<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO
RULE 13d-2(a)
(AMENDMENT NO. ____________)(1)
CENTRAL RESERVE LIFE CORPORATION
- --------------------------------------------------------------------------------
(Name of Issuer)
COMMON STOCK (WITHOUT PAR VALUE)
- --------------------------------------------------------------------------------
(Title of Class of Securities)
155055-10-6
- --------------------------------------------------------------------------------
(CUSIP Number)
Insurance Partners Advisors, L.P.
One Chase Manhattan Plaza, 44th Floor
New York, New York 10005
Attention: Mr. Bradley E. Cooper
Tel. No. (212) 898-8700
- --------------------------------------------------------------------------------
(Name, address and telephone number of person
authorized to revise notices and communications)
July 3, 1998
- --------------------------------------------------------------------------------
(Date of event which requires filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13(d)-1(g), check the following
box [ ].
Note. Schedules filed in paper format shall include a signed
original and five copies of the schedule, including all exhibits. See
Rule 13d-7(b) for other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 21 Pages)
____________________
(1) The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE> 2
CUSIP No. 155055 10 6 13D Page 2 of 21 Pages
<TABLE>
<S> <C> <C>
===============================================================================================================
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only)
Insurance Partners, L.P.
- ---------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
- ---------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00 -- Contributions from Partners
- ---------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [ ]
REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
- ---------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ---------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES -----------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 4,290,108(1)
EACH -----------------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH -----------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
4,290,108(1)
- ---------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,290,108(1)
- ---------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES*
Not Applicable
- ---------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
33.3%
- ---------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
===============================================================================================================
</TABLE>
*
SEE INSTRUCTIONS BEFORE FILLING OUT
(1) Includes warrants to acquire an aggregate of 1,399,733 shares of Common
Stock.
<PAGE> 3
CUSIP No. 155055 10 6 13D Page 3 of 21 Pages
<TABLE>
<S> <C> <C>
===============================================================================================================
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only)
Insurance GenPar, L.P.
- ---------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
- ---------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00 -- Contributions from Partners
- ---------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [ ]
REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
- ---------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ---------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES -------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 4,290,108(1)(2)
REPORTING -------------------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH -0-
-------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
4,290,108(1)(2)
- ---------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,290,108(1)(2)
- ---------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 [ ]
EXCLUDES CERTAIN SHARES*
Not Applicable
- ---------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
33.3%
- ---------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
===============================================================================================================
</TABLE>
*
SEE INSTRUCTIONS BEFORE FILLING OUT
(1) Solely in its capacity as sole general partner of Insurance Partners, L.P.
(2) Includes warrants to acquire an aggregate of 1,399,733 shares of Common
Stock.
<PAGE> 4
CUSIP No. 155055 10 6 13D Page 4 of 21 Pages
<TABLE>
<S> <C> <C>
===============================================================================================================
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only)
Insurance GenPar MGP, L.P.
- ---------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
- ---------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00 -- Contributions from Partners
- ---------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [ ]
REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
- ---------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ---------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES ------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY
EACH 4,290,108(1)(2)
REPORTING ------------------------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH -0-
------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
4,290,108(1)(2)
- ---------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,290,108(1)(2)
- ---------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 [ ]
EXCLUDES CERTAIN SHARES
Not Applicable
- ---------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
33.3%
- ---------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
===============================================================================================================
</TABLE>
*
SEE INSTRUCTIONS BEFORE FILLING OUT
(1) Solely in its capacity as sole general partner of Insurance GenPar, L.P.,
which is the sole general partner of Insurance Partners, L.P.
(2) Includes warrants to acquire an aggregate of 1,399,733 shares of Common
Stock.
<PAGE> 5
CUSIP No. 155055 10 6 13D Page 5 of 21 Pages
<TABLE>
<S> <C> <C>
===============================================================================================================
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only)
Insurance GenPar MGP, Inc.
- ---------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
- ---------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00 -- Contributions from Partners
- ---------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [ ]
REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
- ---------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- ---------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES ------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 4,290,108(1)(2)
EACH ------------------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH ------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
4,290,108(1)(2)
- ---------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,290,108(1)(2)
- ---------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 [ ]
EXCLUDES CERTAIN SHARES*
Not Applicable
- ---------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
33.3%
- ---------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
===============================================================================================================
</TABLE>
*
SEE INSTRUCTIONS BEFORE FILLING OUT
(1) Solely in its capacity as sole general partner of Insurance GenPar MGP,
L.P., which is the sole general partner of Insurance GenPar, L.P., which
is the sole general partner of Insurance Partners, L.P.
(2) Includes warrants to acquire an aggregate of 1,399,733 shares of Common
Stock.
<PAGE> 6
CUSIP No. 155055 10 6 13D Page 6 of 21 Pages
<TABLE>
<S> <C> <C>
===============================================================================================================
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only)
Insurance Partners Offshore (Bermuda), L.P.
- ---------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
- ---------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00 -- Contributions from Partners
- ---------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [ ]
REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
- ---------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bermuda
- ---------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES ------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 2,364,438(1)
EACH ------------------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH ------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,364,438(1)
- ---------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,364,438(1)
- ---------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 [ ]
EXCLUDES CERTAIN SHARES
Not Applicable
- ---------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
19.3%
- ---------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
===============================================================================================================
</TABLE>
*
SEE INSTRUCTIONS BEFORE FILLING OUT
(1) Includes warrants to acquire an aggregate of 772,995 shares of Common
Stock.
<PAGE> 7
CUSIP No. 155055 10 6 13D Page 7 of 21 Pages
<TABLE>
<S> <C> <C>
===============================================================================================================
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only)
Insurance GenPar (Bermuda), L.P.
- ---------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
- ---------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00 -- Contributions from Partners
- ---------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [ ]
REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
- ---------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bermuda
- ---------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES ------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 2,364,438(1)(2)
EACH ------------------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH ------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,364,438(1)(2)
- ---------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,364,438(1)(2)
- ---------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 [ ]
EXCLUDES CERTAIN SHARES
Not Applicable
- ---------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
19.3%
- ---------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
===============================================================================================================
</TABLE>
*
SEE INSTRUCTIONS BEFORE FILLING OUT
(1) Solely in its capacity as sole general partner of Insurance Partners
Offshore (Bermuda), L.P.
(2) Includes warrants to acquire an aggregate of 772,995 shares of Common
Stock.
<PAGE> 8
CUSIP No. 155055 10 6 13D Page 8 of 21 Pages
<TABLE>
<S> <C> <C>
===============================================================================================================
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only)
Insurance GenPar (Bermuda) MGP, L.P.
- ---------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
- ---------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00 -- Contributions from Partners
- ---------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [ ]
REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
- ---------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bermuda
- ---------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES ------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 2,364,438(1)(2)
EACH ------------------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH ------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,364,438(1)(2)
- ---------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,364,438(1)(2)
- ---------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 [ ]
EXCLUDES CERTAIN SHARES
Not Applicable
- ---------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
19.3%
- ---------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
===============================================================================================================
</TABLE>
*
SEE INSTRUCTIONS BEFORE FILLING OUT
(1) Solely in its capacity as sole general partner of Insurance GenPar
(Bermuda), L.P., which is the sole general partner of Insurance Partners
Offshore (Bermuda), L.P.
(2) Includes warrants to acquire an aggregate of 772,995 shares of Common
Stock.
<PAGE> 9
CUSIP No. 155055 10 6 13D Page 9 of 21 Pages
<TABLE>
<S> <C> <C>
===============================================================================================================
1 NAME OF REPORTING PERSON
I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only)
Insurance GenPar (Bermuda) MGP, Ltd
- ---------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [x]
- ---------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- ---------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS
00 -- Contributions from Partners
- ---------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS [ ]
REQUIRED PURSUANT TO ITEM 2(d) or 2(e)
- ---------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Bermuda
- ---------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF -0-
SHARES ------------------------------------------------------------------------
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY 2,364,438(1)(2)
EACH ------------------------------------------------------------------------
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON -0-
WITH ------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,364,438(1)(2)
- ---------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,364,438(1)(2)
- ---------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 [ ]
EXCLUDES CERTAIN SHARES
Not Applicable
- ---------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11
19.3%
- ---------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
===============================================================================================================
</TABLE>
*
SEE INSTRUCTIONS BEFORE FILLING OUT
(1) Solely in its capacity as sole general partner of Insurance GenPar
(Bermuda) MGP, L.P., which is the sole general partner of Insurance GenPar
(Bermuda), L.P., which is the sole general partner of Insurance Partners
Offshore (Bermuda), L.P.
(2) Includes warrants to acquire an aggregate of 772,955 shares of Common
Stock.
<PAGE> 10
CUSIP No. 155055 10 6 13D Page 10 of 21 Pages
ITEM 1. SECURITY AND ISSUER.
The title of the class of equity securities of Central Reserve Life
Corporation (the "Company"), to which this Schedule 13D (this "Statement")
relates is the Company's common stock, without par value (the "Common Stock").
The address of the principal executive offices of the Company is located at
17800 Royalton Road, Strongsville, Ohio 44136.
ITEM 2. IDENTITY AND BACKGROUND.
(a) Pursuant to Rules 13d-1(f)(1)-(2) of Regulation 13D-G of the
General Rules and Regulations promulgated under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), this Statement is filed by (i) Insurance
Partners, L.P., a Delaware limited partnership ("IP Delaware"), (ii) Insurance
GenPar, L.P., a Delaware limited partnership ("Insurance GenPar"), (iii)
Insurance GenPar MGP, L.P., a Delaware limited partnership ("IMGPLP"), (iv)
Insurance GenPar MGP, Inc., a Delaware corporation ("IMGPI"), (v) Insurance
Partners Offshore (Bermuda), L.P., a Bermuda limited partnership ("IP
Bermuda"), (vi) Insurance GenPar (Bermuda), L.P., a Bermuda limited partnership
("Insurance GenPar Bermuda"), (vii) Insurance GenPar (Bermuda) MGP, L.P., a
Bermuda limited partnership ("IBMGPLP"), and (viii) Insurance GenPar (Bermuda)
MGP, Ltd., a Bermuda corporation ("IBMGP"). IP Delaware, Insurance GenPar,
IMGPLP, IMGPI, IP Bermuda, Insurance GenPar Bermuda, IBMGPLP, and IBMGP are
sometimes hereinafter collectively referred to as the "Reporting Persons." IP
Delaware and IP Bermuda are sometimes hereinafter referred to as "Insurance
Partners." The Reporting Persons are making this single, joint filing because
they may be deemed to constitute a "group" within the meaning of Section
13(d)(3) of the Exchange Act, although neither the fact of this filing nor
anything contained herein shall be deemed an admission by the Reporting Persons
that a group exists.
(b)-(c)
IP DELAWARE
IP Delaware is a Delaware limited partnership, formed to invest in
securities of insurance entities to be selected by its investment committee.
The principal business address of IP Delaware, which also serves as its
principal office, is 201 Main Street, Fort Worth, Texas 76102. Pursuant to
Instruction C to Schedule 13D of the Exchange Act, information with respect to
Insurance GenPar, the sole general partner of IP Delaware, is set forth below.
INSURANCE GENPAR
Insurance GenPar is a Delaware limited partnership, the principal
business of which is serving as the sole general partner of IP Delaware. The
principal business address of Insurance GenPar, which also serves as its
principal office, is 201 Main Street, Fort Worth, Texas 76102. Pursuant to
Instruction C to Schedule 13D of the Exchange Act, information with respect to
IMGPLP, the sole general partner of Insurance GenPar, is set forth below.
IMGPLP
IMGPLP is a Delaware limited partnership, the principal business of
which is serving as the sole general partner of Insurance GenPar. The
principal business address of IMGPLP, which also serves as its principal
office, is 201 Main Street, Fort Worth, Texas 76102. Pursuant to Instruction
C to Schedule 13D of the Exchange Act, information with respect to IMGPI, the
sole general partner of IMGPLP, is set forth below.
IMGPI
IMGPI is a Delaware corporation, the principal business of which is
serving as the sole general partner of IMGPLP. The principal business address
of IMGPI, which also serves as its principal office, is 201 Main Street, Fort
Worth, Texas 76102. Pursuant to Instruction C to Schedule 13D of the Exchange
Act, the name, residence or business address, and present occupation or
employment of each director, executive officer, and controlling person of
IMGPI, are as follows:
<PAGE> 11
CUSIP No. 155055 10 6 13D Page 11 of 21 Pages
<TABLE>
<CAPTION>
Residence or Principal Occupation
Name Business Address or Employment
---- ---------------- -------------
<S> <C> <C>
Robert A. Spass One Chase Manhattan Plaza Managing Partner of Insurance Partners Advisors, L.P.
44th Floor
New York, New York 10005
Daniel L. Doctoroff 65 East 55th Street Managing Partner of Insurance Partners Advisors, L.P.
New York, New York 10022
Steven B. Gruber 65 East 55th Street Managing Partner of Insurance Partners Advisors, L.P.
New York, New York 10022
</TABLE>
Insurance Partners Advisors, L.P. is a Delaware limited partnership,
the principal business of which is performing investment banking services for
IP Delaware, IP Bermuda, and their portfolio companies. The principal business
address of Insurance Partners Advisors, L.P., is One Chase Manhattan Plaza,
44th Floor, New York, New York 10005.
IP BERMUDA
IP Bermuda is a Bermuda limited partnership, formed to invest in
securities of insurance entities to be selected by its investment committee.
The principal business address of IP Bermuda, which also serves as its
principal office, is Cedar House, 41 Cedar Avenue, P.O. Box HM 1179, Hamilton,
HM EX, Bermuda. Pursuant to Instruction C to Schedule 13D of the Exchange Act,
information with respect to Insurance GenPar Bermuda, the sole general partner
of IP Bermuda, is set forth below.
INSURANCE GENPAR BERMUDA
Insurance GenPar Bermuda is a Bermuda limited partnership, the
principal business of which is serving as the sole general partner of IP
Bermuda. The principal business address of Insurance GenPar Bermuda, which
also serves as its principal office, is Cedar House, 41 Cedar Avenue, P.O. Box
HM 1179, Hamilton, HM EX, Bermuda. Pursuant to Instruction C to Schedule 13D
of the Exchange Act, information with respect to IBMGPLP, the sole general
partner of Insurance GenPar Bermuda, is set forth below.
IBMGPLP
IBMGPLP is a Bermuda limited partnership, the principal business of
which is serving as the sole general partner of Insurance GenPar Bermuda. The
principal business address of IBMGPLP, which also serves as its principal
office, is Cedar House, 41 Cedar Avenue, P.O. Box HM 1179, Hamilton, HM EX,
Bermuda. Pursuant to Instruction C to Schedule 13D of the Exchange Act,
information with respect to IBMGPI, the sole general partner of IBMGPLP, is set
forth below.
IBMGPI
IBMGPI is a Bermuda corporation, the principal business of which is
serving as the sole general partner of IBMGPLP. The principal business address
of IBMGPI, which also serves as its principal office, is Cedar House, 41 Cedar
Avenue, P.O. Box HM 1179, Hamilton, HM EX, Bermuda. Pursuant to Instruction C
to Schedule 13D of the Exchange Act, the name, residence or business address,
and present occupation or employment of each director, executive officer, and
controlling person of IMGPI, are as follows:
<PAGE> 12
CUSIP No. 155055 10 6 13D Page 12 of 21 Pages
<TABLE>
<CAPTION>
Residence or Principal Occupation
Name Business Address or Employment
---- ---------------- -------------
<S> <C> <C>
Robert A. Spass See above See above
Daniel L. Doctoroff See above See above
Steven B. Gruber See above See above
</TABLE>
(d) None of the entities or persons identified in this Item 2 has,
during the last five years, been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors).
(e) None of the entities or persons identified in this Item 2 has,
during the last five years, been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree, or final order enjoining
future violations of, or prohibiting or mandating activities subject to,
federal or state securities laws or finding any violation with respect to such
laws.
(f) All of the natural persons identified in this Item 2 are
citizens of the United States of America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
As more fully described in Item 6 below, IP Delaware purchased
2,799,466 shares of Common Stock and warrants to purchase 1,399,733 shares of
Common Stock for an aggregate purchase price of $15,397,063 and IP Bermuda
purchased 1,545,990 shares of Common Stock and warrants to purchase 772,995
shares of Common Stock for an aggregate purchase price of $8,502,945. Such
purchases were consummated on July 3, 1998 (the "Closing Date"), but were dated
effective July 1, 1998. Both IP Delaware and IP Bermuda used contributions
from their respective partners to fund such purchases.
ITEM 4. PURPOSE OF TRANSACTION.
The Reporting Persons consummated the transaction described herein in
order to acquire a significant interest in the Company and for investment
purposes. The Reporting Persons intend to review continuously their position
in the Company. Depending upon future evaluations of the business prospects of
the Company and upon other developments, including, without limitation, general
economic and business conditions and stock market conditions, each of the
Reporting Persons may retain or from time to time dispose of all or a portion
of its holdings, subject to any applicable legal and contractual restrictions
on its ability to do so, including, without limitation, any restrictions set
forth in the Stockholders Agreement described in Item 6 below, the Voting
Agreement described in Item 6 below, the Amended and Restated Articles of
Incorporation of the Company, and the Code of Regulations of the Company.
In addition, the matters set forth in Item 3 above and Item 6 below
are incorporated in this Item 4 by reference as if fully set forth herein.
In connection with the consummation of the transactions contemplated
by the Stock Purchase Agreement, (a) the following persons tendered their
resignations from the board of directors of the Company (the "Board of
Directors"): Thomas D. Schulte, David L. Rossio, Val Rajic, and John L. McKean,
(b) Robert A. Spass, Bradley E. Cooper, and Mark H. Tabak were nominated by
Insurance Partners as directors of the Company and were elected to the Board of
Directors and Insurance Partners intends to nominate Andrew A. Boemi as a
director of the Company, pursuant to the terms of the Voting Agreement
described in Item 6 below, (c) the Company has amended and restated the Code of
Regulations of the Company to eliminate the classification of the Board of
Directors for purposes of director elections, (d) each of IP Delaware and IP
Bermuda purchased warrants to acquire additional shares of Common Stock (as
described in Item 3 above) and will likely exercise its warrants in the future,
and (e) Peter W. Nauert was elected as Chief Executive Officer of the Company.
In addition, the Voting Agreement (as described in Item 6 below) provides that
the parties thereto and their transferees shall, as promptly as practicable
after the Closing Date, vote in favor of an amendment to the Company's Articles
of Incorporation, Code of Regulations, or Bylaws, as the case may be, to
eliminate
<PAGE> 13
CUSIP No. 155055 10 6 13D Page 13 of 21 Pages
cumulative voting in the election of directors. Except as set forth in this
Item 4, the Reporting Persons have no present plans or proposals that relate to
or that would result in any of the actions specified in clauses (a) through (j)
of Item 4 of Schedule 13D of the Exchange Act.
ITEM 5. INTEREST IN SECURITIES OF ISSUER.
(a)
IP DELAWARE
IP Delaware may, pursuant to Rule 13d-3 of the Exchange Act, be deemed
to be the beneficial owner of 4,290,108 shares of Common Stock, which
constitutes approximately 33.3% of the 12,894,905 shares of Common Stock deemed
outstanding pursuant to Rule 13d-3(d)(1)(i) of the Exchange Act.
INSURANCE GENPAR
In its capacity as the sole general partner of IP Delaware, Insurance
GenPar may, pursuant to Rule 13d-3 of the Exchange Act, be deemed to be the
beneficial owner of 4,290,108 shares of Common Stock, which constitutes
approximately 33.3% of the 12,894,905 shares of Common Stock deemed outstanding
pursuant to Rule 13d-3(d)(1)(i) of the Exchange Act.
IMGPLP
In its capacity as the sole general partner of Insurance GenPar, which
is the sole general partner of IP Delaware, IMGPLP may, pursuant to Rule 13d-3
of the Exchange Act, be deemed to be the beneficial owner of 4,290,108 shares
of Common Stock, which constitutes approximately 33.3% of the 12,894,905 shares
of Common Stock deemed outstanding pursuant to Rule 13d-3(d)(1)(i) of the
Exchange Act.
IMGPI
In its capacity as the sole general partner of IMGPLP, which is the
sole general partner of Insurance GenPar, which is the sole general partner of
IP Delaware, IMGPI may, pursuant to Rule 13d-3 of the Exchange Act, be deemed
to be the beneficial owner of 4,290,108 shares of Common Stock, which
constitutes approximately 33.3% of the 12,894,905 shares of Common Stock deemed
outstanding pursuant to Rule 13d-3(d)(1)(i) of the Exchange Act.
IP BERMUDA
IP Bermuda may, pursuant to Rule 13d-3 of the Exchange Act, be deemed
to be the beneficial owner of 2,364,438 shares of Common Stock, which
constitutes approximately 19.3% of the 12,268,167 shares of Common Stock deemed
outstanding pursuant to Rule 13d(d)(1)(i) of the Exchange Act.
INSURANCE GENPAR BERMUDA
In its capacity as the sole general partner of IP Bermuda, Insurance
GenPar Bermuda may, pursuant to Rule 13d-3 of the Exchange Act, be deemed to be
the beneficial owner of 2,364,438 shares of Common Stock, which constitutes
approximately 19.3% of the 12,268,167 shares of Common Stock deemed outstanding
pursuant to Rule 13d(d)(1)(i) of the Exchange Act.
IBMGPLP
In its capacity as the sole general partner of Insurance GenPar
Bermuda, which is the sole general partner of IP Bermuda, IBMGPLP may, pursuant
to Rule 13d-3 of the Exchange Act, be deemed to be the beneficial owner of
2,364,438 shares of Common Stock, which constitutes approximately 19.3% of the
12,268,167 shares of Common Stock deemed outstanding pursuant to Rule
13d(d)(1)(i) of the Exchange Act.
<PAGE> 14
CUSIP No. 155055 10 6 13D Page 14 of 21 Pages
IBGPI
In its capacity as the sole general partner of IBMGPLP, which is the
sole general partner of Insurance GenPar Bermuda, which is the sole general
partner of IP Bermuda, IBMGPI may, pursuant to Rule 13d-3 of the Exchange Act,
be deemed to be the beneficial owner of 2,364,438 shares of Common Stock, which
constitutes approximately 19.3% of the 12,268,167 shares of Common Stock deemed
outstanding pursuant to Rule 13d(d)(1)(i) of the Exchange Act.
The Reporting Persons may be deemed to beneficially own as part of a
group (as used in Section 13(d)(3) of the Exchange Act) 6,654,546 shares of
Common Stock, which constitutes approximately 48.9% of the shares of Common
Stock deemed outstanding pursuant to Rule 13d-3(d)(1)(i) of the Exchange Act.
Because each of IP Delaware and IP Bermuda is a party to the Voting
Agreement (described in Item 6 below), it may, as of July 1, 1998, be deemed to
beneficially own as part of a group (as used in Section 13(d)(3) of the Exchange
Act), 12,351,000(1) shares of Common Stock, which constitute approximately 76.5%
of the shares of Common Stock deemed outstanding pursuant to Rule 13d-3(a)(1)(i)
of the Exchange Act. Each of IP Delaware and IP Bermuda disclaims beneficial
ownership of all Common Stock owned by Strategic Acquisition Partners, LLC,
("SAP"), Turkey Vulture Fund XIII, Ltd. (the "Fund"), and the Assignees (as
defined below).
(b) Prior to the closing of the transactions contemplated by the
Amended and Restated Stock Purchase Agreement described in Item 6 below, none
of the Reporting Persons had any power to vote or direct the vote or to dispose
or to direct the disposition of any shares of Common Stock.
(c) Except as set forth herein or in the Exhibits filed herewith,
none of the Reporting Persons has effected any transactions in shares of Common
Stock during the past 60 days.
(d) Each of the Reporting Persons affirms that no person other
than such Reporting Person has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, the shares of
Common Stock owned by such Reporting Person.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
Pursuant to the Amended and Restated Stock Purchase Agreement dated as
of March 30, 1998, by and among the Company, IP Delaware, IP Bermuda, and SAP,
as amended by that First Amendment thereto dated June 30, 1998, as further
amended by the Indemnification and Closing Agreement dated as of July 1, 1998,
among the Company, IP Delaware, IP Bermuda, and each of the persons listed on
Schedule 1 thereto (as so amended, the "Stock Purchase Agreement"), the Company
agreed to issue and sell to IP Delaware and IP Bermuda, and IP Delaware and IP
Bermuda agreed to purchase from the Company, an aggregate of 4,345,456 shares of
Common Stock and warrants to purchase an aggregate of 2,172,728 shares of Common
Stock. The description of the Stock Purchase Agreement that follows is not, and
does not purport to be, complete and is qualified in its entirety by reference
to the Stock Purchase Agreement. The Stock Purchase Agreement is incorporated
herein by reference to the Stock Purchase Agreement filed by the Company with
the Securities and Exchange Commission (the "Commission") as Appendix A of the
Company's Proxy Statement, dated May 28, 1998, and filed with the Commission.
Pursuant to various assignment agreements, Peter W. Nauert, Michael
Cavataio, Mercantile Bank of Northern Illinois, trustee of the Conseco Stock
Option Plan F/B/O Michael Cavataio, Karon Hill, Val Rajic, the Fund, Medical
Mutual of Ohio, United Payors & United Providers, Inc., Howard R. Conant, Joseph
Cusimano, LEG Partners SBIC, L.P., Marc C. Krantz, and Krantz Family Limited
Partnership (collectively, the "Assignees"), severally acquired the right to
purchase an aggregate of 2,954,544 shares of Common Stock and warrants to
acquire 1,477,272 shares of Common Stock.
The Stock Purchase Agreement contained certain conditions precedent to
the obligations of IP Delaware and IP Bermuda to close the transactions
contemplated thereby, including, among others, (i) the termination of the
classification of the Board of Directors as provided by Section 10.12 of the
Stock Purchase Agreement, (ii) the resignation of a number of directors of the
Company sufficient to permit the election of directors designated for election
to the Board of Directors pursuant to the Voting Agreement as provided by
Section 10.13 of the Stock Purchase Agreement, (iii) the election of Peter W.
Nauert as Chief Executive Officer of the Company as provided by Section 10.14
of the Stock Purchase Agreement, and (iv) the execution and delivery of each of
the Registration Rights Agreement, the Voting Agreement, and the Stockholders
Agreement as provided by Section 10.1 of the Stock Purchase Agreement.
In connection with the Stock Purchase Agreement, the Company, IP
Delaware, IP Bermuda, and each of the Assignees entered into the Registration
Rights Agreement dated as of July 1, 1998 (the "Registration Rights Agreement").
The description of the Registration Rights Agreement that follows is not, and
does not purport to be, complete and is qualified in its entirety by reference
to the Registration Rights Agreement, a copy of which is attached hereto as
Exhibit 2. Pursuant to the Registration Rights Agreement, the parties thereto,
who are the holders of at least $5,000,000 of the then current market value of
the outstanding Common Stock, have the right, subject to certain limitations set
forth in the Registration Rights Agreement, to request that the Company at any
time register under the Securities Act of 1933, as amended (the "Securities
Act"), at the Company's expense, all or any part of the shares of Common Stock
owned by such parties (a "Demand Registration"). The Company has agreed to pay
for all registration expenses for (i) two Demand Registrations initiated by IP
Delaware, (ii) one Demand Registration initiated by the Fund, and (iii) one
Demand Registration initiated by SAP. Each of the parties to the Registration
Rights Agreement has certain piggyback registration rights in connection with
registrations by the Company under the Securities Act.
- --------------
(1) Includes 2,799,466 shares of Common Stock and warrants to acquire 1,399,733
shares of Common Stock (which are immediately exercisable) owned by IP Delaware.
Includes 1,545,990 shares of Common Stock and warrants (which are immediately
exercisable) to acquire 772,995 shares of Common Stock owned by IP Bermuda.
Also, includes (i) 2,954,244 shares of Common Stock and warrants to acquire
1,477,272 shares of Common Stock owned severally by the Assignees, (ii) 1,000
shares of Common Stock and guarantee warrants (which are immediately
exercisable) to acquire 660,000 shares of Common Stock owned by Peter W. Nauert,
and (iii) 400,000 shares of Common Stock and guarantee warrants (which are
immediately exercisable) to acquire 340,000 shares of Common Stock owned by the
Fund.
<PAGE> 15
CUSIP No. 155055 10 6 13D Page 15 of 21 Pages
In connection with the Stock Purchase Agreement, the Company, IP
Delaware, IP Bermuda, and each of the Assignees entered into the Voting
Agreement dated as of July 1, 1998 (the "Voting Agreement"). The description of
the Voting Agreement that follows is not, and does not purport to be, complete
and is qualified in its entirety by reference to the Voting Agreement, a copy of
which is attached hereto as Exhibit 1.
Pursuant to the Voting Agreement, each of the parties thereto and
their respective transferees who execute the Voting Agreement shall cause the
Board of Directors to consist of nine directors, some or all, as applicable, of
whom shall consist of the following individuals: (i)(a) four individuals
designated by Insurance Partners, so long as IP Delaware, IP Bermuda, their
respective affiliates, the respective officers, directors, and employees of the
foregoing, and the respective limited partners of IP Delaware and IP Bermuda
(collectively, the "IP Group") own Common Stock equal to at least 75% of the
Common Stock owned by the IP Group on the Closing Date, (b) three individuals
designated by Insurance Partners, so long as the IP Group owns Common Shares
equal to at least 50%, but less than 75% of the Common Stock owned by the IP
Group on the Closing Date, (c) two individuals designated by Insurance
Partners, so long as the IP Group owns Common Stock equal to at least 25%, but
less than 50%, of the Common Stock owned by the IP Group on the Closing Date,
and (d) one individual designated by Insurance Partners, so long as the IP
Group owns Common Stock equal to at least 10%, but less than 25%, of the Common
Stock owned by the IP Group on the Closing Date; (ii)(a) two individuals
designated by SAP, so long as SAP and its affiliates (the "SAP Group") own
Common Stock equal to at least 50% of the Common Stock owned by the SAP Group
on the Closing Date, and (b) one individual designated by SAP, so long as the
SAP Group owns Common Stock equal to at least 10%, but less than 50% of the
Common Stock owned by the SAP Group on the Closing Date; and (iii) one
individual designated by the Fund, so long as the Fund and its affiliates (the
"Osborne Group"), own Common Stock equal to at least 25% of the Common Stock
owned by the Osborne Group on the Closing Date; (iv) John F. Novatney, Jr.
until the earlier to occur of (A) December 31, 1999 or (B) the first date as of
which the Company does not have a class of equity securities registered under
the Exchange Act; (v) Fred Lick, Jr. until the earlier to occur of (A)
December 31, 1999, (B) the first date as of which the Company does not have a
class of equity securities registered under the Exchange Act or (C) expiration
of the remaining term of his employment agreement with the Company, as amended;
provided that so long as the Company has a class of equity securities
registered under the Exchange Act, at least two directors remaining on the
Board of Directors shall be "independent" as such term is defined under
applicable Nasdaq National Market System, Inc. standards (such directors are
referred to herein as "Independent Directors"); provided that none of Insurance
Partners, SAP, or the Fund shall be required to designate an individual that
constitutes an Independent Director so long as two individuals who constitute
Independent Directors are nominated to serve as directors and Insurance
Partners, SAP, and the Fund vote for their election; and provided further that
the Company shall not voluntarily be delisted from the Nasdaq National Market
System, Inc. except in connection with a going private transaction or if the
Company becomes listed on another national securities exchange. Under Nasdaq
National Market System, Inc. standards, the term "independent director" means a
person other than an officer or employee of the Company or its subsidiaries or
any other individual having a relationship which, in the opinion of the Board
of Directors, would interfere with the exercise of independent judgment in
carrying out the responsibilities of a director. Under the Voting Agreement,
each of the parties thereto and their respective transferees who execute the
Voting Agreement, granted each of IP Delaware, SAP and the Fund a proxy to
vote the shares of Common Stock held by such person, in the event such person
fails to vote its Common Stock in accordance with the foregoing provisions of
this paragraph.
In addition, the Voting Agreement provides that the parties thereto
and their transferees who execute the Voting Agreement shall, as promptly as
practicable after the closing date of the Stock Purchase Agreement, vote in
favor of an amendment to the Company's Articles of Incorporation, Code of
Regulations, or Bylaws, as the case may be, to eliminate cumulative voting in
the election of directors.
The Voting Agreement further provides that no party thereto or their
transferees who execute the Voting Agreement may effect, cause to be effected,
or permit any voluntary or involuntary sale, assignment, or transfer
("Transfer") of any shares of Common Stock or any interest therein, except for
Transfers pursuant to an effective registration statement or pursuant to Rule
144 under the Securities Act of 1933, as amended, unless the transferee agrees
to be bound by the provisions of the Voting Agreement and the Stockholders
Agreement and such Transfer is, where applicable, made in compliance with the
terms of the Stockholders Agreement. Any Transfer not complying with the
provisions of the Voting Agreement shall be void ab initio, shall not be
effective for any purpose, and any purported transferee of such a Transfer
shall not acquire any right or interest in such Common Stock.
<PAGE> 16
CUSIP No. 155055 10 6 13D Page 16 of 21 Pages
In connection with the Stock Purchase Agreement, the Company, IP
Delaware, IP Bermuda, and each of the Assignees entered into the Stockholders
Agreement dated as of July 1, 1998 (the "Stockholders Agreement"). The
description of the Stockholders Agreement that follows is not, and does not
purport to be, complete and is qualified in its entirety by reference to the
Stockholders Agreement, a copy of which is attached hereto as Exhibit 3.
Pursuant to the Stockholders Agreement, each of Insurance Partners, SAP, the
Fund, and their respective transferees who become parties thereto ("Shareholder
Parties") are provided certain rights in respect of its outstanding Common Stock
in the event of certain sales of Common Stock by other Shareholder Parties.
Specifically, if Insurance Partners disposes of Common Stock representing more
than 20% of the outstanding Common Stock, the IP Group has the right to require
each non-selling Shareholder Party (each, a "Co-Seller") to transfer a portion
of its Common Stock which represents the same percentage of the fully diluted
Common Stock held by such Co-Seller as the Common Stock being disposed of by the
IP Group represent of the fully diluted Common Stock held by the IP Group. All
Common Stock transferred pursuant to the foregoing provision of the Stockholders
Agreement will be sold at the same price and time and otherwise be treated
identically with the Common Stock being sold by the IP Group.
The Stockholders Agreement further provides that if any Shareholder
Party desires to effect a transfer of Common Stock (other than a transfer in an
underwritten public offering pursuant to an effective registration statement
under the Securities Act) representing more than 20% of the outstanding Common
Stock, then the selling Shareholder Party must make an offer to each Co-Seller
to include in the proposed sale a portion of such Co-Seller's Common Stock
which represents the same percentage of such Co-Seller's fully diluted Common
Stock as the Common Stock being sold by the selling Shareholder Party represent
of its fully diluted Common Stock.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
<TABLE>
<S> <C>
Incorporated by reference to Amended and Restated Stock Purchase Agreement dated as of March 30, 1998,
Appendix A of the Company's among Central Reserve Life Corporation, Strategic Acquisition Partners,
Proxy Statement dated May 28, LLC, Insurance Partners, L.P., and Insurance Partners Offshore (Bermuda),
1998. L.P.
Incorporated by reference to Form of Common Stock Purchase Warrant.
Exhibit A of Appendix A of the
Company's Proxy Statement dated
May 28, 1998.
1 Voting Agreement dated as of July 1, 1998, by and among Central Reserve
Life Corporation, Insurance Partners, L.P., Insurance Partners Offshore
(Bermuda), L.P., and each of the security holders listed on the signature
pages thereto.
2 Registration Rights Agreement dated as of July 1, 1998, by and among
Central Reserve Life Corporation, Insurance Partners, L.P., Insurance
Partners Offshore (Bermuda), L.P., and each of the persons and entities
set forth on the signature pages thereto.
3 Stockholders Agreement dated as of July 1, 1998, by and among Central
Reserve Life Corporation, Insurance Partners, L.P., Insurance Partners
Offshore (Bermuda), L.P., and each of the security holders listed on the
signature pages thereto.
</TABLE>
<PAGE> 17
CUSIP No. 155055 10 6 13D Page 17 of 21 Pages
<TABLE>
<S> <C>
4 Indemnification and Closing Agreement dated as of July 1, 1998, by and
among Central Reserve Life Corporation, Insurance Partners, L.P.,
Insurance Partners Offshore (Bermuda), L.P., and each of the persons
identified on Schedule 1 thereto.
5 Agreement of Understanding dated July 3, 1998, among Central Reserve Life
Corporation, Insurance Partners, L.P., Insurance Partners Offshore
(Bermuda), L.P., and Strategic Acquisition Partners, LLC.
</TABLE>
<PAGE> 18
CUSIP No. 155055 10 6 13D Page 18 of 21 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete, and
correct.
Dated: July ___, 1998.
<TABLE>
<S> <C>
INSURANCE PARTNERS, L.P., a Delaware limited partnership
By: Insurance GenPar, L.P., a Delaware limited partnership, its General Partner
By: Insurance GenPar MGP, L.P., a Delaware limited partnership, its General
Partner
By: Insurance GenPar MGP, Inc., a Delaware corporation, its General Partner
By: /s/ ROBERT A. SPASS
--------------------------------------------------------------------
Name: Robert A. Spass
Title: President
INSURANCE GENPAR, L.P., a Delaware limited partnership
By: Insurance GenPar MGP, L.P., a Delaware limited partnership, its General
Partner
By: Insurance GenPar MGP, Inc., a Delaware corporation, its General Partner
By: /s/ ROBERT A. SPASS
--------------------------------------------------------------------
Name: Robert A. Spass
Title: President
</TABLE>
<PAGE> 19
CUSIP No. 155055 10 6 13D Page 19 of 21 Pages
<TABLE>
<S> <C>
INSURANCE GENPAR MGP, L.P., a Delaware limited partnership
By: Insurance GenPar MGP, Inc., a Delaware corporation, its General Partner
By: /s/ ROBERT A. SPASS
--------------------------------------------------------------------
Name: Robert A. Spass
Title: President
INSURANCE GENPAR MGP, INC., a Delaware corporation
By: /s/ ROBERT A. SPASS
--------------------------------------------------------------------
Name: Robert A. Spass
Title: President
INSURANCE PARTNERS OFFSHORE (BERMUDA), L.P.
By: Insurance GenPar (Bermuda), L.P., a Bermuda limited partnership, its General
Partner
By: Insurance GenPar (Bermuda) MGP, L.P., a Bermuda limited partnership, its
General Partner
By: Insurance GenPar (Bermuda) MGP, Ltd., a Bermuda corporation, its General
Partner
By: /s/ ROBERT A. SPASS
--------------------------------------------------------------------
Name: Robert A. Spass
Title: President
</TABLE>
<PAGE> 20
CUSIP No. 155055 10 6 13D Page 20 of 21 Pages
<TABLE>
<S> <C>
INSURANCE GENPAR (BERMUDA), L.P., a Bermuda limited partnership
By: Insurance GenPar (Bermuda) MGP, L.P., a Bermuda limited partnership, its
General Partner
By: Insurance GenPar (Bermuda) MGP, Ltd., a Bermuda corporation, its General
Partner
By: /s/ ROBERT A. SPASS
--------------------------------------------------------------------
Name: Robert A. Spass
Title: President
INSURANCE GENPAR (BERMUDA) MGP, L.P., a Bermuda limited partnership
By: Insurance GenPar (Bermuda) MGP, Ltd., a Bermuda corporation, its General
Partner
By: /s/ ROBERT A. SPASS
--------------------------------------------------------------------
Name: Robert A. Spass
Title: President
INSURANCE GENPAR (BERMUDA) MGP, LTD., a Bermuda corporation
By: /s/ ROBERT A. SPASS
--------------------------------------------------------------------
Name: Robert A. Spass
Title: President
</TABLE>
<PAGE> 21
CUSIP No. 155055 10 6 13D Page 21 of 21 Pages
EXHIBIT INDEX
<TABLE>
<CAPTION>
Page on which Exhibit appears
No. Document
<S> <C> <C>
Amended and Restated Stock Purchase Agreement dated as of March Incorporated by reference to
30, 1998, among Central Reserve Life Corporation, Strategic Appendix A of the Company's
Acquisition Partners, LLC, Insurance Partners, L.P., and Proxy Statement dated May 28,
Insurance Partners Offshore (Bermuda), L.P. 1998.
Form of Common Stock Purchase Warrant. Incorporated by reference to
Exhibit A of Appendix A of the
Company's Proxy Statement dated
May 28, 1998.
1 Voting Agreement dated as of July 1, 1998, by and among Central
Reserve Life Corporation, Insurance Partners, L.P., Insurance
Partners Offshore (Bermuda), L.P., and each of the security
holders listed on the signature pages thereto.
2 Registration Rights Agreement dated as of July 1, 1998, by and
among Central Reserve Life Corporation, Insurance Partners, L.P.,
Insurance Partners Offshore (Bermuda), L.P., and each of the
persons and entities set forth on the signature pages thereto.
3 Stockholders Agreement dated as of July 1, 1998, by and among
Central Reserve Life Corporation, Insurance Partners, L.P.,
Insurance Partners Offshore (Bermuda), L.P., and each of the
security holders listed on the signature pages thereto.
4 Indemnification and Closing Agreement dated as of July 1, 1998,
by and among Central Reserve Life Corporation, Insurance
Partners, L.P., Insurance Partners Offshore (Bermuda), L.P., and
each of the persons identified on Schedule 1 thereto.
5 Agreement of Understanding dated July 3, 1998, among Central
Reserve Life Corporation, Insurance Partners, L.P., Insurance
Partners Offshore (Bermuda), L.P., and Strategic Acquisition
Partners, LLC.
</TABLE>
<PAGE> 1
EXHIBIT 1
VOTING AGREEMENT
This VOTING AGREEMENT (the "AGREEMENT") is entered into as of July 1,
1998, 1998, by and among Central Reserve Life Corporation, an Ohio corporation
(including its successors, the "COMPANY") and the security holders listed on
the signature pages of this Agreement (or who may hereafter become a party
hereto pursuant to the terms hereof).
WHEREAS, pursuant to the Amended and Restated Stock Purchase Agreement
dated as of March 30, 1998, by and among the Company and certain purchasers
identified therein (the "STOCK PURCHASE AGREEMENT"), the Company shall issue
7,300,000 shares of common stock, without par value, of the Company and
warrants to purchase up to 3,650,000 shares of common stock of the Company (the
"WARRANT SHARES");
WHEREAS, upon closing of the transactions contemplated by the Stock
Purchase Agreement (the "CLOSING DATE"), the shares purchased thereunder shall
constitute a majority of the common stock of the Company; and
WHEREAS, the parties desire to regulate certain aspects of their
relationship as holders of common stock of the Company.
NOW THEREFORE, in consideration of the agreements and covenants herein
contained and for other good and valuable consideration, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"AFFILIATE" shall mean, with respect to any Person, any
Person who, directly or indirectly, controls, is controlled by, or is
under common control with that Person. For purposes of this
definition, "control," and "controlled by" and when used with respect
to any Person shall mean the power to direct the management and
policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract, or otherwise.
"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.
<PAGE> 2
"COMMON STOCK EQUIVALENTS" shall mean, without duplication
with any other Common Stock or Common Stock Equivalents, any rights,
warrants, options, convertible securities or indebtedness,
exchangeable securities or indebtedness, or other rights, exercisable
for or convertible or exchangeable into, directly or indirectly,
Common Stock and securities convertible or exchangeable into Common
Stock, whether at the time of issuance or upon the passage of time or
the occurrence of some future event.
"DESIGNEE" shall mean an individual designated for election
to the Board of Directors by IP Delaware, SAP, or Osborne pursuant to
Section 2.1 of this Agreement.
"EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated by the SEC
thereunder.
"HOLDER" shall mean (i) a securityholder listed on the
signature page hereof and (ii) any direct or indirect transferee of
any such securityholder who shall become a party to this Agreement by
executing a joinder agreement in the form of Exhibit A hereto.
"INDEPENDENT DIRECTOR" shall mean a director meeting the
standards of an "independent director" as defined in Rule 4200(a) of
the rules of the NASD as of the Closing Date.
"IP" shall mean, collectively, IP Bermuda and IP Delaware.
"IP BERMUDA" shall mean Insurance Partners Offshore
(Bermuda), L.P., a Bermuda limited partnership.
"IP DELAWARE" shall mean Insurance Partners, L.P., a Delaware
limited partnership.
"IP GROUP" shall mean IP Delaware, IP Bermuda, their
respective Affiliates, the respective officers, directors, and
employees (and members of their respective families and trusts for the
primary benefit of such family members) of the foregoing, and the
respective limited partners of IP Delaware and IP Bermuda.
"IP GROUP CLOSING DATE SHARES" shall mean the number of
shares of Common Stock owned by the IP Group as of the date of this
Agreement as set forth on Exhibit B hereto.
"LICK EMPLOYMENT AGREEMENT" shall mean that certain
Employment Agreement, dated as of December 15, 1997, between the
Company and Fred Lick, Jr.
-2-
<PAGE> 3
"OSBORNE" shall mean Turkey Vulture Fund, III, Ltd. an Ohio
limited liability company.
"OSBORNE GROUP" shall mean Osborne, its Affiliates, and their
respective officers, directors, and employees (and members of their
respective families and trusts for the primary benefit of such family
members).
"OSBORNE GROUP CLOSING DATE SHARES" shall mean the number of
shares of Common Stock owned by the Osborne Group as of the date of
this Agreement as set forth on Exhibit B hereto.
"PERSON" or "PERSON" shall mean any individual, corporation,
partnership, limited liability company, joint venture, association,
joint-stock company, trust, unincorporated organization, or government
or other agency or political subdivision thereof.
"REQUIRED HOLDERS" shall mean Holders who then own
beneficially more than 66-2/3% of the aggregate number of shares of
Common Stock subject to this Agreement.
"SAP" shall mean Strategic Acquisition Partners, LLC, a
Nevada limited liability company.
"SAP GROUP" shall mean SAP, its Affiliates, and their
respective officers, directors, and employees, Peter W. Nauert,
Michael A. Cavataio, Karon Hill and Val Rajic (and members of their
respective families and trusts for the primary benefit of such family
members).
"SAP GROUP CLOSING DATE SHARES" shall mean the number of
shares of Common Stock owned by the SAP Group as of the date of this
Agreement as set forth on Exhibit B hereto.
"STOCKHOLDERS AGREEMENT" shall mean that certain Stockholders
Agreement, dated as of July 1, 1998, among the Company and the various
stockholders party thereto from time to time.
-3-
<PAGE> 4
ARTICLE II
ELECTION OF DIRECTORS
SECTION 2.1 Board of Directors.
(a) The Holders shall cause the Board of Directors of the Company
to consist of nine directors, some or all, as applicable, of whom shall consist
of the following individuals:
(i) IP Designees. Four individuals designated by IP, so
long as the IP Group shall own a number of shares of Common Stock
equal to at least 75% of the IP Group Closing Date Shares; three
individuals designated by IP, so long as the IP Group shall own a
number of shares of Common Stock equal to at least 50%, but less than
75%, of the IP Group Closing Date Shares; two individuals designated
by IP, so long as the IP Group shall own a number of shares of Common
Stock equal to at least 25%, but less than 50%, of the IP Group
Closing Date Shares; and one individual designated by IP, so long as
the IP Group shall own a number of shares of Common Stock equal to at
least 10%, but less than 25%, of the IP Group Closing Date Shares;
(ii) SAP Designees. Two individuals designated by SAP, so
long as the SAP Group shall own a number of shares of Common Stock
equal to at least 50% of the SAP Closing Date Shares; and one
individual designated by SAP, so long as the SAP Group shall own a
number of shares of Common Stock equal to at least 10%, but less than
50%, of the SAP Group Closing Date Shares;
(iii) Osborne Designee. One individual designated by
Osborne, so long as the Osborne Group shall own a number of shares of
Common Stock equal to at least 25% of the Osborne Group Closing Date
Shares;
(iv) Novatney. John Novatney, until the earlier to occur
of (A) December 31, 1999, or (B) the first date as of which the
Company does not have a class of equity securities registered under
either Section 12(b) or 12(g) of the Exchange Act; and
(v) Lick. Fred Lick, Jr. until the earlier to occur of
(A) December 31, 1999, (B) termination of his employment under the
Lick Employment Agreement, or (C) the first date as of which the
Company does not have a class of equity securities registered under
either Section 12(b) or 12(g) of the Exchange Act;
provided, however, that until the first date as of which the Company
does not have a class of equity securities either registered under
Section 12(b) or 12(g) of the Exchange Act, at least two of the
individuals elected to the Board of Directors shall constitute
Independent Directors; and provided further, that (i) none of IP, SAP
or
-4-
<PAGE> 5
Osborne shall be required to designate an individual that constitutes
an Independent Director so long as two individuals who constitute
Independent Directors are nominated to serve as directors and SAP, IP
and Osborne vote for their election; provided, that if the Company has
cumulative voting with respect to the election of its directors, the
SAP Group, IP Group and Osborne Group shall be permitted to vote in
favor of the SAP Designees, IP Designees and Osborne Designee as
provided in this Section 2.1(a) to the extent necessary to ensure the
election of such Designees prior to casting any votes in favor of such
Independent Directors; (ii) in the event one or two of the individuals
to be designated pursuant to the foregoing provisions must constitute
an Independent Director in order to meet the requirements of the
immediately preceding proviso, then, first, IP shall designate as one
of its designees an individual that constitutes an Independent
Director, and, second, SAP shall designate as one of its designees an
individual that constitutes an Independent Director.
(b) For purposes of the foregoing provisions and Section 2.2, in
determining whether any person or group owns a specified number of shares of
Common Stock for purposes of comparison to the number of shares owned by a
person or group on the Closing Date, appropriate adjustment shall be made in
each case to give effect to any stock splits, dividends or combinations.
(c) If, prior to his election to the Board of Directors of the
Company pursuant to Section 2.1, any designee shall be unable or unwilling to
serve as a director of the Company, the Holder or Holders who designated such
Designee shall be entitled to nominate a replacement who shall then be a
Designee for purposes of this Section 2.1. If, following an election to the
Board of Directors of the Company pursuant to Section 2.1, any Designee shall
resign or be removed or be unable to serve for any reason prior to the
expiration of his term as a director of the Company, the Holder or Holders who
designated such Designee shall, within thirty (30) days of such event, notify
the Board of Directors of the Company in writing of a replacement Designee, and
either (i) the Holders shall vote their shares of Common Stock, at any regular
or special meeting called for the purpose of filling positions on the Board of
Directors of the Company or in any written consent executed in lieu of such a
meeting of stockholders, and shall take all such other actions necessary to
ensure the election to the Board of Directors of the Company of such
replacement Designee to fill the unexpired term of the Designee who such new
Designee is replacing or (ii) the Holders shall cause the Board of Directors to
elect such replacement Designee to fill the unexpired term of the Designee who
such new Designee is replacing subject to any fiduciary duties of the Board of
Directors. If any Holder requests that any Designee designated by such Holder
be removed as a Director (with or without cause) by written notice thereof to
the Company, then the Company shall take all actions necessary to effect, and
each of the Holders shall vote all of its capital stock in favor of, such
removal upon such request.
-5-
<PAGE> 6
(d) Each Holder shall vote its shares of Common Stock at any
regular or special meeting of stockholders of the Company or in any written
consent executed in lieu of such a meeting of stockholders and shall take all
other actions necessary to give effect to the agreements contained in this
Agreement (including, without limitation, the election of Designees as directors
as described herein) and to ensure that the certificate of incorporation and
bylaws as in effect immediately following the date hereof do not, at any time
thereafter, conflict in any respect with the provisions of this Agreement. In
order to effectuate the provisions of this Section 2.1, each Holder hereby
agrees that when any action or vote is required to be taken by such Holder
pursuant to this Agreement, such Holder shall use its best efforts to call, or
cause the appropriate officers and directors of the Company to call, a special
or annual meeting of stockholders of the Company, as the case may be, or execute
or cause to be executed a consent in writing in lieu of any such meetings
pursuant to applicable law.
SECTION 2.2 Continued Listing. Until the three year
anniversary of the Closing Date, each Holder shall vote its shares of Common
Stock in such manner that the Company shall not be voluntarily delisted from
the Nasdaq National Market, except (y) in connection with (1) a transaction
that would constitute a "Rule 13e-3 transaction" (as that term is defined under
Rule 13e-3 under the Exchange Act as in effect on the date hereof) with respect
to the Common Stock or (2) any other transaction that, if it were effected by
the Company or an affiliate thereof, would constitute a "Rule 13e-3
transaction" (as so defined) with respect to the Common Stock, or (z) if the
Company becomes listed on a national securities exchange.
SECTION 2.3 Proxy. Each Holder hereby grants to each of IP
Delaware, SAP and Osborne, with full powers of substitution, an irrevocable
proxy coupled with an interest as may be necessary to permit each of IP
Delaware, SAP and Osborne, to vote the shares of the Holder granting such proxy
in accordance with the requirements of Section 2.1 (by written consent or
otherwise) in event the Holder fails to vote its shares of Common Stock as
required under Section 2.1 within ten (10) days after notice from the party
holding such proxy requesting such a vote.
SECTION 2.4 Cumulative Voting. As promptly as practicable
following the Closing Date, the Holders shall vote in favor of an amendment to
the Company's Articles of Incorporation, Code of Regulations or Bylaws, as the
case may be, to eliminate cumulative voting in the election of directors, and
shall take all additional action as may be necessary under the Ohio General
Corporation Law to effect any such amendment, including causing the Company to
file such amendment with the Ohio Secretary of State.
SECTION 2.5 Proxy Statement. In connection with any annual
meeting of the stockholders or special meeting of the stockholders of the
Company called for the election of directors, the Company shall prepare and
file, if required, with the Securities and Exchange Commission (the
"COMMISSION") a proxy statement relating to such meeting
-6-
<PAGE> 7
(together with any amendments thereof or supplements thereto, the "PROXY
STATEMENT") which shall include the recommendation of the Board in favor of
electing the directors specified in Section 2.1. Except in the event of
termination of this Agreement, no modification or withdrawal of such
recommendation shall release the Company of its obligation to submit the
election of directors specified in Section 2.1 to its stockholders for their
vote in accordance with applicable law. The Company shall use reasonable
efforts to assure the election of the directors specified in Section 2.1.
ARTICLE III
RESTRICTIONS ON TRANSFER
SECTION 3.1 Restrictions Upon Transfer. No Holder may
effect, cause to be effected or permit any voluntary or involuntary sale,
assignment or transfer of any shares of Common Stock or Common Stock
Equivalents or any interest therein (a "TRANSFER"), except for Transfers
pursuant to an effective registration statement or pursuant to Rule 144 under
the Securities Act, unless the transferee agrees to be bound by the provisions
of this Agreement and the Stockholders Agreement and such Transfer is, where
applicable, made in compliance with the terms of the Stockholders Agreement;
provided, that the Warrants and the Warrant Shares shall not be subject to this
Agreement upon the Transfer to a beneficial owner other than IP, SAP, or
Osborne and their respective affiliates; provided further, that nothing
contained herein shall restrict the sale, assignment or transfer of any
warrants issued by the Company pursuant to the Credit Agreement dated December
16, 1997 by and between the Company and SAP. Any Transfer not complying with
the provisions of this Agreement shall be void ab initio, shall not be
effective for any purpose and any purported transferee of such a Transfer shall
not acquire any right or interest in such Common Stock or the Company.
SECTION 3.2 Restrictive Legends.
(a) For the term of this Agreement, each certificate
representing the shares of Common Stock or Common Stock Equivalents subject
hereto, and each instrument or certificate issued upon exchange or transfer
thereof, shall be stamped or otherwise imprinted with the following legend:
"THIS CERTIFICATE AND THE SHARES REPRESENTED HEREBY ARE
SUBJECT TO TRANSFER RESTRICTIONS, VOTING LIMITATIONS, AND OTHER TERMS
AND CONDITIONS CONTAINED IN A VOTING AGREEMENT DATED JULY 1, 1998 BY
AND AMONG THE COMPANY AND CERTAIN OF ITS STOCKHOLDERS, A COPY OF WHICH
IS ON FILE WITH THE SECRETARY OF THE COMPANY."
-7-
<PAGE> 8
(b) In addition, each certificate representing shares of
Common Stock or Common Stock Equivalents subject hereto and each instrument or
certificate issued upon exchange or Transfer thereof shall be stamped or
otherwise imprinted with any and all legends required by applicable state and
federal securities laws.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1 Term. The term of this Agreement shall begin on
the Closing Date and shall remain in effect until the five (5) year anniversary
of the Closing Date.
SECTION 4.2 Amendment. Any provision of this Agreement may
be amended or waived if, but only if, such amendment or waiver is in writing
and is signed by the Company and the Required Holders; provided, that, no such
amendment or waiver: (i) that is adverse to any Holder that owns more than 5%
of the outstanding Common Stock shall be effective as to that Holder prior to
the three (3) year anniversary of the Closing Date without the consent of such
Holder or (ii) shall amend Section 2.1(a)(iv), Section 2.1(a)(v), the first
proviso of Section 2.1(a) or Section 2.2 unless approved by a majority of the
Independent Directors.
SECTION 4.3 Successors and Assigns. All covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto shall bind and inure to the benefit of the respective successors and
assigns of the parties hereto including any and all subsequent Holders from
time to time.
SECTION 4.4 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Ohio, as
applicable to contracts executed and to be performed entirely in such state.
SECTION 4.5 Entire Agreement. Except as provided below, this
Agreement constitutes the entire agreement of the parties with respect to the
subject matter hereof and may not be modified or amended except in writing.
SECTION 4.6 Counterparts. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
SECTION 4.7 Enforcement.
(a) The Holders each acknowledge and agree that irreparable
damage will occur if any of the provisions of this Agreement are not complied
with in accordance with
-8-
<PAGE> 9
their specific terms. Accordingly, the Company will be entitled to an
injunction to prevent breached of this Agreement and to enforce specifically
its provisions in any court of the United States or any state having
jurisdiction, this being in addition to any other remedy to which the Company
may be entitled at law or in equity.
(b) No failure or delay on the part of any party in the
exercise of any power, right or privilege hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege.
SECTION 4.8 Severability. In case any provision of 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.
SECTION 4.9 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
17800 Royalton Road
Strongsville, Ohio 44136
Facsimile No.: (440) 572-4501
Attention: Fred Lick, Jr.
If to any Holder, at its address listed on the signature pages hereof
or in any joinder agreement.
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). Failure to mail a notice or
communication to a Holder or any defect in it shall not affect its sufficiency
with respect to other Holders. If a notice or communication is mailed in the
manner provided above, it is duly given, whether or not the addressee receives
it.
* * *
-9-
<PAGE> 10
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be signed on its behalf by its duly authorized officers, all as of
the day and year first above written.
CENTRAL RESERVE LIFE CORPORATION
By: /s/ FRANK W. GRIMONE
--------------------------------------
Name: Frank W. Grimone
Title: CFO
<PAGE> 11
SIGNATURE PAGE TO VOTING AGREEMENT
INSURANCE PARTNERS, L.P.
By: Insurance GenPar, L.P.,
its general partner
By: Insurance GenPar MGP, L.P.,
its general partner
By: Insurance GenPar MGP, Inc.,
its general partner
By: /s/ ROBERT SPASS
----------------------------------
Name: Robert Spass
--------------------------------
Title: President
-------------------------------
Address:
One Chase Manhattan Plaza
44th Floor
New York, New York 10005
Attention: Bradley E. Cooper
Copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Thomas A. Roberts
<PAGE> 12
SIGNATURE PAGE TO VOTING AGREEMENT
INSURANCE PARTNERS OFFSHORE (BERMUDA), L.P.
By: Insurance GenPar (Bermuda), L.P.,
its general partner
By: Insurance GenPar MGP (Bermuda), L.P.,
its general partner
By: Insurance GenPar MGP (Bermuda),
Inc., its general partner
By: /s/ ROBERT SPASS
----------------------------------
Name: Robert Spass
--------------------------------
Title: President
-------------------------------
Address:
One Chase Manhattan Plaza
44th Floor
New York, New York 10005
Attention: Bradley & Cooper
Copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Thomas A. Roberts
<PAGE> 13
SIGNATURE PAGE TO VOTING AGREEMENT
STRATEGIC ACQUISITION PARTNERS, LLC
By: /s/ VAL RAJIC
--------------------------------------
Name: Val Rajic
------------------------------------
Title: President
-----------------------------------
Address:
1750 East Golf Road
Suite 210
Schaumburg, Illinois 60173
Copy to:
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
Attention: Stanley H. Meadows, P.C.
<PAGE> 14
SIGNATURE PAGE TO VOTING AGREEMENT
/s/ PETER W. NAUERT
-----------------------------------------
Peter W. Nauert
Address:
1750 East Golf Road
Suite 210
Schaumburg, Illinois 60173
Copy to:
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
Attention: Stanley H. Meadows, P.C.
<PAGE> 15
SIGNATURE PAGE TO VOTING AGREEMENT
/s/ MICHAEL A. CAVATAIO
-----------------------------------------
Michael A. Cavataio
Address:
3125 Ramsgate Road
Rockford, Illinois 61114
<PAGE> 16
SIGNATURE PAGE TO VOTING AGREEMENT
MERCANTILE BANK OF NORTHERN ILLINOIS,
TRUSTEE OF THE CONSECO STOCK OPTION
DIRECTOR PLAN FBO
MICHAEL CAVATAIO #08590033
By: /s/ KATHY A. MOFFATT
--------------------------------------
Name: Kathy A. Moffatt
------------------------------------
Title: Trust Officer
-----------------------------------
Address:
P.O. Box 30
Freeport, Illinois 61032
Copy to:
Michael A. Cavataio
3125 Ramsgate Road
Rockford, Illinois 61114
<PAGE> 17
SIGNATURE PAGE TO VOTING AGREEMENT
MERCANTILE BANK OF NORTHERN ILLINOIS,
TRUSTEE OF THE CONSECO STOCK OPTION
DIRECTOR PLAN FBO
MICHAEL CAVATAIO #08590034
By: /s/ KATHY A. MOFFATT
--------------------------------------
Name: Kathy A. Moffatt
------------------------------------
Title: Trust Officer
-----------------------------------
Address:
P.O. Box 30
Freeport, Illinois 61032
Copy to:
Michael A. Cavataio
3125 Ramsgate Road
Rockford, Illinois 61114
<PAGE> 18
SIGNATURE PAGE TO VOTING AGREEMENT
/s/ KARON HILL
-----------------------------------------
Karon Hill
Address:
1750 East Golf Road
Suite 210
Schaumburg, Illinois 60173
<PAGE> 19
SIGNATURE PAGE TO VOTING AGREEMENT
/s/ VAL RAJIC
-----------------------------------------
Val Rajic
Address:
1750 East Golf Road
Suite 210
Schaumburg, Illinois 60173
<PAGE> 20
SIGNATURE PAGE TO VOTING AGREEMENT
TURKEY VULTURE FUND XIII, LTD.
By: /s/ RICHARD M. OSBORNE
--------------------------------------
Name: Richard M. Osborne
------------------------------------
Title: Manager
-----------------------------------
Address:
7001 Center Street
Mentor, Ohio 44060
Attention: Richard M. Osborne
Copy to:
Kohrman Jackson & Krantz, P.L.L.
1375 East Ninth Street
One Cleveland Center, 20th Floor
Cleveland, Ohio 44114
Attention: Marc C. Krantz
<PAGE> 21
SIGNATURE PAGE TO VOTING AGREEMENT
/s/ MARC C. KRANTZ
-----------------------------------------
Marc C. Krantz
Address:
Kohrman Jackson & Krantz, P.L.L.
1375 East Ninth Street
One Cleveland Center, 20th Floor
Cleveland, Ohio 44114
<PAGE> 22
SIGNATURE PAGE TO VOTING AGREEMENT
MEDICAL MUTUAL OF OHIO
By: /s/ ROBERT N. TROMBLY
-------------------------------------
Name: Robert N. Trombly
-----------------------------------
Title: Corporate Secretary
----------------------------------
Medical Mutual of Ohio
Address:
2060 East Ninth Street
Cleveland, Ohio 44115
Attention: General Counsel
<PAGE> 23
SIGNATURE PAGE TO VOTING AGREEMENT
UNITED PAYORS AND UNITED PROVIDERS, INC.
By: /s/ S. JOSEPH BRUNO
-------------------------------------
Name: S. Joseph Bruno
-----------------------------------
Title: V.P. and CFO
----------------------------------
Address:
2275 Research Blvd.
6th Floor
Rockville, Maryland 20850
Attention: Joe Mott
<PAGE> 24
SIGNATURE PAGE TO VOTING AGREEMENT
/s/ HOWARD R. CONANT
-----------------------------------------
Howard R. Conant
Address:
c/o Lunn Partners
209 South LaSalle Street
Chicago, Illinois 60604
Attention: John Cochrane
<PAGE> 25
SIGNATURE PAGE TO VOTING AGREEMENT
JOSEPH CUSIMANO IRA
By: /s/ JOSEPH CUSIMANO, IRA
-------------------------------------
Name: Joseph Cusimano, IRA
-----------------------------------
Title:
----------------------------------
Address:
c/o Lunn Partners
209 South LaSalle Street
Chicago, Illinois 60604
<PAGE> 26
SIGNATURE PAGE TO VOTING AGREEMENT
LEG PARTNERS SBIC, L.P.
By: /s/ LAWRENCE GOLUB
----------------------------------------
Name: President of Golub G.P. II Corporation
--------------------------------------
Title: General Partner
-------------------------------------
Address:
230 Park Avenue
19th Floor
New York, New York 10169
Attention: Lawrence Golub
<PAGE> 27
SIGNATURE PAGE TO VOTING AGREEMENT
KRANTZ FAMILY LIMITED PARTNERSHIP
By: /s/ BYRON S. KRANTZ
--------------------------------------
Byron S. Krantz, its General Partner
Address:
Kohrman Jackson & Krantz, P.L.L.
1375 East Ninth Street
One Cleveland Center, 20th Floor
Cleveland, Ohio 44114
<PAGE> 1
EXHIBIT 2
CENTRAL RESERVE LIFE CORPORATION
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), dated as of
July 1, 1998, is between CENTRAL RESERVE LIFE CORPORATION, an Ohio corporation
(the "Corporation"), and the persons and entities set forth on the signature
pages attached hereto (the "Investors").
R E C I T A L S
A. The Investors have agreed to purchase common shares, without par
value, of the Corporation (the "Common Shares") pursuant to that certain
Amended and Restated Stock Purchase Agreement of even date herewith provided
that the parties hereto enter into this Agreement.
B. The Corporation deems it desirable to enter into this Agreement in
order to induce the Investors to purchase the Common Shares pursuant to the
Stock Purchase Agreement.
AGREEMENTS
In consideration of the premises and the mutual covenants herein
contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1. Definitions. As used in this Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Shares" means the Common Shares, without par value, of the
Corporation.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Person" means a natural person, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization or other entity, or a
governmental entity or any department, agency or political subdivision thereof.
"Public Offering" means any offering by the Corporation of its equity
securities to the public pursuant to an effective registration statement under
the Securities Act or any comparable statement under any comparable federal
statute then in effect.
"Registrable Shares" means at any time (i) any Common Shares then
outstanding which were issued pursuant to the Stock Purchase Agreement; (ii)
any Common Shares then outstanding and held by any Investor (including the
Common Shares issuable upon exercise the Warrants (as defined in the Stock
Purchase Agreement)); (iii) any Common Shares then outstanding which were
issued as, or were issued directly or indirectly upon the conversion or
exercise of other securities issued as a dividend or other distribution with
respect or in replacement of any shares referred to in
<PAGE> 2
(i) or (ii); and (iv) any Common Shares then issuable directly or indirectly
upon the conversion or exercise of other securities which were issued as a
dividend or other distribution with respect to or in replacement of any shares
referred to in (i) or (ii); provided, however, that Registrable Shares shall
not include any shares which have been registered pursuant to the Securities
Act or which have been sold to the public pursuant to Rule 144 of the
Commission under the Securities Act. For purposes of this Agreement, a Person
will be deemed to be a holder of Registrable Shares whenever such Person has
the then-existing right to acquire such Registrable Shares, whether or not such
acquisition actually has been effected.
"Securities Act" means the Securities Act of 1933, as amended.
"Stock Purchase Agreement" means the Amended and Restated Stock
Purchase Agreement dated as of March 30, 1998, by and among the Company,
Strategic Acquisition Partners, L.L.C., Insurance Partners, L.P. and Insurance
Partners Offshore (Bermuda).
2. Demand Registration.
2.1 Requests for Registration. Subject to the terms of
this Agreement, the holders of at least $5,000,000 of the then market value of
the outstanding Registrable Shares may, at any time, request registration under
the Securities Act of all or part of their Registrable Shares on Form S-1 or
any similar long-form registration ("Long- Form Registrations") or, if
available, then at the option of the Company, on Form S-2 or S-3 or any similar
short-form registration ("Short-Form Registrations"). Within ten (10) days
after receipt of any request pursuant to this Section 2.1, the Corporation will
give written notice of such request to all other holders of Registrable Shares,
subject to Section 2.4, and will include in such registration all Registrable
Shares with respect to which the Corporation has received written requests for
inclusion within thirty (30) days after delivery of the Corporation's notice.
All registrations requested pursuant to this Section 2 are referred to herein
as "Demand Registrations."
2.2 Payment of Expenses for Demand Registrations. The
Corporation will pay all Registration Expenses (as defined in Section 6 below)
for two Demand Registrations initiated by Insurance Partners, L.P., one Demand
Registration initiated by Turkey Vulture Fund XIII, Ltd. and one Demand
Registration initiated by Strategic Acquisition Partners, L.L.C. (or its
principals or affiliates) (including those under Section 2.3) (whether a
Long-Form Registration or a Short-Form Registration). A registration will not
count as one of the Corporation-paid Demand Registrations until it has become
effective and the holders of Registrable Shares are able to register and sell
at least 90% of the Registrable Shares requested to be included in such
registration (or in the case of a shelf registration, it remains effective for
not less than 180 days); provided, however, that in any event the Corporation
will pay all Registration Expenses in connection with any registration
initiated as a Demand Registration even though such registration shall not
count as a Corporation-paid Demand Registration. In a Demand Registration
other than the four Demand Registrations referred to in the first sentence of
this Section (including those under Section 2.3), the Registration Expenses of
such registration shall be borne by the holders of Registrable Shares to be
registered thereunder pro rata based on the number of Registrable Shares and
other securities requested or permitted to be included in such registration
pursuant to the terms of this Agreement.
-2-
<PAGE> 3
2.3 Short-Form Registrations. Demand Registrations will
be Short-Form Registrations whenever the Corporation is permitted to use any
applicable short form. The Corporation will use its best efforts to make
Short-Form Registrations available for the sale of Registrable Shares. If a
Short-Form Registration is to be an underwritten public offering, and if the
underwriters for marketing or other reasons request the inclusion in the
registration statement of information which is not required under the
Securities Act to be included in a registration statement on the applicable
form for the Short-Form Registration, the Corporation will provide such
information as may be reasonably requested for inclusion by the underwriters in
the Short-Form Registration.
2.4 Priority. If a Demand Registration is an
underwritten public offering and the managing underwriters advise the
Corporation in writing that in their opinion the inclusion of the number of
Registrable Shares and other securities requested to be included (by the
Corporation or others) creates a substantial risk that the price per Common
Share will be reduced, the Corporation will include in such registration, prior
to the inclusion of any securities which are not Registrable Shares, the number
of Registrable Shares requested to be included which in the opinion of such
underwriters can be sold without creating such a risk, pro rata among the
respective holders of Registrable Shares on the basis of the number of
Registrable Shares owned by such holders, with further successive pro rata
allocations among the holders of Registrable Shares if any such holder of
Registrable Shares has requested the registration of less than all such
Registrable Shares it is entitled to register.
2.5 Restrictions. The Corporation will not be obligated
to effect any Demand Registration within 180 days after the effective date of a
previous Demand Registration. The Corporation may postpone for up to ninety
(90) days the filing or the effectiveness (but not the preparation) of a
registration statement for a Demand Registration if the Board of Directors of
the Corporation reasonably and in good faith determines that such filing would
require a disclosure of a material fact that would have a material adverse
effect on the Corporation or any plan by the Corporation to engage in any
acquisition of assets (other than in the ordinary course of business) or any
merger, consolidation, tender offer or other significant transaction. In order
to postpone the filing of a registration statement pursuant to this Section
2.5, the Corporation shall promptly (but in any event within ten (10) days),
upon determining to seek such postponement, deliver to each holder who has
requested the registration of all or any part of its Registrable Shares, a
certificate signed by an executive officer of the Corporation stating that the
Corporation is postponing such filing pursuant to this Section 2.5 and a
general statement of the reason for such postponement and an approximation of
the anticipated delay. Within twenty (20) days after receiving such
certificate, the holders of a majority of the Registrable Shares held who have
requested the registration of all or any part of their respective Registrable
Shares and for which registration was previously requested may withdraw such
demand request by giving written notice to the Corporation; if withdrawn, the
demand request shall be deemed not to have been made for all purposes of this
Agreement. The Corporation may postpone the filing of a particular
registration statement pursuant to this Section 2.5 only once.
2.6 Selection of Underwriters. The holders of at least
a majority of the Registrable Shares included in any Demand Registration shall
have the right to select the investment banker(s)
-3-
<PAGE> 4
and manager(s) to administer the offering, subject to the Corporation's
approval which will not be unreasonably withheld or delayed, and any existing
contract rights of Advest, Inc.
3. Piggyback Registration.
3.1 Right to Piggyback. Whenever the Corporation
proposes to register any of its equity securities under the Securities Act
(other than pursuant to a Demand Registration hereunder or on Form S-8 or S-4
or any successor form thereto) and the registration form to be used may be used
for the registration of any Registrable Shares (a "Piggyback Registration"),
the Corporation will give prompt written notice (which shall be given not less
than thirty (30) days prior to the effective date of the registration
statement) to all holders of the Registrable Shares of its intention to effect
such a registration and will include in such registration all Registrable
Shares (in accordance with the priorities set forth in Sections 3.2 and 3.3
below) with respect to which the Corporation has received written requests for
inclusion within fifteen (15) days after the delivery of the Corporation's
notice.
3.2 Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the
Corporation and the managing underwriters advise the Corporation in writing
that in their opinion the number of securities requested to be included in the
registration creates a substantial risk that the price per Common Share will be
reduced, the Corporation will include in such registration first, the
securities that the Corporation proposes to sell, second, the Registrable
Shares requested to be included in such registration, pro rata among the
holders of such Registrable Shares on the basis of the number of shares which
are owned by such holders, and third, other securities requested to be included
in such registration.
3.3 Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Corporation's securities and the managing underwriters advise the
Corporation in writing that in their opinion the number of securities requested
to be included in the registration creates a substantial risk that the price
per Common Share will be reduced, the Corporation will include in such
registration first, the securities requested to be included therein by the
holders requesting such registration and the Registrable Shares requested to be
included in such registration, pro rata among the holders of such securities on
the basis of the number of Common Shares or Registrable Shares which are owned
by such holders, and second, other securities requested to be included in such
registration.
3.4 Other Registrations. If the Corporation has
previously filed a registration statement with respect to Registrable Shares
pursuant to Section 2 or pursuant to this Section 3, and if such previous
registration has not been withdrawn or abandoned, the Corporation will not file
or cause to be effected any other registration of any of its equity securities
or securities convertible or exchangeable into or exercisable for its equity
securities under the Securities Act (except on Form S-8 or any successor form),
whether on its own behalf or at the request of any holder or holders of such
securities, until a period of at least 180 days has elapsed from the effective
date of such previous registration.
3.5 Selection of Underwriters. In connection with any
Piggyback Registration, the holders of at least a majority of the Registrable
Shares requested to be registered shall have the right
-4-
<PAGE> 5
to select the managing underwriters (subject to the approval of the Corporation
which shall not be unreasonably withheld or delayed) to administer any offering
of the Corporation's securities in which the Corporation does not participate,
and the Corporation will have such right in any offering in which it
participates.
4. Holdback Agreements.
4.1 Holders' Agreements. Each holder of Registrable
Shares agrees not to effect any public sale or distribution of equity
securities of the Corporation, or any securities convertible into or
exchangeable or exercisable for such securities or make any demand for
registration under Sections 2 or 3 hereof, during the seven (7) days prior to,
and during the ninety (90) days following, the effective date of any
underwritten Demand Registration or any underwritten Piggyback Registration in
which Registrable Shares are included (except as part of such underwritten
registration), unless the underwriters managing the registered public offering
otherwise agree. Nothing herein shall prevent a holder of Registrable Shares
that is a partnership from making a distribution of Registrable Shares to its
partners, a holder of Registrable Shares that is a trust from making a
distribution of Registrable Shares to its beneficiaries or a holder of
Registrable Shares that is a corporation from making a distribution of
Registrable Shares to its stockholders, provided that the transferees of such
Registrable Shares agree to be bound by the provisions of this Agreement to the
extent the transferor would be so bound.
4.2 Corporation's Agreements. The Corporation agrees
(i) not to effect any public sale or distribution of its equity securities, or
any securities convertible into or exchangeable or exercisable for such
securities, during the seven (7) days prior to, and during the ninety (90) days
following, the effective date of any underwritten Demand Registration or any
underwritten Piggyback Registration (except as part of such underwritten
registration or pursuant to registrations on Form S-8 or any successor form),
unless the underwriters managing the registered public offering otherwise
agree, (ii) to use all reasonable efforts to cause each holder of at least five
percent (5%) (on a fully diluted basis) of its equity securities, or any
securities convertible into or exchangeable or exercisable for such securities
to agree not to effect any public sale or distribution of any such securities
during such period (except as part of such underwritten registration, if
otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree, subject to the registration obligations of the
Company under the Common Share Purchase Warrants and (iii) if requested by the
underwriters managing the registered public offering, to use all reasonable
efforts to cause each other holder of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, purchased
from the Corporation at any time (other than in a registered public offering)
to agree not to effect any public sale or distribution of any such securities
during such period (except as part of such underwritten registration, if
otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree, subject to the registration obligations of the
Company under the Common Share Purchase Warrants.
5. Registration Procedures. Whenever the holders of Registrable
Shares have requested that any Registrable Shares be registered pursuant to
this Agreement, the Corporation will use its best efforts to effect the
registration and sale of such Registrable Shares in accordance with the
intended method of disposition thereof and, pursuant thereto, the Corporation
will as expeditiously as possible:
-5-
<PAGE> 6
(a) prepare and file with the Commission a registration statement with
respect to such Registrable Shares and use its best efforts to cause such
registration statement to become effective (provided that before filing a
registration statement or prospectus, or any amendments or supplements thereto,
the Corporation will furnish copies of all such documents proposed to be filed
to the counsel or counsels for the sellers of the Registrable Shares covered by
such registration statement);
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus(es) used in
connection therewith as may be necessary to keep such registration statement
effective for a period of not less than nine months and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such registration statement;
(c) furnish to each seller of Registrable Shares and the
underwriters such number of copies of such registration statement, each
amendment and supplement thereto, the prospectus(es) included in such
registration statement (including each preliminary prospectus) and such other
documents as such seller or underwriter may reasonably request in order to
facilitate the disposition of the Registrable Shares;
(d) use its best efforts to register or qualify such Registrable
Shares under such other securities or blue sky laws of such jurisdictions as
any seller or underwriter reasonably requests and do any and all other acts and
things which may be reasonably necessary or advisable to enable such seller or
underwriter to consummate the disposition in such jurisdictions of the
Registrable Shares (provided that the Corporation will not be required to (i)
qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph or (ii) consent to
general service of process in any such jurisdiction);
(e) promptly notify each seller of such Registrable Shares, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Corporation will
prepare a supplement or amendment to such prospectus or registration statement
so that, as thereafter delivered to the purchasers of such Registrable Shares,
such prospectus or registration statement will not contain any untrue statement
of a material fact or omit to state any fact necessary to make the statements
therein not misleading;
(f) cause all such Registrable Shares to be (i) listed on each
securities exchange on which similar securities issued by the Corporation are
then listed, (ii) authorized to be quoted and/or listed (to the extent
applicable) on the NASD Automated Quotation System or The Nasdaq National
Market if the Registrable Shares so qualify, or (iii) if no similar securities
issued by the Corporation are then listed on a securities exchange, a
securities exchange selected by the holders of at least a majority of the
Registrable Shares included in such registration;
-6-
<PAGE> 7
(g) provide a transfer agent and registrar for all such Registrable
Shares not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
at least a majority of the Registrable Shares being sold or the underwriters,
if any, reasonably request in order to expedite or facilitate the disposition
of such Registrable Shares (including, but not limited to, effecting a stock
split or a combination of shares).
(i) make available for inspection by any seller of Registrable Shares,
any underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant or other agent retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Corporation, and cause the Corporation's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(j) advise each seller of such Registrable Shares, promptly after it
shall receive notice or obtain knowledge thereof, of the issuance of any stop
order by the Commission or any state securities or other regulatory authority
suspending the effectiveness of such registration statement or the initiation
or threatening of any proceeding for such purpose and promptly use all best
efforts to prevent the issuance of any stop order or to obtain its withdrawal
if such stop order should be issued;
(k) at least forty eight (48) hours prior to the filing of any
registration statement or prospectus, or any amendment or supplement to such
registration statement or prospectus, furnish a copy thereof to each seller of
such Registrable Shares and refrain from filing any such registration
statement, prospectus, amendment or supplement to which counsel selected by the
holders of at least a majority of the Registrable Shares being registered shall
have reasonably objected on the grounds that such document does not comply in
all material respects with the requirements of the Securities Act or the rules
and regulations thereunder, unless, in the case of an amendment or supplement,
in the opinion of counsel for the Corporation the filing of such amendment or
supplement is reasonably necessary to protect the Corporation from any
liabilities under any applicable federal or state law and such filing will not
violate applicable laws;
(l) at the request of any seller of such Registrable Shares in
connection with an underwritten offering, furnish on the date or dates provided
for in the underwriting agreement: (i) an opinion of counsel, addressed to the
underwriters and the sellers of Registrable Shares, covering such matters as
such underwriters and sellers may reasonably request, including such matters as
are customarily furnished in connection with an underwritten offering and (ii)
a letter or letters from the independent certified public accountants of the
Corporation addressed to the underwriters and the sellers of Registrable
Shares, covering such matters as such underwriters and sellers may reasonably
request, in which letter(s) such accountants shall state, without limiting the
generality of the foregoing, that they are independent certified public
accountants within the meaning of the Securities Act and that in their opinion
the financial statements and other financial data of the Corporation included
in the registration statement, the prospectus(es),
-7-
<PAGE> 8
or any amendment or supplement thereto, comply in all material respects with
the applicable accounting requirements of the Securities Act;
(m) make generally available to the Corporation's securityholders an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act no later than thirty (30) days after the end of the twelve (12) month
period beginning with the first day of the Corporation's first fiscal quarter
commencing after the effective date of a registration statement, which earnings
statement shall cover such twelve (12) month period, and which requirement will
be deemed to be satisfied if the Corporation timely files complete and accurate
information on Forms 10-Q, 10-K, and 8-K under the Exchange Act and otherwise
complies with Rule 158 under the Securities Act;
(n) If requested by the managing underwriter or any seller promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or any seller reasonably requests to be
included therein, including, without limitation, with respect to the
Registrable Shares being sold by such seller, the purchase price being paid
therefor by the underwriters and with respect to any other terms of the
underwritten offering of the Registrable Shares to be sold in such offering,
and promptly make all required filings of such prospectus supplement or
post-effective amendment;
(o) cooperate with each seller and each underwriter participating in
the disposition of such Registrable Shares and their respective counsel in
connection with any filings required to be made with the NASD;
(p) during the period when the prospectus is required to be delivered
under the Securities Act, promptly file all documents required to be filed with
the Commission pursuant to Sections 13(a), 13(c), 14, or 15(d) of the Exchange
Act; and
(q) notify each seller of Registrable Shares promptly of any request
by the Commission for the amending or supplementing of such registration
statement or prospectus or for additional information.
6. Registration Expenses.
6.1 Corporation's Expenses. Except as provided in
Section 2.2 hereof, all expenses incident to the Corporation's performance of
or compliance with this Agreement, including, but not limited to, all
registration and filing fees, fees and expenses of compliance with securities
or blue sky laws, printing expenses, messenger and delivery expenses, and fees
and disbursements of counsel for the Corporation and all independent certified
public accountants, underwriters (excluding discounts and commissions) and
other Persons retained by the Corporation (all such expenses being herein
called "Registration Expenses"), will be borne by the Corporation. In
addition, the Corporation will pay its internal expenses (including, but not
limited to, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit or quarterly
review, the expense of any liability insurance obtained by the Corporation; the
expenses and fees for listing the securities to be registered on each
securities exchange, expenses
-8-
<PAGE> 9
incurred in obtaining any comfort letters, and all fees and expenses associated
with filings required to be made with the NASD.
6.2 Holder's Expenses. Except as provided in Section
2.2 hereof, in connection with any registration statement in which Registrable
Shares are included, the Corporation will reimburse the holders of Registrable
Shares covered by such registration for the reasonable cost and expenses
incurred by such holders in connection with such registration, including, but
not limited to, reasonable fees and disbursements of one counsel chosen by the
holders of at least a majority of such Registrable Shares.
7. Indemnification.
7.1 By the Corporation. The Corporation agrees to
indemnify and reimburse, to the fullest extent permitted by law, each holder of
Registrable Shares, its officers and directors and each Person who controls
such holder (within the meaning of the Securities Act) against all losses,
claims, damages, liabilities and expenses (including, but not limited to,
attorney's fees) caused by any untrue or alleged untrue statement of material
fact contained in any registration statement, prospectus or preliminary
prospectus, or any amendment thereof or supplement thereto, or any omission or
alleged omission of a material fact, required to be stated therein or necessary
to make the statements therein not misleading, except insofar as the same are
directly caused by statements or omissions made in reliance on and in strict
conformity with the information furnished in writing to the Corporation by such
holder expressly for use therein or by such holder's failure to deliver a copy
of the prospectus or any amendments or supplements thereto after the
Corporation has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Corporation will
indemnify such underwriters, their officers and directors and each Person who
controls such underwriters (within the meaning of the Securities Act) to the
extent customary. The payments required by this Section 7.1 will be made
periodically during the course of the investigation or defense, as and when
bills are received or expenses incurred, subject to an obligation of repayment
in the event such indemnity is determined not to be owed.
7.2 By Each Holder. In connection with any registration
statement in which a holder of Registrable Shares is participating, each such
holder will furnish to the Corporation in writing such information as the
Corporation reasonably requests for use in connection with any such
registration statement, preliminary prospectus or prospectus, or any amendment
or supplement thereto and, to the extent permitted by law, will indemnify the
Corporation, its directors and officers and each Person who controls the
Corporation (within the meaning of the Securities Act) against any losses,
claims, damages, liabilities and expenses resulting from any untrue or alleged
untrue statement of material fact contained in the registration statement,
prospectus or preliminary prospectus, or any amendment thereof or supplement
thereto, or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading, but
only to the extent that such untrue statement or omission is contained in any
information so furnished in writing by such holder specifically for inclusion
in the registration statement or prospectus; provided, that the obligation to
indemnify will be several, and not joint and several, among such sellers of
Registrable Shares, and the liability of each such seller of Registrable Shares
will be in proportion to, and provided further
-9-
<PAGE> 10
that such liability will be limited to, the net amount received by such seller
from the sale of Registrable Shares pursuant to such registration statement;
further provided, however, that such seller of Registrable Shares shall not be
liable in any such case to the extent that prior to the filing of any such
registration statement or prospectus or amendment thereof or supplement
thereto, such seller has furnished in writing to the Corporation information
expressly for use in such registration statement or prospectus or any amendment
thereof or supplement thereto that corrected or made not misleading information
previously furnished to the Corporation.
7.3 Procedure. Any Person entitled to indemnification
hereunder will (i) give prompt written notice to the indemnifying Person of any
claim with respect to which it seeks indemnification (provided that the failure
to give such notice shall not limit the rights of such Person except to the
extent such failure to provide notice materially prejudices the indemnifying
Person) and (ii) unless in such indemnified Person's reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may
exist with respect to such claim, permit such indemnifying Person to assume the
defense of such claim with counsel reasonably satisfactory to the indemnified
Person; provided, however, that any Person entitled to indemnification
hereunder shall have the right to employ separate counsel and to participate in
the defense of such claim, but the fees and expenses of such counsel shall be
at the expense of such Person unless (x) the indemnifying party has agreed to
pay such fees or expenses, or (y) the indemnifying party shall have failed to
assume the defense of such claim and employ counsel reasonably satisfactory to
such Person. If such defense is not assumed by the indemnifying party as
permitted hereunder, the indemnifying party will not be subject to any
liability for any settlement made by the indemnified party without its consent
(but such consent will not be unreasonably delayed or withheld). If such
defense is assumed by the indemnifying party pursuant to the provisions hereof,
such indemnifying party shall not settle or otherwise compromise the applicable
claim unless (i) such settlement or compromise contains a full and
unconditional release of the indemnified party or (ii) the indemnified party
otherwise consents in writing. An indemnifying Person who is not entitled to,
or elects not to, assume the defense of a claim will not be obligated to pay
the fees and expenses of more than one counsel for all parties indemnified by
such indemnifying Person with respect to such claim, unless in the reasonable
judgment of any indemnified Person a conflict of interest may exist between
such indemnified Person and any other of such indemnified parties with respect
to such claim.
7.4 Each party hereto agrees that, if for any reason the
indemnification provisions contemplated by Section 7.1 or 7.2 are unavailable
to or insufficient to hold harmless an indemnified party in respect of any
losses, liabilities, claims, damages, or expenses (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, liabilities, claims, damages, or expenses (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative fault of
the indemnifying party and the indemnified party in connection with the actions
which resulted in the losses, liabilities, claims, damages, or expenses as well
as any other relevant equitable considerations. The relative fault of such
indemnifying party and indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by such indemnifying party or indemnified party, and
the parties' relative intent, knowledge, access to information, and opportunity
to correct or prevent such statement or
-10-
<PAGE> 11
omission. The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 7.4 were determined by pro rata
allocation (even if the holders or any underwriters or all of them were treated
as one Person for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in this Section
7.4, The amount paid or payable by an indemnified party as a result of the
losses, liabilities, claims, damages, or expenses (or actions in respect
thereafter referred to above shall be deemed to include any legal or other fees
or expenses reasonably incurred by such indemnified party in connection with
investigating or, except as provided in Section 7.3, defending any such action
or claim. Notwithstanding the provisions of this Section 7.4, no holder shall
be required to contribute an amount greater than the dollar amount by which the
net proceeds received by such holder with respect to the sale of any
Registrable Shares exceeds the amount of damages which such holder has
otherwise been required to pay by reason of any and all untrue or alleged
untrue statements of material fact or omissions or alleged omissions of
material fact made in any registration statement, prospectus, or preliminary
prospectus or any amendment thereof or supplement thereto, related to such sale
of Registrable Shares. No Person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any Person who was not guilty of such fraudulent
misrepresentation. The holders' obligations in this Section 7.4 to contribute
shall be several in proportion to the amount of Registrable Shares registered
by them and not joint. If indemnification is available under this Section 7,
the indemnifying parties shall indemnify each indemnified party to the full
extent provided in Sections 7.1 and 7.2 without regard to the relative fault of
such indemnifying party or indemnified party or any other equitable
consideration provided for in this Section 7.4 subject, in the case of the
holders, to the limited dollar amounts get forth in Section 7.2.
7.5 Survival. The indemnification provided for under
this Agreement will remain in full force and effect regardless of any
investigation made by or on behalf of the indemnified Person or any officer,
director or controlling Person of such indemnified Person and will survive the
transfer of securities. The Corporation also agrees to make such provisions as
are reasonably requested by any indemnified Person for contribution to such
Person in the event the Corporation's indemnification is unavailable for any
reason.
8. Compliance with Rule 144 and Rule 144A. At the request of any
holder of Registrable Shares who proposes to sell securities in compliance with
Rule 144 of the Commission, the Corporation will (i) forthwith furnish to such
holder a written statement of compliance with the filing requirements of the
Commission as set forth in Rule 144, as such rule may be amended from time to
time and (ii) make available to the public and such holders such information as
will enable the holders of Registrable Shares to make sales pursuant to Rule
144. Unless the Corporation is subject to Section 13 or 15(d) of the Exchange
Act, the Corporation will provide to the holder of Registrable Shares and to
any prospective purchaser of Registrable Shares under Rule 144A of the
Commission, the information described in Rule 144A(d)(4) of the Commission.
9. Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell its securities on the basis provided in any
underwriting arrangements approved by such Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, custody agreements, indemnities, underwriting agreements
and other documents
-11-
<PAGE> 12
reasonably required under the terms of such underwriting arrangements;
provided, that no holder of Registrable Shares shall be required to make any
representations or warranties in connection with any registration other than as
to (i) such holder's ownership of his or its Registrable Shares to be sold or
transferred free and clear of all liens, claims, and encumbrances, (ii) such
holder's power and authority to effect such transfer, and (iii) such matters
pertaining to the compliance with securities laws as may be reasonably
requested; provided, further, that the obligation of such holder to indemnify
pursuant to any such underwriting arrangements shall be several, not joint and
several, among such holders selling Registrable Shares, and the liability of
each such holder will be in proportion to, and provided further that such
liability will be limited to, the net amount received by such holder from the
sale of his or its Registrable Shares pursuant to such registration.
10. Miscellaneous.
10.1 No Inconsistent Agreements. The Corporation will
not hereafter enter into any agreement with respect to its securities which is
inconsistent with the rights granted to the holders of Registrable Shares in
this Agreement.
10.2 Adjustments Affecting Registrable Shares. The
Corporation will not take any action, or permit any change to occur, with
respect to its securities which would adversely affect the ability of the
holders of Registrable Shares to include such Registrable Shares in a
registration undertaken pursuant to this Agreement or which would adversely
affect the marketability of such Registrable Shares in any such registration,
including, but not limited to, effecting a stock split or combination of
shares.
10.3 Other Registration Rights. Except as provided in
this Agreement, the Corporation will not hereafter grant to any Person or
Persons the right to request the Corporation to register any equity securities
of the Corporation, or any securities convertible or exchangeable into or
exercisable for such securities, without the prior written consent of the
holders of at least a majority of the Registrable Shares.
10.4 Remedies. Any Person having rights under any
provision of this Agreement will be entitled to enforce such rights
specifically, to recover damages caused by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law, in
equity, or otherwise.
10.5 Amendments and Waivers. Except as otherwise
expressly provided herein, the provisions of this Agreement may be amended or
waived at any time only by the written agreement of the Corporation and the
holders of at least a majority of the Registrable Shares; provided, however,
that the provisions of this Agreement may not be amended or waived without the
consent of the holders of all the Registrable Shares adversely affected by such
amendment or waiver if such amendment or waiver adversely affects a portion of
the Registrable Shares but does not so adversely affect all of the Registrable
Shares. Any waiver, permit, consent or approval of any kind or character on
the part of any such holders of any provision or condition of this Agreement
must be made in writing and shall be effective only to the extent specifically
set forth in writing.
-12-
<PAGE> 13
Any amendment or waiver effected in accordance with this paragraph shall be
binding upon each holder of Registrable Securities and the Corporation.
10.6 Successors and Assigns. Except as otherwise
expressly provided herein, all covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto will bind and inure to
the benefit of the respective successors and assigns of the parties hereto,
whether so expressed or not. In addition, and whether or not any express
assignment has been made, the provisions of this Agreement which are for the
benefit of the Investors or holders of Registrable Shares are also for the
benefit of, and enforceable by, any subsequent holders of such Registrable
Shares.
10.7 Severability. Whenever possible, each provision of
this Agreement will be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement is held to be
prohibited by or invalid under applicable law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of this Agreement.
10.8 Descriptive Headings. The descriptive headings of
this Agreement are inserted for convenience of reference only and do not
constitute a part of and shall not be utilized in interpreting this Agreement.
10.9 Notices. Any notices required or permitted to be
sent hereunder shall be delivered personally or mailed, certified mail, return
receipt requested, or delivered by overnight courier service to the following
addresses, or such other address as any Person designates by written notice to
the Corporation, and shall be deemed to have been given upon delivery, if
delivered personally, three days after mailing, if mailed, or one business day
after delivery to the courier, if delivered by overnight courier service:
If to the Corporation, to:
Central Reserve Life Corporation
17800 Royalton Road
Strongsville, Ohio 44136
with a copy to:
Latham & Watkins
5800 Sears Tower
233 S. Wacker Drive
Chicago, Illinois
Attention: Mark D. Gerstein
If to the Investors, to the addresses set forth on the Signature pages
hereto.
If to holders of the Registrable Shares other than the Investors, to
the addresses set forth on the stock record books of the Corporation.
-13-
<PAGE> 14
10.10 Governing Law. All questions concerning the
construction, validity and interpretation of this Agreement, and the
performance of the obligations imposed by this Agreement, shall be governed by
the laws of the State of Ohio applicable to contracts made and wholly to be
performed in that state.
10.11 Final Agreement. This Agreement, together with the
Stock Purchase Agreement and all other agreements entered into by the parties
hereto pursuant to the Stock Purchase Agreement, constitutes the complete and
final agreement of the parties concerning the matters referred to herein, and
supersedes all prior agreements and understandings.
10.12 Execution in Counterparts. This Agreement may be
executed in any number of counterparts, each of which when so executed and
delivered shall be deemed an original, and such counterparts together shall
constitute one instrument.
10.13 No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties hereto to
express their mutual intent, and no rule of strict construction will be used
against any Person.
[Remainder of page intentionally left blank.
Signature pages follow.]
-14-
<PAGE> 15
The parties hereto have executed this Agreement on the date first
above written.
THE CORPORATION:
CENTRAL RESERVE LIFE CORPORATION
By: /s/ FRANK W. GRIMONE
--------------------------------
Name: Frank W. Grimone
Title: CFO
<PAGE> 16
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
INSURANCE PARTNERS, L.P.
By: Insurance GenPar, L.P.,
its General Partner
By: Insurance GenPar MGP, L.P.
its General Partner
By: Insurance GenPar MGP, Inc.,
its General Partner
By: /s/ ROBERT SPASS
-----------------------------
Name: Robert Spass
---------------------------
Title: President
--------------------------
Address:
One Chase Manhattan Plaza
44th Floor
New York, New York 10005
Attention: Bradley & Cooper
Copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Thomas A. Roberts
<PAGE> 17
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
INSURANCE PARTNERS OFFSHORE (BERMUDA), L.P.
By: Insurance Genpar (Bermuda), L.P.,
its General Partner
By: Insurance GenPar MGP (Bermuda), L.P.,
its General Partner
By: Insurance GenPar MGP (Bermuda), Inc.,
its General Partner
By: /s/ ROBERT SPASS
----------------------------------------
Name: Robert Spass
--------------------------------------
Title: President
-------------------------------------
Address:
One Chase Manhattan Plaza
44th Floor
New York, New York 10005
Attention: Bradley & Cooper
Copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Thomas A. Roberts
<PAGE> 18
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
/s/ PETER W. NAUERT
-----------------------------------
Peter W. Nauert
Address:
1750 East Golf Road
Suite 210
Schaumburg, Illinois 60173
Copy to:
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
Attention: Stanley H. Meadows, P.C.
<PAGE> 19
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
/s/ MICHAEL A. CAVATAIO
-----------------------------------
Michael A. Cavataio
Address:
3125 Ramsgate Road
Rockford, Illinois 61114
<PAGE> 20
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
MERCANTILE BANK OF NORTHERN ILLINOIS,
TRUSTEE OF THE CONSECO STOCK OPTION DIRECTOR
PLAN FBO MICHAEL CAVATAIO #08590033
By: /s/ KATHY A. MOFFATT
-------------------------------------------
Name: Kathy A. Moffatt
-----------------------------------------
Title: Trust Officer
----------------------------------------
Address:
P.O. Box 30
Freeport, Illinois 61032
Copy to:
Michael A. Cavataio
3125 Ramsgate Road
Rockford, Illinois 61114
<PAGE> 21
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
MERCANTILE BANK OF NORTHERN ILLINOIS,
TRUSTEE OF THE CONSECO STOCK OPTION DIRECTOR PLAN
FBO MICHAEL CAVATAIO #08590034
By: /s/ KATHY A. MOFFATT
----------------------------------------------
Name: Kathy A. Moffatt
--------------------------------------------
Title: Trust Officer
-------------------------------------------
Address:
P.O. Box 30
Freeport, Illinois 61032
Copy to:
Michael A. Cavataio
3125 Ramsgate Road
Rockford, Illinois 61114
<PAGE> 22
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
/s/ KARON HILL
-----------------------------------
Karon Hill
Address:
1750 East Golf Road
Suite 210
Schaumburg, Illinois 60173
<PAGE> 23
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
/s/ VAL RAJIC
-----------------------------------
Val Rajic
Address:
1750 East Golf Road
Suite 210
Schaumburg, Illinois 60173
<PAGE> 24
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
TURKEY VULTURE FUND XIII, LTD.
By: /s/ RICHARD M. OSBURNE
-------------------------------
Name: Richard M. Osburne
-----------------------------
Title: Manager
----------------------------
Address:
7001 Center Street
Mentor, Ohio 44060
Attention: Richard M. Osborne
Copy to:
Kohrman, Jackson & Krantz P.L.L.
1375 East Ninth Street
One Cleveland Center, 20th Floor
Cleveland, Ohio 44114
Attention: Marc C. Krantz
<PAGE> 25
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
/s/ MARC C. KRANTZ
-----------------------------------
Marc C. Krantz
Address:
Kohrman, Jackson & Krantz P.L.L.
1375 East Ninth Street
One Cleveland Center, 20th Floor
Cleveland, Ohio 44114
<PAGE> 26
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
KRANTZ FAMILY LIMITED PARTNERSHIP
By: /s/ BYRON S. KRANTZ
----------------------------------------
Byron S. Krantz, its General Partner
Address:
Kohrman, Jackson & Krantz P.L.L.
1375 East Ninth Street
One Cleveland Center, 20th Floor
Cleveland, Ohio 44114
<PAGE> 27
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
MEDICAL MUTUAL OF OHIO
By: /s/ ROBERT N. TROMBLY
---------------------------------
Name: Robert N. Trombly
-------------------------------
Title: Corporate Secretary
------------------------------
Address:
2060 East Ninth Street
Cleveland, Ohio 44115
Attention: General Counsel
<PAGE> 28
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
UNITED PAYORS AND UNITED PROVIDERS, INC.
By: /s/ S. J. BRUNO
-------------------------------------
Name: S. J. Bruno
-----------------------------------
Title: V.P. and CPO
----------------------------------
Address:
2275 Research Blvd.
6th Floor
Rockville, Maryland 20850
Attention: Joe Mott
<PAGE> 29
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
/s/ HOWARD R. CONANT
-----------------------------------
Howard R. Conant
Address:
c/o Lunn Partners
209 South LaSalle Street
Chicago, Illinois 60604
Attention: John Cochrane
<PAGE> 30
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
JOSEPH CUSIMANO IRA
By: /s/ JOSEPH CUSIMANO, IRA
-------------------------------
Name: Joseph Cusimano, IRA
-----------------------------
Title:
----------------------------
Address:
c/o Lunn Partners
209 South LaSalle Street
Chicago, Illinois 60604
Attention: John Cochrane
<PAGE> 31
SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
LEG PARTNERS SBIC, L.P.
By: /s/ LAWRENCE GOLUB
--------------------------------
Name: President of Golub GP II
Corporation
------------------------------
Title: General Partner
-----------------------------
Address:
230 Park Avenue
19th Floor
New York, New York 10169
Attention: Lawrence Golub
<PAGE> 1
EXHIBIT 3
================================================================================
STOCKHOLDERS AGREEMENT
by and among
CENTRAL RESERVE LIFE CORPORATION
and
THE SECURITY HOLDERS LISTED ON
THE SIGNATURE PAGES HEREOF
Dated as of July 1, 1998
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
ARTICLE I
DEFINITIONS
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE II
CERTAIN OTHER ACTIVITIES; FIDUCIARY DUTIES
2.1 Other Activities of the Holders; Fiduciary Duties . . . . . . . . . 4
ARTICLE III
TRANSFERS OF SECURITIES
3.1 Drag Along Rights . . . . . . . . . . . . . . . . . . . . . . . . . 4
3.2 Tag Along Rights . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.3 Certain Events Not Deemed Transfers . . . . . . . . . . . . . . . . 6
3.4 Replacement of Securities . . . . . . . . . . . . . . . . . . . . . 6
3.5 Restrictive Legend . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE IV
TERMINATION
4.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE V
MISCELLANEOUS
5.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
5.2 Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.3 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.4 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . 8
5.5 Duplicate Originals . . . . . . . . . . . . . . . . . . . . . . . . 8
5.6 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
5.7 No Waivers; Amendments . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>
<PAGE> 3
STOCKHOLDERS AGREEMENT
THIS STOCKHOLDERS AGREEMENT (this "AGREEMENT") dated as of July 1,
1998, is entered into by and among Central Reserve Life Corporation, an Ohio
corporation (including its successors, the "COMPANY"), and the security holders
listed on the signature pages of this Agreement.
NOW, THEREFORE, for and in consideration of the premises, mutual
covenants, and agreements contained herein and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"ACCREDITED INVESTOR" shall mean an "Accredited Investor," as
defined in Regulation D, or any successor rule then in effect.
"AFFILIATE" shall mean, with respect to any Person, any Person
who, directly or indirectly, controls, is controlled by, or is under
common control with that Person. For purposes of this definition,
"CONTROL," and "CONTROLLED BY" when used with respect to any Person
shall mean the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of
voting securities, by contract, or otherwise.
"AGREEMENT" shall mean this Agreement, as such from time to
time may be amended.
"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.
"COMMON STOCK EQUIVALENTS" shall mean, without duplication
with any other Common Stock or Common Stock Equivalents, any rights,
warrants, options, convertible securities or indebtedness,
exchangeable securities or indebtedness, or other rights, exercisable
for or convertible or exchangeable into, directly or indirectly,
Common Stock and securities convertible or exchangeable into Common
Stock, whether at the time of issuance or upon the passage of time or
the occurrence of some future event.
"COMPANY" shall have the meaning set forth in the introductory
paragraph hereof.
<PAGE> 4
"CO-SELLER" shall have the meaning set forth in Section 3.1.
"FULLY-DILUTED COMMON STOCK" shall mean, at any time, the then
outstanding Common Stock plus (without duplication) all shares of
Common Stock issuable, whether at such time or upon the passage of
time or the occurrence of future events, upon the exercise,
conversion, or exchange of all then outstanding Common Stock
Equivalents.
"HOLDER" shall mean (i) a securityholder listed on the
signature page hereof and (ii) any direct or indirect transferee of
any such securityholder who shall become a party to this Agreement.
"IP BERMUDA" shall mean Insurance Partners Offshore (Bermuda),
L.P., a Bermuda limited partnership.
"IP DELAWARE" shall mean Insurance Partners, L.P., a Delaware
limited partnership.
"IP GROUP" shall mean IP Delaware, IP Bermuda, their
respective Affiliates, the respective officers, directors, and
employees (and members of their respective families and trusts for the
primary benefit of such family members) of any of the foregoing, and
any Person that is a limited partner of IP Delaware or IP Bermuda.
"LEGAL HOLIDAY" shall have the meaning set forth in Section
5.2.
"PARTICIPATION OFFER" shall have the meaning set forth in
Section 3.2.
"PERSON" or "PERSON" shall mean any individual, corporation,
partnership, limited liability company, joint venture, association,
joint-stock company, trust, unincorporated organization, or government
or other agency or political subdivision thereof.
"REGULATION D" shall mean Regulation D promulgated under the
Securities Act by the SEC.
"REQUIRED HOLDERS" shall mean Holders who then own
beneficially more than 66 2/3% of the aggregate number of shares of
Common Stock subject to this Agreement.
"SEC" shall mean the Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated by the SEC
thereunder.
-2-
<PAGE> 5
"SIGNIFICANT DRAG SALE" shall have the meaning set forth in
Section 3.1.
"SIGNIFICANT TAG SALE" shall have the meaning set forth in
Section 3.2.
"SUBSIDIARY" of any Person shall mean (i) a corporation a
majority of whose outstanding shares of capital stock or other equity
interests with voting power, under ordinary circumstances, to elect
directors, is at the time, directly or indirectly, owned by such
Person, by one or more subsidiaries of such Person, or by such Person
and one or more subsidiaries of such Person, and (ii) any other Person
(other than a corporation) in which such Person, a subsidiary of such
Person, or such Person and one or more subsidiaries of such Person,
directly or indirectly, at the date of determination thereof, has (x)
at least a majority ownership interest or (y) the power to elect or
direct the election of the directors or other governing body of such
Person.
"TRANSFER" shall mean any disposition of any Common Stock or
any interest therein that would constitute a "sale" thereof within the
meaning of the Securities Act.
1.2 Rules of Construction. Unless the context otherwise requires:
(a) a term shall have the meaning assigned to it; (b) "OR" is not exclusive;
(c) words in the singular shall include the plural, and words in the plural
shall include the singular; (d) provisions apply to successive events and
transactions; (e) the words "HEREOF," "HEREIN," "HEREUNDER," and words of
similar import shall refer to this Agreement as a whole and not to any
particular provision of this Agreement; (f) words in the neuter or masculine
gender shall include the feminine, masculine, and neuter genders; (g) all
references to Articles and Sections refer to Articles and Sections of this
Agreement; and (h) "INCLUDE" and derivatives thereof shall mean "including,
without limitation."
1.3 Other Definitions. Certain capitalized terms used in this
Agreement, but not defined in this Article I, shall have the meanings set forth
elsewhere in this Agreement.
ARTICLE II
CERTAIN OTHER ACTIVITIES; FIDUCIARY DUTIES
2.1 Other Activities of the Holders; Fiduciary Duties. It is
understood and accepted that the Holders and their Affiliates have interests in
other business ventures which may be in conflict with the activities of the
Company and its Subsidiaries and that, subject to applicable law, nothing in
this Agreement shall limit the current or future business activities of the
Holders whether or not such activities are competitive with those of the
Company and its Subsidiaries. Nothing in this Agreement, express or implied,
shall relieve any officer or director of the Company or any of its
Subsidiaries, or any Holder, of any fiduciary or other duties or obligations
they may have to the Company's stockholders.
-3-
<PAGE> 6
ARTICLE III
TRANSFERS OF SECURITIES
3.1 Drag Along Rights.
3.1.1 Applicability. In connection with any Transfer by
members of the IP Group of shares of Common Stock and/or Common Stock
Equivalents representing more than twenty percent (20%) of the
outstanding shares of Common Stock (provided, that for the purposes of
such calculation, the following shares of Common Stock shall be deemed
to be issued and outstanding: (i) any shares of Common Stock to be
Transferred that are to be issued pursuant to the exercise or
conversion of any Common Stock Equivalents and (ii) any shares of
Common Stock underlying any Common Stock Equivalents that are to be
Transferred) in any one transaction or series of related transactions
(a "SIGNIFICANT DRAG SALE"), the IP Group shall have the right to
require each non-selling Holder (each, a "CO-SELLER") to Transfer a
portion of its Common Stock and/or Common Stock Equivalents which
represents the same percentage of the Fully-Diluted Common Stock held
by such Co-Seller as the shares of Common Stock and/or Common Stock
Equivalents being disposed of by the IP Group represent of the
Fully-Diluted Common Stock held by the IP Group. (For example, if the
IP Group is selling sixty-five percent (65%) of its Fully-Diluted
Common Stock position, each Co-Seller shall be required to sell
sixty-five percent (65%) of its Fully-Diluted Common Stock position.)
All Common Stock Transferred by Holders pursuant to this Section 3.1
shall be sold at the same price and time and otherwise treated
identically with the Common Stock being sold by the IP Group in all
respects.
3.1.2 Notice of Significant Drag Sale. IP Delaware, on
behalf of the IP Group, shall give each Co-Seller at least thirty
(30) days' prior written notice of any Significant Drag Sale as to
which the IP Group intends to exercise its rights under this Section
3.1. If the IP Group elects to exercise its rights under this Section
3.1, the Co-Sellers shall take such actions as may be reasonably
required and otherwise cooperate in good faith with the IP Group in
connection with consummating the Significant Drag Sale (including the
voting of any Common Stock or other voting capital stock of the
Company to approve such Significant Drag Sale). At the closing of
such Significant Drag Sale, each Co-Seller shall deliver certificates
for all shares of Common Stock to be sold by such Co-Seller, duly
endorsed for transfer, with the signature guaranteed, to the purchaser
against payment of the appropriate purchase price.
3.2 Tag Along Rights.
3.2.1 Applicability. In the event any Holder desires to
effect a Transfer (other than a Transfer in an underwritten public
offering pursuant to an effective registration statement under the
Securities Act) of shares of Common Stock and/or Common Stock
Equivalents representing more than twenty percent (20%) of the
outstanding shares of Common Stock (provided, that for the purposes of
such calculation, the following
-4-
<PAGE> 7
shares of Common Stock shall be deemed to be issued and outstanding:
(i) any shares of Common Stock to be Transferred that are to be issued
pursuant to the exercise or conversion of any Common Stock Equivalents
and (ii) any shares of Common Stock underlying any Common Stock
Equivalents that are to be Transferred) in any one transaction or
series of related transactions (a "SIGNIFICANT TAG SALE"), and the IP
Group does not elect to exercise its rights (if any) under Section
3.1, then at least thirty (30) days prior to the closing of such
Significant Tag Sale, such Holder shall make an offer (the
"PARTICIPATION OFFER") to each Co-Seller to include in the proposed
Significant Tag Sale a portion of its Common Stock and/or Common Stock
Equivalents which represents the same percentage of such Co-Seller's
Fully-Diluted Common Stock as the shares of Common Stock and/or Common
Stock Equivalents being sold by such Holder represent of its
Fully-Diluted Common Stock; provided, however, that, if the
consideration to be received by such Holder includes any securities,
only Co-Sellers who have certified to the reasonable satisfaction of
such Holder that they are Accredited Investors shall be entitled to
participate in such transfer, unless the transferee consents
otherwise.
3.2.2 Terms of Participation Offer. The Participation
Offer shall describe the terms and conditions of the proposed
Significant Tag Sale and shall be conditioned upon (i) the
consummation of the transactions contemplated in the Participation
Offer with the transferee named therein, and (ii) each Co-Seller's
execution and delivery of all agreements and other documents as the
Holder is required to execute and deliver in connection with such
Significant Tag Sale (provided that the Co-Seller shall not be
required to make any representations or warranties in connection with
such sale or transfer other than representations and warranties as to
(A) such Co-Seller's ownership of his or its Common Stock to be sold
or transferred free and clear of all liens, claims, and encumbrances,
(B) such Co-Seller's power and authority to effect such transfer, and
(C) such matters pertaining to compliance with securities laws as the
transferee may reasonably require). If any Co-Seller shall accept the
Participation Offer, the Holder shall reduce, to the extent necessary,
the number of shares of Common Stock it otherwise would have sold in
the proposed transfer so as to permit those Co-Sellers who have
accepted the Participation Offer to sell the number of shares of
Common Stock that they are entitled to sell under this Section 3.2,
and the Holder and such Co-Sellers shall transfer the number of shares
of Common Stock specified in the Participation Offer to the proposed
transferee in accordance with the terms of such transfer as set forth
in the Participation Offer.
3.3 Certain Events Not Deemed Transfers. In no event shall any
exchange, reclassification, or other conversion of shares into any cash,
securities, or other property pursuant to a merger or consolidation of the
Company or any Subsidiary with, or any sale or transfer by the Company or any
Subsidiary of all or substantially all its assets to, any Person constitute a
Significant Drag Sale or a Significant Tag Sale for purposes of Section 3.1 or
3.2; provided, however, that all of Holders of Common Stock receive the same
consideration per share in such exchange, reclassification, or conversion. In
addition, Sections 3.1 and 3.2 shall
-5-
<PAGE> 8
not apply to any transfer, sale, or disposition of shares of Common Stock
solely among Holders.
3.4 Replacement of Securities. If a mutilated certificate
representing Common Stock is surrendered to the Company or if the Holder of a
certificate representing Common Stock claims and submits an affidavit or other
evidence, satisfactory to the Company, to the effect that any such certificate
has been lost, destroyed, or wrongfully taken, the Company shall issue a
replacement certificate if the Company's requirements are met. If required by
the Company, such securityholder must provide an indemnity bond, or other form
of indemnity, sufficient in the judgment of the Company to protect the Company
against any loss which may be suffered; provided, however, that no indemnity
bond or other form of indemnity shall be required from a Holder who is an
Accredited Investor.
3.5 Restrictive Legend. Each certificate representing Common
Stock issued to each Holder or a subsequent transferee shall include a legend
in substantially the following form:
THIS SECURITY IS SUBJECT TO CERTAIN RIGHTS AND RESTRICTIONS
SET FORTH IN THE STOCKHOLDERS AGREEMENT DATED AS OF JULY 1,
1998, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY AT ITS
PRINCIPAL EXECUTIVE OFFICES.
ARTICLE IV
TERMINATION
4.1 Termination. The provisions of this Agreement shall terminate
on July 1, 2003.
ARTICLE V
MISCELLANEOUS
5.1 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
17800 Royalton Road
Strongsville, Ohio 44136
Facsimile No.: (440) 572-4501
Attention: Fred Lick, Jr.
If to any Holder, at its address listed on the signature pages hereof.
-6-
<PAGE> 9
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). Failure to mail a notice or
communication to a Holder or any defect in it shall not affect its sufficiency
with respect to other Holders. If a notice or communication is mailed in the
manner provided above, it is duly given, whether or not the addressee receives
it.
5.2 Legal Holidays. A "LEGAL HOLIDAY" used with respect to a
particular place of payment is a Saturday, a Sunday, or a day on which banking
institutions at such place are not required to be open. If a payment date is a
Legal Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest on the amount of
such payment shall accrue for the intervening period.
5.3 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.
5.4 Successors and Assigns. Whether or not an express assignment
has been made pursuant to the provisions of this Agreement, provisions of this
Agreement that are for the Holders' benefit as the holders of any Common Stock
are also for the benefit of, and enforceable by, all subsequent holders of
Common Stock, except as otherwise expressly provided herein. This Agreement
shall be binding upon the Company, each Holder, and their respective successors
and assigns.
5.5 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.
5.6 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.
5.7 No Waivers; Amendments.
5.7.1 No failure or delay on the part of the Company or any
Holder in exercising any right, power, or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise
of any such right, power, or remedy preclude any other or further
exercise thereof or the exercise of any other right, power, or remedy.
The remedies provided for herein are cumulative and are not exclusive
of any remedies that may be available to the Company or any Holder at
law, in equity, or otherwise.
-7-
<PAGE> 10
5.7.2 Any provision of this Agreement may be amended or
waived if, but only if, such amendment or waiver is in writing and is
signed by the Company and the Required Holders; provided that no
amendment or waiver that is adverse to any Holder that owns more than
5% of the outstanding Common Stock shall be effective as to that
Holder prior to the three year anniversary of the date hereof without
such Holder's consent.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
-8-
<PAGE> 11
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/ FRANK W. GRIMONE
------------------------------------
Name: Frank W. Grimone
Title: CFO
<PAGE> 12
SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT
INSURANCE PARTNERS, L.P.
By: Insurance GenPar, L.P.,
its general partner
By: Insurance GenPar MGP, L.P.,
its general partner
By: Insurance GenPar MGP, Inc.,
its general partner
By: /s/ ROBERT SPASS
-------------------------------------
Name: Robert Spass
-----------------------------------
Title: President
----------------------------------
Address:
One Chase Manhattan Plaza
44th Floor
New York, New York 10005
Attention: Bradley E. Cooper
Copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Thomas A. Roberts
<PAGE> 13
SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT
INSURANCE PARTNERS OFFSHORE (BERMUDA), L.P.
By: Insurance GenPar (Bermuda), L.P.,
its general partner
By: Insurance GenPar MGP (Bermuda), L.P.,
its general partner
By: Insurance GenPar MGP (Bermuda), Inc.,
its general partner
By: /s/ ROBERT SPASS
-------------------------------------
Name: Robert Spass
-----------------------------------
Title: President
----------------------------------
Address:
One Chase Manhattan Plaza
44th Floor
New York, New York 10005
Attention: Bradley & Cooper
Copy to:
Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
Attention: Thomas A. Roberts
<PAGE> 14
SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT
STRATEGIC ACQUISITION PARTNERS, LLC
By: /s/ VAL RAJIC
---------------------------------
Name: Val Rajic
-------------------------------
Title: President
------------------------------
Address:
1750 East Golf Road
Suite 210
Chicago, Illinois 60173
Copy to:
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
Attention: Stanley H. Meadows, P.C.
<PAGE> 15
SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT
/s/ PETER W. NAUERT
--------------------------------------------
Peter W. Nauert
Address:
1750 East Golf Road
Suite 210
Schaumburg, Illinois 60173
Copy to:
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
Attention: Stanley H. Meadows, P.C.
<PAGE> 16
SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT
/s/ MICHAEL A. CAVATAIO
---------------------------------------------
Michael A. Cavataio
Address:
3125 Ramsgate Road
Rockford, Illinois 61114
<PAGE> 17
SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT
MERCANTILE BANK OF NORTHERN ILLINOIS,
TRUSTEE OF THE CONSECO STOCK OPTION
DIRECTOR PLAN FBO
MICHAEL CAVATAIO #08590033
By: /s/ KATHY A. MOFFATT
---------------------------------------
Name: Kathy A. Moffatt
-------------------------------------
Title: Trust Officer
------------------------------------
Address:
P.O. Box 30
Freeport, Illinois 61032
Copy to:
Michael A. Cavataio
3125 Ramsgate Road
Rockford, Illinois 61114
<PAGE> 18
SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT
MERCANTILE BANK OF NORTHERN ILLINOIS,
TRUSTEE OF THE CONSECO STOCK OPTION
DIRECTOR PLAN FBO
MICHAEL CAVATAIO #08590034
By: /s/ KATHY A. MOFFATT
---------------------------------------
Name: Kathy A. Moffatt
-------------------------------------
Title: Trust Officer
------------------------------------
Address:
P.O. Box 30
Freeport, Illinois 61032
Copy to:
Michael A. Cavataio
3125 Ramsgate Road
Rockford, Illinois 61114
<PAGE> 19
SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT
/s/ KARON HILL
---------------------------------------------
Karon Hill
Address:
1750 East Golf Road
Suite 210
Schaumburg, Illinois 60173
<PAGE> 20
SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT
/s/ VAL RAJIC
---------------------------------------------
Val Rajic
Address:
1750 East Golf Road
Suite 210
Schaumburg, Illinois 60173
<PAGE> 21
SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT
TURKEY VULTURE FUND XIII, LTD.
By: /s/ RICHARD M. OSBURNE
------------------------------------------
Name: Richard M. Osburne
----------------------------------------
Title: Manager
---------------------------------------
Address:
7001 Center Street
Mentor, Ohio 44060
Attention: Richard M. Osborne
Copy to:
Kohrman Jackson & Krantz, P.L.L.
1375 East Ninth Street
One Cleveland Center, 20th Floor
Cleveland, Ohio 44114
Attention: Marc C. Krantz
<PAGE> 22
SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT
/s/ MARC C. KRANTZ
---------------------------------------------
Marc C. Krantz
Address:
Kohrman Jackson & Krantz, P.L.L.
1375 East Ninth Street
One Cleveland Center, 20th Floor
Cleveland, Ohio 44114
<PAGE> 23
SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT
KRANTZ FAMILY LIMITED PARTNERSHIP
By: /s/ BYRON S. KRANTZ
------------------------------------------
Byron S. Krantz, its General Partner
Address:
Kohrman Jackson & Krantz, P.L.L.
1375 East Ninth Street
One Cleveland Center, 20th Floor
Cleveland, Ohio 44114
<PAGE> 24
SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT
MEDICAL MUTUAL OF OHIO
By: /s/ ROBERT N. TROMBLY
----------------------------------------
Name: Robert N. Trombly
--------------------------------------
Title: Corporate Secretary
-------------------------------------
Address:
2060 East Ninth Street
Cleveland, Ohio 44115
Attention: General Counsel
<PAGE> 25
SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT
UNITED PAYORS AND UNITED PROVIDERS, INC.
By: /s/ S. JOSEPH BRUNO
----------------------------------------
Name: S. Joseph Bruno
--------------------------------------
Title: Vice President and CFO
-------------------------------------
Address:
2275 Research Blvd.
6th Floor
Rockville, Maryland 20850
Attention: Joe Mott
<PAGE> 26
SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT
/s/ HOWARD R. CONANT
---------------------------------------------
Howard R. Conant
Address:
c/o Lunn Partners
209 South LaSalle Street
Chicago, Illinois 60604
Attention: John Cochrane
<PAGE> 27
SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT
JOSEPH CUSIMANO IRA
By: /s/ JOSEPH CUSIMANO
---------------------------------------
Name: Joseph Cusimano, IRA
-------------------------------------
Title:
------------------------------------
Address:
c/o Lunn Partners
209 South LaSalle Street
Chicago, Illinois 60604
<PAGE> 28
SIGNATURE PAGE TO STOCKHOLDERS AGREEMENT
LEG PARTNERS SBIC, L.P.
By: /s/ LAWRENCE GOLUB
---------------------------------------
Name: President of Golub GP II Corporation
-------------------------------------
Title: General Partner
------------------------------------
Address:
230 Park Avenue
19th Floor
New York, New York 10169
Attention: Lawrence Golub
<PAGE> 1
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
<PAGE> 2
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.
2
<PAGE> 3
"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.
3
<PAGE> 4
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.
4
<PAGE> 5
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.
5
<PAGE> 6
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.
6
<PAGE> 7
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/ FRED LICK, JR.
---------------------------------------
Name: Fred Lick, Jr.
-------------------------------------
Title: Chairman
------------------------------------
7
<PAGE> 8
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/ B. COOPER
------------------------
Name: Bradley Cooper
----------------------
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/ B. COOPER
------------------------
Name: Bradley Cooper
----------------------
Title: First V.P.
---------------------
8
<PAGE> 9
SIGNATURE PAGE TO INDEMNIFICATION AND CLOSING AGREEMENT
NAMES OF PURCHASERS:
------------------------------------------
Peter W. Nauert
------------------------------------------
Michael Cavataio
MERCANTILE BANK OF NORTHERN ILLINOIS,
trustee of The Conseco Stock Option Plan
F/B/O Michael Cavataio
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
------------------------------------------
Karon Hill
------------------------------------------
Val Rajic
TURKEY VULTURE FUND, LTD.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
MEDICAL MUTUAL OF OHIO
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
9
<PAGE> 10
UNITED PAYORS & UNITED PROVIDERS, INC.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
------------------------------------------
Howard R. Conant
------------------------------------------
Joseph Cusimano IRA
LEG PARTNERS SBIC, L.P.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
------------------------------------------
Marc C. Krantz
KRANTZ FAMILY LIMITED PARTNERSHIP
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
10
<PAGE> 11
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/ VAL RAJIC
-------------------------------
Name: Val Rajic
-----------------------------
Title: President
----------------------------
ACCEPTED
Central Reserve Life Corporation
By: /s/ VAL RAJIC
------------------------------
Name: Val Rajic
----------------------------
Title: Executive Vice President
---------------------------
Dated: July 1, 1998
<PAGE> 12
STRATEGIC ACQUISITION PARTNERS, LLC
By: /s/ VAL RAJIC
--------------------------------
Name: Val Rajic
------------------------------
Title: President
-----------------------------
Address:
1750 East Golf Road
Suite 210
Schaumburg, Illinois 60173
Copy to:
McDermott, Will & Emery
227 West Monroe Street
Chicago, Illinois 60606
Attention: Stanley H. Meadows, P.C.
<PAGE> 13
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:
<PAGE> 14
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
2
<PAGE> 15
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
3
<PAGE> 16
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
4
<PAGE> 17
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 Moody's 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
5
<PAGE> 18
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
17800 Royalton Road
Strongsville, Ohio 44136
Facsimile No.: [__________________]
Attention: [__________________]
6
<PAGE> 19
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.
7
<PAGE> 20
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.]
8
<PAGE> 21
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:
------------------------------
9
<PAGE> 22
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
<PAGE> 23
SIGNATURE PAGE TO INDEMNIFICATION ESCROW AGREEMENT
NAMES OF PURCHASERS:
----------------------------------------------
Peter W. Nauert
----------------------------------------------
Michael Cavataio
MERCANTILE BANK OF NORTHERN
ILLINOIS, trustee of The Conseco
Stock Option Plan F/B/O Michael Cavataio
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
----------------------------------------------
Karon Hill
----------------------------------------------
Val Rajic
TURKEY VULTURE FUND, LTD.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
MEDICAL MUTUAL OF OHIO
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
11
<PAGE> 24
UNITED PAYORS & UNITED PROVIDERS, INC.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
----------------------------------------------
Howard R. Conant
----------------------------------------------
Joseph Cusimano IRA
LEG PARTNERS SBIC, L.P.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
----------------------------------------------
Marc C. Krantz
KRANTZ FAMILY LIMITED PARTNERSHIP
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
12
<PAGE> 25
SIGNATURE PAGE TO INDEMNIFICATION ESCROW AGREEMENT
ESCROW AGENT:
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
13
<PAGE> 1
EXHIBIT 5
AGREEMENT OF UNDERSTANDING
Dated July 3, 1998
Reference is hereby made to the Amended and Restated Stock Purchase
Agreement (the "Purchase Agreement") dated as of March 30, 1998, by and among
Strategic Acquisition Partners, LLC ("SAP"), Insurance Partners, L.P.,
Insurance Partners Offshore (Bermuda), L.P. (collectively, "Purchasers") and
Central Reserve Life Corporation (the "Company").
Whereas, in connection with the consummation of the transactions
contemplated by the Purchase Agreement, the Company and Purchasers have entered
into that certain Indemnification and Closing Agreement ("Indemnification
Agreement") dated as of July 1, 1998.
Whereas, the Company and the Purchasers wish to clarify their intent with
respect to the Indemnification Agreement.
Now, therefore, the parties hereto hereby acknowledge and agree as follows:
1. The Indemnification Agreement constitutes an amendment to the
Purchase Agreement.
2. The assignees of SAP referred to in the Indemnification Agreement are
not parties to the Purchase Agreement and are not intended to be parties to the
Indemnification Agreement.
3. The Indemnification Agreement shall be valid and binding among the
Company and the Purchasers.
4. The parties hereto shall take all such necessary and further action
as may be reasonably requested by any party hereto to implement the terms of
this Agreement of Understanding.
<PAGE> 2
INSURANCE PARTNERS, L.P.
By: Insurance GenPar L.P., its general partner
By: Insurance GenPar MGP, L.P.,
its General Partner
By: Insurance GenPar MGP, Inc.,
its General Partner
By: /s/ BRADLEY E. COOPER
-----------------------------
Name: Bradley E. Cooper
Title: First Vice President
INSURANCE PARTNERS OFFSHORE (BERMUDA), L.P.
By: Insurance GenPar (Bermuda) L.P., its
general partner
By: Insurance GenPar (Bermuda) MGP, L.P., its
general Partner
By: Insurance GenPar (Bermuda) MGP, Inc.,
its general Partner
By: /s/ BRADLEY E. COOPER
----------------------------------
Name: Bradley E. Cooper
Title: First Vice President
<PAGE> 3
STRATEGIC ACQUISITION PARTNERS, LLC
By: /s/ VAL RAJIC
---------------------------------
Name: Val Rajic
-------------------------------
Title: PRESIDENT
------------------------------
CENTRAL RESERVE LIFE CORPORATION
By: /s/ VAL RAJIC
---------------------------------
Name: Val Rajic
-------------------------------
Title: EXECUTIVE VICE PRESIDENT
------------------------------
