EXHIBIT 10(r)(1)
CHUBB Executive Protection Policy
DECLARATIONS
EXECUTIVE PROTECTION POLICY
Policy Number 8125-64-60D
Federal Insurance Company, a stock
insurance company, incorporated under the
laws of Indiana, herein called the
Company.
Item 1. Parent Organization:
RICHARDSON ELECTRONICS, LTD.
40W267 KESLINGER ROAD
LA FOX, ILLINOIS
60147
Item 2. Policy Period: From 12:01 A.M. on MAY 31, 1995
To 12:01 A.M. MAY 31, 1996
Local time at the address shown in
Item 1.
Item 3. Coverage Summary
Description
GENERAL TERMS AND CONDITIONS
EXECUTIVE LIABILITY AND INDEMNIFICATION
FIDUCIARY LIABILITY
CRIME INSURANCE
KIDNAP/RANSOM AND EXTORTION
Item 4. Termination of
Prior Policies: 8125-64-60C
THE EXECUTIVE LIABILITY AND INDEMNIFICATION, FIDUCIARY LIABILITY,
OUTSIDE DIRECTORSHIP LIABILITY AND EMPLOYMENT PRACTICES LIABILITY
COVERAGE SECTIONS (WHICHEVER ARE APPLICABLE) ARE ALL WRITTEN ON A
CLAIMS MADE BASIS. EXCEPT AS OTHERWISE PROVIDED, THESE COVERAGE
SECTIONS COVER ONLY CLAIMS FIRST MADE AGAINST THE INSURED DURING
THE POLICY PERIOD. PLEASE READ CAREFULLY.
In witness whereof, the Company issuing this policy has caused this
policy to be signed by its authorized officers, but it shall not be
valid unless also signed by a duly authorized representative of the
Company.
FEDERAL INSURANCE COMPANY
Henry G. Gulick Dean R. O'Hare
Secretary President
May 24, 1995 John S. Bain
Date Authorized Representative
CHUBB Executive Protection Policy
General Terms
and Conditions
Territory 1. Coverage shall extend anywhere in the world.
Terms and Conditions
2. Except for the General Terms and Conditions or
unless stated to the contrary in any coverage
section, the terms and conditions of each coverage
section of this policy apply only to that section
and shall not be construed to apply to any other
coverage section of this policy.
Limits of Liability and
Deductible Amounts
3. Unless stated to the contrary in any coverage
section, the limits of liability and deductible
amounts shown for each coverage section of this
policy are separate limits of liability and
separate deductible amounts pertaining to the
coverage section for which they are shown; the
application of a deductible amount to a loss under
one coverage section of this policy shall not
reduce the deductible amount under any other
coverage section of this policy.
Notice 4. Notice to the Company under this policy shall be
given in writing addressed to:
Notice of Claim:
National Claims Department
Chubb Group of Insurance Companies
15 Mountain View Road
Warren, New Jersey 07059
All Other Notices:
Executive Protection Department
Chubb Group of Insurance Companies
15 Mountain View Road
Warren, New Jersey 07059
Such notice shall be effective on the date of
receipt by the Company at such address.
Investigation and Settlement
5. The Company may make any investigation it deems
necessary and may, with the written consent of the
Insured, make any settlement of a claim it deems
expedient. If the Insured withholds consent to
such settlement, the Company's liability for all
loss on account of such claim shall not exceed the
amount for which the Company could have settled
such claim plus costs, charges and expenses accrued
as of the date such settlement was proposed in
writing by the Company to the Insured.
Valuation and
Foreign Currency
6. All premiums, limits, retentions, loss and other
amounts under this policy are expressed and payable
in the currency of the United States of America.
Except as otherwise provided in any coverage
section, if judgment is rendered, settlement is
denominated or another element of loss under this
policy is stated in a currency other than United
States of America 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.
Subrogation
7. In the event of any payment under this policy, the
Company shall be subrogated to the extent of such
payment to all the Insured's rights of recovery,
and the Insured shall execute all papers required
and shall do everything necessary to secure and
preserve such rights, including the execution of
such documents necessary to enable the Company
effectively to bring suit in the name of the
Insured.
Action Against
the Company
8. No action shall lie against the Company unless, as
a condition precedent thereto, there shall have
been full compliance with all the terms of this
policy. No person or organization shall have any
right under this policy to join the Company as a
party to any action against the Insured to
determine the Insured's liability nor shall the
Company be impleaded by the Insured or his legal
representatives. Bankruptcy or insolvency of an
Insured or of the estate of an Insured shall not
relieve the Company of its obligations nor deprive
the Company of its rights under this policy.
Authorization Clause
9. By acceptance of this policy, the Parent
Organization agrees to act on behalf of all
Insureds with respect to the giving and receiving
of notice of claim or termination, the payment of
premiums and the receiving of any return premiums
that may become due under this policy, the
negotiation, agreement to and acceptance of
endorsements, and the giving or receiving of any
notice provided for in this policy (except the
giving of notice to apply for the Extended
Reporting Period), and the Insureds agree that the
Parent Organization shall act on their behalf.
Alteration
and Assignment
10. No change in, modification of, or assignment of
interest under this policy shall be effective
except when made by a written endorsement to this
policy which is signed by an authorized employee of
Chubb & Son Inc.
Termination of
Policy or
Coverage Section
11. This policy or any coverage section shall terminate
at the earliest of the following times:
(A) sixty days after the receipt by the Parent
Organization of a written notice of
termination from the Company,
(B) upon the receipt by the Company of written
notice of termination from the Parent
Organization,
(C) upon expiration of the Policy Period as set
forth in Item 2 of the Declarations of this
policy, or
(D) at such other time as may be agreed upon by
the Company and the Parent Organization.
The Company shall refund the unearned premium
computed at customary short rates if the policy or
any coverage section is terminated by the Parent
Organization. Under any other circumstances the
refund shall be computed pro rata.
Termination of
Prior Bonds
or Policies
12. Any bonds or policies issued by the Company or its
affiliates and specified in Item 4 of the
Declarations of this policy shall terminate, if not
already terminated, as of the inception date of
this policy. Such prior bonds or policies shall
not cover any loss under the Crime or Kidnap/Ransom
& Extortion coverage sections not discovered and
notified to the Company prior to the inception date
of this policy.
Definitions
13. When used in this policy:
Parent Organization means the organization
designated in Item 1 of the Declarations of this
policy.
Policy Period means the period of time specified in
Item 2 of the Declarations of this policy, subject
to prior termination in accordance with Subsection
11 above. If this period is less than or greater
than one year, then the Limits of Liability
specified in the Declarations for each coverage
section shall be the Company's maximum limit of
liability under such coverage section for the
entire period.
CHUBB Executive Protection Policy
ENDORSEMENT
Coverage Section: GENERAL TERMS
Company: FEDERAL INSURANCE COMPANY
Endorsement No: 1
Effective date of
this endorsement: MAY 31, 1995
To be attached to and form part of Policy No. 8125-64-60D
Issued to: RICHARDSON ELECTRONICS, LTD.
ILLINOIS AMENDATORY ENDORSEMENT
It is agreed that:
Subsection 11, "Termination of Policy or Coverage Section", of the
General Terms and Conditions is amended by the following:
CANCELLATION
All notices of cancellation of insurance must be mailed at least 30
days prior to the effective date of cancellation during the first
60 days of coverage. After the policy or coverage section has been
effective for 61 days or more, all notices must be mailed at least
60 days prior to the effective date of cancellation. All such
notices shall include a specific explanation of the reason or
reasons for cancellation and shall be mailed to the Parent
Organization and mortgagee or lien holder, if known, at the last
mailing address known to the company. However, where cancellation
is for nonpayment of premium, at least 10 days notice of
cancellation shall be given.
No policy or coverage section which has been in effect for 60 days
may be cancelled except for one of the following reasons:
(a) Nonpayment of premium;
(b) The policy or coverage section was obtained through a
material misrepresentation;
(c) Any insured violated any of the terms and conditions of
the policy or coverage section;
(d) The risk originally accepted has measurably increased;
(e) Certification to the Director of the loss of reinsurance
by the insurer which provided coverage to the insurer for
all or a substantial part of the underlying risk insured;
or,
(f) A determination by the Director that the continuation of
the policy or coverage section could place the insurer in
violation of the insurance laws of this state.
NONRENEWAL AND EXTENDED REPORTING PERIOD
No company shall fail to renew any policy or coverage section of
insurance unless it shall send by mail to the Parent Organization
at least 60 days advance notice of its intention not to renew. The
company shall maintain proof of the mailing of such notice on one
of the following forms: a recognized U.S. Post Office form or a
form acceptable to the U.S. Post Office or other commercial mail
delivery service. An exact and unaltered copy of such notice shall
also be sent to the Parent Organization's broker, if known, or the
agent of record and to the mortgagee or lien holder at the last
mailing address known by the company. However, where cancellation
is for nonpayment of premium, at least 10 days notice of
cancellation shall be given.
Should a company fail to comply with the notice requirements, the
policy or coverage section shall terminate only as provided in this
Subsection. In the event notice is provided at least 31 days, but
less than 60 days prior to expiration of the policy or coverage
section, the policy or coverage section shall be extended for a
period of 60 days or until the effective date of any similar
insurance procured by the Insured, whichever is less, on the same
terms and conditions as the policy or coverage section sought to be
terminated. In the event notice is provided less than 31 days
prior to the expiration of the policy or coverage section, the
policy or coverage section shall be extended for a period of one
year or until the effective date of any similar insurance procured
by the insured, whichever is less, on the same terms and conditions
as the policy or coverage section sought to be terminated unless
the insurer has manifested its willingness to renew at a premium
which represents an increase not exceeding 30%. The premium for
coverage shall be prorated in accordance with the amount of the
last year's premium, and the company shall be entitled to this
premium for the extension of coverage and such extension may be
contingent upon the payment of such premium.
Renewal of a policy or coverage section does not constitute a
waiver or estoppel with respect to grounds for cancellation which
existed before the effective date of such renewal.
In all notices of intention not to renew any policy or coverage
section for insurance, the company shall provide a specific
explanation of the reasons for nonrenewal.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
John S. Bain
Authorized Representative
May 24, 1995
Date
CHUBB Executive Protection Policy
DECLARATIONS
EXECUTIVE LIABILITY AND
INDEMNIFICATION COVERAGE SECTION
Item 1. Parent Organization:
RICHARDSON ELECTRONICS, LTD.
Item 2. Limits of Liability:
(A) Each Loss $15,000,000.
(B) Each Policy Period $15,000,000.
Note that the limits of liability and any deductible or
retention are reduced or exhausted by Defense Costs.
Item 3. Coinsurance Percent: NONE
Item 4. Deductible Amount:
Insuring Clause 2 $ 500,000.
Item 5. Insured Organization:
Richardson Electronics, Ltd.
and its Subsidiaries.
Item 6. Insured Persons:
Any person who has been, now is, or shall become a duly
elected director or a duly elected or appointed officer
of the Insured Organization.
Item 7. Extended Reporting Period:
(A) Additional Premium: 75% of the annual premium
(B) Additional Period: one year
Item 8. Pending or Prior Date: October 12, 1983
Item 9. Continuity Date: October 12, 1983
CHUBB Executive Protection Policy
Executive Liability
and Indemnification
Coverage Section
In consideration of payment of the premium and subject to
the Declarations, General Terms and Conditions, and the
limitations, conditions, provisions and other terms of
this coverage section, the Company agrees as follows:
Insuring Clauses
Executive
Liability Coverage
Insuring Clause 1
1. The Company shall pay on behalf of each of the
Insured Persons all Loss for which the Insured
Person is not indemnified by the Insured
Organization and which the Insured Person becomes
legally obligated to pay on account of any Claim
first made against him, individually or otherwise,
during the Policy Period or, if exercised, during
the Extended Reporting Period, for a Wrongful Act
committed, attempted, or allegedly committed or
attempted by such Insured Person before or during
the Policy Period.
Executive
Indemnification
Coverage
Insuring Clause 2
2. The Company shall pay on behalf of the Insured
Organization all Loss for which the Insured
Organization grants indemnification to each Insured
Person, as permitted or required by law, which the
Insured Person has become legally obligated to pay
on account of any Claim first made against him,
individually or otherwise, during the Policy Period
or, if exercised, during the Extended Reporting
Period, for a Wrongful Act committed, attempted, or
allegedly committed or attempted by such Insured
Person before or during the Policy Period.
Estates and Legal Representatives
3. Subject otherwise to the General Terms and
Conditions and the limitations, conditions,
provisions and other terms of this coverage
section, coverage shall extend to Claims for the
Wrongful Acts of Insured Persons made against the
estates, heirs, legal representatives or assigns of
Insured Persons who are deceased or against the
legal representatives or assigns of Insured Persons
who are incompetent, insolvent or bankrupt.
Extended
Reporting Period
4. If the Company terminates or refuses to renew this
coverage section other than for nonpayment of
premium, the Parent Organization and the Insured
Persons shall have the right, upon payment of the
additional premium set forth in Item 7(A) of the
Declarations for this coverage section, to an
extension of the coverage granted by this coverage
section for the period set forth in Item 7(B) of
the Declarations for this coverage section
(Extended Reporting Period) following the effective
date of termination or nonrenewal, but only for any
Wrongful Act committed, attempted, or allegedly
committed or attempted, prior to the effective date
of termination or nonrenewal. This right of
extension shall lapse unless written notice of such
election, together with payment of the additional
premium due, is received by the Company within 30
days following the effective date of termination or
nonrenewal. Any Claim made during the Extended
Reporting Period shall be deemed to have been made
during the immediately preceding Policy Period.
If the Parent Organization terminates or declines
to accept renewal, the Company may, if requested,
at its sole option, grant an Extended Reporting
Period. The offer of renewal terms and conditions
or premiums different from those in effect prior to
renewal shall not constitute refusal to renew.
Exclusions
Exclusions Applicable
to Insuring
Clauses 1 and 2
5. The Company shall not be liable for Loss on account
of any Claim made against any Insured Person:
(a) based upon, arising from, or in consequence of
any circumstance if written notice of such
circumstance has been given under any policy
or coverage section of which this coverage
section is a renewal or replacement and if
such prior policy or coverage section affords
coverage (or would afford such coverage except
for the exhaustion of its limits of liability)
for such Loss, in whole or in part, as a
result of such notice;
(b) based upon, arising from, or in consequence of
any demand, suit or other proceeding pending,
or order, decree or judgement entered against
any Insured on or prior to the Pending or
Prior Date set forth in Item 8 of the
Declarations for this coverage section, or the
same or any substantially similar fact,
circumstance or situation underlying or
alleged therein;
(c) brought or maintained by or on behalf of any
Insured except:
(i) a Claim that is a derivative action
brought or maintained on behalf of an
Insured Organization by one or more
persons who are not Insured Persons and
who bring and maintain the Claim without
the solicitation, assistance or
participation of any Insured,
(ii) a Claim brought or maintained by an
Insured Person for the actual or alleged
wrongful termination of the Insured
Person, or
(iii) a Claim brought or maintained by an
Insured Person for contribution or
indemnity, if the Claim directly results
from another Claim covered under this
coverage section;
(d) for an actual or alleged violation of the
responsibilities, obligations or duties
imposed by the Employee Retirement Income
Security Act of 1974 and amendments thereto or
similar provisions of any federal, state or
local statutory law or common law upon
fiduciaries of any pension, profit sharing,
health and welfare or other employee benefit
plan or trust established or maintained for
the purpose of providing benefits to employees
of an Insured Organization;
(e) for bodily injury, mental or emotional
distress, sickness, disease or death of any
person or damage to or destruction of any
tangible property including loss of use
thereof; or
(f) based upon, arising from, or in consequence of
(i) the actual, alleged or threatened
discharge, release, escape or disposal of
Pollutants into or on real or personal
property, water or the atmosphere; or (ii) any
direction or request that the Insured test
for, monitor, clean up, remove, contain,
treat, detoxify or neutralize Pollutants, or
any voluntary decision to do so; including but
not limited to any Claim for financial loss to
the Insured Organization, its security holders
or its creditors based upon, arising from, or
in consequence of the matters described in (i)
or (ii) of this exclusion.
Exclusions Applicable
to Insuring
Clause 1 Only
6. The Company shall not be liable under Insuring
Clause 1 for Loss on account of any Claim made
against any Insured Person:
(a) for an accounting of profits made from the
purchase or sale by such Insured Person of
securities of the Insured Organization within
the meaning of Section 16 (b) of the
Securities Exchange Act of 1934 and amendments
thereto or similar provisions of any federal,
state or local statutory law or common law;
(b) based upon, arising from, or in consequence of
any deliberately fraudulent act or omission or
any willful violation of any statute or
regulation by such Insured Person, if a
judgement or other final adjudication adverse
to the Insured Person establishes such a
deliberately fraudulent act or omission or
willful violation; or
(c) based upon, arising from, or in consequence of
such Insured Person having gained in fact any
personal profit, remuneration or advantage to
which such Insured Person was not legally
entitled.
Severability of Exclusions
7. With respect to the Exclusions in Subsections 5 and
6 of this coverage section, no fact pertaining to
or knowledge possessed by any Insured Person shall
be imputed to any other Insured Person to determine
if coverage is available.
Limit of Liability,
Deductible and
Coinsurance
8. For the purposes of this coverage section, all Loss
arising out of the same Wrongful Act and all
Interrelated Wrongful Acts of any Insured Person
shall be deemed one Loss, and such Loss shall be
deemed to have originated in the earliest Policy
Period in which a Claim is first made against any
Insured Person alleging any such Wrongful Act or
Interrelated Wrongful Acts.
The Company's maximum liability for each Loss,
whether covered under Insuring Clause 1 or Insuring
Clause 2 or both, shall be the Limit of Liability
for each Loss set forth in Item 2(A) of the
Declarations for this coverage section. The
Company's maximum aggregate liability for all Loss
on account of all Claims first made during the same
Policy Period, whether covered under Insuring
Clause 1 or Insuring Clause 2 or both, shall be the
Limit of Liability for each Policy Period set forth
in Item 2(B) of the Declarations for this coverage
section.
The Company's liability under Insuring Clause 2
shall apply only to that part of each Loss which is
excess of the Deductible Amount set forth in Item 4
of the Declarations for this coverage section and
such Deductible Amount shall be borne by the
Insureds uninsured and at their own risk.
If a single Loss is covered in part under Insuring
Clause 1 and in part under Insuring Clause 2, the
Deductible Amount applicable to the Loss shall be
the Insuring Clause 2 deductible set forth in Item
4 of the Declarations for this coverage section.
With respect to all Loss (excess of the applicable
Deductible Amount) originating in any one Policy
Period, the Insureds shall bear uninsured and at
their own risk that percent of all such Loss
specified as the Coinsurance Percent in Item 3 of
the Declarations for this coverage section, and the
Company's liability hereunder shall apply only to
the remaining percent of all such Loss.
Any Loss covered in whole or in part by this
coverage section and the Employment Practices
Liability coverage section of this policy (if
purchased) shall be subject to the limits of
liability, deductible and coinsurance percent
applicable to such other coverage section;
provided, however, if any limit of liability
applicable to such other coverage section is
exhausted with respect to such Loss, any remaining
portion of such Loss otherwise covered by this
coverage section shall be subject to the Limits of
Liability and Coinsurance Percent applicable to
this coverage section, as reduced by the amount of
such Loss otherwise covered by this coverage
section which is paid by the Company pursuant to
such other coverage section.
For purposes of this Subsection 8 only, the
Extended Reporting Period, if exercised, shall be
part of and not in addition to the immediately
preceding Policy Period.
Presumptive
Indemnification
9. If the Insured Organization.
(a) fails or refuses, other than for reason of
Financial Impairment, to indemnify the Insured
Person for Loss; and
(b) is permitted or required to indemnify the
Insured Person for such Loss pursuant to:
(i) the by-laws or certificate of
incorporation of the Insured Organization
in effect at the inception of this
coverage section, or
(ii) any subsequently amended or superseding
by-laws or certificate of incorporation
of the Insured Organization provided,
however, that such amended or superseding
by-laws or certificate of incorporation
expand or broaden, and do not restrict or
in any way limit, the Insured
Organization's ability to indemnify the
Insured Person;
then, notwithstanding any other conditions,
provisions or terms of this coverage section
to the contrary, any payment by the Company of
such Loss shall be subject to (i) the Insuring
Clause 2 Deductible Amount set forth in Item 4
of the Declarations for this coverage section,
and (ii) all of the Exclusions set forth in
Subsections 5 and 6 of this coverage section.
For purposes of this Subsection 9, the
shareholder and board of director resolutions
of the Insured Organization shall be deemed to
provide indemnification for such Loss to the
fullest extent permitted by such by-laws or
certificate of incorporation.
Reporting
and Notice
10. The Insureds shall, as a condition precedent to
exercising their rights under this coverage
section, give to the Company written notice as soon
as practicable of any Claim made against any of
them for a Wrongful Act.
If during the Policy Period or Extended Reporting
Period (if exercised) an Insured becomes aware of
circumstances which could give rise to a Claim and
gives written notice of such circumstance(s) to the
Company, then any Claims subsequently arising from
such circumstances shall be considered to have been
made during the Policy Period or the Extended
Reporting Period in which the circumstances were
first reported to the Company.
The Insureds shall, as a condition precedent to
exercising their rights under this coverage
section, give to the Company such information and
cooperation as it may reasonably require, including
but not limited to a description of the Claim or
circumstances, the nature of the alleged 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 Claim or circumstances.
Defense and Settlement
11. Subject to this Subsection, it shall be the duty of
the Insured Persons and not the duty of the Company
to defend Claims made against the Insured Persons.
The Insureds agree not to settle any Claim, incur
any Defense Costs or otherwise assume any
contractual obligation or admit any liability with
respect to any Claim without the Company's written
consent, which shall not be unreasonably withheld.
The Company shall not be liable for any settlement,
Defense Costs, assumed obligation or admission to
which it has not consented.
The Company shall have the right and shall be given
the opportunity to effectively associate with the
Insureds in the investigation, defense and
settlement, including but not limited to the
negotiation of a settlement, of any Claim that
appears reasonably likely to be covered in whole or
in part by this coverage section.
The Insureds agree to provide the Company with all
information, assistance and cooperation which the
Company reasonably requests and agree that in the
event of a Claim the Insureds will do nothing that
may prejudice the Company's position or its
potential or actual rights of recovery.
Defense Costs are 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 of Defense Costs reduces
such Limits of Liability.
Allocation
12. If both Loss covered by this coverage section and
loss not covered by this coverage section are
incurred, either because a Claim against the
Insured Persons includes both covered and uncovered
matters or because a Claim is made against both an
Insured Person and others, including the Insured
Organization, the Insureds and the Company shall
use their best efforts to agree upon a fair and
proper allocation of such amount between covered
Loss and uncovered loss.
If the Insureds and the Company agree on an
allocation of Defense Costs, the Company shall
advance on a current basis Defense Costs allocated
to the covered Loss. If the Insureds and the
Company cannot agree on an allocation:
(a) no presumption as to allocation shall exist in
any arbitration, suit or other proceeding;
(b) the Company shall advance on a current basis
Defense Costs which the Company believes to be
covered under this coverage section until a
different allocation is negotiated, arbitrated
or judicially determined; and
(c) the Company, if requested by the Insureds,
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 the Insureds, one
arbitrator selected by the Company, and a
third independent arbitrator selected by the
first two arbitrators.
Any negotiated, arbitrated or judicially determined
allocation of Defense Costs on account of a Claim
shall be applied retroactively to all Defense Costs
on account of such Claim, notwithstanding any prior
advancement to the contrary. Any allocation or
advancement of Defense Costs on account of a Claim
shall not apply to or create any presumption with
respect to the allocation of other Loss on account
of such Claim.
Other
Insurance
13. If any Loss arising from any Claim made against any
Insured Persons is insured under any other valid
policy(ies), prior or current, then this coverage
section shall cover such Loss, subject to its
limitations, conditions, provisions and other
terms, only to the extent that the amount of such
Loss is in excess of the amount of payment from
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.
Changes in Exposure
Acquisition or
Creation of
Another Organization
14. If the Insured Organization (i) acquires securities
or voting rights in another organization or creates
another organization, which as a result of such
acquisition or creation becomes a Subsidiary, or
(ii) acquires any organization by merger into or
consolidation with an Insured Organization, such
organization and its Insured Persons shall be
Insureds under this coverage section but only with
respect to Wrongful Acts committed, attempted, or
allegedly committed or attempted, after such
acquisition or creation unless the Company agrees,
after presentation of a complete application and
all appropriate information, to provide coverage by
endorsement for Wrongful Acts committed, attempted,
or allegedly committed or attempted, by such
Insured Persons prior to such acquisition or
creation.
If the fair value of all cash, securities, assumed
indebtedness and other consideration paid by the
Insured Organization for any such acquisition or
creation exceeds 10% of the total assets of the
Parent Organization as reflected in the Parent
Organization's most recent audited consolidated
financial statements, the Parent Organization shall
give written notice of such acquisition or creation
to the Company as soon as practicable together with
such information as the Company may require and
shall pay any reasonable additional premium
required by the Company.
Acquisition of Parent
Organization by
Another Organization
15. If (i) the Parent Organization merges into or
consolidates with another organization, or (ii)
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 50% of
the outstanding securities representing the present
right to vote for the election of directors of the
Parent Organization, coverage under this coverage
section shall continue until termination of this
coverage section, but only with respect to Claims
for Wrongful Acts committed, attempted, or
allegedly committed or attempted, by Insured
Persons prior to such merger, consolidation or
acquisition. The Parent Organization shall give
written notice of such merger, consolidation or
acquisition to the Company as soon as practicable
together with such information as the Company may
require.
Cessation of Subsidiaries
16. In the event an organization ceases to be a
Subsidiary before or after the Inception Date of
this coverage section, coverage with respect to
such Subsidiary and its Insured Persons shall
continue until termination of this coverage section
but only with respect to Claims for Wrongful Acts
committed, attempted or allegedly committed or
attempted prior to the date such organization
ceased to be a Subsidiary.
Representations and Severability
17. In granting coverage to any one of the Insureds,
the Company has relied upon the declarations and
statements in the written application for this
coverage section and upon any declarations and
statements in the original written application
submitted to another insurer in respect of the
prior coverage incepting as of the Continuity Date
set forth in Item 9 of the Declarations for this
coverage section. All such declarations and
statements are the basis of such coverage and shall
be considered as incorporated in and constituting
part of this coverage section.
Such written application(s) for coverage shall be
construed as a separate application for coverage by
each of the Insured Persons. With respect to the
declarations and statements contained in such
written application(s) for coverage, no statement
in the application or knowledge possessed by any
Insured Person shall be imputed to any other
Insured Person for the purpose of determining if
coverage is available.
Definitions
18. When used in this coverage section:
Claim means:
(i) a written demand for monetary damages,
(ii) a civil proceeding commenced by the service of
a complaint or similar pleading,
(iii) a criminal proceeding commenced by a return of
an indictment, or
(iv) a formal administrative or regulatory
proceeding commenced by the filing of a notice
of charges, formal investigative order or
similar document,
against any Insured Person for a Wrongful Act,
including any appeal therefrom.
Defense Costs means that part of Loss 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 or fees of the directors, officers or
employees of the Insured Organization) incurred in
defending or investigating Claims and the premium
for appeal, attachment or similar bonds.
Financial Impairment means the status of the
Insured Organization resulting from (i) 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 the Insured Organization, or (ii) the
Insured Organization becoming a debtor in
possession.
Insured, either in the singular or plural, means
the Insured Organization and any Insured Person.
Insured Capacity means the position or capacity
designated in Item 6 of the Declarations for this
coverage section held by any Insured Person but
shall not include any position or capacity in any
organization other than the Insured Organization,
even if the Insured Organization directed or
requested the Insured Person to serve in such other
position or capacity.
Insured Organization means, collectively, those
organizations designated in Item 5 of the
Declarations for this coverage section.
Insured Person, either in the singular or plural,
means any one or more of those persons designated
in Item 6 of the Declarations for this coverage
section.
Interrelated Wrongful Acts means all causally
connected Wrongful Acts.
Loss means the total amount which any Insured
Person becomes legally obligated to pay on account
of each Claim and for all Claims in each Policy
Period and the Extended Reporting Period, if
exercised, made against them for Wrongful Acts for
which coverage applies, including, but not limited
to, damages, judgements, settlements, costs and
Defense Costs. Loss does not include (i) any amount
not indemnified by the Insured Organization for
which the Insured Person is absolved from payment
by reason of any covenant, agreement or court
order, (ii) any amount incurred by the Insured
Organization (including its board of directors or
any committee of the board of directors) in
connection with the investigation or evaluation of
any Claim or potential Claim by or on behalf of the
Insured Organization, (iii) fines or penalties
imposed by law or the multiple portion of any
multiplied damage award, or (iv) matters
uninsurable under the law pursuant to which this
coverage section is construed.
Pollutants means 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 a state, county,
municipality or locality counterpart thereof. Such
substances shall include, without limitation,
solids, liquids, gaseous or thermal irritants,
contaminants or smoke, vapor, soot, fumes, acids,
alkalis, chemicals or waste materials. Pollutants
shall also mean any other air emission, odor, waste
water, oil or oil products, infectious or medical
waste, asbestos or asbestos products and any noise.
Subsidiary, either in the singular or plural, means
any organization in which more than 50% of the
outstanding securities or voting rights
representing the present right to vote for election
of directors is owned or controlled, directly or
indirectly, in any combination, by one or more
Insured Organizations.
Wrongful Act means any error, misstatement,
misleading statement, act, omission, neglect, or
breach of duty committed, attempted, or allegedly
committed or attempted, by an Insured Person,
individually or otherwise, in his Insured Capacity,
or any matter claimed against him solely by reason
of his serving in such Insured Capacity.
CHUBB Executive Protection Policy
ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Company: FEDERAL INSURANCE COMPANY
Endorsement No: 1
Effective date of this endorsement: MAY 31, 1995
Issued to: RICHARDSON ELECTRONICS, LTD.
To be attached to and form part of Policy No. 8125-64-60D
ILLINOIS AMENDATORY ENDORSEMENT
It is agreed that:
Subsection 4, "Extended Reporting Period", shall be deleted and
replaced by the following:
EXTENDED REPORTING PERIOD
4. If the Company or the Insured terminates or refuses to renew
this coverage section, the Parent Organization and the Insured
Persons shall have the right, upon payment of the additional
premium set forth in Item 7(A) of the Declarations for this
coverage section, to an extension of the coverage granted by
the coverage section for a period of one year as set forth in
Item 7(B) of the Declarations for this coverage section
(Extended Reporting Period) following the effective date of
termination or nonrenewal, but only for any Wrongful Act
committed, attempted, or allegedly committed or attempted,
prior to the effective date of termination or nonrenewal.
This right of extension shall lapse unless written notice of
such election, together with payment of the additional premium
due, is received by the Company within 30 days following the
effective date of termination or nonrenewal. Any Claim made
during the Extended Reporting Period shall be deemed to have
been made during the immediately preceding Policy Period.
It is further agreed that Subsection 18, "Definitions", shall be
amended by deleting Defense Costs and replacing it with the
following:
Defense Costs means that part of Loss 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 or fees of the directors, officers or
employees of the Insured Organization or the salaries of the
employees, officers or staff attorneys of the Company)
incurred in defending or investigating Claims and the premium
for appeal, attachment or similar bonds.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
John S. Bain
Authorized Representative
May 24, 1995
Date
CHUBB Executive Protection Policy
ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Company: FEDERAL INSURANCE COMPANY
Endorsement No: 2
Effective date of this endorsement: MAY 31, 1995
Issued to: RICHARDSON ELECTRONICS, LTD.
To be attached to and form part of Policy No. 8125-64-60D
It is agreed that Item 6 of the Declarations page, Insured Persons,
is amended to include the following:
Microwave Business Unit Manager
Broadcast Business Unit Manager
Export/Middle East/Africa/Reg. Sls. Mgr.
Regional Sales Manager - REI/GEB
Industrial Business Unit Manager
General Manager - RESA
Solid State Components Bus. Unit Manager
Director General - REISA
Regional Sales Manager - RESA
Medical Business Unit Manager
Canada Region Sales Manager
Western Region Sales Manager
Eastern Region Sales Manager
Director Marketing Administration ROW
Regional Sales Manager - GmbH
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
John S. Bain
Authorized Representative
May 24, 1995
Date
CHUBB Executive Protection Policy
ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Company: FEDERAL INSURANCE COMPANY
Endorsement No: 3
Effective date of this endorsement: MAY 31, 1995
Issued to: RICHARDSON ELECTRONICS, LTD.
To be attached to and form part of Policy No. 8125-64-60D
OPTIONAL GUARANTEED DEFENSE COSTS ALLOCATION
In consideration of the premium paid, it is agreed that subsection 12,
Allocation, is deleted in its entirety and the following is inserted:
Allocation
12. If both Loss covered by this coverage section and loss not covered by
this coverage section are incurred, either because a Claim against an
Insured Person includes both covered and uncovered matters or because a
Claim is made against both an Insured Person and others, including the
Insured Organization, the Insured and the Company shall allocate such
amount as follows:
(a) with respect to defense costs, to create certainty in determining
a fair and proper allocation of Defense Costs, 80% of all Defense
Costs which must otherwise be allocated as described above shall
be allocated to covered Loss and shall be advanced by the Company
on a current basis; provided, however, that no Defense Costs shall
be allocated to the Insured Organization to the extent the Insured
Organization is unable to pay by reason of Financial Impairment.
This Defense Cost allocation shall be the final and binding allocation of such
Defense Costs and shall not apply to or create any presumption with respect to
the allocation of any other Loss;
(b) with respect to Loss other than Defense Costs:
(i) the Insured and the Company shall use their best efforts to
agree upon a fair and proper allocation of such amount
between covered Loss and uncovered loss; and
(ii) if the Insured and the Company cannot agree on any
allocation, no presumption as to allocation shall exist in
any arbitration, suit or other proceeding. The Company, if
requested by the Insured, shall submit the allocation
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 the Insureds, one arbitrator
selected by the Company, and a third independent arbitrator
selected by the first two arbitrators.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
John S. Bain
Authorized Representative
May 24, 1995
Date
CHUBB Executive Protection Policy
ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Company: FEDERAL INSURANCE COMPANY
Endorsement No: 4
Effective date of this endorsement: MAY 31, 1995
Issued to: RICHARDSON ELECTRONICS, LTD.
To be attached to and form part of Policy No. 8125-64-60D
It is agreed that:
1. Item 6 of the Declarations, Insured Persons, is amended by adding the
following:
... and any elected or appointed officer of the Insured Organization in
an Outside Directorship.
2. Subsection 18, "Definitions", is amended by adding the following:
Outside Directorship means the position of director, officer, trustee,
governor, or equivalent executive position with an Outside Entity if
service by an Insured Person in such position was at the specific
request of the Insured Organization or was part of the duties regularly
assigned to the Insured Person by the Insured Organization.
Outside Entity means any non-profit corporation, community chest, fund
organization or foundation exempt from federal income tax as an
organization described in Section 501(c)(3), Internal Revenue Code of
1986, as amended.
3. The following subsection is added to this coverage section:
OUTSIDE DIRECTORSHIPS
19. Coverage provided to any Insured person in an Outside Directorship
shall:
(a) not extend to the Outside Entity or to any director,
officer, trustee, governor or any other equivalent executive
or employee of the Outside Entity, other than the Insured
Person serving in the Outside Directorship;
(b) be specifically excess of any indemnity (other than any
indemnity provided by the Insured Organization) or insurance
available to such Insured Person by reason of serving in the
Outside Directorship, including any indemnity or insurance
available from or provided by the Outside Entity;
(c) not extend to Loss on account of any Claim made against any
Insured Person for a Wrongful Act committed, attempted, or
allegedly committed or attempted by such Insured Person
while serving in the Outside Directorship if such Wrongful
Act is committed, attempted, or allegedly committed or
attempted, after the date (i) such Insured Person ceases to
be an officer of the Insured Organization, or (ii) service
by such Insured Person in the Outside Directorship ceases to
be at the specific request of the Insured Organization or a
part of the duties regularly assigned to the Insured Person
by the Insured Organization;
(d) not extend to Loss on account of any Claim made against any
Insured Person for a Wrongful Act committed, attempted or
allegedly committed or attempted by such Insured Person
while serving in the Outside Directorship where such Claim
is (i) by the Outside Entity, or (ii) on behalf of the
Outside Entity and a director, officer, trustee, governor or
equivalent executive of the Outside Entity instigates such
Claim, or (iii) by any director, officer, trustee, governor
or equivalent executive of the Outside Entity.
4. The Company maximum liability to pay Loss under this coverage section,
including this endorsement, shall not exceed the amount set forth in
Item 2 of the Declarations. This endorsement does not increase the
Company's maximum liability beyond the Limits of Liability set forth in
Item 2 of the Declarations.
5. Payment by the Company or any of its subsidiaries or affiliated
companies under another policy on account of a Claim also covered
pursuant to this endorsement shall reduce by the amount of the payment
the Company's Limits of Liability under this coverage section with
respect to such Claim.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
John S. Bain
Authorized Representative
May 24, 1995
Date
CHUBB Executive Protection Policy
ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Company: FEDERAL INSURANCE COMPANY
Endorsement No: 5
Effective date of this endorsement: MAY 31, 1995
Issued to: RICHARDSON ELECTRONICS, LTD.
To be attached to and form part of Policy No. 8125-64-60D
It is agreed that if a Claim against an Insured Person includes a claim
against the Insured Person's lawful spouse solely by reason of (i) such
spouse's status as a spouse of the Insured Person, or (ii) such spouse's
ownership interest in property which the claimant seeks as recovery for
alleged Wrongful Acts of the Insured Person, all loss which such spouse
becomes legally obligated to pay on account of such Claim shall be treated for
purposes of this coverage section as Loss which the Insured Person becomes
legally obligated to pay on account of the Claim made against the Insured
Person. All limitations, conditions, provisions and other terms of coverage
(including the deductible) applicable to the Insured Person's Loss shall also
be applicable to such spousal loss.
The coverage extension afforded by this Endorsement does not apply to any
Claim alleging any wrongful act or omission by the Insured Person's spouse.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
John S. Bain
Authorized Representative
May 24, 1995
Date