AGREEMENT OF GUARANTY
BETWEEN
MICHIGAN EDUCATORS INSURANCE AGENCY, INC.
AND
MICHIGAN EDUCATORS LIFE INSURANCE AGENCY, INC.
AND
MICHIGAN EDUCATIONAL EMPLOYEES
MUTUAL INSURANCE COMPANY
------------------------
Dated as of
September 22, 1997
TABLE OF CONTENTS
ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2. Other Definitional Provisions . . . . . . . . . . . . . . . . 2
ARTICLE II - GUARANTY. . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.1. Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.2. Waiver of Notice. . . . . . . . . . . . . . . . . . . . . . . 3
2.3. Obligation Primary. . . . . . . . . . . . . . . . . . . . . . 3
2.4. Waiver of Rights. . . . . . . . . . . . . . . . . . . . . . . 3
2.5. Reinstatement of Guaranty . . . . . . . . . . . . . . . . . . 4
2.6. Limitation of Guaranty. . . . . . . . . . . . . . . . . . . . 4
2.7. Waiver of Defenses. . . . . . . . . . . . . . . . . . . . . . 4
2.8. Reasonableness of Waivers . . . . . . . . . . . . . . . . . . 5
ARTICLE III - REPRESENTATIONS AND WARRANTIES OF MUTUAL . . . . . . . . . 5
3.1. Organization. . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2. Authority . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3. Requisite Consents of Mutual; Nonviolation. . . . . . . . . . 5
ARTICLE IV - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 5
4.1. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
4.2. Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . . 7
4.3. Successors and Assigns. . . . . . . . . . . . . . . . . . . . 7
4.4. Entire Agreement; Amendment . . . . . . . . . . . . . . . . . 7
4.5. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . 7
4.6. Headings; References; Interpretation. . . . . . . . . . . . . 7
4.7. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 8
4.8. Severability. . . . . . . . . . . . . . . . . . . . . . . . . 8
4.9. No Third Party Beneficiaries. . . . . . . . . . . . . . . . . 8
4.10. Acknowledgment. . . . . . . . . . . . . . . . . . . . . . . . 8
4.11. Indemnification . . . . . . . . . . . . . . . . . . . . . . . 8
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AGREEMENT OF GUARANTY
This Agreement of Guaranty (this "Agreement") is made and entered
into as of September 22, 1997, by and between Michigan Educators Insurance
Agency, Inc., a Michigan corporation ("MEIA I"), Michigan Educators Life
Insurance Agency, Inc., a Michigan corporation ("MEIA," and together with
MEIA I, the "Agency"), and Michigan Educational Employees Mutual Insurance
Company, a Michigan corporation ("Mutual").
WHEREAS, MEEMIC Insurance Services Corporation, a Michigan corporation
and wholly-owned subsidiary of Mutual ("XXXX XX"), and Professionals Insurance
Company Management Group have made and entered into a certain Asset Purchase
Agreement with the Agency (the "Asset Purchase Agreement") as of September 22,
1997; and
WHEREAS, in order to induce the Agency to make and enter into the
Asset Purchase Agreement, Mutual has agreed to unconditionally guarantee that
certain of the Installment Payments (as hereinafter defined) will be promptly
paid in full on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises, the representations
and warranties and covenants and agreements set forth herein, and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Agency and Mutual, intending to be legally bound, agree as
follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS.
(a) Capitalized terms used herein and not otherwise defined
shall have the meanings assigned thereto in the Asset Purchase Agreement.
(b) The following terms, as used herein, have the following
respective meanings:
"AGREEMENT" means this Agreement of Guaranty, as amended,
modified or supplemented from time to time hereafter in accordance with the
terms hereof.
"AGENCY" has the meaning assigned to such term in the preambles
of this Agreement.
"GUARANTEED PAYMENTS" has the meaning assigned to such term in
Section 2.1.
"MEIA I" has the meaning assigned to such term in the
introductory paragraph of this Agreement.
"XXXX XX" has the meaning assigned to such term in the introductory
paragraph of this Agreement.
"MELA" has the meaning assigned to such term in the introductory
paragraph of this Agreement.
"Mutual" has the meaning assigned to such term in the introductory
paragraph of this Agreement.
1.2. OTHER DEFINITIONAL PROVISIONS. References to "Articles,"
"Sections," "Subsections," "Clauses," "Exhibits" and "Schedules," if any,
shall be to Articles, Sections, Subsections, Clauses, Exhibits and Schedules,
respectively, of this Agreement unless otherwise specifically provided. Any
of the terms defined in this Agreement, unless the context otherwise
requires, may be used in the singular or the plural depending on the
reference. In this Agreement, "hereof," "herein," "hereto," "hereunder" and
the like mean and refer to this Agreement as a whole and not merely to the
specific Article, Section, Subsection or Clause in which the respective word
appears; words importing any gender include the other genders; references to
"writing" include printing, typing, lithography and other means of
reproducing words in a tangible visible form; the words "including,"
"includes" and "include" shall be deemed to be followed by the words "without
limitation"; references to agreements and other contractual instruments shall
be deemed to include subsequent amendments, assignments, and other
modifications thereto, but only to the extent such amendments, assignments
and other modifications are not prohibited by the terms of this Agreement;
references to Persons include their respective permitted successors and
assigns or, in the case of governmental Persons, Persons succeeding to the
relevant functions of such Persons; and all references to statutes and
related regulations shall include any amendments of same and any successor
statutes and regulations.
ARTICLE II
GUARANTY
2.1. GUARANTY. Subject to the terms and conditions hereof, and to
induce the Agency to make and enter into the Asset Purchase Agreement, Mutual
hereby unconditionally guarantees to the Agency the full, prompt and faithful
payment of, on each Applicable Installment Payment Date in 1998 through 2000,
inclusive, the excess, if any, of the Minimum Cumulative Payment with respect
to such Annual Installment Payment Date over the Aggregate Payment as of the
immediately preceding Annual Installment Payment Date (such excess being
referred to herein as the "Guaranteed Payments"), in accordance with the
terms and provisions of the Asset Purchase Agreement, and, in case of any
extension(s) of time of payment, in whole or in part, thereof, according to
such extension(s) (it being understood and acknowledged that, pursuant to
the Inter-Creditor Agreement and as between one another, Mutual has the
option of remitting the Guaranteed Payments to XXXX XX for remittance by XXXX
XX to the Agency,
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PROVIDED that the remittance of any Guaranteed Payments to XXXX XX shall not in
any way relieve Mutual of its obligation hereunder to the Agency unless and
until such Guaranteed Payments have been delivered to the Agency free and clear
of any lien, adverse claim, charge, encumbrance or condition of any kind
(whether arising under any bankruptcy law or otherwise).
2.2. WAIVER OF NOTICE. Mutual hereby waives notice of acceptance
of this Agreement and any notice of demand, any presentment for payment and
any and all notice of protest, default, non-payment or dishonor in respect
of any of the Guaranteed Payments. No extension of time or other indulgence
granted by the Agency of XXXX XX shall release or affect the obligation of
Mutual hereunder, and no omission or delay on the Agency's part in exercising
any right hereunder or in taking any action to collect or enforce payment of
any obligation guaranteed hereby will be a waiver of any such right or
release or affect the guaranty obligation of Mutual hereunder.
2.3. OBLIGATION PRIMARY. The guaranty obligation of Mutual
hereunder is a primary and unconditional obligation which shall be
enforceable before or after proceeding against XXXX XX and shall be effective
regardless of the solvency or insolvency of XXXX XX or Mutual. In the event
any security shall later be held by the Agency for the payment of any of the
Guaranteed Payments, whether from XXXX XX, any guarantor or otherwise, and
whether in the nature of a security interest, pledge, lien, assignment, set
off, suretyship, guaranty, indemnity, insurance or otherwise, such security
shall not affect in any manner the unconditional obligation of Mutual under
this Agreement (it being understood and acknowledged that, as of the date
hereof, no security has been given for the performance of Mutual's
obligations under this Agreement). The Agency may, without notice to or the
consent of Mutual, release any collateral securing any of the Guaranteed
Payments without diminishing the obligation of Mutual hereunder, and the
Agency shall have no duty to: marshal any security; xxx or otherwise attempt
to collect from XXXX XX or any other Person any of the Guaranteed Payments;
initiate any proceeding with respect to any collateral securing any of the
Guaranteed Payments or any other property; or take any other action of any
kind prior to demanding payment from Mutual hereunder. The Agency has no
obligation to acquire or perfect any lien on or security interest in any
asset(s), whether realty or personalty, to secure payment of the Guaranteed
Payments, and Mutual is not relying upon any asset(s) in which the Agency has
or may have a lien or security interest for payment of the Guaranteed
Payments.
2.4. WAIVER OF RIGHTS.
(a) Mutual waives any and all rights to be subrogated to the
position of the Agency or to have the benefit of any lien, security interest
or other guaranty now or later held by the Agency for the Guaranteed Payments
or to enforce any remedy which the Agency now or later has against XXXX XX or
any other Person. Mutual shall have no right of reimbursement, indemnity,
contribution or other right of recourse to or with respect to XXXX XX or any
other Person, EXCEPT as provided in the Inter-Creditor Agreement (it being
understood and acknowledged that, without the prior written consent of to
Agency, Mutual and XXXX XX shall not amend, modify or supplement the
Inter-Creditor Agreement). The Agency has no duty to
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enforce or protect any rights which Mutual may have against XXXX XX or any other
Person and Mutual assumes full responsibility for enforcing and protecting such
rights.
(b) Notwithstanding anything in this Agreement or otherwise to the
contrary, if Mutual is or becomes an "insider" or "affiliate" (as defined in
Section 101 of the Federal Bankruptcy Code, as it may be amended) with
respect to XXXX XX, Mutual irrevocably and absolutely waives any and all
rights of subrogation, contribution, indemnification, recourse, reimbursement
and any similar rights against XXXX XX (or any other guarantor) with respect
to this Agreement, whether such rights arise under an express or implied
contract or by operation of law. It is the intention of the Agency and
Mutual that Mutual shall not be (or be deemed to be) a "creditor" (as defined
in Section 101 of the Federal Bankruptcy Code, as it may be amended) of XXXX
XX (or any other guarantor) by reason of the existence of this Agreement in
the event that XXXX XX becomes a debtor in any proceeding under the Federal
Bankruptcy Code. Mutual warrants and agrees that none of the Agency's rights,
remedies or interests shall be directly or indirectly impaired because of the
status of Mutual as an "insider" or "affiliate" of XXXX XX, and Mutual shall
take any action, and shall execute any document, which the Agency may request
in order to effectuate this warranty to the Agency.
2.5. REINSTATEMENT OF GUARANTY. Notwithstanding any prior
revocation, termination, surrender or discharge of this Agreement (or of any
lien, pledge or security interest securing this Agreement), in whole or in
part, the effectiveness of this Agreement, and of all liens, pledges and
security interests securing this Agreement, shall automatically continue or
be reinstated, as the case may be, in the event that any payment received or
credit given by XXXX XX in respect of the Guaranteed Payments is returned,
disgorged or rescinded as a preference, impermissible set off, fraudulent
conveyance, diversion of trust funds or otherwise under any applicable state
or federal law, including laws pertaining to bankruptcy or insolvency, in
which case this Agreement, and all liens, pledges and security interests
securing this Agreement, shall be enforceable against Mutual as if the
returned, disgorged or rescinded payment or credit had not been received (or
given) by the Agency, and whether or not the Agency relied upon such payment
or credit or changed its position as a consequence of it.
2.6. LIMITATION OF GUARANTY. Notwithstanding anything in this
Agreement or otherwise to the contrary, the guaranty obligation of Mutual
hereunder shall not exceed Three Million and No/100 Dollars ($3,000,000.00)
in the aggregate PLUS any costs and expenses (including reasonable attorneys'
fees and expenses of investigation) incurred by the Agency in enforcing,
collecting or defending any suit seeking to set aside, avoid or recover the
guaranty obligation of Mutual hereunder.
2.7. WAIVER OF DEFENSES. Mutual hereby waives all defenses which
may be asserted against the Agency with respect to this Agreement on the
basis of suretyship, impairment of collateral, failure of consideration,
breach of warranty, fraud, payment, any statute of fraud, bankruptcy, lack of
legal capacity, any statute of limitations, lender liability, accord and
satisfaction or usury and acknowledges that, as of the date hereof, no such
defense exists.
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2.8. REASONABLENESS OF WAIVERS. Mutual acknowledges that the
waivers set forth herein are made with its full knowledge of their
significance and consequences and that, under the circumstances giving rise
to this Agreement, such waivers are reasonable and not contrary to public
policy or law.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF MUTUAL
Mutual represents and warrants to the Agency that:
3.1. ORGANIZATION. Mutual is a corporation duly organized, validly
existing and in good standing under the laws of the State of Michigan and has
all requisite corporate power to enter into this Agreement, to perform each
of the other agreements contained herein and to own, lease and operate its
properties and assets and carry on its business as currently operated.
Mutual is in good standing in every jurisdiction where the nature of the
business conducted by it or the properties owned, leased or operated by it
requires qualification or licensure.
3.2. AUTHORITY. The execution and delivery of this Agreement, and the
consummation of the transactions contemplated hereby and all other necessary
corporate action on the part of Mutual or its Affiliates, and the agreements
of Mutual contained herein constitute valid and legally binding obligations
enforceable in accordance with their terms.
3.3. REQUISITE CONSENTS OF MUTUAL; NONVIOLATION. The execution and
delivery of this Agreement, and the consummation of the transactions
contemplated hereby in compliance with the terms hereof, by Mutual, do and
will not, (a) except for the consent of the Michigan Commissioner of
Insurance, require the consent, license, permit, waiver, approval,
authorization or other action of, by or with respect to, any person or
Governmental Authority, the absence of which would have a Material Adverse
Effect on Mutual or Mutual's ability to perform its obligations hereunder,
(b) violate or conflict with the provisions of the Articles of Incorporation
or Bylaws of Mutual, or (c) constitute a default under, violate, conflict with
or result in the termination of any judgment, order, injunction or decree to
which Mutual is a party, or by which Mutual is bound or to which Mutual, or
any of its properties, is subject (except where such default, violation,
conflict or termination would not have a Material Adverse Effect on Mutual or
on the ability of Mutual to consummate the transaction contemplated hereby).
ARTICLE IV
MISCELLANEOUS
4.1. NOTICES. All notices, demands, requests, consents, approvals
or other communications (collectively, "Notices") required or permitted to be
given hereunder or which are given with respect to this Agreement shall be in
writing and shall be personally served or deposited in the United States
mail, first class, registered or certified, return receipt requested,
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postage prepaid, addressed as set forth below, or such other address or to
such other Person as any of MEIA I, MELA or Mutual shall have specified most
recently by written notice in accordance with this Section 3.1. Notice shall
be deemed given on the date of service if personally served. Notice mailed
as provided herein shall be deemed given on the third business day following
the date so mailed. Notice given by telex, telecopy or other means of
telecommunications shall be deemed to have been given at the time of receipt
thereof by the Person to whom such notice is addressed; PROVIDED, HOWEVER,
that any Notice given by telex, telecopy or other means of telecommunications
and received after the receiving Person's normal business hours shall be
deemed received by such Person on the immediately succeeding business day.
To the Agency:
Michigan Educators Insurance Agency, Inc.
000 X. Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attn.: Xxxx X. Xxxx, Chairman
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
With a copy to:
Xxxxxx & Xxxxxx Attorneys, P.C.
0000 X. Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx Xxxxx, Xxxxxxxx 00000
Attn.: Xxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
To Mutual:
Michigan Educational Employees Mutual Insurance Company
000 X. Xxxxxxxx Xxxx, Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attn.: R. Xxxxx Xxxxxxx
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
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With a copy to:
Xxxxxx Xxxxxxx PLLC
000 Xxxxxxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attn.: Xxxx X. Xxxxxxxx
Telecopy No.: 000-000-0000
Telephone No.: 000-000-0000
4.2. EXPENSES. Whether or not the transactions contemplated herein shall
be consummated, all legal and other costs and expenses incurred in connection
herewith and the transactions contemplated hereby shall be paid by the Person
incurring such expenses. The provisions of this Section 3.2 shall survive
any termination of this Agreement.
4.3. SUCCESSORS AND ASSIGNS. This Agreement and all of the provisions
hereof shall be binding upon and shall inure to the benefit of MEIA I, MELA
and Mutual and their respective successors and permitted assigns, PROVIDED
that, except as contemplated by Section 2.12(a) of the Asset Purchase
Agreement, neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned, by operation of law or otherwise, by
any such Person(s) without the prior written consent of such other Person(s).
If any such Person is so permitted to assign any of its rights or
obligations under this Agreement, such assignment (unless otherwise agreed to
by such other Person(s)) shall not in any manner affect or impair such
assigning Person's obligations under this Agreement.
4.4. ENTIRE AGREEMENT; AMENDMENT. This Agreement, together with the
Asset Purchase Agreement and the Related Agreements, embodies the entire
agreement and understanding of MEIA I, MELA and Mutual with respect to the
subject matter hereof and supersedes all prior agreements between MEIA I,
MELA and Mutual or any of their Affiliates with respect to the subject matter
of this Agreement. This Agreement may be amended, modified or supplemented in
any manner and at any time only by a written instrument executed by MEIA I,
MELA and Mutual. No waiver by any of MEIA I, MELA and Mutual of any term or
condition hereof, or the breach of any covenant, agreement, warranty,
representation or provision contained herein, in any one or more instances,
shall be made to be or construed as a further continuing waiver of any such
term, condition or breach or a waiver of any other term, condition or breach.
4.5. COUNTERPARTS. This Agreement may be executed in one or more
counterparts all of which shall together constitute one and the same
instrument and shall become effective when one or more counterparts have been
signed by Mutual and delivered to MEIA I and MELA and one or more
counterparts have been signed by MEIA I and MELA and delivered to Mutual.
4.6. HEADINGS; REFERENCES; INTERPRETATION. The Article and Section
headings in this Agreement are for convenience of reference only and shall
not be deemed to alter or affect the meaning or interpretation of any
provisions hereof.
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4.7. GOVERNING LAW. This Agreement shall be governed by, interpreted
under and construed and enforced in accordance with the internal laws, and not
the laws pertaining to conflicts or choice of laws, of the State of Michigan,
and applicable controlling United States federal law.
4.8. SEVERABILITY. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any adverse manner to
any of MEIA I, MELA and Mutual. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, MEIA I, MELA and
Mutual shall negotiate in good faith to modify this Agreement to effect their
original intent as closely as possible in an acceptable manner so that the
transactions contemplated hereby are fulfilled to the extent possible.
4.9. NO THIRD PARTY BENEFICIARIES. Nothing in this Agreement,
express or implied, is intended to or shall (i) confer on any Person other
than MEIA I, MELA and Mutual and their respective successors or permitted
assigns any rights (including third party beneficiary rights), remedies,
obligations or liabilities of any nature whatsoever under or by reason of
this Agreement, or (ii) constitute MEIA I, MELA and Mutual as partners or as
participants in a joint venture. This Agreement shall not provide third
parties with any remedy, claim, liability, reimbursement, cause of action or
other right in excess of those existing without reference to the terms of
this Agreement.
4.10. ACKNOWLEDGMENT. MEIA I, MELA and Mutual each acknowledge that
all the terms and conditions in this Agreement have been the subject of active
and complete negotiation between them and represent their agreement based upon
all relevant considerations. The terms and conditions of this Agreement shall
not be construed in favor of or against any of MEIA I, MELA and Mutual by reason
of the extent to which any such Person or its professional advisors participated
in the preparation hereof or thereof.
4.11. INDEMNIFICATION.
(a) INDEMNIFICATION BY MUTUAL. If the Closing is consummated,
Mutual shall indemnify and defend and hold the Agency and the directors,
officers, shareholders and other Affiliates thereof harmless against and with
respect to, and shall reimburse the directors, officers, shareholders and other
Affiliates thereof for, any and all damages reasonably and proximately incurred
by any of the foregoing as a result of the following:
(i) any inaccuracy or misrepresentation in or breach of
any representation or warranty of Mutual in this
Agreement, the Asset Purchase Agreement or any of
the Related Agreements; and
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(ii) the breach or failure by Mutual to perform any of
its covenants or agreements under this Agreement,
the Asset Purchase Agreement or any of the Related
Agreements.
(b) PROCEDURE FOR INDEMNIFICATION. The procedure for
indemnification shall be as follows:
(i) The Person claiming indemnification ("Claimant")
shall, within thirty (30) days after its discovery
of any claim for which indemnification will be
sought as provided in this Agreement (the "Claim"),
give notice to the Person from whom indemnification
is sought ("Indemnitor") of this Claim, specifying
in reasonable detail the factual basis for the Claim
and, to the extent known, the amount of the Claim.
Notwithstanding the foregoing, the failure by
Claimant to provide notice of any Claim within the
period specified, or any delay in providing such
notice, shall not affect or impair the obligations
of Indemnitor hereunder, except and only to the
extent that Indemnitor has been adversely affected
by such failure or delay.
(ii) With respect to Claims between the Agency and
Mutual, following receipt of notice from Claimant of
a Claim, Indemnitor shall have thirty (30) days to
make any investigation of the Claim that Indemnitor
deems necessary or desirable. For purposes of this
investigation, Claimant shall make available to
Indemnitor and its authorized representatives the
information relied upon by Claimant to substantiate
the Claim. If Claimant and Indemnitor cannot agree
as to the validity and amount of the Claim within
the thirty (30)-day period (or any mutually agreed
upon extension thereof), Claimant shall submit the
claim to arbitration as provided in Section 411(f).
(iii) With respect to any Claim by a third party as to
which Claimant is entitled to indemnification
hereunder, Indemnitor shall have the right,
exercisable by written notice to Claimant within
thirty (30) days after receipt of written notice
from Claimant of the commencement or assertion of
any such Claim, at its own expense to participate in
or assume control of the defense of the Claim, and
Claimant shall cooperate fully with Indemnitor,
subject to reimbursement for actual out-of-pocket
expenses incurred by Claimant as a result of a
request by Indemnitor. If Indemnitor does not elect
to assume control or otherwise participate in the
defense of any third-party Claim within thirty (30)
days of its receipt of notice of the Claim (or any
extended period mutually
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agreed upon by the parties), Claimant shall (upon
further written notice to Indemnitor) have the right
to undertake the defense, compromise or settlement
of the Claim for the account of Indemnitor subject
to the right of Indemnitor, at its expense, to
assume the defense of the Claim at any time prior to
final settlement, compromise or determination
thereof. In no event shall Indemnitor be liable or
otherwise have any obligation with respect to any
settlement, compromise or determination of any Claim
agreed to by Claimant without the prior written
consent of Indemnitor (which consent shall not be
unreasonably withheld). Notwithstanding the
foregoing, Indemnitor shall not settle or compromise
any Claim without the prior written consent of
Claimant (which consent shall not be unreasonably
withheld).
(c) TIME LIMITATIONS. Indemnitor will have no liability to
Claimant under or in connection with a breach of any of the representations and
warranties made or to be performed by Indemnitor contained in this Agreement
unless written notice asserting a Claim based thereon is given to Indemnitor not
later than eight (8) years following the date of this Agreement.
(d) TAX EFFECT AND INSURANCE. The liability of Indemnitor with
respect to any Claim shall be reduced by the tax benefit actually realized and
any insurance proceeds received by Claimant as a result of any losses upon which
such Claim is based and shall include any tax detriment actually suffered by
Claimant as a result of such losses.
(e) SUBROGATION. Upon payment in full of any Claim, whether
such payment is effected by set-off or otherwise, or payment of any judgment or
settlement with respect to a third-party Claim, Indemnitor shall be subrogated
to the extent of such payment and to the extent permitted by applicable law to
the rights of Claimant against any Person with respect to the subject matter of
such Claim or third party Claim.
(f) ARBITRATION. All disputes arising under this Section 4.11
(other than claims in equity) shall be resolved by arbitration in accordance
with the Commercial Arbitration Rules of the American Arbitration Association
("AAA"). Arbitration shall be by three arbitrators. Each of the Agency and
Mutual shall select a single arbitrator and file with the AAA a notice of
appointment. The two arbitrators so chosen shall select a third arbitrator who
shall act as chairman of the arbitrations. If wither the Agency or Mutual shall
abstain from selecting an arbitrator within ten (10) business days, or should
the two arbitrators selected above fail to select a third arbitrator within ten
(10) business days, then at the request of either the Agency or Mutual the
President of the AAA shall select an arbitrator to fill the vacant position
within ten (10) business days of such request. Arbitration shall be held in
such place in Xxxxxx County, Michigan, as may be specified by the arbitrator (or
any place agreed to by Indemnitor, Claimant and the arbitrator). The decision
of the arbitrator shall be final and binding as to any matters submitted under
this Section 4.11; PROVIDED, HOWEVER, that, if necessary, such decision and
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satisfaction procedure may be enforced by either Indemnitor or Claimant in any
court of record having jurisdiction over the subject matter or over either the
Agency or Mutual. All costs and expenses incurred in connection with any such
arbitration proceeding (including reasonable attorneys' fees) shall be borne by
the Person(s) against which the decision is rendered, or, if no decision is
rendered, such costs and expenses (excluding attorneys' fees) shall be borne
equally by Indemnitor and Claimant and Indemnitor and Claimant shall each bear
its own attorneys' fees. If the arbitrator's decision is a compromise, the
determination of which Person(s) shall bear the costs and expenses (including
reasonable attorneys' fees) incurred in connection with any such arbitration
proceeding shall be made by the arbitrator on the basis of the arbitrator's
assessment of the relative merits of the positions of Indemnitor and Claimant.
(g) If the Closing is consummated, the indemnification provided in
this Section 4.11 shall be the sole and exclusive legal remedy for any
inaccuracy or misrepresentation in or breach of any representation or warranty
made by the Agency or Mutual in this Agreement, the Asset Purchase Agreement or
any of the Related Agreements and no such Person shall seek any other legal
remedy (whether under federal or state securities laws or otherwise) which might
otherwise be available to such Person; PROVIDED, HOWEVER, that nothing in this
Section 4.11 shall preclude any Person from seeking any legal remedy available
to such Person for any inaccuracy or breach which constitutes fraud on the part
of any other Person; and PROVIDED FURTHER, HOWEVER, that nothing in this Section
4.11 shall preclude any Person from seeking any equitable remedy available to
such Person for any such inaccuracy or breach or for any failure by any other
Person to comply with any of the covenants and agreements of such Person
contained herein or in any of the Related Agreements to be performed or
complied with after the Closing.
IN WITNESS WHEREOF, the undersigned execute and deliver this Agreement as
of the date first written above.
MICHIGAN EDUCATORS INSURANCE
AGENCY, INC.
By: /s/ Xxxx X. Xxxx
-------------------------------
Xxxx X. Xxxx
Title: Chairman of the Board
MICHIGAN EDUCATORS LIFE
INSURANCE AGENCY, INC.
By: /s/ Xxxx X. Xxxx
-------------------------------
Xxxx X. Xxxx
Title: Chairman of the Board
11
MICHIGAN EDUCATIONAL EMPLOYEES
MUTUAL INSURANCE COMPANY
By: /s/ R. Xxxxx Xxxxxxx
-------------------------------
R. Xxxxx Xxxxxxx
Title: President
12
