Wrap
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Private Company Directors and Officers Liability
THIS IS A CLAIMS MADE COVERAGE WITH DEFENSE EXPENSES INCLUDED IN THE LIMIT OF LIABILITY.
PLEASE READ ALL TERMS CAREFULLY.
I.
INSURING AGREEMENTS
The Company shall pay on behalf of:
A.
the Insured Persons Loss for Wrongful Acts, except for Loss which the Insured Organization pays to or on
behalf of the Insured Persons as indemnification;
B.
the Insured Organization Loss for Wrongful Acts which the Insured Organization pays to or on behalf of the
Insured Persons as indemnification; and
C.
the Insured Organization Loss for Wrongful Acts;
resulting from any Claim first made during the Policy Period, or if exercised, during the Extended Reporting Period or
Run-Off Extended Reporting Period.
The Company shall also pay on behalf of the Insured Organization Investigation Expense resulting from any Security
Holder Derivative Demand first made during the Policy Period, or if exercised, during the Extended Reporting Period or
Run-Off Extended Reporting Period, against an Insured Person for Wrongful Acts. The Company’s maximum limit of
liability for all Investigation Expense shall be the Investigation Expense Limit of Liability set forth in ITEM 5 of the
Declarations for this Liability Coverage.
II.
SUPPLEMENTAL PERSONAL INDEMNIFICATION
If ITEM 5 of the Declarations indicates that coverage for Supplemental Personal Indemnification Coverage has been
purchased, and if the Liability Coverage Limit of Liability under this Liability Coverage or a Liability Coverage
Shared Limit of Liability, if applicable, has been exhausted, the Company shall provide the Insured Persons with an
additional Supplemental Personal Indemnification Limit of Liability under Insuring Agreement A. Such Supplemental
Personal Indemnification Limit of Liability shall not exceed the amount set forth in ITEM 5 of the Declarations, which
amount is in addition to and not part of the Liability Coverage Limit of Liability or Liability Coverage Shared Limit of
Liability, if applicable. This Supplemental Personal Indemnification Limit of Liability applies solely to Loss resulting from
any Claim other than a Claim for an employment-related Wrongful Act against an Insured Person to which Insuring
Agreement A. is applicable.
III.
DEFINITIONS
Wherever appearing in this Liability Coverage, the following words and phrases appearing in bold type shall have the
meanings set forth in this Section III. DEFINITIONS:
A.
“Claim” means:
1.
a written demand for monetary or non-monetary relief;
2.
a civil proceeding commenced by service of a complaint or similar pleading;
3.
a criminal proceeding commenced by filing of charges;
4.
a formal administrative or regulatory proceeding, commenced by a filing of charges, formal investigative
order, service of summons or similar document;
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5.
an arbitration, mediation or similar alternative dispute resolution proceeding if the Insured is obligated to
participate in such proceeding or if the Insured agrees to participate in such proceeding, with the Company’s written
consent, such consent not to be unreasonably withheld; or
6.
proceeding;
a written request to toll or waive a statute of limitations relating to a potential civil or administrative
against an Insured for a Wrongful Act, provided, that Claim does not include any labor or grievance arbitration or other
proceeding pursuant to a collective bargaining agreement.
A Claim shall be deemed to be made on the earliest date such written notice thereof is received by an Executive Officer.
B.
“Executive Officer” means the chairperson, chief executive officer, president, chief financial officer, in-house
general counsel, or LLC Manager of the Insured Organization or a functional equivalent thereof.
C.
“Insured” means the Insured Persons and the Insured Organization.
D.
“Insured Organization” means the Named Insured and any Subsidiary.
E.
“Insured Person” means any natural person who was, is or becomes a duly elected or appointed member of the
board of directors, officer, or a functional equivalent to a member of the board of directors or officer of the Insured
Organization in the event the Insured Organization is incorporated or domiciled outside the United States, member of
the board of managers, Executive Officer, employee, or member of a management committee or an advisory committee
of the Insured Organization.
In the event of the death, incapacity or bankruptcy of an Insured Person, any Claim against the estate, heirs, legal
representatives or assigns of such Insured Person for a Wrongful Act of such Insured Person will be deemed to be a
Claim against such Insured Person.
F.
“Investigation Expense” means reasonable and necessary legal fees, costs and expenses incurred by the
Insured Organization, including its board of directors, board of managers or any duly constituted committee thereof, in
connection with any investigation or evaluation by the Insured Organization of any Security Holder Derivative
Demand.
G.
“Loss” means Defense Expenses and money which an Insured is legally obligated to pay as a result of a Claim,
including settlements; judgments; back and front pay; compensatory damages; punitive or exemplary damages or the
multiple portion of any multiplied damage award if insurable under the applicable law most favorable to the insurability of
punitive, exemplary, or multiplied damages; prejudgment and postjudgment interest; and legal fees and expenses
awarded pursuant to a court order or judgment. “Loss” does not include:
1.
civil or criminal fines; sanctions; liquidated damages other than liquidated damages awarded under the
Age Discrimination in Employment Act or the Equal Pay Act; payroll or other taxes; or damages, penalties or types of
relief deemed uninsurable under applicable law; or
2.
any amount allocated to non-covered loss pursuant to Section III. CONDITIONS. P. ALLOCATION of the
Liability Coverage Terms and Conditions.
H.
“Outside Entity” means a corporation or organization:
1.
other than the Insured Organization, which is exempt from taxation under Section 501(c)(3) of the
Internal Revenue Code of 1986, as amended; or
2.
specifically scheduled as an Outside Entity by endorsement to this Liability Policy.
I.
“Outside Position” means service by an Insured Person as a member of the board of directors, officer, member
of the board of trustees, member of the board of managers, or a functional equivalent thereof with an Outside Entity, but
only during such time that such service is with the knowledge, consent, and at the specific request of the Insured
Organization.
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J.
“Security Holder Derivative Claim” means any Claim brought on behalf of, or in the name or right of, the
Insured Organization by one or more security holders of the Insured Organization in their capacity(ies) as such, but
only if such Claim is brought and maintained without the assistance, participation or solicitation of any member of the
board of directors, officer, member of the board of managers, or a functional equivalent thereof.
K.
“Security Holder Derivative Demand” means a written demand by one or more security holders of the Insured
Organization in their capacity(ies) as such to bring a civil proceeding in a court of law on behalf of, or in the name or right
of, the Insured Organization against any Insured Person for a Wrongful Act by an Insured Person, but only if such
demand is asserted without the assistance, participation or solicitation of any member of the board of directors, officer,
member of the board of managers, or a functional equivalent thereof.
L.
“Subsidiary” means:
1.
any corporation, partnership or limited liability company organized under the laws of any state in which,
on or prior to the Inception Date set forth in ITEM 2 of the Declarations, the Named Insured owns, directly or through one
or more Subsidiaries, more than fifty percent (50%) of the outstanding securities or voting rights representing the right to
vote for the election of, or to appoint such organization’s board of directors, board of managers or a functional equivalent
thereof, or to exercise a majority control of the board of directors, board of managers or a functional equivalent thereof;
2.
any corporation, partnership or limited liability company operated as a joint venture, in which, on or prior
to the Inception Date set forth in ITEM 2 of the Declarations, the Named Insured owns, directly or through one or more
Subsidiaries, exactly fifty percent (50%) of the issued and outstanding voting stock and which, pursuant to a written
agreement with the owner(s) of the remaining issued and outstanding voting stock of such organization, the Named
Insured solely controls the management and operation of such organization; or
3.
subject to the provisions set forth in Section III. CONDITIONS L. ACQUISITIONS of the Liability
Coverage Terms and Conditions, any organization that the Insured Organization acquires or forms during the Policy
Period in which the Named Insured owns, directly or through one or more Subsidiaries, more than fifty percent (50%) of
the outstanding securities or voting rights representing the right to vote for the election of, or to appoint such
organization’s board of directors, board of managers or a functional equivalent thereof, or to exercise a majority control of
the board of directors, board of managers or a functional equivalent thereof.
M.
“Wrongful Act” means:
1.
any actual or alleged act, error, omission, misstatement, misleading statement or breach of duty or
neglect by, or any matter asserted against, an Insured Person in his or her capacity as such;
2.
any actual or alleged act, error, omission, misstatement, misleading statement or breach of duty or
neglect by, or any matter asserted against, an Insured Person in his or her Outside Position;
3.
any actual or alleged act, error, omission, misstatement, misleading statement or breach of duty or
neglect by, or any matter asserted against, the Insured Organization; or
4.
any matter asserted against an Insured Person solely by reason of his or her status as such.
All Related Wrongful Acts are a single Wrongful Act for purposes of this Liability Coverage, and all Related Wrongful
Acts shall be deemed to have occurred at the time the first of such Related Wrongful Acts occurred whether prior to or
during the Policy Period.
IV.
EXCLUSIONS
A. This Liability Coverage shall not apply to, and the Company shall have no duty to defend or to pay, advance or
reimburse Defense Expenses for, any Claim:
1.
for any actual or alleged damage to, or destruction of, loss of, or loss of use of, any tangible property
including without limitation inadequate or insufficient protection from soil or ground water movement, soil subsidence,
mold, toxic mold, spores, mildew, fungus, or wet or dry rot;
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2.
for any actual or alleged bodily injury, sickness, disease, death, loss of consortium, emotional distress,
mental anguish, humiliation, loss of reputation, libel, slander, oral or written publication of defamatory or disparaging
material, or invasion of privacy; provided, that this exclusion shall not apply to:
a.
any Claim for emotional distress, mental anguish, or humiliation with respect to any employment
related Wrongful Act; or
b.
any Security Holder Derivative Claim;
3.
based upon, alleging, arising out of, or in any way relating to, directly or indirectly, any actual or alleged
nuclear reaction, nuclear radiation, radioactive contamination, or radioactive substance, or the hazardous properties of
nuclear material; or infectious waste or medical waste;
4.
based upon, alleging, arising out of, or in any way relating to, directly or indirectly, any Pollution;
provided, that this exclusion shall not apply to any Security Holder Derivative Claim;
5.
based upon, alleging, arising out of, or in any way relating to, directly or indirectly, any fact, circumstance,
situation, transaction, event or Wrongful Act underlying or alleged in any prior or pending civil, criminal, administrative or
regulatory proceeding, including audits initiated by the Office of Federal Contract Compliance Programs, against any
Insured as of or prior to the applicable Prior and Pending Proceeding Date set forth in ITEM 5 of the Declarations for this
Liability Coverage;
6.
for or arising out of facts, transactions or events which are or reasonably would be regarded as a
Wrongful Act, about which any Executive Officer had knowledge prior to the applicable Continuity Date set forth in
ITEM 5 of the Declarations for this Liability Coverage;
7.
based upon, alleging, arising out of, or in any way relating to, directly or indirectly, any fact, circumstance,
situation, transaction, event or Wrongful Act which, before the Inception Date set forth in ITEM 2 of the Declarations, was
the subject of any notice of claim or potential claim given by or on behalf of any Insured under any policy of insurance of
which this Liability Coverage is a direct or indirect renewal or replacement;
8.
for any actual or alleged violation of responsibilities, duties or obligations under any law concerning Social
Security, unemployment insurance, workers’ compensation, disability insurance, or any similar or related federal, state or
local law or regulation or for any actual or alleged violation of the Worker Adjustment and Retraining Notification Act
(WARN), Occupational Safety and Health Act (OSHA), Consolidated Omnibus Budget Reconciliation Act of 1985
(COBRA), the National Labor Relations Act (NLRA), Fair Labor Standards Act (FLSA) (except the Equal Pay Act), or
amendments thereto or regulations promulgated thereunder, or any similar or related federal, state or local law or
regulation;
9.
for any actual or alleged violation of responsibilities, duties or obligations under the Employee Retirement
Income Security Act of 1974 (ERISA), including amendments thereto and regulations promulgated thereunder, or any
similar or related federal, state or local law or regulation; or for an Insured’s failure or refusal to establish, contribute to,
pay for, insure, maintain, provide benefits pursuant to, or enroll or maintain the enrollment of an employee or dependent
in, any employee benefit plan, fund or program, including contracts or agreements which are not subject to the provisions
of ERISA;
10.
by or on behalf of, or in the name or right of, any Insured; provided, that this exclusion shall not apply to:
a.
any Security Holder Derivative Claim or any Security Holder Derivative Demand;
b.
any Claim in the form of a crossclaim, third party claim or other claim for contribution or indemnity
by an Insured Person and which is part of or results directly from a Claim which is not otherwise excluded by the terms
of this Liability Coverage;
c.
any Claim brought by a receiver, liquidator, bankruptcy trustee or similar official of the Insured
Organization;
d.
any Claim brought or maintained by a natural person who was a member of the board of
directors, officer, member of the board of trustees, member of the board of managers, or a functional equivalent thereof,
but who has not served in such capacity for at least four (4) years preceding the date the Claim is first made; and who
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brings and maintains the Claim without the solicitation, assistance or participation of any current member of the board of
directors, officer, member of the board of trustees, board of managers, or a functional equivalent thereof or anyone who
has served in such capacity during the four (4) year period immediately preceding the date the Claim is first made;
e.
f.
sale of securities if:
any Claim for an employment related Wrongful Act brought by an employee; or
any Claim brought by an employee for a Wrongful Act in connection with an offer, purchase or
i.
the employee brings the Claim solely in his or her capacity as a shareholder of the
Insured Organization without the solicitation, assistance or participation of any current member of the board of directors,
officer, member of the board of trustees, board of managers, or a functional equivalent thereof or anyone who has served
in such capacity during the four (4) year period immediately preceding the date the Claim is first made; and
ii.
the employee is not a member of the board of directors, officer, member of the board of
trustees, board of managers, or a functional equivalent thereof and has not served in such capacity during the four (4)
year period immediately preceding the date the Claim is first made;
11.
by or on behalf of, or in the name or right of, any Outside Entity against an Insured Person for a
Wrongful Act in his or her Outside Position with respect to such Outside Entity; provided, that this exclusion shall not
apply to any Claim brought derivatively by a shareholder of such Outside Entity in his or her capacity as such;
12.
based upon, alleging, arising out of, or in any way relating to, directly or indirectly:
a.
the public offer, sale, solicitation or distribution of securities issued by the Insured Organization;
or
b.
the actual or alleged violation of any federal, state, local or provincial statute relating to securities,
including but not limited to the Securities Act of 1933 and the Securities and Exchange Act of 1934, or any rules or
regulations promulgated thereunder;
provided, that this exclusion will not apply to any offer, purchase or sale of securities, whether debt or equity, in a
transaction that is exempt from registration under the Securities Act of 1933 (an “Exempt Transaction”);
in addition, if at least thirty (30) days prior to an offering of securities of the Insured Organization, other than pursuant to
an Exempt Transaction, the Company receives notice of the proposed transaction and any additional information
requested by the Company, the Insured Organization may request a proposal for coverage subject to any additional
terms and conditions, and payment of any additional premium, described in such proposal;
13.
based upon, alleging, arising out of or in any way relating to, directly or indirectly, any Wrongful Act by a
Subsidiary or any related Insured Person occurring at any time during which such entity was not a Subsidiary; or
14.
with respect to Insuring Agreement C only:
a.
for any actual or alleged plagiarism, misappropriation, infringement or violation of copyright,
patent, trademark, service mark, trade name, trade secret or any other intellectual property rights;
b.
based upon, alleging, arising out of or in any way relating to, directly or indirectly, any malfunction
of any product or failure of any product to perform in any manner as a result of any defect, deficiency, inadequacy or
dangerous condition in such product or in its design or manufacture;
c.
based upon, alleging, arising out of, or in any way relating to, directly or indirectly, any
employment related Wrongful Act; or
d.
for any actual or alleged liability of the Insured Organization under any express contract or
agreement. For the purposes of this exclusion, an express contract or agreement is an actual agreement among the
contracting parties, the terms of which are openly stated in distinct or explicit language, either orally or in writing, at the
time of its making.
B.
The Company shall have no duty to pay Loss, other than Defense Expenses, for any Claim:
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1.
based upon, alleging, arising out of, or in any way relating to, directly or indirectly, any Insured:
a.
committing any intentionally dishonest or fraudulent act or omission;
b.
committing any willful violation of any statute, rule or law; or
c.
gaining any profit, remuneration or advantage to which such Insured was not legally entitled;
provided, that this Exclusion B.1. shall not apply unless a judgment or other final adjudication establishes that such
Insured committed such intentionally dishonest or fraudulent act or omission, or willful violation of any statute, rule or law,
or gained such profit, remuneration or advantage to which such Insured was not legally entitled; or
2.
seeking costs and expenses incurred or to be incurred to comply with an order, judgment or award of
injunctive or other equitable relief of any kind, or that portion of a settlement encompassing injunctive or other equitable
relief, including but not limited to actual or anticipated costs and expenses associated with or arising from an Insured’s
obligation to provide reasonable accommodation under, or otherwise comply with, the Americans With Disabilities Act or
the Rehabilitation Act of 1973, including amendments thereto and regulations thereunder, or any related or similar federal,
state or local law or regulation.
V.
SEVERABILITY OF EXCLUSIONS
No conduct of any Insured Person shall be imputed to any other Insured Person to determine the application of any of
the Exclusions set forth in Section IV. EXCLUSIONS above. Solely with respect to Exclusion B.1. set forth above, no
conduct of any Insured shall be imputed to any other Insured to determine if coverage is available.
VI.
CONDITIONS
A.
RETENTION
This Section VI. CONDITIONS A. RETENTION shall supplement, and not replace Section III. CONDITIONS B.
RETENTION of the Liability Coverage Terms and Conditions.
No retention shall apply to Defense Expenses resulting from any Claim, other than a Claim for an employment related
Wrongful Act, and the Company shall reimburse the Insured Organization for any such retention paid by the Insured
Organization in connection with any such Claim, if:
1.
with respect to such Claim, there is a final judgment of no liability obtained prior to or during trial, in favor
of all Insureds, by reason of a motion to dismiss or a motion for summary judgment or any similar motion or process,
after exhaustion of all appeals, or a final judgment of no liability obtained after trial, in favor of all Insureds, after
exhaustion of all appeals; or
2.
such Claim is dismissed or there is a stipulation to dismiss such Claim with prejudice and without the
payment of any monetary consideration by the Insureds.
In no event shall a settlement of a Claim be considered a final judgment of no liability for purposes of this subsection.
As a condition of any reimbursement of the retention as set forth above, the Company may require a written undertaking
on terms and conditions satisfactory to the Company guaranteeing the repayment of such amounts in the event that such
Claim is reinstituted after payment by the Company.
B.
SETTLEMENT
The Company may, with the written consent of the Insured, make such settlement or compromise of any Claim as the
Company deems expedient. In the event that the Company recommends an offer of settlement of any Claim which is
acceptable to the claimant(s) (a “Settlement Offer”), and if the Insured shall refuse to consent to such Settlement Offer,
the Insured shall be solely responsible for thirty percent (30%) of all Defense Expenses incurred or paid by the Insured
after the date the Insured refused to consent to the Settlement Offer, and the Insured shall also be responsible for thirty
percent (30%) of all Loss, other than Defense Expenses, in excess of the Settlement Offer, provided that the Company’s
liability under this Liability Coverage for such Claim shall not exceed the remaining applicable limit of liability.
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C.
PRESUMPTION OF INDEMNIFICATION
Regardless of whether Loss resulting from any Claim against Insured Persons is actually indemnified, Insuring
Agreement B. and the Retention set forth in the Declarations shall apply to any Loss as to which indemnification by the
Insured Organization or any Outside Entity is legally permissible, whether or not actual indemnification is made, unless
such indemnification is not made by the Insured Organization or such Outside Entity solely by reason of its Financial
Insolvency.
The certificate of incorporation, charter, articles of association or other organizational documents of the Insured
Organization and each Outside Entity, including by-laws and resolutions, will be deemed to have been adopted or
amended to provide indemnification to the Insured Persons to the fullest extent permitted by law.
D.
OTHER INSURANCE AND INDEMNIFICATION
This Liability Coverage shall apply only as excess insurance over, and shall not contribute with: (1) any other valid and
collectible insurance available to any Insured, including but not limited to any insurance under which there is a duty to
defend, unless such insurance is written specifically excess of this Liability Coverage by reference in such other policy to
the Policy Number of this Liability Policy; or (2) indemnification to which an Insured Person is entitled from any Outside
Entity other than the Insured Organization. This Liability Coverage will not be subject to the terms of any other
insurance.
E.
OUTSIDE POSITIONS – LIMIT OF LIABILITY
If any Claim against the Insureds gives rise to an obligation both under this Liability Coverage and under any other
coverage or policy of insurance issued by the Company or any of its affiliates to any Outside Entity, the Company’s
maximum aggregate limit of liability under all such policies for all Loss, including Defense Expenses, for such Claim
shall not exceed the largest single available limit of liability under any such coverage.
F.
ORDER OF PAYMENTS
If Loss from any Claim exceeds the remaining applicable limit of liability as set forth in ITEM 5 of the Declarations:
1.
the Company will first pay Loss for such Claim to which Insuring Agreement A. applies; then
to the extent that any amount of the applicable limit of liability shall remain available, the Company shall
2.
pay Loss for such Claim to which Insuring Agreements B. and C. apply.
Upon written request of the Insured Organization by and through any Executive Officer, the Company shall either pay
or withhold payment of Loss from such Claim under Insuring Agreements B. and C., as applicable. In the event of a
written request to withhold payment, the Company shall make any future payment only for Loss from any such Claim to
which Insuring Agreement A. applies, unless otherwise so instructed upon written request by and through an Executive
Officer of the Insured Organization.
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