Exhibit 10(z)(2)
IMPORTANT NOTE: THIS IS CLAIMS MADE COVERAGE. PLEASE READ THIS
POLICY CAREFULLY.
THIS POLICY, SUBJECT TO THE DECLARATIONS, INSURING AGREEMENTS,
TERMS, CONDITIONS, LIMITATIONS AND AMENDMENTS, APPLIES ONLY TO
CLAIM OR CLAIMS THAT ARE FIRST MADE AGAINST THE INSURED AND
REPORTED TO THE INSURER DURING THE POLICY PERIOD OR DISCOVERY
PERIOD (IF APPLICABLE).
THE LIMIT OF LIABILITY AVAILABLE TO PAY JUDGMENTS OR SETTLEMENTS
SHALL BE REDUCED AND MAY BE EXHAUSTED BY AMOUNTS INCURRED FOR
DEFENSE COSTS, CHARGES AND EXPENSES. THE RETENTION(S) APPLY(IES)
TO DEFENSE COSTS, CHARGES AND EXPENSES
ST. PAUL MERCURY
INSURANCE COMPANY
EXCESS DIRECTORS AND OFFICERS LIABILITY AND CORPORATE
INDEMNIFICATION POLICY
DECLARATIONS St. Paul, Minnesota 55102
A Capital Stock Company
Herein Called the Insurer
Policy No.: 0512CM0014
Item 1. Named Insured: The Directors and Officers of Richardson
Electronics, Ltd.
Item 2. Address (No., Street, City, State and Zip Code):40W267
Keslinger Road LaFox, IL 60147
Item 3. Policy Period: From: 5/31/98 To: 5/31/99(12:01 A.M.
Standard time at the address stated in Item 2).
Item 4.Limit of Liability: $15,000,000 each Policy Period in
excess of Item 7(E). The limit of liability available to pay
judgments or settlements shall be reduced and may be exhausted by
amounts incurred for legal defense costs, charges and expense.
Item 5. Retentions (Applicable to Section 2(B)(2)):
$250,000 Corporate Indemnification Each Loss
$0 Each Insured Each Loss
$0 Aggregate All Insureds Each Loss
Item 6. Premium: $ 61,000
Item 7. Schedule of Underlying Insurer(s):
1.Underlying Insurer: Federated Insurance Company
2.Policy Number: 8125-64-60F
3.Policy Period: From: 5/31/98 To: 5/31/99
4.Limit of Liability: $15,000,000
5.Retentions:
$250,000 Corporate Indemnification Each Loss
$0 Each Insured Each Loss
$0 Aggregate All Insureds Each Loss
Total amount of Underlying Limit of Liability $15,000,000 and any
retentions or deductibles as applicable under the policy(ies) as
stated in this Item 7.
Item 8. Subject to the Terms, Conditions and Limitations of this
policy as hereinafter provided, this policy follows the form of:
Insurer's Name: Federated Insurance Company
Policy Number: 8125-64-60F
Item 9. Forms Attached
1) St. Paul Mercury Insurance Company Policy, Form #50408
2) Endorsements one through four
3) St. Paul Mercury Insurance Company Renewal Application,
Form #50264
INSURING CLAUSE
In consideration of the payment of the premium, in reliance upon
the statements made to the Insurer by application including its
attachments, a copy of which is attached to and forms a part of
this policy, and any material submitted therewith (which shall be
retained on file by the Insurer and to be deemed attached
hereto), and except as hereinafter otherwise provided or amended,
this policy is subject to the same Insuring Agreement(s), Terms,
Conditions and Limitations as provided by the policy stated in
Item 8 of the Declarations and any amendments thereto, provided:
A. 1. the Insurer has received prior written notice from the
Insured(s) of any amendments to the policy stated in Item 8
of the Declarations, and
2. the Insurer has given to the Insured(s) its written consent
to any amendments to the policy stated in Item 8 of the
Declarations, and
3. the Insured has paid any required additional premium.
B. This policy is not subject to the same premium or the amount
and Limit of Liability of the policy stated in Item 8 of the
Declarations.
TERMS, CONDITIONS AND LIMITATIONS
Section 1. UNDERLYING INSURANCE
A. It is a condition precedent to the Insured(s) rights under
this policy that the Insured(s) notify the Insurer, as soon as
practicable in writing, of a failure to maintain in full force
and effect, except as provided for under Section 2(B), and
without alteration of any Terms, Conditions, Limit of Liability
or Retentions, any of the underlying insurance policies as stated
in Item 7 of the Declarations.
B. Failure to maintain, as set forth above, any of the underlying
insurance: policies as stated in Item 7 of the Declarations,
except as provided for under Section 2(B), shall not invalidate
this policy, but the liability of the Insurer for loss under this
policy shall apply only to the same extent it would have been
liable had the underlying insurance policies been maintained as
set forth above. In no event shall the Insurer be liable to pay
loss under this policy until the total amount of the Underlying
Limit of Liability, as stated in Item 7(E) of the Declarations,
has been paid solely by reason of the payment of loss.
Section 2. LIMIT OF LIABILITY
A. The Insurer shall only be liable to make payment under this
policy after the total amount of the Underlying Limit of
Liability as stated in Item 7(E) of the Declarations has been
paid solely by reason of payment of loss.
B. In the event of the reduction or exhaustion of the total
amount of the Underlying Limit of Liability as stated in Item
7(E) of the Declarations solely by reason of the payment of loss,
this policy shall:
1. in the event of such reduction pay excess of the reduced
amount of the Underlying Limit of Liability but not to
exceed the amount stated in Item 4 of the Declarations,
or
2. in the event of exhaustion continue in force provided
always that this policy shall only pay the excess over
the Retention amount stated in Item 5 of the
Declarations as respects each and every loss hereunder,
but not to exceed the amount stated in Item 4 of the
Declarations.
C. The Insurers' liability for loss subject to paragraphs (A) and
(B) above shall be the amount in Item 4 of the Declarations which
shall be the maximum liability of the Insurer in the Policy
Period stated in Item 3 of the Declarations. The Limit of
Liability of the Insurer for the Discovery Period, if elected,
shall be part of, and not in addition to, the Limit of Liability
as stated in Item 4 of the Declarations.
Section 3. LOSS PROVISIONS
The Insured(s) shall as a condition precedent to the right to be
indemnified under this policy give to the Insurer notice in
writing, as soon as practicable and during the Policy Period or
during the Discovery Period, if effective, of any claim made
against the Insured(s).
Section 4. NOTICE
Notice hereunder shall be given to St. Paul Mercury Insurance
Company, 385 Washington Street, St. Paul, MN 55102.
Section 5. CANCELLATION
This policy may be cancelled by the Corporation at any time by
mailing written notice to the Insurer at the address shown in
Section 4 stating when thereafter such cancellation shall be
effective or by surrender of this policy to the Insurer or its
authorized agent. This policy may also be cancelled by or on
behalf of the Insurer by delivering to the Corporation or by
mailing to the Corporation by registered, certified, or other
first class mail, at the Corporation's address as shown in Item 2
of the Declarations, written notice stating when, not less than
sixty (60) days thereafter, the cancellation shall be effective.
The mailing of such notice as aforesaid shall be sufficient proof
of notice. The Policy Period terminates at the date and hour
specified in such notice, or at the date and time of surrender.
If the period of limitation relating to the giving of notice is
prohibited or made void by law controlling the construction
thereof, such period shall be deemed to be amended so as to be
equal to the minimum period of limitation permitted by such law.
Section 6. DISCOVERY PERIOD
If the Insurer shall cancel or refuse to renew (refusal to renew
is hereafter referred to as non-renewal) this policy, the
Corporation or the Insureds shall have the right, upon payment to
the additional premium of 75% of the premium hereunder, to an
extension of the cover granted by this policy to report any claim
or claims in accordance with Section 3, which claim or claims are
made against the Insureds during the period of twelve (12) months
after the effective date of cancellation or non-renewal, herein
called the Discovery Period, but only for any Wrongful Act
committed before the effective date of such cancellation or non-
renewal and otherwise covered by this policy.
This right shall terminate, however, unless the Corporation of
the Insureds provide written notice of such election together
with the payment of the additional premium due and this is
received by the Insurer at the address shown in Section 4 within
ten (10) days after the effective date of cancellation or non-
renewal.
Discovery Period wherever used in this policy shall also mean
optional extension period or extended reporting period as defined
by the policy stated in Item 8 of the Declarations.
The offer by the Insurer of renewal terms, conditions, limits of
liability and/or premiums different from those of the expiring
policy shall not constitute non-renewal.
The provisions of this Section 6 and the rights granted herein to
the Corporation or the Insureds shall not apply to any
cancellation resulting from non-payment of premium.
SECTION 7. NUCLEAR ENERGY LIABILITY EXCLUSION
It is agreed that:
A. This policy does not apply:
1. Under any Liability Coverage, to bodily injury or
property damage
a. with respect to which an Insured under this policy is
also an Insured under a nuclear energy liability
policy issued by Nuclear Energy Liability Insurance
Association, Mutual Atomic Energy Underwriters or
Nuclear Insurance Association of Canada, or would be
an Insured under any such policy but for its
termination upon exhaustion of its limit of liability;
or
b. resulting from the hazardous properties of nuclear
material and with respect to which (1) any person or
organization is required to maintain financial
protection pursuant to the Atomic Energy Act of 1954,
or any law amendatory thereof, or (2) the Insured is,
or had this policy not been issued would be, entitled
to indemnity from the United States of America, or an
agency thereof, under any agreement entered into by
the United States of America, or any agency thereof
with any person or organization.
2. Under any Medical Payments coverage, or under any
Supplementary Payments provision relating to first aid, to
expenses incurred with respects to bodily injury resulting
from the hazardous properties of nuclear material and
arising out of the operation of a nuclear facility by any
person or organization.
3. Under any Liability Coverage, to bodily injury or property
damage resulting from the hazardous of nuclear material, if
a. the nuclear material (1) is at any nuclear facility
owned by, or operated by or on behalf of an Insured or
(2) has been discharged or dispersed therefrom;
b. the nuclear material is contained in spent fuel or
waste at any time possessed, handled, used, processed,
stored, transported or disposed of by or on behalf of
an Insured, or
c. the bodily injury or property damage arises out of the
furnishing by an Insured of services, materials, parts
or equipment in connection with the planning,
construction, maintenance, operation or use of any
nuclear facility, but if such facility is located
within the United States of America, its territories
or possessions or Canada, this exclusion (c) applies
only to property damage to such nuclear facility and
any property thereat.
B. As used in this exclusion:
"hazardous properties" include radioactive, toxic or explosive
properties;
"nuclear material" means source material, special nuclear
material or by-pro duct material;
"source material," "special nuclear material," and by-product
material have the meanings given them in the Atomic Energy
Act of 1954 or in any law amendatory thereof;
"spent fuel" means any fuel element or fuel component, solid
or liquid, which has been used or exposed to radiation in a
nuclear reactor;
"waste means any waste material (1) containing by-product
material and (2) resulting from the operation by any person
or organization of any nuclear facility included within the
definition of nuclear facility under paragraph (1)or (2)
thereof;
"nuclear facility" means
(1) any nuclear reactor,
(2) any equipment or device designed or used for (1)
separating the isotopes of uranium or plutonium,
(2)processing or utilizing spent fuel, or (3) handling,
processing or packaging waste,
(3) any equipment or device used for the processing,
fabricating or alloying of special nuclear material if at
any time the total amount of such material in the custody
of the Insured and the premises where such equipment or
device is located consists of or contains more than 25
grams of plutonium or uranium 233 or any combination
thereof, or more than 250 grams of uranium 235,
(4) any structure, basin, excavation, premises or place
prepared or used for the storage or disposal of waste and
includes the site on which any of the foregoing is
located, and operations conducted on such site and all
premises used for such operations;
"nuclear reactor" means any apparatus designed or used to sustain
nuclear fission in a self-supporting chain reaction or to contain
critical mass of fissionable material, "property damage" includes
all forms of radioactive contamination of property.
Section 8. ACTION AGAINST THE INSURER
No action shall lie against the Insurer unless, as a condition
precedent thereto, there shall have been full compliance with all
of the terms of this policy, not until the amount of the
Corporation's obligation to pay and/or the Insured's obligation
to pay have been finally determined either by judgment against
the Insureds after actual trial or by written agreement of the
Corporation and/or the Insureds, the claimant and the Insurer.
Any person or organization or the legal representative thereof
who has secured such judgment or written agreement shall
thereafter be entitled to recover under this policy to the extent
of the insurance afforded by this policy. No person or
organization shall have any right under this policy to join the
Insurer as a party to any action against the Corporation and/or
Insureds to determine the Insureds' liability, nor shall the
Insurer be impleaded by the Corporation and/or Insureds of their
legal representatives. Bankruptcy or insolvency of the
Corporation or the Corporation's estate, or bankruptcy or
insolvency of the Insureds' estate shall not relieve the Insurer
of any of its obligations hereunder.
IN WITNESS WHEREOF, the Insurer designated on the Declarations
page has caused this policy to be signed by its President and
Secretary and countersigned on the Declarations page by a duly
authorized representative of the Insurer.
Secretary President
Paul D. Zicarelli Deufetherdale
ENDORSEMENT OR RIDER NO. 4
The following spaces preceded by an (*)need not be completed if
this endorsement or rider and the Bond or Policy have the same
inception date.
ATTACHED TO AND FORMING PART DATE ENDORSEMENT OR EFFECTIVE DATE
OF BOND OR POLICY NO.: 512CM0014
DATE ENDORSEMENT OR RIDER EXECUTED: 5/31/98
* EFFECTIVE DATE OF ENDORSEMENT OR RIDER: 12:01 A.M. STANDARD
TIME AS SPECIFIED IN THE BOND OR POLICY
REPORTED INCIDENTS EXCLUSION
M1117 Ed. 3-90
In consideration of the premium charged, it is hereby understood
and agreed that under this policy the Insurer shall not be liable
to make any payment for Loss in connection with any claim or
claims made against the Insured(s) arising from any circumstances
of which notice has been given under any insurance in force prior
to the inception date of this policy including any applicable
discovery period.
(If this box is x'd, the signature requested below is
required.)
ACCEPTED BY INSURED By: Title:
Nothing herein contained shall be held to vary, alter, waive or
extend any of the terms, conditions, provisions, agreements or
limitations of the above mentioned Bond or Policy, other than as
above stated.
ST. PAUL MERCURY INSURANCE COMPANY
In Witness Hereof the company has
caused this endorsement to be signed by
a duly authorized representative of the
Company.
By: COPY
Authorized Representative
AGENT
ENDORSEMENT OR RIDER NO. 3
The following spaces preceded by an (*)need not be completed if
this endorsement or rider and the Bond or Policy have the same
inception date.
ATTACHED TO AND FORMING PART DATE ENDORSEMENT OR EFFECTIVE DATE
OF BOND OR POLICY NO.: 512CM0014
DATE ENDORSEMENT OR RIDER EXECUTED: 5/31/98
* EFFECTIVE DATE OF ENDORSEMENT OR RIDER: 12:01 A.M. STANDARD
TIME AS SPECIFIED IN THE BOND OR POLICY
SPECIFIC EVENT EXCLUSION
M1316 Ed. 12/92
In consideration of the premium charged, it is hereby understood
and agreed that under this policy the Insurer shall not be liable
to make any payment for Loss in connection with any claim or
claims made against the Insured(s) based upon, arising out of or
attributable to or in any way involving the
1. Panache Broadcasting of Pennsylvania, Inc. v. Richardson
Electronics, Ltd.; Varian Associates, Inc.; and Varian Supply
Company ( Case No. 90 C 6400); or
2. A contract to supply tubes to the United States Government
which was completed in 1989 as described in Note K -Litigation on
page 23 of the Richardson Electronics, Ltd. 1994 Annual Report;
or
3. Arius, Inc. v. Richardson Electronics, Ltd., Flint Cooper,
William Alexander, Kevin Dutton (case number Cl. 95-202 in the
Circuit Court of the Ninth Judicial Circuit in and for Orange
County, Florida)
(If this box is x'd, the signature requested below is
required.)
ACCEPTED BY INSURED By: Title:
Nothing herein contained shall be held to vary, alter, waive or
extend any of the terms, conditions, provisions, agreements or
limitations of the above mentioned Bond or Policy, other than as
above stated.
ST. PAUL MERCURY INSURANCE COMPANY
In Witness Hereof the company has
caused this endorsement to be signed by
a duly authorized representative of the
Company.
By: COPY
Authorized Representative
AGENT
ENDORSEMENT OR RIDER NO. 2
The following spaces preceded by an (*) need not be completed if
this endorsement or rider and the Bond or Policy have the same
inception date.
ATTACHED TO AND FORMING PART DATE ENDORSEMENT OR EFFECTIVE DATE
OF BOND OR POLICY NO.: 512CM0014
DATE ENDORSEMENT OR RIDER EXECUTED: 5/31/98
* EFFECTIVE DATE OF ENDORSEMENT OR RIDER: 12:01 A.M. STANDARD
TIME AS SPECIFIED IN THE BOND OR POLICY
PRIOR AND PENDING LITIGATION EXCLUSION
M1150 Ed. 3-90
In consideration of the premium charged, it is hereby understood
and agreed that the Insurer shall not be liable to make any
payment for loss in connection with any claim or claims made
against the Insured(s) arising from any prior or pending
litigation as of 5-31-90, as well as all future claims or
litigation based upon the pending or prior litigation or derived
from the same or essentially the same facts (actual or alleged)
that gave rise to the prior or pending litigation.
(If this box is x'd, the signature requested below is
required.)
ACCEPTED BY INSURED By: Title:
Nothing herein contained shall be held to vary, alter, waive or
extend any of the terms, conditions, provisions, agreements or
limitations of the above mentioned Bond or Policy, other than as
above stated.
ST. PAUL MERCURY INSURANCE COMPANY
In Witness Hereof the company has
caused this endorsement to be signed by
a duly authorized representative of the
Company.
By: COPY
Authorized Representative
AGENT
ENDORSEMENT I
The following spaces preceded by an asterisk (*) need not be
completed if this endorsement and the policy have the same
inception date.
ATTACHED TO AND FORMING PART OF POLICY NO.: 512CM0014
* EFFECTIVE DATE OF ENDORSEMENT OR RIDER: 5/31/98
* ISSUED TO: RICHARDSON ELECTRONICS
ILLINOIS AMENDATORY ENDORSEMENT
M 1137 Ed. 6-90
In Consideration of the premium charged, it is hereby understood
and agreed that:
1. The first paragraph under Section 5. CANCELLATION is and
substituted with the following:
This policy may be cancelled by the Corporation at any time by
mailing written notice the Insurer at the address shown in
Section 4 stating when thereafter such cancellation shall be
effective or by surrender of this policy to the Insurer or its
authorized agent. This policy may also be cancelled by or on
behalf of the Insurer by mailing to the Corporation, by
registered, certified or other first class mail, at the last
mailing adress known to the Insurer, written notice stating when,
not less than sixty (60) days thereafter, the cancellation shall
be effective. All such notices shall contain the specific
reason(s) for cancellation. If this policy has been in effect,
for more than sixty (60) days the cancellation must be for one of
the following reasons:
A. Nonpayment of premium;
B. Misrepresentation or fraud made by or with the knowledge
of the Corporation or Insureds in obtaining the policy or
in pursuing a claim under the policy;
C. A violation by any Insured of any of the terms and
conditions of the policy;
D. A substantial increase in the risk originally assumed;
E. Loss of reinsurance by the Insurer which provided
coverage to the insurer for a significant amount of the
underlying risk insured. Certification of the loss of
reinsurance must be given to the Director of Insurance.
F. A determination by the Director of Insurance that the
continuation of the policy would place the Insurer in
violation of the insurance law of the State of Illinois.
Nothing herein contained shall be hold to vary, alter, waive or
extend any of the terms, conditions, provisions, agreements or
limitations of the above mentioned policy, other than as above
stated.
In Witness Whereof, the Company
has caused this endorsement to
*Agency Name and Address be signed by a duly authorized
representative of the Company
COPY
Authorized Representative
AGENT
ENDORSEMENT 1
The following spaces preceded by an asterisk (*) need not be
completed if this endorsement and the policy have the same
inception date.
ATTACHED TO AND FORMING PART OF POLICY NO.: 512CM0014
* EFFECTIVE DATE OF ENDORSEMENT OR RIDER: 5/31/98
* ISSUED TO: RICHARDSON ELECTRONICS
It is further agreed that this policy may be non renewed by or on
behalf of the Insurer by mailing written notice to the
Corporation, by registered, certified, or other first class mail,
at the last mailing address known to the Insurer. All such
notices shall contain the specific reason(s) for non renewal. It
is further agreed that non renewal of this policy will be
effective sixty (60) days after receipt of the Insured of written
notice from the Insurer of its desire to non renew this policy,
or at the time and date set forth in the notice of non renewal,
provided sixty (60) day notice has been given the Corporation
prior to said date.
2. It is further understood and agreed that Section 6. DISCOVERY
PERIOD is hereby deleted in its entirety and replaced with the
following:
If the Insurer or the Insured(s) shall cancel or refuse to renew
(refusal to renew is hereafter referred to as non-renewal) this
policy, the Corporation or the Insured(s)shall have the right,
upon payment of the a additional premium of seventy five percent
(75%) of the expiring annual premium hereunder to report any
claim or claims in accordance with Section 3, which claim or
claims are made against the Insured(s) during the period
of twelve (12) months after the effective date of cancellation or
non-renewal, herein called the Discovery Period, but only for any
Wrongful Act committed before the effective date of such
cancellation or non-renewal and otherwise covered by this policy.
This right shall terminate, however, unless the Corporation or
the Insured(s) provide written notice of such election together
with the additional premium due and this is received by the
Insurer at the address shown in Section 4 within thirty (30)days
after the effective date of cancellation or non-renewal.
The additional premium for the Discovery Period shall be fully
earned at the inception of the Discovery Period. The Discovery
Period is not cancellable.
Nothing herein contained shall be hold to vary, alter, waive or
extend any of the terms, conditions, provisions, agreements or
limitations of the above mentioned policy, other than as above
stated.
In Witness Whereof, the Company
has caused this endorsement to by
*Agency Name and Address a duly be signed authorized
representative of the Company
COPY
Authorized Representative
AGENT