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EXHIBIT 4
INDEMNIFICATION AND CLOSING AGREEMENT
This Indemnification and Closing Agreement (this "Agreement")
is made and entered into as of July 1, 1998, by Central Reserve Life Corporation
(the "Company"), Insurance Partners, L.P. ("IP Delaware"), Insurance Partners
Offshore (Bermuda), L.P. ("IP Bermuda"), and each of the other persons
identified on Schedule 1 to this Agreement (the foregoing persons, other than
the Company, being referred to herein, collectively, as the "Purchasers", with
each being a "Purchaser").
RECITALS:
WHEREAS, the Company, IP Delaware, IP Bermuda and Strategic
Acquisition Partners ("SAP") are parties to an Amended and Restated Stock
Purchase Agreement dated as of March 30, 1998 (the "Stock Purchase Agreement");
WHEREAS, pursuant to one or more assignment and assumption
agreements (whether one or more, the "SAP Assignments"), SAP has assigned its
rights to acquire securities of the Company under the Stock Purchase Agreement
to certain assignees and each such person has accepted such assignment and
assumed certain obligations under the Stock Purchase Agreement;
WHEREAS, pursuant to the Stock Purchase Agreement and, in
certain instances, the SAP Assignments, the respective Purchasers have agreed to
purchase certain shares of common stock of the Company and warrants to purchase
common stock of the Company on the terms and subject to the conditions set forth
in the Stock Purchase Agreement;
WHEREAS, United Benefit Life Insurance Company ("UBL") has
asserted certain claims against the Company and filed the UBL Lawsuit (as
defined below) against the Company;
WHEREAS, the claims asserted by UBL and the UBL Lawsuit have
resulted in a breach of the representation and warranty of the Company set forth
in the first sentence of Section 4.8 of the Stock Purchase Agreement;
WHEREAS, Article X of the Stock Purchase Agreement sets forth
certain conditions to the respective obligations of the Purchasers to effect the
closing contemplated by the Stock Purchase Agreement, including Section 10.1
which provides, in the first sentence thereof, that the representations and
warranties
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of the Company shall be accurate in all material respects as if made on and as
of the Closing Date;
WHEREAS, the Purchasers have asserted that the
above-referenced closing condition in the first sentence of Section 10.1 of the
Stock Purchase Agreement has not been met due to the existence of the UBL claims
and UBL Lawsuit and are not willing to effect the closing contemplated by the
Stock Purchase Agreement due to the failure of such condition to be met unless
certain matters related thereto are addressed by the Company to the satisfaction
of the Purchasers, including an agreement by the Company that any losses arising
from the breach of the Stock Purchase Agreement resulting from such claims and
the UBL Lawsuit will be indemnified by the Company under the Stock Purchase
Agreement;
WHEREAS, the Company has not agreed that the above-referenced
closing condition in the first sentence of Section 10.1 of the Stock Purchase
Agreement has not been met, but is, nevertheless, willing to address certain
matters raised by the Purchasers in order to effect the closing contemplated by
the Stock Purchase Agreement;
NOW, THEREFORE, in consideration of the foregoing premises and
the mutual covenants and agreements contained herein, the parties hereto hereby
agree as follows:
1. Definitions. As used herein the following terms
shall have the following meanings:
"AVERAGE CLOSING PRICE" shall mean: (i) in the case of any
Judgment, the average closing price for the Common Stock for the 10
trading days following the public announcement of the Judgment; (ii) in
the case of a Settlement, the average closing price for the Common
Stock for the 10 trading days following the public announcement of the
Settlement; and (iii) in all other cases, the average closing price for
the Common Stock for the 10 trading days immediately following the
calendar quarter in which obligations that give rise to an
indemnification claim by a Purchaser are incurred by the Company.
"COMMON STOCK" shall mean shares of the Common Stock, without
par value per share, of the Company, and any capital stock into which
such Common Stock thereafter may be changed.
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"INDEMNIFICATION ESCROW AGENT" shall mean the indemnification
escrow agent designated by IP Delaware pursuant to Section 4 of this
Agreement.
"INDEMNIFICATION ESCROW AGREEMENT" shall mean the
Indemnification Escrow Agreement to be entered into by IP Delaware, IP
Bermuda, the Company and the Indemnification Escrow Agreement, in the
form attached hereto as Exhibit A.
"JUDGMENT" shall mean any judgment, order, decree, award or
similar action by any court, arbitration panel or any regulatory,
administrative or other agency, commission or tribunal.
"PURCHASED SECURITIES" shall mean, as of any specified date
with respect to any Purchaser, (i) the shares of Common Stock that were
issued by the Company pursuant to the Stock Purchase Agreement that are
then owned by such Purchaser, (ii) the shares of Common Stock then
outstanding that were issued upon the exercise of any Warrants that are
then owned by such Purchaser, and (iii) the Warrants that were issued
by the Company pursuant to the Stock Purchase Agreement that are then
owned by such Purchaser.
"SETTLEMENT" shall mean any settlement, compromise or other
resolution of any claim, action, suit, arbitration, inquiry, proceeding
or investigation, but shall not include a Judgment.
"UBL LETTER" shall mean that certain letter, dated June 1,
1998, between the Company and UBL.
"UBL LAWSUIT" shall mean the lawsuit commenced against the
Company by UBL relating to the transactions and other matters
contemplated by the UBL Letter, as such lawsuit may be amended,
modified, substituted or replaced from time to time.
"UBL MATTER" shall mean any third-party claim against the
Company or any of its Subsidiaries that arises out of, relates to or is
based upon the allegations that are the subject matter of the UBL
Lawsuit.
"WARRANTS" shall mean the "Common Shares Purchase Warrants" to
be acquired by the Purchasers pursuant to the Stock Purchase Agreement
permitting the Purchasers to purchase up to 3,650,000 shares of Common
Stock in the aggregate at an exercise price of $5.50 per share.
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2. Indemnification. Notwithstanding anything in the
Stock Purchase Agreement to the contrary, the Company agrees as
follows:
(a) the indemnification obligations of the Company shall
apply to any and all loss, diminution in value, damage, cost, expense,
fine, penalty, suit, action claim, deficiency, liability or obligation
caused by or arising from any UBL Matter (collectively, "UBL Losses");
(b) the provisions of Section 12.4 "Limitations" of the
Stock Purchase Agreement shall not apply to any UBL Loss; and
(c) for purposes of determining the amount of
indemnifiable losses of a Purchaser for which the Company shall be
liable under the indemnification provisions of the Stock Purchase
Agreement, there shall be taken into account any diminution in the
value of such Purchaser's Purchased Securities that results from any
payment of amounts to any Purchaser in respect of any indemnifiable
losses of such Purchaser under the Stock Purchase Agreement.
In the event that the aggregate amount paid or payable by the
Company to the Purchasers in respect of its indemnification obligations with
respect to UBL Losses shall exceed $10,000,000, the Company may, at its option,
pay all or any portion of such excess by delivering shares of Common Stock to
the respective Purchasers, pro rata, subject to the following requirements: (i)
such shares shall, upon issuance, be duly authorized, validly issued, fully paid
and non-assessable, and shall be free of all liens, claims, security interests
and other encumbrances, and (ii) such issuance shall not conflict with,
constitute a default under or violate (A) any of the terms, conditions or
provisions of the charter, by-laws or similar governing documents of the
Company, (B) any of the terms, conditions or provisions of any document,
agreement or other instrument to which the Company or any of its subsidiaries is
a party or by which the Company or any of its subsidiaries is bound, (C) any
applicable law, rule or regulation, or (D) any judgment, writ, injunction,
decree, order or ruling of any court or governmental authority binding on the
Company or any of its subsidiaries. For purposes of the preceding sentence, the
number of shares of Common Stock to be issued to the Purchasers in respect of
any cash payments otherwise due shall be determined by dividing such cash
payments by the Average Closing Price.
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3. Segregation of Funds. Contemporaneously with the
execution and delivery of this Agreement, the Company shall deposit with a
national bank in a separate account for the benefit of the Purchasers, and in
order to secure the Company's indemnification obligations under the Stock
Purchase Agreement, as modified by this Agreement, $10,000,000 in cash. The
Company shall maintain such deposit in a separate account with a national bank
for such purposes until the earlier to occur of (i) the execution and delivery
of the Indemnification Escrow Agreement, (ii) the payment of any amounts payable
pursuant to any Judgments or Settlements of all pending UBL Matters, and (iii)
the dismissal, with prejudice to the plaintiffs, of all pending UBL Matters and,
in the case of clause (ii) or clause (iii), all indemnification obligations of
the Company in respect of UBL Losses shall have been paid in full.
4. Indemnification Escrow Agreement. IP Delaware shall
designate the Indemnification Escrow Agent. Unless Judgments shall have been
rendered, or settlements effected, relating to all pending UBL Matters and all
amounts payable in connection therewith shall have been paid in full or all
pending UBL Matters shall have been dismissed with prejudice to the plaintiffs,
the Company and the Purchasers shall enter into the Indemnification Escrow
Agreement, with such changes in or additions to as the Indemnification Escrow
Agent shall reasonably request, promptly following the designation of the
Indemnification Escrow Agent. Contemporaneously with the execution and delivery
of the Indemnification Escrow Agreement by the Company, the Company shall
deposit with the Indemnification Escrow Agent $10,000,000 in cash to be held by
the Indemnification Escrow Agent in accordance with the terms of the
Indemnification Escrow Agreement.
5. Agreement With Respect to Closing Condition. Each
Purchaser hereby acknowledges and agrees that for purposes of determining
whether the condition to closing set forth in the first sentence of Section 10.1
of the Stock Purchase Agreement has been met, the existence of the UBL Lawsuit
shall not be considered.
6. Certain UBL Items. Without the prior written consent
of IP Delaware and IP Bermuda, the Company shall (i) not alter, amend, waive or
modify in any respect the UBL Letter, (ii) effect any Settlement of any UBL
Matter, or (iii) enter into any agreement or arrangement with UBL relating to
any of the transactions, matters or arrangements specified in the UBL Letter or
contemplated thereby.
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7. Successors and Assigns. This Agreement shall be
binding upon, and inure to the benefit of, the Company, each Purchaser, and
their respective successors and assigns.
8. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO, WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
9. Duplicate Originals. All parties may sign any number
of copies of this Agreement. Each signed copy shall be an original, but all of
them together shall represent the same agreement.
10. Severability. In case any provision in this Agreement
shall be held invalid, illegal, or unenforceable in any respect for any reason,
the validity, legality, and enforceability of any such provision in every other
respect and the remaining provisions shall not in any way be affected or
impaired thereby.
11. Amendments. Any modification or amendment to, or
waiver of, any provision of this Agreement may be made only by an instrument in
writing executed by the Company and Purchasers holding a majority of the
Purchased Securities.
12. Headings. The descriptive section headings are
for convenience only and shall not control or affect the meaning
or construction of any provision of 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 written above.
CENTRAL RESERVE LIFE CORPORATION
By: /s/ XXXX LICK, JR.
---------------------------------------
Name: Xxxx Lick, Jr.
-------------------------------------
Title: Chairman
------------------------------------
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SIGNATURE PAGE TO INDEMNIFICATION AND CLOSING AGREEMENT
NAMES OF PURCHASER:
INSURANCE PARTNERS, L.P., a Delaware
limited partnership
By: Insurance GenPar, L.P., its general
partner
By: Insurance GenPar MGP, Inc.
By: /s/ X. XXXXXX
------------------------
Name: Xxxxxxx Xxxxxx
----------------------
Title: First V.P.
---------------------
INSURANCE PARTNERS OFFSHORE (BERMUDA),
L.P.
By: Insurance GenPar (Bermuda), L.P.,
its general partner
By: Insurance GenPar (Bermuda)
MGP, Inc.
By: /s/ X. XXXXXX
------------------------
Name: Xxxxxxx Xxxxxx
----------------------
Title: First V.P.
---------------------
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SIGNATURE PAGE TO INDEMNIFICATION AND CLOSING AGREEMENT
NAMES OF PURCHASERS:
------------------------------------------
Xxxxx X. Xxxxxx
------------------------------------------
Xxxxxxx Xxxxxxxx
MERCANTILE BANK OF NORTHERN ILLINOIS,
trustee of The Conseco Stock Option Plan
F/B/O Xxxxxxx Xxxxxxxx
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
------------------------------------------
Xxxxx Xxxx
------------------------------------------
Xxx Xxxxx
TURKEY VULTURE FUND, LTD.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
MEDICAL MUTUAL OF OHIO
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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UNITED PAYORS & UNITED PROVIDERS, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
------------------------------------------
Xxxxxx X. Xxxxxx
------------------------------------------
Xxxxxx Xxxxxxxx XXX
LEG PARTNERS SBIC, L.P.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
------------------------------------------
Xxxx X. Xxxxxx
XXXXXX FAMILY LIMITED PARTNERSHIP
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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JOINDER AGREEMENT
Reference is made to that certain Indemnification and Closing Agreement
("Indemnification Agreement"), dated as of July 1, 1998, among Central Reserve
Life Corporation, Insurance Partners, L.P. and Insurance Partners Offshore
(Bermuda), L.P., a copy of which is attached hereto.
The undersigned, Strategic Acquisition Partners, LLC in order to become
the beneficiary of the rights granted by the Indemnification Agreement, hereby
agrees that by the undersigned's execution hereof, the undersigned is a party
to the Indemnification Agreement, subject to all of the restrictions,
conditions and obligations applicable to purchasers set forth in the
Indemnification Agreement. This Joinder Agreement shall take effect and shall
become a part of the Indemnification Agreement immediately upon execution.
Executed as of July 1, 1998.
Strategic Acquisition Partners, LLC
By: /s/ XXX XXXXX
-------------------------------
Name: Xxx Xxxxx
-----------------------------
Title: President
----------------------------
ACCEPTED
Central Reserve Life Corporation
By: /s/ XXX XXXXX
------------------------------
Name: Xxx Xxxxx
----------------------------
Title: Executive Vice President
---------------------------
Dated: July 1, 1998
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STRATEGIC ACQUISITION PARTNERS, LLC
By: /s/ XXX XXXXX
--------------------------------
Name: Xxx Xxxxx
------------------------------
Title: President
-----------------------------
Address:
0000 Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Copy to:
XxXxxxxxx, Will & Xxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, P.C.
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EXHIBIT A
INDEMNIFICATION ESCROW AGREEMENT
THIS INDEMNIFICATION ESCROW AGREEMENT ("Agreement") is made
and entered into between Central Reserve Life Corporation (the "Company"),
Insurance Partners, L.P. ("IP Delaware"), Insurance Partners Offshore
(Bermuda), L.P. ("IP Bermuda"), and each of the other persons identified on
Schedule 1 to this Agreement (the foregoing persons, other than the Company,
being referred to herein, collectively, as the "Purchasers", with each being a
"Purchaser"), and _________________ ("Escrow Agent").
RECITALS
WHEREAS, the Company, IP Delaware, IP Bermuda and Strategic
Acquisition Partners ("SAP") are parties to an Amended and Restated Stock
Purchase Agreement dated as of March 30, 1998 (the "Stock Purchase Agreement");
WHEREAS, pursuant to one or more assignment and assumption
agreements (whether one or more, the "SAP Assignments"), SAP has assigned a its
rights to acquire securities of the Company under the Stock Purchase Agreement
to certain assignees and each such person has accepted such assignment and
assumed certain obligations under the Stock Purchase Agreement;
WHEREAS, pursuant to the Stock Purchase Agreement and, in
certain instances, the SAP Assignment, the respective Purchasers have agreed to
purchase certain shares of common stock of the Company and warrants to purchase
common stock of the Company on the terms and subject to the conditions set
forth in the Stock Purchase Agreement;
WHEREAS, the Company and the Purchasers have entered into an
Indemnification and Closing Agreement, dated as of July ___, 1998 (the "I/C
Agreement");
WHEREAS, the I/C Agreement provides for the execution and
delivery of this Agreement by the parties hereto and the delivery by the
Company of $10,000,000 in cash to the Escrow Agent, such funds to be held by
the Escrow Agent in accordance with the terms hereof (the "Escrow Property");
NOW, THEREFORE, for valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
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ARTICLE 1
ESCROW AGENT
1.1 APPOINTMENT. The Escrow Agent is hereby appointed
depositary and escrow agent for the Company and the Purchasers with respect to
the property to be held in escrow pursuant to the provisions hereof.
1.2 BINDING OBLIGATIONS. Except for this Agreement, the
Escrow Agent is not a party to, nor is it bound by nor need it give any
consideration to the terms or provisions of, any agreement between the Company
or the Purchasers. The only duties and responsibilities of the Escrow Agent
shall be to hold the Escrow Property as escrow agent according to the
provisions of this Agreement and to dispose of and deliver the Escrow Property
as provided in this Agreement. The Escrow Agent shall not be responsible or
liable in any manner whatsoever for the sufficiency, correctness, genuineness,
or validity of the subject matter of the escrow, or any part thereof.
1.3 ACTS OF ESCROW AGENT. The Escrow Agent may in good
faith act or refrain from acting hereunder with respect to any matter referred
to herein in full reliance upon and by and with the advice of counsel which may
be selected by the Escrow Agent. The Escrow Agent may rely upon any documents
which may be submitted to it in connection with its duties hereunder and which
it reasonably believes to be genuine and to have been signed or presented by
the proper party or parties and the Escrow Agent shall have no liability or
responsibility with respect to the form of execution or validity thereof except
as otherwise herein specifically set forth. Each Purchaser agrees to indemnify
the Escrow Agent against any expenses or liabilities incurred by the Escrow
Agent as a result of acts taken in good faith by the Escrow Agent at the
express direction of such Purchaser; the Company agrees to indemnify the Escrow
Agent against any expenses or liabilities incurred by the Escrow Agent as a
result of acts taken in good faith by the Escrow Agent at the express direction
of the Company. The Escrow Agent shall not be liable for anything which it may
do or refrain from doing in connection herewith, except its own gross
negligence or willful misconduct.
1.4 DISPUTES BETWEEN THE PARTIES. In the event a dispute
arises from conflicting demands by the Purchasers, on the one hand, and the
Company, on the other hand, being
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made upon the Escrow Property or any property held by the Escrow Agent
hereunder, the Escrow Agent shall have, in addition to all other remedies which
it may have at law or in equity, the right to refuse to comply with any such
demand without liability for such refusal, until the matter in dispute has been
settled in accordance with the terms hereof, and it has received evidence
thereof satisfactory to it. In the event a dispute between the parties hereto
cannot be resolved by agreement among them, the Escrow Agent may institute an
interpleader action in a court of competent jurisdiction with respect to the
amount of the Escrow Property in dispute.
1.5 LITIGATION. Except as provided in Section 4.2, the
Escrow Agent shall not be required to institute legal proceedings of any kind.
In the event litigation is instituted that (a) requires additional duties of
the Escrow Agent, (b) requires court appearances by or on behalf of the Escrow
Agent, or (c) requires the Escrow Agent to incur expenses or make disbursements
in the resolution of contested claims against the Escrow Property, the Company
shall indemnify and hold harmless the Escrow Agent from all loss, cost,
damages, expenses, and attorneys' fees suffered or incurred by the Escrow Agent
in connection therewith. The Escrow Agent shall be reimbursed for all other
expenses incurred in acting as Escrow Agent, such expenses to be paid by the
Company.
ARTICLE 2
DELIVERY OF PROPERTY
The Escrow Agent hereby acknowledges receipt of the Escrow
Property from the Company and agrees to carry out the duties contained herein
pursuant to the provisions of this Agreement.
ARTICLE 3
DISBURSEMENT OF ESCROW PROPERTY
The Escrow Property shall be released to the Company upon the
earlier to occur of the following: (i) the payment of any amounts payable
pursuant to any Judgments or Settlements of all pending UBL Matters (as each
such term is defined in the I/C Agreement), and (ii) the dismissal, with
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prejudice to the plaintiffs, of all pending UBL Matters and, in the case of
clause (i) or clause (ii), all indemnification obligations of the Company in
respect of UBL Losses (as defined in the I/C Agreement) shall have been paid in
full. Notwithstanding the foregoing, on the four year anniversary date of this
Agreement (such date being hereinafter referred to as the "Release Date"), such
portion of the Escrow Property not then subject to claims by the Purchasers as
provided in Article 4 hereof shall be released to the Company.
ARTICLE 4
CLAIMS AGAINST ESCROW
Any claims by the Purchasers against the Escrow Property for
indemnification in respect of UBL Losses under the Stock Purchase Agreement (as
modified by the I/C Agreement) shall be made as follows:
4.1 NOTIFICATION. (a) Any Purchaser may notify the
Escrow Agent in writing, in accordance with paragraph (b) below, of any
indemnification claims in respect of UBL Losses.
(b) Any notice delivered pursuant to paragraph (a)
above shall consist of a description of the claim or claims and shall state
either (i) the amount of each claim or (ii) the maximum amount of each claim
against the Escrow Property, but that the exact amount cannot be definitely
determined at such time. The Escrow Agent shall promptly notify the Company in
writing that a Purchaser has made a claim against the Escrow Property and such
notification shall be accompanied by a photocopy of the notice received by the
Escrow Agent from the Purchaser regarding such claim.
4.2 CONTEST. The Company may contest any such claim by
giving the Escrow Agent and such Purchaser written notice of such contest
within 30 business days after receipt by the Company of notice of such claim
from the Escrow Agent. If the Company notifies the Escrow Agent and such
Purchaser that it contests a claim in accordance with this Section 4.2, the
Escrow Agent shall continue to hold the Escrow Property pending resolution of
the dispute in accordance with the terms hereof. The Company and such
Purchaser shall have 30 days from the date of receipt by the
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Purchaser of such notice or such longer period as the parties may agree upon
within which to resolve privately such contest. If the Company and such
Purchaser cannot reach a resolution within such time period, Escrow Agent
shall, within 10 days following the expiration of such time period, file a suit
in a court of competent jurisdiction seeking an adjudication of the claim of
such Purchaser. The Escrow Agent shall continue to hold the Escrow Property
pending court adjudication of the dispute.
ARTICLE 5
INVESTMENT AND INTEREST
5.1 INVESTMENT. The Escrow Agent shall invest any funds
constituting part of the Escrow Property in such (a) obligations of the United
States Government or any agency thereof, (b) commercial paper of companies
incorporated or organized under the laws of the United States or one of the
States thereof and in each case having a rating assigned to such commercial
paper by Standard & Poor's Corporation or Xxxxx'x Investor Services, Inc. equal
to the highest rating assigned by such organization, (c) U.S.
dollar-denominated certificates of deposit issued by any bank, trust company or
national banking association incorporated in the United States and having a
combined capital and surplus and retained earnings of at least $100,000,000,
(d) interest bearing accounts of any bank, trust company or national banking
association incorporated in the United States and having a combined capital and
surplus and retained earnings of at least $100,000,000, or (e) money market
mutual funds, as shall be specified in written instructions signed by IP
Delaware. The Escrow Property does not form a part of the capital or assets of
the Escrow Agent, and will not be subject to the claims of its creditors or
depositors. Escrow Agent hereby agrees that during the term of this Agreement,
the Escrow Property shall be physically segregated from the other assets of the
Escrow Agent, and held for the exclusive benefit of the Company and the
Purchasers.
5.2 INTEREST. All interest earned with respect to the
investment of the Escrow Property by the Escrow Agent during the period of
these escrow arrangements shall accrue and be held by the Escrow Agent. Upon
any distribution of any part of the Escrow Property to any person, all interest
earned and accrued with respect to such part of the Escrow
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Property shall be distributed along with such part of the Escrow Property to
such person. For tax purposes, the Escrow Property shall be treated as
property of the Company, and interest earned on the Escrow Property prior to
the distribution thereof shall, for tax purposes, be deemed to be income of the
Company. All tax reporting by the Company, the Purchasers and the Escrow Agent
shall be consistent with the foregoing treatment.
ARTICLE 6
FEES AND CHARGES
For its ordinary services hereunder, the Escrow Agent shall
receive a fee of $_________, payable by the Company. However, in the event
Escrow Agent is required to institute litigation to resolve a dispute under
Article 4, the Escrow Agent's fees and expenses shall be paid as provided in
Section 1.5.
ARTICLE 7
MISCELLANEOUS
7.1 NOTICES. Any notices or other communications
required or permitted hereunder shall be in writing, and shall be sufficiently
given if made by hand delivery, by telex, by telecopier, or registered or
certified mail, postage prepaid, return receipt requested, addressed as follows
(or at such other address as may be substituted by notice given as herein
provided):
If to the Company:
Central Reserve Life Corporation
00000 Xxxxxxxx Xxxx
Xxxxxxxxxxxx, Xxxx 00000
Facsimile No.: [__________________]
Attention: [__________________]
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If to Escrow Agent:
Attn:
Fax:
If to any Purchaser, at its address listed on the signature pages
hereof or as otherwise notified to the Company.
Any notice or communication hereunder shall be deemed to have been
given or made as of the date so delivered if personally delivered; when
answered back, if telexed; when receipt is acknowledged, if telecopied; and
five (5) calendar days after mailing if sent by registered or certified mail
(except that a notice of change of address shall not be deemed to have been
given until actually received by the addressee).
7.2 INVALID PROVISIONS. If any provision of this
Agreement is held to be illegal, invalid, or unenforceable under present or
future laws effective during the term hereof, such provision shall be fully
severable, this Agreement shall be construed and enforced as of such illegal,
invalid, or unenforceable provision had never comprised a part hereof, and the
remaining provisions hereof shall remain in full force and effect and shall not
be affected by the illegal, invalid, or unenforceable provision or by its
severance from this Agreement.
7.3 ENTIRETY AND AMENDMENTS. This Agreement supersedes
all prior documents, understandings, or agreement, oral or written, relating to
the subject matter hereof and constitutes the entire understanding between the
parties with respect to the subject matter hereof. Any modification or
amendment to, or waiver of, any provision of this Agreement may be made only by
an instrument in writing executed by the party against whom enforcement is
sought.
7.4 HEADINGS. The descriptive section headings are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
7.5 CHOICE OF LAW. This Agreement, including, without
limitation, the interpretation, construction, validity and enforceability
thereof, shall be governed by the laws (other than the conflict of laws rules)
of the State of New York.
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7.6 PARTIES BOUND. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.
7.7 INSOLVENCY. The bankruptcy or insolvency of the
Company or any Purchaser shall not affect or prevent performance by the Escrow
Agent of its obligations and instructions hereunder.
7.8 INSPECTION OF RECORDS. The Company and each
Purchaser may examine the records pertaining to the Escrow Property during the
business hours of the Escrow Agent; such examination shall be permitted,
however, only in the presence of an officer of the Escrow Agent.
7.9 MULTIPLE COUNTERPARTS. This Agreement may be
executed in a number of identical counterparts, each of which shall for all
purposes by deemed an original, and all of which together shall constitute but
one and the same instrument.
[Remainder of page intentionally left blank.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first written above.
CENTRAL RESERVE LIFE CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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SIGNATURE PAGE TO INDEMNIFICATION ESCROW AGREEMENT
NAMES OF PURCHASERS:
INSURANCE PARTNERS, L.P., a
Delaware limited partnership
By: Insurance GenPar, L.P., its
general partner
By: Insurance GenPar MGP,
Inc.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
INSURANCE PARTNERS OFFSHORE (BERMUDA), L.P.
By: Insurance GenPar (Bermuda), L.P.,
its general partner
By: Insurance GenPar (Bermuda) MGP, Inc.
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
10
23
SIGNATURE PAGE TO INDEMNIFICATION ESCROW AGREEMENT
NAMES OF PURCHASERS:
----------------------------------------------
Xxxxx X. Xxxxxx
----------------------------------------------
Xxxxxxx Xxxxxxxx
MERCANTILE BANK OF NORTHERN
ILLINOIS, trustee of The Conseco
Stock Option Plan F/B/O Xxxxxxx Xxxxxxxx
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
----------------------------------------------
Xxxxx Xxxx
----------------------------------------------
Xxx Xxxxx
TURKEY VULTURE FUND, LTD.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
MEDICAL MUTUAL OF OHIO
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
11
24
UNITED PAYORS & UNITED PROVIDERS, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
----------------------------------------------
Xxxxxx X. Xxxxxx
----------------------------------------------
Xxxxxx Xxxxxxxx XXX
LEG PARTNERS SBIC, L.P.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
----------------------------------------------
Xxxx X. Xxxxxx
XXXXXX FAMILY LIMITED PARTNERSHIP
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
12
25
SIGNATURE PAGE TO INDEMNIFICATION ESCROW AGREEMENT
ESCROW AGENT:
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
13
