1
INDEMNIFICATION AND ESCROW AGREEMENT
This Indemnification and Escrow Agreement ("Agreement") is
entered into as of February 20, 1996, by and among: (A) JACOR COMMUNICATIONS,
INC., an Ohio corporation ("Buyer"); (B) PRUDENTIAL VENTURE PARTNERS II, L.P., a
limited partnership ("Prudential"); (C) NORTHEAST VENTURES II, a partnership
("NorthEast"); (D) XXXX X. XXXXX ("Xxxxx"); (E) XXXXX X. DE FRANCESCO ("De
Francesco"); (F) XXXXXX X. XXXXXXX ("Xxxxxxx"); (G) XXXXXXX X. XXXXXX
("Arbenz"); (H) CIHC, INCORPORATED, a Delaware corporation ("CIHC"); (I) BANKERS
LIFE HOLDING CORPORATION, a Delaware corporation ("BLH"); (J) NOBLE BROADCAST
GROUP, INC. a Delaware corporation ("Company"); (K) THE FIFTH THIRD BANK, an
Ohio banking corporation (the "Escrow Agent"); (L) CONSECO, INC., an Indiana
corporation ("Conseco"), and Xxxxx ("Sellers Representative"), under the
following circumstances:
A. Prudential and NorthEast are the record and beneficial
owners of 100% of the Class A Stock.
X. Xxxxx, De Francesco, Xxxxxxx and Arbenz are the record and,
along with their respective spouses, the beneficial owners of 100% of the issued
Class B Stock.
C. CIHC and BLH are the record and beneficial owners of the
Warrants.
D. Concurrently with the execution of this Agreement (i) the
Buyer; (ii) the Class A Shareholders; (iii) the Class B Shareholders; (iv) the
Warrant Sellers; and (v) Company have entered into the Stock Agreement.
E. Concurrently with the execution of this Agreement, NBS, SRI,
NBCI and Chesapeake have entered into the NBS Contract.
F. Concurrently with the execution of this Agreement, Buyer and
Company entered into an Investment Agreement pursuant to which Company has
agreed to issue and the Buyer has agreed to purchase the New Warrants.
G. The Class B Shareholders are herein authorizing Sellers
Representative to act as their sole and exclusive agent in connection with this
Agreement, and the Warrant Sellers and the Class A Shareholders are herein
authorizing Conseco to act as their sole and exclusive agent in connection with
this Agreement.
NOW, THEREFORE, for and in consideration of the mutual promises
herein made, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
2
ARTICLE 1
DEFINITIONS
1.1 CERTAIN DEFINITIONS. As used herein, the following terms
shall have the meanings ascribed to them below.
1.1.1 "ARBENZ" means Xxxxxxx X. Xxxxxx.
1.1.2 "AWARD NOTICE" means a written notice executed by a
prevailing Claimant or Claim Respondent, as the case may be,
reporting that any Objection to any Claim Notice has been
determined and resolved by entry of a final order, decree or
judgment by the federal or state court as provided in SECTION
10.9 hereof (the time for appeal therefrom having expired and
no appeal having been perfected), or by consent to entry of any
judgment concerning such Objection. Such notice shall include a
true copy of any such order, decree or judgment, if any,
certified by a clerk of such court, and directions from the
prevailing Claimant or Claim Respondent, as applicable, for any
disbursements to be made from the Escrow Fund in connection
with the resolution of such Objection.
1.1.3 "BLH" means Bankers Life Holding Corporation, a Delaware
corporation.
1.1.4 "BUYER" means Jacor Communications, Inc., an Ohio
corporation.
1.1.5 "BUYER AGREEMENT OR COVENANT" means:
1.1.5.1 An agreement or covenant made by the Buyer in
the Stock Agreement or any agreement or
covenant made by the Buyer in any Ancillary
Document referred to in the Stock Agreement;
and/or
1.1.5.2 An agreement or covenant made by Chesapeake in
the NBS Contract.
1.1.6 "BUYER ESCROW INDEMNIFIED CLAIM" means:
1.1.6.1 A claim for Damages by Buyer against the
Securities Sellers for breach of one or more
Company Representations and Warranties; and/or
2
3
1.1.6.2 A claim for Damages by Buyer against the
Securities Sellers for breach of one or more
NBS Representation or Warranty.
1.1.7 "BUYER NON-ESCROW INDEMNIFIED CLAIM" means:
1.1.7.1 A claim for Damages by Buyer against a Class B
Shareholder for breach by such Class B
Shareholder of one or more Class B Shareholder
Representation or Warranty; or a claim for
Damages by Buyer against a Conseco Party for a
breach by such Conseco Party of one or more
Conseco Party Representation or Warranty; or
1.1.7.2 A claim for Damages by Buyer against a Class B
Shareholder for breach by such Class B
Shareholder of one or more Class B Shareholder
Agreement or Covenant; or a claim for Damages
by Buyer against a Conseco Party for a breach
by such Conseco Party of one or more Conseco
Party Agreement; or
1.1.7.3 A claim for Damages by Buyer against the Class
B Shareholders for breach of one or more
Company Agreement or Covenant; or
1.1.7.4 A claim for Damages by Buyer against the Class
B Shareholders for breach of an NBS Agreement;
or
1.1.8 "BUYER REPRESENTATION OR WARRANTY" means:
1.1.8.1 "Buyer's Representations and Warranties" as
that term is defined in the Stock Agreement,
and in addition, any representation or
warranty made by the Buyer in any Ancillary
Document referred to in the Stock Agreement;
or
1.1.8.2 "Buyer's Representations and Warranties" as
that term is defined in the NBS Contract.
1.1.9 "CHESAPEAKE" means Buyer's wholly-owned subsidiary,
Chesapeake Securities, Inc., a Delaware corporation.
1.1.10 "CIHC" means CIHC, Incorporated, a Delaware corporation.
3
4
1.1.11 "CLAIMANT" means a party submitting a Claim Notice.
1.1.12 "CLAIM NOTICE" means a written notice of a Buyer Escrow
Indemnified Claim, a Buyer Non-Escrow Indemnified Claim and/or
a Seller Indemnified Claim that includes a statement, with
reasonable specificity, of (i) the nature and basis of the
claim and (ii) the estimated dollar amount or range of the
dollar amount of the claim upon which such Claim Notice is
based to the knowledge and belief of the Claimant. Such Claim
Notice shall (a) in the case of a Buyer Escrow Indemnified
Claim be delivered by Buyer to (i) Sellers Representative, in
the event the claim is asserted against one or more of the
Class B Shareholders (and, provided that the time for bringing
any Buyer Escrow Indemnified Claim or Buyer Non-Escrow
Indemnified Claim against the Conseco Parties has not expired,
with a copy to Conseco); or (ii) to Conseco, in the event the
claim is asserted against one or more of the Conseco Parties
(with a copy to the Sellers Representative); or (iii) to both
Sellers Representative and Conseco, in the event the claim is
directed against one or more Class B Shareholders and one or
more Conseco Parties; and (iv) to the Escrow Agent; or (b) in
the case of a Buyer Non-Escrow Indemnified Claim be delivered
by Buyer to (i) Sellers Representative, in the event the claim
is directed against one or more of the Class B Shareholders
(with a copy to Conseco); or (ii) to Conseco, in the event the
claim is directed against one or more of the Conseco Parties
(with a copy to Sellers Representative); or (iii) to both
Sellers Representative and Conseco, in the event the claim is
directed against both the Class B Shareholders and the Conseco
Parties; or (c) in the case of a Seller Indemnified Claim
delivered by the Sellers Representative and/or Conseco, as the
case may be, to the Buyer.
1.1.13 "CLAIM RESPONDENT" means one or more party against whom
a claim is asserted pursuant to a Claim Notice.
1.1.14 "CLASS A ESCROW ACCOUNT" means the "Class A Escrow
Account" of the Escrow Fund.
1.1.15 "CLASS A ESCROW CONSIDERATION" means One Hundred Two
Thousand and Five Hundred Dollars ($102,500) of the Class A
Redemption Price to be deposited into the Escrow Fund by the
Class A Shareholders on the date of this Agreement.
1.1.16 "CLASS A ESCROW RELEASE DATE" means the date which is
the first anniversary of the date on which the Class A Escrow
Consideration was initially deposited with the Escrow Agent,
provided no unresolved Claim Notice is then pending with
respect to which one or more Class A Shareholder is a Claim
Respondent, or if any such unresolved Claim Notice
4
5
is then pending, the date on which such unresolved Claim Notice
no longer remains pending, whichever is later; provided
further, however, an amount equal to 110% of the estimated
amount of the Damages pertaining to the pending claim set forth
in such unresolved Claim Notice shall be retained until such
Claim Notice is resolved, and the balance of such funds held by
the Escrow Agent in the Class A Escrow Account shall be
released on the first anniversary of the date of this
Agreement.
1.1.17 "CLASS A SHAREHOLDER(S)" means Prudential and NorthEast
(each referred to herein individually as a "Class A
Shareholder", and together as the "Class A Shareholders")
1.1.18 "CLASS A STOCK" means the Class A convertible common
stock of Company which is being redeemed on the date hereof
pursuant to the Stock Agreement.
1.1.19 "CLASS A REDEMPTION PRICE" has the meaning ascribed to
it in SECTION 2.2 of the Stock Agreement.
1.1.20 "CLASS B SHAREHOLDER(S)" means Xxxxx, De Francesco,
Xxxxxxx and Arbenz (each referred to herein individually as a
"Class B Shareholder", and collectively as the "Class B
Shareholders")
1.1.21 "CLASS B SHAREHOLDER AGREEMENT OR COVENANT" means an
agreement or covenant made by any Class B Shareholder in the
Stock Agreement or any agreement or covenant made by any Class
B Shareholder in any Ancillary Document referred to in the
Stock Agreement.
1.1.22 "CLASS B SHAREHOLDER REPRESENTATION OR WARRANTY" means a
representation or warranty made by any Class B Shareholder in
the Stock Agreement or a representation or warranty made by any
Class B Shareholder in any Ancillary Document referred to in
the Stock Agreement.
1.1.23 "CLASS B STOCK" means the Class B voting common stock of
Company.
1.1.24 "COMPANY" means Noble Broadcast Group, Inc., a Delaware
corporation.
1.1.25 "COMPANY AGREEMENT OR COVENANT" means an agreement or
covenant made by Company in the Stock Agreement or any
agreement or covenant made by Company in any Ancillary Document
referred to in the Stock Agreement.
5
6
1.1.26 "COMPANY REPRESENTATIONS AND WARRANTIES" has the meaning
ascribed to it in Section 4 of the Stock Agreement, and in
addition, any representation or warranty made by Company in any
Ancillary Document referred to in the Stock Agreement.
1.1.27 "CONSECO" means Conseco, Inc., an Indiana corporation.
1.1.28 "CONSECO PARTY(IES)" means the Class A Shareholders and
the Warrant Sellers (each referred to herein individually as a
"Conseco Party", and collectively as the "Conseco Parties")
1.1.29 "CONSECO PARTY AGREEMENT" means an agreement made by any
Conseco Party in the Stock Agreement.
1.1.30 "CONSECO PARTY REPRESENTATION OR WARRANTY" means a
representation or warranty made by any Conseco Party in ARTICLE
3 of the Stock Agreement or a representation or warranty made
by any Conseco Party in any Ancillary Document referred to in
the Stock Agreement.
1.1.31 "DAMAGES" means all losses, costs, damages, liabilities
and expenses which cause actual economic detriment to the
damaged party.
1.1.32 "DE FRANCESCO" means Xxxxx X. De Francesco.
1.1.33 "DISBURSEMENT EVENT" means any event described in
SECTION 6.2 of this Agreement upon the occurrence of which the
Escrow Agent is authorized and required to make a disbursement
from the Escrow Fund.
1.1.34 "ESCROW AGENT" means The Fifth Third Bank, an Ohio
banking corporation.
1.1.35 "ESCROW AGENT INDEMNIFYING PARTIES" means collectively
each Class A Shareholder, each Class B Shareholder, each
Warrant Seller, Company and Buyer.
1.1.36 "ESCROW ASSETS" means the Warrant Escrow Consideration,
the Class A Escrow Consideration and the Stock Purchase Escrow
Consideration and any undistributed interest or dividend
earnings thereon.
1.1.37 "ESCROW CONSIDERATION" means the Warrant Escrow
Consideration, the Class A Escrow Consideration and the Stock
Purchase Escrow Consideration.
1.1.38 "ESCROW FUND" means an account at The Fifth Third Bank
established in the name of Jacor/Noble Indemnity and Escrow
Account, such account
6
7
having three sub-accounts: one designated as the "Warrant
Escrow Account" in which the Warrant Escrow Consideration shall
be held; one designated as the "Class A Escrow Account" in
which the Class A Escrow Consideration shall be held; and one
designated as the "Stock Purchase Escrow Account" in which the
Stock Purchase Escrow Consideration shall be held.
1.1.39 "INDEMNIFIED PARTY" means any party to this agreement
who has served a Claim Notice, until the Claim Respondent is
finally adjudicated by a court assuming and having jurisdiction
as provided in SECTION 10.9 hereof as not being required to
provide indemnification with respect to such Claim Notice.
1.1.40 "INDEMNIFYING PARTY" means any party to this agreement
against whom a Claim Notice is served until such party is
finally adjudicated by a court assuming and having jurisdiction
as provided in SECTION 10.9 hereof as not being required to
provide indemnification with respect to such Claim Notice.
1.1.41 "INVESTMENT AGREEMENT" means the Investment Agreement
between Buyer and Company of even date herewith pursuant to
which the Buyer has agreed to purchase the New Warrants.
1.1.42 "XXXXXXX" means Xxxxxx X. Xxxxxxx.
1.1.43 "KNOWLEDGE" means conscious awareness of facts or other
information by the president, an executive vice president, or
the chief financial officer of the party with respect to whom
the awareness of such facts or information shall be attributed.
1.1.44 "XXXXX" means Xxxx X. Xxxxx.
1.1.45 "NBCI" means Noble Broadcast Center, Inc., a California
corporation.
1.1.46 "NBS" means Noble Broadcast of San Diego, Inc., a
California corporation.
1.1.47 "NBS CONTRACT" means the Asset Purchase Agreement of
even date herewith by and among NBS, SRI, and NBCI as sellers,
and Chesapeake, as purchaser.
1.1.48 "NBS AGREEMENT" means any agreement made by NBS, SRI
and/or NBCI in the NBS Contract.
1.1.49 "NBS REPRESENTATION OR WARRANTY" means "Sellers
Representations and Warranties" as defined in the NBS Contract.
7
8
1.1.50 "NEW WARRANTS" mean warrants to acquire Class A
convertible common stock of Company which are being issued by
Company to the Buyer pursuant to the Investment Agreement.
1.1.51 "NORTHEAST" means NorthEast Ventures II, a partnership.
1.1.52 "NOTICE OF AGREED RELEASE" means a written declaration
executed by Buyer and Sellers Representative and, provided that
the Warrant Escrow Release Date has not yet occurred, Conseco,
specifying the resolution of any Objection to any Claim Notice,
and including directions for any disbursement to be made from
the Escrow Fund in connection with the resolution of such
Objection.
1.1.53 "OBJECTION" means a written objection to a Claim Notice
stating in detail the basis for such objection.
1.1.54 "PRUDENTIAL" means Prudential Venture Partners II, L.P.,
a limited partnership.
1.1.55 "REDEMPTION CLOSING" has the meaning ascribed to it in
SECTION 10.1.1 of the Stock Agreement.
1.1.56 "SECURITIES SELLER(S)" means each Class B Shareholder
and each Conseco Party (each referred to herein as a
"Securities Seller," and the Class B Shareholders and Conseco
Parties are referred to herein collectively as the "Securities
Sellers.")
1.1.57 "SELLERS REPRESENTATIVE" means Xxxxx who has been
authorized by the Class B Shareholders to act as their sole and
exclusive agent in connection with this Agreement pursuant to
SECTION 10.6 hereof, and any designated successor.
1.1.58 "SELLER INDEMNIFIED CLAIM" means:
1.1.58.1 A claim for Damages by the Securities
Sellers against the Buyer for breach
of one or more Buyer Representation
or Warranty; or
1.1.58.2 A claim for Damages by the Securities
Sellers against the Buyer for breach
of one or more Buyer Agreement or
Covenant; or
1.1.59 "STOCK CLOSING" has the meaning ascribed to it in
SECTION 12.1.1 of the Stock Agreement.
8
9
1.1.60 "STOCK ESCROW RELEASE DATE" means the date which is the
first anniversary of the Stock Closing, provided no unresolved
Claim Notice is then pending with respect to which one or more
Class B Shareholder is a Claim Respondent, or if any such
unresolved Claim Notice is then pending, the date on which such
unresolved Claim Notice no longer remains pending, whichever is
later; provided further, however, an amount equal to 110% of
the estimated amount of the Damages pertaining to the pending
claim set forth in such unresolved Claim Notice shall be
retained until such Claim Notice is resolved, and the balance
of such funds held by the Escrow Agent in the Stock Escrow
Account shall be released on the first anniversary of the Stock
Closing.
1.1.61 "STOCK AGREEMENT" means the Stock Purchase and Warrant
Redemption Agreement of even date herewith among (i) the Buyer;
(ii) the Class A Shareholders; (iii) the Class B Shareholders;
(iv) the Warrant Sellers; and (v) Company.
1.1.62 "STOCK PURCHASE ESCROW ACCOUNT" means the "Stock
Purchase Escrow Account" of the Escrow Fund.
1.1.63 "STOCK PURCHASE ESCROW CONSIDERATION" means Five Hundred
Twenty-Two Thousand Five Hundred Dollars ($522,500) of the
Stock Purchase Price to be deposited into the Escrow Fund on
the date of the Stock Closing.
1.1.64 "STOCK PURCHASE PRICE" has the meaning ascribed to it in
SECTION 1.2 of the Stock Agreement.
1.1.65 "SRI" means Sports Radio, Inc., a California
corporation.
1.1.66 "TERMINATION DATE" means the date this Agreement is
terminated pursuant to SECTION 9 hereof.
1.1.67 "THIRD PARTY CLAIM" means any demand, suit, claim or
assertion of liability by one or more third parties giving rise
to a claim by way of a Claim Notice by the Claimant for
indemnification for Damages for a Buyer Escrow Indemnified
Claim, a Buyer Non-Escrow Indemnified Claim or a Seller
Indemnified Claim, as the case may be, pursuant to this
Agreement.
1.1.68 "UNCONTESTED CLAIM NOTICE" means (a) any Claim Notice
with respect to a Buyer Escrow Indemnified Claim to which the
Claim Respondent does not submit a timely Objection, or (b) any
Claim Notice with respect to a Buyer Escrow Indemnified Claim
to which the Claim Respondent submits a timely Objection that
is subsequently withdrawn in a Withdrawal Notice submitted by
the Claim Respondent.
9
10
1.1.69 "WARRANTS" mean warrants to acquire Class A convertible
common stock of Company that are owned by the Warrant Sellers
which shall be redeemed on the date hereof pursuant to the
Stock Agreement.
1.1.70 "WARRANT ESCROW ACCOUNT" means the "Warrant Escrow
Account" of the Escrow Fund.
1.1.71 "WARRANT ESCROW CONSIDERATION" means One Million Eight
Hundred Seventy-Five Thousand Dollars ($1,875,000) of the
Warrant Redemption Price to be deposited into the Escrow Fund
by the Warrant Sellers on the date of this Agreement.
1.1.72 "WARRANT ESCROW RELEASE DATE" means the date which is
the first anniversary of the date on which the Warrant Escrow
Consideration was initially deposited with the Escrow Agent,
provided no unresolved Claim Notice is then pending with
respect to which one or more Warrant Seller is a Claim
Respondent, or if any such unresolved Claim Notice is then
pending, the date on which such unresolved Claim Notice no
longer remains pending, whichever is later; provided further,
however, an amount equal to 110% of the estimated amount of the
Damages pertaining to the pending claim set forth in such
unresolved Claim Notice shall be retained until such Claim
Notice is resolved, and the balance of such funds held by the
Escrow Agent in the Warrant Escrow Account shall be released on
the first anniversary of the date of this Agreement.
1.1.73 "WARRANT REDEMPTION PRICE" has the meaning ascribed to
it in SECTION 2.2 of the Stock Agreement.
1.1.74 "WARRANT SELLER(S)" means CIHC and BLH (each referred to
herein individually as a "Warrant Seller", and together as the
"Warrant Sellers").
1.1.75 "WARRANT SELLERS NOTE REPAYMENT AMOUNT" means the
amounts received by the Warrant Sellers on account of repayment
of their notes payable from the Company received on the date of
this Agreement.
1.1.76 "WITHDRAWAL NOTICE" means a written declaration executed
by a Claimant withdrawing a Claim Notice or by a Claim
Respondent withdrawing an Objection.
SECTION 2
RIGHT TO INDEMNIFICATION
10
11
2.1 INDEMNIFICATION BY SECURITIES SELLERS FOR BUYER ESCROW
INDEMNIFIED CLAIMS. Subject to the limitations imposed by SECTION 2.5
hereof, the Securities Sellers agree to indemnify and hold harmless Buyer
against any Buyer Escrow Indemnified Claim described in SECTION 1.1.6.1 and/or
SECTION 1.1.6.2 hereof. The obligation of the Securities Sellers to indemnify
and hold harmless Buyer pursuant to this SECTION 2.1, shall be subject to the
limitations contained in SECTION 8.15 of the Stock Agreement, and shall not
become operative until the aggregate indemnification obligation of the
Securities Sellers to Buyer hereunder exceeds $500,000, and provided, further,
that once the aggregate indemnification obligation of the Securities Sellers to
Buyer exceeds $500,000, only those Damages that exceed $500,000, shall be
included within the indemnification obligations of the Securities Sellers with
respect to a Buyer Escrow Indemnified Claim. The Buyer's sole source of recovery
against the Securities Sellers for indemnification by Securities Sellers with
respect to a Buyer Escrow Indemnified Claim pursuant to this SECTION 2.1, shall
be limited to a claim by the Buyer against the Escrow Assets, and once the
Escrow Assets have been exhausted, Buyer shall have no right whatsoever to
proceed directly against or offset amounts payable to the Securities Sellers
(except as permitted by SECTION 5.1 hereof) for recovery with respect to a Buyer
Escrow Indemnified Claim pursuant to this SECTION 2.1. With respect to Buyer
Escrow Indemnified Claims brought within twelve (12) months from the date of the
Redemption Closing, seventy-five percent (75%) of the responsibility for such
claims shall be borne by the Warrant Sellers; Four and one-tenth percent (4.1%)
of the responsibility for such claims shall be borne by the Class A
Shareholders; and twenty and nine-tenths percent (20.9%) of the responsibility
for such claims shall be borne by the Class B Shareholders; and thereafter with
respect to Buyer Escrow Indemnified Claims, one hundred percent (100%) of the
responsibility for such claims shall be borne by the Class B Shareholders.
2.2 INDEMNIFICATION BY SECURITIES SELLERS FOR BUYER
NON-ESCROW INDEMNIFIED CLAIMS. Subject to the limitations imposed by SECTION
2.5 hereof, each Securities Seller severally agrees to indemnify and hold
harmless Buyer against any Buyer Non- Escrow Indemnified Claim resulting from
such Securities Seller's breach pursuant to SECTION 1.1.7.1, SECTION 1.1.7.2,
SECTION 1.1.7.3, or SECTION 1.1.7.4 hereof.
2.3 INDEMNIFICATION BY BUYER FOR BREACH OF A BUYER
REPRESENTATION OR WARRANTY. Subject to the limitations imposed by SECTION
2.5 hereof, Buyer agrees to indemnify and hold harmless any Securities Seller
against any Seller Indemnified Claim resulting from Buyer's breach pursuant to
SECTION 1.1.58.1 hereof.
2.4 INDEMNIFICATION BY BUYER FOR BREACH OF A BUYER
AGREEMENT OR COVENANT. Subject to the limitations imposed by SECTION 2.5
hereof, Buyer agrees to indemnify and hold harmless the Securities Sellers
against any Seller Indemnified Claim resulting from Buyer's breach pursuant to
SECTION 1.1.58.2 hereof.
2.5 LIMITATIONS ON INDEMNIFICATION. In no event shall (i) the
obligation of each Class B Shareholder to indemnify and hold harmless Buyer
pursuant to SECTION 2.2
11
12
hereof exceed such Class B Shareholder's proportionate share of the Stock
Purchase Price as set forth on Exhibit B; or (ii) the obligation of each Warrant
Seller to indemnify and hold harmless Buyer pursuant to SECTION 2.2 hereof
exceed such Warrant Seller's proportionate share of the Warrant Redemption Price
as set forth on Exhibit B and so much of the Warrant Sellers Note Repayment
Amount as was received by such Warrant Seller; or (iii) the obligation of each
Class A Shareholder to indemnify and hold harmless Buyer pursuant to SECTION 2.2
hereof exceed such Class A Shareholder's proportionate share of the Class A
Redemption Price as set forth on Exhibit B. Buyer's obligation to indemnify and
hold harmless a Warrant Seller pursuant to SECTION 2.3 and SECTION 2.4 hereof
shall in no event exceed such Warrant Seller's proportionate share of the
Warrant Redemption Price as set forth on Exhibit B and so much of the Warrant
Sellers Note Repayment Amount as was received by such Warrant Seller. Buyer's
obligation to indemnify and hold harmless a Class A Shareholder pursuant to
SECTION 2.3 and SECTION 2.4 hereof shall in no event exceed such Class A
Shareholder's proportionate share of the Class A Redemption Price as set forth
on Exhibit B. Buyer's obligation to indemnify and hold harmless a Class B
Shareholder pursuant to SECTION 2.3 and SECTION 2.4 hereof shall in no event
exceed such Class B Shareholder's proportionate share of the Stock Purchase
Price as set forth on Exhibit B.
SECTION 3
INDEMNIFICATION PROCEDURES
3.1 DIRECT CLAIMS. Within twenty (20) days from the
date upon which the Indemnified Party has Knowledge that it is entitled to
indemnity hereunder, an Indemnified Party shall give written notice by means of
a Claim Notice to the Indemnifying Party of any claim by the Indemnified Party
for indemnity hereunder. Thereafter the Indemnified Party and the Indemnifying
Party shall attempt, in good faith, to resolve such claim for indemnity. In the
event the Indemnified Party and the Indemnifying Party are unable to resolve a
claim for indemnity within twenty (20) days of receipt of notice, the
Indemnified Party may pursue an action in law or equity in the federal or state
court as provided in SECTION 10.9 hereof.
3.2 THIRD PARTY CLAIMS.
3.2.1 NOTICE OF THIRD PARTY CLAIM. An Indemnified Party agrees
to give written notice by means of a Claim Notice within a
reasonable time, but not to exceed twenty (20) days from
receipt, to the Indemnifying Party of any Third Party Claim, it
being understood that the failure to give such notice shall not
affect the Indemnified Party's right to indemnification and the
Indemnifying Party's obligation to indemnify as set forth in
this Agreement, unless the Indemnifying Party's ability to
contest, defend or settle with respect to such Third Party
Claim is thereby demonstrably prejudiced.
12
13
3.2.2 DEFENSE OF THIRD PARTY CLAIMS BY INDEMNIFYING PARTY. The
Indemnifying Party shall have the right, but not the
obligation, to undertake, by counsel or other representatives
of its own choosing, the defense or opposition to such Third
Party Claim.
3.2.3 DEFENSE OF THIRD PARTY CLAIMS BY INDEMNIFIED PARTY. In
the event that the Indemnifying Party shall elect not to
undertake such defense or opposition, or within ten days after
notice of any such Third Party Claim from the Indemnified Party
shall fail to defend or oppose, the Indemnified Party (upon
further written notice to the Indemnifying Party) shall have
the right to undertake the defense, opposition, compromise or
settlement of such Third Party Claim, by counsel or other
representatives of its own choosing, on behalf of and for the
account and risk of the Indemnifying Party (subject to the
right of the Indemnifying Party to assume defense of or
opposition to such Third Party Claim at any time prior to
settlement, compromise or final determination thereof).
Notwithstanding the foregoing, the Indemnifying Party shall
have the right to dispute whether such Third Party Claim gives
rise to a valid claim for indemnification hereunder.
3.2.4 PARTICIPATION IN DEFENSE OF THIRD PARTY CLAIMS. Anything
in this SECTION 3.2 to the contrary notwithstanding, (A) the
Indemnified Party shall have the right, at its own cost and
expense, to participate in the defense, opposition, compromise
or settlement of the Third Party Claim, (B) the Indemnifying
Party shall not, without the Indemnified Party's written
consent, settle or compromise any Third Party Claim or consent
to entry of any judgment which does not include as an
unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnified Party of a release from all
liability in respect of such Third Party Claim, and (C) in the
event that the Indemnifying Party undertakes defense of or
opposition to any Third Party Claim, the Indemnified Party, by
counsel or other representative of its own choosing and at its
sole cost and expense, shall have the right to consult with the
Indemnifying Party and its counsel or other representatives
concerning such Third Party Claim and the Indemnifying Party
and the Indemnified Party and their respective counsel or other
representatives shall cooperate in good faith with respect to
such Third Party Claim.
3.2.5 THIRD PARTY CLAIM GIVING RISE TO BUYER ESCROW INDEMNIFIED
CLAIM. In the event a Third Party Claim gives rise to a Buyer
Escrow Indemnified Claim, if Buyer is entitled to
indemnification with respect to such Third Party Claim, then
such claim shall be satisfied from Escrow Assets available for
such purpose.
13
14
3.2.6 NO ADMISSION REGARDING THIRD PARTY CLAIMS. No undertaking
of defense or opposition to a Third Party Claim shall be
construed as an acknowledgement by such party that it is liable
to the Indemnified Party with respect to the Third Party Claim
at issue or other similar Third Party Claims.
3.3 EXPENSES. Any expense of an Indemnified Party in
enforcing such Indemnified Party's claim of indemnity hereunder shall also
constitute an indemnified claim in the event the Indemnified Party prevails on
the claim; provided, however, if the Indemnified Party does not prevail on the
claim such unsuccessful Indemnified Party shall pay the reasonable expenses,
including reasonable attorney's fees and expenses, of the Indemnifying Party in
defending against such unsuccessful claim.
3.4 CLAIMS AGAINST ESCROW ASSETS. Any claim by an
Indemnified Party against the Escrow Assets shall be brought pursuant to SECTION
6 hereof.
3.5 TIME PERIOD FOR BRINGING CLAIMS.
3.5.1 CLAIMS UNDER STOCK AGREEMENT.
3.5.1.1 Any claim by Buyer against one or more Conseco
Party for indemnification for breach of one or more
Company Representations and Warranties pursuant to
SECTION 1.1.6.1 hereof may be brought at any time
within a period of twelve (12) months from the date of
the Redemption Closing. Any claim by Buyer against one
or more Class B Shareholder for indemnification for
breach of one or more Company Representations and
Warranties pursuant to SECTION 1.1.6.1 hereof may be
brought at any time within the time periods specified
in SECTION 8.13.3, SECTION 8.13.4, SECTION 8.13.5, of
the Stock Agreement, as applicable.
3.5.1.2 Any claim by Buyer against one or more Class B
Shareholder for indemnification for breach of a Class
B Shareholder Representation or Warranty pursuant to
SECTION 1.1.7.1 hereof may be brought at any time
within the time periods specified in SECTION 8.13.2 of
the Stock Agreement. Any claim by Buyer against one or
more Conseco Party for indemnification for breach of a
Conseco Party Representation or Warranty pursuant to
SECTION 1.1.7.1 hereof may be brought at any time
within the time periods specified in SECTION 8.13.2 of
the Stock Agreement.
3.5.1.3 Any claim by Buyer against one or more Class B
Shareholder for indemnification for breach of a Class
B Shareholder Agreement or Covenant pursuant to
SECTION 1.1.7.2 hereof may be
14
15
brought at any time within the time periods specified
in SECTION 8.13.1 of the Stock Agreement. Any claim by
Buyer against one or more Conseco Party for
indemnification for breach of a Conseco Party
Agreement pursuant to SECTION 1.1.7.2 hereof may be
brought at any time within the time periods specified
in SECTION 8.13.1 of the Stock Agreement.
3.5.1.4 Any claim by Buyer against one or more Class B
Shareholder for indemnification for breach of a
Company Agreement or Covenant pursuant to SECTION
1.1.7.3 hereof may be brought at any time within the
time periods specified in SECTION 8.13.1 of the Stock
Agreement.
3.5.1.5 Any claim for indemnification brought by
Securities Sellers against Buyer for breach of a Buyer
Representation or Warranty pursuant to SECTION 1.1.8.1
hereof may be brought within the time periods
specified in SECTION 8.13.2 of the Stock Agreement.
3.5.1.6 Any claim for indemnification brought by
Securities Sellers against Buyer for breach of a Buyer
Agreement or Covenant pursuant SECTION 1.1.5.1 hereof,
may be brought within the time periods specified in
SECTION 8.13.1 of the Stock Agreement.
3.5.2 CLAIMS UNDER NBS CONTRACT.
3.5.2.1 Any claim by Buyer against one or more
Securities Seller for indemnification for breach of an
NBS Representation or Warranty pursuant to SECTION
1.1.6.2 hereof may be brought within the time periods
specified in SECTION 8.7.2 of the NBS Contract.
3.5.2.2 Any claim by Buyer against one or more Class B
Shareholder for indemnification for breach of an NBS
Agreement pursuant to SECTION 1.1.7.4 hereof, may be
brought at any time within the time periods specified
in SECTION 8.7.1 of the NBS Contract.
3.5.2.3 Any claim by Securities Sellers against Buyer
for indemnification for breach of a Buyer
Representation or Warranty pursuant to SECTION 1.1.8.2
hereof may be brought at any time within the time
periods specified in SECTION 8.7.2 of the NBS
Contract.
3.5.2.4 Any claim by Securities Sellers against Buyer
for indemnification for breach of a Buyer Agreement or
Covenant pursuant to SECTION 1.1.5.2 hereof, may be
brought within the time periods specified in SECTION
8.7.1 of the NBS Contract.
15
16
3.6 RIGHT TO REVIEW AND AUDIT. A Claim Respondent shall
have the right to review and audit, at such Claim Respondent's expense, the
books and records of the Claimant specifically relating to the Claimant's claim
to determine the amount and validity of a claim set forth in the Claim Notice.
The Claim Respondent further agrees that any information obtained from the
review and audit of such books and records will be used by the Claim Respondent,
and the Claim Respondent's attorneys, accountants and other professional
advisors, solely for the purpose of responding to the Claim Notice and for no
other purpose. Claim Respondent further agrees to keep such information
confidential unless such information (i) at the time of disclosure or thereafter
is generally available to the public (other than as a result of a disclosure in
violation of this agreement), (ii) was available on a nonconfidential basis from
a source other than the Claimant, provided that such source was not obligated to
keep such information confidential, or (iii) has been independently acquired or
developed without violating any of the obligations under this agreement. Upon
resolution of the Claim Notice, the Claim Respondent agrees to return to the
Claimant all such information obtained from the Claimant's books and records
together with all copies thereof.
3.7 NO CONSENT REQUIRED BY NON-PARTICIPATING PARTY. A
Claimant and any Claim Respondent shall be entitled to resolve and settle as
between such Claimant and Claim Respondent the applicable Claim Notice without
any requirement for the consent of any other party to this Agreement, and such
settlement shall not act to release any other party to this Agreement from such
other party's obligations hereunder.
SECTION 4
APPOINTMENT OF ESCROW AGENT
4.1 APPOINTMENT. The Class A Shareholders, the Class B
Shareholders, the Warrant Sellers, the Buyer, and Company hereby appoint the
Escrow Agent to serve as escrow agent and the Escrow Agent hereby accepts the
appointment to act as escrow agent upon the terms, conditions and provisions of
this Agreement.
4.2 ESCROW AGENT FEES. For its services hereunder
(which shall include receipt, investment, and disbursement of the Escrow Fund in
the manner contemplated by this Agreement), the Escrow Agent shall be paid an
annual fee in the amount set forth on Exhibit A to this Agreement. The Escrow
Agent's fees and expenses shall be paid one-half by Buyer and one-half by the
Securities Sellers in accordance with the percentages set forth in Exhibit B.
16
17
SECTION 5
ESCROW FUND
5.1 CREATION OF ESCROW FUND. At the Warrant Closing,
the Warrant Sellers shall deposit the Warrant Escrow Consideration into the
Warrant Escrow Account of the Escrow Fund and the Class A Shareholders shall
deposit the Class A Escrow Consideration into the Class A Escrow Account of the
Escrow Fund. At the Stock Closing, Buyer shall deposit the Stock Purchase Escrow
Consideration into the Stock Purchase Escrow Account of the Escrow Fund. The
Escrow Agent hereby acknowledges receipt of the Warrant Escrow Consideration and
the Class A Escrow Consideration, acknowledges that the Warrant Escrow
Consideration and the Class A Escrow Consideration has been placed in the Escrow
Fund and agrees to hold, administer and pay the Escrow Fund in accordance with
the terms of this Agreement and not permit any withdrawal thereof except
pursuant to the terms hereof. In the event claims against the Warrant Escrow
Account brought prior to the Warrant Escrow Release Date exceed the Warrant
Escrow Consideration, and/or claims against the Class A Escrow Account brought
prior to the Class A Escrow Release Date exceed the Class A Escrow
Consideration, the excess amount of such claims may, at Buyer's option, be
offset against any sums owed by Buyer to the Class B Shareholders up to the
amount of the Stock Purchase Escrow Consideration, or may be paid from the Stock
Purchase Escrow Account once the Stock Purchase Escrow Consideration has been
deposited therein.
5.2 INVESTMENT OF ESCROW ASSETS. During the term of
this Agreement the Escrow Agent shall invest and reinvest the Escrow Assets in
obligations of the United States and agencies thereof or any money market
account or fund investing solely in obligations of the United States or agencies
thereof, provided that no such investment shall have a maturity of more than
thirty (30) days from the date of such investment unless specifically agreed to
by Buyer, Sellers Representative and, provided that the Warrant Escrow Release
Date has not yet occurred, Conseco. Sellers Representative and, provided that
the Warrant Escrow Release Date has not yet occurred, Conseco may, but are not
required to, direct such investments of the foregoing types as Sellers
Representative and, provided that the Warrant Escrow Release Date has not yet
occurred, Conseco shall, in their sole discretion, deem appropriate, provided
that no such investment shall have a maturity of more than thirty (30) days from
the date of such investment unless specifically agreed to by Buyer. In the
absence of a direction regarding investment, the Escrow Agent shall invest the
Escrow Assets in the Escrow Agent's Fountain Square U.S. Treasury Obligations
Fund. Investment Directions shall be delivered to the Escrow Agent by written
instructions in the form of Exhibit C attached hereto. Interest earned on the
Escrow Fund shall be distributed, no less frequently than quarterly, and
allocated pro rata based upon the initial amount deposited, between Conseco and
the Sellers Representative, who shall promptly distribute such interest earnings
to the Securities Sellers pro rata according to the proportions set forth in
Exhibit B.
17
18
5.3 COOPERATION. Each of the parties hereto shall
cooperate with the Escrow Agent and deliver to the Escrow Agent such additional
confirmations, certificates, affirmations, information and other documents as
the Escrow Agent shall reasonably request in the performance of its obligations
under this Agreement, including any and all such items as the Escrow Agent shall
deem necessary to evidence termination of this Agreement and to evidence the
parties' consent to the final distribution of the Escrow Fund in accordance with
the terms of this Agreement.
5.4 PURPOSE OF ESCROW FUND. The Escrow Fund has been
established for the purpose of providing the exclusive source of funds to
satisfy Buyer Escrow Indemnified Claims.
SECTION 6
CLAIM NOTICES AND DISTRIBUTION OF ESCROW FUND
6.1 NOTICES OF BUYER ESCROW INDEMNIFIED CLAIMS. At any
time prior to the expiration of time for bringing any Buyer Escrow Indemnified
Claim against one or more Securities Sellers, Buyer may deliver a Claim Notice
with respect to a Buyer Escrow Indemnified Claim. The Claim Respondent shall
have fifteen (15) days following the date of such a Claim Notice or an amended
Claim Notice to timely deliver to the Escrow Agent and the Claimant an
Objection. The Claimant and the Claim Respondent shall review together any
Objection timely submitted by the Claim Respondent to such Claim Notice, and
shall attempt in good faith to resolve such Objection. Any such resolution shall
be evidenced by a Notice of Agreed Release executed by the Claimant and the
Claim Respondent and delivered to the Escrow Agent. At any time during such
discussions the Claimant may submit a Withdrawal Notice for all or any part of
any claim described in such Claim Notice, and the Claim Respondent may submit a
Withdrawal Notice for all or any part of any Objection. In the event the
Claimant and the Claim Respondent are unable to resolve such a Claim Notice
within twenty (20) days, the Indemnified Party may pursue an action in law or
equity in the federal or state court as provided in SECTION 10.9 hereof. The
Escrow Agent shall respond to an Uncontested Claim Notice, a Notice of Agreed
Release, or an Award Notice in accordance with SECTION 6.2 hereof.
6.2 DISPOSITION OF ESCROW FUND. The Escrow Agent shall pay and
disburse amounts held in the Escrow Fund as follows:
6.2.1 To Buyer as specified in any Uncontested Claim Notice;
6.2.2 To Buyer as specified in any Notice of Agreed Release
received by the Escrow Agent;
18
19
6.2.3 To Buyer, if Buyer has prevailed on a claim as
specified in any Award Notice received by the Escrow
Agent;
6.2.4 Any amounts held in the Warrant Escrow Account shall
be distributed by the Escrow Agent to Conseco, on
behalf of the Warrant Sellers, on the Warrant Escrow
Release Date, provided no unresolved Claim Notice is
then pending with respect to which one or more Warrant
Seller is a Claim Respondent, or if any such
unresolved Claim Notice is then pending, the date on
which such unresolved Claim Notice no longer remains
pending, whichever is later; provided further,
however, an amount equal to 110% of the estimated
amount of the Damages pertaining to the unresolved
portion or any pending claim set forth in such
unresolved Claim Notice shall be retained until such
Claim Notice is resolved, and the balance of such
funds held by the Escrow Agent in the Warrant Escrow
Account shall be released to Conseco, on behalf of the
Warrant Sellers on the first anniversary of the date
of this Agreement.
6.2.5 Any amounts held in the Class A Escrow Account shall
be distributed by the Escrow Agent to Conseco, on
behalf of the Class A Shareholders, on the Class A
Escrow Release Date, provided no unresolved Claim
Notice is then pending with respect to which one or
more Class A Shareholder is a Claim Respondent, or if
any such unresolved Claim Notice is then pending, the
date on which such unresolved Claim Notice no longer
remains pending, whichever is later; provided further,
however, an amount equal to 110% of the estimated
amount of the Damages pertaining to the unresolved
portion or any pending claim set forth in such
unresolved Claim Notice shall be retained until such
Claim Notice is resolved, and the balance of such
funds held by the Escrow Agent in the Class A Escrow
Account shall be released to Conseco, on behalf of the
Class A Shareholders on the first anniversary of the
date of this Agreement.
6.2.6 Any amounts held in the Stock Purchase Escrow Account
shall be distributed by the Escrow Agent to Sellers
Representative, on behalf of the Class B Shareholders,
on the Stock Escrow Release Date; provided no
unresolved Claim Notice is then pending with respect
to which one or more Class B Shareholder is a Claim
Respondent, or if any such unresolved Claim Notice is
then pending, the date on which such unresolved Claim
Notice no longer remains pending, whichever is later;
provided further, however, an amount equal to 110% of
the estimated amount of the Damages pertaining to the
unresolved portion or any pending claim set forth in
such unresolved Claim Notice shall be retained until
such Claim Notice is resolved, and the balance of
19
20
such funds held by the Escrow Agent in the Stock
Purchase Escrow Account shall be released to Sellers
Representative, on behalf of the Class B Shareholders,
on the first anniversary of the Stock Closing.
6.3 DISBURSEMENT PROCEDURE. All disbursements hereunder
shall be made by the Escrow Agent within three (3) business days following its
receipt of notice of a Disbursement Event executed in accordance with this
Agreement. Any disbursements to the Class B Shareholders shall be made in
immediately available funds payable to Sellers Representative. Any disbursements
to the Warrant Sellers shall be made in immediately available funds payable to
Conseco. Any disbursements to the Class A Shareholders shall be made in
immediately available funds payable to Conseco.
SECTION 7
PERFORMANCE OF THE ESCROW AGENT
7.1 LIMITATION OF LIABILITY. The duties and obligations of the
Escrow Agent are only those expressly set forth in this Agreement. Escrow Agent
shall not be liable to anyone for any damages, losses, or expenses which they
may incur as a result of any act or omission of Escrow Agent, unless such
damages, losses, or expenses are caused by Escrow Agent's fraud, willful
misconduct or gross negligence. Accordingly, Escrow Agent shall not incur any
such liability with respect to (a) any action taken or omitted in good faith
upon the advice of Escrow Agent's counsel or the joint advice of counsel for the
other parties hereto, given with respect to any question relating to the duties
and responsibilities of Escrow Agent under this Agreement or (b) any action
taken or omitted in reliance upon any instrument, including execution, or the
identity or authority of any person executing such instrument, its validity and
effectiveness, but also as to the truth and accuracy of any information
contained therein which Escrow Agent shall, in good faith, believe to be
genuine, to have been signed by a proper person or persons and to conform to the
provisions of this Agreement. Escrow Agent shall not be bound in any way by any
contract or agreement between other parties hereto, whether or not it has
knowledge of any such contract or agreement or of its terms or conditions.
7.2 INDEMNITY OF THE ESCROW AGENT.
7.2.1 INDEMNIFICATION. The Escrow Agent Indemnifying Parties
jointly and severally, hereby agree to indemnify and hold
harmless Escrow Agent against any and all costs, losses,
claims, damages, liabilities and expenses, including reasonable
costs of investigation, court costs, and reasonable attorney's
fees and disbursements, which may be imposed upon Escrow Agent
in connection with its acceptance of appointment as Escrow
Agent hereunder, including any litigation arising from this
Agreement involving the subject matter hereof, and all such
costs, expenses and disbursements shall be for the account of
and shall be borne and paid as provided in SECTION 7.2.3 as a
condition to
20
21
termination of the Agreement, except that there shall be no
indemnification for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the
fraud, willful misconduct or gross negligence of the Escrow
Agent.
7.2.2 SECURITY. As security for the indemnification obligations
of the Escrow Agent by the Indemnifying Parties, the Escrow
Agent is hereby granted a lien upon all assets held by Escrow
Agent hereunder, which lien shall be prior to all other liens
upon or claims against such assets.
7.2.3 SHARING OF COSTS. Any amounts that become payable to the
Escrow Agent in accordance with SECTION 7.2.1 shall be borne
and paid one-half by Buyer and one-half by the Securities
Sellers except (i) if such amounts become payable to the Escrow
Agent due solely to the action or failure to act of Buyer, all
such amounts shall be borne and paid entirely by Buyer, or (ii)
if such amounts become payable to the Escrow Agent due solely
to the action or failure to act of one or more Class B
Shareholder, one or more Conseco Party, Sellers Representative,
and/or Conseco, all such amounts shall be borne and paid
entirely by the party or parties responsible. All amounts borne
and to be paid as provided for pursuant to this SECTION 7.2.3
may be paid directly to the Escrow Agent from property held by
the Escrow Agent pursuant to this Agreement. If the
indemnification obligations to the Escrow Agent are satisfied
from such property held by the Escrow Agent hereunder, then the
party obligated to pay such costs, expenses and disbursements
pursuant to this SECTION 7.2.3 shall make such payments in cash
to the Escrow Agent to reimburse the Escrow Fund for
satisfaction of such indemnification obligations.
7.3 DISPUTES.
7.3.1 DISAGREEMENTS. In the event of any disagreement among any
of the parties to this Agreement, or among them or any other
person resulting in adverse claims and demands being made in
connection with or from any property involved herein or
affected hereby, Escrow Agent shall be entitled to refuse to
comply with any such claims or demands as long as such
disagreement may continue, and in so refusing, shall make no
delivery or other disposition of any property then held by it
under this Agreement, and in so doing the Escrow Agent shall be
entitled to continue to refrain from acting until (i) the right
of adverse claimants shall have been finally settled by binding
arbitration or finally adjudicated in a court assuming and
having jurisdiction of the property involved herein or affected
hereby as provided in SECTION 10.9 or (ii) all differences
shall have been adjusted by agreement and Escrow Agent shall
have been notified in writing of such agreement signed by the
parties hereto.
21
22
7.3.2 INTERPLEADER. In the event of such disagreement, Escrow
Agent may, but need not, tender into the registry or custody of
any court of competent jurisdiction as provided in SECTION 10.9
all money or property in its hands under the terms of this
Agreement, together with such legal proceedings as it deems
appropriate and thereupon to be discharged from all further
duties under this Agreement. The filing of any such legal
proceeding shall not deprive Escrow Agent of its compensation
earned prior to such filing.
7.3.3 SECURITY TO BE PROVIDED. Escrow Agent shall have no
obligation to take any legal action in connection with this
Agreement or towards its enforcement, or to appear in,
prosecute or defend any action or legal proceeding which would
or might involve it in any cost, expense, loss or liability
unless security and indemnity, as provided in SECTION 7.2 of
this Agreement, shall be furnished.
SECTION 8
VACANCIES
8.1 RESIGNATION OF THE ESCROW AGENT. The Escrow Agent
may at any time resign by giving at least thirty (30) days' prior written notice
of such resignation to each of the other parties hereto. In such event, Buyer
with the approval of Sellers Representative and Conseco, which approval shall
not be unreasonably withheld, will promptly select another bank insured by the
Federal Deposit Insurance Corporation, and with assets of not less than
$50,000,000 which will be appointed as successor escrow agent and Buyer and the
other parties hereto shall enter into an agreement with such other bank, in
substantially the form of this Agreement. From and after the effective date of
the appointment of a successor escrow agent hereunder, the Escrow Agent shall
not be obligated to perform any of the duties of the Escrow Agent hereunder and
will not be liable for any nonperformance thereof nor for any act or failure to
act whatsoever on the part of any successor escrow agent. If a substitute for
the Escrow Agent hereunder shall not have been selected, as aforesaid, the
Escrow Agent shall be entitled to petition any court for the appointment of a
substitute for it hereunder, or in the alternative, it may transfer and deliver
the Escrow Fund to or upon the order of any court; provided, however, until such
time as a substitute has been appointed as herein provided or a court has
otherwise ordered, the Escrow Agent shall continue to serve hereunder.
8.2 SUCCESSOR TO THE ESCROW AGENT. Any corporation
resulting from any merger or consolidation to which the Escrow Agent shall be a
party, or any corporation in any manner succeeding to all or substantially all
of the business of the Escrow Agent, provided such corporation shall be a
banking corporation organized under the laws of the United States of America
with trust powers, shall be the successor agent hereunder without the execution
or filing of any paper or any further act on the part of any of the parties
hereto.
22
23
8.3 REMOVAL OF THE ESCROW AGENT. In the event Buyer,
Sellers Representative and, provided that the time for bringing any Buyer Escrow
Indemnified Claim or Buyer Non-Escrow Indemnified Claim against the Conseco
Parties has not expired, Conseco consent to the removal of the Escrow Agent and
the appointment of a successor escrow agent, the Escrow Agent shall transfer and
deliver the Escrow Fund to such successor escrow agent whereupon the Escrow
Agent shall be discharged from all further duties hereunder.
SECTION 9
TERMINATION
This Agreement shall terminate when the time for bringing any
Buyer Escrow Indemnified Claim or Buyer Non-Escrow Indemnified Claim against any
Securities Seller has expired, the time for bringing any Seller Indemnified
Claim against the Buyer has expired, and all Escrow Assets in the Escrow Fund
are distributed as provided in SECTION 6. When all Escrow Assets in the Escrow
Fund are distributed as provided in SECTION 6 hereof, the Escrow Agent shall be
released and discharged from any further obligations under this Agreement.
SECTION 10
GENERAL PROVISIONS
10.1 ENTIRE AGREEMENT; AMENDMENT. This Agreement
contains the entire agreement among the parties hereto and supersedes all prior
oral or written agreements, promises, representations, commitments or
understandings with respect to the matters provided for herein. This Agreement
may be modified or amended only by a writing duly executed by Buyer, Company,
Sellers Representative, Conseco, and the Escrow Agent, which modification or
amendment shall be binding upon all of the parties hereto.
10.2 NO INTENDED THIRD PARTY BENEFICIARIES. Nothing
herein expressed or implied is intended or shall be construed to confer upon or
give to any person or entity other than the parties hereto and their successors
or permitted assigns, any rights or remedies under or by reason of this
Agreement.
10.3 ASSIGNMENT AND BINDING EFFECT. This Agreement and
the rights and obligations of any party hereunder may be assigned and delegated
by any party hereto without the prior written consent of the other parties
hereto. No such assignment and delegation shall relieve the assigning party of
its obligations hereunder in the event that its assignee fails to performs the
obligations delegated. All covenants, agreements, statements, representations,
warranties and indemnities in this Agreement by and on behalf of any of the
parties hereto shall bind and inure to the benefit of their respective
successors and permitted assigns of the parties hereto.
23
24
10.4 WAIVERS. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a continuing waiver, and no
waiver shall be binding unless executed in writing by the party making the
wavier.
10.5 NOTICES. All notices, including a Claim Notice,
demands or other communications which may be or are required to be given by any
party to any other party pursuant to this Agreement, shall be in writing and
shall be mailed by certified mail, return receipt requested, postage prepaid, or
transmitted by hand delivery, national overnight express, telegram or facsimile
transmission, addressed as follows:
10.5.1 If to Buyer: Jacor Communications, Inc.
1300 PNC Center
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxx Xxxxxxxx
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxxx, Head & Xxxxxxx
0000 Xxxxx Xxxxx Xxxxxx
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxx X. Xxxxx, Esq.
Fax: (000) 000-0000
10.5.2 If to the Class B Shareholders, to Sellers Representative as follows:
Xxxx X. Xxxxx
0000 Xxx Xxxxx Xxxxx
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxx, Xxxx Xxxx & Freidenrich
000 X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: J. Xxxxxxx X'Xxxxxx, Esq.
Fax: (000) 000-0000
and with a copy (which shall not constitute notice) to:
Xxxxx X. De Francesco
24
25
00000 Xxxxx Xxxxxx Xxxxx
Xxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
10.5.3 If to a Conseco Party, to Conseco, as follows:
Conseco, Inc.
00000 X. Xxxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000-0000
Attention: Xxxx Xxxxxx, Esq.
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Conseco, Inc.
Suite 2700
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx
Attention: Xxxxxx X. Xxxxx
Fax: (000) 000 0000
and with a copy (which shall not constitute notice) to:
Xxxxxxxxx, Daily, Xxxxxxx & Xxxxx
0000 Xxx Xxxxxxx Xxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
10.5.4 If to Escrow Agent, as follows:
The Fifth Third Bank
Corporate Trust Department
00 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx, Vice President
Fax: (000) 000-0000
25
26
10.5.5 If to the Company, as follows:
0000 Xxxxxxx Xxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Xxxxx X. De Francesco
Fax: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxx, Xxxx Xxxx & Freidenrich
000 X Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: J. Xxxxxxx X'Xxxxxx, Esq.
Fax: (000) 000-0000
until such time as either party notifies the other of a change of address. Each
notice or other communication which shall be mailed, delivered or transmitted in
the manner described above shall be deemed sufficiently given and received for
all purposes at such time as it is delivered to the addressee (with the return
receipt, the delivery receipt, or the affidavit of messenger or telefax
transmission log being deemed conclusive evidence of such delivery) or at such
time as delivery is refused by the addressee upon presentation.
10.6 REPRESENTATIVES. The Class B Shareholders hereby
appoint Xxxx X. Xxxxx as their agent and representative (the "Sellers
Representative") for the purposes of representing, acting for and binding the
Class B Shareholders for all purposes of this Agreement, including, without
limitation: (i) amending, restating, supplementing, terminating or otherwise
modifying this Agreement or making any waivers on behalf of Class B Shareholders
pursuant hereto; and (ii) settling of any controversies or disagreements on
behalf of the Class B Shareholders hereunder; and (iii) receiving or giving any
notices to or from Class B Shareholders hereunder; and (iv) communicating on
behalf of Class B Shareholders with the other parties hereto as to any matters
relating to this Agreement. The other parties to this Agreement shall be
entitled to presumptively rely without further inquiry upon all acts of, and
communications from, Sellers Representative as being the authorized actions and
communications of the Shareholders Representative as approved by Class B
Shareholders. The Sellers Representative may resign upon thirty (30) days
written notice to all parties hereto, and may be removed by a majority vote of
the Class B Shareholders (based upon their interests as set forth in Exhibit B).
Upon resignation or removal of the Sellers Representative, the Class B
Shareholders shall appoint a replacement (by majority vote) and shall give
notice of the name and address of such replacement to all parties hereto. If at
any time no Sellers Representative is currently serving, any notice, including a
Claim Notice, required to be served on the Sellers Representative hereunder may
be served upon the Class B Shareholders with the same effect as if such notice
had been served on the Sellers Representative.
26
27
The Conseco Parties hereby appoint Conseco as their agent and
representative for the purposes of representing, acting for and binding the
Conseco Parties for all purposes of this Agreement, including, without
limitation: (i) amending, restating, supplementing, terminating or otherwise
modifying this Agreement (other than a modification to the percentages set forth
in Exhibit B hereto) or making any waivers on behalf of the Conseco Parties
pursuant hereto; and (ii) settling of any controversies or disagreements on
behalf of the Conseco Parties hereunder; and (iii) receiving or giving any
notices to or from the Conseco Parties hereunder; and (iv) communicating on
behalf of the Conseco Parties with the other parties hereto as to any matters
relating to this Agreement. The other parties to this Agreement shall be
entitled to presumptively rely without further inquiry upon all acts of, and
communications from, Conseco as being the authorized actions and communications
of Conseco as approved by the Conseco Parties. If at any time Conseco is no
longer serving as the representative of the Conseco Parties hereunder, any
notice, including a Claim Notice, required to be served on Conseco hereunder may
be served upon the Conseco Parties with the same effect as if such notice had
been served on Conseco.
10.7 HEADINGS. The article and section headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
10.8 SEVERABILITY. Wherever possible, each provision of
this Agreement will be interpreted so as to be effective and valid under
applicable law, but if any provision of this Agreement is prohibited by or
invalid under such law, such provision will be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.
10.9 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of Ohio (but not
including the choice-of-laws rules thereof). The parties agree that any action
brought by any party against one or more other parties arising out of this
Agreement, or in relation to or connection with the validity or performance (or
nonperformance) hereof, shall be initiated and prosecuted in a federal or state
court located in Xxxxxxxx County, Ohio, and each party hereby consents and
submits to the exercise of jurisdiction over its person by any court situated
therein having jurisdiction over the subject matter. The parties waive any
objection based on forum non conveniens and/or to venue of any action
instituted hereunder.
10.10 REMEDIES. The rights, remedies and powers
provided herein pertain only to claims which are a Buyer Escrow Indemnified
Claim, a Buyer Non-Escrow Indemnified Claim, and/or a Seller Indemnified Claim.
Any party hereto having a claim against another party hereto other than a claim
which is a Buyer Escrow Indemnified Claim, a Buyer Non-Escrow Indemnified Claim,
and/or a Seller Indemnified Claim may enforce such claim by pursuing any remedy
available to such party at law or in equity, and
27
28
nothing contained herein shall be deemed to limit such party's rights, remedies,
or powers with respect to such claim.
10.11 COUNTERPARTS; EXECUTION. This Agreement may be
executed in as many counterparts as may be required, and each such counterpart
hereof shall be deemed to be an original instrument, but all such counterparts
together shall constitute but a single agreement.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
28
29
IN WITNESS WHEREOF, each of the parties hereto has executed
this Agreement, or caused this Agreement to be executed on its behalf, as of the
date first above written.
JACOR COMMUNICATIONS, INC. ______________________________
XXXX X. XXXXX
By:___________________________ ______________________________
Its:___________________________ XXXXX X. XXXXXXXXXXX
CIHC, INCORPORATED
______________________________
XXXXXX X. XXXXXXX
By:___________________________
Its:___________________________ ______________________________
XXXXXXX X. XXXXXX
BANKERS LIFE HOLDING CORPORATION
By:___________________________
Its:___________________________
NOBLE BROADCAST GROUP, INC. THE FIFTH THIRD BANK
By:___________________________ By:___________________________
Its:___________________________ Its:__________________________
PRUDENTIAL VENTURE PARTNERS II, L.P. NORTHEAST VENTURES II
By: Prudential Equity Investors, Inc. By: NorthEast Ventures, L.P., Partner
General Partner By: NorthEast Ventures Inc., General Partner
By:___________________________ By:____________________________
XXXX X. X'XXXXX, Executive Vice President XXXXX X. XXXXX, XX., President
CONSECO, INC.
By:___________________________ _____________________________
Its:___________________________ XXXX X. XXXXX, Sellers Representative
[Signature Page to Indemnification and Escrow Agreement]
29
30
EXHIBIT A
ESCROW AGENT FOR
INDEMNIFICATION AND ESCROW AGREEMENT
FEBRUARY 6, 1996
JACOR COMMUNICATIONS, INC.
RE: NOBLE BROADCAST GROUP, INC.
ACCEPTANCE FEE & 1ST YEAR FEE $7,500.00
INCLUDES ANTICIPATED LEGAL FEES FOR INITIAL REVIEW.
ANNUAL ADMINISTRATION FEE (AFTER 1ST YEAR): $5,000.00
All out-of-pocket expenses deemed necessary and incurred in the acceptance or
the administration of this account by Fifth Third Bank, including but not
limited to attorney's and agent's fees, extraordinary time and expenses of Fifth
Third Bank, postage, supplies, long distance telephone charges, wire transfer
fees, travel, redemption expenses, and courier expenses, are to be reimbursed in
addition to payment for services rendered. Fifth Third Bank also charges a cash
management fee on its' taxable Fountain Square Funds in the amount of $.30 per
$1,000 held per month. Fees for activities not specifically contemplated herein
shall be additional. The acceptance of this account and fees are subject to
Fifth Third Bank's review and approval of documents governing this issue.
30
31
EXHIBIT B
CLASS B SHAREHOLDERS AND CONSECO PARTIES PROPORTIONS
PRUDENTIAL VENTURE PARTNERS II, L.P. 3 .9%
NORTHEAST VENTURES II 0 .2%
XXXX X. XXXXX 18.9%
XXXXXX X. XXXXXXX 0 .1%
XXXXX X. DE FRANCESCO 1 .8%
XXXXXXX X. XXXXXX 0 .1%
BANKERS LIFE HOLDING CORPORATION 30.4%
CIHC, INCORPORATED 44.6%
31
32
EXHIBIT C
INVESTMENT DIRECTION LETTER
The Fifth Third Bank
Corporate Trust Department
00 Xxxxxxxx Xxxxxx Xxxxx
Xxxxxxxxxx, Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxx, Vice President
RE: JACOR/NOBLE INDEMNITY AND ESCROW ACCOUNT
Dear Sir:
This letter is being provided to you pursuant to Section 5.2 of
the Indemnification and Escrow Agreement ("Agreement") date February __, 1996,
by and among: (A) Jacor Communications, Inc., an Ohio corporation (B) Prudential
Venture Partners II, L.P., a limited partnership; (C) NorthEast Ventures II, a
partnership; (D) Xxxx X. Xxxxx; (E) Xxxxx X. De Francesco; (F) Xxxxxx X.
Xxxxxxx; (G) Xxxxxxx X. Xxxxxx; (H) CIHC, Incorporated; , a Delaware
corporation; (I) Bankers Life Holding Corporation, a Delaware corporation; (J)
Noble Broadcast Group, Inc., a Delaware corporation; (K) The Fifth Third Bank,
an Ohio banking corporation; (L) Conseco, Inc., an Indiana corporation; and Xxxx
X. Xxxxx, as Sellers Representative.
You are hereby directed to invest the Escrow Assets in the
following investments:
Please contact the undersigned if you have any questions.
================================================================================
In the event the
investments in which
you are directed to
invest the Escrow
Assets have a maturity
of more than
______________________________ thirty (30) days from the date of such
Sellers Representative investment:
In the event the Warrant Escrow Jacor Communications, Inc.
Release Date has not yet occurred:
Conseco, Inc.
By____________________________ By__________________________
================================================================================
32
