CHUBB GROUP OF INSURANCE COMPANIES DECLARATIONS
FINANCIAL INSTITUTION
15 Mountain View Road, Warren, New Jersey 07059 BOND FORM B
NAME OF ASSURED (including its SUBSIDIARIES): Bond Number: 81911329
HIGHLAND CAPITAL MANAGEMENT, L.P. FEDERAL INSURANCE COMPANY
Incorporated under the laws of
13455 NOEL ROAD, SUITE 800 Indiana a stock insurance
DALLAS, TEX 75240 company herein called the
COMPANY
Capital Center,
251 North Illinois,
Suite 1100 Indianapolis,
IN 46204-1927
ITEM 1. BOND PERIOD: from 12:01 a.m. on May 2, 2006
to 12:01 a.m. on May 2, 2007
ITEM 2. AGGREGATE LIMIT OF LIABILITY: $3,000,000
ITEM 3. SINGLE LOSS LIMITS OF LIABILITY - DEDUCTIBLE AMOUNTS:
The amounts set forth below shall be part of and not in addition to the
AGGREGATE LIMIT OF LIABILITY. If "NOT COVERED" is inserted opposite any
specified INSURING CLAUSE, such INSURING CLAUSE and any other reference
to such INSURING CLAUSE in this Bond shall be deemed to be deleted.
SINGLE LOSS DEDUCTIBLE
INSURING CLAUSE LIMIT OF LIABILITY AMOUNT
--------------- ------------------ ----------
1. Dishonesty
A. Employee $3,000,000 $50,000
B. Trade or Loan $3,000,000 $50,000
C. Partner $3,000,000 $50,000
2. On Premises $3,000,000 $50,000
3. In Transit $3,000,000 $50,000
4. Forgery or Alteration $3,000,000 $50,000
5. Extended Forgery $3,000,000 $50,000
6. Counterfeit Money $3,000,000 $50,000
7. Computer System $3,000,000 $50,000
8. Facsimile Signature $ 100,000 $10,000
ITEM 4. THE LIABILITY OF THE COMPANY IS ALSO SUBJECT TO THE TERMS OF THE
FOLLOWING ENDORSEMENTS EXECUTED SIMULTANEOUSLY HEREWITH:
Amended Extended Forgery 17-02-5497
Texas Amendatory 17-02-1429
Name of Assured Endorsement 17-02-0949
ITEM 5. ORGANIZATIONS TO BE NOTIFIED OF TERMINATION:
Highland Capital Management, L.P.
IN WITNESS WHEREOF, THE COMPANY has caused this Bond to be signed by its
authorized officers, but it shall not be valid unless also signed by an
authorized representative of the Company.
W. ANDREW MACAN THOMAS MOTAMED
------------------------------------- ----------------------------------------
Secretary President
Countersigned by ROBERT HAMBURGER
-------------------- ----------------------------------------
Authorized Representative
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 1 of 1
The COMPANY, in consideration of payment of the
required premium, and in reliance on the
APPLICATION and all other statements made and
information furnished to the COMPANY by the
ASSURED, and subject to the DECLARATIONS made a
part of this Bond and to all other terms and
conditions of this Bond, agrees to pay the
ASSURED for:
INSURING CLAUSES
Dishonesty 1. A. Employee
Loss resulting directly from
dishonest acts, other than stated in
1.B. below, of any EMPLOYEE,
committed alone or in collusion with
others except with a director or
trustee of the ASSURED who is not an
EMPLOYEE, which result in improper
personal financial gain to either
such EMPLOYEE or other natural person
acting in collusion with such
EMPLOYEE, or which acts were
committed with the intent to cause
the ASSURED to sustain such loss.
B. Trade or Loan
Loss resulting directly from
dishonest acts of any EMPLOYEE,
committed alone or in collusion with
others except with a director or
trustee of the ASSURED who is not an
EMPLOYEE, which arises totally or
partially from:
(1) any TRADE, or
(2) any LOAN,
provided, however, the ASSURED shall
first establish that the loss was
directly caused by dishonest acts of
any EMPLOYEE which result in improper
personal financial gain to such
EMPLOYEE and which acts were
committed with the intent to cause
the ASSURED to sustain such loss.
Notwithstanding the foregoing, when a
loss is covered under this INSURING
CLAUSE and the EMPLOYEE was acting in
collusion with others and intended to
receive improper personal financial
gain, but said EMPLOYEE failed to
derive such improper personal
financial gain, such loss will
nevertheless be covered under this
INSURING CLAUSE as if the EMPLOYEE
had obtained such improper personal
financial gain provided that the
ASSURED establishes that the EMPLOYEE
intended to receive such improper
personal financial gain.
C. Partner
Loss, in excess of the FINANCIAL
INTEREST IN THE ASSURED of a PARTNER,
resulting directly from dishonest or
fraudulent acts of such PARTNER,
committed alone or in collusion with
others, which acts must be committed
with the intent:
(1) to cause the ASSURED to sustain
such loss, and
(2) to obtain improper personal
financial gain for such PARTNER
and which acts in fact result in
such PARTNER obtaining such
gain.
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 1 of 20
INSURING CLAUSES
Dishonesty For the purpose of this INSURING CLAUSE,
(continued) improper personal financial gain shall not
include salary, salary increases,
commissions, fees, bonuses, promotions,
awards, profit sharing, incentive plans,
pensions or other emoluments received by a
PARTNER or EMPLOYEE.
On Premises 2. Loss of PROPERTY resulting directly from:
a. robbery, burglary, misplacement,
mysterious unexplainable
disappearance, damage or destruction,
or
b. false pretenses, or common law or
statutory larceny, committed by a
natural person while on the premises
of the ASSURED,
while the PROPERTY is lodged or deposited
at premises located anywhere.
Those premises of depositories maintained
by a stock exchange in which the ASSURED
is a member shall be deemed to be premises
of the ASSURED but only as respects loss
of CERTIFICATED SECURITIES.
CERTIFICATED SECURITIES held by such
depository shall be deemed to be PROPERTY
to the extent of the ASSURED'S interest
therein as effected by the making of
appropriate entries on the books and
records of such depository.
In Transit 3. Loss of PROPERTY resulting directly from
common law or statutory larceny,
misplacement, mysterious unexplainable
disappearance, damage or destruction,
while the PROPERTY is in transit anywhere:
a. in an armored motor vehicle,
including loading and unloading
thereof,
b. in the custody of a natural person
acting as a messenger of the ASSURED,
or
c. in the custody of a TRANSPORTATION
COMPANY and being transported in a
conveyance other than an armored
motor vehicle provided, however, that
covered PROPERTY transported in such
manner is limited to the following:
(1) written records,
(2) CERTIFICATED SECURITIES issued
in registered form, which are
not endorsed or are
restrictively endorsed, or
(3) NEGOTIABLE INSTRUMENTS not
payable to bearer, which are not
endorsed or are restrictively
endorsed.
Coverage under this INSURING CLAUSE begins
immediately on the receipt of such
PROPERTY by the natural person or
TRANSPORTATION COMPANY and ends
immediately on delivery to the premises of
the addressee or to any representative of
the addressee located anywhere.
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 2 of 20
INSURING CLAUSES
(continued)
Forgery Or Alteration 4. Loss resulting directly from:
a. FORGERY on, or fraudulent material
alteration of, any NEGOTIABLE
INSTRUMENT (other than an EVIDENCE OF
DEBT), ACCEPTANCE, WITHDRAWAL ORDER
or receipt for the withdrawal of
PROPERTY, CERTIFICATE OF DEPOSIT or
LETTER OF CREDIT, or
b. transferring, paying or delivering
any funds or other PROPERTY, or
establishing any credit or giving any
value in reliance on any written
instructions to the ASSURED
authorizing or acknowledging the
transfer, payment, delivery or
receipt of funds or other PROPERTY
which instructions fraudulently
purport to bear the handwritten
signature of any customer of the
ASSURED, financial institution, or
EMPLOYEE, but which instructions
either bear a FORGERY or have been
fraudulently materially altered
without the knowledge and consent of
such customer, financial institution,
or EMPLOYEE.
For the purpose of this INSURING CLAUSE, a
mechanically reproduced facsimile
signature is treated the same as a
handwritten signature.
Extended Forgery 5. Loss resulting directly from the ASSURED
having, in good faith, for its own account
or the account of others:
a. acquired, sold or delivered, given
value, extended credit or assumed
liability, in reliance on any
original
(1) CERTIFICATED SECURITY,
(2) deed, mortgage or other
instrument conveying title to,
or creating or discharging a
lien on, real property,
(3) EVIDENCE OF DEBT,
(4) INSTRUCTION which
i. bears a FORGERY, or
ii. is fraudulently materially
altered, or
iii. is lost or stolen, or
b. guaranteed in writing or witnessed
any signature on any transfer,
assignment, bill of sale, power of
attorney, or endorsement upon or in
connection with any item listed in
a.(1) through a.(4) above, or
c. acquired, sold or delivered, or given
value, extended credit or assumed
liability in reliance on any item
listed in a.(1) or a.(2) above which
is a COUNTERFEIT ORIGINAL.
Actual physical possession, and continued
actual physical possession if taken as
collateral, of the items listed in a.(1)
through a.(4) above by the ASSURED or a
Federal or State chartered deposit
institution of the ASSURED is a condition
precedent to the ASSURED having relied on
such items. Release or return of such
collateral is an acknowledgment by the
ASSURED that it no longer relies on such
collateral.
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 3 of 20
INSURING CLAUSES
Extended Forgery For the purpose of this INSURING CLAUSE, a
(continued) mechanically reproduced facsimile signature is
treated the same as a handwritten signature.
Counterfeit Money 6. Loss resulting directly from the receipt
by the ASSURED in good faith of any
counterfeit MONEY.
Computer System 7. Loss resulting directly from fraudulent:
a. entries of data into, or
b. changes of data elements or programs
within,
a COMPUTER SYSTEM, provided the fraudulent
entry or change causes:
(1) funds or other property to be
transferred, paid or delivered,
(2) an account of the ASSURED or of
its customer to be added,
deleted, debited or credited, or
(3) an unauthorized account or a
fictitious account to be debited
or credited.
Facsimile Signature 8. Loss resulting directly from any issuer of
securities, transfer agent, bank, banker
or trust company having received from the
ASSURED or the New York Stock Exchange,
specimen copies of the ASSURED'S
mechanically reproduced facsimile
signature and having acted in reliance
upon any false, fraudulent or unauthorized
reproduction of such facsimile signature,
whether such facsimile signature is the
facsimile signature duly adopted by the
ASSURED or is one resembling or purporting
to be such facsimile signature, regardless
of by whom or by what means the same may
have been imprinted, and whether or not
such loss is sustained by reason of the
ASSURED having entered into an agreement
to be legally liable when such facsimile
signature or one resembling or purporting
to be such facsimile signature is used,
provided, however, that
a. such facsimile signature is used
(1) as the signature to an
assignment or other instrument
authorizing or effecting the
transfer of shares of stock, or
other registered securities,
which may now or at any time
hereafter be registered in the
name of the ASSURED on the books
of the association, company or
corporation issuing the same, or
(2) as the signature to a power of
substitution, designating a
substitute or substitutes to
make the actual transfer on the
books of the issuer of shares of
stock, or other registered
securities, in respect of which
the ASSURED may now or at any
time hereafter be named as an
attorney to effect said
transfer, whether said power of
substitution is embodied in an
endorsement on the certificate
for said shares of stock or
other registered security or in
a separate instrument, and
b. the New York Stock Exchange has not
interposed any objections to the use
by the ASSURED of such facsimile
signature and such agreement, if any,
was required by the said Exchange as
a condition to its failing to
interpose any such objections, and
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 4 of 20
INSURING CLAUSES
Facsimile Signature c. this INSURING CLAUSE 8. shall not
(continued) apply to any CERTIFICATED SECURITY
which is a COUNTERFEIT ORIGINAL.
GENERAL AGREEMENTS
Joint Assured A. Only the first named ASSURED shall be
deemed to be the sole agent of the others
for all purposes under this Bond,
including but not limited to the giving or
receiving of any notice or proof required
to be given and for the purpose of
effecting or accepting any amendments to
or termination of this Bond. Each and
every other ASSURED shall be conclusively
deemed to have consented and agreed that
none of them shall have any direct
beneficiary interest in or any right of
action under this Bond and neither this
Bond nor any right of action shall be
assignable.
Knowledge possessed or discovery made by
any ASSURED shall constitute knowledge
possessed or discovery made by all of the
ASSUREDS for the purposes of this Bond.
All losses and other payments, if any,
payable by the COMPANY shall be payable to
the first named ASSURED without regard to
such ASSURED'S obligations to others, and
the COMPANY shall not be responsible for
the application by the first named ASSURED
of any payment made by the COMPANY. If the
COMPANY agrees to and makes payment to any
ASSURED other than the one first named,
such payment shall be treated as though
made to the first named ASSURED. The
COMPANY shall not be liable for loss
sustained by one ASSURED to the advantage
of any other ASSURED.
Representations Made By B. The ASSURED represents that all
Assured information it has furnished in the
APPLICATION for this Bond or otherwise is
complete, true and correct. Such
APPLICATION and other information
constitute part of this Bond.
The ASSURED must promptly notify the
COMPANY of any change in any fact or
circumstance which materially affects the
risk assumed by the COMPANY under this
Bond.
Any intentional misrepresentation,
omission, concealment or incorrect
statement of a material fact, in the
APPLICATION or otherwise, shall be grounds
for recision of this Bond.
Additional Offices Or C. If the ASSURED, while this Bond is in
Employees - Consolidation, force, merges or consolidates with, or
Merger Or Purchase Or purchases or acquires assets or
Acquisition Of Assets Or liabilities of another institution, the
Liabilities - Notice To ASSURED shall not have the coverage
Company afforded under this Bond for loss which
has:
(1) occurred or will occur on premises,
(2) been caused or will be caused by any
employee, or
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 5 of 20
GENERAL AGREEMENTS
Additional Offices Or (3) arisen or will arise out of the
Employees - Consolidation, assets or liabilities,
Merger Or Purchase Or
Acquisition Of Assets Or of such institution, unless the ASSURED:
Liabilities - Notice To
Company a. gives the COMPANY written notice of
(continued) the proposed consolidation, merger or
purchase or acquisition of assets or
liabilities prior to the proposed
effective date of such action, and
b. obtains the written consent of the
COMPANY to extend some or all of the
coverage provided by this Bond to
such additional exposure, and
c. on obtaining such consent, pays to
the COMPANY an additional premium.
Notwithstanding anything stated above to
the contrary, the COMPANY hereby agrees to
provide coverage which shall be effective
on the date of acquisition under this Bond
for those acquired institutions in which
the ASSURED owns greater than fifty
percent (50%) of the voting stock or
voting rights either directly or through
one or more of its subsidiaries for the
remainder of the BOND PERIOD, with no
additional premium, provided the acquired
institution meets all of the following
conditions:
i. the assets shall not exceed ten
percent (10%) of the ASSURED'S
assets,
ii. there shall be neither any paid
nor pending Bond claim for the
three (3) year period prior to
the date of acquisition, and
iii. the ASSURED is not aware of any
disciplinary action or
proceeding by State or Federal
officials involving the acquired
institution as of the date of
acquisition.
The COMPANY further agrees that as
respects any acquisition that involves a
State or Federal regulatory assisted
acquisition or assumption of assets and/or
liabilities, coverage shall be provided
under this Bond for the remainder of the
BOND PERIOD as long as conditions i. and
ii. above are met. As respects such
acquisition or assumption of assets and/or
liabilities, coverage applies only to a
SINGLE LOSS fully sustained by the ASSURED
on or after the date of such acquisition
or assumption. All of the circumstances,
conditions or acts causing or contributing
to a SINGLE LOSS must occur on or after
the date of such acquisition or assumption
for coverage to apply regardless of the
time such loss is discovered by the
ASSURED.
Change Of Control - D. The ASSURED shall notify the COMPANY at
Notice To Company the earliest practical moment, not to
exceed sixty (60) days, after the ASSURED
learns of a change of control.
There shall be no coverage under this Bond
for any loss involving a PARTNER or a
stockholder or affiliated group of
stockholders that acquires control if such
loss occurs after the date such party
acquired control and if notice of such
change in control is not received by the
COMPANY within the sixty (60) day time
period.
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 6 of 20
GENERAL AGREEMENTS
Change Of Control - As used in this General Agreement, control
Notice To Company means the power to determine the
(continued) management or policy of a controlling
holding company or of the ASSURED by
virtue of partnership interest or voting
stock ownership. A change in control, for
the purpose of the required notice, means:
(1) a change of twenty-five (25%) percent
in the FINANCIAL INTEREST IN THE
ASSURED or PARTNERS due to a
realignment of such PARTNERS'
percentage interest, or
(2) a change in ownership of voting stock
or voting rights which results in
direct or indirect ownership by a
stockholder or an affiliated group of
stockholders of ten (10%) percent or
more of such stock or voting rights.
Notice To Company Of Legal E. The ASSURED shall notify the COMPANY at
Proceedings Against Assured - the earliest practical moment, not to
Election To Defend exceed sixty (60) days after the ASSURED
receives notice, of any legal proceeding
brought to determine the ASSURED'S
liability for any loss, claim or damage
which, if established, would constitute a
collectible loss under this Bond.
Concurrent with such notice, and as
requested thereafter, the ASSURED shall
furnish copies of all pleadings and
pertinent papers to the COMPANY.
The COMPANY may, at it sole option, elect
to conduct the defense of all or part of
such legal proceeding. The defense by the
COMPANY shall be in the name of the
ASSURED through attorneys selected by the
COMPANY. The ASSURED shall provide all
reasonable information and assistance as
required by the COMPANY for such defense.
If the COMPANY elects to defend all or
part of any legal proceeding, the court
costs and attorneys' fees incurred by the
COMPANY and any settlement or judgment on
that part defended by the COMPANY shall be
a loss under the applicable INSURING
CLAUSE of this Bond. In addition, if the
amount demanded in the legal proceeding is
greater than the amount recoverable under
this Bond, or if a DEDUCTIBLE AMOUNT is
applicable, or both, the COMPANY'S
liability for court costs and attorney's
fees incurred in defending all or part of
such legal proceeding is limited to the
proportion of such court costs and
attorneys' fees incurred that the amount
recoverable under this Bond bears to the
total of the amount demanded in such legal
proceeding.
If the COMPANY declines to defend the
ASSURED, no settlement without the prior
written consent of the COMPANY or judgment
against the ASSURED shall determine the
existence, extent or amount of coverage
under this Bond, and the COMPANY shall not
be liable for any costs, fees and expenses
incurred by the ASSURED.
Nominees F. Loss sustained by any nominee organized by
the ASSURED for the purpose of handling
certain of the ASSURED'S business
transactions and composed exclusively of
its EMPLOYEES shall, for all purposes
under this Bond and whether any partner of
the nominee is concerned or implicated in
such loss, be deemed to be loss sustained
by the ASSURED.
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 7 of 20
CONDITIONS AND LIMITATIONS
Definitions 1. As used in this Bond:
a. ACCEPTANCE means a draft which the
drawee has, by signature written on
it, engaged to honor as presented.
b. CERTIFICATE OF DEPOSIT means an
acknowledgment in writing by a
financial institution of receipt of
MONEY with an engagement to repay it.
c. CERTIFICATED SECURITY means a share,
participation or other interest in
property of, or an enterprise of, the
issuer or an obligation of the
issuer, which is:
(1) represented by an instrument
issued in bearer or registered
form, and
(2) of a type commonly dealt in on
securities exchanges or markets
or commonly recognized in any
area in which it is issued or
dealt in as a medium for
investment, and
(3) either one of a class or series
or by its terms divisible into a
class or series of shares,
participations, interests or
obligations.
d. COMPUTER SYSTEM means a computer and
all input, output, processing,
storage, off-line media libraries,
and communication facilities which
are connected to the computer and
which are under the control and
supervision of the operating
system(s) or application(s) software
used by the ASSURED.
e. COUNTERFEIT ORIGINAL means an
imitation of an actual valid original
which is intended to deceive and be
taken as the original.
f. EMPLOYEE means:
(1) an officer of the ASSURED,
(2) a natural person while in the
regular service of the ASSURED
at any of the ASSURED'S premises
and compensated directly by the
ASSURED through its payroll
system and subject to the United
States Internal Revenue Service
Form W-2 or equivalent income
reporting plans of other
countries, and whom the ASSURED
has the right to control and
direct both as to the result to
be accomplished and details and
means by which such result is
accomplished in the performance
of such service,
(3) a guest student pursuing studies
or duties in any of the
ASSURED'S premises,
(4) an attorney retained by the
ASSURED and an employee of such
attorney while either is
performing legal services for
the ASSURED,
(5) a natural person provided by an
employment contractor to perform
employee duties for the ASSURED
under the ASSURED'S supervision
at any of the ASSURED'S
premises,
(6) an employee of an institution
merged or consolidated with the
ASSURED prior to the effective
date of this Bond, or
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 8 of 20
CONDITIONS AND LIMITATIONS
Definitions (7) a director or trustee of the
(continued) ASSURED, but only while
performing acts within the scope
of the customary and usual
duties of any officer or other
employee of the ASSURED or while
acting as a member of any
committee duly elected or
appointed to examine or audit or
have custody of or access to
PROPERTY of the ASSURED.
Each employer of persons as set forth
in f.(4) or f.(5) preceding and the
partners, officers and other
employees of such employers shall
collectively be deemed to be one
person for the purpose of Section
1.s. below, and in the event of
payment under this Bond, the COMPANY
shall be subrogated to the ASSURED'S
rights of recovery, as stated in
Section 11., against any such
employer.
EMPLOYEE does not mean any agent,
broker, factor, commission merchant,
independent contractor not specified
in f.(4) or f.(5) preceding,
intermediary, finder or other
representative of the same general
character who is not on the ASSURED'S
payroll system or who is not subject
to the ASSURED'S reporting to the
United States Internal Revenue
Service on a Form W-2 or equivalent
income reporting plans of other
countries.
g. EVIDENCE OF DEBT means an instrument,
including a NEGOTIABLE INSTRUMENT,
executed by a customer of the ASSURED
and held by the ASSURED, which in the
regular course of business is treated
as evidencing the customer's debt to
the ASSURED.
h. FINANCIAL INTEREST IN THE ASSURED
includes the financial interest of
the ASSURED'S general partner(s) or
limited partner(s) included as
PARTNER under this Bond, committing
dishonest acts covered by this Bond
or concerned or implicated in such
acts, and means:
(1) as respects general partners,
the value of all right, title
and interest of such general
partner(s), determined as of the
close of business on the date of
discovery of loss covered by
this Bond, in the aggregate of:
(a) the "net worth" of the
ASSURED which, for the
purposes of this Bond,
shall be deemed to be the
excess of its total assets
over its total liabilities,
without adjustment to give
effect to loss covered by
this Bond (except that
credit balances and
equities in proprietary
accounts of the ASSURED,
which shall include capital
accounts of partners,
investment and trading
accounts of the ASSURED,
participations of the
ASSURED in joint accounts,
and accounts of partners
which are covered by
agreements providing for
the inclusion of equities
as partnership property,
shall not be considered as
liabilities) with
securities, spot
commodities, commodity
future contracts in such
proprietary accounts and
all other assets marked to
market or fair value and
with adjustment for profits
and losses at the market of
contractual commitments for
such proprietary accounts
of the ASSURED, and
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 9 of 20
CONDITIONS AND LIMITATIONS
Definitions (b) the value of all other
(continued) MONEY, securities and
property belonging to such
general partner(s), or in
which such general
partner(s) have pecuniary
interest, held by or in the
custody of and legally
available to the ASSURED as
set-off against loss
covered by this Bond,
provided,
however, that if such "net worth"
adjusted to give effect to loss
covered by this Bond and such value
of all other MONEY, securities and
property as set forth in h.(1)(b)
preceding, plus the amount of
coverage afforded by this Bond on
account of such loss, is not
sufficient to enable the ASSURED to
meet its obligations, including its
obligations to its partners other
than to such general partner(s), then
the FINANCIAL INTEREST IN THE ASSURED
of such general partner(s) shall be
reduced in an amount necessary, or
eliminated if need be, in order to
enable the ASSURED on payment of loss
under this Bond to meet such
obligations, to the extent that such
payment will enable the ASSURED to
meet such obligations, without any
benefit accruing to such general
partner(s) from such payment, and
(2) as respects limited partners,
the value of such limited
partner's(s) investment in the
ASSURED.
i. FORGERY means the signing of the name
of another natural person with the
intent to deceive but does not mean a
signature which consists in whole or
in part of one's own name, with or
without authority, in any capacity
for any purpose.
j. INITIAL TRANSACTION STATEMENT means
the first written statement signed by
or on behalf of the issuer of an
UNCERTIFICATED SECURITY sent to the
registered owner or registered
pledgee containing:
(1) a description of the issue of
which the UNCERTIFICATED
SECURITY is a part, and
(2) the number of shares or units
transferred to the registered
owner, pledged by the registered
owner to the registered pledgee,
or released from pledge by the
registered pledgee, and
(3) the name, address and taxpayer
identification number, if any,
of the registered owner and
registered pledgee, and
(4) the date the transfer pledge or
release was registered.
k. INSTRUCTION means a written order to
the issuer of an UNCERTIFICATED
SECURITY requesting that the
transfer, pledge or release from
pledge of the specified
Uncertificated Security be
registered.
l. LETTER OF CREDIT means an engagement
in writing by a bank or other person
made at the request of a customer
that the bank or other person will
honor drafts or other demands for
payment in compliance with the
conditions specified in the
engagement.
m. LOAN means all extensions of credit
by the ASSURED and all transactions
creating a creditor or lessor
relationship in favor of the ASSURED,
including all purchase and repurchase
agreements, and all transactions by
which the ASSURED assumes an existing
creditor or lessor relationship.
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 10 of 20
CONDITIONS AND LIMITATIONS
Definitions n. MONEY means a medium of exchange in
(continued) current use authorized or adopted by
a domestic or foreign government as
part of its currency.
o. NEGOTIABLE INSTRUMENT means any
writing:
(1) signed by the maker or drawer,
and
(2) containing an unconditional
promise or order to pay a sum
certain in MONEY and no other
promise, order, obligation or
power given by the maker or
drawer, and
(3) is payable on demand or at a
definite time, and
(4) is payable to order or bearer.
p. PARTNER means any general partner of
the ASSURED and any limited partner
of the ASSURED who is also employed
by the ASSURED.
q. PROPERTY means any MONEY;
CERTIFICATED SECURITY; INITIAL
TRANSACTION STATEMENT; NEGOTIABLE
INSTRUMENT; CERTIFICATE OF DEPOSIT;
ACCEPTANCE; EVIDENCE OF DEBT;
WITHDRAWAL ORDER; LETTER OF CREDIT;
insurance policy; abstract of title,
deed and mortgage on real estate;
revenue and other stamps; precious
metals in any form; and books of
account and other records recorded in
writing, but not data processing
records or media.
r. SECURITIES means either CERTIFICATED
SECURITIES or UNCERTIFICATED
SECURITIES.
s. SINGLE LOSS means all covered loss,
including court costs and attorneys'
fees incurred by the COMPANY under
General Agreement E., resulting from:
(1) any one act of burglary, robbery
or attempt at either, in which
no PARTNER or EMPLOYEE is
implicated, or
(2) any one act or series of related
acts on the part of any natural
person resulting in damage,
destruction, or misplacement of
PROPERTY, or
(3) all acts other than those
specified in s.(1) and s.(2),
caused by any natural person or
in which such person is
implicated, or
(4) any one event not specified in
s.(1), s.(2) or s.(3).
t. SUBSIDIARY means any organization
that, at the inception date of this
Bond, is named in the APPLICATION or
is created during the BOND PERIOD and
of which more than fifty percent
(50%) of the outstanding securities
or voting rights representing the
present right to vote for election of
directors is owned or controlled by
the ASSURED either directly or
through one or more of its
subsidiaries.
u. TRADE means any purchase, exchange,
or sale transaction, with or without
knowledge of the ASSURED, whether or
not represented by any indebtedness
or balance shown to be due the
ASSURED on any customer account,
actual or fictitious.
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 11 of 20
CONDITIONS AND LIMITATIONS
Definitions v. TRANSPORTATION COMPANY means any
(continued) organization which provides its own
or its leased vehicles for
transportation or which provides
freight forwarding or air express
services.
w. UNCERTIFICATED SECURITY means a
share, participation or other
interest in property of or an
enterprise of the issuer or an
obligation of the issuer, which is:
(1) not represented by an instrument
and the transfer of which is
registered on books maintained
for that purpose by or on behalf
of the issuer, and
(2) of a type commonly dealt in on
securities exchanges or markets,
and
(3) either one of a class or series
or by its terms divisible into a
class or series of shares,
participations, interests or
obligations.
x. WITHDRAWAL ORDER means a
non-negotiable instrument, other than
an instruction, signed by a customer
of the ASSURED authorizing the
ASSURED to debit the customer's
account in the amount of funds stated
therein.
For the purposes of these definitions, the
singular includes the plural and the
plural includes the singular, unless
otherwise indicated.
General Exclusions - 2. THIS BOND DOES NOT DIRECTLY OR INDIRECTLY
Applicable To All Insuring COVER:
Clauses
a. loss not reported to the COMPANY in
writing within sixty (60) days after
termination of this Bond as an
entirety;
b. loss due to riot or civil commotion
outside the United States of America
and Canada, or any loss due to
military, naval or usurped power, war
or insurrection. This Section 2.b.,
however, shall not apply to loss
which occurs in transit in the
circumstances recited in INSURING
CLAUSE 3., provided that when such
transit was initiated there was no
knowledge on the part of any person
acting for the ASSURED of such riot,
civil commotion, military, naval or
usurped power, war or insurrection;
c. loss resulting from the effects of
nuclear fission or fusion or
radioactivity;
d. loss of potential income including,
but not limited to, interest and
dividends not realized by the ASSURED
or by any customer of the ASSURED;
e. damages of any type for which the
ASSURED is legally liable, except
compensatory damages, but not
multiples thereof, arising from a
loss covered under this Bond;
f. any costs, fees and expenses incurred
by the ASSURED:
(1) in establishing the existence of
or amount of loss covered under
this Bond, or
(2) as a party to any legal
proceeding, even if such legal
proceeding results in a loss
covered by this Bond;
g. loss resulting from indirect or
consequential loss of any nature;
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 12 of 20
CONDITIONS AND LIMITATIONS
General Exclusions - h. loss resulting from dishonest acts of
Applicable To All Insuring any member of the Board of Directors
Clauses or Board of Trustees of the ASSURED
(continued) who is not an EMPLOYEE, acting alone
or in collusion with others;
i. loss, or that part of any loss,
resulting solely from any violation
by the ASSURED or by any PARTNER or
EMPLOYEE:
(1) of any law regulating:
a. the issuance, purchase or
sale of securities,
b. securities transactions on
security or commodity
exchanges or the over the
counter market,
c. investment companies,
d. investment advisors, or
(2) of any rule or regulation made
pursuant to any such law;
j. loss of confidential information,
material or data;
k. loss resulting from any actual or
alleged:
(1) representation or advice, or
(2) warranty or guarantee as to the
performance of any investment;
l. loss due to liability resulting from
disclosure of or acting on material
nonpublic information;
m. loss resulting from transactions in a
customer's account, whether
authorized or unauthorized, except
loss resulting from the unlawful
withdrawal and conversion of MONEY,
SECURITIES or precious metals
directly from a customer's account
and provided such unlawful withdrawal
and conversion is covered under
INSURING CLAUSE 1; or
n. loss caused by any natural person,
partnership or corporation engaged by
the ASSURED to perform data
processing services.
Specific Exclusions - 3. THIS BOND DOES NOT DIRECTLY OR INDIRECTLY
Applicable To All Insuring COVER:
Clauses Except Insuring
Clause 1. a. loss caused by a PARTNER or EMPLOYEE
provided, however, this Section 3.a.
shall not apply to loss covered under
INSURING CLAUSE 2. or 3. which
results directly from misplacement,
mysterious unexplainable
disappearance, or damage or
destruction of PROPERTY;
b. loss through the surrender of
property away from premises of the
ASSURED as a result of a threat:
(1) to do bodily harm to any person,
except loss of PROPERTY in
transit in the custody of any
natural person acting as
messenger of the ASSURED,
provided that when such transit
was initiated there was no
knowledge by the ASSURED of any
such threat, or
(2) to do damage to the premises or
PROPERTY of the ASSURED;
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 13 of 20
CONDITIONS AND LIMITATIONS
Specific Exclusions - c. loss resulting from payments made or
Applicable To All Insuring withdrawals from any account
Clauses Except Insuring involving erroneous credits to such
Clause 1. account, unless such payments or
(continued) withdrawals are physically received
by such depositor or representative
of such depositor who is within the
office of the ASSURED at the time of
such payment or withdrawal, or except
when covered under INSURING CLAUSE
1.;
d. loss involving any UNCERTIFICATED
SECURITY provided, however, this
Section 3.d. shall not apply to
INSURING CLAUSE 7.;
e. loss of property while in the mail;
f. damages resulting from any civil,
criminal or other legal proceeding in
which the ASSURED is adjudicated to
have engaged in racketeering
activity. For the purposes of this
Section 3.f., "racketeering activity"
is defined in 18 United State Code
1961 et seq., as amended;
g. loss resulting from the failure for
any reason of a financial or
depository institution, its receiver
or other liquidator to pay or deliver
funds or PROPERTY to the ASSURED
provided, however, this Section 3.g.
shall not apply to SECURITIES covered
under INSURING CLAUSE 2.a.;
h. loss of PROPERTY while in the custody
of a TRANSPORTATION COMPANY provided,
however, this Section 3.h. shall not
apply to INSURING CLAUSE 3.;
i. loss resulting from entries or
changes made by a natural person with
authorized access to a COMPUTER
SYSTEM who acts in good faith on
instructions, unless such
instructions are given to that person
by a software contractor or its
partner, officer, or employee
authorized by the ASSURED to design,
develop, prepare, supply, service,
write or implement programs for the
ASSURED'S COMPUTER SYSTEM;
j. loss resulting directly or indirectly
from the input of data into a
COMPUTER SYSTEM terminal device,
either on the premises of a customer
of the ASSURED or under the control
of such a customer, by a customer or
other person who had authorized
access to the customer's
authentication mechanism;
k. loss resulting from the use of
credit, debit, charge, access,
convenience, identification, cash
management or other cards whether
such cards were issued, or purport to
have been issued, by the ASSURED or
by anyone other than the ASSURED;
l. loss involving items of deposit which
are not finally paid for any reason
including, but not limited to,
forgery or any other fraud;
m. loss caused by any agent, broker,
factor, commission merchant,
independent contractor, intermediary,
finder or other representative of the
same general character of the
ASSURED; or
n. loss caused by any employee, agent,
broker, factor, commission merchant,
independent contractor, intermediary,
finder or other representative of the
same general character of any third
party, while conducting business with
the ASSURED on behalf of such third
party.
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 14 of 20
CONDITIONS AND LIMITATIONS
(continued)
Specific Exclusions - 4. THIS BOND DOES NOT DIRECTLY OR INDIRECTLY
Applicable To All Insuring COVER:
Clauses Except Insuring
Clauses 1., 4., And 5. a. loss resulting from the complete or
partial non-payment of or default on
any LOAN whether such LOAN was
procured in good faith or through
trick, artifice, fraud or false
pretenses provided, however, this
Section 4.a. shall not apply to
INSURING CLAUSE 7;
b. loss resulting from forgery or any
alteration;
c. loss involving a counterfeit
provided, however, this Section 4.c.
shall not apply to INSURING CLAUSE 6;
or
d. loss resulting from any TRADE
provided, however, this Section 4.d.
shall not apply to INSURING CLAUSE 7.
Limit Of Liability 5. The COMPANY'S total cumulative liability
for all SINGLE LOSS of all ASSUREDS
Aggregate Limit Of discovered during the BOND PERIOD shall
Liability not exceed the AGGREGATE LIMIT OF
LIABILITY as stated in ITEM 2. of the
DECLARATIONS. Each payment made under the
terms of this Bond shall reduce the unpaid
portion of the AGGREGATE LIMIT OF
LIABILITY until it is exhausted.
On exhausting the AGGREGATE LIMIT OF
LIABILITY by such payments:
a. the COMPANY shall have no further
liability for loss or losses
regardless of when discovered and
whether or not previously reported to
the COMPANY, and
b. the COMPANY shall have no obligation
under General Agreement E. to
continue the defense of the ASSURED,
and on notice by the COMPANY to the
ASSURED that the AGGREGATE LIMIT OF
LIABILITY has been exhausted, the
ASSURED shall assume all
responsibility for its defense at its
own cost.
The unpaid portion of the AGGREGATE LIMIT
OF LIABILITY shall not be increased or
reinstated by any recovery made and
applied in accordance with Section 11. In
the event that a loss of PROPERTY is
settled by indemnity in lieu of payment,
then such loss shall not reduce the unpaid
portion of the AGGREGATE LIMIT OF
LIABILITY.
Single Loss Limit Of The COMPANY'S liability for each SINGLE
Liability LOSS shall not exceed the applicable
SINGLE LOSS LIMIT OF LIABILITY as stated
in ITEM 3. of the DECLARATIONS or the
unpaid portion of the AGGREGATE LIMIT OF
LIABILITY, whichever is less. If a Single
Loss is covered under more than one
INSURING CLAUSE, the maximum payable shall
not exceed the largest applicable SINGLE
LOSS LIMIT OF LIABILITY.
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 15 of 20
CONDITIONS AND LIMITATIONS
(Continued)
Discovery 6. This Bond applies only to loss first
discovered by an officer of the ASSURED
during the BOND PERIOD. Discovery occurs
at the earlier of an officer of the
ASSURED being aware of:
a. facts which may subsequently result
in a loss of a type covered by this
Bond, or
b. an actual or potential claim in which
it is alleged that the ASSURED is
liable to a third party,
regardless of when the act or acts causing
or contributing to such loss occurred,
even though the amount of loss does not
exceed the applicable DEDUCTIBLE AMOUNT or
the FINANCIAL INTEREST IN THE ASSURED, or
the exact amount or details of loss may
not then be known.
Notice To Company - Proof - 7. a. The ASSURED shall give the COMPANY
Legal Proceedings Against notice at the earliest practicable
Company moment, not to exceed sixty (60) days
after discovery of a loss, in an
amount that is in excess of 50% of
the applicable DEDUCTIBLE AMOUNT, as
stated in ITEM 3. of the
DECLARATIONS.
b. The ASSURED shall furnish to the
COMPANY proof of loss, duly sworn to,
with full particulars, within six (6)
months after such discovery.
c. CERTIFICATED SECURITIES listed in a
proof of loss shall be identified by
certificate or bond numbers, if
issued with them.
d. Legal proceedings for the recovery of
any loss under this Bond shall not be
brought prior to the expiration of
sixty (60) days after the proof of
loss is filed with the COMPANY or
after the expiration of twenty-four
(24) months from the discovery of
such loss.
e. This Bond affords coverage only in
favor of the ASSURED. No claim, suit,
action or legal proceeding shall be
brought under this Bond by anyone
other than the ASSURED.
Deductible Amount 8. The COMPANY shall be liable under this
Bond only for the amount by which any
SINGLE LOSS is greater than the applicable
DEDUCTIBLE AMOUNT as stated in ITEM 3. of
the DECLARATIONS, and is equal to or less
than the applicable SINGLE LOSS LIMIT OF
LIABILITY. The DEDUCTIBLE AMOUNT is in
addition to the FINANCIAL INTEREST IN THE
ASSURED as stated in Section 1.h.
Valuation 9. The value of any loss of PROPERTY
consisting of books of account or other
Books Of Account Or Other records used by the ASSURED in the conduct
Records of its business shall be the amount paid
by the ASSURED for blank books, blank
pages, or other materials which replace
the lost books of account or other
records, plus the cost of labor paid by
the ASSURED for the actual transcription
or copying of data to reproduce such books
of account or other records.
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 16 of 20
CONDITIONS AND LIMITATIONS
(Continued)
Loan The value of any loss or that portion of
any loss resulting from a LOAN shall be
the amount actually disbursed by the
ASSURED to a borrower under such LOAN
reduced by all amounts including, but not
limited to, interest and fees received by
the ASSURED under all LOANS to such
borrower, whether or not part of any claim
under this Bond.
Money Any loss of MONEY, or loss payable in
MONEY, shall be paid in the MONEY of the
United States of America or the dollar
equivalent of it, determined by the free
market rate of exchange in effect at the
time of discovery of such loss.
Other Property The value of any loss of PROPERTY, other
than as stated above, shall be the actual
cash value or the cost of repairing or
replacing such PROPERTY with property of
like quality and value, whichever is less.
Securities The value of any loss of SECURITIES shall
be the average market value of such
SECURITIES on the business day immediately
preceding discovery of such loss provided,
however, that the value of any SECURITIES
replaced by the ASSURED, with the consent
of the COMPANY and prior to the settlement
of any claim for them, shall be the actual
market value at the time of replacement.
In the case of a loss of interim
certificates, warrants, rights or other
SECURITIES, the production of which is
necessary to the exercise of subscription,
conversion, redemption or deposit
privileges, the value of them shall be the
market value of such privileges
immediately preceding their expiration if
said loss is not discovered until after
their expiration. If no market price is
quoted for such SECURITIES or for such
privileges, the value shall be fixed by
agreement of the parties.
Set-Off Any loss covered under INSURING CLAUSE
1.A. shall be reduced by a set-off
consisting of the amount owed to the
EMPLOYEE causing the loss, whether or not
assigned to another.
Trade The value of any loss or that portion of
any loss resulting from a TRADE shall be
reduced by the amount of commission and
other amounts received by the ASSURED as a
result of such TRADE.
Securities Settlement 10. In the event of a loss of SECURITIES
covered under this Bond, the COMPANY may,
at its sole discretion, purchase
replacement SECURITIES, tender the value
of the SECURITIES in MONEY, or issue its
indemnity to effect replacement
SECURITIES.
The indemnity required from the ASSURED
under the terms of this Section against
all loss, cost or expense arising from the
replacement of SECURITIES by the COMPANY'S
indemnity shall be:
a. for SECURITIES having a value less
than or equal to the applicable
DEDUCTIBLE AMOUNT - one hundred
(100%) percent;
b. for SECURITIES having a value in
excess of the applicable DEDUCTIBLE
AMOUNT but within the SINGLE LOSS
LIMIT OF LIABILITY - the percentage
that the DEDUCTIBLE AMOUNT bears to
the value of the SECURITIES;
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 17 of 20
CONDITIONS AND LIMITATIONS
Securities Settlement c. for SECURITIES having a value greater
(continued) than the applicable SINGLE LOSS LIMIT
OF LIABILITY - the percentage that
the DEDUCTIBLE AMOUNT and portion in
excess of the SINGLE LOSS LIMIT OF
LIABILITY bears to the value of the
SECURITIES.
The value referred to in Sections 10.a.,
b., and c. is the value in accordance with
Section 9., Valuation, regardless of the
value of such SECURITIES at the time the
loss under the COMPANY'S indemnity is
sustained.
The COMPANY is not required to issue its
indemnity for any portion of a loss of
SECURITIES which is not covered by this
Bond, however, the COMPANY may do so as a
courtesy to the ASSURED and at its sole
discretion.
The ASSURED shall pay the proportion of
the COMPANY'S premium charge for the
COMPANY'S indemnity as set forth in
Sections 10.a., b., and c. No portion of
the SINGLE LOSS LIMIT OF LIABILITY shall
be used as payment of premium for any
indemnity purchased by the ASSURED to
obtain replacement SECURITIES.
Subrogation - 11. In the event of a payment under this Bond,
Assignment - Recovery the COMPANY shall be subrogated to all of
the ASSURED'S rights of recovery against
any person or entity to the extent of such
payment. On request, the ASSURED shall
deliver to the COMPANY an assignment of
the ASSURED'S rights, title and interest
and causes of action against any person or
entity to the extent of such payment.
Recoveries, whether effected by the
COMPANY or by the ASSURED, shall be
applied net of the expense of such
recovery, in the following order:
a. first, to the satisfaction of the
ASSURED'S covered loss which would
otherwise have been paid but for the
fact that it is in excess of either
the SINGLE LOSS LIMIT OF LIABILITY or
AGGREGATE LIMIT OF LIABILITY,
b. second, to the COMPANY in
satisfaction of amounts paid in
settlement of the ASSURED'S claim,
c. third, to the ASSURED in satisfaction
of the applicable DEDUCTIBLE AMOUNT,
and
d. fourth, to the ASSURED in
satisfaction of any loss suffered by
the ASSURED which was not covered
under this Bond.
Recovery from reinsurance or indemnity of
the COMPANY shall not be deemed a recovery
under this Section.
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 18 of 20
CONDITIONS AND LIMITATIONS
Subrogation - This Bond does not afford coverage in
Assignment - Recovery favor of any Depository, and, in the event
(continued) of a payment under this Bond, the COMPANY
shall be subrogated to the ASSURED'S
rights of recovery against any Depository.
To the extent that, under the rules of a
Depository, the ASSURED is liable to such
Depository for a portion of the recovery
received by the COMPANY, the COMPANY will
reimburse the ASSURED for the ASSURED'S
liability for its portion of such recovery
up to, but not exceeding, the amount of
the loss payment by the COMPANY.
Cooperation Of Assured 12. At the COMPANY'S request and at reasonable
times and places designated by the
COMPANY, the ASSURED shall:
a. submit to examination by the COMPANY
and subscribe to the same under oath,
and
b. produce for the COMPANY'S examination
all pertinent records, and
c. cooperate with the COMPANY in all
matters pertaining to the loss.
The ASSURED shall execute all papers and
render assistance to secure to the COMPANY
the rights and causes of action provided
for under this Bond. The ASSURED shall do
nothing after loss to prejudice such
rights or causes of action.
Termination 13. This Bond terminates as an entirety on the
earliest occurrence of any of the
following:
a. immediately on the receipt by the
COMPANY of a written notice from the
ASSURED of its decision to terminate
this Bond, or
b. immediately on the appointment of a
trustee, receiver or liquidator to
act on behalf of the ASSURED, or the
taking over of the ASSURED by State
or Federal officials, or
c. immediately on the dissolution of the
ASSURED, or
d. immediately on the taking over of the
ASSURED by another entity, or
e. immediately on exhausting the
AGGREGATE LIMIT OF LIABILITY, or
f. immediately on expiration of the BOND
PERIOD.
This Bond terminates as to any PARTNER or
EMPLOYEE:
(1) immediately on the ASSURED, or
any of its PARTNERS, directors,
trustees or officers not acting
in collusion with such PARTNER
or EMPLOYEE, learning of any
dishonest act committed by such
PARTNER or EMPLOYEE at any time,
whether in the employment of the
ASSURED or otherwise, whether or
not such act is of the type
covered under this Bond, and
whether against the ASSURED or
any other person or entity, or
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 19 of 20
CONDITIONS AND LIMITATIONS
Termination (2) fifteen (15) days after the
(continued) receipt by the ASSURED of a
written notice from the COMPANY
of its decision to terminate
this Bond as to any PARTNER or
EMPLOYEE.
Termination as to any PARTNER or
EMPLOYEE shall not apply if the
dishonest act occurred prior to the
employment with the ASSURED and
involved less than $10,000.
Such termination, however, is without
prejudice to the loss of any PROPERTY
then in transit in the custody of
such PARTNER or EMPLOYEE.
The COMPANY will mark its records to
indicate that the organizations named in
ITEM 5. of the DECLARATIONS are to be
notified promptly concerning termination
or substantial modification of this Bond
as an entirety or as to any PARTNER or
EMPLOYEE, whether such termination is
effected by notice from the ASSURED or by
the COMPANY. The COMPANY will use its best
efforts to so notify said organizations,
but failure to so notify shall not impair
or delay the effectiveness of any such
termination.
Other Insurance 14. Coverage under this Bond shall apply only
as excess over any other valid and
collectible insurance, indemnity or
suretyship obtained by or on behalf of:
a. the ASSURED, or
b. a TRANSPORTATION COMPANY, or
c. another entity on whose premises the
loss occurred or which employed the
person causing the loss or engaged
the messenger conveying the PROPERTY
involved.
Employee Benefit Plans 15. All of the ASSURED'S employee benefit
plans that qualify under Section 412 of
the Employee Retirement Income Security
Act of 1974 (ERISA), are provided bonding
protection under INSURING CLAUSE 1.,
DISHONESTY, as required under ERISA.
Conformity 16. If any limitation within this Bond is
prohibited by any law controlling this
Bond's construction, such limitation shall
be deemed to be amended so as to equal the
minimum period of limitation provided by
such law.
Change Or Modification 17. This Bond or any instrument amending or
affecting this Bond may not be changed or
modified orally. No change in or
modification of this Bond shall be
effective except when made by written
endorsement to this Bond signed by an
authorized representative of the COMPANY.
Form B-2 (12-97)
Form 17-02-1371 (Ed. 12-97) Page 20 of 20
FEDERAL INSURANCE COMPANY
Endorsement No.: 1
Bond Number: 81911329
NAME OF ASSURED: HIGHLAND CAPITAL MANAGEMENT, L.P.
NAME OF ASSURED ENDORSEMENT
It is agreed that the NAME OF ASSURED in the DECLARATIONS is amended to read as
follows:
Highland Capital Management, L.P.
Prospect Street High Income Portfolio, Inc.
Prospect Street Income Shares, Inc.
Highland Corporate Opportunities Fund
Restoration Opportunities Fund
Highland Floating Rate Fund
Highland Floating Rate Advantage Fund
Highland Floating Rate, LLC
Highland Institutional Floating Rate Income Fund
This Endorsement applies to loss discovered after 12:01 a.m. on May 2, 2006.
ALL OTHER TERMS AND CONDITIONS OF THIS BOND REMAIN UNCHANGED.
Date: June 15, 2006 By ROBERT HAMBURGER
-------------------------------------
Authorized Representative
B-2 Bond
Form 17-02-0949 (Rev. 1-97) Page 1
FEDERAL INSURANCE COMPANY
Endorsement No: 2
Bond Number: 81911329
NAME OF ASSURED: HIGHLAND CAPITAL MANAGEMENT, L.P.
AMENDED EXTENDED FORGERY ENDORSEMENT
It is agreed that this Bond is amended by deleting INSURING CLAUSE 5., Extended
Forgery, in its entirety and substituting the following:
5. Extended Forgery
Loss resulting directly from the ASSURED having, in good faith, for its own
account or the account of others:
a. acquired, sold or delivered, or given value, extended credit or
assumed liability, in reliance on any original
(1) CERTIFICATED SECURITY,
(2) deed, mortgage or other instrument conveying title to, or
creating or discharging a lien on, real property,
(3) EVIDENCE OF DEBT, or
(4) INSTRUCTION
which
i. bears a FORGERY, or
ii. is fraudulently materially altered, or
iii. is lost or stolen, or
b. guaranteed in writing or witnessed any signature on any transfer,
assignment, bill of sale, power of attorney, or endorsement upon or in
connection with any item listed in a.(1) through a.(4) above, or
c. acquired, sold or delivered, or given value, extended credit or
assumed liability in reliance on any item listed in a.(1) or a.(2)
above which is a COUNTERFEIT ORIGINAL.
B-2 Bond
Form 17-02-5497 (Ed. 7-03) Page 1
Actual physical possession, and continued actual physical possession if taken as
collateral, of the items listed in a.(1) through a.(4) above by the ASSURED or a
Federal or State chartered deposit institution of the ASSURED is a condition
precedent to the ASSURED having relied on such items. Release or return of such
collateral is an acknowledgment by the ASSURED that it no longer relies on such
collateral.
For the purpose of this INSURING CLAUSE, a mechanically reproduced facsimile
signature is treated the same as a handwritten signature.
This Endorsement applies to loss discovered after 12:01 a.m. on May 2, 2006.
ALL OTHER TERMS AND CONDITIONS OF THIS BOND REMAIN UNCHANGED.
Date: June 15, 2006 By ROBERT HAMBURGER
-------------------------------------
Authorized Representative
B-2 Bond
Form 17-02-5497 (Ed. 7-03) Page 2
FEDERAL INSURANCE COMPANY
Endorsement No.: 3
Bond Number: 81911329
NAME OF ASSURED: HIGHLAND CAPITAL MANAGEMENT, L.P.
TEXAS AMENDATORY ENDORSEMENT
It is agreed that this Bond is amended by adding an additional paragraph to
Section 13., Termination, as follows:
"The COMPANY may not terminate or refuse to renew this Bond solely because
the ASSURED is an elected official."
This Endorsement applies to loss discovered after 12:01 a.m. on May 2, 2006.
ALL OTHER TERMS AND CONDITIONS OF THIS BOND REMAIN UNCHANGED.
Date: June 15, 2006 By ROBERT HAMBURGER
-------------------------------------
Authorized Representative
State Amendatory-General Use
Form 17-02-1429 (Ed. 1-97)
(CHUBB LOGO)
--------------------------------------------------------------------------------
FEDERAL INSURANCE COMPANY
Endorsement No: 4
Bond Number: 81911329
NAME OF ASSURED: HIGHLAND CAPITAL MANAGEMENT, L.P.
--------------------------------------------------------------------------------
NAME OF ASSURED ENDORSEMENT
It is agreed that the NAME OF ASSURED in the DECLARATIONS is amended to read as
follows:
Highland Capital Management, L.P.
Prospect Street High Income Portfolio, Inc.
Prospect Street Income Shares, Inc.
Highland Corporate Opportunities Fund
Restoration Opportunities Fund
Highland Floating Rate Fund
Highland Floating Rate Advantage Fund
Highland Floating Rate, LLC
Highland Institutional Floating Rate Income Fund
Highland Funds I (Highland Equity Opportunities Fund)
Highland Credit Strategies Fund
This Endorsement applies to loss discovered after 12:01 a.m. on May 2, 2006.
ALL OTHER TERMS AND CONDITIONS OF THIS BOND REMAIN UNCHANGED.
Date: July 5, 2006 By /s/ ROBERT HAMBURGER
-----------------------------------------
Authorized Representative
CHUBB & SON, DIV. OF FEDERAL INSURANCE COMPANY
AS MANAGER OF THE MEMBER INSURERS OF THE
CHUBB GROUP OF INSURANCE COMPANIES
POLICYHOLDER
DISCLOSURE NOTICE OF
TERRORISM INSURANCE COVERAGE
(FOR POLICIES WITH NO TERRORISM EXCLUSION OR SUBLIMIT)
You are hereby notified that, under the Terrorism Risk Insurance Act of 2002
(the "Act") effective November 26, 2002, this policy makes available to you
insurance for losses arising out of certain acts of international terrorism.
Terrorism is defined as any act certified by the Secretary of the Treasury, in
concurrence with the Secretary of State and the Attorney General of the United
States, to be an act of terrorism; to be a violent act or an act that is
dangerous to human life, property or infrastructure; to have resulted in damage
within the United States, or outside the United States in the case of an air
carrier or vessel or the premises of a United States Mission; and to have been
committed by an individual or individuals acting on behalf of any foreign person
or foreign interest, as part of an effort to coerce the civilian population of
the United States or to influence the policy or affect the conduct of the United
States Government by coercion.
You should know that the insurance provided by your policy for losses caused by
acts of terrorism is partially reimbursed by the United States under the formula
set forth in the Act. Under this formula, the United States pays 90% of covered
terrorism losses that exceed the statutorily established deductible to be paid
by the insurance company providing the coverage. The portion of your policy's
annual premium that is attributable to insurance for such acts of terrorism is:
$-0-.
If you have any questions about this notice, please contact your agent or
broker.
Form 10-02-1281 (Ed. 1/2003)
POLICYHOLDER INFORMATION NOTICE
POLICYHOLDER INFORMATION NOTICE
IMPORTANT NOTICE AVISO IMPORTANTE
To obtain information or make a Para obtener informacion o para someter
complaint: una queja:
You may call Chubb's toll-free Usted puede llamar al numero de telefono
telephone number for information or gratis de Chubb's para informacion o
to make a complaint at para someter una queja al
1-800-36-CHUBB 1-800-36-CHUBB
You may contact the Texas Department Puede comunicarse con el Departamento de
of Insurance to obtain the Seguros de Texas para obtener
information on companies, coverages, informacion acerca de companias
rights or complaints at coberturas, derechos o quejas al
1-800-252-3439 1-800-252-3439
You may write the Texas Department of Puede escribir al Departamento de
Insurance Seguros de Texas
P.O. Box 149104 P.O. Box 149104
Austin, TX 78714-9104 Austin TX 78714-9104
Fax # (512) 475-1771 FAX # (512) 475-1771
PREMIUM OR CLAIM DISPUTES DISPUTAS SOBRE PRIMAS O RECLAMOS:
Should you have a dispute concerning Si tiene una disputa concerniente a su
your premium or about a claim you prima o a un reclamo, debe comunicarse
should contact the agent first. If con el agente primero. Si no se resueve
the dispute is not resolved, you may la disputa, puede entonces comunicarse
contact the Texas Department of con el departamento (TDI).
Insurance.
ATTACH THIS NOTICE TO YOUR POLICY: UNA ESTE AVISO A SU POLIZA:
This notice is for information only Este aviso es solo para proposito de
and does not become a part or informacion y no se convierte en parte o
condition of the attached document. condicion del documento adjunto.
Texas Policyholder Information Notice
Form 99-10-0299 (Ed. 8-01)
POLICYHOLDER INFORMATION NOTICE
IMPORTANT NOTICE AVISO IMPORTANTE
To obtain information or make a Para obtener informacion o para someter
complaint: una queja:
You may call Chubb's toll-free Usted puede llamar al numero de telefono
telephone number for information or gratis de Chubb's para informacion o
to make a complaint at para someter una queja al
1-800-36-CHUBB 1-800-36-CHUBB
You may contact the Texas Department Puede comunicarse con el Departamento de
of Insurance to obtain the Seguros de Texas para obtener
information on companies, coverages, informacion at acerca de companias
rights or complaints coberturas, derechos o quejas al
1-800-252-3439 1-800-252-3439
You may write the Texas Department of Puede escribir al Departamento de
Insurance Seguros de Texas
P.O. Box 149104 P.O. Box 149104
Austin, TX 78714-9104 Austin TX 78714-9104
Fax # (512) 475-1771 FAX # (512) 475-1771
PREMIUM OR CLAIM DISPUTES DISPUTAS SOBRE PRIMAS O RECLAMOS:
Should you have a dispute concerning Si tiene una disputa concerniente a su
your premium or about a claim you prima o a un reclamo, debe comunicarse
should contact the agent first. If con el agente primero. Si no se resueve
the dispute is not resolved, you may la disputa, puede entonces comunicarse
contact the Texas Department of con el departamento (TDI).
Insurance.
ATTACH THIS NOTICE TO YOUR POLICY: UNA ESTE AVISO A SU POLIZA:
This notice is for information only Este aviso es solo para proposito de
and does not become a part or informacion y no se convierte en parte o
condition of the attached document. condicion del documento adjunto.
Texas Policyholder Information Notice
Form 99-10-0299 (Ed. 8-01)