HARRIS & HARRIS GROUP, INC.
Unanimous Written Consent
by the Directors of the Board
February 22, 2007
Pursuant to Section 708 (b) of the New York Business Corporation Law (the
"NYBCL"), the undersigned, the members of the Board of Directors of Harris &
Harris Group, Inc. (the "Company"), hereby adopt and consent to the adoption of
the following resolutions and agree that said resolutions shall have the same
force and effect as if adopted at a meeting of the Board of Directors duly
called and held for such purpose.
WHEREAS, Section 17(g) of the Investment Company Act of 1940 (the
"1940 Act"), and Rule 17g-1(a) thereunder, requires a business development
company (a "BDC"), such as the Company, to provide and maintain a bond
which shall be issued by a reputable fidelity insurance company,
authorized to do business in the place where the bond is issued, to
protect the Company against larceny and embezzlement, covering each
officer and employee of the BDC who may singly, or jointly with others,
have access to the securities or funds of the BDC, either directly or
through authority to draw upon such funds of, or to direct generally, the
disposition of such securities, unless the officer or employee has such
access solely through his position as an officer or employee of a bank
(each, a "covered person");
WHEREAS, Rule 17g-1 specifies that the bond may be in the form of
(i) an individual bond for each covered person, or a schedule or blanket
bond covering such persons, (ii) a blanket bond which names the Company as
the only insured (a "single insured bond"), or (iii) a bond which names
the Company and one or more other parties as insureds (a "joint insured
bond"), as permitted by Rule 17g-1;
WHEREAS, the Rule requires that a majority of directors who are not
"interested persons" of the BDC approve periodically (but not less than
once every 12 months) the reasonableness of the form and amount of the
bond, with due consideration to the value of the aggregate assets of the
Company to which any covered person may have access, the type and terms of
the arrangements made for the custody and safekeeping of such assets, and
the nature of securities and other investments to be held by the Company;
and
WHEREAS, under the Rule, the Company is required to make certain
filings with the SEC and give certain notices to each member of the Board
of Directors in connection with the bond as specified in the accompanying
memorandum attached hereto, and designate an officer who shall make such
filings and give such notices.
NOW, THEREFORE, BE IT RESOLVED, that having considered the expected
aggregate value of the securities and funds of the Company to which
officers or employees of the Company may have access (either directly or
through authority to draw upon such funds or to direct generally the
disposition of such securities), the type and terms of the arrangements
made for the custody of such securities and funds, the nature of
securities and other investments to be held by the Company, the accounting
procedures and controls of the Company, the nature and method of
conducting the operations of the Company, and the requirements of Section
17(g) of the 1940 Act and Rule 17g-1 thereunder, it is determined that the
amount, type, form, premium and coverage of the bond, a copy of which is
attached here to as Exhibit A, covering the officers and employees of the
Company and insuring the Company against loss from fraudulent or dishonest
acts, including larceny and embezzlement, issued by St. Paul Travelers in
the amount of $ 525,000, (the "Fidelity Bond") are hereby approved;
FURTHER RESOLVED, that the officers of the Company be, and they
hereby are, authorized to take all appropriate actions, with the advice of
legal counsel to the Company, to provide and maintain the Fidelity Bond on
behalf of the Company; and
FURTHER RESOLVED, that the General Counsel of the Company is hereby
designated and directed to:
(1) File with the SEC within 10 days after receipt of the executed
Fidelity Bond, or any amendment thereof:
(i) a copy of the Fidelity Bond;
(ii) a copy of each resolution of the Board of Directors,
including a majority of the directors who are not
"interested persons" of the Company, approving the
amount, type, form and coverage of the Fidelity Bond and
the premium to be paid by the Company;
(iii) a statement as to the period for which premiums have
been paid; and
(iv) a copy of any amendment to such agreement within 10 days
after the execution of such amendment.
(2) File with the SEC, in writing, within five days after the
making of a claim under the Fidelity Bond by the Company, a
statement of the nature and amount thereof;
(3) File with the SEC, within five days after the receipt thereof,
a copy of the terms of the settlement of any claim under the
Fidelity Bond by the Company; and
(4) Notify by registered mail each member of the Board of
Directors at his or her last known residence address of:
(i) any cancellation, termination or modification of the
Fidelity Bond, not less than 45 days prior to the
effective date of the cancellation, termination or
modification;
(ii) the filing and the settlement of any claim under the
Fidelity Bond by the Company, at the time the filings
required by (2) and (3) above are made with the SEC; and
(iii) the filing and proposed terms of settlement of any claim
under the Fidelity Bond by any other named insured,
within five days of the receipt of a notice from the
issuer of the Fidelity Bond.
These actions are taken this 22th day February, 2007.
This Unanimous Written Consent may be signed in two or more counterparts,
which together shall constitute a single written consent.
/s/ Charles E. Harris /s/ W. Dillaway Ayres, Jr.
---------------------------- ----------------------------
Charles E. Harris (Chairman) W. Dillaway Ayres, Jr.
/s/ C. Wayne Bardin /s/ Phillip A. Bauman
---------------------------- ----------------------------
C. Wayne Bardin Phillip A. Bauman
/s/ G. Morgan Browne /s/ Dugald A. Fletcher
---------------------------- ----------------------------
G. Morgan Browne Dugald A. Fletcher
/s/ Kelly S. Kirkpatrick /s/ Mark A. Parsells
---------------------------- ----------------------------
Kelly S. Kirkpatrick Mark A. Parsells
/s/ Lori D. Pressman /s/ Charles E. Ramsey
---------------------------- ----------------------------
Lori D. Pressman Charles E. Ramsey
/s/ James E. Roberts
----------------------------
James E. Roberts
POLICY COVER SHEET
Job Name: XP3312I Print Date and Time: 03/28/07 13:21
File Number: O617O
Business Center/
Original Business Unit:
Policy Number: 490PB1498
Name of insured: HARRIS & HARRIS GROUP, INC.
Agency Number: 3155036
Department or Expense Center: 001
Underwriter: 894121 Underwriting Team:
Data Entry Person: HALL,DWIGHT
Date and Time: 03/28/07 10:54 001
Special Instructions
Policy Commencement Date: 03/04/07
THIS POLICY CONTAINS FORMS SELECTED THROUGH DOCUMENT SELECT
THE FOLLOWING SELECTED FORMS ARE NOT APPROVED ON THE FORMS STATUS TABLE
FORM NBR EDITION CO STATE TRANS DATE
* MEL3281 05.05 1 NY 2007-03-04*
* MLABL 09.85 1 NY 2007-03-04*
* ND059 11.06 1 NY 2007-03-04*
[LOGO] THE ST PAUL
DELIVERY INVOICE
================================================================================
Company: ST. PAUL FIRE & MARINE INSURANCE COMPANY
--------------------------------------------------------------------------------
I HARRIS & HARRIS GROUP, INC. Policy Inception/Effective Date: 03/04/07
N 111 WEST 57TH STREET Agency Number: 3155036
S NEW YORK NY 10019
U NASDAQ
R Transaction Type:
E RENEWAL
D Transaction number: 02
Processing date: 03/28/2007
Policy Number: 490PB1498
---------------------------------------
A NASDAQ INS AGENCY LLC
G 1 LIBERTY PLAZA 50TH FLOOR
E NEW YORK, NY 10006
N ATTN: JOHN DULAY
T
================================================================================
Policy Description Amount Surtax/
Number Surcharge
--------------------------------------------------------------------------------
490PB1498 FI - BOND $3,890
================================================================================
40724 Ed.12-90 Printed in U.S.A. INSURED COPY Page 1
[LOGO] THE ST PAUL
================================================================================
40724 Ed.12-90 Printed in U.S.A. INSURED COPY Page 2
[LOGO] TRAVELERS
IMPORTANT NOTICE REGARDING INDEPENDENT AGENT AND BROKER COMPENSATION
--------------------------------------------------------------------------------
For information about how Travelers compensates independent agents and brokers,
please visit www.travelers.com, or you may request a written copy from Marketing
at One Tower Square, 2GSA, Hartford, CT 06183.
================================================================================
ND044 Rev. 8-05
(C) 2005 The St. Paul Travelers Companies, Inc. All Rights Reserved Page 1 of 1
[LOGO] TRAVELERS
HOW TO REPORT LOSSES, CLAIMS, OR POTENTIAL CLAIMS TO TRAVELERS
--------------------------------------------------------------------------------
Reporting new losses, claims, or potential claims promptly can be critical. It
helps to resolve covered losses or claims as quickly as possible and often
reduces the overall cost. Prompt reporting:
o better protects the interests of all parties;
o helps Travelers to try to resolve losses or claims more quickly; and
o often reduces the overall cost of a loss or claim - losses or claims
reported more than five days after they happen cost on average 35%
more than those reported earlier.
Report losses, claims, or potential claims to Travelers easily and quickly by
fax, U S mail, or email.
--------------------------------------------------------------------------------
FAX
--------------------------------------------------------------------------------
Use this number to report a loss, claim, or potential claim by fax toll free.
1-888-460-6622
--------------------------------------------------------------------------------
US MAIL
--------------------------------------------------------------------------------
Use this address to report a loss, claim, or potential claim by U S Mail.
Bond-FPS Claims Department
Travelers
Mail Code NB08F
385 Washington Street
Saint Paul, Minnesota 55102
--------------------------------------------------------------------------------
EMAIL
--------------------------------------------------------------------------------
Use this address to report a loss, claim, or potential claim by email.
Pro.E&O.Claim.Reporting@SPT.com
This is a general description of how to report a loss, claim, or potential claim
under this internal policy or bond. This description does not replace or add to
the terms of this policy or bond. The policy or bond alone determines the scope
of coverage. Please read it carefully for complete information on coverage.
Contact your agent or broker if you have any questions about coverage.
ND059 Ed. 11-06 -1-
(C) 2006 The St. Paul Travelers Companies, Inc. All Rights Reserved
POLICY FORM LIST
Here's a list of all forms included in your policy, on the date shown below.
These forms are listed in the same order as they appear in your policy.
================================================================================
Title Form Number Edition Date
Policy Form List 40705 05-84
Investment Company Blanket Bond - Declarations ICB001 07-04
Investment Company Blanket Bond - Insuring Agreements ICB005 07-04
Computer Systems ICB011 07-04
New Statutory Rider ICB057 04-05
Amend Section 13. Termination MEL3281 05-05
================================================================================
Name of Insured Policy Number 490PB1498 Effective Date 03/04/07
HARRIS & HARRIS GROUP, INC. Processing Date 03/28/07 10:54 001
================================================================================
40705 Ed.5-84 Form List
(C)St.Paul Fire and Marine Insurance Co. 1995 Page 1
================================================================================
Page 2
(C)St.Paul Fire and Marine Insurance Co.1995
[LOGO] TRAVELERS
INVESTMENT COMPANY BLANKET BOND
St. Paul Fire and Marine Insurance Company
St. Paul, Minnesota 55102-1396
(A Stock Insurance Company, herein called Underwriter)
DECLARATIONS BOND NO. 490PB1498
Item 1. Name of Insured (herein called Insured):
HARRIS & HARRIS GROUP, INC.
Principal Address:
111 WEST 57TH STREET
SUITE 1100
NEW YORK NY 10019
--------------------------------------------------------------------------------
Item 2. Bond Period from 12:01 a.m. on 03/04/07 to 12:01 a.m. on 03/04/08 the
effective date of the termination or cancellation of the bond, standard
time at the Principal Address as to each of said dates.
--------------------------------------------------------------------------------
Item 3. Limit of Liability
Subject to Sections 9, 10, and 12 hereof:
Limit of Liability Deductible Amount
Insuring Agreement A - FIDELITY $525,000 $0
Insuring Agreement B - AUDIT EXPENSE $525,000 $2,500
Insuring Agreement C - PREMISES $525,000 $15,000
Insuring Agreement D - TRANSIT $525,000 $15,000
Insuring Agreement E - FORGERY OR ALTERATION $525,000 $15,000
Insuring Agreement F - SECURITIES $525,000 $15,000
Insuring Agreement G - COUNTERFEIT CURRENCY $525,000 $15,000
Insuring Agreement H - STOP PAYMENT $25,000 $2,500
Insuring Agreement I - UNCOLLECTIBLE ITEMS OF DEPOSIT $25,000 $2,500
OPTIONAL COVERAGES ADDED BY RIDER:
N/A
If "Not Covered" is inserted above opposite any specified Insuring Agreement or
Coverage, such Insuring Agreement or Coverage and any other reference thereto in
this bond shall be deemed to be deleted therefrom.
--------------------------------------------------------------------------------
Item 4. Offices or Premises Covered - Offices acquired or established
subsequent to the effective date of this bond are covered according to
the terms of General Agreement A. All the Insured's offices or premises
in existence at the time this bond becomes effective are covered under
this bond except the offices or premises located as follows: N/A
--------------------------------------------------------------------------------
Item 5. The liability of the Underwriter is subject to the terms of the
following endorsements or riders attached hereto:
ICB001 07-04; ICB005 07-04; ICB011 07-04; ICB057 04-05; MEL3281 05-05;
ND044 08-05; ND059 11-06; 40724 12-90;
ICB001 Rev. 7/04
(C) 2004 The St. Paul Travelers Companies, Inc. All Rights Reserved Page 1 of 2
--------------------------------------------------------------------------------
Item 6. The Insured by the acceptance of this bond gives notice to the
Underwriter terminating or canceling prior bonds or policy(ies) No.(s)
468PB0825 such termination or cancellation to be effective as of the
time this bond becomes effective.
================================================================================
IN WITNESS WHEREOF, the Company has caused this bond to be signed by its
President and Secretary and countersigned by a duly authorized representative of
the Company.
Countersigned: ST. PAUL FIRE AND MARINE INSURANCE COMPANY
[illegible] Brian MacLean
Secretary President
--------------------------------------------------------------
Authorized Representative Countersigned At
-----------------------------
Countersignature Date
ICB001 Rev. 7/04
(C) 2004 The St. Paul Travelers Companies, Inc. All Rights Reserved Page 2 of 2
INVESTMENT COMPANY BLANKET BOND
The Underwriter, in consideration of an agreed premium, and subject to the
Declarations made a part hereof, the General Agreements, Conditions and
Limitations and other terms of this bond, agrees with the Insured, accordance
with the Insuring Agreements hereof to which an amount of insurance is
applicable as set forth in Item 3 of the Declarations and with respect to loss
sustained by the Insured at any time but discovered during the Bond Period, to
indemnify and hold harmless the Insured for:
INSURING AGREEMENTS
(A) FIDELITY
Loss resulting from any dishonest or fraudulent act(s), including Larceny
or Embezzlement, committed by an Employee, committed anywhere and whether
committed alone or in collusion with others, including loss of Property
resulting from such acts of an Employee, which Property is held by the
Insured for any purpose or in any capacity and whether so held
gratuitously or not and whether or not the Insured is liable therefor.
Dishonest or fraudulent act(s) as used in this Insuring Agreement shall
mean only dishonest or fraudulent act(s) committed by such Employee with
the manifest intent:
(a) to cause the Insured to sustain such loss; and
(b) to obtain financial benefit for the Employee, or for any other
Person or organization intended by the Employee to receive such
benefit, other than salaries, commissions, fees, bonuses,
promotions, awards, profit sharing, pensions or other employee
benefits earned in the normal course of employment.
(B) AUDIT EXPENSE
Expense incurred by the Insured for that part of the costs of audits or
examinations required by any governmental regulatory authority to be
conducted either by such authority or by an independent accountant by
reason of the discovery of loss sustained by the Insured through any
dishonest or fraudulent act(s), including Larceny or Embezzlement, of any
of the Employees. The total liability of the Underwriter for such expense
by reason of such acts of any Employee or in which such Employee is
concerned or implicated or with respect to any one audit or examination is
limited to the amount stated opposite Audit Expense in Item 3 of the
Declarations; it being understood, however, that such expense shall be
deemed to be a loss sustained by the Insured through any dishonest or
fraudulent act(s), including Larceny or Embezzlement, of one or more of
the Employees, and the liability under this paragraph shall be in addition
to the Limit of Liability stated in Insuring Agreement (A) in Item 3 of
the Declarations.
(C) ON PREMISES
Loss of Property (occurring with or without negligence or violence)
through robbery, burglary, Larceny, theft, holdup, or other fraudulent
means, misplacement, mysterious unexplainable disappearance, damage
thereto or destruction thereof, abstraction or removal from the
possession, custody or control of the Insured, and loss of subscription,
conversion, redemption or deposit privileges through the misplacement or
loss of Property, while the Property is (or is supposed or believed by the
Insured to be) lodged or deposited within any offices or premises located
anywhere, except in an office listed in Item 4 of the Declarations or
amendment thereof or in the mail or with a carrier for hire, other than an
armored motor vehicle company, for the purpose of transportation.
Office and Equipment
(1) loss of or damage to furnishings, fixtures, stationery, supplies or
equipment, within any of the Insured's offices covered under this
bond caused by Larceny or theft in, or by burglary, robbery or
hold-up of, such office, or attempt thereat, or by vandalism or
malicious mischief; or
(2) loss through damage to any such office by Larceny or theft in, or by
burglary, robbery or hold-up of, such office, or attempt thereat, or
to the interior of any such office by vandalism or malicious
mischief provided, in any event, that the Insured is the owner of
such offices, furnishings, fixtures, stationery, supplies or
equipment or is legally liable for such loss or damage always
excepting, however, all loss or damage through fire.
(D) IN TRANSIT
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ICB005 Ed. 7-04
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Loss of Property (occurring with or without negligence or violence)
through robbery, Larceny, theft, hold-up, misplacement, mysterious
unexplainable disappearance, being lost or otherwise made away with,
damage thereto or destruction thereof, and loss of subscription,
conversion, redemption or deposit privileges through the misplacement or
loss of Property, while the Property is in transit anywhere in the custody
of any person or persons acting as messenger, except while in the mail or
with a carrier for hire, other than an armored motor vehicle company, for
the purpose of transportation, such transit to begin immediately upon
receipt of such Property by the transporting person or persons, and to end
immediately upon delivery thereof at destination.
(E) FORGERY 0R ALTERATION
Loss through Forgery or alteration of or on:
(1) any bills of exchange, checks, drafts, acceptances, certificates of
deposit, promissory notes, or other written promises, orders or
directions to pay sums certain in money, due bills, money orders,
warrants, orders upon public treasuries, letters of credit; or
(2) other written instructions, advices or applications directed to the
Insured, authorizing or acknowledging the transfer, payment,
delivery or receipt of funds or Property, which instructions,
advices or applications purport to have been signed or endorsed by
any:
(a) customer of the Insured, or
(b) shareholder or subscriber to shares, whether certificated or
uncertificated, of any Investment Company, or
(c) financial or banking institution or stockbroker,
but which instructions, advices or applications either bear the
forged signature or endorsement or have been altered without the
knowledge and consent of such customer, shareholder or subscriber to
shares, or financial or banking institution or stockbroker; or
(3) withdrawal orders or receipts for the withdrawal of funds or
Property, or receipts or certificates of deposit for Property and
bearing the name of the Insured as issuer, or of another Investment
Company for which the Insured acts as agent, excluding, however, any
loss covered under Insuring Agreement (F) hereof whether or not
coverage for Insuring Agreement (F) is provided for in the
Declarations of this bond.
Any check or draft (a) made payable to a fictitious payee and endorsed in
the name of such fictitious payee or (b) procured in a transaction with
the maker or drawer thereof or with one acting as an agent of such maker
or drawer or anyone impersonating another and made or drawn payable to the
one so impersonated and endorsed by anyone other than the one
impersonated, shall be deemed to be forged as to such endorsement.
Mechanically reproduced facsimile signatures are treated the same as
handwritten signatures.
(F) SECURITIES
Loss sustained by the Insured, including loss sustained by reason of a
violation of the constitution by-laws, rules or regulations of any Self
Regulatory Organization of which the Insured is a member or which would
have been imposed upon the Insured by the constitution, by-laws, rules or
regulations of any Self Regulatory Organization if the Insured had been a
member thereof,
(1) through the Insured's having, in good faith and in the course of
business, whether for its own account or for the account of others,
in any representative, fiduciary, agency or any other capacity,
either gratuitously or otherwise, purchased or otherwise acquired,
accepted or received, or sold or delivered, or given any value,
extended any credit or assumed any liability, on the faith of, or
otherwise acted upon, any securities, documents or other written
instruments which prove to have been:
(a) counterfeited, or
(b) forged as to the signature of any maker, drawer, issuer,
endorser, assignor, lessee, transfer agent or registrar,
acceptor, surety or guarantor or as to the signature of any
person signing in any other capacity, or
(c) raised or otherwise altered, or lost, or stolen, or
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ICB005 Ed. 7-04
(c) 2004 The St. Paul Travelers Companies, Inc. All Right Reserved
(2) through the Insured's having, in good faith and in the course of
business, guaranteed in writing or witnessed any signatures whether
for valuable consideration or not and whether or not such
guaranteeing or witnessing is ultra vires the Insured, upon any
transfers, assignments, bills of sale, powers of attorney,
guarantees, endorsements or other obligations upon or in connection
with any securities, documents or other written instruments and
which pass or purport to pass title to such securities, documents or
other written instruments; excluding losses caused by Forgery or
alteration of, on or in those instruments covered under Insuring
Agreement (E) hereof.
Securities, documents or other written instruments shall be deemed to mean
original (including original counterparts) negotiable or non-negotiable
agreements which in and of themselves represent an equitable interest,
ownership, or debt, including an assignment thereof, which instruments
are, in the ordinary course of business, transferable by delivery of such
agreements with any necessary endorsement or assignment.
The word "counterfeited" as used in this Insuring Agreement shall be
deemed to mean any security, document or other written instrument which is
intended to deceive and to be taken for an original.
Mechanically reproduced facsimile signatures are treated the same as
handwritten signatures.
(G) COUNTERFEIT CURRENCY
Loss through the receipt by the Insured, in good faith, of any
counterfeited money orders or altered paper currencies or coin of the
United States of America or Canada issued or purporting to have been
issued by the United States of America or Canada or issued pursuant to a
United States of America or Canada statute for use as currency.
(H) STOP PAYMENT
Loss against any and all sums which the Insured shall become obligated to
pay by reason of the liability imposed upon the Insured by law for
damages:
For having either complied with or failed to comply with any written
notice of any customer, shareholder or subscriber of the Insured or
any Authorized Representative of such customer, shareholder or
subscriber to stop payment of any check or draft made or drawn by
such customer, shareholder or subscriber or any Authorized
Representative of such customer, shareholder or subscriber, or
For having refused to pay any check or draft made or drawn by any
customer, shareholder or subscriber of the Insured or any Authorized
Representative of such customer, shareholder or subscriber.
(I) UNCOLLECTIBLE ITEMS OF DEPOSIT
Loss resulting from payments of dividends or fund shares, or withdrawals
permitted from any customer's, shareholder's, or subscriber's account
based upon Uncollectible Items of Deposit of a customer, shareholder or
subscriber credited by the Insured or the Insured's agent to such
customer's, shareholder's or subscriber's Mutual Fund Account; or loss
resulting from an Item of Deposit processed through an Automated Clearing
House which is reversed by the customer, shareholder or subscriber and
deemed uncollectible by the Insured.
Loss includes dividends and interest accrued not to exceed 15% of the
Uncollectible Items which are deposited.
This Insuring Agreement applies to all Mutual Funds with "exchange
privileges" if all Fund(s) in the exchange program are insured by the
Underwriter for Uncollectible Items of Deposit. Regardless of the number
of transactions between Fund(s), the minimum number of days of deposit
within the Fund(s) before withdrawal as declared in the Fund(s) prospectus
shall begin from the date a deposit was first credited to any Insured
Fund(s).
GENERAL AGREEMENTS
A. ADDITIONAL OFFICES OR EMPLOYEES - CONSOLIDATION OR MERGER - NOTICE
(1) If the Insured shall, while this bond is in force, establish any
additional office or offices, such offices shall be automatically
covered hereunder from the dates of their establishment,
respectively. No notice to the Underwriter of an increase during any
premium period in the number of offices or in the number of
Employees at any of the offices covered hereunder need be given and
no additional premium need be paid for the remainder of such premium
period.
(2) If an Investment Company, named as Insured herein, shall, while this
bond is in force, merge or consolidate with, or purchase the assets
of another institution, coverage for such acquisition shall apply
automatically from the date of acquisition. The Insured shall notify
the Underwriter of such acquisition within 60 days of said date, and
an additional premium shall be computed only if such acquisition
involves additional offices or employees.
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ICB005 Ed. 7-04
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B. WARRANTY
No statement made by or on behalf of the Insured, whether contained in the
application or otherwise, shall be deemed to be a warranty of anything
except that it is true to the best of the knowledge and belief of the
person making the statement.
C. COURT COSTS AND ATTORNEYS' FEES
(Applicable to all Insuring Agreements or Coverages now or hereafter
forming part of this bond)
The Underwriter will indemnify the Insured against court costs and
reasonable attorneys' fees incurred and paid by the Insured in defense,
whether or not successful, whether or not fully litigated on the merits
and whether or not settled, of any suit or legal proceeding brought
against the Insured to enforce the Insured's liability or alleged
liability on account of any loss, claim or damage which, if established
against the Insured, would constitute a loss sustained by the Insured
covered under the terms of this bond provided, however, that with respect
to Insuring Agreement (A) this indemnity shall apply only in the event
that:
(1) an Employee admits to being guilty of any dishonest or fraudulent
act(s), including Larceny or Embezzlement; or
(2) an Employee is adjudicated to be guilty of any dishonest or
fraudulent act(s), including Larceny or Embezzlement;
(3) in the absence of (1) or (2) above an arbitration panel agrees,
after a review of an agreed statement of facts, that an Employee
would be found guilty of dishonesty if such Employee were
prosecuted.
The Insured shall promptly give notice to the Underwriter of any such suit
or legal proceedings and at the request of the Underwriter shall furnish
it with copies of all pleadings and other papers therein. At the
Underwriter's election the Insured shall permit the Underwriter to conduct
the defense of such suit or legal proceeding, in the Insured's name,
through attorneys of the Underwriter's selection. In such event, the
Insured shall give all reasonable information and assistance which the
Underwriter shall deem necessary to the proper defense of such suit or
legal proceeding.
If the amount of the Insured's liability or alleged liability is greater
than the amount recoverable under this bond, or if a Deductible Amount is
applicable, or both, the liability of the Underwriter under this General
Agreement is limited to the proportion of court costs and attorneys' fees
incurred and paid by the Insured or by the Underwriter that the amount
recoverable under this bond bears to the total of such amount plus the
amount which is not so recoverable. Such indemnity shall be in addition to
the Limit of Liability for the applicable Insuring Agreement or Coverage.
D. FORMER EMPLOYEE
Acts of an Employee, as defined in this bond, are covered under Insuring
Agreement (A) only while the Employee is in the Insured's employ. Should
loss involving a former Employee of the Insured be discovered subsequent
to the termination of employment, coverage would still apply under
Insuring Agreement (A) if the direct proximate cause of the loss occurred
while the former Employee performed duties within the scope of his/her
employment.
THE FOREGOING INSURING AGREEMENTS AND GENERAL
AGREEMENTS ARE SUBJECT TO THE FOLLOWING
CONDITIONS AND LIMITATIONS:
SECTION 1. DEFINITIONS
The following terms, as used in this bond have the respective meanings stated in
this Section:
(a) "Employee" means:
(1) any of the Insured's officers, partners, or employees, and
(2) any of the officers or employees of any predecessor of the Insured
whose principal assets are acquired by the Insured by consolidation
or merger with, or purchase of assets or capital stock of, such
predecessor, and
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(c) 2004 The St. Paul Travelers Companies, Inc. All Right Reserved
(3) attorneys retained by the Insured to perform legal services for the
Insured and the employees of such attorneys while such attorneys or
employees of such attorneys are performing such services for the
Insured, and
(4) guest students pursuing their studies or duties in any of the
Insured's offices, and
(5) directors or trustees of the Insured, the investment advisor,
underwriter (distributor), transfer agent, or shareholder accounting
record keeper, or administrator authorized by written agreement to
keep financial and/or other required records, but only while
performing acts coming within the scope of the usual duties of an
officer or employee or while acting as a member of any committee
duly elected or appointed to examine or audit or have custody of or
access to the Property of the Insured, and
(6) any individual or individuals assigned to perform the usual duties
of an employee within the premises of the Insured, by contract, or
by any agency furnishing temporary personnel on a contingent or
part-time basis, and
(7) each natural person, partnership or corporation authorized by
written agreement with the Insured to perform services as electronic
data processor of checks or other accounting records of the Insured,
but excluding any such processor who acts as transfer agent or in
any other agency capacity in issuing checks, drafts or securities
for the Insured, unless included under sub-section (9) hereof, and
(8) those persons so designated in Section 15, Central Handling of
Securities, and
(9) any officer, partner, or Employee of:
(a) an investment advisor,
(b) an underwriter (distributor),
(c) a transfer agent or shareholder accounting record-keeper, or
(d) an administrator authorized by written agreement to keep
financial and/or other required records,
for an Investment Company named as Insured while performing acts coming
within the scope of the usual duties of an officer or Employee of any
investment Company named as Insured herein, or while acting as a member of
any committee duly elected or appointed to examine or audit or have
custody of or access to the Property of any such Investment Company,
provided that only Employees or partners of a transfer agent, shareholder
accounting record-keeper or administrator which is an affiliated person,
as defined in the Investment Company Act of 1940, of an Investment Company
named as Insured or is an affiliated person of the advisor, underwriter or
administrator of such Investment Company, and which is not a bank, shall
be included within the definition of Employee.
Each employer of temporary personnel or processors as set forth in
sub-sections (6) and (7) of Section 1(a) and their partners, officers and
employees shall collectively be deemed to be one person for all the
purposes of this bond, excepting, however, the last paragraph of Section
13.
Brokers, or other agents under contract or representatives of the same
general character shall not be considered Employees.
(b) "Property" means money (i.e. currency, coin, bank notes, Federal Reserve
notes), postage and revenue stamps, U.S. Savings Stamps, bullion, precious
metals of all kinds and in any form and articles made therefrom, jewelry,
watches, necklaces, bracelets, gems, precious and semi-precious stones,
bonds, securities, evidences of debts, debentures, scrip, certificates,
interim receipts, warrants, rights, puts, calls, straddles, spreads,
transfers, coupons, drafts, bills of exchange, acceptances, notes, checks,
withdrawal orders, money orders, warehouse receipts, bills of lading,
conditional sales contracts, abstracts of title, insurance policies,
deeds, mortgages under real estate and/or chattels and upon interests
therein, and assignments of such policies, mortgages and instruments, and
other valuable papers, including books of account and other records used
by the Insured in the conduct of its business, and all other instruments
similar to or in the nature of the foregoing including Electronic
Representations of such instruments enumerated above (but excluding all
data processing records) in which the Insured has an interest or in which
the Insured acquired or should have acquired an interest by reason of a
predecessor's declared financial condition at the time of the Insured's
consolidation or merger with, or purchase of the principal assets of, such
predecessor or which are held by the Insured for any purpose or in any
capacity and whether so held gratuitously or not and whether or not the
Insured is liable therefor.
(c) "Forgery" means the signing of the name of another with intent to deceive;
it does not include the signing of one's own name with or without
authority, in any capacity, for any purpose.
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(d) "Larceny and Embezzlement" as it applies to any named Insured means those
acts as set forth in Section 37 of the Investment Company Act of 1940.
(e) "Items of Deposit" means any one or more checks and drafts. Items of
Deposit shall not be deemed uncollectible until the Insured's collection
procedures have failed.
SECTION 2. EXCLUSIONS THIS BOND, DOES NOT COVER:
(a) loss effected directly or indirectly by means of forgery or alteration of,
on or in any instrument, except when covered by Insuring Agreement (A),
(E), (F) or (G).
(b) loss due to riot or civil commotion outside the United States of America
and Canada; or loss due to military, naval or usurped power, war or
insurrection unless such loss occurs in transit in the circumstances
recited in Insuring Agreement (D), and unless, when such transit was
initiated, there was no knowledge of such riot, civil commotion, military,
naval or usurped power, war or insurrection on the part of any person
acting for the Insured in initiating such transit.
(c) loss, in time of peace or war, directly or indirectly caused by or
resulting from the effects of nuclear fission or fusion or radioactivity;
provided, however, that this paragraph shall not apply to loss resulting
from industrial uses of nuclear energy.
(d) loss resulting from any wrongful act or acts of any person who is a member
of the Board of Directors of the Insured or a member of any equivalent
body by whatsoever name known unless such person is also an Employee or an
elected official, partial owner or partner of the Insured in some other
capacity, nor, in any event, loss resulting from the act or acts of any
person while acting in the capacity of a member of such Board or
equivalent body.
(e) loss resulting from the complete or partial non-payment of, or default
upon, any loan or transaction in the nature of, or amounting to, a loan
made by or obtained from the Insured or any of its partners, directors or
Employees, whether authorized or unauthorized and whether procured in good
faith or through trick, artifice fraud or false pretenses, unless such
loss is covered under Insuring Agreement (A), (E) or (F).
(f) loss resulting from any violation by the Insured or by any Employee:
(1) of law regulating (a) the issuance, purchase or sale of securities,
(b) securities transactions upon Security Exchanges or over the
counter market, (c) Investment Companies, or (d) Investment
Advisors, or
(2) of any rule or regulation made pursuant to any such law.
unless such loss, in the absence of such laws, rules or regulations, would
be covered under Insuring Agreements (A) or (E).
(g) loss of Property or loss of privileges through the misplacement or loss of
Property as set forth in Insuring Agreement (C) or (D) while the Property
is in the custody of any armored motor vehicle company, unless such loss
shall be in excess of the amount recovered or received by the Insured
under (a) the Insured's contract with said armored motor vehicle company,
(b) insurance carried by said armored motor vehicle company for the
benefit of users of its service, and (c) all other insurance and indemnity
in force in whatsoever form carried by or for the benefit of users of said
armored motor vehicle company's service, and then this bond shall cover
only such excess.
(h) potential income, including but not limited to interest and dividends, not
realized by the Insured because of a loss covered under this bond, except
as included under Insuring Agreement (I).
(i) all damages of any type for which the Insured is legally liable, except
direct compensatory damages arising from a loss covered under this bond.
(j) loss through the surrender of Property away from an office of the Insured
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 person acting as messenger provided that when
such transit was initiated there was no knowledge by the Insured of
any such threat, or
(2) to do damage to the premises or Property of the Insured, except when
covered under Insuring Agreement (A).
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(k) all costs, fees and other expenses incurred by the Insured in establishing
the existence of or amount of loss covered under this bond unless such
indemnity is provided for under Insuring Agreement (B).
(l) loss resulting from payments made or withdrawals from the account of a
customer of the Insured, shareholder or subscriber to shares involving
funds erroneously credited to such account, unless such payments are made
to or withdrawn by such depositors or representative of such person, who
is within the premises of the drawee bank of the Insured or within the
office of the Insured at the time of such payment or withdrawal or unless
such payment is covered under Insuring Agreement (A).
(m) any loss resulting from Uncollectible Items of Deposit which are drawn
from a financial institution outside the fifty states of the United States
of America, District of Columbia, and territories and possessions of the
United States of America, and Canada.
SECTION 3. ASSIGNMENT OF RIGHTS
This bond does not afford coverage in favor of any Employers of temporary
personnel or of processors as set forth in sub-sections (6) and (7) of Section
1(a) of this bond, as aforesaid, and upon payment to the Insured by the
Underwriter on account of any loss through dishonest or fraudulent act(s)
including Larceny or Embezzlement committed by any of the partners, officers or
employees of such Employers, whether acting alone or in collusion with others,
an assignment of such of the Insured's rights and causes of action as it may
have against such Employers by reason of such acts so committed shall, to the
extent of such payment, be given by the Insured to the Underwriter, and the
Insured shall execute all papers necessary to secure to the Underwriter the
rights herein provided for.
SECTION 4. LOSS - NOTICE - PROOF -LEGAL PROCEEDINGS
This bond is for the use and benefit only of the Insured named in the
Declarations and the Underwriter shall not be liable hereunder for loss
sustained by anyone other than the Insured unless the Insured, in its sole
discretion and at its option, shall include such loss in the Insured's proof of
loss. At the earliest practicable moment after discovery of any loss hereunder
the Insured shall give the Underwriter written notice thereof and shall also
within six months after such discovery furnish to the Underwriter affirmative
proof of loss with full particulars. If claim is made under this bond for loss
of securities or shares, the Underwriter shall not be liable unless each of such
securities or shares is identified in such proof of loss by a certificate or
bond number or, where such securities or shares are uncertificated, by such
identification means as agreed to by the Underwriter. The Underwriter shall have
thirty days after notice and proof of loss within which to investigate the
claim, but where the loss is clear and undisputed, settlement shall be made
within forty-eight hours; and this shall apply notwithstanding the loss is made
up wholly or in part of securities of which duplicates may be obtained. Legal
proceedings for recovery of any loss hereunder shall not be brought prior to the
expiration of sixty days after such proof of loss is filed with the Underwriter
nor after the expiration of twenty-four months from the discovery of such loss,
except that any action or proceedings to recover hereunder on account of any
judgment against the Insured in any suit mentioned in General Agreement C or to
recover attorneys' fees paid in any such suit, shall be begun within twenty-four
months from the date upon which the judgment in such suit shall become final. If
any limitation embodied in this bond is prohibited by any law controlling the
construction hereof, such limitation shall be deemed to be amended so as to be
equal to the minimum period of limitation permitted by such law.
Discovery occurs when the Insured:
(a) becomes aware of facts, or
(b) receives written notice of an actual or potential claim by a third
party which alleges that the Insured is liable under circumstances,
which would cause a reasonable person to assume that a loss covered by the bond
has been or will be incurred even though the exact amount or details of loss may
not be then known.
SECTION 5. VALUATION OF PROPERTY
The value of any Property, except books of accounts or other records used by the
Insured in the conduct of its business, for the loss of which a claim shall be
made hereunder, shall be determined by the average market value of such Property
on the business day next preceding the discovery of such loss; provided,
however, that the value of any Property replaced by the Insured prior to the
payment of claim therefor shall be the actual market value at the time of
replacement; and further provided that in case of a loss or misplacement 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 thereof shall be the market value of such
privileges immediately preceding the expiration thereof if said loss or
misplacement is not discovered until after their expiration. If no market price
is quoted for such Property or for such privileges, the value shall be fixed by
agreement between the parties or by arbitration.
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In case of any loss or damage to Property consisting of books of accounts or
other records used by the Insured in the conduct of its business, the
Underwriter shall be liable under this bond only if such books or records are
actually reproduced and then for not more than the cost of blank books, blank
pages or other materials plus the cost of labor for the actual transcription or
copying of data which shall have been furnished by the Insured in order to
reproduce such books and other records.
SECTION 6. VALUATION OF PREMISES AND FURNISHINGS
In case of damage to any office of the Insured, or loss of or damage to the
furnishings, fixtures, stationery, supplies, equipment, safes or vaults therein,
the Underwriter shall not be liable for more than the actual cash value thereof,
or for more than the actual cost of their replacement or repair. The Underwriter
may, at its election, pay such actual cash value or make such replacement or
repair. If the underwriter and the Insured cannot agree upon such cash value or
such cost of replacement or repair, such shall be determined by arbitration.
SECTION 7. LOST SECURITIES
If the Insured shall sustain a loss of securities the total value of which is in
excess of the limit stated in Item 3 of the Declarations of this bond, the
liability of the Underwriter shall be limited to payment for, or duplication of,
securities having value equal to the limit stated in Item 3 of the Declarations
of this bond.
If the Underwriter shall make payment to the Insured for any loss of securities,
the Insured shall thereupon assign to the Underwriter all of the Insured's
rights, title and interest in and to said securities.
With respect to securities the value of which do not exceed the Deductible
Amount (at the time of the discovery of the loss) and for which the Underwriter
may at its sole discretion and option and at the request of the Insured issue a
Lost Instrument Bond or Bonds to effect replacement thereof, the Insured will
pay the usual premium charged therefor and will indemnify the Underwriter
against all loss or expense that the Underwriter may sustain because of the
issuance of such Lost Instrument Bond or Bonds.
With respect to securities the value of which exceeds the Deductible Amount (at
the time of discovery of the loss) and for which the Underwriter may issue or
arrange for the issuance of a Lost Instrument Bond or Bonds to effect
replacement thereof, the Insured agrees that it will pay as premium therefor a
proportion of the usual premium charged therefor, said proportion being equal to
the percentage that the Deductible Amount bears to the value of the securities
upon discovery of the loss, and that it will indemnify the issuer of said Lost
Instrument Bond or Bonds against all loss and expense that is not recoverable
from the Underwriter under the terms and conditions of this Investment Company
Blanket Bond subject to the Limit of Liability hereunder.
SECTION 8. SALVAGE
in case of recovery, whether made by the Insured or by the Underwriter, on
account of any loss in excess of the Limit of Liability hereunder plus the
Deductible Amount applicable to such loss, from any source other than
suretyship, insurance, reinsurance, security or indemnity taken by or for the
benefit of the Underwriter, the net amount of such recovery, less the actual
costs and expenses of making same, shall be applied to reimburse the Insured in
full for the excess portion of such loss, and the remainder, if any, shall be
paid first in reimbursement of the Underwriter and thereafter in reimbursement
of the Insured for that part of such loss within the Deductible Amount. The
Insured shall execute all necessary papers to secure to the Underwriter the
rights provided for herein.
SECTION 9. NON-REDUCTION AND NON-ACCUMULATION OF LIABILITY AND TOTAL LIABILITY
At all times prior to termination hereof, this bond shall continue in force for
the limit stated in the applicable sections of Item 3 of the Declarations of
this bond notwithstanding any previous loss for which the Underwriter may have
paid or be liable to pay hereunder; PROVIDED, however, that regardless of the
number of years this bond shall continue in force and the number or premiums
which shall be payable or paid, the liability of the Underwriter under this bond
with respect to all loss resulting from:
(a) any one act of burglary, robbery or holdup, or attempt thereat, in
which no Partner or Employee is concerned or implicated shall be
deemed to be one loss, or
(b) any one unintentional or negligent act on the part of any other
person resulting in damage to or destruction or misplacement of
Property, shall be deemed to be one loss, or
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(c) all wrongful acts, other than those specified in (a) above, of any
one person shall be deemed to be one loss, or
(d) all wrongful acts, other than those specified in (a) above, of one
or more persons (which dishonest act(s) or act(s) of Larceny or
Embezzlement include, but are not limited to, the failure of an
Employee to report such acts of others) whose dishonest act or acts
intentionally or unintentionally, knowingly or unknowingly, directly
or indirectly, aid or aids in any way, or permits the continuation
of, the dishonest act or acts of any other person or persons shall
be deemed to be one loss with the act or acts of the persons aided,
or
(e) any one casualty or event other than those specified in (a), (b),
(c) or (d) preceding, shall be deemed to be one loss, and
shall be limited to the applicable Limit of Liability stated in Item 3 of the
Declarations of this bond irrespective of the total amount of such loss or
losses and shall not be cumulative in amounts from year to year or from period
to period.
Sub-section (c) is not applicable to any situation to which the language of
sub-section (d) applies.
SECTION 10. LIMIT OF LIABILITY
With respect to any loss set forth in the PROVIDED clause of Section 9 of this
bond which is recoverable or recovered in whole or in part under any other bonds
or policies issued by the Underwriter to the Insured or to any predecessor in
interest of the Insured and terminated or cancelled or allowed to expire and in
which the period of discovery has not expired at the time any such loss
thereunder is discovered, the total liability of the Underwriter under this bond
and under other bonds or policies shall not exceed, in the aggregate, the amount
carried hereunder on such loss or the amount available to the Insured under such
other bonds or policies, as limited by the terms and conditions thereof, for any
such loss if the latter amount be the larger.
SECTION 11. OTHER INSURANCE
If the Insured shall hold, as indemnity against any loss covered hereunder, any
valid and enforceable insurance or suretyship, the Underwriter shall be liable
hereunder only for such amount of such loss which is in excess of the amount of
such other insurance or suretyship, not exceeding, however, the Limit of
Liability of this bond applicable to such loss.
SECTION 12. DEDUCTIBLE
The Underwriter shall not be liable under any of the Insuring Agreements of this
bond on account of loss as specified, respectively, in sub-sections (a), (b),
(c), (d) and (e) of Section 9, NON-REDUCTION AND NON- ACCUMULATION OF LIABILITY
AND TOTAL LIABILITY, unless the amount of such loss, after deducting the net
amount of all reimbursement and/or recovery obtained or made by the Insured,
other than from any bond or policy of insurance issued by an insurance company
and covering such loss, or by the Underwriter on account thereof prior to
payment by the Underwriter of such loss, shall exceed the Deductible Amount set
forth in Item 3 of the Declarations hereof (herein called Deductible Amount),
and then for such excess only, but in no event for more than the applicable
Limit of Liability stated in Item 3 of the Declarations.
The Insured will bear, in addition to the Deductible Amount, premiums on Lost
Instrument Bonds as set forth in Section 7.
There shall be no deductible applicable to any loss under Insuring Agreement A
sustained by any Investment Company named as Insured herein.
SECTION 13. TERMINATION
The Underwriter may terminate this bond as an entirety by furnishing written
notice specifying the termination date, which cannot be prior to 60 days after
the receipt of such written notice by each Investment Company named as Insured
and the Securities and Exchange Commission, Washington, D.C. The Insured may
terminate this bond as an entirety by furnishing written notice to the
Underwriter. When the Insured cancels, the Insured shall furnish written notice
to the Securities and Exchange Commission, Washington, D.C., prior to 60 days
before the effective date of the termination. The Underwriter shall notify all
other Investment Companies named as Insured of the receipt of such termination
notice and the termination cannot be effective prior to 60 days after receipt of
written notice by all other Investment Companies. Premiums are earned until the
termination date as set forth herein.
This Bond will terminate as to any one Insured immediately upon taking over of
such Insured by a receiver or other liquidator or by State or Federal officials,
or immediately upon the filing of a petition under any State or Federal statute
relative to bankruptcy or reorganization of the Insured, or assignment for the
benefit of creditors of the Insured, or immediately upon such Insured ceasing to
exist, whether through merger into another entity, or by disposition of all of
its assets.
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The Underwriter shall refund the unearned premium computed at short rates in
accordance with the standard short rate cancellation tables if terminated by the
Insured or pro rata if terminated for any other reason.
This Bond shall terminate:
(a) as to any Employee as soon as any partner, officer or supervisory
Employee of the Insured, who is not in collusion with such Employee,
shall learn of any dishonest or fraudulent act(s), including Larceny
or Embezzlement on the part of such Employee without prejudice to
the loss of any Property then in transit in the custody of such
Employee (see Section 16(d)), or
(b) as to any Employee 60 days after receipt by each Insured and by the
Securities and Exchange Commission of a written notice from the
Underwriter of its desire to terminate this bond as to such
Employee, or
(c) as to any person, who is a partner, officer or employee of any
Electronic Data Processor covered under this bond, from and after
the time that the Insured or any partner or officer thereof not in
collusion with such person shall have knowledge or information that
such person has committed any dishonest or fraudulent act(s),
including Larceny or Embezzlement in the service of the Insured or
otherwise, whether such act be committed before or after the time
this bond is effective.
SECTION 14. RIGHTS AFTER TERMINATION OR CANCELLATION
At any time prior to the termination or cancellation of this bond as an
entirety, whether by the Insured or the Underwrite, the Insured may give the
Underwriter notice that it desires under this bond an additional period of 12
months within which to discover loss sustained by the Insured prior to the
effective date of such termination or cancellation and shall pay an additional
premium therefor.
Upon receipt of such notice from the Insured, the Underwriter shall give its
written consent thereto; provided, however, that such additional period of time
shall terminate immediately:
(a) on the effective date of any other insurance obtained by the
Insured, its successor in business or any other party, replacing in
whole or in part the insurance afforded by this bond, whether or not
such other insurance provides coverage for loss sustained prior to
its effective date, or
(b) upon takeover of the Insured's business by any State or Federal
official or agency, or by any receiver or liquidator, acting or
appointed for this purpose without the necessity of the Underwriter
giving notice of such termination. In the event that such additional
period of time is terminated, as provided above, the Underwriter
shall refund any unearned premium.
The right to purchase such additional period for the discovery of loss may not
be exercised by any State or Federal official or agency, or by a receiver or
liquidator, acting or appointed to take over the Insured's business for the
operation or for the liquidation thereof or for any purpose.
SECTION 15. CENTRAL HANDLING OF SECURITIES
Securities included in the system for the central handling of securities
established and maintained by Depository Trust Company, Midwest Depository Trust
Company, Pacific Securities Depository Trust Company, and Philadelphia
Depository Trust Company, hereinafter called Corporations, to the extent of the
Insured's interest therein as effected by the making of appropriate entries on
the books and records of such Corporations shall be deemed to be Property.
The words "Employee" and 'Employees" shall be deemed to include the officers,
partners, clerks and other employees of the New York Stock Exchange, Boston
Stock Exchange, Midwest Stock Exchange, Pacific Stock Exchange and Philadelphia
Stock Exchange, hereinafter called Exchanges, and of the above named
Corporations, and of any nominee in whose name is registered any security
included within the systems for the central handling of securities established
and maintained by such Corporations, and any employee or any recognized service
company, while such officers, partners, clerks and other employees and employees
of service companies perform services for such Corporations in the operation of
such systems. For the purpose of the above definition a recognized service
company shall be any company providing clerks or other personnel to the said
Exchanges or Corporations on a contract basis.
The Underwriter shall not be liable on account of any loss(es) in connection
with the central handling of securities within the systems established and
maintained by such Corporations, unless such loss(es) shall be in excess of the
amount(s) recoverable or recovered under any bond or policy of insurance
indemnifying such Corporations against such loss(es), and then the Underwriter
shall be liable hereunder only for the Insured's share of such excess loss(es),
but in no event for more than the Limit of Liability applicable hereunder.
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For the purpose of determining the Insured's share of excess loss(es) it shall
be deemed that the Insured has an interest in any certificate representing any
security included within such systems equivalent to the interest the Insured
then has in all certificates representing the same security included within such
systems and that such Corporations shall use their best judgment in apportioning
the amount(s) recoverable or recovered under any bond or policy of insurance
indemnifying such Corporations against such loss(es) in connection with the
central handling of securities within such systems among all those having an
interest as recorded by appropriate entries in the books and records of such
Corporations in Property involved in such loss(es) on the basis that each such
interest shall share in the amount(s) so recoverable or recovered in the ratio
that the value of each such interest bears to the total value all such interests
and that the Insured's share of such excess loss(es) shall be the amount of the
Insured's interest in such Property in excess of the amount(s) so apportioned to
the Insured by such Corporations.
This bond does not afford coverage in favor of such Corporations or Exchanges or
any nominee in whose name is registered any security included within the systems
for the central handling of securities established and maintained by such
Corporations, and upon payment to the Insured by the Underwriter on account of
any loss(es) within the systems, an assignment of such of the Insured's rights
and causes of action as it may have against such Corporations or Exchanges shall
to the extent of such payment, be given by the Insured to the Underwriter, and
the Insured shall execute all papers necessary to secure the Underwriter the
rights provided for herein.
SECTION 16. ADDITIONAL COMPANIES INCLUDED AS INSURED
If more than one corporation, co-partnership or person or any combination of
them be included as the Insured herein:
(a) the total liability of the Underwriter hereunder for loss or losses
sustained by any one or more or all of them shall not exceed the
limit for which the Underwriter would be liable hereunder if all
such loss were sustained by any one of them;
(b) the one first named herein shall be deemed authorized to make,
adjust and receive and enforce payment of all claims hereunder and
shall be deemed to be the agent of the others for such purposes and
for the giving or receiving of any notice required or permitted to
be given by the terms hereof, provided that the Underwriter shall
furnish each named Investment Company with a copy of the bond and
with any amendment thereto, together with a copy of each formal
filing of the settlement of each such claim prior to the execution
of such settlement;
(c) the Underwriter shall not be responsible for the proper application
of any payment made hereunder to said first named Insured;
(d) knowledge possessed or discovery made by any partner, officer of
supervisory Employee of any Insured shall for the purposes of
Section 4 and Section 13 of this bond constitute knowledge or
discovery by all the Insured; and
(e) if the first named Insured ceases for any reason to be covered under
this bond, then the Insured next named shall thereafter be
considered as the first, named Insured for the purposes of this
bond.
SECTION 17. NOTICE AND CHANGE OF CONTROL
Upon the Insured obtaining knowledge of a transfer of its outstanding voting
securities which results in a change in control (as set forth in Section 2(a)
(9) of the Investment Company Act of 1940) of the Insured, the Insured shall
within thirty (30) days of such knowledge give written notice to the Underwriter
setting forth:
(a) the names of the transferors and transferees (or the names of the
beneficial owners if the voting securities are requested in another
name), and
(b) the total number of voting securities owned by the transferors and
the transferees (or the beneficial owners), both immediately before
and after the transfer, and
(c) the total number of outstanding voting securities.
As used in this section, control means the power to exercise a controlling
influence over the management or policies of the Insured.
Failing to give the required notice shall result in termination of coverage of
this bond, effective upon the date of stock transfer for any loss in which any
transferee is concerned or implicated.
Such notice is not required to be given in the case of an Insured which is an
Investment Company.
SECTION 18. CHANGE OR MODIFICATION
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This bond or any instrument amending or effecting same may not be changed or
modified orally. No changes in or modification thereof shall be effective unless
made by written endorsement issued to form a part hereof over the signature of
the Underwriter's Authorized Representative. When a bond covers only one
Investment Company no change or modification which would adversely affect the
rights of the Investment Company shall be effective prior to 60 days after
written notification has been furnished to the Securities and Exchange
Commission, Washington, D.C., by the Insured or by the Underwriter. If more than
one Investment Company is named as the Insured herein, the Underwriter shall
give written notice to each Investment Company and to the Securities and
Exchange Commission, Washington, D.C., not less than 60 days prior to the
effective date of any change or modification which would adversely affect the
rights of such Investment Company.
12 of 12
ICB005 Ed. 7-04
(c) 2004 The St. Paul Travelers Companies, Inc. All Right Reserved
ENDORSEMENT OR RIDER NO.
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
The following spaces preceded by an (*) need not be completed if this endorsement or rider
and the Bond or Policy have the same inception date.
---------------------------------------------------------------------------------------------
ATTACHED TO AND FORMING DATE ENDORSEMENT OR * EFFECTIVE DATE OF ENDORSEMENT OR RIDER
PART OF BOND OR POLICY NO. RIDER EXECUTED 12:01 A.M. STANDARD TIME AS
SPECIFIED IN THE BOND OR POLICY
490PB1498 03/28/07 03/04/07
---------------------------------------------------------------------------------------------
* ISSUED TO
HARRIS & HARRIS GROUP, INC.
---------------------------------------------------------------------------------------------
Computer Systems
It is agreed that:
1. The attached bond is amended by adding an additional Insuring Agreement as
follows:
INSURING AGREEMENT COMPUTER SYSTEMS
Loss resulting directly from a fraudulent
(1) entry of data into, or
(2) change of data elements or program within a Computer System listed
in the SCHEDULE below, provided the fraudulent entry or change
causes
(a) Property to be transferred, paid or delivered,
(b) an account of the Insured, or of its customer, to be added,
deleted, debited or credited, or
(c) an unauthorized account or a fictitious account to be debited
or credited, and provided further, the fraudulent entry or
change is made or caused by an individual acting with the
manifest intent to
(i) cause the Insured to sustain a loss, and
(ii) obtain financial benefit for that individual or for
other persons intended by that individual to receive
financial benefit.
SCHEDULE
All systems utilized by the Insured
2. As used in this Rider, Computer System means
(a) computers with related peripheral components, including storage
components, wherever located,
(b) systems and applications software,
(c) terminal devices, and
(d) related communication networks
by which data are electronically collected, transmitted, processed, stored
and retrieved.
3. In addition to the exclusions in the attached bond, the following
exclusions are applicable to this Insuring Agreement:
(a) loss resulting directly or indirectly from the theft of confidential
information, material or data; and
Page 1 of 2
ICB011 Ed. 7-04
(c) 2004 The St. Paul Travelers Companies, Inc. All Right Reserved
(b) loss resulting directly or indirectly from entries or changes made
by an individual authorized to have access to a Computer System who
acts in good faith on instructions, unless such instructions are
given to that individual by a software contractor (or by a partner,
officer or employee thereof) authorized by the Insured to design,
develop, prepare, supply, service, write or implement programs for
the Insured's Computer System.
4. The following portions of the attached bond are not applicable to this
Rider:
(a) the portion preceding the Insuring Agreements which reads "at any
time but discovered during the Bond Period";
(b) Section 9 NONREDUCTION AND NON-ACCUMULATION OF LIABILITY of the
Conditions and Limitations; and
(c) Section 10 LIMIT OF LIABILITY of the Conditions and Limitations.
5. The coverage afforded by this Rider applies only to loss discovered by the
Insured during the period this Rider is in force.
6. All loss or series of losses involving the fraudulent activity of one
individual, or involving fraudulent activity, in which one individual is
implicated, whether or not that individual is specifically identified,
shall be treated as one loss. A series of losses involving unidentified
individuals but arising from the same method of operation may be deemed by
the Underwriter to involve the same individual and in that event shall be
treated as one loss.
7. The Limit of Liability for the coverage provided by this Rider shall be
FIVE HUNDRED TWENTY FIVE THOUSAND DOLLARS
Dollars ($525,000 ), it being understood, however, that such liability
shall be a part of and not in addition to the Limit of Liability stated in
Item 3 of the Declarations of the attached bond or any amendment thereof.
8. The Underwriter shall be liable hereunder for the amount by which one loss
exceeds the Deductible Amount applicable to the attached bond, but not in
excess of the Limit of Liability stated above.
9. If any loss is covered under this Insuring Agreement and any other
Insuring Agreement or Coverage, the maximum amount payable for such loss
shall not exceed the largest amount available under any one Insuring
Agreement or Coverage.
10. Coverage under this Rider shall terminate upon termination or cancellation
of the bond to which this Rider is attached. Coverage under this Rider may
also be terminated or canceled without canceling the bond as an entirety
(a) 60 days after receipt by the Insured of written notice from the
Underwriter of its desire to terminate or cancel coverage under this
Rider, or
(b) immediately upon receipt by the Underwriter of a written request
from the Insured to terminate or cancel coverage under this Rider.
The Underwriter shall refund to the Insured the unearned premium for the
coverage under this Rider. The refund shall be computed at short rates if
this Rider be terminated or canceled or reduced by notice from, or at the
instance of, the Insured.
Nothing herein contained shall be held to vary, alter, waive, or extend any of
the terms, conditions, provisions, agreements or limitations of the above
mentioned Bond or Policy, other than as above stated.
By
--------------------------------------
Authorized Representative
INSURED
Page 2 of 2
ICB011 Ed. 7-04
(c) 2004 The St. Paul Travelers Companies, Inc. All Right Reserved
ENDORSEMENT OR RIDER NO.
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
The following spaces preceded by an (*) need not be completed if this endorsement or rider
and the Bond or Policy have the same inception date.
---------------------------------------------------------------------------------------------
ATTACHED TO AND FORMING DATE ENDORSEMENT OR * EFFECTIVE DATE OF ENDORSEMENT OR RIDER
PART OF BOND OR POLICY NO. RIDER EXECUTED 12:01 A.M. STANDARD TIME AS
SPECIFIED IN THE BOND OR POLICY
490PB1498 03/28/07 03/04/07
---------------------------------------------------------------------------------------------
* ISSUED TO
HARRIS & HARRIS GROUP, INC.
---------------------------------------------------------------------------------------------
New York Statutory Rider
1. The first paragraph of Section 13. "TERMINATION" under Conditions and
Limitations is amended by adding the following:
Cancellation of this bond by the Underwriter is subject to the following
provisions:
If the bond has been in effect for 60 days or less, it may be canceled by
the Underwriter for any reason. Such cancellation shall be effective 60
days after the Underwriter mails a notice of cancellation to the
first-named Insured at the mailing address shown in the bond. However, if
the bond has been in effect for more than 60 days or is a renewal, then
cancellation must be based on one of the followings grounds:
(A) non-payment of premium, however, that a notice of cancellation on
this ground shall inform the insured of the amount due;
(B) conviction of crime arising out of acts increasing the hazard
insured against;
(C) discovery of fraud or material misrepresentation in the obtaining of
the bond or in the presentation of claim thereunder;
(D) after issuance of the bond or after the last renewal date, discovery
of an act or omission, or a violation of any bond condition that
substantially and materially increases the hazard Insured against,
and which occurred subsequent to inception of the current bond
period;
(E) material change in the nature or extent of the risk, occurring after
issuance or last annual renewal anniversary date of the bond, which
causes the risk of loss to be substantially and materially increased
beyond that contemplated at the time the bond was issued or last
renewed;
(F) the cancellation is required pursuant to a determination by the
superintendent that continuation of the present premium volume of
the Insurer would jeopardize the Insurer's solvency or be hazardous
to the interest of the Insureds, the Insurer's creditors or the
public;
(G) a determination by the superintendent that the continuation of the
bond would violate, or would place the Insurer in violation of, any
provision of the New York State Insurance laws.
(H) where the Insurer has reason to believe, in good faith and with
sufficient cause, that there is a possible risk or danger that the
Insured property will be destroyed by the Insured for the purpose of
collecting the insurance proceeds, provided, however, that:
(i) a notice of cancellation on this ground shall inform the
Insured in plain language that the Insured must act within ten
days if review by the Insurance Department of the State of New
York of the ground for cancellation is desired, and
(ii) notice of cancellation on this ground shall be provided
simultaneously by the Insurer to the Insurance Department of
the State of New York.
(iii) upon written request of the Insured made to the Insurance
Department of the State of New York within ten days from the
Insured's receipt of notice of cancellation on this ground,
the department shall undertake a review of the ground for
cancellation to determine whether or not the Insurer has
satisfied the criteria for cancellation specified in this
subparagraph; if after such review the department finds not
sufficient cause for cancellation on this ground, the notice
of cancellation on this ground shall be deemed null and void.
Page 1 of 2
ICB057 Ed. 4-05
(c) 2005 The St. Paul Travelers Companies, Inc. All Right Reserved
Cancellation based on one of the above grounds shall be effective 60 days
after the notice of cancellation is mailed or delivered to the Named
Insured, at the address shown on the bond, and to its authorized agent or
broker.
2. If the Underwriter elects not to replace a bond at the termination of the
Bond Period, it shall notify the Insured not more than 120 days nor less
than 60 days before termination. If such notice is given late, the bond
shall continue in effect for 60 days after such notice is given. The
Aggregate Limit of Liability shall not be increased or reinstated. The
notice not to replace shall be mailed to the Insured and its broker or
agent.
3. If the Underwriter elects to replace the bond, but with a change of
limits, reduced coverage, increased deductible, additional exclusion, or
upon increased premiums in excess of ten percent (exclusive of any premium
increase as a result of experience rating), the Underwriter must mail
written notice to the Insured and its agent or broker not more than 120
days nor less than 60 days before replacement. If such notice is given
late, the replacement bond shall be in effect with the same terms,
conditions and rates as the terminated bond for 60 days after such notice
is given.
4. The Underwriter may elect to simply notify the Insured that the bond will
either be not renewed or renewed certified with different terms,
conditions or rates. In this event, the Underwriter will inform the
Insured that a second notice will be sent at a later date specifying the
Underwriter's exact intention. The Underwriter shall inform the Insured
that, in the meantime, coverage shall continue on the same terms,
conditions and rates as the expiring bond until the expiration date of the
bond or 60 days after the second notice is mailed or delivered, nor
whichever is later.
Nothing herein contained shall be held to vary, alter, waive, or extend any of
the terms, conditions, provisions, agreements or limitations of the above
mentioned Bond or Policy, other than as above stated.
By
--------------------------------------
Authorized Representative
INSURED
Page 2 of 2
ICB057 Ed. 4-05
(c) 2005 The St. Paul Travelers Companies, Inc. All Right Reserved
ENDORSEMENT OR RIDER NO.
THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT CAREFULLY.
The following spaces preceded by an (*) need not be completed if this endorsement or rider
and the Bond or Policy have the same inception date.
---------------------------------------------------------------------------------------------
ATTACHED TO AND FORMING DATE ENDORSEMENT OR * EFFECTIVE DATE OF ENDORSEMENT OR RIDER
PART OF BOND OR POLICY NO. RIDER EXECUTED 12:01 A.M. STANDARD TIME AS
SPECIFIED IN THE BOND OR POLICY
490PB1498 03/28/07 03/04/07
---------------------------------------------------------------------------------------------
* ISSUED TO
HARRIS & HARRIS GROUP, INC.
---------------------------------------------------------------------------------------------
AMEND SECTION 13. TERMINATION
For use with ICB005 - Ed. 7/04
MEL3281 - Ed. 5/05
It is agreed that:
This Bond is amended by deleting from SECTION 13. TERMINATION, the term "60
days" under the first paragraph and substituting "90 days".
Nothing herein contained shall be held to vary, alter, waive, or extend any of
the terms, conditions, provisions, agreements or limitations of the above
mentioned Bond or Policy, other than as above stated.
By
--------------------------------------
Authorized Representative
INSURED
(c) 2005 The St. Paul Travelers Companies, Inc. All Right Reserved