EQUUS TOTAL RETURN, INC.
December 14, 2007
Securities and Exchange Commission
100 F Street N.E.
Washington, DC 20549
Re:
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Equus Total
Return, Inc. (the "Fund")
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File No. 814-00098
Amendment to Fidelity Bond
Ladies and Gentlemen:
The following document is attached and statements are made concerning the
fidelity bond coverage for the Fund:
1.
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A copy of
the Fund's fidelity bond issued by Hartford Casualty Insurance Company in
the amount of $1,000,000;
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2.
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The Fund's
Board of Directors, including all of the Directors who are not "interested
persons" of the Fund, unanimously adopted the following resolutions on
December 10, 2007:
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WHEREAS, the Board of Directors of the Fund has
previously approved the fidelity bond (the "Fidelity Bond") with Hartford
Casualty Insurance Company ("Hartford") for the Fund for an additional one-year
term in the amount of $1,000,000; and
WHEREAS, the Directors have evaluated the
amendment to the Fidelity Bond with Hartford to remove the deductible applicable
to any loss the Fund may incur under the Fidelity Bond;
NOW, THEREFORE, BE IT RESOLVED, that the
Directors, including all of the Independent Directors, approve and ratify the
amendment to the Fidelity Bond to remove the deductible applicable to any loss
the Fund may incur under the Fidelity Bond;
RESOLVED FURTHER, that the officers of the
Fund are authorized to file the following documents with the SEC (and any
actions previously taken in this regard are ratified):
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a.
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A copy of
the Fidelity Bond;
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b.
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A copy of
the Board resolution approving and ratifying the amendment to the Fidelity
Bond; and
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c.
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Any other
documents required by Rule 17g-1 under the Investment Company Act of 1940;
and
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RESOLVED FURTHER, that the officers of the Fund
be, and they hereby are, authorized, on behalf of the Fund, to take other
actions as they deem necessary or appropriate to give effect to the foregoing
resolutions.
WORTHAM TOWER
2727 ALLEN PARKWAY
THIRTEENTH FLOOR
HOUSTON, TX 77019
TEL: (713) 529-0900
FAX: (713) 529-9545
EQUUS TOTAL RETURN, INC.
3.
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The fidelity
bond has been paid for a term of one year beginning January 29, 2007.
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Very truly yours,
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Equus Total Return,
Inc.
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/s/ L'Sheryl D. Hudson
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L'Sheryl D. Hudson
Vice President and Chief Financial
Officer
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WORTHAM TOWER
2727 ALLEN PARKWAY
THIRTEENTH FLOOR
HOUSTON, TX 77019
TEL: (713) 529-0900
FAX: (713) 529-9545
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FINANCIAL INSTITUTION BOND
Standard Form No. 14, Revised to October,
1987
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Hartford Casualty Insurance
COmpany
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Bond
No.
61 FI 0228522 - 07
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Hartford Plaza
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Hartford, CT 06115
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(Herein called Underwriter)
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DECLARATIONS
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Item 1.
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Name of Insured (herein called
Insured):
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Equus Total Return, Inc.
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(Formerly known as Equus II
Incorporated)
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Principal Address:
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2727 Allen Parkway, 13
th
Floor
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Houston, Texas
77019
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Item 2.
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Bond Period: from 12:01 a.m.
on
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January 29, 2007
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to 12:01 a.m. on
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January 29, 2008
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standard time.
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(MONTH, DAY, YEAR)
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(MONTH, DAY, YEAR)
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Item 3.
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The Aggregate Liability of the Underwriter
during the Bond Period shall be
$ 1,000,000.
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Item 4.
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Subject to Sections 4 and 11
hereof,
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the Single Loss Limit of Liability is
$1,000,000
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and the Single Loss Deductible is
$25,000
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Provided, however,
that if any amounts are inserted below opposite specified Insuring
Agreements or Coverage, those amounts shall be controlling. Any amount set
forth below shall be part of and not in addition to amounts set forth
above. (If an Insuring Agreement or Coverage is to be deleted, insert "Not
Covered.")
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Amount applicable
to:
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Single Loss
Limit of Liability
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Single Loss
Deductible
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Insuring Agreement
(D) - FORGERY OR ALTERATION
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$1,000,000
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$25,000
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Insuring Agreement
(E) - SECURITIES
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$1,000,000
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$25,000
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Coverage on
Partners
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$ Not Covered
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$ N/A
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Optional Insuring
Agreements and Coverages:
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$
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$
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$
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$
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$
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$
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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.
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Item 5.
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The liability of the Underwriter is subject
to the terms of the following riders attached hereto:
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Item 6.
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The Insured by the acceptance of this bond
gives notice to the Underwriter terminating or canceling prior
bond(s) or policy(ies) No.(s) 61 FI 0228522
- 06
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such termination or cancellation to be
effective as of the time this bond becomes
effective.
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Signed, sealed and dated this 7th day of February, 2007
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Attest:
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By:
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Peggy A. Lemmon,
Attorney-in-Fact
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Donald R. Bonnell,
Attorney-in-Fact
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Page 1
The Underwriter, in consideration of an agreed premium, and in reliance
upon all statements made and information furnished to the Underwriter by the
Insured in applying for this bond, and subject to the Declarations, Insuring
Agreements, General Agreements, Conditions and Limitations and other terms
hereof, agrees to indemnify the Insured for:
INSURING AGREEMENTS
(A) Loss resulting directly from dishonest or
fraudulent acts committed by an Employee acting alone or in collusion with
others.
Such dishonest or fraudulent acts must be
committed by the Employee with the manifest intent:
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(a)
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to cause the
Insured to sustain such loss; and
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(b)
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to obtain
financial benefit for the Employee and which, in fact, result in obtaining
such benefit.
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As used in this Insuring Agreement, financial
benefit does not include any employee benefits earned in the normal course of
employment, including: salaries, commissions, fees, bonuses, promotions, awards,
profit sharing or pensions.
ON PREMISES
(B)(1) Loss of Property resulting directly from
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(a)
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robbery,
burglary, misplacement, mysterious unexplainable disappearance and damage
thereto or destruction thereof, or
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(b)
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theft, false
pretenses, common-law or statutory larceny, committed by a person present
in an office or on the premises of the Insured
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while the Property is lodged or deposited within
offices or premises located anywhere.
(2) Loss of or damage to
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(a)
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furnishings
fixtures, supplies or equipment within an office of the Insured covered
under this bond resulting directly from larceny or theft in, or by
burglary or robbery of, such office or attempt thereat, or by vandalism or
malicious mischief, or
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(b)
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such office
resulting from larceny or theft in, or by burglary or robbery of such
office or attempt thereat, or to the interior of such office by vandalism
or malicious mischief,
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provided that
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(i)
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the Insured
is the owner of such furnishings, fixtures, supplies, equipment, or office
or is liable for such loss or damage, and
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(ii)
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the loss is
not caused by fire.
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IN TRANSIT
(C) Loss of Property resulting directly from
robbery, common-law or statutory larceny, theft, misplacement, mysterious
unexplainable disappearance, being lost or made away with, and damage thereto or
destruction thereof, while the Property is in transit anywhere in the custody of
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(a)
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a natural
person acting as a messenger of the Insured (or another natural person
acting as messenger or custodian during an emergency arising from the
incapacity of the original messenger), or
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(b)
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a
Transportation Company and being transported in an armored motor vehicle,
or
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(c)
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a
Transportation Company and being transported in a conveyance other than an
armored motor vehicle provided that covered Property transported in such
manner is limited to the following:
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(i)
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records,
whether recorded in writing or electronically, and
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(ii)
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Certificated
Securities issued in registered form and not endorsed, or with restrictive
endorsements, and
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(iii)
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Negotiable
Instruments not payable to bearer, or not endorsed, or with restrictive
endorsements.
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Coverage under this Insuring Agreement begins
immediately upon the receipt of such Property by the natural person or
Transportation Company and ends immediately upon delivery to the designated
recipient or its agent.
FORGERY OR ALTERATION
(D) Loss resulting directly from
(1) Forgery or alteration of, on or in any
Negotiable Instrument (except an Evidence of Debt), Acceptance, Withdrawal
Order, receipt for the withdrawal of Property, Certificate of Deposit or Letter
of Credit,
(2) transferring, paying or delivering any funds
or Property or establishing any credit or giving any value on the faith of any
written instructions or advices directed to the Insured and authorizing or
acknowledging the transfer, payment, delivery or receipt of funds or Property,
which instructions or advices purport to have been signed or endorsed by any
customer to the Insured or by any financial institution but which instructions
or advices either bear a signature which is a Forgery or have been altered
without the knowledge and consent of such customer or financial institution.
A mechanically reproduced facsimile signature is
treated the same as a handwritten signature.
SECURITIES
(E) Loss resulting directly from the Insured
having, in good faith, for its own account or for the account of others
(1) acquired, sold or delivered, or given value,
extended credit or assumed liability, on the faith of, any original
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(a)
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Certificated
Security,
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(b)
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deed,
mortgage or other instrument conveying title to, or creating or
discharging a lien upon, real property,
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(d)
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Instruction
to a Federal Reserve Bank of the United States, or
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(e)
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Statement of
Uncertificated Security of any Federal Reserve Bank of the United States
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which
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(i)
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bears a
signature of any maker, drawer, issuer, endorser, assignor, lessee,
transfer agent, registrar, acceptor, surety, guarantor, or of any person
signing in any other capacity which is a Forgery, or
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Page 2
INSURING AGREEMENTS (Continued)
(2) guaranteed in writing or witnessed any
signature upon any transfer, assignment, bill of sale, power of attorney.
Guarantee, or any items listed in (a) through (c) above;
(3) acquired, sold or delivered, or given value,
extended credit or assumed liability, on the faith of any item listed in
(a) and (b) above which is a Counterfeit. A mechanically reproduced
facsimile signature is treated the same as a handwritten signature.
COUNTERFEIT CURRENCY
(F) Loss resulting directly from the receipt by
the Insured in good faith, of any Counterfeit Money of the United States of
America, Canada or of any other country in which the Insured maintains a branch
office.
GENERAL AGREEMENTS
NOMINEES
A. Loss sustained by any nominee organized by the
Insured for the purpose of handling certain of its business transactions and
composed exclusively of its Employees shall, for all the purposes of this bond
and whether or not any partner of such nominee is implicated in such loss, be
deemed to be loss sustained by the Insured.
ADDITIONAL OFFICES OR EMPLOYEES
CONSOLIDATION, MERGER OR PURCHASE
OF ASSETS - NOTICE
B. If the Insured shall, while this bond is in
force, establish any additional offices, other than by consolidation or merger
with, or purchase or acquisition of assets or liabilities of, another
institution, such offices shall be automatically covered hereunder from the date
of such establishment without the requirement of notice to the Underwriter or
the payment of additional premium for the remainder of the premium period.
If the Insured shall, while this bond is in force,
consolidate or merge with, or purchase or acquire assets of liabilities of,
another institution, the Insured shall not have such coverage as is afforded
under this bond for loss which
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(a)
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has occurred
or will occur in offices or premises, or
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(b)
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has been
caused or will be caused by an employee or employees of such institution,
or
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(c)
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has arisen
or will arise out of the assets or liabilities acquired by the Insured as
a result of such consolidation, merger or purchase or acquisition of
assets or liabilities unless the Insured shall
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(i)
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give the
Underwriter written notice of the proposed consolidation, merger or
purchase or acquisition of assets or liabilities prior to the proposed
effective date of such action and
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(ii)
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obtain the
written consent of the Underwriter to extend the coverage provided by this
bond to such additional offices or premises, Employees and other
exposures, and
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(iii)
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upon
obtaining such consent, pay to the Underwriter an additional premium.
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CHANGE OF CONTROL - NOTICE
C. When the Insured learns of a change in control,
it shall give written notice to the Underwriter.
As used in this General Agreement, control means
the power to determine the management or policy of a controlling holding company
or the Insured by virtue of voting stock ownership. A change in ownership of
voting stock which results in direct or indirect ownership by a stockholder or
an affiliated group of stockholders of ten percent.
(10%) or more of such stock shall be presumed to result in a change
of control for the purpose of the required notice.
Failure to give the required notice shall result
in termination of coverage for any loss involving a transferee, to be effective
upon the date of the stock transfer.
REPRESENTATION OF INSURED
D. The Insured represents that the information
furnished in the application for this bond is complete, true and correct. Such
application constitutes part of this bond.
Any misrepresentation, omission, concealment or
incorrect statement of a material fact, in the application or otherwise, shall
be grounds for the rescission of this bond.
JOINT INSURED
E. If two or more Insureds are covered under this
bond, the first named Insured shall act for all Insureds. Payment by the
Underwriter to the first named Insured of loss sustained by any Insured shall
fully release the Underwriter on account of such loss. If the first named
Insured ceases to be covered under this bond, the Insured next named shall
thereafter be considered as the first named Insured. Knowledge possessed or
discovery made by any Insured shall constitute knowledge or discovery by all
Insureds for all purposes of this bond. The liability of the Underwriter for
loss or losses sustained by all Insureds shall not exceed the amount for which
the Underwriter would have been liable had all such loss of losses been
sustained by one Insured.
NOTICE OF LEGAL PROCEEDINGS
AGAINST INSURED - ELECTION TO DEFEND
F. The Insured shall notify the Underwriter at the
earliest practicable moment, not to exceed 30 days after notice thereof, of any
legal proceeding brought to determine the Insured's liability for any loss,
claim or damage, which, if established, would constitute a collectible loss
under this bond. Concurrently, the Insured shall furnish copies of all pleadings
and pertinent papers to the Underwriter.
The Underwriter, at its sole option, may elect to
conduct the defense of such legal proceeding, in whole or in part. The defense
by the Underwriter shall be in the Insured's name through attorneys selected by
the Underwriter. The Insured shall provide all reasonable information and
assistance required by the Underwriter for such defense.
If the Underwriter elects to defend the Insured,
in whole or in part, any judgment against the Insured on those counts or causes
of action which the Underwriter defended on behalf of the Insured or any
settlement in which the Underwriter participates and all attorneys' fees, costs
and expenses incurred by the Underwriter in the defense of the litigation shall
be a loss covered by this bond.
Page 3
GENERAL AGREEMENTS (Continued)
If the Insured does not give the notices required
in subsection (a) of Section 5 of this bond and in the first paragraph
of this General Agreement, or if the Underwriter elects not to defend any causes
of action, neither a judgment against the Insured, nor a settlement of any legal
proceeding by the Insured, shall determine the existence, extent or amount of
coverage under this bond for loss sustained by the Insured, and the Underwriter
shall not be liable for any attorneys' fees, costs and expenses incurred by the
Insured.
With respect to this General Agreement,
subsections (b) and (d) of Section 5 of this bond apply upon the
entry of such judgment or the occurrence of such settlement instead of upon
discovery of loss. In addition, the Insured must notify the Underwriter within
30 days after such judgment is entered against it or after the Insured settles
such legal proceeding, and, subject to subsection (e) of Section 5,
the Insured may not bring legal proceedings for the recovery of such loss after
the expiration of 24 months from the date of such final judgment or settlement.
CONDITIONS AND LIMITATIONS
DEFINITIONS
Section 1. As used in this bond:
(a) Acceptance means a draft which the drawee has,
by signature written thereon, 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:
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(1)
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represented
by an instrument issued in bearer or registered form;
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(2)
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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
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(3)
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either one
of a class or series or by its terms divisible into a class or series of
shares, participations, interests or obligations.
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(d) Counterfeit means an imitation of an actual
valid original which is intended to deceive and to be taken as the original.
(e) Employee means
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(1)
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a natural
person in the service of the Insured at any of the Insured's offices or
premises covered hereunder whom the Insured compensates directly by salary
or commissions and whom the Insured has the right to direct and control
while performing services for the Insured;
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(2)
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an attorney
retained by the Insured and an employee of such attorney while either is
performing legal services for the Insured;
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(3)
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a person
provided by an employment contractor to perform employee duties for the
Insured under the Insured's supervision at any of the Insured's offices or
premises covered hereunder; and a guest student pursuing studies or duties
in any of said offices or premises;
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(4)
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an employee
of an institution merged or consolidated with the Insured prior to the
effective date of this bond;
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(5)
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each natural
person, partnership or corporation authorized by the Insured to perform
services as data processor of checks or other accounting records of the
Insured (not including preparation or modification of computer software or
programs), herein called Processor. (Each such Processor, and the
partners, officers and employees of such Processor shall, collectively, be
deemed to be one Employee for all the purposes of this bond, excepting,
however, the second paragraph of Section 12. A Federal Reserve Bank
or clearing house shall not be construed to be a processor.) and
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(6)
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a Partner of
the Insured, unless not covered as stated in Item 4 of the
Declarations.
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(f) Evidence of Debt means an instrument,
including a Negotiable Instrument, executed by a customer of the Insured and
held by the Insured which in the regular course of business is treated as
evidencing the customer's debt to the Insured.
(g) Financial Interest in the Insured of the
Insured's general partner(s), or limited partner(s), committing dishonest or
fraudulent acts covered by this bond or concerned or implicated there in means:
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(1)
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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:
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(a)
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the "net
worth" of the Insured, 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 Insured,
which shall include capital accounts of partners, investment and trading
accounts of the Insured, participations of the Insured in joint accounts,
and accounts of partners which are covered by agreements providing for the
inclusion of equities therein 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
Insured; and
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(b)
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the value of
all other Money, securities and property belonging to such general
partner(s), or in which such general partner(s) have a pecuniary interest,
held by or in the custody of and legally available to the Insured as
set-off against loss covered by this bond;
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Page 4
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 (g)(1)(b) preceding, plus the
amount of coverage afforded by this bond on account of such loss, is not
sufficient to enable the Insured to meet its obligations, including its
obligations to its partners other than to such general partner(s), then the
Financial Interest in the Insured, as above defined, of such general partner(s)
shall be reduced in an amount necessary, or eliminated if need be, in order to
enable the Insured upon payment of loss under this bond to meet such
obligations, to the extent that such payment will enable the Insured to meet
such obligations, without any benefit accruing to such general partner(s) from
such payment; and
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(2)
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as respects
limited partners the value of such limited partner's investment in the
Insured.
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(h) Forgery means the signing of the name of
another person or organization with intent to deceive; it does not mean a
signature which consists in whole or in part of one's own name signed with or
without authority, in any capacity, for any purpose.
(i) Guarantee means a written undertaking
obligating the signer to pay the debt of another to the Insured or its assignee
or to a financial institution from which the Insured has purchased participation
in the debt, if the debt is not paid in accordance with its terms.
(j) Instruction means a written order to the
issuer of an Uncertificated Security requesting that the transfer, pledge, or
release from pledge of the Uncertificated Security specified be registered.
(k) 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 upon
compliance with the conditions specified in the Letter of Credit.
(l) Money means a medium of exchange in current
use authorized or adopted by a domestic or foreign government as a part of its
currency.
(m) Negotiable Instrument means any writing
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(1)
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signed by
the maker or drawer; and
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(2)
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containing
any 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
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(3)
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is payable
on demand or at a definite time; and
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(4)
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is payable
to order or bearer.
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(n) Partner means a natural person who
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(1)
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is a general
partner of the Insured, or
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(2)
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is a limited
partner and an Employee (as defined in Section 1 (e) (1) of
the bond) of the Insured.
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(o) Property means Money, Certificated Securities,
Uncertificated Securities of any Federal Reserve Bank of the United States,
Negotiable Instruments, Certificates of Deposit, documents of title,
Acceptances, Evidences of Debt, security agreements, Withdrawal Orders,
certificates of origin or title, Letters of Credit, insurance policies,
abstracts of title, deeds and mortgages on real estate, revenue and other
stamps, tokens, unsold state lottery tickets, books of account and other records
whether recorded in writing or electronically, gems, jewelry, precious metals of
all kinds and in any form, and tangible items of personal property which are not
hereinbefore enumerated.
(p) Statement of Uncertificated Security means a
written statement of the issuer of an Uncertificated Security containing:
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(1)
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a
description of the Issue of which the Uncertificated Security is a part;
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(2)
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the number
of shares or units:
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(a)
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transferred
to the registered owner;
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(b)
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pledged by
the registered owner to the registered pledgee;
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(c)
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released
from pledge by the registered pledgee;
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(d)
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registered
in the name of the registered owner on the date of the statement; or
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(e)
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subject to
pledge on the date of the statement;
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(3)
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the name and
address of the registered owner and registered pledgee;
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(4)
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a notation
of any liens and restrictions of the issuer and any adverse claims to
which the Uncertificated Security is or may be subject or a statement that
there are none of those liens, restrictions or adverse claims; and
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(a)
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the transfer
of the shares or units to the new registered owner of the shares or units
was registered;
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(b)
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the pledge
of the registered pledgee was registered, or
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(c)
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of the
statement, if it is a periodic or annual statement.
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(q) Transportation Company means any organization
which provides its own or leased vehicles for transportation or which provides
freight forwarding or air express services.
(r) 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:
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(1)
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not
represented by an instrument and the transfer of which is registered upon
books maintained for that purpose by or on behalf of the issuer;
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(2)
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of a type
commonly dealt in on securities exchanges or markets; and
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(3)
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either one
of a class or series or by its terms divisible into a class or series of
shares, participations, interests or obligations.
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(s) Withdrawal Order means a non-negotiable
instrument, other than an Instruction, signed by a customer of the Insured
authorizing the Insured to debit the customer's account in the amount of funds
stated therein.
Page 5
EXCLUSIONS
Section 2. This bond does not cover:
(a) loss resulting directly or indirectly from
forgery or alteration, except when covered under Insuring Agreements (A),
(D) or (E);
(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 (C), 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 resulting directly or indirectly 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 act or acts of any
person who is a member of the Board of Directors of the Insured or a member any
equivalent body by whatsoever name known unless such person is also an Employee
or an elected official 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 directly or indirectly from the
complete or partial nonpayment of, or default upon, any loan or transaction
involving the Insured as a lender or borrower, or extension of credit, including
the purchase, discounting or other acquisition of false or genuine accounts,
invoices, notes, agreements or Evidences of Debt, whether such loan, transaction
or extension was procured in good faith or through trick, artifice, fraud or
false pretenses; except when covered under Insuring Agreements (A), (D) or
(E);
(f) loss resulting from any violation by the
Insured or by any Employee
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(1)
|
of law
regulating (i) the issuance, purchase or sale of securities,
(ii) securities transactions upon security exchanges or over the
counter market, (iii) investment companies, or (iv) investment
advisers, or
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|
(2)
|
of any rule
or regulation made pursuant to any such law, unless it is established by
the Insured that the act or acts which caused the said loss involved
fraudulent or dishonest conduct which would have caused a loss to the
Insured in a similar amount in the absence of such laws, rule or
regulations;
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(g) loss resulting directly or indirectly from the
failure of a financial or depository, institution, or its receiver or
liquidator, to pay or deliver, on demand of the Insured, funds or Property of
the Insured held by it in any capacity, except when covered under Insuring
Agreements (A) or (B)(1)(a);
(h) loss caused by an Employee, except when
covered under Insuring Agreement (A) or when covered under Insuring
Agreement (B) or (C) and resulting directly from misplacement,
mysterious unexplainable disappearance or destruction of or damage to Property;
(i) loss resulting directly or indirectly from
transactions in a customer's account, whether authorized or unauthorized, except
the unlawful withdrawal and conversion of Money, securities or precious metals,
directly from a customer's account by an Employee provided such unlawful
withdrawal and conversion is covered under Insuring Agreement (A);
(j) damages resulting from any civil, criminal or
other legal proceeding in which the Insured is alleged to have engaged in
racketeering activity except when the Insured establishes that the act or acts
giving rise to such damages were committed by an Employee under circumstances
which result directly in a loss to the Insured covered by Insuring Agreement
(A). For the purposes of this exclusion, "racketeering activity" is defined in
18 United States Code 1961 et seq., as amended;
(k) loss resulting directly or indirectly from the
use or purported use of credit, debit, charge, access, convenience,
identification, cash management or other cards
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(1)
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in obtaining
credit or funds, or
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(2)
|
in gaining
access to automated mechanical devices which, on behalf of the Insured,
disburse Money, accept deposits, cash checks, drafts or similar written
instruments or make credit card loans, or
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(3)
|
in gaining
access to point of sale terminals, customer-bank communication terminals,
or similar electronic terminals of electronic funds transfer systems,
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whether such cards were issued, or purport to have been issued, by the
Insured or by anyone other than the Insured, except when covered under Insuring
Agreement (A);
(l) loss involving automated mechanical devices
which, on behalf of the Insured, disburse Money, accept deposits, cash checks,
drafts or similar written instruments or make credit card loans, except when
covered under Insuring Agreement (A);
(m) loss through the surrender of Property away
from an office of the Insured as a result of a threat
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(1)
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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
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(2)
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to do damage
to the premises or property of the Insured, except when covered under
Insuring Agreement (A);
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(n) loss resulting directly or indirectly from
payments made or withdrawals from a depositor's or customer's account involving
erroneous credits to such accounting unless such payments or withdrawals are
physically received by such depositor or customer or representative of such
depositor or customer who is within the office of the Insured at the time of
such payment or withdrawal, or except when covered under Insuring Agreement (A);
(o) loss involving items of deposit which are not
finally paid for any reason, including but not limited to Forgery or any other
fraud, except when covered under Insuring Agreement (A);
(p) loss resulting directly or indirectly from
counterfeiting, except when covered under Insuring Agreements (A), (E) or
(F);
Page 6
(q) loss of any tangible item of personal property
which is not specifically enumerated in the paragraph defining Property if such
property is specifically insured by other insurance of any kind and in any
amount obtained by the Insured, and in any event, loss of such property
occurring more than 60 days after the Insured takes possession of such property,
except when covered under Insuring Agreements (A) or (B)(2);
(r) loss of Property while
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(2)
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in the
custody of any Transportation Company, unless covered under Insuring
Agreement (C),
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except when covered under Insuring Agreement (A);
(s) potential income, including but not limited to
interest and dividends, not realized by the Insured or by any customer of the
Insured;
(t) damages of any type for which the Insured is
legally liable, except compensatory damages, but not multiples thereof, arising
directly from a loss covered under this bond;
(u) all fees, costs and expenses incurred by the
Insured
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(1)
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in
establishing the existence of or amount of loss covered under this bond,
or
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(2)
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as a party
to any legal proceeding whether or not such legal proceeding exposes the
Insured to loss covered by this bond;
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(v) indirect or consequential loss of any nature;
(w) loss involving any Uncertificated Security
except an Uncertificated Security of any Federal Reserve Bank of the United
States or when covered under Insuring Agreement (A);
(x) loss resulting directly or indirectly from any
dishonest or fraudulent act or acts committed by any non-Employee who is a
securities, commodities, money, mortgage, real estate, loan, insurance, property
management, investment banking broker, agent or other representative of the same
general character;
(y) loss caused directly or indirectly by a
Partner of the Insured unless the amount of such loss exceeds the Financial
Interest in the Insured of such Partner and the Deductible Amount applicable to
this bond, and then for the excess only;
(z) loss resulting directly or indirectly from any
actual or alleged representation, advice, warranty or guarantee as to the
performance of any investments;
(aa) loss due to liability imposed upon the
Insured as a result of the unlawful disclosure of non-public material
information by the Insured or any Employee, or as a result of any Employee
acting upon such information, whether authorized or unauthorized.
DISCOVERY
Section 3. This bond applies to loss
discovered by the Insured during the Bond Period. Discovery occurs when the
Insured first becomes aware of facts which would cause a reasonable person to
assume that a loss of a type covered by this bond has been or will be incurred,
regardless of when the act or acts causing or contributing to such loss
occurred, even though the exact amount or details of loss may not then be known.
Discovery also occurs when the Insured receives
notice of an actual or potential claim in which it is alleged that the Insured
is liable to a third party under circumstance which if true, would constitute a
loss under this bond.
LIMIT OF LIABILITY
Section 4.
Aggregate Limit of Liability
The Underwriter's total liability for all losses
discovered during the Bond Period shown in Item 2 of the Declarations shall
not exceed the Aggregate Limit of Liability shown in Item 3 of the
Declarations. The Aggregate Limit of Liability shall be reduced by the amount of
any payment made under the terms of this bond.
Upon exhaustion of the Aggregate Limit of
Liability by such payments:
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(a)
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The
Underwriter shall have no further liability for loss or losses regardless
of when discovered and whether or not previously reported to the
Underwriter, and
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|
(b)
|
The
Underwriter shall have no obligation under General Agreement F to continue
the defense of the Insured, and upon notice by the Underwriter to the
Insured that the Aggregate Limit of Liability has been exhausted, the
Insured shall assume all responsibility for its defense at its own cost.
|
The Aggregate Limit of Liability shall not be
increased or reinstated by any recovery made and applied in accordance with
subsections (a), (b) and (c) of Section 7. In the event that a
loss of Property is settled by the Underwriter through the use of a lost
instrument bond, such loss shall not reduce the Aggregate Limit of Liability.
Single Loss Limit of Liability
Subject to the Aggregate Limit of Liability, the
Underwriter's liability for each Single Loss shall not exceed the applicable
Single Loss Limit of Liability shown in Item 4 of the Declarations. If a
Single Loss is covered under more than one Insuring Agreement or Coverage, the
maximum payable shall not exceed the largest applicable Single Loss Limit of
Liability.
Single Loss Defined
Single Loss means all covered loss, including
court costs and attorneys' fees incurred by the Underwriter under General
Agreement F, resulting from
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(a)
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any one act
or series of related acts of burglary, robbery or attempt thereat, in
which no Employee is implicated, or
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|
(b)
|
any one act
or series of related unintentional or negligent acts or omissions on the
part of any person (whether an Employee or not) resulting in damage to or
destruction or misplacement of Property, or
|
|
(c)
|
all acts or
omissions other than those specified in (a) and (b) preceding,
caused by any person (whether an Employee or not) or in which such person
is implicated, or
|
|
(d)
|
any on
casualty or event not specified in (a),(b) or (c) preceding.
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Page 7
NOTICE/PROOF-LEGAL
PROCEEDINGS AGAINST UNDERWRITER
Section 5.
(a) At the earliest practicable moment, not to
exceed 30 days, after discovery of loss, the Insured shall give the Underwriter
notice thereof.
(b) Within 6 months after such discovery, the
Insured shall furnish to the Underwriter proof of loss, duly sworn to, with full
particulars.
(c) Lost Certificated Securities listed in a proof
of loss shall be identified by certificate or bond numbers if such securities
were issued therewith.
(d) Legal proceedings for the recovery of any loss
hereunder shall not be brought prior to the expiration of 60 days after the
original proof of loss is filed with the Underwriter or after the expiration of
24 months from the discovery of such loss.
(e) 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 equal the minimum period of limitation provided
by such law.
(f) This bond affords coverage only in favor of
the Insured. No suit, action or legal proceedings shall be brought hereunder by
any one other than the named Insured.
VALUATION
Section 6. Any loss of Money, or loss payable
in Money, shall be paid, at the option of the Insured, in the Money of the
country in which the loss was sustained or in the United States of America
dollar equivalent thereof determined at the rate of exchange at the time of
payment of such loss.
Securities
The Underwriter shall settle in kind its liability
under this bond on account of a loss of any securities or, at the option of the
Insured, shall pay to the Insured the cost of replacing such securities,
determined by the market value thereof at the time of such settlement. However,
if prior to such settlement the Insured shall be compelled by the demands of a
third party or by market rules to purchase equivalent securities, and gives
written notification of this to the Underwriter, the cost incurred by the
Insured shall be taken as the value of those securities. In case of a loss of
subscription, conversion or redemption privileges through the misplacement or
loss of securities, the amount of such loss shall be the value of such
privileges immediately preceding the expiration thereof. If such securities
cannot be replaced or have no quoted market value, or if such privileges have no
quoted market value, their value shall be determined by agreement or
arbitration.
If the applicable coverage of this bond is subject
to a Deductible Amount and/or is not sufficient in amount to indemnify the
Insured in full for the loss of securities for which claim is made hereunder,
the liability of the Underwriter under this bond is limited to the payment for,
or the duplication of, so much of such securities as has a value equal to the
amount of such applicable coverage.
Books of Account and Other Records
In case of loss of, or damage to, any books of
account or other records used by the Insured in its business, the Underwriter
shall be liable under this bond only of such books or records are actually
reproduced and then for not more than the cost of the 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.
Property other than Money, Securities or Records
In case of loss of, or damage to, any Property
other than Money, securities, books of account or other records, or damage
covered under Insuring Agreement (B)(2), the Underwriter shall not be liable for
more than the actual cash value of such Property, or of items covered under
Insuring Agreement (B)(2). The Underwriter may, at its election, pay the actual
cash value of, replace or repair such property. Disagreement between the
Underwriter and the Insured as to the cash value or as to the adequacy of repair
or replacement shall be resolved by arbitration.
Set-Off
Any loss covered under this bond shall be reduced
by a set-off consisting of any amount owed to the Employee causing the loss if
such loss is covered under Insuring Agreement (A).
ASSIGNMENT-SUBROGATION-RECOVERY-
COOPERATION
Section 7.
(a) In the event of payment under this bond, the
Insured shall deliver, if so requested by the Underwriter, an assignment of such
of the Insured's rights, title and interest and causes of action as it has
against any person or entity to the extent of the loss payment.
(b) In the event of payment under this bond, the
Underwriter shall be subrogated to all of the Insured's rights of recovery therefor against any person or entity to the extent of such payment.
(c) Recoveries, whether effected by the
Underwriter or by the Insured, shall be applied net of the expense of such
recovery first to the satisfaction of the Insured's loss which would otherwise
have been paid but for the fact that it is in excess of either the Single or
Aggregate Limit of Liability, secondly, to the Underwriter as reimbursement of
amounts paid in settlement of the Insured's claim, and thirdly, to the Insured
in satisfaction of any Deductible Amount. Recovery on account of loss of
securities as set forth in the second paragraph of Section 6 or recovery
from reinsurance and/or indemnity of the Underwriter shall not be deemed a
recovery as used herein.
(d) Upon the Underwriter's request and at
reasonable times and places designated by the Underwriter the Insured shall
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(1)
|
submit to
examination by the Underwriter and subscribe to the same under oath; and
|
|
(2)
|
produce for
the Underwriter's examination all pertinent records; and
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Page 8
|
(3)
|
cooperate
with the Underwriter in all matters pertaining to the loss.
|
(e) The Insured shall execute all papers and
render assistance to secure to the Underwriter the rights and causes of action
provided for herein. The Insured shall do nothing after discovery of loss to
prejudice such rights or causes of action.
LIMIT OF LIABILITY UNDER THIS BOND AND PRIOR INSURANCE
Section 8. With respect to any loss set forth
in subsection (c) of Section 4 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 canceled or allowed to expire and in which the period for
discovery has not expired at the time any such loss thereunder is discovered,
the total liability of the Underwriter under this bond and under such 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.
If the coverage of this bond supersedes in whole
or in part the coverage of any other bond or policy of insurance issued by an
Insurer other than the Underwriter and terminated, canceled or allowed to
expire, the Underwriter, with respect to any loss sustained prior to such
termination, cancellation or expiration and discovered within the period
permitted under such other bond or policy for the discovery of loss thereunder,
shall be liable under this bond only for that part of such loss covered by this
bond as is in excess of the amount recoverable or recovered on account of such
loss under such other bond or policy, anything to the contrary in such other
bond or policy notwithstanding.
OTHER INSURANCE OR INDEMNITY
Section 9. Coverage afforded hereunder shall
apply only as excess over any valid and collectible insurance or indemnity
obtained by the Insured, or by one other than the Insured on Property subject to
exclusion (p) or by a Transportation Company, or by another entity on whose
premises the loss occurred or which employed the person causing the loss or the
messenger conveying the Property involved.
OWNERSHIP
Section 10. This bond shall apply to loss of
Property (1) owned by the Insured, (2) held by the Insured in any
capacity, or (3) for which the Insured is legally liable. This bond shall
be for the sole use and benefit of the Insured named in the Declarations.
DEDUCTIBLE AMOUNT
Section 11. The Underwriter shall be liable
hereunder only for the amount by which any single loss, as defined in
Section 4, exceeds the Single Loss Deductible amount for the Insuring
Agreement or coverage applicable to such loss, subject to the Aggregate Limit of
Liability and the applicable Single Loss Limit of Liability.
The Insured shall, in the time and in the manner
prescribed in this bond, give the Underwriter notice of any loss of the kind
covered by the terms of this bond, whether or not the Underwriter is liable
therefor, and upon the request of the Underwriter shall file with it a brief
statement giving the particulars concerning such loss.
TERMINATION OR CANCELATION
Section 12. This bond terminates as an
entirety upon occurrence of any of the following: - (a) 60 days after the
receipt by the Insured of a written notice from the Underwriter of its desire to
cancel this bond, or (b) immediately upon the receipt by the Underwriter of
a written notice from the Insured of its desire to cancel this bond, or
(c) immediately upon the taking over of the Insured by a receiver or other
liquidator or by State or Federal officials, or (d) immediately upon the
taking over of the Insured by another institution, or (e) immediately upon
exhaustion of the Aggregate Limit of Liability, or (f) immediately upon
expiration of the Bond Period as set forth in Item 2 of the Declarations.
This bond terminates as to any Employee or any
partner officer or employee of any Processor - (a) as soon as an Insured, or any
director or officer not in collusion with such person, learns of any dishonest
or fraudulent act committed by such person at any time, whether in the
employment of the Insured or otherwise, whether or not of the type covered under
Insuring Agreement (A), against the Insured or any other person or entity,
without prejudice to the loss of any Property then in transit in the custody of
such person, or (b) 15 days after the receipt by the Insured of a written
notice from the Underwriter of its desire to cancel this bond as to such person.
Termination of the bond as to any Insured
terminates liability for any loss sustained by such Insured which is discovered
after the effective date of such termination.
In witness whereof, the Underwriter has caused
this bond to be executed on the Declarations page.
Page 9
RIDER
AMEND DEFINITION OF EMPLOYEES FOR FUND MANAGERS
To be attached to and form part of Financial Institution Bond, Standard Form
No. 14, No. 16 FI 0228522 - 07
in favor of Equus Total Return, Inc.
It is agreed that:
1.
|
CONDITIONS AND LIMITATIONS,
SECTION 1.DEFINTIIONS, (e) employee is amended by adding the following:
|
Employee also means employees of Moore Clayton Capital Advisors, Inc. or
Equus Capital Administration Company, Inc. while providing services to the Named
Insured.
2.
|
This rider shall become
effective as of 12:01 a.m. on 1/29/2007.
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|
|
|
|
|
David Castillo, Attorney in
Fact
|
|
|
AMEND DEFINITION OF EMPLOYEE RIDER
For use with Financial Institution Bond
Standard Form14 .
RIDER:
AMEND DEDUCTIBLE FOR REGULATED INVESTMENT COMPANY
To be attached to and form part of Financial
Institution Bond, Standard Form No. 14, No.61 FI 0228522 - 07 in favor of Equus
Total Return, Inc.
It is agreed that:
1.
|
Section 11., DEDUCTIBLE
AMOUNT, of the
CONDITIONS AND LIMITATIONS
is amended by adding the
following:
|
|
|
|
There shall be no deductible
applicable to any loss under INSURING AGREEMENT (A), Fidelity, sustained by
any Investment Company.
|
|
|
2.
|
Section 1., DEFINITIONS, of
the
CONDITIONS AND LIMITATIONS
is amended by adding the following:
|
|
|
|
(t) Investment Company means
an investment company regulated under the Investment Company Act of 1940 and
as listed under the Named Insured on the Declarations.
|
|
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3.
|
Except where herein
modified, the Bond to which this rider attaches remains subject to all of
its Conditions, Exclusions and Limitations.
|
|
|
4.
|
This rider shall become
effective as of 12:01 a.m. on 01/29/2007.
|
|
|
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David Castillo, Attorney in Fact
|
FB 00 H052 00 1207
|
(c)The Hartford
|
Page 1 of 1
|
RIDER:
SEC NOTIFICATION RIDER
To be attached to and form part of Financial
Institution Bond, Standard Form No. 14, No.61 FI 0228522 - 07
in favor of Equus Total Return, Inc.
It is agreed that:
1. The Underwriter will mark its records to indicate
that the Securities And Exchange Commission is to be notified sixty days prior
to the cancellation or substantial modification of the attached bond, whether at
the request of the Insured or the Underwriter, and will use its best efforts to
so notify said Commission but failure to so notify said Commission shall not
impair or delay the effectiveness of any such cancellation or modification.
2. This rider shall become effective as of 12:01 a.m.
on 01/29/2007.
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|
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David Castillo, Attorney in Fact
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FB 00 H053 00
1207
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Page 1 of 1
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(c)The Hartford, 2007, contains material used with permission
of Surety and Fidelity
Association of America
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