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Exhibit 10.2
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PLEDGE AGREEMENT
dated as of December 16, 1997
between
CENTRAL RESERVE LIFE CORPORATION
and
STRATEGIC ACQUISITION PARTNERS, LLC
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PLEDGE AGREEMENT
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THIS PLEDGE AGREEMENT (this "Agreement"), dated as of December
16, 1997, is made between CENTRAL RESERVE LIFE CORPORATION, an Ohio corporation
(herein, called the "Pledgor"), and STRATEGIC ACQUISITION PARTNERS, LLC, a
Nevada limited liability company (herein, called the "Lender"). This is the
Pledge Agreement referred to in that certain Credit Agreement (as from time to
time, in whole or in part, amended, modified, supplemented, restated,
refinanced, refunded or renewed, the "Credit Agreement"), dated as of December
16, 1997 between Pledgor and Lender.
WHEREAS, as security for the Loan and as a condition precedent
to the making thereof, Lender has required that the Pledgor execute and deliver
this Agreement.
NOW, THEREFORE, in consideration of any Loan or other
financial accommodation heretofore or hereafter at any time made or granted by
Lender to the Pledgor and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the Pledgor agrees with Lender
that:
SECTION 1 DEFINITIONS. Capitalized terms used herein, unless
otherwise specified, shall have the meanings assigned thereto in the Credit
Agreement; PROVIDED that such definitions shall survive any termination of the
Credit Agreement. In addition, when used herein the following terms shall have
the following meanings:
"Collateral" see SECTION 2.
"Permitted Actions" see SECTION 5(B).
"Pledged Shares" see SECTION 2.
"Uniform Commercial Code" shall mean the Uniform Commercial
Code as in effect from time to time in the State of Illinois.
SECTION 2 PLEDGE. To secure the prompt and complete payment
and performance of the Liabilities, the Pledgor hereby pledges, hypothecates,
assigns, transfers, sets over and delivers unto Lender and hereby grants to
Lender a continuing security interest in the following (herein collectively
called the "Collateral"):
(a) the shares of stock of CRL described in ATTACHMENT 1
hereto (herein called the "Pledged Shares") and the certificates
representing or evidencing the
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Pledged Shares, and all cash, securities, interests, dividends, rights,
notes, instruments and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for
any or all of such Pledged Shares;
(b) all additional shares of stock of CRL from time to time
acquired by the Pledgor in any manner (which additional shares of stock
shall constitute a part of, and be, "Pledged Shares") and the
certificates representing or evidencing such additional shares, and all
cash, securities, interest, dividends, rights, notes, instruments and
other property at any time and from time to time received, receivable
or otherwise distributed in respect of or in exchange for any and all
of such additional shares;
(c) all other property hereafter delivered to Lender in
substitution for or in addition to any of the foregoing, all
certificates and instruments representing or evidencing such other
property and all cash, securities, interest, dividends, rights and
other property at any time and from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all
thereof;
(d) the surplus note in respect of indebtedness to the Pledgor
issued by CRL and listed in ATTACHMENT 2 hereto (herein called the
"Pledged Surplus Note") and all cash, securities, interests, rights,
notes, instruments and other property at any time and from time to time
received, receivable or otherwise distributed in respect of or in
exchange for any or all of the Pledged Surplus Note;
(e) all additional surplus notes acquired by the Pledgor in
any manner and issued by CRL (which additional surplus debentures shall
constitute a part of, and each being a, "Pledged Surplus Note"), and
all cash, securities, interests, rights, notes, instruments and other
property at any time and from time to time received, receivable or
otherwise distributed in respect of or in exchange for any and all of
the additional surplus notes; and
(f) all proceeds, rents, issues, profits and returns of and
from all of the foregoing;
TO HAVE AND TO HOLD the Collateral, together with all rights, titles, interests,
privileges and preferences appertaining or
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incidental thereto, unto Lender, its successors and assigns, forever; SUBJECT,
HOWEVER, to the terms, covenants and conditions hereafter set forth.
The Pledgor agrees to deliver to Lender, promptly upon receipt
and in the case of the Pledged Shares in due form for transfer (i.e., endorsed
in blank accompanied by stock or bond powers executed in blank or registered on
the books of CRL) and, subject to the provisions of SECTION 6 hereof, any
Collateral which may at any time or from time to time be in or come into
possession or control of the Pledgor; and prior to the delivery thereof to
Lender, such Collateral shall be held by the Pledgor separate and apart from its
other property and in express trust for Lender.
SECTION 3 REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) The Pledgor represents and warrants to Lender that: (i)
the Pledged Shares are duly authorized and validly issued and are fully paid and
non-assessable; (ii) except for liens, claims and rights of third parties
arising solely through acts of Lender, Lender has and, assuming Lender or its
agent retains continuous possession of the Collateral, will continue to have at
all times as security for the Liabilities a valid, first priority perfected
security interest in the Collateral and the proceeds thereof free of all Liens
(except for Permitted Encumbrances), claims and rights of third parties
whatsoever; (iii) to the extent any Collateral is evidenced by certificates, the
Pledgor has delivered to Lender for pledge under this Agreement on the date
hereof the certificates representing all the Collateral which it owns; and (iv)
the Pledged Shares represent all of the issued and outstanding capital stock of
CRL. The Pledgor agrees to endorse and deliver to Lender for pledge hereunder,
promptly upon its obtaining thereof, any additional Collateral and to hold such
Collateral, pending such delivery, in trust for Lender, separate and distinct
from any other property of the Pledgor. As of the date of any such delivery of
additional shares, surplus notes, certificates or instruments to Lender, the
Pledgor represents and warrants that (1) it will own such shares, surplus notes,
certificates and instruments free and clear of any rights of any other Person
(other than the rights created in Lender hereunder), (2) it will have good and
marketable title to said shares, surplus notes, certificates and instruments and
have the right to pledge such shares, surplus notes, certificates or instruments
to Lender pursuant to this Agreement and (3) it will have pledged to Lender, as
at such date, all of the capital stock and surplus notes of CRL. The Pledgor
shall have represented and warranted by delivery of any additional shares,
surplus notes, certificates or instruments, that at the time of such delivery
Lender has a valid, first priority perfected security interest in said shares,
surplus notes, certificates or instruments and the proceeds thereof free of all
liens, claims and rights of
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third parties whatsoever. All documentary, stamp or other taxes or fees owing in
connection with the issuance, transfer and/or pledge of the Pledged Shares,
Pledged Surplus Note and other certificates or instruments have been paid and
will hereafter be paid by the Pledgor as such become due and payable.
(b) The Pledgor further represents and warrants to Lender that
it is the lawful owner of the Collateral, free of all Liens, other than the Lien
granted hereunder and Permitted Encumbrances and security interest hereunder,
with full right to deliver, pledge, assign and transfer such Collateral to
Lender as Collateral hereunder. The pledge of the Collateral effected by this
Agreement is effective to vest in Lender the rights of Lender in the Collateral
set forth herein.
(c) The Pledged Surplus Note constitutes all or will
constitute all of the surplus notes issued by CRL and held by the Pledgor which
are required to be pledged hereunder by the terms of the Credit Agreement.
(d) The Pledgor additionally represents and warrants to Lender
that (i) each of the Pledgor and its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation, (ii) the execution and delivery of this Agreement and the
performance by the Pledgor of its obligations hereunder are within its corporate
powers, have been duly authorized by all necessary corporate action (including,
without limitation, shareholder approval if required), (iii) each of the Pledgor
and its Subsidiaries has received all governmental consents and approvals (if
any shall be required) necessary for such execution, delivery and performance
(except governmental consents required by any Applicable Insurance Code to
foreclose on the Pledged Shares or Pledged Surplus Note), and such execution,
delivery and performance do not and will not contravene or conflict with, result
in any breach of, or constitute a default under, any material agreement or
instrument binding on it or result in the creation or imposition of or the
obligation to create or impose any Lien (except for Permitted Encumbrances) and
(iv) this Agreement is the legal, valid and binding obligation of the Pledgor,
enforceable against the Pledgor in accordance with its terms, except to the
extent such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer or other similar laws affecting
the enforcement of creditors' rights generally and by the effect of general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity (including, without limitation, good faith, materiality and
reasonableness) or at law).
(e) The Pledgor additionally covenants and agrees with Lender
that, so long as any of the Liabilities remain outstanding,
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the Pledgor will, unless Lender shall otherwise consent in writing:
(i) at the Pledgor's sole expense, promptly deliver to Lender,
from time to time upon request of Lender, such stock powers and other
documents, satisfactory in form and substance to Lender, with respect
to the Collateral as Lender may reasonably request, to preserve and
protect, and to enable Lender to enforce, its rights and remedies
hereunder;
(ii) except as otherwise may be permitted by the Credit
Agreement, not sell, assign, exchange, pledge or otherwise dispose or
transfer any of its rights to any of the Collateral;
(iii) except as otherwise may be permitted by the Credit
Agreement, not create or suffer to exist any Lien in or with respect to
any of the Collateral except for the pledge hereunder and the Lien and
security interest created hereby;
(iv) except as otherwise may be permitted by the Credit
Agreement, not make or consent to any amendment or other modification
or waiver with respect to any of the Collateral, or enter into any
agreement or permit to exist any restriction with respect to any of the
Collateral other than pursuant hereto; and
(v) except as otherwise may be permitted by the Credit
Agreement, not take or fail to take any action which would in any
manner impair the enforceability of Lender's lien on and security
interest in any of the Collateral.
(f) The information contained in ATTACHMENTS 1 and 2 is true
and accurate in all respects.
SECTION 4 CARE OF COLLATERAL. Lender shall exercise reasonable
care in the custody and preservation of the Collateral. In addition, Lender
shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral if it takes such action for that purpose as the
Pledgor requests in writing, but failure of Lender to comply with any such
request shall not of itself be deemed a failure to exercise reasonable care, and
no failure of Lender to preserve or protect any rights with respect to the
Collateral against prior or other parties, or to do any act with respect to
preservation of the Collateral not so requested by the Pledgor, shall be deemed
a failure to exercise reasonable care in the custody or preservation of the
Collateral.
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SECTION 5 CERTAIN RIGHTS REGARDING COLLATERAL AND LIABILITIES.
(a) Subject to SECTIONS 5(c) and 6 hereof, Lender may, from
time to time, after the occurrence and during the continuance of a Default
pursuant to SECTION 10.1(f) of the Credit Agreement or an Event of Default,
without notice to the Pledgor, (i) transfer all or any part of the Collateral
into the name of Lender or its nominee or sub-agent, with or without disclosing
that such Collateral is subject to the Lien and security interest hereunder,
(ii) notify any Person obligated on any of the Collateral to make payment to
Lender of any amounts due or to become due thereunder, and (iii) enforce
collection of any of the Collateral by suit or otherwise.
(b) If at any time Lender takes any or all of the Permitted
Actions (as hereinafter defined) whether such actions are taken before or after
any of the Liabilities shall be due and payable and without notice to the
Pledgor, such actions shall not affect the enforceability of this Agreement.
Lender shall have taken a "Permitted Action" if it shall (i) retain or obtain a
Lien upon or a security interest in, any property to secure payment and
performance of any of the Liabilities or any obligation hereunder, (ii) retain,
obtain or release the primary or secondary obligation of any Person, in addition
to the Borrower with respect to one or more of the Liabilities, (iii) create,
extend or renew for any periods (whether or not longer than the original period)
or alter or exchange any of the Liabilities, or release or compromise any
obligation of any nature of any Person with respect to any of the Liabilities
hereunder, (iv) release or fail to perfect its Lien upon or security interest
in, or impair, surrender, release or permit any substitution or exchange for,
all or any part of any property securing any of the Liabilities or any
obligation hereunder, or create, extend or renew for one or more periods
(whether or not longer than the original period) or release, compromise, alter
or exchange any obligations of any nature of any Person with respect to any such
property or (v) resort to the Collateral for payment of any of the Liabilities
whether or not Lender (1) shall have resorted to any other property securing any
of the Liabilities or any obligation hereunder or (2) shall have proceeded
against any Person primarily or secondarily obligated with respect to any of the
Liabilities (all of the actions referred to in preceding CLAUSES (1) and (2)
being hereby expressly waived by the Pledgor).
(c) Lender shall have no right to vote the Pledged Shares or
other Collateral or give consents, waivers or ratifications in respect thereof
prior to the occurrence and during the continuance of a Default pursuant to
SECTION 10.1(f) of the Credit Agreement or an Event of Default. After the
occurrence and
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during the continuance of a Default pursuant to SECTION 10.1(f) of the Credit
Agreement or an Event of Default, the Pledgor shall have the right to vote any
and all of the Pledged Shares and other Collateral and give consents, waivers
and ratifications in respect thereof unless and until it receives notice from
Lender that such right has been terminated. The Pledgor agrees to deliver
(properly endorsed when required) to Lender, after a Default pursuant to SECTION
10.1(f) of the Credit Agreement or an Event of Default shall have occurred and
shall be continuing, promptly upon request of Lender, such proxies and other
documents as may be necessary for Lender to exercise the voting power with
respect to the Pledged Shares and other Collateral then or previously owned by
the Pledgor.
SECTION 6 DIVIDENDS, ETC.
(a) So long as no Default pursuant to SECTION 10.1(f) of the
Credit Agreement or an Event of Default shall have occurred and shall be
continuing:
(i) Subject to the provisions of the Credit Agreement and
notwithstanding the provisions of PARAGRAPH 2(a) of this Agreement, the
Pledgor shall be entitled to receive any and all cash dividends and
payments on the Collateral which it is otherwise entitled to receive,
but any and all securities and/or liquidating dividends, payments,
distributions in property, returns of capital made on or in respect of
the Collateral, whether resulting from a subdivision, combination,
reclassification or conversion of the outstanding capital stock of CRL,
or received in exchange for the Collateral or any part thereof, or as a
result of any merger, consolidation, acquisition or other exchange of
assets to which CRL may be a party or otherwise, and any and all cash
and other property received in exchange for any Collateral shall be and
become part of the Collateral pledged hereunder and, if received by the
Pledgor, shall forthwith be delivered to Lender or its designated
nominee (accompanied, if appropriate, by proper instruments of
assignment and/or stock powers executed by the Pledgor in accordance
with Lender's instructions) to be held subject to the terms of this
Agreement.
(ii) If the Collateral or any part thereof shall have been
registered in the name of Lender or its sub-agent, Lender shall execute
and deliver (or cause to be executed and delivered) to the Pledgor all
such dividend orders and other instruments as the Pledgor may request
for the purpose of enabling the Pledgor to
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receive the dividends or other payments which it is authorized to
receive and retain pursuant to SECTION 6(a)(i) above.
(b) Upon the occurrence and during the continuance of a
Default pursuant to SECTION 10.1(f) of the Credit Agreement or an Event of
Default, all rights of the Pledgor pursuant to SECTION 6(a)(i) hereof shall
cease and Lender shall have the sole and exclusive right and authority to
receive and retain the dividends and other payments of the Collateral which the
Pledgor would otherwise be authorized to retain. All such dividends, payments,
and all other distributions made on or in respect of the Collateral which may at
any time and from time to time be held by the Pledgor, shall, until delivery to
Lender, be held by the Pledgor separate and apart from its other property in
trust for Lender. Any and all money and other property paid over to or received
by Lender pursuant to the provisions of this PARAGRAPH (b) shall be retained by
Lender as additional Collateral hereunder and be applied in accordance with the
provisions hereof.
SECTION 7 DEFAULT.
(a) Upon the occurrence and during the continuance of a
Default pursuant to SECTION 10.1(f) of the Credit Agreement or an Event of
Default, Lender may exercise from time to time any rights and remedies available
to it under the Credit Agreement, the Uniform Commercial Code as in effect from
time to time in the State of Illinois, or the Related Documents or otherwise
available to it, including, without limitation, sale, assignment, or other
disposal of the Collateral in exchange for cash or credit. If any notification
of intended disposition of any of the Collateral is required by law, such
notification, if mailed, shall be deemed reasonably and properly given if mailed
to the Pledgor at least five (5) days before such disposition as provided in
SECTION 11.2(f) of the Credit Agreement, with copies sent on the same date to
Xxxx Xxxxxxxx by facsimile c/o Latham & Xxxxxxx at (000) 000-0000 and the
General Counsel of Borrower at the address of Borrower set forth in the Purchase
Agreement. Any proceeds of any disposition of Collateral shall be applied as
provided in SECTION 8 hereof. No rights and remedies of Lender expressed
hereunder are intended to be exclusive of any other right or remedy, but every
such right or remedy shall be cumulative and shall be in addition to all other
rights and remedies herein conferred, or conferred upon Lender under any other
agreement or instrument relating to any of the Liabilities or security therefor
or now or hereafter existing at law or in equity or by statute. No delay on the
part of Lender in the exercise of any right or remedy shall operate as a waiver
thereof, and no single or partial exercise by Lender of any right or remedy
shall preclude other or further exercise thereof or the exercise of any other
right or remedy.
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(b)(i) The Pledgor agrees that in any sale of any of the
Collateral, Lender is authorized to comply with any limitation or restriction in
connection with such sale as counsel may advise Lender is necessary in order to
avoid any violation of applicable law (including, without limitation, compliance
with such procedures as may restrict the number of prospective bidders and
purchasers, require that such prospective bidders and purchasers have certain
qualifications, and restrict such prospective bidders and purchasers to persons
who will represent and agree that they are purchasing for their own account for
investment and not with a view to the distribution or resale of such
Collateral), or in order to obtain any required approval of the sale or of the
purchaser by any governmental regulatory authority or official, and the Pledgor
further agrees that such compliance shall not result in such sale being
considered or deemed not to have been made in a commercially reasonable manner,
nor shall Lender be liable or accountable to the Pledgor for any discount
allowed by reason of the fact that such Collateral is sold in compliance with
any such limitation or restriction.
Without limiting the foregoing paragraph, if Lender decides to
exercise its right to sell all or any of the Pledged Shares or other Collateral,
upon written request, the Pledgor shall furnish or cause to be furnished to
Lender all such information as Lender may request in order to qualify such
Pledged Shares or other Collateral as exempt securities, or the sale or resale
of such Pledged Shares or other Collateral as exempt transactions, under federal
and state securities laws. The Pledgor agrees to allow, and to cause CRL to
allow, upon request by Lender, Lender access at reasonable times and places to
the books, records and premises of CRL; the Pledgor further agrees to assist,
and cause CRL to assist, Lender, any agent, counsel, accountant or other expert
for any thereof, in inspection, evaluation, and any other "due diligence" action
of or with respect to any such books, records and premises.
(ii) The Pledgor, upon the occurrence and during the
continuance of a Default under Section 10.1(f) of the Credit Agreement or an
Event of Default, further agrees that Lender shall have the right, for and in
the name, place and stead of the Pledgor to execute endorsements, assignments,
stock powers and other instruments of conveyance or transfer with respect to all
or any of the Collateral, and may, without demand, presentment or notice of any
kind appropriate and apply toward the payment of the Liabilities in order of
application set forth in SECTION 8 any balances, credits, deposits, accounts or
monies of the Pledgor held by Lender.
(iii) Without limiting the foregoing paragraph, upon the
occurrence and during the continuance of a Default pursuant to SECTION 10.1(f)
of the Credit Agreement or an Event of Default,
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Lender may, to the fullest extent permitted by applicable law, without notice,
advertisement, hearing or process of law of any kind, (x) sell any or all of the
Collateral, free of all rights and claims of the Pledgor therein and thereto at
any public or private sale or brokers' board, and (y) bid for and purchase any
or all of the Collateral at any such public sale free from rights of redemption,
stay or appraisal of the Pledgor.
(iv) The Pledgor and Lender acknowledge that the commissioners
or departments of insurance of various states under all applicable insurance
laws, rules and regulation may have to consent to or approve any such sale,
transfer or other disposition of the Collateral and the terms and conditions
thereof. The Pledgor hereby waives and agrees not to assert against Lender any
claim that any such sale, transfer or other disposition hereunder, or the terms
or conditions thereof, were not commercially reasonable because of any provision
of any such insurance law, rule or regulation or any matter related thereto.
SECTION 8 APPLICATION OF PROCEEDS. The proceeds of sale of
Collateral sold pursuant to the terms of SECTION 7 hereof and/or, after a
Default pursuant to SECTION 10.1(f) of the Credit Agreement or an Event of
Default, the cash held as Collateral hereunder shall be applied by Lender as
follows:
FIRST: to the payment of all of the reasonable costs and
expenses of Lender incurred by retaking, holding, preparing for sale or
lease, selling, leasing and the like, including (i) the reasonable
costs and expenses incurred by Lender and the reasonable fees and costs
and expenses of counsel employed incurred by Lender (whether or not
such costs and expenses are incurred by Lender), and (ii) the payment
of all reasonable costs and expenses incurred by Lender in connection
with the administration and enforcement of this Agreement, to the
extent that such advances, costs and expenses shall not have been
reimbursed to Lender;
SECOND: to the payment in full of the Liabilities in such
order as Lender may determine from time to time in its sole discretion;
and
THIRD: the balance, if any, of such proceeds shall be paid
to the Pledgor, its successors and assigns, or as a court of competent
jurisdiction may direct.
SECTION 9 AUTHORITY OF LENDER. Lender may execute any of its
duties hereunder by or through agents or employees and shall be entitled to
retain counsel and to act in reliance upon the advice of such counsel concerning
all matters pertaining to its
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duties hereunder. Neither Lender nor any director, officer or employee thereof
shall be liable for any action taken or omitted to be taken by it hereunder or
in connection herewith, except for its own gross negligence or willful
misconduct. The Pledgor agrees to reimburse Lender, on demand, for all
reasonable costs and expenses incurred by Lender in connection with the
administration and enforcement of this Agreement and for all costs and expenses
of the enforcement of this Agreement (including, without limitation, reasonable
costs and expenses incurred by any agent employed by Lender) and agrees to
indemnify (which indemnification shall survive any termination of this
Agreement) and hold harmless Lender (and any such agent) from and against any
and all liability incurred by Lender or any such agent thereof hereunder or in
connection herewith, unless such liability shall be due to gross negligence, or
willful misconduct on the part of Lender or such agent, as the case may be.
SECTION 10 TERMINATION. The Pledgor agrees that its pledge
hereunder shall (notwithstanding, without limitation, that at any time or from
time to time all Liabilities may have been paid in full) terminate only when all
Liabilities (including, without limitation, any extensions or renewals of any
thereof) and all expenses (including, without limitation, reasonable attorneys'
fees and legal expenses) paid or incurred by Lender or the holder or the holders
of the Note in endeavoring to enforce this Agreement, the Credit Agreement and
the Related Documents to which Lender is a party or of which it is a beneficiary
shall have been finally paid in full and all other obligations of the Pledgor
hereunder and thereunder have been fully performed, and all Commitments under
the Credit Agreement have been terminated, at which time Lender shall reassign
and redeliver (or cause to be reassigned and redelivered) to the Pledgor, or to
such Person or Persons as the Pledgor shall designate, such of the Collateral
(if any) as shall not have been sold or otherwise applied by Lender pursuant to
the terms hereof and shall still be held by it hereunder, together with
appropriate instruments of reassignment and release. Any such reassignment shall
be without recourse upon, or representation or warranty by, Lender and at the
sole cost and expense of the Pledgor.
SECTION 11 MISCELLANEOUS.
(a) All notices or other communications hereunder shall be
given in the manner specified under SECTION 11.2 of the Credit Agreement,
whether or not then in effect.
(b) This Agreement, and the terms, covenants and conditions
hereof, shall be binding upon and inure to the benefit of the parties hereto,
and their respective successors and assigns, except the Pledgor shall not be
permitted to assign this Agreement nor any interest herein nor in the
Collateral, nor any part
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thereof, nor otherwise pledge, encumber or grant any option with respect to the
Collateral, nor any part thereof.
(c) SUBMISSION TO JURISDICTION; WAIVER OF VENUE. EACH OF THE
PLEDGOR AND LENDER (i) HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY
ILLINOIS STATE OR FEDERAL COURT SITTING IN CHICAGO, ILLINOIS OVER ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE RELATED
DOCUMENTS, AND EACH OF THE PLEDGOR AND LENDER HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH ILLINOIS STATE OR FEDERAL COURT, AND (ii) AGREES NOT TO INSTITUTE ANY LEGAL
ACTION OR PROCEEDING AGAINST THE OTHER PARTY HERETO OR THE DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS OR PROPERTY OF ANY THEREOF, ARISING OUT OF OR RELATING TO THIS
AGREEMENT, IN ANY COURT OTHER THAN AS HEREINABOVE SPECIFIED IN THIS SECTION
11(c). EACH OF THE PLEDGOR AND LENDER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE IN ANY ACTION OR PROCEEDING (WHETHER BROUGHT BY THE PLEDGOR, ANY
OF ITS SUBSIDIARIES, LENDER OR OTHERWISE) IN ANY COURT HEREINABOVE SPECIFIED IN
THIS SECTION 11(c) AS WELL AS ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE
ANY SUCH ACTION OR PROCEEDING, ONCE COMMENCED, TO ANOTHER COURT ON THE GROUNDS
OF FORUM NON CONVENIENS OR OTHERWISE. EACH OF THE PLEDGOR AND LENDER AGREES THAT
A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW.
(d) At the option of Lender, this Agreement, or a carbon,
photographic or other reproduction of this Agreement or of any Uniform
Commercial Code financing statement covering the Collateral or any portion
thereof, shall be sufficient as a Uniform Commercial Code financing statement
and may be filed as such.
(e) No amendment to, modification or waiver of, or consent
with respect to, any provision of this Agreement shall in any event be effective
unless the same shall be in writing and signed and delivered by Lender, and then
any such amendment, modification, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
(f) The section headings in this Agreement are inserted for
convenience of reference and shall not be considered a part of this Agreement or
used in its interpretation.
(g) The Pledgor hereby expressly waives: (i) notice of the
acceptance by Lender of this Agreement, (ii) notice of the existence or creation
or non-payment of all or any of the Liabilities, (iii) presentment, demand,
notice of dishonor, protest, and all other notices whatsoever (except as
otherwise
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required herein), and (iv) all diligence in collection or protection of or
realization upon the Liabilities hereunder, or any security for or guaranty of
any of the foregoing.
(h) Lender may, from time to time, without notice to the
Pledgor, assign or transfer any or all of the Liabilities or any interest
therein; and, notwithstanding any such assignment or transfer or any subsequent
assignment or transfer thereof, such Liabilities shall be and remain Liabilities
for the purposes of this Agreement, and each and every immediate and successive
assignee or transferee of any of the Liabilities or of any interest therein
shall, to the extent of the interest of such assignee or transferee in the
Liabilities, be entitled to the benefits of this Agreement to the same extent as
if such assignee or transferee were Lender; provided, however, that, unless
Lender shall otherwise consent in writing, Lender shall have an unimpaired
right, prior and superior to that of any such assignee or transferee, to enforce
this Agreement, for the benefit of Lender, as to those of the Liabilities which
Lender has not assigned or transferred.
(i) The Pledgor agrees that, if at any time all or any part of
any payment theretofore applied by Lender to any of the Liabilities is or must
be rescinded or returned by Lender for any reason whatsoever, such Liabilities
shall, for the purposes of this Agreement, to the extent that such payment is or
must be rescinded or returned, be deemed to have continued in existence,
notwithstanding such application by Lender, and the pledge by the Pledgor
hereunder shall continue to be effective or be reinstated, as the case may be,
as to such Liabilities, all as though such application by Lender had not been
made.
(j) No action of Lender permitted hereunder shall in any way
affect or impair the rights of Lender and the obligations of the Pledgor under
this Agreement. The Pledgor hereby acknowledges that there are no conditions to
the effectiveness of this Agreement.
(k) All obligations of the Pledgor and rights of Lender or
obligation expressed in this Agreement shall be in addition to and not in
limitation of those provided in applicable law or in any other written
instrument or agreement relating to any of the Liabilities.
(L) GOVERNING LAW. THIS AGREEMENT SHALL BE A CONTRACT MADE
UNDER AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES. ALL OBLIGATIONS OF THE PLEDGOR AND RIGHTS OF
LENDER SHALL BE IN ADDITION TO AND NOT IN LIMITATION OF THOSE PROVIDED BY
APPLICABLE LAW.
(m) This Agreement may be executed in any number of
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counterparts, each of which shall for all purposes be deemed an original, but
all such counterparts shall constitute but one and the same Agreement. The
Pledgor hereby acknowledges receipt of a true, correct and complete counterpart
of this Agreement.
(n) Lender acts herein as agent for itself and any and all
future holders of the Liabilities.
(o) WAIVER OF JURY TRIAL. EACH OF THE PLEDGOR AND LENDER
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT TO A TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT OR UNDER ANY OTHER DOCUMENT OR AGREEMENT
DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR
THEREWITH, OR ARISING FROM ANY BANKING RELATIONSHIP EXISTING IN CONNECTION WITH
THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION, PROCEEDING OR COUNTERCLAIM
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY; THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE PARTIES ENTERING INTO THIS AGREEMENT.
* * *
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the date first above written.
STRATEGIC ACQUISITION PARTNERS, LLC
By: /s/ Xxx Xxxxx
-------------------------------------
Name: Xxx Xxxxx
----------------------------------
Its: Manager
-------------------------------------
CENTRAL RESERVE LIFE CORPORATION
By: /s/ Xxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxxx
----------------------------------
Its: CFO
-------------------------------------
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ATTACHMENT 1
LISTING OF CRL'S STOCK PLEDGED
------------------------------
Number of
Certificate Shares of
Number Stock % Ownership
------------ ---------- -----------
0052 1,250,000 100
18
ATTACHMENT 2
Listing Of Surplus Notes Pledged
--------------------------------
14 Million Dollar Surplus Note executed by Central Reserve Life Insurance
Company in favor of Central Reserve Life Corporation dated December 16, 1997.
