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. . ~ Dr, Jeris Danielson May 22, 1986 Page Two could find, as a minimum, that coverage for any .of our contracts with the State would be cancelled or, of much greater concern, that our entire professional liability insurance coverage for all of our operations might not be renewed. This would have a significant impact on our operations in both Colorado and the other areas throughout the united States where we provide professional services. I am sure that you -- and all Boyle clients -- want Boyle to maintain adequate liability insurance coverage both during and well after completion of the work, The position of the State and Boyle must certainly coincide on this point. As you know, claims attributable to a consultant's acts (which would unquestionably be alleaed to be based on negligence) could include practically anything connected with the project, and might occur during the proj ect or, more probable many years after our assignment with the State is complete. Without limitation to negligence, we would be forced to indemnify the State, its employees, and agents, from all costs. includina attorneys' fees. incurred as a result of such claim. While we would, obviously, have to defend ourselves and try to obtain dismissal on the basis of non-negligence, we would nevertheless have to indemnify the State for their costs of defense, including attorneys' fees, despite a lack of demonstrated negligence. As you know, these defense costs could be enormous and, potentially, much greater than judgments themselves, More important, there is no insurance available to cover these costs, I would be placing the stockholders' equity of Boyle Engineering Corporation at risk to cover such open-ended costs. Boyle (and other consultants) do not have the resources to absorb these uninsurable exposures for any and all claims that may arise from our work on this assignment. This is asking the consultant to assume risk over which he has totally no control whatsoever, For example, a settlement with Kansas might be proposed and implemented employing, in part, the analysis of the consultant(s). Several years after the fact, a disgruntled ditch company might sue, or a class action by land owners might be instituted alleging that their water rights were diminished in the settlement and that their land values were, accordingly, reduced. Whether the claim is true or not, Boyle would have to cover the enormous expenses of defending such a claim directly from our stockholders' equity since there would be no insurance coverage, Of equal or greater concern is that we may find that we do not even have insurance coverage for negligence next year if we sign the State's indemnification provision,