| | | | | | | | |
 | | | | | | | | EXHIBIT 10.8 |
| | | Chubb Group of Insurance Companies | | | | Executive Protection PortfolioSM |
| | | 15 Mountain View Road | | | | Executive Liability and Entity Securities |
| | | Warren, New Jersey 07059 | | | | Liability Coverage Section |
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| DECLARATIONS | | FEDERAL INSURANCE COMPANY |
| | | A stock insurance company, incorporated under the laws of Indiana, herein called the Company |
THIS COVERAGE SECTION PROVIDES CLAIMS MADE COVERAGE, WHICH APPLIES ONLY TO “CLAIMS” FIRST MADE DURING THE “POLICY PERIOD”, OR ANY EXTENDED REPORTING PERIOD. THE LIMIT OF LIABILITY TO PAY “LOSS” WILL BE REDUCED, AND MAY BE EXHAUSTED, BY “DEFENSE COSTS”, AND “DEFENSE COSTS” WILL BE APPLIED AGAINST THE RETENTION. READ THE ENTIRE POLICY CAREFULLY.
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Item 1. | | Parent Organization: | | | | |
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| | | RYERSON, INC. 2621 WEST 15TH PLACE CHICAGO, IL 60608 | | | | |
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Item 2. | | Limits of Liability: | | | | |
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| | | (A) EachClaim: | | $ | 15,000,000.00 | |
| | | (B) EachPolicy Period: | | $ | 15,000,00000 | |
| | | (C) Sublimit for allSecurityholder Derivative Demands under Insuring Clause 4: | | $ | 250,000.00 | |
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Item 3. | | Coinsurance Percentage: | | | | |
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| | | (A)Securities Claims: | | | 000 | % |
| | | (B)Claims other thanSecurities Claims: | | | 0.00 | % |
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Item 4. | | Retention: | | | | |
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| | | (A) Insuring Clauses 1 and 4: | | | None | |
| | | (B) Insuring Clause 2 (Claims other thanSecurities Claims): | | $ | 1,000,000.00 | |
| | | (C) Insuring Clauses 2 and 3 (Securities Claims only): | | $ | 2,000,000.00 | |
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Item 5. | | Organization: | | | | |
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| | | Ryerson, Inc. and its Subsidiaries | | | | |
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| | | Chubb Group of Insurance Companies | | | | Executive Protection PortfolioSM |
| | | 15 Mountain View Road | | | | Executive Liability and Entity Securities |
| | | Warren, New Jersey 07059 | | | | Liability Coverage Section |
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Item 6. | | Extended Reporting Period: | | | | |
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| | | (A) Additional Period: | | one year | | | | |
| | | (B) Additional Premium: | | 150 % of Annualized Premium for the ExpiringPolicy Period | | |
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| Item 7. | | Pending or Prior Date: | | None | | | | |
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| | Executive Protection PortfolioSM |
| | Executive Liability and Entity Securities |
| | Liability Coverage Section |
In consideration of payment of the premium and subject to the Declarations, the General Terms and Conditions, and the limitations, conditions, provisions and other terms of this coverage section, the Company and the Insureds agree as follows:
Insuring Clauses
Executive Liability Coverage Insuring Clause 1
| | 1. | The Company shall pay, on behalf of each of theInsured Persons, Lossfor which theInsured Personis not indemnified by theOrganizationand which theInsured Personbecomes legally obligated to pay on account of anyClaimfirst made against theInsured Person,individually or otherwise, during thePolicy Periodor, if exercised, during the Extended Reporting Period, for aWrongful Actcommitted, attempted, or allegedly committed or attempted by suchInsured Personbefore or during thePolicy Period,but only if suchClaimis reported to the Company in writing in the manner and within the time provided in Subsection 15 of this coverage section. |
Executive Indemnification Coverage Insuring Clause 2
| | 2. | The Company shall pay, on behalf of theOrganization, Lossfor which theOrganization grants indemnification to anInsured Person,as permitted or required by law, and which theInsured Personbecomes legally obligated to pay on account of anyClaimfirst made against theInsured Person,individually or otherwise, during thePolicy Periodor, if exercised, during the Extended Reporting Period, for aWrongful Actcommitted, attempted, or allegedly committed or attempted by suchInsured Personbefore or during thePolicy Period,but only if suchClaimis reported to the Company in writing in the manner and within the time provided in Subsection 15 of this coverage section. |
Entity SecuritiesCoverageInsuring Clause 3
| | 3. | The Company shall pay, on behalf of theOrganization, Losswhich theOrganizationbecomes legally obligated to pay on account of anySecurities Claimfirst made against theOrganizationduring thePolicy Periodor, if exercised, during the Extended Reporting Period, for aWrongful Actcommitted, attempted, or allegedly committed or attempted by theOrganization or theInsured Persons before or during thePolicy Period,but only if suchSecurities Claimis reported to the Company in writing in the manner and within the time provided in Subsection 15 of this coverage section. |
Securityholder Derivative Demand Coverage Insuring Clause 4
| | 4. | The Company shall pay, on behalf of theOrganization, Investigative Costsresulting from aSecurityholder Derivative Demandfirst received by theOrganizationduring thePolicy Periodor, if exercised, during the Extended Reporting Period, for aWrongful Actcommitted, attempted, or allegedly committed or attempted before or during thePolicy Period,but only if suchSecurityholder Derivative Demandis reported to the Company in writing in the manner and within the time provided in Subsection 15 of this coverage section. |
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| | | Executive Protection PortfolioSM |
| | | Executive Liability and Entity Securities |
| | | Liability Coverage Section |
Definitions
| | 5. | When used in this coverage section: |
Applicationmeans all signed applications, including attachments and other materials submitted therewith or incorporated therein, submitted by theInsureds to the Company for this coverage section or for any coverage section or policy of which this coverage section is a direct or indirect renewal or replacement.
Applicationshall also include, for eachOrganization,all of the following documents whether or not submitted with or attached to any such signed application: (i) the Annual Report (including financial statements) last issued to shareholders before this policy’s inception date; (ii) the report last filed with the Securities and Exchange Commission on Form 10-K before this policy’s inception date; (iii) the report last filed with the Securities and Exchange Commission on Form 10-Q before this policy’s inception date; (iv) the proxy statement and (if different) definitive proxy statement last filed with the Securities and Exchange Commission before this policy’s inception date; (v) all reports filed with the Securities and Exchange Commission on Form 8-K during the twelve months preceding this policy’s inception date; and (vi) all reports filed with the Securities and Exchange Commission on Schedule 13D, with respect to any equity securities of suchOrganization,during the twelve months preceding this policy’s inception date. All such applications, attachments, materials and other documents are deemed attached to, incorporated into and made a part of this coverage section.
Claimmeans:
| | (1) | when used in reference to the coverage provided by Insuring Clause 1 or 2: |
| | (a) | a written demand for monetary damages or non-monetary relief; |
| | (b) | a civil proceeding commenced by the service of a complaint or similar pleading; or |
| | (c) | a formal civil administrative or civil regulatory proceeding commenced by the filing of a notice of charges or similar document or by the entry of a formal order of investigation or similar document, |
against anInsured Person for aWrongful Act, including any appeal therefrom;
| | (2) | when used in reference to the coverage provided by Insuring Clause 3: |
| | (a) | a written demand for monetary damages or non-monetary relief; |
| | (b) | a civil proceeding commenced by the service of a complaint or similar pleading; or |
| | (c) | a formal civil administrative or civil regulatory proceeding commenced by the filing of a notice of charges or similar document or by the entry of a formal order of investigation or similar document, but only while such proceeding is also pending against anInsured Person, |
against anOrganization for aWrongful Act, including any appeal therefrom; or
| | (3) | when used in reference to the coverage provided by Insuring Clause 4, aSecurityholder Derivative Demand. |
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| | Executive Protection PortfolioSM |
| | Executive Liability and Entity Securities |
| | Liability Coverage Section |
Except as may otherwise be provided in Subsection 12, Subsection 13(g),or Subsection 15(b) of this coverage section, aClaimwill be deemed to have first been made when suchClaimis commenced as set forth in this definition (or, in the case of a written demand, including but not limited to anySecurityholder Derivative Demand,when such demand is first received by anInsured).
Defense Costsmeans that part ofLoss consisting of reasonable costs, charges, fees (including but not limited to attorneys’ fees and experts’ fees) and expenses (other than regular or overtime wages, salaries, fees or benefits of the directors, officers or employees of theOrganization)incurred in defending anyClaimand the premium for appeal, attachment or similar bonds.
Domestic Partner means any natural person qualifying as a domestic partner under the provisions of any applicable federal, state or local law or under the provisions of any formal program established by theOrganization.
Financial Impairmentmeans the status of anOrganizationresulting from:
| | (a) | the appointment by any state or federal official, agency or court of any receiver, conservator, liquidator, trustee, rehabilitator or similar official to take control of, supervise, manage or liquidate suchOrganization; or |
| | (b) | suchOrganization becoming a debtor in possession under the United States bankruptcy law or the equivalent of a debtor in possession under the law of any other country. |
Insured means theOrganizationand anyInsured Person.
Insured Capacitymeans the position or capacity of anInsured Personthat causes him or her to meet the definition ofInsured Personset forth in this coverage section.Insured Capacitydoes not include any position or capacity held by anInsured Personin any organization other than theOrganization,even if theOrganizationdirected or requested theInsured Personto serve in such position or capacity in such other organization.
Insured Personmeans any natural person who was, now is or shall become:
| | (a) | a duly elected or appointed director, officer,Manager,or the in-house general counsel of anyOrganizationchartered in the United States of America; |
| | (b) | a holder of a position equivalent to any position described in (a) above in anOrganizationthat is chartered in any jurisdiction other than the United States of America; or |
| | (c) | solely with respect toSecurities Claims,any other employee of anOrganization,provided that such other employees shall not, solely by reason of their status as employees, beInsured Personsfor purposes of Exclusion 6(c). |
Investigative Costsmeans reasonable costs, charges, fees (including but not limited to attorneys’ fees and experts’ fees) and expenses (other than regular or overtime wages, salaries, fees, or benefits of the directors, officers, or employees of theOrganization)incurred by theOrganization(including its Board of Directors or any committee of its Board of Directors) in investigating or evaluating on behalf of theOrganizationwhether it is in the best interest of theOrganizationto prosecute the claims alleged in aSecurityholder Derivative Demand.
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| | | Executive Protection PortfolioSM |
| | | Executive Liability and Entity Securities |
| | | Liability Coverage Section |
Lossmeans:
| | (a) | the amount that anyInsured Person(for purposes of Insuring Clauses 1 and 2) or theOrganization(for purposes of Insuring Clause 3) becomes legally obligated to pay on account of any coveredClaim,including but not limited to damages (including punitive or exemplary damages, if and to the extent that such punitive or exemplary damages are insurable under the law of the jurisdiction most favorable to the insurability of such damages provided such jurisdiction has a substantial relationship to the relevantInsureds,to the Company, or to theClaimgiving rise to the damages), judgments, settlements, pre-judgment and post-judgment interest andDefense Costs; or |
| | (b) | for purposes of Insuring Clause 4, coveredInvestigative Costs. |
Lossdoes not include:
| | (a) | any amount not indemnified by theOrganizationfor which anInsured Personis absolved from payment by reason of any covenant, agreement or court order; |
| | (b) | any costs incurred by theOrganizationto comply with any order for injunctive or other non-monetary relief, or to comply with an agreement to provide such relief; |
| | (c) | any amount incurred by anInsuredin the defense or investigation of any action, proceeding or demand that is not then aClaimeven if (i) such amount also benefits the defense of a coveredClaim,or (ii) such action, proceeding or demand subsequently gives rise to aClaim; |
| | (d) | taxes, fines or penalties, or the multiple portion of any multiplied damage award, except as provided above with respect to punitive or exemplary damages; |
| | (e) | any amount not insurable under the law pursuant to which this coverage section is construed, except as provided above with respect to punitive or exemplary damages; |
| | (f) | any amount allocated to non-covered loss pursuant to Subsection 17 of this coverage section; or |
| | (g) | any amount that represents or is substantially equivalent to an increase in the consideration paid (or proposed to be paid) by anOrganizationin connection with its purchase of any securities or assets. |
Manager means any natural person who was, now is or shall become a manager, member of the Board of Managers or equivalent executive of anOrganizationthat is a limited liability company.
Organizationmeans, collectively, those organizations designated in Item 5 of the Declarations for this coverage section, including any such organization in its capacity as a debtor in possession under the United States bankruptcy law or in an equivalent status under the law of any other country.
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| | Executive Protection PortfolioSM |
| | Executive Liability and Entity Securities |
| | Liability Coverage Section |
Pollutantsmeans (a) any substance located anywhere in the world exhibiting any hazardous characteristics as defined by, or identified on a list of hazardous substances issued by, the United States Environmental Protection Agency or any state, county, municipality or locality counterpart thereof, including, without limitation, solids, liquids, gaseous or thermal irritants, contaminants or smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste materials, or (b) any other air emission, odor, waste water, oil or oil products, infectious or medical waste, asbestos or asbestos products or any noise.
Related Claimsmeans allClaims forWrongful Acts based upon, arising from, or in consequence of the same or related facts, circumstances, situations, transactions or events or the same or related series of facts, circumstances, situations, transactions or events.
Securities Claimmeans that portion of aClaimwhich:
| | (a) | is brought by a securityholder of anOrganization |
| | (i) | in his or her capacity as a securityholder of suchOrganization,with respect to his or her interest in securities of suchOrganization,and against suchOrganizationor any of itsInsured Persons; or |
| | (ii) | derivatively, on behalf of suchOrganization,against anInsured Personof suchOrganization; or |
| | (b) | alleges that anOrganization or any of itsInsured Persons |
| | (i) | violated a federal, state, local or foreign securities law or a rule or regulation promulgated under any such securities law; or |
| | (ii) | committed aWrongful Actthat constitutes or arises from a purchase, sale, or offer to purchase or sell securities of suchOrganization. |
provided thatSecurities Claimdoes not include anyClaimby or on behalf of a former, current, future or prospective employee of theOrganizationthat is based upon, arising from, or in consequence of any offer, grant or issuance, or any plan or agreement relating to the offer, grant or issuance, by theOrganizationto such employee in his or her capacity as such of stock, stock warrants, stock options or other securities of theOrganization,or any payment or instrument the amount or value of which is derived from the value of securities of theOrganization;and provided, further, thatSecurities Claimdoes not include anySecurityholder Derivative Demand.
Securityholder Derivative Demandmeans:
| | (a) | any written demand, by a securityholder of anOrganization,upon the Board of Directors or Board ofManagersof suchOrganizationto bring a civil proceeding in a court of law against anInsured Person for aWrongful Act; or |
| | (b) | any lawsuit by a securityholder of anOrganization,brought derivatively on behalf of suchOrganizationagainst anInsured Person for aWrongful Act without first making a demand as described in (a) above, |
provided such demand or lawsuit is brought and maintained without any active assistance or participation of, or solicitation by, anyInsured Person.
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| | | Executive Protection PortfolioSM |
| | | Executive Liability and Entity Securities |
| | | Liability Coverage Section |
Subsidiary, either in the singular or plural, means any organization while more than fifty percent (50%) of the outstanding securities or voting rights representing the present right to vote for election of or to appoint directors orManagers of such organization are owned or controlled, directly or indirectly, in any combination, by one or moreOrganizations.
Wrongful Actmeans:
| | (a) | any error, misstatement, misleading statement, act, omission, neglect, or breach of duty committed, attempted, or allegedly committed or attempted by anInsured Personin his or herInsured Capacity,or for purposes of coverage under Insuring Clause 3, by theOrganization, or |
| | (b) | any other matter claimed against anInsured Personsolely by reason of his or her serving in anInsured Capacity. |
Exclusions
Applicable To All Insuring Clauses
| | 6. | The Company shall not be liable forLosson account of anyClaim: |
| | (a) | based upon, arising from, or in consequence of any fact, circumstance, situation, transaction, event orWrongfulAct that, before the inception date set forth in Item 2 of the Declarations of the General Terms and Conditions, was the subject of any notice given under any policy or coverage section of which this coverage section is a direct or indirect renewal or replacement; |
| | (b) | based upon, arising from, or in consequence of any demand, suit or other proceeding pending against, or order, decree or judgment entered for or against anyInsured,on or prior to the Pending or Prior Date set forth in Item 7 of the Declarations for this coverage section, or the same or substantially the same fact, circumstance or situation underlying or alleged therein; |
| | (c) | brought or maintained by or on behalf of anyInsuredin any capacity; provided that this Exclusion 6(c) shall not apply to: |
| | (i) | a Claimbrought or maintained derivatively on behalf of theOrganizationby one or more securityholders of theOrganization,provided suchClaimis brought and maintained without any active assistance or participation of, or solicitation by, anyInsured Person; |
| | (ii) | an employmentClaimbrought or maintained by or on behalf of anInsured Person; |
| | (iii) | aClaimbrought or maintained by anInsured Personfor contribution or indemnity, if suchClaimdirectly results from anotherClaimcovered under this coverage section; or |
| | (iv) | aClaimbrought by anInsured Personwho has not served in anInsured Capacity for at least four (4) years prior to the date suchClaimis first made and who brings and maintains suchClaimwithout any active assistance or participation of, or solicitation by, theOrganizationor any otherInsured Personwho is serving or has served in anInsured Capacitywithin such four (4) year period; |
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| | Executive Liability and Entity Securities |
| | Liability Coverage Section |
| | (d) | based upon, arising from, or in consequence of: |
| | (i) | any actual, alleged, or threatened exposure to, or generation, storage, transportation, discharge, emission, release, dispersal, escape, treatment, removal or disposal of anyPollutants; or |
| | (ii) | any regulation, order, direction or request to test for, monitor, clean up, remove, contain, treat, detoxify or neutralize anyPollutants,or any action taken in contemplation or anticipation of any such regulation, order, direction or request, |
including but not limited to anyClaimfor financial loss to theOrganization,its securityholders or its creditors based upon, arising from, or in consequence of any matter described in clause (i) or clause (ii) of this Exclusion 6(d);
| | (e) | for bodily injury, mental anguish, emotional distress, sickness, disease or death of any person or damage to or destruction of any tangible property including loss of use thereof whether or not it is damaged or destroyed; provided that this Exclusion 6(e) shall not apply to mental anguish or emotional distress for which a claimant seeks compensation in an employmentClaim; |
| | (f) | for an actual or alleged violation of the responsibilities, obligations or duties imposed on fiduciaries by the Employee Retirement Income Security Act of 1974, or any amendments thereto, or any rules or regulations promulgated thereunder, or any similar provisions of any federal, state, or local statutory law or common law anywhere in the world; |
| | (g) | forWrongful Acts of anInsured Personin his or her capacity as a director, officer, manager, trustee, regent, governor or employee of any entity other than theOrganization,even if theInsured Person’s servicein such capacity is with the knowledge or consent or at the request of theOrganization; or |
| | (h) | made against aSubsidiaryor anInsured Person ofsuchSubsidiaryfor anyWrongful Act committed, attempted, or allegedly committed or attempted during any time when such entity was not aSubsidiary |
Applicable To Insuring Clauses 1 and 2 Only
| | 7. | TheCompany shall not be liable under Insuring Clause 1 or 2 forLosson account of anyClaimmade against anyInsured Person: |
| | (a) | for an accounting of profits made from the purchase or sale by suchInsured Personof securities of theOrganizationwithin the meaning of Section 16(b) of the Securities Exchange Act of 1934, any amendments thereto, or any similar provision of any federal, state, or local statutory law or common law anywhere in the world; or |
| | (b) | based upon, arising from, or in consequence of: |
| | (i) | the committing in fact of any deliberately fraudulent act or omission or any willful violation of any statute or regulation by suchInsured Person;or |
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| | | Liability Coverage Section |
| | (ii) | suchInsured Personhaving gained in fact any profit, remuneration or advantage to which suchInsured Personwas not legally entitled, |
as evidenced by (A) any written statement or written document by anyinsuredor (B) any judgment or ruling in any judicial, administrative or alternative dispute resolution proceeding.
Applicable To Insuring Clause 3 Only
| | 8. | The Company shall not be liable under Insuring Clause 3 forLosson account of anySecurities Claimmade against anyOrganization: |
| | (a) | based upon, arising from, or in consequence of: |
| | (i) | the committing in fact of any deliberately fraudulent act or omission or any willful violation of any statute or regulation by anOrganizationor by any past, present or future chief financial officer, in-house general counsel, president, chief executive officer or chairperson of anOrganization;or |
| | (ii) | suchOrganizationhaving gained in fact any profit, remuneration or advantage to which suchOrganizationwas not legally entitled, |
as evidenced by (A) any written statement or written document by anyInsuredor (B) any judgment or ruling in any judicial, administrative or alternative dispute resolution proceeding; or
| | (b) | for any actual or alleged liability of anOrganizationunder any contract or agreement that relates to the purchase, sale, or offer to purchase or sell any securities; provided that this Exclusion 8(b) shall not apply to liability that would have attached to suchOrganizationin the absence of such contract or agreement. |
Severability of Exclusions
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| 9. | | (a) | | No fact pertaining to or knowledge possessed by anyInsured Personshall be imputed to any otherInsured Personfor the purpose of applying the exclusions in Subsection 7 of this coverage section. |
| | | (b) | | Only facts pertaining to and knowledge possessed by any past, present, or future chief financial officer, in-house general counsel, president, chief executive officer or chairperson of anOrganizationshall be imputed to suchOrganizationfor the purpose of applying the exclusions in Subsection 8 of this coverage section. |
Spouses, Estates and Legal Representatives
| | 10. | Subject otherwise to the General Terms and Conditions and the limitations, conditions, provisions and other terms of this coverage section, coverage shall extend toClaimsfor theWrongful Actsof anInsured Personmade against: |
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| | Executive Protection PortfolioSM |
| | Executive Liability and Entity Securities |
| | Liability Coverage Section |
| | (a) | the estate, heirs, legal representatives or assigns of suchInsured Personif suchInsured Personis deceased or the legal representatives or assigns of suchInsured Personif suchInsured Personis incompetent, insolvent or bankrupt; or |
| | (b) | the lawful spouse orDomestic Partnerof suchInsured Personsolely by reason of such spouse orDomestic Partner’sstatus as a spouse orDomestic Partner,or such spouse orDomestic Partner’sownership interest in property which the claimant seeks as recovery for an allegedWrongful Actof suchInsured Person. |
All terms and conditions of this coverage section, including without limitation the Retention, applicable toLossincurred by theInsured Persons,shall also apply to loss incurred by the estates, heirs, legal representatives, assigns, spouses andDomestic Partnersof suchInsured Persons.The coverage provided by this Subsection 10 shall not apply with respect to any loss arising from an act or omission by anInsured Person’sestate, heirs, legal representatives, assigns, spouse orDomestic Partner.
Coordination With Employment Practices Liability Coverage Section
| | 11. | Any Lossotherwise covered by both (i) this coverage section and (ii) any employment practices liability coverage section or policy issued by the Company or by any affiliate of the Company (an “Employment Practices Liability Coverage”) first shall be covered as provided in, and shall be subject to the limit of liability, retention and coinsurance percentage applicable to such Employment Practices Liability Coverage. Any remainingLossotherwise covered by this coverage section which is not paid under such Employment Practices Liability Coverage shall be covered as provided in, and shall be subject to the Limit of Liability, Retention and Coinsurance Percentage applicable to this coverage section; provided the Retention applicable to suchLossunder this coverage section shall be reduced by the amount ofLossotherwise covered by this coverage section which is paid by theInsuredsas the retention under such Employment Practices Liability Coverage. |
Extended Reporting Period
| | 12. | If the Company or theParent Organizationterminates or does not renew this coverage section, other than termination by the Company for nonpayment of premium, theParent Organizationand theInsured Personsshall have the right, upon payment of the additional premium set forth in Item 6(B) of the Declarations for this coverage section, to an extension of the coverage granted by this coverage section forClaimsthat are (i) first made during the period set forth in Item 6(A) of the Declarations for this coverage section (the “Extended Reporting Period”) following the effective date of termination or nonrenewable, and (ii) reported to the Company in writing within the time provided in Subsection 15(a) of this coverage section, but only to the extent suchClaims are forWrongful Acts committed, attempted, or allegedly committed or attempted before the earlier of the effective date of termination or nonrenewal or the date of the first merger, consolidation or acquisition event described in Subsection 21 below. The offer of renewal terms and conditions or premiums different from those in effect prior to renewal shall not constitute refusal to renew. The right to purchase an extension of coverage as described in this Subsection shall lapse unless written notice of election to purchase the extension, together with payment of the additional premium due, is received by the Company within thirty (30) days after the effective date of termination or nonrenewal AnyClaimmade during the Extended Reporting Period shall be deemed to have been made during the immediately precedingPolicy Period.The entire additional premium for the Extended Reporting Period shall be deemed fully earned at the inception of such Extended Reporting Period. |
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| | | Executive Liability and Entity Securities |
| | | Liability Coverage Section |
Limit of Liability, Retention and Coinsurance
| | 13. (a) | The Company’s maximum liability for allLosson account of eachClaim,whether covered under one or more Insuring Clauses, shall be the Limit of Liability set forth in Item 2(A) of the Declarations for this coverage section. The Company’s maximum aggregate liability for allLosson account of allClaimsfirst made during thePolicy Period,whether covered under one or more Insuring Clauses, shall be the Limit of Liability for eachPolicy Periodset forth in Item 2(B) of the Declarations for this coverage section. |
| | (b) | The Company’s maximum aggregate liability under Insuring Clause 4 for allInvestigative Costson account of allSecurityholder Derivative Demandsshall be the Sublimit set forth in Item 2(C) of the Declarations for this coverage section. Such Sublimit is part of, and not in addition to, the Limits of Liability set forth in Items 2(A) and 2(B) of the Declarations. |
| | (c) | Defense Costsare part of, and not in addition to, the Limits of Liability set forth in Item 2 of the Declarations for this coverage section, and the payment by the Company ofDefense Costsshall reduce and may exhaust such applicable Limits of Liability. |
| | (d) | The Company’s liability under Insuring Clause 2 or 3 shall apply only to that part of coveredLoss(as determined by any applicable provision in Subsection 17 of this coverage section) on account of eachClaimwhich is excess of the applicable Retention set forth in Item 4 of the Declarations for this coverage section. Such Retention shall be depleted only byLossotherwise covered under this coverage section and shall be borne by theInsuredsuninsured and at their own risk. Except as otherwise provided in Subsection 14, no Retention shall apply to anyLossunder Insuring Clause 1 or 4. |
| | (e) | If different parts of a singleClaimare subject to different Retentions, the applicable Retentions will be applied separately to each part of suchClaim,but the sum of such Retentions shall not exceed the largest applicable Retention. |
| | (f) | To the extent thatLossresulting from aSecurities Claimis covered under Insuring Clause 2 or 3 (as determined by Subsection 17(a) of this coverage section) and is in excess of the applicable Retention, theInsuredsshall bear uninsured and at their own risk that percentage of suchLossspecified as the Coinsurance Percentage in Item 3(A) of the Declarations for this coverage section, and the Company’s liability shall apply only to the remaining percentage of suchLoss.To the extent thatLossresulting from aClaimother than aSecurities Claimis covered under Insuring Clause 2 or 3 (as determined by Subsection 17(b) of this coverage section) and is in excess of the applicable Retention, theInsuredsshall bear uninsured and at their own risk that percentage of suchLoss specified as the Coinsurance Percentage in Item 3(B) of the Declarations for this coverage section, and the Company’s liability shall apply only to the remaining percentage of suchLoss. |
| | (g) | AllRelated Claimsshall be treated as a singleClaimfirst made on the date the earliest of suchRelated Claimswas first made, or on the date the earliest of suchRelated Claimsis treated as having been made in accordance with Subsection 15(b) below, regardless of whether such date is before or during thePolicy Period. |
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| | Liability Coverage Section |
| | (h) | The limit of liability available during the Extended Reporting Period (if exercised) shall be part of, and not in addition to, the Company’s maximum aggregate limit of liability for allLosson account of allClaimsfirst made during the immediately precedingPolicy Period. |
Presumptive Indemnification
| | 14. | If theOrganizationfails or refuses, other than for reason ofFinancial Impairment,to indemnify anInsured Person forLoss, or to advanceDefense Costson behalf of anInsured Person, to the fullest extent permitted by statutory or common law, then, notwithstanding any other conditions, provisions or terms of this coverage section to the contrary, any payment by the Company of suchDefense Costs or otherLossshall be subject to: |
| | (i) | the applicable Insuring Clause 2 Retention set forth in Item 4 of the Declarations for this coverage section; and |
| | (ii) | the applicable Coinsurance Percentage set forth in Item 3 of the Declarations for this coverage section. |
Reporting and Notice
| | 15. (a) | The Insureds shall, as a condition precedent to exercising any right to coverage under this coverage section, give to the Company written notice of anyClaimas soon as practicable, but in no event later than the earliest of the following dates: |
| | (i) | sixty (60) days after the date on which anyOrganization’schief financial officer, in-house general counsel, risk manager, president, chief executive officer or chairperson first becomes aware that theClaimhas been made; |
| | (ii) | if this coverage section expires (or is otherwise terminated) without being renewed and if no Extended Reporting Period is purchased, sixty (60) days after the effective date of such expiration or termination; or |
| | (iii) | the expiration date of the Extended Reporting Period, if purchased; |
provided that if the Company sends written notice to theParent Organization, at any time before the date set forth in (i) above with respect to anyClaim,stating that this coverage section is being terminated for nonpayment of premium, theInsureds shall give to the Company written notice of suchClaimprior to the effective date of such termination.
| | (b) | If during thePolicy PeriodanInsured: |
| | (i) | becomes aware of circumstances which could give rise to aClaimand gives written notice of such circumstances to the Company; |
| | (ii) | receives a written request to toll or waive a statute of limitations applicable toWrongful Actscommitted, attempted, or allegedly committed or attempted before or during thePolicy Periodand gives written notice of such request and of such allegedWrongful Actsto the Company; or |
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| | (iii) | gives written notice to the Company of aSecurityholder Derivative Demand, |
then anyClaimsubsequently arising from the circumstances referred to in (i) above, from theWrongful Actsreferred to in (ii) above, or from theSecurityholder Derivative Demandreferred to in (iii) above, shall be deemed to have been first made during thePolicy Periodin which the written notice described in (i), (ii) or (iii) above was first given by anInsuredto the Company, provided any such subsequentClaimis reported to the Company as set forth in Subsection 15(a) above. With respect to any such subsequentClaim,no coverage under this coverage section shall apply to loss incurred prior to the date such subsequentClaimis actually made.
| | (c) | TheInsuredsshall, as a condition precedent to exercising any right to coverage under this coverage section, give to the Company such information, assistance, and cooperation as the Company may reasonably require, and shall include in any notice under Subsection 15(a) or (b) a description of theClaim,circumstances, orSecurityholder Derivative Demand,the nature of any allegedWrongful Acts,the nature of the alleged or potential damage, the names of all actual or potential claimants, the names of all actual or potential defendants, and the manner in which suchInsuredfirst became aware of theClaim,circumstances, orSecurityholder Derivative Demand. |
Defense and Settlement
| | 16. (a) | It shall be the duty of theInsuredsand not the duty of the Company to defendClaimsmade against theInsureds. |
| | (b) | TheInsuredsagree not to settle or offer to settle anyClaim,incur anyDefenseCostsor otherwise assume any contractual obligation or admit any liability with respect to anyClaimwithout the Company’s prior written consent. The Company shall not be liable for any element ofLossincurred, for any obligation assumed, or for any admission made, by anyInsuredwithout the Company’s prior written consent. Provided theInsuredscomply with Subsections 16(c) and (d) below, the Company shall not unreasonably withhold any such consent. |
| | (c) | With respect to anyClaimthat appears reasonably likely to be covered in whole or in part under this coverage section, the Company shall have the right and shall be given the opportunity to effectively associate with theInsureds,and shall be consulted in advance by theInsureds,regarding the investigation, defense and settlement of suchClaim,including but not limited to selecting appropriate defense counsel and negotiating any settlement. |
| | (d) | TheInsuredsagree to provide the Company with all information, assistance and cooperation which the Company may reasonably require and agree that in the event of aClaimtheInsuredswill do nothing that could prejudice the Company’s position or its potential or actual rights of recovery. |
| | (e) | Any advancement ofDefense Costsshall be repaid to the Company by theInsureds,severally according to their respective interests, if and to the extent it is determined that suchDefense Costsare not insured under this coverage section. |
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Allocation
| | 17. (a) | If in anySecurities ClaimtheInsuredsincur bothLossthat is covered under this coverage section and loss that is not covered under this coverage section, theInsuredsand the Company shall allocate such amount between coveredLossand non-covered loss as follows: |
| | (i) | The portion, if any, of such amount that is in part covered and in part not covered under Insuring Clause 2 shall be allocated in its entirety to coveredLoss,subject, however, to the applicable Retention and Coinsurance Percentage set forth in Items 4(C) and 3(A) of the Declarations for this coverage section, respectively; and |
| | (ii) | The portion, if any, of such amount that is in part covered and in part not covered under Insuring Clause 1 or 3 shall be allocated between coveredLoss and non-covered loss based on the relative legal and financial exposures of theInsuredsto covered and non-covered matters and, in the event of a settlement in suchSecurities Claim,based also on the relative benefits to theInsuredsfrom settlement of the covered matters and from settlement of the non-covered matters; provided that the amount so allocated to coveredLoss under Insuring Clause 3 shall be subject to the Retention and Coinsurance Percentage set forth in Items 4(C) and 3(A) of the Declarations for this coverage section, respectively. |
The Company shall not be liable under this coverage section for the portion of such amount allocated to non-covered loss. The allocation described in (i) above shall be final and binding on the Company and theInsuredsunder Insuring Clause 2, but shall not apply to any allocation under Insuring Clauses 1 and 3.
| | (b) | If in anyClaimother than aSecurities Claim theInsured Persons incur bothLossthat is covered under this coverage section and loss that is not covered under this coverage section, either because suchClaimincludes both covered and non-covered matters or because suchClaimis made against bothInsured Personsand others (including theOrganization), theInsureds and the Company shall allocate such amount between coveredLossand non-covered loss based on the relative legal and financial exposures of the parties to covered and non-covered matters and, in the event of a settlement in suchClaim,based also on the relative benefits to the parties from such settlement. The Company shall not be liable under this coverage section for the portion of such amount allocated to non-covered loss. |
| | (c) | If theInsuredsand the Company agree on an allocation ofDefense Costs,the Company shall advance on a current basisDefense Costsallocated to the coveredLoss.If theInsuredsand the Company cannot agree on an allocation: |
| | (i) | no presumption as to allocation shall exist in any arbitration, suit or other proceeding; |
| | (ii) | the Company shall advance on a current basisDefense Costswhich the Company believes to be covered under this coverage section until a different allocation is negotiated, arbitrated or judicially determined; and |
| | (iii) | the Company, if requested by theInsureds,shall submit the dispute to binding arbitration. The rules of the American Arbitration Association shall apply except with respect to the selection of the arbitration panel, which shall consist of one arbitrator selected by theInsureds,one arbitrator selected by the Company, and a third independent arbitrator selected by the first two arbitrators. |
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| | (d) | Any negotiated, arbitrated or judicially determined allocation ofDefense Costson account of aClaimshall be applied retroactively to allDefense Costson account of suchClaim, notwithstanding any prior advancement to the contrary. Any allocation or advancement ofDefense Costs on account of aClaimshall not apply to or create any presumption with respect to the allocation of otherLosson account of suchClaim. |
Other Insurance
| | 18. | If anyLossunder this coverage section is insured under any other valid insurance policy(ies), then this coverage section shall cover suchLoss,subject to its limitations, conditions, provisions and other terms, only to the extent that the amount of suchLossis in excess of the applicable retention (or deductible) and limit of liability under such other insurance, whether such other insurance is stated to be primary, contributory, excess, contingent or otherwise, unless such other insurance is written only as specific excess insurance over the Limits of Liability provided in this coverage section. Any payment byInsuredsof a retention or deductible under such other insurance shall reduce, by the amount of such payment which would otherwise have been covered under this coverage section, the applicable Retention under this coverage section. |
Payment of Loss
| | 19. | In the event payment ofLoss is due under this coverage section but the amount of suchLossin the aggregate exceeds the remaining available Limit of Liability for this coverage section, the Company shall: |
| | (a) | first pay suchLoss for which coverage is provided under Insuring Clause 1 of this coverage section; then |
| | (b) | to the extent of any remaining amount of the Limit of Liability available after payment under (a) above, pay suchLossfor which coverage is provided under any other Insuring Clause of this coverage section. |
Except as otherwise provided in this Subsection 19, the Company may pay coveredLossas it becomes due under this coverage section without regard to the potential for other future payment obligations under this coverage section.
Changes in Exposure
Acquisition /Creation of Another Organization
| | 20. | If before or during thePolicy PeriodanyOrganization: |
| | (a) | acquires securities or voting rights in another organization or creates another organization, which as a result of such acquisition or creation becomes aSubsidiary; or |
| | (b) | acquires another organization by merger into or consolidation with anOrganizationsuch that theOrganizationis the surviving entity. |
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such other organization and itsInsured Personsshall beInsureds under this coverage section, but only with respect toWrongful Actscommitted, attempted, or allegedly committed or attempted after such acquisition or creation unless the Company agrees, after presentation of a complete application and all other appropriate information, to provide coverage by endorsement forWrongful Actscommitted, attempted, or allegedly committed or attempted by suchInsuredsbefore such acquisition or creation.
If the total assets of any such acquired organization or newSubsidiaryexceed ten percent (10%) of the total assets of theParent Organization(as reflected in the most recent audited consolidated financial statements of such organization and theParent Organization,respectively, as of the date of such acquisition or creation), theParent Organizationshall give written notice of such acquisition or creation to the Company as soon as practicable, but in no event later than sixty (60) days after the date of such acquisition or creation, together with such other information as the Company may require and shall pay any reasonable additional premium required by the Company. If theParent Organizationfails to give such notice within the time specified in the preceding sentence, or fails to pay the additional premium required by the Company, coverage for such acquired or created organization and itsInsured Personsshall terminate with respect toClaimsfirst made more than sixty (60) days after such acquisition or creation. Coverage for any acquired or created organization described in this paragraph, and for theInsured Personsof such organization, shall be subject to such additional or different terms, conditions and limitations of coverage as the Company in its sole discretion may require.
Acquisition by Another Organization
| | (a) | theParent Organizationmerges into or consolidates with another organization and theParent Organizationis not the surviving entity; or |
| | (b) | another organization or person or group of organizations and/or persons acting in concert acquires securities or voting rights which result in ownership or voting control by the other organization(s) or person(s) of more than fifty percent (50%) of the outstanding securities or voting rights representing the present right to vote for the election of or to appoint directors orManagersof theParent Organization, |
coverage under this coverage section shall continue until termination of this coverage section, but only with respect toClaims for Wrongful Actscommitted, attempted, or allegedly committed or attempted byInsuredsbefore such merger, consolidation or acquisition. Upon the occurrence of any event described in (a) or (b) of this Subsection 21, the entire premium for this coverage section shall be deemed fully earned. TheParent Organizationshall give written notice of such merger, consolidation or acquisition to the Company as soon as practicable, but in no event later than sixty (60) days after the date of such merger, consolidation or acquisition, together with such other information as the Company may require. Upon receipt of such notice and information and at the request of theParent Organization,the Company shall provide to theParent Organizationa quotation for an extension of coverage (for such period as may be negotiated between the Company and theParent Organization)with respect toClaims for Wrongful Actscommitted, attempted, or allegedly committed or attempted byInsuredsbefore such merger, consolidation or acquisition. Any coverage extension pursuant to such quotation shall be subject to such additional or different terms, conditions and limitations of coverage, and payment of such additional premium, as the Company in its sole discretion may require.
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Cessation of Subsidiary
| | 22. | In the event an organization ceases to be aSubsidiarybefore or during thePolicy Period,coverage with respect to suchSubsidiaryand itsInsured Personsshall continue until termination of this coverage section, but only with respect toClaims forWrongful Acts committed, attempted, or allegedly committed or attempted while such organization was aSubsidiary. |
Related Entity Public Offering
| | 23. | If anyOrganizationfiles or causes to be filed, with the United States Securities and Exchange Commission or an equivalent agency or government department in any country other than the United States of America, any registration statement in contemplation of a public offering of equity securities by any entity other than theParent Organization (irrespective of whether such public offering is an initial public offering or a secondary or other offering subsequent to an initial public offering), then the Company shall not be liable forLosson account of anyClaimbased upon, arising from, or in consequence of such registration statement or the sale, offer to sell, distribution or issuance of any securities pursuant to such registration statement, unless (i) the Company receives written notice at least thirty (30) days prior to the effective date of such registration statement providing full details of the contemplated offering, and (ii) the Company, in its sole discretion, agrees by written endorsement to this coverage section to provide coverage for suchClaimsupon such terms and conditions, subject to such limitations and other provisions, and for such additional premium as the Company may require. If the Company in its sole discretion agrees to provide coverage for suchClaims,the additional premium specified by the Company shall be payable to the Company in full not later than the date on which such registration statement becomes effective. |
Representations and Severability
| | 24. | In issuing this coverage section the Company has relied upon the statements, representations and information in theApplication.All of the Insuredsacknowledge and agree that all such statements, representations and information (i) are true and accurate, (ii) were made or provided in order to induce the Company to issue this coverage section, and (iii) are material to the Company’s acceptance of the risk to which this coverage section applies. |
In the event that any of the statements, representations or information in theApplicationare not true and accurate, this coverage section shall be void with respect to (i) anyInsuredwho knew as of the effective date of theApplicationthe facts that were not truthfully and accurately disclosed (whether or not theInsuredknew of such untruthful disclosure in theApplication)or to whom knowledge of such facts is imputed, and (ii) theOrganizationunder Insuring Clause 2 to the extent it indemnifies anInsured Personwho had such actual or imputed knowledge. For purposes of the preceding sentence:
| | (a) | the knowledge of anyInsured Person who is a past, present or future chief financial officer, in-house general counsel, chief executive officer, president or chairperson of anOrganization shall be imputed to suchOrganization and itsSubsidiaries; |
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| | (b) | the knowledge of the person(s) who signed theApplicationfor this coverage section shall be imputed to all of theInsureds;and |
| | (c) | except as provided in (a) above, the knowledge of anInsured Personwho did not sign theApplicationshall not be imputed to any otherInsured. |
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