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EXHIBIT 10.8

 

    Chubb Group of Insurance Companies        Executive Protection Portfolio SM
    15 Mountain View Road        Executive Liability and Entity Securities    
Warren, New Jersey 07059        Liability Coverage Section

 

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DECLARATIONS    FEDERAL INSURANCE COMPANY     

A stock insurance company, incorporated under

the laws of Indiana, herein called the Company

 

THIS COVERAGE SECTION PROVIDES CLAIMS MADE COVERAGE, WHICH APPLIES ONLY TO
“CLAIMS” FIRST MADE DURING THE “POLICY PERIOD”, OR ANY EXTENDED REPORTING
PERIOD. THE LIMIT OF LIABILITY TO PAY “LOSS” WILL BE REDUCED, AND MAY BE
EXHAUSTED, BY “DEFENSE COSTS”, AND “DEFENSE COSTS” WILL BE APPLIED AGAINST THE
RETENTION. READ THE ENTIRE POLICY CAREFULLY.

 

Item 1.

  Parent Organization:             

RYERSON, INC.

2621 WEST 15TH PLACE

CHICAGO, IL 60608

        

Item 2.

  Limits of Liability:              (A) Each Claim:    $ 15,000,000.00       (B)
Each Policy Period:    $ 15,000,00000       (C) Sublimit for all Securityholder
Derivative Demands under Insuring Clause 4:    $ 250,000.00  

Item 3.

  Coinsurance Percentage:              (A) Securities Claims:      000 %     (B)
Claims other than Securities Claims:      0.00 %

Item 4.

  Retention:              (A) Insuring Clauses 1 and 4:      None       (B)
Insuring Clause 2 (Claims other than Securities Claims):    $ 1,000,000.00      
(C) Insuring Clauses 2 and 3 (Securities Claims only):    $ 2,000,000.00  

Item 5.

  Organization:              Ryerson, Inc. and its Subsidiaries         

 

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    Chubb Group of Insurance Companies        Executive Protection Portfolio SM
    15 Mountain View Road        Executive Liability and Entity Securities    
Warren, New Jersey 07059        Liability Coverage Section

 

Item 6.

  Extended Reporting Period:               (A) Additional Period:   one year   
           (B) Additional Premium:   150 % of Annualized Premium for the
Expiring Policy Period      Item 7.   Pending or Prior Date:   None          

 

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   Executive Protection Portfolio SM    Executive Liability and Entity
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In consideration of payment of the premium and subject to the Declarations, the
General Terms and Conditions, and the limitations, conditions, provisions and
other terms of this coverage section, the Company and the Insureds agree as
follows:

 

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Insuring Clauses

 

Executive Liability Coverage Insuring Clause 1

 

  1. The Company shall pay, on behalf of each of the Insured Persons, Loss for
which the Insured Person is not indemnified by the Organization and which the
Insured Person becomes legally obligated to pay on account of any Claim first
made against the Insured Person, 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, but only if such Claim is reported to
the Company in writing in the manner and within the time provided in Subsection
15 of this coverage section.

 

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Executive Indemnification Coverage Insuring Clause 2

 

  2. The Company shall pay, on behalf of the Organization, Loss for which the
Organization grants indemnification to an Insured Person, as permitted or
required by law, and which the Insured Person becomes legally obligated to pay
on account of any Claim first made against the Insured Person, 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, but only if such Claim is reported to the Company in writing in the
manner and within the time provided in Subsection 15 of this coverage section.

 

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Entity Securities Coverage Insuring Clause 3

 

  3. The Company shall pay, on behalf of the Organization, Loss which the
Organization becomes legally obligated to pay on account of any Securities Claim
first made against the Organization during the Policy Period or, if exercised,
during the Extended Reporting Period, for a Wrongful Act committed, attempted,
or allegedly committed or attempted by the Organization or the Insured Persons
before or during the Policy Period, but only if such Securities Claim is
reported to the Company in writing in the manner and within the time provided in
Subsection 15 of this coverage section.

 

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Securityholder Derivative Demand Coverage Insuring Clause 4

 

  4. The Company shall pay, on behalf of the Organization, Investigative Costs
resulting from a Securityholder Derivative Demand first received by the
Organization during the Policy Period or, if exercised, during the Extended
Reporting Period, for a Wrongful Act committed, attempted, or allegedly
committed or attempted before or during the Policy Period, but only if such
Securityholder Derivative Demand is reported to the Company in writing in the
manner and within the time provided in Subsection 15 of this coverage section.

 

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     Executive Protection Portfolio SM      Executive Liability and Entity
Securities      Liability Coverage Section

 

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Definitions

 

  5. When used in this coverage section:

 

Application means all signed applications, including attachments and other
materials submitted therewith or incorporated therein, submitted by the Insureds
to the Company for this coverage section or for any coverage section or policy
of which this coverage section is a direct or indirect renewal or replacement.

 

Application shall also include, for each Organization, all of the following
documents whether or not submitted with or attached to any such signed
application: (i) the Annual Report (including financial statements) last issued
to shareholders before this policy’s inception date; (ii) the report last filed
with the Securities and Exchange Commission on Form 10-K before this policy’s
inception date; (iii) the report last filed with the Securities and Exchange
Commission on Form 10-Q before this policy’s inception date; (iv) the proxy
statement and (if different) definitive proxy statement last filed with the
Securities and Exchange Commission before this policy’s inception date; (v) all
reports filed with the Securities and Exchange Commission on Form 8-K during the
twelve months preceding this policy’s inception date; and (vi) all reports filed
with the Securities and Exchange Commission on Schedule 13D, with respect to any
equity securities of such Organization, during the twelve months preceding this
policy’s inception date. All such applications, attachments, materials and other
documents are deemed attached to, incorporated into and made a part of this
coverage section.

 

Claim means:

 

  (1) when used in reference to the coverage provided by Insuring Clause 1 or 2:

 

  (a) a written demand for monetary damages or non-monetary relief;

 

  (b) a civil proceeding commenced by the service of a complaint or similar
pleading; or

 

  (c) a formal civil administrative or civil regulatory proceeding commenced by
the filing of a notice of charges or similar document or by the entry of a
formal order of investigation or similar document,

 

against an Insured Person for a Wrongful Act, including any appeal therefrom;

 

  (2) when used in reference to the coverage provided by Insuring Clause 3:

 

  (a) a written demand for monetary damages or non-monetary relief;

 

  (b) a civil proceeding commenced by the service of a complaint or similar
pleading; or

 

  (c) a formal civil administrative or civil regulatory proceeding commenced by
the filing of a notice of charges or similar document or by the entry of a
formal order of investigation or similar document, but only while such
proceeding is also pending against an Insured Person,

 

against an Organization for a Wrongful Act, including any appeal therefrom; or

 

  (3) when used in reference to the coverage provided by Insuring Clause 4, a
Securityholder Derivative Demand.

 

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Except as may otherwise be provided in Subsection 12, Subsection 13(g),or
Subsection 15(b) of this coverage section, a Claim will be deemed to have first
been made when such Claim is commenced as set forth in this definition (or, in
the case of a written demand, including but not limited to any Securityholder
Derivative Demand, when such demand is first received by an Insured).

 

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, fees or benefits of
the directors, officers or employees of the Organization) incurred in defending
any Claim and the premium for appeal, attachment or similar bonds.

 

Domestic Partner means any natural person qualifying as a domestic partner under
the provisions of any applicable federal, state or local law or under the
provisions of any formal program established by the Organization.

 

Financial Impairment means the status of an Organization resulting from:

 

  (a) the appointment by any state or federal official, agency or court of any
receiver, conservator, liquidator, trustee, rehabilitator or similar official to
take control of, supervise, manage or liquidate such Organization; or

 

  (b) such Organization becoming a debtor in possession under the United States
bankruptcy law or the equivalent of a debtor in possession under the law of any
other country.

 

Insured means the Organization and any Insured Person.

 

Insured Capacity means the position or capacity of an Insured Person that causes
him or her to meet the definition of Insured Person set forth in this coverage
section. Insured Capacity does not include any position or capacity held by an
Insured Person in any organization other than the Organization, even if the
Organization directed or requested the Insured Person to serve in such position
or capacity in such other organization.

 

Insured Person means any natural person who was, now is or shall become:

 

  (a) a duly elected or appointed director, officer, Manager, or the in-house
general counsel of any Organization chartered in the United States of America;

 

  (b) a holder of a position equivalent to any position described in (a) above
in an Organization that is chartered in any jurisdiction other than the United
States of America; or

 

  (c) solely with respect to Securities Claims, any other employee of an
Organization, provided that such other employees shall not, solely by reason of
their status as employees, be Insured Persons for purposes of Exclusion 6(c).

 

Investigative Costs means reasonable costs, charges, fees (including but not
limited to attorneys’ fees and experts’ fees) and expenses (other than regular
or overtime wages, salaries, fees, or benefits of the directors, officers, or
employees of the Organization) incurred by the Organization (including its Board
of Directors or any committee of its Board of Directors) in investigating or
evaluating on behalf of the Organization whether it is in the best interest of
the Organization to prosecute the claims alleged in a Securityholder Derivative
Demand.

 

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     Executive Protection Portfolio SM      Executive Liability and Entity
Securities      Liability Coverage Section

 

Loss means:

 

  (a) the amount that any Insured Person (for purposes of Insuring Clauses 1 and
2) or the Organization (for purposes of Insuring Clause 3) becomes legally
obligated to pay on account of any covered Claim, including but not limited to
damages (including punitive or exemplary damages, if and to the extent that such
punitive or exemplary damages are insurable under the law of the jurisdiction
most favorable to the insurability of such damages provided such jurisdiction
has a substantial relationship to the relevant Insureds, to the Company, or to
the Claim giving rise to the damages), judgments, settlements, pre-judgment and
post-judgment interest and Defense Costs; or

 

  (b) for purposes of Insuring Clause 4, covered Investigative Costs.

 

Loss does not include:

 

  (a) any amount not indemnified by the Organization for which an Insured Person
is absolved from payment by reason of any covenant, agreement or court order;

 

  (b) any costs incurred by the Organization to comply with any order for
injunctive or other non-monetary relief, or to comply with an agreement to
provide such relief;

 

  (c) any amount incurred by an Insured in the defense or investigation of any
action, proceeding or demand that is not then a Claim even if (i) such amount
also benefits the defense of a covered Claim, or (ii) such action, proceeding or
demand subsequently gives rise to a Claim;

 

  (d) taxes, fines or penalties, or the multiple portion of any multiplied
damage award, except as provided above with respect to punitive or exemplary
damages;

 

  (e) any amount not insurable under the law pursuant to which this coverage
section is construed, except as provided above with respect to punitive or
exemplary damages;

 

  (f) any amount allocated to non-covered loss pursuant to Subsection 17 of this
coverage section; or

 

  (g) any amount that represents or is substantially equivalent to an increase
in the consideration paid (or proposed to be paid) by an Organization in
connection with its purchase of any securities or assets.

 

Manager means any natural person who was, now is or shall become a manager,
member of the Board of Managers or equivalent executive of an Organization that
is a limited liability company.

 

Organization means, collectively, those organizations designated in Item 5 of
the Declarations for this coverage section, including any such organization in
its capacity as a debtor in possession under the United States bankruptcy law or
in an equivalent status under the law of any other country.

 

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Pollutants means (a) any substance located anywhere in the world exhibiting any
hazardous characteristics as defined by, or identified on a list of hazardous
substances issued by, the United States Environmental Protection Agency or any
state, county, municipality or locality counterpart thereof, including, without
limitation, solids, liquids, gaseous or thermal irritants, contaminants or
smoke, vapor, soot, fumes, acids, alkalis, chemicals or waste materials, or
(b) any other air emission, odor, waste water, oil or oil products, infectious
or medical waste, asbestos or asbestos products or any noise.

 

Related Claims means all Claims for Wrongful Acts based upon, arising from, or
in consequence of the same or related facts, circumstances, situations,
transactions or events or the same or related series of facts, circumstances,
situations, transactions or events.

 

Securities Claim means that portion of a Claim which:

 

  (a) is brought by a securityholder of an Organization

 

  (i) in his or her capacity as a securityholder of such Organization, with
respect to his or her interest in securities of such Organization, and against
such Organization or any of its Insured Persons; or

 

  (ii) derivatively, on behalf of such Organization, against an Insured Person
of such Organization; or

 

  (b) alleges that an Organization or any of its Insured Persons

 

  (i) violated a federal, state, local or foreign securities law or a rule or
regulation promulgated under any such securities law; or

 

  (ii) committed a Wrongful Act that constitutes or arises from a purchase,
sale, or offer to purchase or sell securities of such Organization.

 

provided that Securities Claim does not include any Claim by or on behalf of a
former, current, future or prospective employee of the Organization that is
based upon, arising from, or in consequence of any offer, grant or issuance, or
any plan or agreement relating to the offer, grant or issuance, by the
Organization to such employee in his or her capacity as such of stock, stock
warrants, stock options or other securities of the Organization, or any payment
or instrument the amount or value of which is derived from the value of
securities of the Organization; and provided, further, that Securities Claim
does not include any Securityholder Derivative Demand.

 

Securityholder Derivative Demand means:

 

  (a) any written demand, by a securityholder of an Organization, upon the Board
of Directors or Board of Managers of such Organization to bring a civil
proceeding in a court of law against an Insured Person for a Wrongful Act; or

 

  (b) any lawsuit by a securityholder of an Organization, brought derivatively
on behalf of such Organization against an Insured Person for a Wrongful Act
without first making a demand as described in (a) above,

provided such demand or lawsuit is brought and maintained without any active
assistance or participation of, or solicitation by, any Insured Person.

 

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     Executive Protection Portfolio SM      Executive Liability and Entity
Securities      Liability Coverage Section

 

Subsidiary, either in the singular or plural, means any organization while more
than fifty percent (50%) of the outstanding securities or voting rights
representing the present right to vote for election of or to appoint directors
or Managers of such organization are owned or controlled, directly or
indirectly, in any combination, by one or more Organizations.

 

Wrongful Act means:

 

  (a) any error, misstatement, misleading statement, act, omission, neglect, or
breach of duty committed, attempted, or allegedly committed or attempted by an
Insured Person in his or her Insured Capacity, or for purposes of coverage under
Insuring Clause 3, by the Organization, or

 

  (b) any other matter claimed against an Insured Person solely by reason of his
or her serving in an Insured Capacity.

 

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Exclusions

 

Applicable To All Insuring Clauses

 

  6. The Company shall not be liable for Loss on account of any Claim:

 

  (a) based upon, arising from, or in consequence of any fact, circumstance,
situation, transaction, event or Wrongful Act that, before the inception date
set forth in Item 2 of the Declarations of the General Terms and Conditions, was
the subject of any notice given under any policy or coverage section of which
this coverage section is a direct or indirect renewal or replacement;

 

  (b) based upon, arising from, or in consequence of any demand, suit or other
proceeding pending against, or order, decree or judgment entered for or against
any Insured, on or prior to the Pending or Prior Date set forth in Item 7 of the
Declarations for this coverage section, or the same or substantially the same
fact, circumstance or situation underlying or alleged therein;

 

  (c) brought or maintained by or on behalf of any Insured in any capacity;
provided that this Exclusion 6(c) shall not apply to:

 

  (i) a Claim brought or maintained derivatively on behalf of the Organization
by one or more securityholders of the Organization, provided such Claim is
brought and maintained without any active assistance or participation of, or
solicitation by, any Insured Person;

 

  (ii) an employment Claim brought or maintained by or on behalf of an Insured
Person;

 

  (iii) a Claim brought or maintained by an Insured Person for contribution or
indemnity, if such Claim directly results from another Claim covered under this
coverage section; or

 

  (iv) a Claim brought by an Insured Person who has not served in an Insured
Capacity for at least four (4) years prior to the date such Claim is first made
and who brings and maintains such Claim without any active assistance or
participation of, or solicitation by, the Organization or any other Insured
Person who is serving or has served in an Insured Capacity within such four
(4) year period;

 

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  (d) based upon, arising from, or in consequence of:

 

  (i) any actual, alleged, or threatened exposure to, or generation, storage,
transportation, discharge, emission, release, dispersal, escape, treatment,
removal or disposal of any Pollutants; or

 

  (ii) any regulation, order, direction or request to test for, monitor, clean
up, remove, contain, treat, detoxify or neutralize any Pollutants, or any action
taken in contemplation or anticipation of any such regulation, order, direction
or request,

 

including but not limited to any Claim for financial loss to the Organization,
its securityholders or its creditors based upon, arising from, or in consequence
of any matter described in clause (i) or clause (ii) of this Exclusion 6(d);

 

  (e) for bodily injury, mental anguish, emotional distress, sickness, disease
or death of any person or damage to or destruction of any tangible property
including loss of use thereof whether or not it is damaged or destroyed;
provided that this Exclusion 6(e) shall not apply to mental anguish or emotional
distress for which a claimant seeks compensation in an employment Claim;

 

  (f) for an actual or alleged violation of the responsibilities, obligations or
duties imposed on fiduciaries by the Employee Retirement Income Security Act of
1974, or any amendments thereto, or any rules or regulations promulgated
thereunder, or any similar provisions of any federal, state, or local statutory
law or common law anywhere in the world;

 

  (g) for Wrongful Acts of an Insured Person in his or her capacity as a
director, officer, manager, trustee, regent, governor or employee of any entity
other than the Organization, even if the Insured Person’s service in such
capacity is with the knowledge or consent or at the request of the Organization;
or

 

  (h) made against a Subsidiary or an Insured Person of such Subsidiary for any
Wrongful Act committed, attempted, or allegedly committed or attempted during
any time when such entity was not a Subsidiary

 

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Applicable To Insuring Clauses 1 and 2 Only

 

  7. The Company shall not be liable under Insuring Clause 1 or 2 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 Organization within the meaning of
Section 16(b) of the Securities Exchange Act of 1934, any amendments thereto, or
any similar provision of any federal, state, or local statutory law or common
law anywhere in the world; or

 

  (b) based upon, arising from, or in consequence of:

 

  (i) the committing in fact of any deliberately fraudulent act or omission or
any willful violation of any statute or regulation by such Insured Person; or

 

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     Executive Protection Portfolio SM      Executive Liability and Entity
Securities      Liability Coverage Section

 

  (ii) such Insured Person having gained in fact any profit, remuneration or
advantage to which such Insured Person was not legally entitled,

 

as evidenced by (A) any written statement or written document by any insured or
(B) any judgment or ruling in any judicial, administrative or alternative
dispute resolution proceeding.

 

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Applicable To Insuring Clause 3 Only

 

  8. The Company shall not be liable under Insuring Clause 3 for Loss on account
of any Securities Claim made against any Organization:

 

  (a) based upon, arising from, or in consequence of:

 

  (i) the committing in fact of any deliberately fraudulent act or omission or
any willful violation of any statute or regulation by an Organization or by any
past, present or future chief financial officer, in-house general counsel,
president, chief executive officer or chairperson of an Organization; or

 

  (ii) such Organization having gained in fact any profit, remuneration or
advantage to which such Organization was not legally entitled,

 

as evidenced by (A) any written statement or written document by any Insured or
(B) any judgment or ruling in any judicial, administrative or alternative
dispute resolution proceeding; or

 

  (b) for any actual or alleged liability of an Organization under any contract
or agreement that relates to the purchase, sale, or offer to purchase or sell
any securities; provided that this Exclusion 8(b) shall not apply to liability
that would have attached to such Organization in the absence of such contract or
agreement.

 

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Severability of Exclusions

 

9.        (a)        No fact pertaining to or knowledge possessed by any Insured
Person shall be imputed to any other Insured Person for the purpose of applying
the exclusions in Subsection 7 of this coverage section.      (b)      Only
facts pertaining to and knowledge possessed by any past, present, or future
chief financial officer, in-house general counsel, president, chief executive
officer or chairperson of an Organization shall be imputed to such Organization
for the purpose of applying the exclusions in Subsection 8 of this coverage
section.

 

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Spouses, Estates and Legal Representatives

 

  10. Subject otherwise to the General Terms and Conditions and the limitations,
conditions, provisions and other terms of this coverage section, coverage shall
extend to Claims for the Wrongful Acts of an Insured Person made against:

 

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  (a) the estate, heirs, legal representatives or assigns of such Insured Person
if such Insured Person is deceased or the legal representatives or assigns of
such Insured Person if such Insured Person is incompetent, insolvent or
bankrupt; or

 

  (b) the lawful spouse or Domestic Partner of such Insured Person solely by
reason of such spouse or Domestic Partner’s status as a spouse or Domestic
Partner, or such spouse or Domestic Partner’s ownership interest in property
which the claimant seeks as recovery for an alleged Wrongful Act of such Insured
Person.

 

All terms and conditions of this coverage section, including without limitation
the Retention, applicable to Loss incurred by the Insured Persons, shall also
apply to loss incurred by the estates, heirs, legal representatives, assigns,
spouses and Domestic Partners of such Insured Persons. The coverage provided by
this Subsection 10 shall not apply with respect to any loss arising from an act
or omission by an Insured Person’s estate, heirs, legal representatives,
assigns, spouse or Domestic Partner.

 

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Coordination With Employment Practices Liability Coverage Section

 

  11. Any Loss otherwise covered by both (i) this coverage section and (ii) any
employment practices liability coverage section or policy issued by the Company
or by any affiliate of the Company (an “Employment Practices Liability
Coverage”) first shall be covered as provided in, and shall be subject to the
limit of liability, retention and coinsurance percentage applicable to such
Employment Practices Liability Coverage. Any remaining Loss otherwise covered by
this coverage section which is not paid under such Employment Practices
Liability Coverage shall be covered as provided in, and shall be subject to the
Limit of Liability, Retention and Coinsurance Percentage applicable to this
coverage section; provided the Retention applicable to such Loss under this
coverage section shall be reduced by the amount of Loss otherwise covered by
this coverage section which is paid by the Insureds as the retention under such
Employment Practices Liability Coverage.

 

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Extended Reporting Period

 

  12. If the Company or the Parent Organization terminates or does not renew
this coverage section, other than termination by the Company 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 6(B) of the
Declarations for this coverage section, to an extension of the coverage granted
by this coverage section for Claims that are (i) first made during the period
set forth in Item 6(A) of the Declarations for this coverage section (the
“Extended Reporting Period”) following the effective date of termination or
nonrenewable, and (ii) reported to the Company in writing within the time
provided in Subsection 15(a) of this coverage section, but only to the extent
such Claims are for Wrongful Acts committed, attempted, or allegedly committed
or attempted before the earlier of the effective date of termination or
nonrenewal or the date of the first merger, consolidation or acquisition event
described in Subsection 21 below. The offer of renewal terms and conditions or
premiums different from those in effect prior to renewal shall not constitute
refusal to renew. The right to purchase an extension of coverage as described in
this Subsection shall lapse unless written notice of election to purchase the
extension, together with payment of the additional premium due, is received by
the Company within thirty (30) days after the effective date of termination or
nonrenewal Any Claim made during the Extended Reporting Period shall be deemed
to have been made during the immediately preceding Policy Period. The entire
additional premium for the Extended Reporting Period shall be deemed fully
earned at the inception of such Extended Reporting Period.

 

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     Executive Protection Portfolio SM      Executive Liability and Entity
Securities      Liability Coverage Section

 

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Limit of Liability, Retention and Coinsurance

 

  13.       (a) The Company’s maximum liability for all Loss on account of each
Claim, whether covered under one or more Insuring Clauses, shall be the Limit of
Liability set forth in Item 2(A) of the Declarations for this coverage section.
The Company’s maximum aggregate liability for all Loss on account of all Claims
first made during the 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.

 

  (b) The Company’s maximum aggregate liability under Insuring Clause 4 for all
Investigative Costs on account of all Securityholder Derivative Demands shall be
the Sublimit set forth in Item 2(C) of the Declarations for this coverage
section. Such Sublimit is part of, and not in addition to, the Limits of
Liability set forth in Items 2(A) and 2(B) of the Declarations.

 

  (c) Defense 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 shall reduce and may exhaust such
applicable Limits of Liability.

 

  (d) The Company’s liability under Insuring Clause 2 or 3 shall apply only to
that part of covered Loss (as determined by any applicable provision in
Subsection 17 of this coverage section) on account of each Claim which is excess
of the applicable Retention set forth in Item 4 of the Declarations for this
coverage section. Such Retention shall be depleted only by Loss otherwise
covered under this coverage section and shall be borne by the Insureds uninsured
and at their own risk. Except as otherwise provided in Subsection 14, no
Retention shall apply to any Loss under Insuring Clause 1 or 4.

 

  (e) If different parts of a single Claim are subject to different Retentions,
the applicable Retentions will be applied separately to each part of such Claim,
but the sum of such Retentions shall not exceed the largest applicable
Retention.

 

  (f) To the extent that Loss resulting from a Securities Claim is covered under
Insuring Clause 2 or 3 (as determined by Subsection 17(a) of this coverage
section) and is in excess of the applicable Retention, the Insureds shall bear
uninsured and at their own risk that percentage of such Loss specified as the
Coinsurance Percentage in Item 3(A) of the Declarations for this coverage
section, and the Company’s liability shall apply only to the remaining
percentage of such Loss. To the extent that Loss resulting from a Claim other
than a Securities Claim is covered under Insuring Clause 2 or 3 (as determined
by Subsection 17(b) of this coverage section) and is in excess of the applicable
Retention, the Insureds shall bear uninsured and at their own risk that
percentage of such Loss specified as the Coinsurance Percentage in Item 3(B) of
the Declarations for this coverage section, and the Company’s liability shall
apply only to the remaining percentage of such Loss.

 

  (g) All Related Claims shall be treated as a single Claim first made on the
date the earliest of such Related Claims was first made, or on the date the
earliest of such Related Claims is treated as having been made in accordance
with Subsection 15(b) below, regardless of whether such date is before or during
the Policy Period.

 

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  (h) The limit of liability available during the Extended Reporting Period (if
exercised) shall be part of, and not in addition to, the Company’s maximum
aggregate limit of liability for all Loss on account of all Claims first made
during the immediately preceding Policy Period.

 

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Presumptive Indemnification

 

  14. If the Organization fails or refuses, other than for reason of Financial
Impairment, to indemnify an Insured Person for Loss, or to advance Defense Costs
on behalf of an Insured Person, to the fullest extent permitted by statutory or
common law, then, notwithstanding any other conditions, provisions or terms of
this coverage section to the contrary, any payment by the Company of such
Defense Costs or other Loss shall be subject to:

 

  (i) the applicable Insuring Clause 2 Retention set forth in Item 4 of the
Declarations for this coverage section; and

 

  (ii) the applicable Coinsurance Percentage set forth in Item 3 of the
Declarations for this coverage section.

 

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Reporting and Notice

 

  15.       (a) The Insureds shall, as a condition precedent to exercising any
right to coverage under this coverage section, give to the Company written
notice of any Claim as soon as practicable, but in no event later than the
earliest of the following dates:

 

  (i) sixty (60) days after the date on which any Organization’s chief financial
officer, in-house general counsel, risk manager, president, chief executive
officer or chairperson first becomes aware that the Claim has been made;

 

  (ii) if this coverage section expires (or is otherwise terminated) without
being renewed and if no Extended Reporting Period is purchased, sixty (60) days
after the effective date of such expiration or termination; or

 

  (iii) the expiration date of the Extended Reporting Period, if purchased;

 

provided that if the Company sends written notice to the Parent Organization, at
any time before the date set forth in (i) above with respect to any Claim,
stating that this coverage section is being terminated for nonpayment of
premium, the Insureds shall give to the Company written notice of such Claim
prior to the effective date of such termination.

 

  (b) If during the Policy Period an Insured:

 

  (i) becomes aware of circumstances which could give rise to a Claim and gives
written notice of such circumstances to the Company;

 

  (ii) receives a written request to toll or waive a statute of limitations
applicable to Wrongful Acts committed, attempted, or allegedly committed or
attempted before or during the Policy Period and gives written notice of such
request and of such alleged Wrongful Acts to the Company; or

 

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  (iii) gives written notice to the Company of a Securityholder Derivative
Demand,

 

then any Claim subsequently arising from the circumstances referred to in
(i) above, from the Wrongful Acts referred to in (ii) above, or from the
Securityholder Derivative Demand referred to in (iii) above, shall be deemed to
have been first made during the Policy Period in which the written notice
described in (i), (ii) or (iii) above was first given by an Insured to the
Company, provided any such subsequent Claim is reported to the Company as set
forth in Subsection 15(a) above. With respect to any such subsequent Claim, no
coverage under this coverage section shall apply to loss incurred prior to the
date such subsequent Claim is actually made.

 

  (c) The Insureds shall, as a condition precedent to exercising any right to
coverage under this coverage section, give to the Company such information,
assistance, and cooperation as the Company may reasonably require, and shall
include in any notice under Subsection 15(a) or (b) a description of the Claim,
circumstances, or Securityholder Derivative Demand, the nature of any alleged
Wrongful Acts, the nature of the alleged or potential damage, the names of all
actual or potential claimants, the names of all actual or potential defendants,
and the manner in which such Insured first became aware of the Claim,
circumstances, or Securityholder Derivative Demand.

 

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Defense and Settlement

 

  16.    (a) It shall be the duty of the Insureds and not the duty of the
Company to defend Claims made against the Insureds.

 

  (b) The Insureds agree not to settle or offer 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 prior written consent.
The Company shall not be liable for any element of Loss incurred, for any
obligation assumed, or for any admission made, by any Insured without the
Company’s prior written consent. Provided the Insureds comply with Subsections
16(c) and (d) below, the Company shall not unreasonably withhold any such
consent.

 

  (c) With respect to any Claim that appears reasonably likely to be covered in
whole or in part under this coverage section, the Company shall have the right
and shall be given the opportunity to effectively associate with the Insureds,
and shall be consulted in advance by the Insureds, regarding the investigation,
defense and settlement of such Claim, including but not limited to selecting
appropriate defense counsel and negotiating any settlement.

 

  (d) The Insureds agree to provide the Company with all information, assistance
and cooperation which the Company may reasonably require and agree that in the
event of a Claim the Insureds will do nothing that could prejudice the Company’s
position or its potential or actual rights of recovery.

 

  (e) Any advancement of Defense Costs shall be repaid to the Company by the
Insureds, severally according to their respective interests, if and to the
extent it is determined that such Defense Costs are not insured under this
coverage section.

 

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Allocation

 

  17.    (a) If in any Securities Claim the Insureds incur both Loss that is
covered under this coverage section and loss that is not covered under this
coverage section, the Insureds and the Company shall allocate such amount
between covered Loss and non-covered loss as follows:

 

  (i) The portion, if any, of such amount that is in part covered and in part
not covered under Insuring Clause 2 shall be allocated in its entirety to
covered Loss, subject, however, to the applicable Retention and Coinsurance
Percentage set forth in Items 4(C) and 3(A) of the Declarations for this
coverage section, respectively; and

 

  (ii) The portion, if any, of such amount that is in part covered and in part
not covered under Insuring Clause 1 or 3 shall be allocated between covered Loss
and non-covered loss based on the relative legal and financial exposures of the
Insureds to covered and non-covered matters and, in the event of a settlement in
such Securities Claim, based also on the relative benefits to the Insureds from
settlement of the covered matters and from settlement of the non-covered
matters; provided that the amount so allocated to covered Loss under Insuring
Clause 3 shall be subject to the Retention and Coinsurance Percentage set forth
in Items 4(C) and 3(A) of the Declarations for this coverage section,
respectively.

 

The Company shall not be liable under this coverage section for the portion of
such amount allocated to non-covered loss. The allocation described in (i) above
shall be final and binding on the Company and the Insureds under Insuring Clause
2, but shall not apply to any allocation under Insuring Clauses 1 and 3.

 

  (b) If in any Claim other than a Securities Claim the Insured Persons incur
both Loss that is covered under this coverage section and loss that is not
covered under this coverage section, either because such Claim includes both
covered and non-covered matters or because such Claim is made against both
Insured Persons and others (including the Organization), the Insureds and the
Company shall allocate such amount between covered Loss and non-covered loss
based on the relative legal and financial exposures of the parties to covered
and non-covered matters and, in the event of a settlement in such Claim, based
also on the relative benefits to the parties from such settlement. The Company
shall not be liable under this coverage section for the portion of such amount
allocated to non-covered loss.

 

  (c) If 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:

 

  (i) no presumption as to allocation shall exist in any arbitration, suit or
other proceeding;

 

  (ii) 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

 

  (iii) 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.

 

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  (d) 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.

 

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Other Insurance

 

  18. If any Loss under this coverage section is insured under any other valid
insurance policy(ies), 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 applicable retention (or
deductible) and limit of liability under such other insurance, whether such
other insurance is stated to be primary, contributory, excess, contingent or
otherwise, unless such other insurance is written only as specific excess
insurance over the Limits of Liability provided in this coverage section. Any
payment by Insureds of a retention or deductible under such other insurance
shall reduce, by the amount of such payment which would otherwise have been
covered under this coverage section, the applicable Retention under this
coverage section.

 

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Payment of Loss

 

  19. In the event payment of Loss is due under this coverage section but the
amount of such Loss in the aggregate exceeds the remaining available Limit of
Liability for this coverage section, the Company shall:

 

  (a) first pay such Loss for which coverage is provided under Insuring Clause 1
of this coverage section; then

 

  (b) to the extent of any remaining amount of the Limit of Liability available
after payment under (a) above, pay such Loss for which coverage is provided
under any other Insuring Clause of this coverage section.

 

Except as otherwise provided in this Subsection 19, the Company may pay covered
Loss as it becomes due under this coverage section without regard to the
potential for other future payment obligations under this coverage section.

 

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Changes in Exposure

 

Acquisition /Creation of Another Organization

 

  20. If before or during the Policy Period any Organization:

 

  (a) 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

 

  (b) acquires another organization by merger into or consolidation with an
Organization such that the Organization is the surviving entity.

 

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such other 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 other
appropriate information, to provide coverage by endorsement for Wrongful Acts
committed, attempted, or allegedly committed or attempted by such Insureds
before such acquisition or creation.

 

If the total assets of any such acquired organization or new Subsidiary exceed
ten percent (10%) of the total assets of the Parent Organization (as reflected
in the most recent audited consolidated financial statements of such
organization and the Parent Organization, respectively, as of the date of such
acquisition or creation), the Parent Organization shall give written notice of
such acquisition or creation to the Company as soon as practicable, but in no
event later than sixty (60) days after the date of such acquisition or creation,
together with such other information as the Company may require and shall pay
any reasonable additional premium required by the Company. If the Parent
Organization fails to give such notice within the time specified in the
preceding sentence, or fails to pay the additional premium required by the
Company, coverage for such acquired or created organization and its Insured
Persons shall terminate with respect to Claims first made more than sixty
(60) days after such acquisition or creation. Coverage for any acquired or
created organization described in this paragraph, and for the Insured Persons of
such organization, shall be subject to such additional or different terms,
conditions and limitations of coverage as the Company in its sole discretion may
require.

 

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Acquisition by Another Organization

 

  21. If:

 

  (a) the Parent Organization merges into or consolidates with another
organization and the Parent Organization is not the surviving entity; or

 

  (b) another organization or person or group of organizations and/or persons
acting in concert acquires securities or voting rights which result in ownership
or voting control by the other organization(s) or person(s) of more than fifty
percent (50%) of the outstanding securities or voting rights representing the
present right to vote for the election of or to appoint directors or Managers 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 Insureds before such merger,
consolidation or acquisition. Upon the occurrence of any event described in
(a) or (b) of this Subsection 21, the entire premium for this coverage section
shall be deemed fully earned. The Parent Organization shall give written notice
of such merger, consolidation or acquisition to the Company as soon as
practicable, but in no event later than sixty (60) days after the date of such
merger, consolidation or acquisition, together with such other information as
the Company may require. Upon receipt of such notice and information and at the
request of the Parent Organization, the Company shall provide to the Parent
Organization a quotation for an extension of coverage (for such period as may be
negotiated between the Company and the Parent Organization) with respect to
Claims for Wrongful Acts committed, attempted, or allegedly committed or
attempted by Insureds before such merger, consolidation or acquisition. Any
coverage extension pursuant to such quotation shall be subject to such
additional or different terms, conditions and limitations of coverage, and
payment of such additional premium, as the Company in its sole discretion may
require.

 

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Cessation of Subsidiary

 

  22. In the event an organization ceases to be a Subsidiary before or during
the Policy Period, 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 while such organization was a Subsidiary.

 

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Related Entity Public Offering

 

  23. If any Organization files or causes to be filed, with the United States
Securities and Exchange Commission or an equivalent agency or government
department in any country other than the United States of America, any
registration statement in contemplation of a public offering of equity
securities by any entity other than the Parent Organization (irrespective of
whether such public offering is an initial public offering or a secondary or
other offering subsequent to an initial public offering), then the Company shall
not be liable for Loss on account of any Claim based upon, arising from, or in
consequence of such registration statement or the sale, offer to sell,
distribution or issuance of any securities pursuant to such registration
statement, unless (i) the Company receives written notice at least thirty
(30) days prior to the effective date of such registration statement providing
full details of the contemplated offering, and (ii) the Company, in its sole
discretion, agrees by written endorsement to this coverage section to provide
coverage for such Claims upon such terms and conditions, subject to such
limitations and other provisions, and for such additional premium as the Company
may require. If the Company in its sole discretion agrees to provide coverage
for such Claims, the additional premium specified by the Company shall be
payable to the Company in full not later than the date on which such
registration statement becomes effective.

 

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Representations and Severability

 

  24. In issuing this coverage section the Company has relied upon the
statements, representations and information in the Application. All of the
Insureds acknowledge and agree that all such statements, representations and
information (i) are true and accurate, (ii) were made or provided in order to
induce the Company to issue this coverage section, and (iii) are material to the
Company’s acceptance of the risk to which this coverage section applies.

 

In the event that any of the statements, representations or information in the
Application are not true and accurate, this coverage section shall be void with
respect to (i) any Insured who knew as of the effective date of the Application
the facts that were not truthfully and accurately disclosed (whether or not the
Insured knew of such untruthful disclosure in the Application) or to whom
knowledge of such facts is imputed, and (ii) the Organization under Insuring
Clause 2 to the extent it indemnifies an Insured Person who had such actual or
imputed knowledge. For purposes of the preceding sentence:

 

  (a) the knowledge of any Insured Person who is a past, present or future chief
financial officer, in-house general counsel, chief executive officer, president
or chairperson of an Organization shall be imputed to such Organization and its
Subsidiaries;

 

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  (b) the knowledge of the person(s) who signed the Application for this
coverage section shall be imputed to all of the Insureds; and

 

  (c) except as provided in (a) above, the knowledge of an Insured Person who
did not sign the Application shall not be imputed to any other Insured.

 

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