EXHIBIT 10(t)(1)
CHUBB Executive Protection Policy
DECLARATIONS
EXECUTIVE PROTECTION POLICY
Policy Number 8125-64-60E
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, 1996
To 12:01 A.M. MAY 31, 1997
Local time at the address shown in
Item 1.
Item 3. Coverage Summary
Description
GENERAL TERMS AND CONDITIONS
EXECUTIVE LIABILITY AND INDEMNIFICATION
FIDUCIARY LIABILITY
KIDNAP/RANSOM AND EXTORTION
Item 4. Termination of
Prior Policies: 8125-64-60D
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
June 12, 1996 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, 1996
To be attached to and form part of Policy No. 8125-64-60E
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
June 12, 1996
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 yhe 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, 1996
Issued to: RICHARDSON ELECTRONICS, LTD.
To be attached to and form part of Policy No. 8125-64-60E
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
June 12, 1996
Date
CHUBB Executive Protection Policy
ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Company: FEDERAL INSURANCE COMPANY
Endorsement No: 2
Effective date of this endorsement: MAY 31, 1996
Issued to: RICHARDSON ELECTRONICS, LTD.
To be attached to and form part of Policy No. 8125-64-60E
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
U.S. Export/Israel Regional Sales Manager
Regional Product Marketing Manager ROW
Regional Sales Manager Germany
Regional Sales Manager Italy
Industrial Business Unit Manager
Display Products Group Business Unit Manager
Solid State Components Business Unit Manager
Regional Sales Manager RDM
REEL Operations Manager
Western Region Sales Manager
Director General - REISA
Manager, Marketing Operations Europe
Regional Sales Manager France
Canada Region Sales Manager
Medical Business Unit Manager
Eastern Region Sales Manager
PL 240 RF Business Unit Manager
Singapore/Japan/Far East Regional Sales Manager
Regional Sales Manager REEL
Sales Administration Manager ROW
Regional Product Marketing Manager
Industrial
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
John S. Bain
Authorized Representative
June 12, 1996
Date
CHUBB Executive Protection Policy
ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Company: FEDERAL INSURANCE COMPANY
Endorsement No: 3
Effective date of this endorsement: MAY 31, 1996
Issued to: RICHARDSON ELECTRONICS, LTD.
To be attached to and form part of Policy No. 8125-64-60E
It is agreed that:
1. This coverage section is amended by adding the following:
Insured Organization Coverage
Insuring Clause 3
The Company shall pay on behalf of any Insured Organization
all Loss for which it becomes legally obligated to pay on
account of any Claim first made against it during the Policy
Period or, if exercised, during the Extended Reporting
Period, for a Wrongful Act committed, attempted, or
allegedly committed or attempted, by any Insured before or
during the Policy Period.
2. Subsection 18, Definitions, is amended as follows.
a. The definitions of Claim and Wrongful Act are deleted
in their entirety and the following is inserted:
Claim means:
(a) For purposes of coverage under Insuring Clauses 1
or 2:
(i) a written demand for monetary or non-monetary
damages;
(ii) a civil proceeding commenced by the service
of a complaint or similar pleading;
(iii) a criminal proceeding commenced by the
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;
(b) For purposes of coverage under Insuring Clause 3:
(i) a written demand for monetary or non-monetary
damages;
(ii) a civil proceeding commenced by the service
of a complaint or similar pleading; or
(iii) a criminal proceeding commenced by the
return of an indictment;
against any Insured Organization for a Wrongful
Act, including any appeal therefrom.
Wrongful Act means:
(a) For purposes of coverage under Insuring Clauses 1
or 2, any error, misstatement, misleading
statement, act, omission, neglect, or breach of
duty committed, attempted, or allegedly committed
or attempted, by any Insured Person, individually
or otherwise, in his Insured Capacity, or any
matter claimed against him solely by reason of
serving in such Insured Capacity;
(b) For purposes of coverage under Insuring Clause 3,
any error, misstatement, misleading statement,
act, omission, neglect, or breach of duty
committed, attempted, or allegedly committed or
attempted, by any Insured based upon, arising
from, or in consequence of a Securities
Transaction.
b. The following definition is added:
Securities Transaction means the purchase or sale of,
or offer to purchase or sell, any securities issued by
any Insured Organization.
c. The definitions of Insured Person and Loss are amended
by adding the following:
Insured Person also means:
(i) For purposes of coverage under Insuring Clause 1
or 2, any past, present or future employee of the
Insured Organization, but only for Wrongful acts
based upon, arising from or in consequence of any
Securities Transaction; and
(ii) For purposes of coverage under Insuring Clause 3,
the Insured Organization.
Loss does not include any amount allocated to uncovered
loss pursuant to subsection 12, Allocation. For
purposes of coverage under Insuring Clause 3, Loss
includes punitive or exemplary damages which any
Insured Organization becomes legally obligated to pay,
provided the punitive or exemplary damages are
otherwise covered under Insuring Clause 3 and are
insurable under the law pursuant to which this coverage
section is construed.
3. The heading for subsection 5 is deleted din its entirety and
the following is inserted:
Exclusions Applicable to all Insuring Clauses
4. Subsection 5, Exclusions: Exclusions Applicable to all
Insuring Clauses, is amended by adding the following to
paragraph (c):
(iv) a Claim that is brought by any Insured Person
identified in section 2c(i) of this endorsement for any
Wrongful Act based upon, arising from or in consequence
of any Securities Transaction.
5. Exclusions is amended by adding the following subsections:
Exclusions Applicable to Insuring Clause 3 Only
6A. The Company shall not be liable under Insuring Clause 3
for Loss on account of any Claim made against any
Insured Organization:
(a) based upon, arising from, or in consequence of any
deliberately fraudulent act or omission or any
willful violation of any statute or regulation by
any past, present or future chief financial
officer, President or Chairman if a judgment or
other final adjudication adverse to the Insured
Organization establishes such a deliberately
fraudulent act or omission or willful violation.
6B. The Company shall not be liable under Insuring Clause 3
for that part of Loss, other than Defense Costs:
(a) which is based upon, arises from, or is in
consequence of the actual or proposed payment by
any Insured Organization of allegedly inadequate
or excessive consideration in connection with its
purchase of securities issued by any Insured
Organization; or
(b) which is based upon, arises from, or is in
consequence of any Insured Organization having
gained in fact any profit or advantage to which it
was not legally entitled.
6. The second, third and fourth paragraphs of subsection 8,
Limit of Liability, Deductible and Coinsurance, are deleted
in their entirety and the following is inserted:
The Company's maximum liability for each Loss, whether
covered under one or more Insuring Clauses, 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 one or more Insuring Clauses, 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 or Insuring
Clause 3 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. However, the Deductible Amount applicable to each
Loss on account of any Claim for any Wrongful Acts based
upon, arising from or in consequence of any Securities
Transaction shall:
(a) apply only to that part of Loss which constitutes
Defense Costs; and
(b) not apply if:
(i) a final adjudication with prejudice pursuant
to a trial, motion to dismiss or motion for
summary judgment in such Claim, or
(ii) a complete and final settlement of such Claim
with prejudice,
establishes that no Insured in such claim is
liable for any Loss, other than Defense Costs.
The Company shall reimburse any Insured which has funded a
Deductible Amount if such amount subsequently becomes
inapplicable based upon (i) or (ii) above.
The maximum Deductible Amount applicable to a single Loss
which is covered under more than one Insuring Clause shall
be the amount set forth in Item 4 of the Declarations for
this coverage section.
7. The first paragraph of subsection 12, Allocation, is deleted
in its entirety and the following is inserted:
(a) If a Claim based on, arising from or in consequence of
a Securities Transaction covered, in whole or in part,
under Insuring Clauses 2 or 3 results in both Loss
covered by this coverage section and loss not covered
by this coverage section, because such Claim includes
both covered and uncovered matters or is made against
both covered and uncovered parties, the Insureds and
the Company shall allocate such amount to Loss as
follows:
(i) 100% of such amount constituting defense costs
shall be allocated to covered Loss; and
(ii) 75% of such amount other than defense costs shall
be allocated to covered Loss.
(b) If any other Claim results in both Loss covered by this
coverage section and loss not covered by this coverage
section, because such Claim includes both covered and
uncovered matters or is made against both covered and
uncovered parties, the Insureds and the Company shall
allocate such amount between covered Loss and uncovered
loss based upon the relative legal exposures of the
parties to such matters.
8. For purposes of coverage under Insuring Clause 3 only, the
second paragraph of subsection 17, Representations and
Severability, is deleted in its entirety and the following
is inserted:
With respect to the declarations and statements contained in
the written application(s) for coverage, all declarations
and statements contained in such application and knowledge
possessed by any Insured Person identified in Item 6 of the
Declarations shall be imputed to any Insured Organization
for the purpose of determining if coverage is available.
9. For purposes of coverage under Insuring Clause 3 only,
subsection 7, Severability of Exclusions, is deleted in its
entirety and the following is inserted:
With respect to the exclusions in subsections 5, 6A and 6B,
only facts pertaining to and knowledge possessed by any
past, present or future chief financial officer, President
or Chairman of any Insured Organization shall be imputed to
any Insured Organization to determine if coverage is
available for such Insured Organization.
10. For purposes of coverage for employees who are Insured
Persons pursuant to paragraph 2c(i) of this endorsement,
subsection 9, Presumptive Indemnification, is amended as
follows:
a. Paragraph (b) is deleted in its entirey and the
following is inserted:
(b) is permitted or required to indemnify the Insured
Person for such Loss to the fullest extent
permitted or required by law.
b. The final paragraph in the subection is deleted in its
entirey and the following is inserted:
For purposes of this subection 9, the shareholder and
board of director resolutions of the Insured
Organziation shall be deemed to provide indemnification
for such Loss to the fullest extent permitted by common
or statutory law.
ALL OTHER TERMS AND CONDITIONS REMAIN UNCHANGED.
John S. Bain
Authorized Representative
June 12, 1996
Date
CHUBB Executive Protection Policy
ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Company: FEDERAL INSURANCE COMPANY
Endorsement No: 4
Effective date of this endorsement: MAY 31, 1996
Issued to: RICHARDSON ELECTRONICS, LTD.
To be attached to and form part of Policy No. 8125-64-60E
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
June 12, 1996
Date
CHUBB Executive Protection Policy
ENDORSEMENT
Coverage Section: EXECUTIVE LIABILITY
Company: FEDERAL INSURANCE COMPANY
Endorsement No: 5
Effective date of this endorsement: MAY 31, 1996
Issued to: RICHARDSON ELECTRONICS, LTD.
To be attached to and form part of Policy No. 8125-64-60E
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
June 12, 1996
Date