an even weaker rationale for refusing your contractual obligations. The single remaining basis you cite for your void ab initio argument-that contrary to his response, Mr. Loeber somehow made a misrepresentation in the application as it relates to past claims is not accurate and cannot be established through citation of allegations in a complaint. We hope this letter, focused on that issue, provides additional clarity to encourage Clear Blue to honor its commitments to the insureds under the binding, enforceable contract now being disavowed by your company at great expense to your policyholders. In your letter, you continue to suggest that Mr. Loeber misrepresented his knowledge during the application. You state: However, based on the information you’ve provided to date, Clear Blue maintains its position that as of February 28, 2020, Mr. Loeber knew of “a specific circumstance likely to result in a claim under the Policy.” Had Apollo answered the question regarding Past Claims accurately, it would have been ineligible for the Policy. The clear and unambiguous language in the warranty statement Apollo signed in the Application permits the Policy to be voided. As stated in our earlier correspondence and restated here unequivocally, Mr. Loeber denies that he had any knowledge of a specific circumstance likely to result in a claim under the Policy at the time of his submission of the application. He answered the question correctly and his answer was not a misrepresentation and cannot serve as a basis for rescission or avoidance of your obligations under the Policy. Moreover, reliance upon allegations the complaint and letters from counsel purporting to create this knowledge in Mr. Loeber is misplaced and inappropriate. Specifically, you state: We refer you to our prior letter regarding the allegations (made under penalty of perjury) contained in the complaint regarding Mr. Loeber’s actions prior to the submission of the Application. Moreover, our continued investigation has revealed additional information regarding the February 28, 2020, meeting between Mr. Loeber, Coalition and Coalition’s outside counsel. It is our understanding that, at that meeting, Mr. Loeber was specifically told that if he and the other named defendants continued to pursue Apollo Brokers, Coalition would file suit against the new company and the departing employees. We further understand that this conversation was confirmed in a March 13, 2020, letter from Coalition’s outside counsel to Mr. Loeber. We’ve repeatedly requested all correspondence between Mr. Loeber and Coalition’s outside counsel. We are troubled by your continued reliance upon allegations in a complaint as being equivalent to facts (that have not been proven, are at issue in the litigation, and are denied by your policyholder). We assume your use of the phrase “made under penalty of perjury” is to somehow emphasize the veracity and reliability of those allegations because the complaint has been verified. First, it should be noted that under California pleading rules, the verification of a complaint is not some guarantee of its absolute truth-it only attests to the pleaders’ belief of their truth. Specifically, the section reads: In all cases of a verification of a pleading, the affidavit of the party shall state that the same is true of his own knowledge, except as to the matters which are therein stated on his or her information or belief, and as to those matters that he or she believes it to be true; and where a pleading is verified, it shall be by the affidavit of a party, unless the parties are absent from the county where the attorney has his or her office, or from some cause unable to verify it, or the facts are within the knowledge of his or her attorney or other person verifying the same. (emphasis added) California Code of Civil Procedure, Part 2, Title 6, Chapter 446. More specifically, Mr. Motta’s verification at the end of the verified complaint reads as follows: I am the Chief Executive Officer of Coalition, Inc., the Plaintiff in this action, and I am authorized to make this verification on its behalf. I have read the foregoing Complaint and know its contents. I am informed and believe and on that ground allege that the matters stated in the foregoing Complaint are true. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. (emphasis added). Allegations are merely assertions of fact. Until they are proved, they are only assertions. The fundamental coverage grant under the policy is to provide the insured with the benefit of their bargain-to be defended appropriately in order to fairly refute allegations they believe are untrue. To simply accept allegations as fact and to use them as a basis for forfeiture of that coverage deprives those insureds of the precise instrument they (and you) agreed upon for that express purpose. Your position regarding past claims . (1) Your request for letters Your letter suggests somehow that we have withheld correspondence that you have repeatedly requested from Goodwin to your insureds. To the contrary, on May 1, 2020, we supplied the March 13, 2020 letter from Goodwin to Mr. McNamara, and noted that Messrs. Loeber and Becker received the same letter (they are virtually identical, save for a preamble). Regardless, please find all three letters, as well as an excerpt from our email thread in which we submitted said letter, enclosed. (2) Your insinuations regarding the February 28, 2020 meeting You wrote: It is our understanding that, at that meeting, Mr. Loeber was specifically told that if he and the other named defendants continued to pursue Apollo Brokers, Coalition would file suit against the new company and the departing employees. We further understand that this conversation was confirmed in a March 13, 2020, letter from Coalition’s outside counsel to Mr. Loeber. Your understanding is incorrect and, given the materials you have in your possession already, cannot be reasonably inferred from the record. First, the complaint contains no such allegation. Instead, it contains only two references to the conversation that occurred on February 28, 2020. Specifically, it states: At the time Coalition terminated Loeber on February 28, 2020, Coalition’s outside counsel met with him, provided him a highlighted copy of his employment agreements with Coalition, and explained to him his ongoing obligations to the company. Complaint at ¶38, and: At the time Coalition terminated the individual defendants’ employment, Coalition’s counsel met with each individual defendant, presented highlighted copies of their employment agreements, and specifically admonished them about their ongoing contractual obligations to Coalition. On March 13, March 31, and April 15, 2020, Coalition sent letters to the individual defendants reminding them of the contractual obligations described above and requesting them to cease Apollo’s operations and return any retained Coalition proprietary documents. The defendants have neither ceased operating Apollo nor returned all Coalition documents. Complaint at ¶66. Importantly, the complaint does not allege that the defendants were reminded to cease Apollo’s operations during the February 28 meeting. This occurred-according to the plaintiff’s own, verified allegation-on and after March 13, which is after the February 28 meeting and after Mr. Loeber applied for the insurance about March 5/6, 2020. Importantly, the verified complaint-by its own terms-describes March 13 as the earliest date that Coalition did anything more than simply remind Mr. Loeber and the others of their obligations under their agreements. Critically, the complaint describes March 13 as the earliest date that Coalition “request[ed] them to cease Apollo’s operations”. The letter sent by Goodwin to Mr. Loeber on March 13, 2020-contrary to the verified complaint-does not contain any request to cease Apollo’s operations and contains only a few mentions of the February 28 meeting (which, again, is a nearly verbatim copy of the letter to Mr. McNamara). It does not contain any verifiable record of the conversation, and contains only a few general statements purporting to confirm conversations during that meeting. That letter stated: This will confirm that during our meeting on Friday, February 28, 2020, you were provided with additional copies of certain documents you signed at the time of your hire by Crucible Risk, Inc. (now known as Coalition, Inc., referred to herein as the “Company”) in March 2017. These include a Proprietary Information and Inventions Agreement (“PIIA”); a Technology Assignment Agreement (“TAA”); and a Stock Purchase Agreement (“SPA”). We discussed these agreements with you, and reminded you of your obligations under them, including the portions to which we added highlighting for purposes of our discussion. We invited any questions you may have had and responded to them. No conclusion can be drawn from this letter, or the complaint, that Mr. Loeber received any information before he applied for the policy other than a “reminder” of his obligations under a variety of agreements. No inference can be made that a lawsuit or other matters is likely to follow. Indeed, Mr. Loeber and the other defendants emphatically state that they have not violated any of the provisions of these agreements, did not intend to compete with Coalition, and did not take or convert any documents in contravention of their agreements. They intend to vigorously defend themselves on each of these points and nothing in the correspondence or pleadings you cite establish facts that Mr. Loeber knew of a specific circumstance likely to become a claim under the Policy. To conclude, we reiterate our statements from our previous letter: Reminders of ongoing obligations by executives to departing employees are common. What is missing is a suggestion or statement by Coalition’s counsel that they informed Mr. Loeber of actionable conduct at that time. Surely, if this had occurred (it didn’t), the allegation in the complaint would have indicated as much and would be the key factor necessary for Mr. Loeber to form a belief that a claim was likely to occur. As you know, we expressed a number of concerns in our prior correspondence about your coverage determination to this point. While we do not restate all those points here, they remain of paramount concern about your commitment to your contractual obligations. Given the information we have supplied, it is our hope that you withdraw your position regarding prior claims, and finally retract your inappropriate attempts to rescind this policy and to declare it void ab initio. We again request that you immediately honor your contractual commitments for coverage for the named defendants in this matter. Sincerely, John Loeber Enclosures: Goodwin letters to Messrs. Becker, Loeber, McNamara Email thread excerpt EXHIBIT Q EXHIBIT R Clark Hill One America Plaza 600 West Broadway, Suite 500 San Diego, CA 92101 Mark E. Hellenkamp T (619) 557-0404 T 619.819.2404 F (619) 557-0460 F 619.557.0460 Email: MHellenkamp@ClarkHill.com clarkhill.com 260904590.v1 September 28, 2020 Via Email Deanna L. Johnston General Counsel & Vice President of Compliance Embroker Insurance Services LLC 24 Shotwell Street San Francisco, CA 94103 Email: deanna@embroker.com Claimant: Coalition Inc. Insured: Apollo Brokers, Inc. Insurer: Clear Blue Specialty Insurance Company Policy No.: AX01-1103-01 Policy Period: March 6, 2020 to March 6, 2021 Dear Ms. Johnston: Thank you for discussing this matter with us on Friday. We received your email correspondence this morning and were happy to note that you were able to procure Mr. Loeber’s declaration from the docket over the weekend. We request a full and complete copy of the Apollo application, and any of Clear Blue’s and Embroker’s notes, correspondence and other documentation relating to, referencing or documenting any communications you or Clear Blue have had with Coalition and/or its employees or representatives, including any calendar entries. Thereafter, we will respond to your correspondence and also address your admission that you have been in contact with Coalition regarding issues relating to Apollo’s alleged policy misrepresentation. Thank you for your attention to this matter. Sincerely, Mark E. Hellenkamp MEH:lo cc: Robert Tomilson - (Via email) Mark E. Hellenkamp EXHIBIT S 1 From: Deanna Johnston Sent: Monday, September 28, 2020 9:12 AM To: Hellenkamp, Mark E.; Tomilson, Robert W. Subject: Apollo Brokers - Coverage Dispute Dear Mark & Rob: Thank you for your time last week regarding your client, Apollo Brokers, Inc., et al. Also, thank you for informing me that additional documents had been filed in the underlying matter with Coalition. I have reviewed a number of the documents, including Mr. Loeber's declaration. Two paragraphs of his declaration in particular raise additional questions regarding Mr. Loeber's knowledge at the time he submitted the application for D&O insurance. The first is paragraph 6 regarding "threats made to dissuade [Apollo] from competing with Coalition . . ." which may or may not related to a threat by Coalition to file suit against Apollo, et al. The second is paragraph 35 regarding Mr. Loeber's retention of Mr. Graves of Wilson Sonsini who Mr. Loeber had engaged to provide "advice concerning his departure." The CMC statement written on behalf of your clients raises additional questions regarding your clients' prior knowledge. The following is from Defendants' Submission: Mr. Hering - admittedly skilled at using civil litigation to achieve his business goals - immediately took a decisively different tact than his CEO during this follow-up February 26 meeting. Despite Defendants’ stated desire to, as a brokerage, distribute Coalition insurance as their flagship product, Mr. Hering accused Defendants of building a business that would compete with Coalition if they were to offer their own cyberinsurance policy (which they do not). In this follow-up meeting, Mr. Motta asked Defendants what percentage of their new company they would gift to Coalition (assuming they left Coalition and moved forward with their proposed business concept). The train quickly veered off the track, with Mr. Hering personally threatening Defendants, claiming Defendants have declared “jihad” with the founders, and promising to use his influence to interfere with any fund-raising efforts Defendants might eventually undertake. Once he finished pounding the table, Mr. Hering reinforced that a positive outcome was still possible if Defendants offered him a piece of any company they’d start. Two days later, eschewing the measured transition plans discussed during this meeting, Coalition terminated both Mr. Loeber’s and Mr. Becker’s employment. During their exit interviews, Plaintiff’s own lawyers claimed (mistakenly) that Defendants were prohibited from starting any company involving cybersecurity, insurance, or reinsurance. (Emphasis added.) Unfortunately, these statements raise more questions regarding what Mr. Loeber knew or had been told prior to completing the D&O application. In addition to the other matters we discussed which might allow us to resolve this matter absent filing a DJ action, we ask that your clients agree to an examination under oath so we may fully investigate what facts they were aware of at the time the application was submitted. I look forward to your response. Thank you. Deanna L. Johnston General Counsel & Vice President Compliance 2 www.embroker.com 24 Shotwell St. | San Francisco, CA 94103 O: 415 702 3083 deanna@embroker.com This email may contain confidential and/or privileged material for the sole use of the intended recipient(s). Any review, use, distribution or disclosure by others is strictly prohibited. If you are not the intended recipient (or authorized to receive for the recipient), please contact the sender by reply email and delete all copies of this message. EXHIBIT T Clark Hill One America Plaza 600 West Broadway, Suite 500 San Diego, CA 92101 Mark E. Hellenkamp T (619) 557-0404 T 619.819.2404 F (619) 557-0460 F 619.557.0460 Email: MHellenkamp@ClarkHill.com clarkhill.com 260966805.v1 October 5, 2020 Via Email Deanna L. Johnston General Counsel & Vice President of Compliance Embroker Insurance Services LLC 24 Shotwell Street San Francisco, CA 94103 Email: deanna@embroker.com Claimant: Coalition Inc. Insured: Apollo Brokers, Inc. Insurer: Clear Blue Specialty Insurance Company Policy No.: AX01-1103-01 Policy Period: March 6, 2020 to March 6, 2021 Dear Ms. Johnston: We write in response to your recent correspondence and to explain the basis for Apollo Brokers, Inc.’s (“Apollo” or “Insured”) forthcoming bad faith action arising from Embroker Insurance Services LLC’s (“Embroker”) and Clear Blue Specialty Insurance Company’s (“Clear Blue”) handling of Apollo’s claim under the above referenced policy (“Policy”). Embroker’s and Clear Blue’s disclaimer of coverage contradicts the explicit terms of the Policy and is based on a dereliction of your duty to investigate, including bad faith reliance on your Insured’s adversaries’ allegations. On July 21, 2020, after Apollo had properly notified Clear Blue of the Coalition, Inc. (“Coalition”) lawsuit, Apollo received a letter advising that Clear Blue was denying coverage and intended to “void the Policy ab initio,” based on purported “misrepresentations” in Apollo’s application (“Application”). The supposed misrepresentations involved (i) the number of Apollo employees (ii) the amount of Apollo fund-raising and (iii) “past claims.” The letter notified Apollo that it could provide refuting documentation by July 31, 2020 or simply stipulate to the Policy being voided. Otherwise, “Clear Blue will be required to file a declaratory judgment action to void the Policy.” This bad faith threat flatly contradicts the plain terms of the Policy, which provide that Clear Blue “shall not have the right to rescind this Policy or any Coverage Part for any reason.” (See e.g., Imperial Cas. & Indem. Co. v. Sogomonian (1988) 198 Cal.App.3d 169 [improper attempt to rescind policy is bad faith and “fraught with peril” for insurer].) EXHIBIT U 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 CASE NO.: CGC-20-588300 PROOF OF SERVICE LEGAL\50931634\1 C O Z E N O ’C O N N O R 1 0 1 M O N T G O M E R Y S T , S U IT E 1 4 0 0 S A N F R A N C IS C O , C A 9 4 1 0 4 PROOF OF SERVICE I, the undersigned, declare that I am employed in the city of San Francisco, State of California. I am over the age of 18 years and not a party to the within cause; my business address is 101 Montgomery Street, Suite 1400, San Francisco, California. On February 10, 2021, I served the following documents: VERIFIED CROSS-COMPLAINT on the following interested party(ies) in the matter of Apollo Brokers, Inc., et al. v. Clear Blue Specialty Insurance Company, et al., San Francisco County Superior Court Case No.: CGC-20- 588300 SERVICE LIST Mark E. Hellenkamp David M. Plouff CLARK HILL LLP 600 West Broadway, Suite 500 San Diego, CA 92101 Counsel for Plaintiffs Apollo Brokers, Inc.; John Loeber; Alex Becker and John Shea McNamara Tel: 619.557.0404 Fax: 619.557.0460 Email: mhellenkamp@clarkhill.com dplouff@clarkhill.com Robert W. Tomilson CLARK HILL LLP 2005 Market Street Philadelphia, PA 19103 Counsel for Plaintiffs Apollo Brokers, Inc.; John Loeber; Alex Becker and John Shea McNamara Tel: 215.640.8550 Fax: 215.640.8501 Email: rtomlinson@clarkhill.com By electronic service. Via a vendor per San Francisco Superior Court Local Rule 2.11. A copy of the vendor’s receipt page will be maintained in our file. I declare under penalty of perjury that the foregoing is true and correct and that this declaration was executed on February 10, 2021 at Pacifica, California. Sandra Richey
