Document:

Exhibit 10.9

 

	
   

  
	
   

   

  STOCK PURCHASE AGREEMENT

   

  BY AND AMONG

   

  TRIPLE-S MANAGEMENT CORPORATION

   

  AND

   

  GREAT AMERICAN FINANCIAL RESOURCES, INC.

   

  DATED AS OF DECEMBER 15, 2005

   

   

  
	
   

  

 

 

TABLE OF CONTENTS

 

	
  ARTICLE I CERTAIN
  DEFINITIONS

  	
  1

  
	
  1.1

  	
  Certain Definitions

  	
  1

  
	
  ARTICLE II PURCHASE
  AND SALE OF THE ACQUIRED SHARES

  	
  5

  
	
  2.1

  	
  Purchase and Sale of the
  Acquired Shares

  	
  5

  
	
  2.2

  	
  Conveyance

  	
  5

  
	
  2.3

  	
  Consideration

  	
  5

  
	
  ARTICLE III THE
  CLOSING

  	
  5

  
	
  3.1

  	
  Closing

  	
  5

  
	
  3.2

  	
  Deliveries by Purchaser

  	
  5

  
	
  3.3

  	
  Deliveries by the Seller

  	
  6

  
	
  3.4

  	
  Deliveries by the Company

  	
  6

  
	
  3.5

  	
  Consideration

  	
  6

  
	
  ARTICLE IV
  RELATED TRANSACTIONS

  	
  7

  
	
  4.1

  	
  Employment Agreements

  	
  7

  
	
  ARTICLE V
  REPRESENTATIONS AND WARRANTIES OF SELLER

  	
  7

  
	
  5.1

  	
  Authority; Binding Effect

  	
  7

  
	
  5.2

  	
  Title to Company Shares

  	
  7

  
	
  5.3

  	
  Consents and Approvals; No
  Violation

  	
  8

  
	
  5.4

  	
  Absence of Litigation

  	
  8

  
	
  5.5

  	
  Broker

  	
  8

  
	
  ARTICLE VI
  REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COMPANY

  	
  8

  
	
  6.1

  	
  Organization and
  Qualification

  	
  8

  
	
  6.2

  	
  Certificates of
  Incorporation and By-Laws; Corporate Records

  	
  9

  
	
  6.3

  	
  Capitalization

  	
  9

  
	
  6.4

  	
  No Conflict; Required
  Filings and Consents

  	
  9

  
	
  6.5

  	
  Financial Statements;
  Undisclosed Liabilities

  	
  10

  
	
  6.6

  	
  Absence of Certain Changes
  or Events

  	
  11

  
	
  6.7

  	
  Absence of Litigation

  	
  11

  
	
  6.8

  	
  Compliance with Applicable
  Law

  	
  11

  
	
  6.9

  	
  Labor Related Matters

  	
  12

  
	
  6.10

  	
  Disclosure

  	
  13

  
	
  ARTICLE VII
  REPRESENTATIONS AND WARRANTIES OF PURCHASER

  	
  13

  
	
  7.1

  	
  Organization

  	
  14

  
	
  7.2

  	
  Authority; Enforceability

  	
  14

  
	
  7.3

  	
  No Conflict; Required
  Filings and Consents

  	
  14

  
	
  7.4

  	
  Brokers

  	
  15

  
	
  7.5

  	
  Litigation

  	
  15

  
	
  7.6

  	
  Financing

  	
  15

  
	
  7.7

  	
  Inspection and Due
  Diligence; No Other Representations

  	
  15

  
	
  7.8

  	
  Disclosure Schedule/Letter

  	
  16

  
	
  ARTICLE VIII
  COVENANTS

  	
  16

  
	
  8.1

  	
  Affirmative Covenants of
  the Company

  	
  16

  
	
  8.2

  	
  Negative Covenants of the
  Company

  	
  17

  
	
  8.3

  	
  Access and Information

  	
  19

  

 

i

 

	
  8.4

  	
  Confidentiality

  	
  19

  
	
  8.5

  	
  Exclusivity

  	
  21

  
	
  8.6

  	
  Non Solicitation

  	
  21

  
	
  8.7

  	
  Further Assurances;
  Supplements to Schedules

  	
  21

  
	
  8.8

  	
  Maintenance of Records

  	
  22

  
	
  8.9

  	
  Capital

  	
  22

  
	
  ARTICLE IX ADDITIONAL
  AGREEMENTS

  	
  22

  
	
  9.1

  	
  Appropriate Action;
  Consents; Filings

  	
  22

  
	
  9.2

  	
  Public Announcements

  	
  23

  
	
  9.3

  	
  Termination of Existing
  Agreement between Seller and the Company

  	
  23

  
	
  9.4

  	
  Savings Plan

  	
  23

  
	
  ARTICLE X CLOSING
  CONDITIONS

  	
  23

  
	
  10.1

  	
  Conditions to Obligations
  of Each Party Under This Agreement

  	
  23

  
	
  10.2

  	
  Additional Conditions to
  Obligations of Purchaser

  	
  24

  
	
  10.3

  	
  Additional Conditions to
  Obligations of the Seller

  	
  25

  
	
  10.4

  	
  Mutual Conditions

  	
  25

  
	
  ARTICLE XI
  TERMINATION

  	
  26

  
	
  11.1

  	
  Termination

  	
  26

  
	
  11.2

  	
  Effect of Termination

  	
  27

  
	
  11.3

  	
  Fees, Expenses and Other
  Payments

  	
  27

  
	
  ARTICLE XII SURVIVAL
  OF REPRESENTATIONS; INDEMNIFICATION

  	
  27

  
	
  12.1

  	
  Survival of
  Representations

  	
  27

  
	
  12.2

  	
  Seller Agreement to
  Indemnify

  	
  27

  
	
  12.3

  	
  Seller Limitation of
  Liability

  	
  27

  
	
  12.4

  	
  Purchaser’s Agreement to
  Indemnify

  	
  28

  
	
  12.5

  	
  Purchaser’s Limitation of
  Liability

  	
  28

  
	
  12.6

  	
  Conditions of
  Indemnification

  	
  29

  
	
  12.7

  	
  Insurance

  	
  30

  
	
  12.8

  	
  Remedies Exclusive

  	
  30

  
	
  12.9

  	
  Disclaimer of Other
  Representations and Warranties

  	
  30

  
	
  ARTICLE XIII GENERAL
  PROVISIONS

  	
  31

  
	
  13.1

  	
  Notices

  	
  31

  
	
  13.2

  	
  Amendment

  	
  32

  
	
  13.3

  	
  Waiver

  	
  32

  
	
  13.4

  	
  Headings

  	
  32

  
	
  13.5

  	
  Informal Resolution of
  Disputes

  	
  32

  
	
  13.6

  	
  Arbitration

  	
  33

  
	
  13.7

  	
  Severability

  	
  33

  
	
  13.8

  	
  Entire Agreement

  	
  33

  
	
  13.9

  	
  Assignment

  	
  33

  
	
  13.10

  	
  Parties in Interest

  	
  33

  
	
  13.11

  	
  Failure or Delay Not
  Waiver; Remedies Cumulative

  	
  34

  
	
  13.12

  	
  Specific Performance

  	
  34

  
	
  13.13

  	
  Governing Law

  	
  34

  
	
  13.14

  	
  Counterparts

  	
  34

  
	
  13.15

  	
  Interpretation

  	
  34

  

 

ii

 

SCHEDULES
 SCHEDULE I                          Directors’ Shares

 

EXHIBITS

 

EXHIBIT A                                  Assignment
Agreement (Directors’ Shares)

 

iii

 

DEFINED
TERMS

 

	
  2004 Balance
  Sheet

  	
  29

  
	
  Affiliate

  	
  1

  
	
  Agreement

  	
  2

  
	
  Ancillary
  Agreements

  	
  2

  
	
  Applicable
  Law

  	
  2

  
	
  Base Balance
  Sheet

  	
  10

  
	
  Balance
  Sheets

  	
  10

  
	
  Business

  	
  2

  
	
  Business Day

  	
  2

  
	
  Claim

  	
  2

  
	
  Closing

  	
  5

  
	
  Closing Date

  	
  5

  
	
  Code

  	
  2

  
	
  Commissioner

  	
  2

  
	
  Company

  	
  2

  
	
  Consent

  	
  10

  
	
  Damages

  	
  2

  
	
  Disclosure
  Letter

  	
  17

  
	
  Disclosure
  Schedule

  	
  17

  
	
  Employment
  Agreements

  	
  7

  
	
  ERISA

  	
  3

  
	
  ERISA
  Affiliate

  	
  3

  
	
  Expenses

  	
  3

  
	
  Financial
  Statements

  	
  10

  
	
  GAAP

  	
  3

  
	
  Governmental
  Entity

  	
  3

  
	
  HSR Act

  	
  10

  
	
  Laws

  	
  3

  
	
  Liens

  	
  3

  
	
  Litigation

  	
  12

  
	
  Material
  Adverse Effect

  	
  3

  
	
  OCIPR

  	
  4

  
	
  Person

  	
  4

  
	
  Permits

  	
  12

  
	
  PRIRC

  	
  4

  
	
  P.R. Plan

  	
  24

  
	
  Purchase
  Price

  	
  7

  
	
  Purchaser

  	
  1

  
	
  Purchaser
  Claims

  	
  29

  
	
  Purchaser
  Group

  	
  28

  
	
  Purchaser
  Representatives

  	
  20

  
	
  Seller

  	
  1

  
	
  Seller
  Claims

  	
  30

  
	
  Shares

  	
  1

  
	
  Stock
  Purchase

  	
  4

  
	
  To the
  Knowledge of Seller

  	
  4

  
	
  Threshold
  Indemnification Amount

  	
  29

  
	
  Transactions

  	
  5

  
	
  U.S. Plan

  	
  24

  
	
  Unaudited
  Interim Financial Statements

  	
  10

  

 

iv

 

STOCK PURCHASE AGREEMENT

 

STOCK PURCHASE AGREEMENT, dated as of December 15, 2005 (this “Agreement”),
and entered into at Washington, D.C. by and among GREAT AMERICAN FINANCIAL
RESOURCES, INC., a corporation organized under the laws of Delaware (“Seller”),
and TRIPLE-S MANAGEMENT CORPORATION, a corporation organized under the laws of
the Commonwealth of Puerto Rico (“Purchaser”).

 

W  I  T  N
E  S  S  E  T  H:

 

WHEREAS, Seller is the record and beneficial owner of 2,499,960 of the
issued and outstanding shares of common stock, par value one dollar ($1.00) per
share (the “Shares”) of Great American Life Assurance Company of Puerto Rico (“Company”)
and an additional 40 shares of common stock are owned by the directors of the
Company in accordance with the provisions of the Insurance Code of the
Commonwealth of Puerto Rico;

 

WHEREAS, the directors of the Company are the record owners of the
number of shares set forth opposite their name on Schedule I attached
hereto (collectively the “Directors’ Shares”);

 

WHEREAS, Purchaser desires to acquire from Seller, and Seller desires
to sell to Purchaser, 100% of the Shares, upon the terms and subject to the
conditions contained herein;

 

WHEREAS, Purchaser desires to acquire from Seller, and Seller desires
to transfer to Purchaser, Seller’s interest in the Directors’ Shares, upon the
terms and subject to the conditions contained herein; and

 

NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements of the parties set forth
in this Agreement, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

ARTICLE I

CERTAIN DEFINITIONS

 

1.1                                 Certain
Definitions

 

“Affiliate” means, with respect to any Person, any other Person
who directly or indirectly controls, is controlled by or is under common
control with such Person. The term “control”, for the purposes of this
definition, means the power to direct or cause the direction of the management
or policies of the controlled Person.

 

 

“Agreement” has the meaning set forth in the Preamble.

 

“Ancillary Agreements” means the Assignment Agreement of the
Directors’ Shares.

 

“Applicable Law” means any federal, state, local or foreign law
(including common law), statute, ordinance, rule, regulation, permit,
regulatory agreement with a Governmental Entity, order, writ, injunction,
judgment or decree applicable to a Person or any such Person’s subsidiaries,
properties, assets, officers, directors, employees or agents.

 

“Base Balance Sheet” has the meaning set forth in Section 6.5(a).

 

“Balance Sheets” has the meaning set forth in Section 6.5(a).

 

“Business” shall mean the business of providing life and
accidental death insurance, and services related to any of the foregoing, to
the public or private sectors of the Commonwealth of Puerto Rico and the U.S.
Virgin Islands.

 

“Business Day” means any day other than a day on which banks in
the State of New York are authorized or obligated to be closed.

 

“Claim” means any suit, arbitration, opposition, interference,
cancellation or other adversarial proceeding.

 

“Closing” has the meaning set forth in Section 3.1.

 

“Closing Date” has the meaning set forth in Section 3.1.

 

“Code” means the US Internal Revenue Code of 1986, as amended.

 

“Commissioner” means the Commissioner of the OCIPR.

 

“Company” has the meaning set forth in the First Whereas.

 

“Consent” has the meaning set forth in Section 6.4(b).

 

“Damages” means any and all claims, losses, liabilities,
damages, costs and expenses (including reasonable attorney’s, accountant’s,
consultant’s and expert’s fees and expenses) that are imposed upon or otherwise
incurred or suffered by the relevant party.

 

“Disclosure Letter” has the meaning set forth in Section 7.8.

 

“Disclosure Schedule” has the meaning set forth in Section 7.8.

 

“Employment Agreements” has the meaning set forth in Section 4.1.

 

2

 

“ERISA” means Employee Retirement Income Security Act of 1974,
as amended.

 

“ERISA Affiliate” shall mean as defined in §407 (d) (7) of
ERISA.

 

“Expenses” means all reasonable out-of-pocket expenses
(including all fees and expenses of counsel, accountants, investment bankers,
experts and consultants to a party hereto and its affiliates) incurred by a
party or on its behalf in connection with or related to the authorization,
preparation, negotiation, execution, delivery and performance of this
Agreement, and all other matters related to the consummation of the
Transactions contemplated hereby.

 

“Financial Statements” has the meaning set forth in Section 6.5(a).

 

“GAAP” means the United States generally accepted accounting
principles.

 

“Governmental Entity” means any nation or government, any state
or other political subdivision thereof; any entity, authority or body
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, including any government authority,
agency, department, board, commission or instrumentality of the United States
or any state of the United States or any political subdivision or territory
thereof, the Commonwealth of Puerto Rico, or any nation; or any court, or
legally constituted tribunal or arbitrator.

 

“HSR Act” has the meaning set forth in Section 6.4(b).

 

“Laws” means all federal, state, local and foreign laws,
statutes, ordinances, rules, regulations, orders, judgments and decrees
(including Laws of the Commonwealth of Puerto Rico).

 

“Liens” means any and all liens, encumbrances, security
interests, mortgages, pledges, claims, options or restrictions of any kind
whatsoever.

 

“Litigation” has the meaning set forth in Section 6.7.

 

“Material Adverse Effect” means a material adverse effect on the
financial condition or results of operations of the Company; provided, however,
to the extent such effect results from any of the following, such effect shall
not be considered a Material Adverse Effect: (i) general conditions
applicable to the economy of Puerto Rico or the United States, including
changes in interest rates and changes in the stock or other financial markets; (ii) conditions
generally affecting the life insurance, life reinsurance or securities
industries, including, but not limited to changes in Applicable Laws; or (iii) conditions
or effects resulting from or relating to the announcement or the existence or
terms of this Agreement or the consummation of the transactions contemplated
hereby.

 

3

 

“OCIPR” means the Office of the Commissioner of Insurance of the
Commonwealth of Puerto Rico.

 

“Person” means an individual, corporation, partnership, limited
liability company, association, trust, unincorporated organization, other
entity or group (as defined in Section 13(d) of the Exchange Act).

 

“Permits” has the meaning set forth in Section 6.8.

 

“PRIRC” means the Puerto Rico Internal Revenue Code of 1994, as
amended.

 

“P.R. Plan” has the meaning set forth in Section 9.4.

 

“Purchase Price” has the meaning set forth in Section 3.5(a).

 

“Purchaser” has the meaning set forth in the Preamble.

 

“Purchaser Claims” has the meaning set forth in Section 12.3(b).

 

“Purchaser Group” has the meaning set forth in Section 12.2.

 

“Purchaser Representatives” has the meaning set forth in Section 8.3.

 

“Seller” has the meaning set forth in Preamble.

 

“Seller Claims” has the meaning set forth in Section 12.4.

 

“Shares” has the meaning set forth in the Recitals.

 

“Stock Purchase” has the meaning set forth in the Recitals.

 

“To the Knowledge of Seller” means the actual knowledge of
Arturo Carrión, Billy B. Hill or Mark F. Muething.

 

“Threshold Indemnification Amount” has the meaning set forth in Section 12.3(b).

 

“Transactions” means the transactions contemplated by this
Agreement, including, without limitation, the Stock Purchase and the execution
and delivery of the Ancillary Agreements.

 

“U.S. Plan” has the meaning set forth in Section 9.4.

 

“Unaudited Interim Financial Statements” has the meaning set
forth in Section 6.5(a).

 

4

 

ARTICLE II

PURCHASE AND SALE OF THE ACQUIRED SHARES

 

2.1                                 Purchase
and Sale of the Acquired Shares. Upon the terms and subject to the
conditions of this Agreement, at the Closing, Seller shall sell, convey,
assign, transfer and deliver to Purchaser, and Purchaser shall purchase,
acquire and accept from Seller, all right, title and interest in and to the
Shares and Seller’s interest in the Directors’ Shares listed opposite Directors
name on Schedule I attached hereto as held by Seller, free and
clear of any and all Liens.

 

2.2                                 Conveyance.
Such sale, conveyance, assignment, transfer and delivery shall be effected by
delivery by Seller to Purchaser of stock certificates representing the Shares
as held by Seller, duly endorsed or accompanied by stock powers duly executed
in blank.

 

2.3                                 Consideration.
Upon the terms and subject to the conditions of this Agreement, in
consideration of such sale, conveyance, assignment, transfer and delivery of
the Shares by Seller, Purchaser shall pay or cause to be paid to Seller the
Purchase Price (as hereinafter defined).

 

ARTICLE III

THE CLOSING

 

3.1                                 Closing.
The Closing of the transaction contemplated in this Agreement (the “Closing”)
shall take place at such place outside of Puerto Rico as the parties may agree,
on a date and time to be specified by the parties (the “Closing Date), which
(subject to the satisfaction or, to the extent permitted by applicable Law,
waiver of the conditions set forth in Article X hereof) shall be no later
than the second Business Day following satisfaction or, to the extent permitted
by Law, waiver of the conditions set forth in Article X hereof or at such
other place, date and time as shall be agreed upon in writing by Purchaser and
Seller but not later than March 31, 2006.

 

3.2                                 Deliveries
by Purchaser. At the Closing, Purchaser shall deliver or cause to be
delivered the following:

 

(a)                                  Purchaser
shall deliver to the Seller, by wire transfer of immediately available funds to
a bank account designated in writing by the Seller prior to the Closing Date,
cash in an amount equal to Thirty-Seven Million Five Hundred Thousand Dollars
($37,500,000.00);

 

(b)                                 All
other documents, certificates, instruments and writings required to be
delivered by Purchaser at or prior to the Closing pursuant to this Agreement or
otherwise required in connection herewith.

 

5

 

3.3                                 Deliveries
by the Seller. At the Closing, the Seller shall deliver or cause to be
delivered the following:

 

(a)                                  the
certificate or certificates representing the Shares held by Seller, duly
endorsed in blank or accompanied by stock powers executed in blank and
sufficient to vest title thereto fully in Purchaser;

 

(b)                                 the
Assignment Agreement pursuant to which Seller assigns all its rights in the
Directors’ Shares to Purchaser, substantially in the form of Exhibit A
attached hereto;

 

(c)                                  a
copy of the Certificate of Incorporation of the Company certified by the
Secretary of State of the Commonwealth of Puerto Rico;

 

(d)                                 resolutions
of the Board of Directors of Seller or a committee thereof, certified by the
Secretary or Assistant Secretary of Seller, approving and authorizing the
execution, delivery and performance of this Agreement and the consummation of
the transactions contemplated hereby;

 

(e)                                  a
certificate of the an officer of Seller as to the incumbency of the officers
executing this Agreement and the genuineness of their signatures;

 

(f)                                    the
minute books, stock ledgers, corporate seal and all other corporate books and
records of the Company;

 

(g)                                 resignation
letters of Directors of the Company and their respective certificate of shares
representing the Directors’ Shares held by each director duly endorsed for
transfer to the Company or to the new Directors of the Company.

 

(h)                                 any
other documents, certificates, instruments and writings required to be
delivered by Seller at or prior to the Closing pursuant to this Agreement or
otherwise in connection herewith.

 

3.4                                 Deliveries
by the Company. At Closing, the Company shall deliver or cause to be
delivered the following:

 

(a)                                  The
Company shall execute and deliver to Mr. Arturo Carrión and Mr. Edgardo
Díaz the Employment Agreement (Consulting Agreements).

 

3.5                                 Consideration

 

(a)                                  Purchase
Price. The purchase price to be paid by Purchaser for the Shares and Seller’s
interest in the Director’s Shares shall be cash in an amount equal to
$37,500,000 (the “Purchase Price”).

 

6

 

ARTICLE IV

RELATED TRANSACTIONS

 

4.1                                 Employment
Agreements. At the Closing, the Company shall enter into employment
agreements and consulting agreements (the “Employment Agreements”) with each of
Mr. Arturo Carrión and Mr. Edgardo Díaz.

 

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF SELLER

 

Seller hereby represents and warrants to Purchaser as follows:

 

5.1                                 Authority;
Binding Effect. Seller has all requisite power, capacity and authority to
execute and deliver this Agreement and each of the Ancillary Agreements to
which Seller is a party, to perform its obligations hereunder and
thereunder and to consummate the Transactions contemplated hereby and thereby.
The execution and delivery by Seller of this Agreement and each of the
Ancillary Agreements to which Seller is a party, the performance of this
Agreement and each of the Ancillary Agreements to which Seller is a party and
the consummation of the Transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate or other action on the part of
Seller, and no other corporate or other action on the part of Seller or
its stockholders is required to authorize the execution, delivery and
performance hereof or thereof, and the consummation of the Transactions
contemplated hereby or thereby. This Agreement has been, and each of the
Ancillary Agreements will be when executed, duly executed and delivered by
Seller and constitutes, or will constitute, the valid and binding obligation of
Seller enforceable against Seller in accordance with its terms.

 

5.2                                 Title
to Company Shares. Seller owns beneficially and of record all of the Shares
and beneficially the Directors’ Shares, flee and clear of all Liens. Upon
consummation of the transactions contemplated hereby, Purchaser will own the
Shares free and clear of all Liens. Upon approval of the Commissioner, Seller
shall have the full and unrestricted power to sell, assign, transfer and
deliver the Shares to Purchaser upon the terms and subject to the conditions of
this Agreement free and clear of Liens other than Liens created by or through
the Purchaser. There are no shares of capital stock of the Company issued or
outstanding other than the Shares and the Directors’ Shares. All of the Shares
are duly authorized, validly issued, fully paid, nonassessable and free of any
preemptive rights. Other than this Agreement, there is no outstanding option,
warrant, right, subscription, call, unsatisfied preemptive right, convertible
or exchangeable security, or other agreement or right of any kind to purchase
or otherwise acquire any capital stock of the Company.

 

7

 

5.3                                 Consents
and Approvals; No Violation. The execution and delivery by Seller of this
Agreement and each of the Ancillary Agreements to which Seller is a party, and
the consummation by Seller of the Transactions contemplated hereby and thereby
will not, except as set forth in Section 1.3 of the Disclosure Schedule attached
hereto and made a part hereof, (i) conflict with or violate its
certificate of incorporation or by-laws or similar organizational documents in
each case, as currently in effect, (ii) conflict with or violate any Laws
applicable to Seller or by which its properties or assets are bound or are
subject, or (iii) result in any breach of, or constitute a default (or an
event that with notice or lapse of time, or both, would constitute a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or require payments under, or result in the creation of a Lien
on any of the properties or assets of Seller under, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Seller is a party or by which its properties
or assets are bound or subject except, in each case, as would not have a
material adverse effect on the ability of Seller to perform its
obligations under this Agreement.

 

5.4                                 Absence
of Litigation. Except as set forth in Section 5.4 of the Disclosure
Schedule, no Litigation pending or, to the Knowledge of Seller, threatened
against Seller, if adversely determined, nor any judgment, order or decree of
any Governmental Entity to which Seller is a party or subject to, (i) has
had or could reasonably be expected to have a material adverse effect on the
transaction contemplated in this Agreement, or (ii) could impair, in any
material respect, Seller’s ability to perform its obligations hereunder or
under any Ancillary Agreement to which Seller is a party or to consummate the
Transactions contemplated hereby or thereby.

 

5.5                                 Broker.
No broker, finder or investment banker, including any director, officer,
employee, affiliate or associate of the Seller, is entitled to any brokerage,
finder’s or other fee or commission in connection with the Transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Seller.

 

ARTICLE VI

REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COMPANY

 

The Seller hereby represents and warrants to Purchaser that:

 

6.1                                 Organization
and Qualification. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of Puerto
Rico, has all requisite corporate power and corporate authority to own, lease
and operate its properties and to carry on its business as now being conducted.
Except as set forth on Section 6.1 of the 

 

8

 

Disclosure
Schedule, the Company is duly licensed or qualified to
do business in each jurisdiction in which the nature of the business conducted
by it or the ownership, lease or operation of its properties makes such
qualification necessary, other than where the failure to be so duly licensed or
qualified has not had, and would not reasonably be expected to have, a material
adverse effect.

 

6.2                                 Certificates
of Incorporation and By-Laws; Corporate Records. The Company has furnished
or made available to Purchaser a true, correct and complete copy of the
articles of incorporation and the by-laws, in each case as amended or restated
to date, of the Company. The Company is not in violation of any provision of
its or articles of incorporation or in material violation of any provisions of
its by-laws. The Company has made available to Purchaser for inspection the
true, correct and complete minute books, stock record book and stock ledger of
the Company.

 

6.3                                 Capitalization.

 

(a)                                  The
authorized capital stock of the Company consists of 3,000,000 shares of common
voting stock with a par value of $1.00 per share and 60,000 shares of preferred
stock with a par value of $100.00 and a 6% interest with preference upon
liquidation, of which 2,500,000 of common stock are issued and outstanding.
Each of the issued and outstanding shares of capital stock of the Company has
been duly authorized and validly issued, and are fully paid and non-assessable,
and, except as set forth in Section 6.3(a) of the Disclosure
Schedule, free of preemptive rights. No legend or other reference to any
purported encumbrance appears upon any certificate representing equity
securities of the Company. There are no contracts or agreements relating to the
issuance, sale, or transfer of any equity securities or other securities of the
Company. None of the outstanding equity securities or other securities of the
Company was issued in violation of applicable securities laws.

 

6.4                                 No
Conflict; Required Filings and Consents.

 

(a)                                  Except
as set forth in Section 6.4(a) of the Disclosure Schedule, the
execution and delivery by Seller of this Agreement does not, and the
performance by Seller any of this Agreement and the consummation of the
Transactions contemplated hereby will not, (i) conflict with or violate
the articles of incorporation or by-laws or in each case as amended or
restated, of the Company, (ii) conflict with or violate any Laws
applicable to the Company or by or to which any of their respective properties
or assets is bound or subject or (iii) result in any material breach of, or
constitute a material default (or an event that with notice or lapse of time or
both would constitute a material default) under, or give to others any material
rights of termination, amendment, acceleration, purchase, sale or cancellation
of, or require payment under, or result in the creation of a material Lien on
any of the assets or properties of the Company under any material contract.

 

9

 

(b)                                 The
execution and delivery by Seller of this Agreement and each of the Ancillary
Agreements to which it is a party does not, and the consummation of the
Transactions contemplated hereby and thereby will not, require the Company to
obtain any consent, approval, authorization or permit of, or to make any filing
with or notification to (“Consent”) , any Governmental Entity, or any third
party, except for (i) applicable requirements, if any, of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”),
(ii) applicable requirements of the OCIPR; (iii) as may be
necessary as a result of any fact or circumstance relating solely to Purchaser
(including, without limitation, its sources of financing); (iv) Consent
required from third parties under contracts to which the Company is a party;
and (v) the Consents listed in Section 6.4(b) of the Disclosure
Schedule.

 

6.5                                 Financial
Statements; Undisclosed Liabilities.

 

(a)                                  The
Company, on behalf of Seller, has previously delivered or made available to
Purchaser (i) the audited consolidated balance sheets of the Company for
the period ended December 31, 2004 and 2003 (the “Balance Sheets”) and the
audited income statements and audited statements of cash flows of the Company
for each such year (collectively, the “Financial Statements”) and (ii) the
unaudited balance sheet of the Company as of September 30, 2005 (the “Base
Balance Sheet”) and the unaudited interim income and cash flow statements of
the Company for the period ended September 30, 2005 (collectively,
the “Unaudited Interim Financial Statements”). Except as set forth in Section 6.6(a) of
the Disclosure Schedule, each of the Financial Statements and the
Unaudited Interim Financial Statements (including any related notes thereto)
has been prepared in accordance with GAAP applied on a consistent basis throughout
the periods involved (except, in the case of Unaudited Interim Financial
Statements, to normal and recurring adjustments that were not or are not
expected to be in a material amount and for the lack of footnote disclosure)
and fairly presents, in all material respects, the financial position, results
of operations and cash flows of the Company as of the respective dates and for
the periods indicated therein.

 

(b)                                 The
Company, on behalf of Seller, has previously delivered or made available to
Purchaser (i) the audited statutory financial statements of the Company as
of and for the years ended December 31, 2004 and 2003, and the audited
statutory income statements and audited statutory statements of cash flows of
the Company for each such year (collectively, the “Statutory Financial
Statements”) and (ii) the unaudited statutory balance sheet of the Company
as of September 30, 2005 and the unaudited statutory interim income and
cash flow statements of the Company for the period ended September 30,
2005 (collectively, the “Unaudited Interim SAP Financial Statements”) prepared
in conformity with accounting practices prescribed or permitted in the
Commonwealth of Puerto Rico. Each of the balance sheets included in the
Statutory Financial Statements and the Unaudited SAP Financial Statements
fairly present in all material respects the financial position of the 

 

10

 

Company as of
its date and each of the statements of operations and cash flows included in
the Statutory Financial Statements and the Unaudited SAP Financial Statements
fairly present in all material respects the results of operations and cash
flows of the Company for the period therein set forth, in accordance with
statutory accounting practices prescribed or permitted in the Commonwealth of
Puerto Rico on a consistent basis to the Knowledge of Seller. No material
deficiencies have been asserted by the Commissioner with respect to the
Statutory Financial Statements and the Unaudited Interim SAP Financial
Statements, and the Statutory Financial Statements and the Unaudited Interim
SAP Financial Statements comply in all material respects with all Applicable
Law.

 

6.6                                 Absence
of Certain Changes or Events. Except as set forth in Section 6.6 of
the Disclosure Schedule, since September 30, 2005 (a) the
Company has conducted its business only in the ordinary course consistent with
past practice, (b) the Company has not engaged in or taken any action
which would be prohibited by Section 8.2 if taken after the date hereof,
and (c) there has not occurred, nor has there been any change or event
which has had, or would reasonably be expected to have, a Material Adverse
Effect.

 

6.7                                 Absence
of Litigation. Except as set forth in Section 6.7 of the Disclosure
Schedule, (a) there is no claim, action, suit, proceeding or
investigation of any kind, at law or in equity (including actions or
proceedings seeking injunctive relief), by or before any Governmental Entity or
by or on behalf of any third party (“Litigation”) pending or to the knowledge
of Seller, threatened in writing against the Company or affecting its business,
assets or rights, and (b) the Company is not a party or subject to or in
default under any judgment, order or decree of any Governmental Entity. There is
no judgment, order, decree or other agreement in effect which would limit the
ability of the Company to conduct its business in substantially the same manner
as it is presently conducted.

 

6.8                                 Compliance
with Applicable Law.

 

(a)                                  The
Company holds in full force and effect all licenses, franchises, permits and
authorizations, (“Permits”), necessary for the lawful ownership and use of
their respective properties and assets and the conduct of its business and
pursuant to Applicable Laws relating to the Company, and there has been no
violation of any Permit nor has the Seller or the Company received written
notice asserting any such violation, except for such failures to be in full
force and effect and for such violations, if any, which would not, individually
or in the aggregate, have a Material Adverse Effect.

 

(b)                                 The
Company is in compliance with each Applicable Law relating to it or any of its
assets, properties or operations, except where noncompliance with any such
Applicable Law would not, individually or in the aggregate, have a Material
Adverse Effect.

 

11

 

6.9                                 Labor
Related Matters.

 

(a)                                  No
employee, supervisor, director or officer of the Company is a party to, or is
otherwise bound by, any agreement or arrangement, including any
confidentiality, noncompetition, or proprietary rights agreement, between such
employee, supervisor, director or officer, and any other person that in any way
adversely affects or will affect (i) the performance of his duties as an
employee, supervisor, director or officer of the Company, or (ii) the
ability of the Company to conduct its business. To the Knowledge of Seller, no
officer, director, or supervisor of the Company intends to terminate his
employment with the Company.

 

(b)                                 The
Company does not have, is not a party to nor is it bound by: (i) any
collective bargaining agreements; and (ii) any agreements or arrangements
that contain any severance pay or post-employment liabilities or obligations;

 

(c)                                  No
employee benefit plan provides, or has any liability to provide, life
insurance, medical or other employee benefits to any employee upon his or her
retirement or termination of employment for any reason and to the Knowledge of
Seller, the Company has never represented, promised or contracted (whether in
oral or written form) to any employee or former employee (either individually
or as a group) that such employee(s) or former employee(s) would be provided
with life insurance, medical or other employee welfare benefits upon their
retirement or termination of employment.

 

(d)                                 Except
as set forth in Section 6.9(d) of the Disclosure Schedule, the
Company is in compliance with all applicable material foreign, federal, state
and local laws, rules and regulations respecting employment, employment
practices, terms and conditions of employment and wages and hours, in each
case, with respect to the employees and former employees; have withheld all
amounts required by law or by agreement to be withheld from the wages, salaries
and other payments to the employees and former employees; are not liable for
any arrears of wages or any taxes or any penalty for failure to comply with any
of the foregoing; and are not liable for any payment to any trust or other fund
or to any Governmental Entity with respect to unemployment, short term
disability, social security for chauffeurs, workers compensation, social
security or other benefits or obligations for the employees or former
employees.

 

(e)                                  No
work stoppage or labor strike against the Company is pending or to the
Knowledge of Seller, threatened. Except as set forth in Section 6.9(e) of
the Disclosure Schedule, the Company is not involved in or to the
Knowledge of Seller, threatened with, any labor dispute, grievance, or
litigation relating to labor, safety or discrimination matters involving any
employee or former employee, including, without limitation, charges or
complaints of unfair labor practices, wrongful discharge, discrimination,
retaliation, harassment, wage and hour, or under any employee benefit plans.

 

12

 

(f)                                    The
Company has complied with all and any notices to any, Governmental Entity and
labor organizations representing any of the Company’s employees, required by
law and/or by any collective bargaining agreement in effect and/or by any of
the Company’s policies and/or practices.

 

(g)                                 Except
as set forth in Section 6.9(g) of the Disclosure Schedule,
there are no material controversies pending or to the Knowledge of Seller,
threatened before any court or Governmental Entity, between the Company and any
of its employees or former employees.

 

(h)                                 Except
as set forth in Section 6.9(h) of the Disclosure Schedule, the
Company has not been notified by any Governmental Entity of any labor or
employee-related investigation involving the Company, nor do any condition
exist, which would constitute a violation of any applicable, material foreign,
federal, state, or local, law or regulation.

 

(i)                                     Except
as set forth in Section 6.9(i) of the Disclosure Schedule, the
Company is not a party to any employment contract or arrangement with respect
to any of their employees or former employees (including, without limitation,
the so-called “golden parachute” or severance agreements), nor have the Company
in any other manner limited its right to terminate the employment relationship
with its employees or former employees, except as provided in Puerto Rico Act No. 80
of May 30, l976.

 

(j)                                     The
Company maintains in full force and effect an insurance with the Corporation of
the State Insurance Fund; and the Company has paid all premiums on said policy
and has no outstanding debts with respect thereto. To the Knowledge of Seller,
no work-related accident occurred for which the Company is or may be
classified as an uninsured employer.

 

(k)                                  To
the Knowledge of Seller, the Company is in compliance with the employment
provisions of the Immigration Reform Act (IRCA).

 

6.10                           Disclosure.
To the Knowledge of Seller, no representation or warranty of related to the
Company contained in this Agreement contains or will contain any untrue
statement of material fact.

 

ARTICLE VII

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

Purchaser hereby represents and warrants to the Company and Seller
that:

 

13

 

7.1                                 Organization.
Purchaser is a duly organized, validly existing and in good standing under the
laws of the Commonwealth of Puerto Rico, and has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted.

 

7.2                                 Authority;
Enforceability. Purchaser has all requisite power and authority to execute
and deliver this Agreement and each of the Ancillary Agreements to which it is
a party, to perform its obligations hereunder and thereunder and to
consummate the Transactions contemplated hereby and thereby. The execution and
delivery by Purchaser of this Agreement and each of the Ancillary Agreements to
which Purchaser is a party and the performance by Purchaser of this Agreement
and each of the Ancillary Agreements to which it is a party and the
consummation of the Transactions contemplated hereby and thereby have been duly
authorized by all necessary corporate action by Purchaser and no other
proceeding on the part of Purchaser is necessary to authorize this
Agreement or any of the Ancillary Agreements to which Purchaser is a party or
to consummate the Transactions contemplated hereby or thereby. This Agreement
has been duly executed and delivered by Purchaser and each of the Ancillary Agreements
to which Purchaser is a party will be duly executed and delivered by Purchaser.
This Agreement constitutes, and each of the Ancillary Agreements to which
Purchaser is a party, when duly executed and delivered by Purchaser, will
constitute, the valid and binding obligation of Purchaser, enforceable against
Purchaser in accordance with its terms.

 

7.3                                 No
Conflict; Required Filings and Consents.

 

(a)                                  The
execution and delivery of this Agreement by Purchaser does not, and the
execution and delivery by Purchaser of any of the Ancillary Agreements to which
Purchaser is a party will not, and performance by Purchaser of this Agreement
and the Ancillary Agreements to which Purchaser is a party, and the
consummation of the Transactions contemplated hereby and thereby will not, (i) conflict
with or violate the certificate of incorporation, by-laws or similar
organizational document in each case, (ii) conflict with or violate any
Laws applicable to Purchaser or by or to which any of its properties or assets
is bound or subject or (iii) result in any breach of or constitute a
default (or an event that with notice or lapse of time or both would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of or require payment under, or result in the
creation of a Lien on any of the properties or assets of Purchaser, pursuant to
any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which Purchaser is a
party or by which Purchaser or any of its properties or assets is bound or
subject.

 

(b)                                 The
execution and delivery of this Agreement by Purchaser does not, and the
execution and delivery by Purchaser of any of the Ancillary Agreements to which
Purchaser 

 

14

 

is a party
will not, and the performance by Purchaser of this Agreement and the Ancillary
Agreements to which Purchaser is a party and the consummation of the
transactions contemplated hereby and thereby will not, require Purchaser to
obtain any Consent of any Governmental Entity or third party except for
applicable requirements under the Insurance Code of the Commonwealth of Puerto
Rico and of the HSR Act, if any, and under any applicable foreign laws
regulating competition.

 

7.4                                 Brokers.
No broker, finder or investment banker is entitled to any brokerage, finder’s
or other fee or commission in connection with the Transactions contemplated by
this Agreement based upon arrangements made by or on behalf of Purchaser or its
affiliates.

 

7.5                                 Litigation.
As of the date of this Agreement, there is no litigation, action, suit,
proceeding, claim, arbitration or investigation pending or, to Purchaser’s
knowledge, threatened against Purchaser, as to which there is a reasonable
likelihood of an adverse determination and which, if adversely determined (a) would
prevent or materially delay the consummation by Purchaser of the Transactions
contemplated by this Agreement or (b) would have, in the aggregate, a Material
Adverse Effect on the ability of Purchaser to perform its obligations
under this Agreement.

 

7.6                                 Financing.
Purchaser has sufficient funds to purchase the Shares and to pay the Purchase
Price in consideration therefor all upon the terms and subject to the
conditions set forth in this Agreement.

 

7.7                                 Inspection
and Due Diligence; No Other Representations. Purchaser is an informed and
sophisticated purchaser, and has engaged advisors, experienced in the
evaluation and purchase of companies such as the Company as contemplated
hereunder. Purchaser has undertaken such investigation and has been provided
with and has evaluated such documents and information as it has deemed
necessary and as more fully set forth in Section 7.7 of the Disclosure
Schedules to enable it to make an informed decision with respect to the
execution, delivery and performance of this Agreement and the Transactions
contemplated hereby. Purchaser has received all materials from the Seller and
the Company relating to the Shares, the Company and the business of the
Company, which it has requested and has been afforded the opportunity to obtain
any additional information necessary to evaluate the merits of the Transactions
contemplated hereby, Purchaser acknowledges that the Company has given
Purchaser complete and open access to the key employees, documents and
facilities of the Company. The Company, the Seller and their representatives
have answered to Purchaser’s all inquiries that Purchaser or its
representatives have made concerning the Shares, the Company and the business
of the Company or otherwise relating to the Transactions contemplated hereby.
Purchaser agrees to accept the Shares and the Directors’ Shares without
reliance upon any express or implied representations or warranties of any
nature, whether in writing, orally or otherwise, made by or on behalf of or
imputed to the Company or Seller, except as expressly set forth in this
Agreement or as disclosed in the Disclosure Schedules. Without limiting
the generality of the foregoing, Purchaser acknowledges that neither the
Company 

 

15

 

nor Seller
makes any representation or warranty with respect to any projections, estimates
or budgets delivered to or made available to Purchaser of future revenues,
future results of operations (or any component thereof), future cash flows or
future financial condition (or any component thereof) of the Company or the
future business and operations of the Company.

 

7.8           Disclosure
Schedule/Letter.

 

Purchaser acknowledges and agrees that:

 

(a)           Seller or the Company
shall be entitled to make all such disclosures up to the Closing Date as they may understand
appropriate in this Agreement or in a disclosure schedule attached to this
Agreement (“Disclosure Schedule”) or in a separate document (“Disclosure Letter”)
, with respect to the representations and warranties of Seller or the Company
or to events related to the business of the Company that occurred prior to the
Closing Date and that Purchaser shall accept such disclosure and that in no
circumstances shall Purchaser or any person deriving title from Purchaser be
entitled to claim Damages or indemnity under Section 12.2 hereof with
respect to any fact, matter, circumstances or documents so disclosed by Seller or
the Company to Purchaser and Purchaser waives any such rights which but for the
preceding provisions of this section it may have under Section 12.2
hereof.

 

(b)           Under no circumstances
shall Purchaser be entitled after the Closing Date to claim Damages or
indemnity for breach of representations and warranties or for events related to
the business of the Company that occurred prior to the Closing Date, with
respect to any fact or circumstances known to the Purchaser prior to the
Closing Date and Purchaser waiver any indemnity rights it may have under
the indemnity provision of Section 12.2. Purchaser acknowledges that at
the time of entering this Agreement it is not aware of any matter, events or
circumstances other than those in the Disclosure Schedules which is
inconsistent with the representations and warranties of Seller or constitute a
breach of said representations and warranties.

 

ARTICLE VIII

COVENANTS

 

8.1                                 Affirmative
Covenants of the Company. Seller hereby covenants and agrees that, prior to
the Closing, unless otherwise expressly contemplated by this Agreement or
consented to in writing by Purchaser, Seller shall cause the Company to (i) operate
its business only in the usual and ordinary course consistent with past
practice and preserve intact its business organizations; (ii) maintain its
material licenses, rights and franchises; (iii) shall use commercially
reasonable efforts to retain the services of its respective officers and key
employees; (iv) maintain its material relationships and goodwill with its 

 

16

 

respective
customers and suppliers and others with which it has business relationships; (v) continue
its advertising and promotional activities, pricing and purchasing policies,
operations and business plan implementation consistent with past practice; (vi) continue
in full force and effect without material modification all existing policies or
binders of insurance currently maintained in respect of its assets, properties,
business, operations, employees, officers or directors except as required by
Applicable Law; (vii) manage and administer all pending and threatened
litigation matters in a manner consistent with commercially reasonable business
practice, giving due regard to recommendations of legal counsel; and (viii) cooperate
with Purchaser to present the change of ownership contemplated by this
Agreement in a positive manner to its contacts, including without limitation
furnishing such introductions and facilitating such continuing access to such
contacts as Purchaser may reasonably request. The Company shall not
undertake any material new business initiative.

 

8.2                                 Negative
Covenants of the Company. Except as set forth in Section 8.2 of the Disclosure
Schedule, Seller hereby covenants that, except as expressly contemplated by
this Agreement or consented to in writing by Purchaser, from the date of this
Agreement until the Closing, Seller shall cause the Company not to do any of
the following:

 

(a)                                  (i) distribute
any dividend in an amount in excess of $100 million during the year 2005 and up
to the Closing Date; (ii) increase the compensation payable to or to
become payable to any of its directors, officers or employees (other than
pursuant to employment agreements in effect on the date of this Agreement or in
the ordinary course of business consistent with past practice); (iii) grant
any severance or termination pay to (other than pursuant to its normal
severance policy as in effect on the date of this Agreement), or enter into any
employment or severance agreement with, any director, officer or employee; (iv) establish,
adopt, enter into or amend any Plan, except as may be required by
Applicable Law; (v) lend, pay or contribute any funds to any of its
directors, officers, employees, affiliates or associates (other than
compensation payable in the ordinary course of business consistent with past
practice); or (vi) take or omit to take any action that would be
reasonably likely to cause any of the representations and warranties made by
Seller in this Agreement to become untrue

 

(b)                                 (i) redeem,
purchase or otherwise acquire any shares of its capital stock or any securities
or obligations convertible into or exchangeable for any shares of its capital
stock, or any options, warrants or conversion or other rights to acquire any
shares of its capital stock or any such securities or obligations; (ii) effect
any reorganization or recapitalization; or (iii) split, combine or
reclassify any of its capital stock or issue or authorize or propose the
issuance of any other securities in respect of, in lieu of or in substitution
for, shares of its capital stock;

 

17

 

(c)                                  issue,
deliver, award, grant or sell, or authorize or propose the issuance, delivery,
award, grant or sale of, any shares of any class of its capital stock, any
securities convertible into or exercisable or exchangeable for any such shares,
or any rights, warrants or options to acquire, any such shares;

 

(d)                                 propose
or adopt any amendments to its articles of incorporation or as to its by-laws;

 

(e)                                  sell,
lease, exchange, mortgage, pledge, transfer or otherwise dispose of, or agree
to sell, lease, exchange, mortgage, pledge, transfer or otherwise dispose of,
any of its assets (other than in the ordinary course of business consistent
with past practice);

 

(f)                                    except
as required by applicable law or accounting procedures, change of its methods
of accounting in effect at December 31, 2004 and September 30, 2005;

 

(g)                                 incur
any obligation for borrowed money or purchase money indebtedness, whether or
not evidenced by a note, bond, debenture, guarantee or similar instrument
(other than in the ordinary course of business) or enter into any swap or other
off-balance sheet transaction for its own account, or enter into any economic
arrangement having the economic effect of any of the foregoing, other than in
the ordinary course of business consistent with past practice;

 

(h)                                 cancel,
forgive, settle or compromise any indebtedness or Litigation, except in the
ordinary course of business;

 

(i)                                     acquire
by merging or consolidating with, or by purchasing a substantial portion of the
assets or securities of, or by any other manner, any corporation, partnership,
joint venture or other entity;

 

(j)                                     permit
the Company or to dissolve, wind-up or liquidate;

 

(k)                                  enter
into any contract, agreement, arrangement or understanding outside the ordinary
course of business;

 

(l)                                     take
any action that would prevent or materially impair the ability of Seller to
consummate the transactions contemplated by this Agreement, including without
limitation actions that would be reasonably likely to prevent or materially
impair the receipt of any consent, registration, approval, permit or
authorization, that is necessary in connection with the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby.

 

18

 

8.3                                 Access
and Information. (a) Between the date of this Agreement and the
Closing Date and subject to Section 8.4, the Seller shall, afford to
Purchaser and its members, employees, accountants, actuaries, consultants,
legal counsel, agents and other representatives (collectively, the “Purchaser
Representatives”) access at reasonable times to the officers, employees,
agents, properties, offices and other facilities of the Company and to the
books and records thereof and furnish promptly to Purchaser and the Purchaser
Representatives such information concerning the business, properties,
contracts, records and personnel of the Company (including financial,
marketing, operating and other data and information) as may be requested,
from time to time, by Purchaser. Notwithstanding anything to the contrary
contained herein, Purchaser (i) shall provide Seller and the Company with
reasonable advance notice of any request for access pursuant to this Section 8.3;
(ii) shall coordinate with Seller and the Company prior to contacting any
customer, supplier or employee of the Company; and (iii) shall avoid any
undue disruption to the business operations of the Company.

 

(b)                                 Seller
shall give prompt notice to Purchaser of (i) any material communication
received from or given to any Governmental Authority in connection with any of
the transactions contemplated hereby, (ii) any notice or other
communication from or on behalf of any Person alleging that the consent of such
Person is or may be required in connection with the transactions
contemplated by this Agreement; and (iii) any actions, suits, claims or
investigations commenced or threatened against Seller, the Company, that, if
pending on the date of this Agreement, would have been required to have been
disclosed, or relate to the consummation of the transactions contemplated by
this Agreement; and

 

(c)                                  Seller
shall, and shall cause any other Person receiving access thereto to, keep strictly
confidential any and all non-public information it or they may receive
from or concerning Purchaser and its Affiliates, including, without limitation,
any information received pursuant to Section 8.7.

 

(d)                                 Purchaser
shall give prompt notice to Seller of (i) any material communication
received from or given to any Governmental Authority in connection with any of
the transactions contemplated hereby, (ii) any notice or other
communication from or on behalf of any Person alleging that the consent of such
Person is or may be required in connection with the transactions
contemplated by this Agreement; and (iii) any actions, suits, claims or
investigations commenced or threatened against Purchaser, that, if pending on
the date of this Agreement, would have been required to have been disclosed, or
relate to the consummation of the transactions contemplated by this Agreement.

 

8.4                                 Confidentiality.

 

(a)                                  Purchaser
will, and will cause the Purchaser Representatives to, treat any agreements,
data and information obtained with

 

19

 

respect to the
Company from any representative, officer, director or employee of the Company
or Seller, or from any books or records of the Company in connection with this
Agreement, confidentially and with commercially reasonable care and discretion,
and will not disclose any such information to third parties; provided, however,
that the foregoing shall not apply to (i) information in the public domain
or that becomes public through disclosure by any party other than Seller or the
Company or their respective employees, officers, directors, shareholders,
outside advisors and representatives, so long as such other party is not in
breach of a confidentiality obligation, (ii) information that may be
required to be disclosed by applicable law provided the Purchaser immediately
give the Company and Seller notice of any request or demand for such
confidential information upon receipt of such request and demand along with a
copy of any written correspondence, pleading or other communication concerning
the request or demand, (iii) information required to be disclosed to
obtain any required Consents, or (iv) any information that is disclosed by
the Purchaser, on a confidential basis, to any of the Purchaser Representatives
in connection with or related to the consummation of the Transactions.
Purchaser agrees to be responsible for the breach of any obligation of
confidentiality under this Agreement by any of Purchaser Representatives;

 

(b)                                 In
the event that the Closing fails to take place and this Agreement is
terminated, Purchaser upon the written request, will, and will cause the
Purchaser Representatives to, promptly deliver to Seller any and all documents
or other materials furnished by the Company or Seller to the Purchaser in
connection with the Agreement without retaining any copy thereof. In the event
of such request, all other documents, whether analyses, compilations or
studies, that contain or otherwise reflect the information furnished by the Company
or Seller shall be destroyed by Purchaser or shall be returned to Seller, and
Purchaser shall confirm to the Company and Seller in writing that all such
materials have been returned or destroyed. No failure or delay by the Company
or Seller in exercising any right, power or privilege hereunder shall operate
as a waiver thereof nor shall any single or partial exercise thereof preclude
any other or further exercise thereof or the exercise of any right, power or
privilege hereunder;

 

(c)                                  The
parties hereto recognize and agree that in the event of a breach by the
Purchaser of this Section, money damages would not be an adequate remedy to
Seller or the Company, as the case may be, for such breach and, even if
money damages were adequate, it would be impossible to ascertain or measure
with any degree of accuracy the damages sustained by Seller or the Company as
the case may be, therefrom. Accordingly, if there should be a breach or
threatened breach by the Purchaser of the provisions of this section, Seller or
the Company, as the case may be, shall be entitled to an injunction
restraining the Purchaser (and those acting with or on behalf of the Purchaser)
from any breach without showing or proving actual damage sustained by the
Company, Seller or its affiliates, as the case may be. Nothing in the
preceding sentence shall limit or 

 

20

 

otherwise
affect any remedies that Seller or the Company may otherwise have under
applicable law. This section shall survive the termination of this
Agreement.

 

8.5                                 Exclusivity.
From the date of this Agreement until the earlier of the Closing Date and the
date upon which this Agreement is terminated pursuant to Section 11.1
hereof, neither the Company nor Seller shall, initiate, propose, encourage or
solicit any inquiries, discussions, negotiations or proposals, or enter into
any discussions or negotiations, agreements, understandings or commitments, or
furnish any information relating to (i) any acquisition by any Person
(other than Purchaser) of (A) any shares of common stock or any capital
stock or other equity interests of the Company or (B) a material portion
of the assets of the Company, or (ii) any merger, consolidation or other
business combination involving the Company, or authorize or permit any of its
directors, officers or employees or any investment banker, financial advisor,
attorney, accountant or other representative retained by it to take any such
action.

 

8.6                                 Non
Solicitation.

 

(a)                                  From
the date hereof until the Closing Date, neither Purchaser nor any of its
affiliates shall, directly or indirectly, without the prior written consent of
Seller, hire any officer or other employee of the Company or solicit or direct
any other Person to solicit any officer or other employee of the Company; (i) terminate
such officer’s or employee’s employment with the Company; or (ii) seek or
accept employment or other affiliation with any other Person (other than, in
each case, any solicitation directed to the public in general in publications
of general distribution).

 

(b)                                 Up
to the first anniversary of the Closing Date, neither Seller nor any of its
affiliates shall, directly or indirectly, without the prior written consent of
Purchaser, hire any officer or other employee of the Company or solicit or
direct any other Person to solicit any officer or other employee of the
Company; (i) terminate such officer’s or employee’s employment with the
Company; or (ii) seek or accept employment or other affiliation with any
other Person (other than, in each case, any solicitation directed to the public
in general in publications of general distribution).

 

8.7                                 Further
Assurances; Supplements to Schedules.

 

(a)                                  Each
of the parties hereto shall execute such documents and other papers and perform such
further acts as may be reasonably required to carry out the provisions
hereof and the transactions contemplated hereby. Each such party shall, on or
prior to the Closing Date, use its commercially reasonable efforts to fulfill
or obtain the fulfillment of the conditions precedent to the consummation of
the transactions contemplated hereby, including the execution and delivery of
any documents, certificates, instruments or other papers that are reasonably
required for the consummation of the transactions contemplated hereby.

 

21

 

(b)                                 On
the date which is ten (10) Business Days prior to the anticipated Closing
Date, and at the Closing, Seller and/or Company shall furnish Purchaser with a
supplement to their schedules, and Purchaser shall furnish Seller with a
supplement to the its schedules, in each case to reflect any additional
matters, occurrences or other disclosures of which the Seller, the Company or
Purchaser, as the case may be, becomes aware during the period commencing
on the date of this Agreement and ending immediately prior to the Closing.

 

8.8                                 Maintenance
of Records. Through the Closing Date, the Company shall maintain the
records in all material respects in the same manner and with the same care that
the records have been maintained prior to the execution of this Agreement. From
and after the Closing Date, each of the parties shall permit the other party
reasonable access to any applicable records in its possession, and the right to
duplicate such records, to the extent that the requesting party has a
reasonable business purpose for requesting such access or duplication.

 

8.9                                 Capital.
On the Closing Date, Seller shall have caused the Company to be in compliance
with the minimum capital requirement imposed by the Insurance Code of the
Commonwealth of Puerto Rico.

 

ARTICLE IX

ADDITIONAL AGREEMENTS

 

9.1                                 Appropriate
Action; Consents; Filings. The Seller and Purchaser shall, use its
commercially reasonable efforts to (i) take, or cause to be taken, all
appropriate action, and do, or cause to be done, all things necessary, proper
or advisable under applicable Law or otherwise to consummate and make effective
the Transactions contemplated by this Agreement, (ii) obtain from any
Governmental Entities or third parties any Consents required to be obtained or
made by Purchaser, Seller, or the Company in connection with the authorization,
execution and delivery of this Agreement and the Ancillary Agreements and the
consummation of the Transactions, and (iii) make all necessary filings,
and thereafter make any other required submissions, with respect to this
Agreement required by the Insurance Code of the Commonwealth of Puerto Rico and
any other applicable Law; provided, that Seller, the Company and
Purchaser shall cooperate with each other in connection with the making of all
such filings, including providing copies of all such documents to the nonfiling
party and its advisors prior to filing and furnishing all information required
for any application or other filing to be made pursuant to the rules and
regulations of any applicable Law in connection with the Transactions. In
furtherance of the foregoing, within ten (10) days of the date hereof,
Purchaser shall make all requisite filings with the 

 

22

 

OCIPR as may be
necessary in order to obtain all consents and approvals of the OCIPR needed to
consummate the transactions contemplated hereby.

 

9.2                                 Public
Announcements. Neither the Company, Purchaser nor Seller shall, issue any
public report, statement or press release or otherwise make any public
statement regarding this Agreement or the Transactions contemplated hereby,
from the date hereof through the Closing, without the prior written consent of
Seller and Purchaser, unless otherwise required by applicable Law, in which
case such party shall advise the other parties hereto and discuss the contents
before issuing any such report, statement or press release.

 

9.3                                 Termination
of Existing Agreement between Seller and the Company. Purchaser
acknowledges that all existing agreements, contracts and understanding between
Seller and the Company and all services provided by Seller to the Company (the “Existing
Agreements”) will terminate on the Closing Date and the relationship and services
contemplated by the Existing Agreement will no longer be in effect. In
addition, all amounts owed by or to be owed by the Company to Seller under the
Existing Agreements shall be paid prior to or at the Closing Date. The
foregoing termination of the Existing Agreement pursuant to this Section 9.3
shall be of no force or effect unless and until the Closing shall have occurred
and such Agreement shall remain in full force and effect in accordance with its
terms unless and until such time as the Closing has occurred.

 

9.4                                 Savings
Plan.

 

Purchaser acknowledges that (i) until March 30, 2004, with
respect to the savings portion of the Great American Financial Resources, Inc.
Retirement and Savings Plan (the “U.S. Plan” ) and until December 31, 2003
with respect to the retirement portion of the U.S. Plan, the employees of the
Company participated in the U.S. Plan and the amount contributed by the Company
and the eligible employees of the Company under the U.S. Plan are still in the
employees account under the U.S. Plan; (ii) that the Company is in the
process of qualifying the U.S. Plan under the provisions of the PRIRC, and (iii) that
upon the issuance of the determination letter by the Puerto Rico Department of
Treasury the Company Seller intends to transfer the participant account of the
employees of the Company in the U.S. Plan Trust to the Trust of the Great
American Life Assurance Company of Puerto Rico Retirement and Savings Plan (the
“P.R. Plan”). Purchaser agrees to cause the Plan Administrator after the
Closing Date to accept the transfer of said participants’ account.

 

ARTICLE X

CLOSING CONDITIONS

 

10.1                           Conditions
to Obligations of Each Party Under This Agreement. The respective
obligations of each party to consummate the 

 

23

 

Transactions,
including the Stock Purchase, shall be subject to the satisfaction at or prior
to the Closing of the following conditions, any or all of which may be
waived, in whole or in part, to the extent permitted by Applicable Law, by the
Seller or Purchaser:

 

(a)                                  No
Order. No Governmental Entity, including any federal or state court of
competent jurisdiction, shall have enacted, issued, promulgated, enforced or
entered any statute, rule, regulation, executive order, judgment, decree,
injunction or other order (whether temporary, preliminary or permanent) which
is in effect and which has the effect of making the Transactions contemplated
hereby illegal or otherwise restrains consummation of the Transactions
contemplated hereby.

 

(b)                                 Insurance
Commissioner. Any required notifications to or filings with the
Commissioner shall have been made and any required Consent of OCIPR shall have
been obtained.

 

(c)                                  Consents
and Approvals; Permits. All material consents or waivers thereof, and
permits, required to consummate the Transactions contemplated hereby, as set
forth in Section 10.1(c) of the Disclosure Schedule, shall
have been obtained from all Governmental Entities and third parties.

 

10.2                           Additional
Conditions to Obligations of Purchaser. The obligations of Purchaser to
consummate the Transactions contemplated hereby, including the Stock Purchase,
are subject to the satisfaction at or prior to the Closing of the following
conditions, any or all of which may be waived, in whole or in part, to the
extent permitted by applicable Law, by Purchaser:

 

(a)                                  Representations
and Warranties. Each of the representations and warranties of Seller
contained in this Agreement shall have been true, correct and complete in all
material respects on the date hereof and as of the Closing Date, as though made
on and as of the Closing Date. Purchaser shall have received a certificate of a
duly authorized officer or other authorized person of Seller to such effect.

 

(b)                                 Agreements
and Covenants. Seller shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by it on or prior to the Closing Date. Purchaser
shall have received a certificate of a duly authorized officer or other
authorized person of Seller to such effect.

 

(c)                                  Legal
Opinion. Purchaser shall have received the opinions of Mark F. Muething, Esq.
and O’Neill & Borges, counsels to Seller and the Company, dated the
Closing Date, addressed to Purchaser, in form and substance to be mutually
agreed upon by the parties.

 

24

 

(d)                                 The
Company shall not be subject to a then pending rehabilitation or liquidation
proceeding under Section 4001 et seq.
of the Puerto Rico Insurance Code.

 

(e)                                  Execution
of Documents. Seller shall have executed and delivered to Purchaser each of
the Ancillary Agreements to which it is a party. Each such Ancillary Agreement
shall be in full force and effect and a valid and binding obligation of each
party thereto.

 

(f)                                    Reinsurance.
Seller shall have reinsured or shall have obtained reinsurance for policy
number 20040110339 (Liza Hernández) for risk in excess of $175,000.00 up to
$958,500.00. The premium of said policy shall be divided pro rata in accordance
with the risk to be assumed by each party.

 

10.3                           Additional
Conditions to Obligations of the Seller. The obligations of Seller to
consummate the Transactions contemplated hereby are subject to the satisfaction
at or prior to the Closing of the following conditions, any or all of which may be
waived, in whole or in part, to the extent permitted by applicable Law, by
Seller:

 

(a)                                  Representations
and Warranties. Each of the representations and warranties of Purchaser
contained in this Agreement shall have been true, correct and complete in all
material respects on the date hereof and as of the Closing Date, as though made
on and as of the Closing Date. The Seller shall have received a certificate of
a duly authorized officer or other authorized person of Purchaser to such
effect.

 

(b)                                 Agreements
and Covenants. Purchaser shall have performed or complied in all material
respects with all agreements and covenants required by this Agreement to be
performed or complied with by Purchaser on or prior to the Closing Date. The
Seller shall have received a certificate of a duly authorized officer or other
authorized person of Purchaser to such effect.

 

(c)                                  Legal
Opinion. Seller shall have received the opinion of Enrique R. Ubarri, Esq.
and Fiddler González & Rodríguez, P.S.C., counsel to Purchaser, dated
the Closing Date, addressed to Seller, in form and substance mutually
agreed upon by the parties.

 

(d)                                 Execution
of Documents. Purchaser shall have executed and delivered to Seller the
Ancillary Agreements to which it is a party. Each such Ancillary Agreement
shall be in full force and effect and a valid and binding obligation of each
party thereto.

 

10.4                           Mutual
Conditions. The obligations of each of Purchaser and Seller to effect the
Closing shall be subject to the following conditions, any one or more of which may be
waived in writing, as to itself by either party:

 

25

 

(a)                                  No
temporary restraining order, preliminary or permanent injunction or other order
issued by a court of competent jurisdiction or other legal restraint or
prohibition preventing the consummation of the transactions contemplated by
this Agreement shall be in effect;

 

(b)                                 All
approvals of Governmental Authorities required to consummate the transactions
contemplated hereby shall have been obtained and shall remain in full force and
effect and all statutory waiting periods in respect thereof shall have expired;
and

 

ARTICLE XI

TERMINATION

 

11.1                           Termination.
This Agreement may be terminated by giving written notice at any time
prior to the Closing as follows:

 

(a)                                  by
mutual consent of Purchaser and Seller;

 

(b)                                 by
either Purchaser or Seller, if there shall be any order which is final and
nonappealable preventing the consummation of the Transactions;

 

(c)                                  by
Purchaser or Seller, at any time after March 31, 2006, if the Transactions
shall not have been consummated for any reason other than the failure of the
party seeking to terminate this Agreement to comply with any covenant or
agreement of such party set forth herein;

 

(d)                                 by
Purchaser, if Seller shall have breached or violated in any material respect
any of its representations, warranties or covenants set forth in this
Agreement, and such breach or violation shall not have been cured within thirty
(30) days after written notice thereof has been given by Purchaser to the party
alleged to be in breach; or

 

(e)                                  by
Seller, if Purchaser shall have breached or violated in any material respect
any of its representations, warranties or covenants set forth in this
Agreement, and such breach or violation shall not have been cured within thirty
(30) days after notice thereof has been given by Seller to Purchaser;

 

The right of any party hereto to terminate this Agreement pursuant to
this Section 11.1 shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of any party hereto, any
person controlling any such party or any of their respective officers or
directors, whether prior to or after the execution of this Agreement.

 

26

 

11.2                           Effect
of Termination. Except as provided in Section 11.3 and Section 8.4,
in the event of the termination of this Agreement pursuant to Section 11.1,
this Agreement shall forthwith become null and void, there shall be no
liability on the part of Purchaser, Seller or the Company or any of their
respective partners, officers, directors, subsidiaries, affiliates or
associates to any other party and all rights and obligations of any party
hereto shall cease, except that nothing herein shall relieve any party hereto
from liability for any breach of this Agreement.

 

11.3                           Fees,
Expenses and Other Payments. Except as otherwise provided in this
Agreement, each party shall bear its own Expenses in connection with the
Transactions contemplated by this Agreement, including costs of their
respective attorneys, accountants, investment bankers, brokers and other
representatives.

 

ARTICLE XII

SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION

 

12.1                           Survival
of Representations. The representations and warranties in this Agreement
and in any other document delivered in connection herewith shall survive the
Closing solely for purposes of Article XII of this Agreement and shall
terminate on the first (1st) anniversary of the Closing Date

 

12.2                           Seller
Agreement to Indemnify. Upon the terms and subject to the conditions of
this Article XII, Seller shall indemnify, reimburse, defend and hold
harmless Purchaser and its directors, officers, employees, Affiliates, and
their respective successors and assigns (collectively “Purchaser Group”) from
and against any Damages incurred by any of them based upon, arising out of or
otherwise in respect of (i) any breach of any representation or warranty
of Seller; (ii) the nonfulfillment on the part of Seller of any
unwaived covenant or agreement set forth in this Agreement; (iii) all
liabilities relating to the U.S. Plan; (iv) all liabilities relating to
any additional or accelerated compensation, benefits or other rights under the
U.S. Plan resulting from the transactions contemplated by this Agreement being
considered to constitute a “change in control” or similar triggering event; (v) liabilities
or penalties arising out of failure of the P.R. Plan to be qualified under the
PRIRC; and (vi) any liability in excess of the $200,000 reserve in the
Balance Sheet, allocated for the investigation set forth under Section 6.9(d) of
the Disclosure Schedule, which may result from such investigation.

 

12.3                           Seller
Limitation of Liability.

 

(a)                                  (i) The
liability of the Seller to indemnify the Purchaser Group in accordance with Section 12.2
hereof shall be limited to Purchaser Claims as to which the Purchaser has given
the Seller written notice 

 

27

 

thereof on or
prior to the first (1st) anniversary of the Closing Date.
Notwithstanding the aforementioned, Seller shall indemnify Purchaser Group for
Purchaser Claims related to the matter subject to indemnification under
Sections  12.2(v) and (vi) as to which the Purchaser has given
the Seller written notice thereof on or prior to the fifth (5th)
anniversary of the Closing Date.

 

(b)                                 The
provisions for indemnity contained in Sections 12.2 hereof shall be
effective only with respect to Purchaser Claims the amount of Damages of which
individually are in excess of $10,000 and only to the extent the Damages in
excess of $10,000 in the aggregate exceeds $1,000,000 (the “Threshold
Indemnification Amount”) and then only to the extent of such excess.

 

(c)                                  Notwithstanding
any other provision of this Agreement, the Seller shall have no indemnification
obligation under Section 12.2 of this Agreement with respect to matters
disclosed in the Disclosure Schedules and or Disclosure Letter as set forth in Section 7.8,
for matters provided for in the 2004 Balance Sheet and the Base Balance Sheet
or to matters to which Purchaser or its affiliates had knowledge on or prior to
the Closing Date.

 

(d)                                 In
the event that the Seller shall indemnify any member of the Purchaser Group
from and against Damages pursuant to Section 12.2 and the Company or any
other member of the Purchaser Group shall subsequently recover any amounts from
a Governmental Entity in respect of such Damages, then the Company or such
other member of the Purchaser Group shall pay the net amount so recovered from
such Governmental Entity to the Seller.

 

12.4                           Purchaser’s
Agreement to Indemnify. Upon the terms and subject to the conditions of
this Article XII, Purchaser agrees to indemnify, defend and hold harmless
the Seller at any time after consummation of the Closing, subject to the
provisions of Section 12.5, from and against all Damages asserted against,
resulting to, imposed upon or incurred by any of Seller, directly or
indirectly, by reason of or resulting from (a) a breach of any
representation or warranty of Purchaser contained in or made pursuant to this
Agreement or any facts or circumstances constituting such a breach; (b) a
breach of any covenant or agreement of Purchaser contained in or made pursuant
to this Agreement or any facts or circumstances constituting such a breach (“Seller
Claims”); or (c) any fact or circumstances related to the operations of
the Company or the Business after the Closing Date.

 

12.5                           Purchaser’s
Limitation of Liability. Except for any liability of Purchaser to indemnify
the Seller for a breach of the representations and warranties set forth in Section 7.2
hereof, which shall survive the Closing indefinitely, the liability of
Purchaser to indemnify Seller for the breach of any representation or warranty
pursuant to Section 12.4 hereof shall be limited to Seller Claims as to
which the Seller have given Purchaser written notice thereof

 

28

 

on or prior to
the first (1st) anniversary of the Closing Date, whether or not any
Damages have then actually been sustained.

 

12.6                           Conditions
of Indemnification.

 

(a)                                  In
the event any member of the Purchaser Group or Seller has a reasonable good
faith basis for asserting a Claim for Damages, Purchaser shall give prompt
written notice Seller or Seller give prompt written notice to Purchaser, as
applicable, briefly setting forth the basis of the Claim and the amount thereof
(or, if not then determinable, a reasonable good faith estimate of the amount
thereof) in reasonable detail.

 

(b)                                 The
obligations and liabilities of Purchaser and Seller with respect to Claims made
by third parties shall be subject to the following terms and conditions:

 

(i)                                     The indemnified
party will give the indemnifying party prompt notice of any such Claim as set
forth in subsection (a) above, and the indemnifying party shall have
the right to undertake the defense thereof by representatives chosen by it;

 

(ii)                                  If the indemnifying
party, within a reasonable time after notice of any such Claim, fails to defend
the indemnified party against which such Claim has been asserted, the
indemnified party shall (upon further notice to the indemnifying party) have
the right to undertake the defense, compromise or settlement of such Claim on
behalf of and for the account and risk of the indemnifying party subject to the
right of the indemnifying party to assume the defense of such Claim at any time
prior to settlement, compromise or final determination thereof;

 

(iii)                               If, in the opinion of
the indemnified party’s legal counsel, a conflict of interest with respect to
any Claim exists between the indemnified party against which a Claim has been
asserted and the indemnifying party, then such indemnified party shall have the
right to retain its own counsel with respect to such Claim; provided
that the reasonable fees and expenses of such counsel shall be at the expense
of the indemnifying party; and

 

(iv)                              Anything in this Article XII
to the contrary notwithstanding, (i) if there is a reasonable probability
that a Claim may materially and adversely affect the indemnified party
other than as a result of money damages or other money payments, the
indemnified party shall have the right, at its own cost and expense, to defend,
compromise or settle such Claim; provided, however, that if such
Claim is settled without the indemnifying party’s consent, the indemnified
party shall be deemed to have waived all rights hereunder against the
indemnifying party for 

 

29

 

money damages arising out of such Claim, and (ii) the indemnifying
party shall not, without the written consent of the indemnified party, settle
or compromise any Claim or consent to the entry of any judgment which does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the indemnified party a release from all liability in respect to
such Claim.

 

12.7                           Insurance.
Notwithstanding anything to the contrary contained in this Agreement, the
amount of Damages for which Seller shall be entitled to receive indemnification
from Purchaser with respect to any Seller Claim pursuant to this Article XII
and the amount of Damages for which the Purchaser Group shall be entitled to
receive indemnification from the Seller with respect to any Purchaser Claim
pursuant to this Article XII shall be calculated net of any insurance
proceeds after giving effect to any costs of collection relating thereto
actually received by Seller or the Purchaser Group, as applicable.

 

12.8                           Remedies
Exclusive. The rights of the parties to indemnification relating to this
Agreement and the Transactions contemplated hereby shall be strictly limited to
those contained in this Article XII, and such indemnification rights shall
be the exclusive remedies of the parties subsequent to the Closing Date with
respect to any matter in any way relating to this Agreement or arising in
connection herewith. To the maximum extent permitted by Law, the parties hereby
waive all of the rights and remedies with respect to any matter in any way
relating to this Agreement or arising in connection herewith, whether under any
Laws, at common Law or otherwise. Except as provided in this Article XII,
no claim, action or remedy shall be brought or maintained by any party against
any other party, and no recourse shall be brought or granted against any of
them, by virtue of or based upon any alleged misstatement or omission
respecting an inaccuracy in or breach of any of the representations, warranties
or covenants of any of the parties hereto set forth or, contained in this
Agreement, except to the extent that the same shall have been the result of
fraud in the inducement by any party hereto.

 

12.9                           Disclaimer
of Other Representations and Warranties.

 

(a)                                  NONE
OF THE COMPANY, ITS REPRESENTATIVES OR THE SELLER HAVE MADE ANY REPRESENTATIONS
OR WARRANTIES, EXPRESS OR IMPLIED, OF ANY NATURE WHATSOEVER RELATING TO THE
COMPANY OR THE BUSINESS OF THE COMPANY OR OTHERWISE IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED HEREBY, OTHER THAN THOSE REPRESENTATIONS AND
WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT.

 

(b)                                 Notwithstanding
anything to the contrary contained in this Agreement or in the Disclosure
Schedule, any information disclosed in one

 

30

 

Section of
the Disclosure Schedule shall be deemed to be disclosed with respect to
other Sections of the Disclosure Schedule.

 

(c)                                  From
time to time prior to the Closing, Seller shall amend or supplement the
Disclosure Schedule with respect to any matter that, if existing or
occurring at or prior to the Closing, would have been required to be set forth
or described in such Disclosure Schedule or that is necessary to complete
or correct any information in any representation or warranty contained in Article V
or Article VI. If the Transactions contemplated hereby are consummated,
any matters disclosed pursuant to any such amendment or supplement to the
Disclosure Schedule, to the extent such matters arise or relate to facts and
circumstances occurring, or of which Seller or the Company becomes aware, after
the date hereof and prior to the Closing, shall be considered to have been
disclosed to Purchaser for purposes of determining whether a breach of any
representation or warranty has occurred which gives rise to indemnification
pursuant to Sections 12.2 hereof; provided, however, that no amendment or
supplement to the Disclosure Schedule shall affect any of Purchaser’s
rights with respect to determining whether the conditions to consummation of
the Transactions contemplated hereby set forth in Article X hereof have
been satisfied.

 

ARTICLE XIII

GENERAL PROVISIONS

 

13.1                           Notices.
All notices and other communications given or made pursuant hereto shall be in
writing and shall be deemed to have been duly given on the date delivered, if
delivered personally, on the third business day after being mailed by
registered or certified mail (postage prepaid, return receipt requested) or on
the next business day after being sent by reputable overnight courier (delivery
prepaid), in each case, to the parties at the following addresses, or on the
date sent and confirmed by electronic transmission to the telecopier number
specified below (or at such other address or telecopier number for a party as
shall be specified by notice given in accordance with this Section):

 

(a)                                  If
to Purchaser:

 

Triple-S Management Corporation

P.O. Box 363628

San Juan, Puerto Rico 00936-3628

Facsimile: (787) 749-4191

Attention: Mr. Ramón Ruiz

 

31

 

with a copy to:

 

Triple-S Management Corporation

P.O. Box 363628

San Juan, Puerto Rico 00936-3628

Facsimile: (787) 749-4191

Attention: Enrique R. Ubarri, Esq.

 

(b)                                 If
to Seller:

 

Great American Financial Resources, Inc.

250 East Fifth Street

Cincinnati, OH 45202

Facsimile: (513) 357-3397

Attention: Mark F. Muething, Esq.

 

with a copy to:

 

O’Neill & Borges

250 Muñoz Rivera Avenue

San Juan, Puerto Rico 00918

Facsimile: (787) 753-8994

Attention: Rosa Lázaro, Esq.

 

13.2                           Amendment.
This Agreement may be amended by the parties hereto at any time prior to
the Closing; provided, however, that this Agreement may not
be amended except by an instrument signed by Purchaser and Seller.

 

13.3                           Waiver.
At any time prior to the Closing, Purchaser, on the one hand, and Seller, on
the other hand, may (a) extend the time for the performance of any of
the obligations or other acts of the other party or parties hereto, (b) waive
any inaccuracies in the representations and warranties of the other party or
parties contained herein or in any document delivered pursuant hereto and (c) waive
compliance by the other party or parties with any of the agreements or
conditions contained herein. Any such extension or waiver shall be valid only
if set forth in a written instrument signed by the party or parties to be bound
thereby.

 

13.4                           Headings.
The headings and captions contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.

 

13.5                           Informal
Resolution of Disputes. Any dispute between the parties either with respect
to the interpretation of any provision of this Agreement shall be resolved as
set forth in this Section 15.5. Upon the written request of either the
Purchaser or the Company, Seller and Purchaser will each appoint a designated
representative whose task shall be to meet for the purpose of endeavoring to
resolve such dispute. The designated representatives shall meet as often as the
parties reasonably deem necessary in order to gather and furnish to the other
all information with respect to the matter in issue which the parties 

 

32

 

believe to be
appropriate and germane in connection with its resolution. The representatives
shall discuss the problem and negotiate in good faith in an effort to resolve
the dispute. During the course of such negotiations, all reasonable requests
made by one party to the other for “non-privileged information” will be
honored. The specific format for such discussions will be left to the discretion
of the designated representatives but may include the preparation of
agreed upon statements of fact or written statements of position furnished to
the other party.

 

13.6                           Arbitration.
Any dispute, controversy or claim which relates in any way to this Agreement
and which is not resolved by the parties using the process set forth in Section 15.5
shall be determined and settled by arbitration in Miami, Florida, in accordance
with the Commercial Arbitration Rules of the American Arbitration
Association (“AAA”). Any award rendered shall be final and conclusive upon the
parties and any judgment thereon may be enforced in any court having
jurisdiction over the parties or their assets. The arbitration conducted
hereunder shall (i) allow for the parties to request reasonable discovery
pursuant to the rules then in effect under the Federal Rules of Civil
Procedure for a period not to exceed sixty (60) days prior to such arbitration,
(ii) require the testimony to be transcribed, and (iii) require the
award to be accompanied by written findings of fact and a written statement of
reasons for the decision.

 

13.7                           Severability.
If any term or other provision of this Agreement, or any portion thereof is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other terms and provisions of this Agreement, or remaining portion
thereof, shall nevertheless remain in full force and effect so long as the
economic or legal substance of the Transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination
that any such term or other provision, or any portion thereof, is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
Transactions contemplated hereby are consummated to the fullest extent
possible.

 

13.8                           Entire
Agreement. This Agreement (together with the Exhibits attached hereto and
the Disclosure Schedule) constitutes the entire agreement of the parties
hereto and supersede all prior agreements and undertakings, both written and
oral, between or among the parties, or any of them, with respect to the subject
matter hereof.

 

13.9                           Assignment.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned, directly or indirectly, by any party hereto
without the prior written consent of the other parties hereto.

 

13.10                     Parties
in Interest. This Agreement shall be binding upon and inure solely to the
benefit of each party hereto and its respective successors and permitted
assigns, and no provision of this Agreement, express or implied, is 

 

33

 

intended to or
shall confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.

 

13.11                     Failure
or Delay Not Waiver; Remedies Cumulative. No failure or delay on the part of
any party hereto in the exercise of any right hereunder shall impair such right
or be construed to be a waiver of, or acquiescence in, any breach of any
representation, warranty or agreement herein, nor shall any single or partial
exercise of any such right preclude other or further exercise thereof or of any
other right. All rights and remedies existing under this Agreement are
cumulative to, and not exclusive of, any rights or remedies otherwise
available.

 

13.12                     Specific
Performance. Each party hereto acknowledges that money damages would be
both incalculable and an insufficient remedy for any breach of this Agreement
by such party and that any such breach would cause Purchaser, on the one hand,
and Seller, on the other hand, irreparable harm. Accordingly, each party hereto
also agrees that, in the event of any breach or threatened breach of the
provisions of this Agreement by such party, Purchaser, on the one hand, and
Seller, on the other hand, shall be entitled to equitable relief without the
requirement of posting a bond or other security, including in the form of
injunctions and orders for specific performance, in addition to all other
remedies available to such other parties at law or in equity.

 

13.13                     Governing
Law. This Agreement shall be governed by, and construed in accordance with,
the laws of the Commonwealth of Puerto Rico, without reference to the
applicable principles of conflicts of law thereof.

 

13.14                     Counterparts.
This Agreement may be executed in counterparts, and by the different
parties hereto in separate counterparts, each of which when executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement.

 

13.15                     Interpretation.
As used in this Agreement, (x) the term “including” means “including, without
limitation” and “including, but not limited to,” and (y) the word “or” is not
exclusive, unless the context otherwise requires. All references in this
Agreement to “dollars” or “$” shall mean United States Dollars.

 

[SIGNATURE PAGE FOLLOW]

 

34

 

IN WITNESS WHEREOF, the undersigned parties hereto have caused this
Stock Purchase Agreement to be executed as of the date first written above.

 

 

	
   

  	
  TRIPLE-S MANAGEMENT

  CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Ramón M. Ruiz

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Ramón Ruiz

  
	
   

  	
   

  	
  Title: 

  	
  President
  and Chief 

  
	
   

  	
   

  	
   

  	
  Executive
  Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  GREAT AMERICAN FINANCIAL

  RESOURCES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
    /s/
  Mark F. Muething

  	
   

  
	
   

  	
   

  	
  Name: 

  	
  Mark F.
  Muething

  
	
   

  	
   

  	
  Title:

  	
  Executive
  Vice President

  
					

 

35

 

Schedule I

 

DIRECTORS’ SHARES

 

	
  Name of Director

  	
   

  	
  Number of Shares

  	
   

  
	
  Great
  American Financial Resources, Inc.

  	
   

  	
  2,499,960

  	
   

  	
  99.998

  	
  %

  
	
  Keith A.
  Jensen

  	
   

  	
  4

  	
   

  	
  .002

  	
  %

  
	
  Charles R.
  Scheper

  	
   

  	
  4

  	
   

  	
   

  	
   

  
	
  Mark
  Muething

  	
   

  	
  4

  	
   

  	
   

  	
   

  
	
  Billy B.
  Hill, Jr.

  	
   

  	
  4

  	
   

  	
   

  	
   

  
	
  Hermes
  Vargas

  	
   

  	
  4

  	
   

  	
   

  	
   

  
	
  Arturo
  Carrión

  	
   

  	
  4

  	
   

  	
   

  	
   

  
	
  Francisco
  Bruno

  	
   

  	
  4

  	
   

  	
   

  	
   

  
	
  Fernando
  Péreaz Colón

  	
   

  	
  4

  	
   

  	
   

  	
   

  
	
  Manuel
  Fernández

  	
   

  	
  4

  	
   

  	
   

  	
   

  
	
  José Gil de
  La Madrid

  	
   

  	
  4

  	
   

  	
   

  	
   

  

 

 

ASSIGNMENT AGREEMENT
 (Directors’ Shares)

 

This Assignment Agreement (this “Agreement”) is made and entered into
as of the          day of
                ,
2006 by and between GREAT AMERICAN FINANCIAL
RESOURCES, INC., a corporation organized and existing under the
laws of Delaware, (“Assignor”) and TRIPLE-S
MANAGEMENT CORPORATION, a corporation organized and existing under
the laws of the Commonwealth of Puerto Rico (“Assignee”).

 

WITNESSETH

 

WHEREAS, pursuant to
the Stock Purchase Agreement entered into on December     ,
2006 between Assignor and Assignee (the “Stock Purchase Agreement”), Assignor has
agreed to assign its interest in the Directors’ Shares to Assignee in return
for the Purchase Price and other good and valuable consideration (as set forth
in the Stock Purchase Agreement); and

 

WHEREAS, Assignor
has agreed to make the assignment described herein upon the terms and subject
to the conditions contained herein and in the Stock Purchase Agreement.

 

NOW, THEREFORE, in
consideration of the premises and the agreements herein, Assignor hereby agrees
with Assignee as follows:

 

FIRST: All capitalized
terms used in this Agreement which are defined in the Stock Purchase Agreement
and which are not otherwise defined herein shall have the same meanings set
forth therein.

 

SECOND: Assignor
hereby assigns, transfers and sets over to Assignee all of Assignor’s rights
and interest in and to the Directors’ Shares as more fully set forth in Schedule I
of the Stock Purchase Agreement.

 

THIRD: This
Agreement shall be deemed to constitute an absolute assignment to Assignee of
Assignor’s rights and interest in and to the Directors’ Shares. The assignment
of the rights and interest in the Directors’ Shares hereunder shall become
effective automatically, without necessity of any further act by Assignee.

 

FOURTH: No
amendments to any provision of this Agreement shall be effective unless it is
in writing and signed by Assignor and Assignee, and no waiver of any provision
of this Agreement and no consent to any departure by Assignor therefrom, shall
be effective other than in the specific instance and/or the specific purpose
for which given.

 

FIFTH: No failure on
the part of Assignor or Assignee to exercise and no delay in exercising
any right hereunder or under the Stock Purchase Agreement 

 

 

shall operate
as a waiver thereof; nor should any single or partial exercise of any such
right preclude any other or further exercise thereof or the exercise of any
other right.

 

SIXTH: Any provision
of this Agreement, which is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be in effect to the extent of such prohibition
or unenforceability without invalidating the remaining portions hereof or
thereof or affecting the validity or enforceability of such provision in any
jurisdiction.

 

SEVENTH: This
Agreement shall be conveyed and construed in accordance with the laws of the
Commonwealth of Puerto Rico.

 

EIGHTH: In the event
further acts are required from Assignor, he agrees to execute whatever
additional documents may be necessary or convenient to implement the
assignment herein made.

 

IN WITNESS WHEREOF,
Assignor has executed and delivered this Agreement and Assignee has caused this
Agreement to be executed and delivered by its duly authorized representative as
of the date first written above.

 

	
  ASSIGNEE:

  
	
   

  
	
  TRIPLE-S MANAGEMENT CORPORATION

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  
	
   

  
	
  ASSIGNOR:

  
	
   

  
	
  GREAT AMERICAN FINANCIAL RESOURCES, INC.

  
	
   

  
	
   

  
	
  By:

  	
   

  	
   

  
	
  Name:

  
	
  Title:

  

 

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Exhibit 10.7  

 
  FORM OF INDEMNIFICATION AGREEMENT    
    

        THIS
INDEMNIFICATION AGREEMENT (this "Agreement") is made as
of                        , 2007 by and among Abraxas General Partner, LLC, a
Delaware limited liability company (the "Company"), Abraxas Energy Partners, L.P., a Delaware limited partnership (the
"Partnership"), and                        ("Indemnitee"). 

 
 

PRELIMINARY STATEMENT    
    

        WHEREAS, qualified persons are reluctant to serve organizations as directors or officers or in other capacities unless they are provided with adequate protection
against risks of claims and actions against them arising out of their service to and activities on behalf of such organizations; 

        WHEREAS,
the parties hereto recognize that the legal risks and potential liabilities, and the threat thereof, associated with lawsuits filed against persons serving the Company, the
Partnership and/or their respective subsidiaries, and the resultant substantial time, expense and anxiety spent and endured in defending lawsuits bears no reasonable relationship to the compensation
received by such persons, and thus poses a significant deterrent and increased reluctance on the part of experienced and capable individuals to serve the Company, the Partnership and/or their
respective subsidiaries; 

        WHEREAS,
the uncertainties related to obtaining adequate insurance and indemnification have increased the difficulty of attracting and retaining such persons; 

        WHEREAS,
it is reasonable, prudent and necessary for the Company and the Partnership to contractually agree to indemnify such persons to the fullest extent permitted by law, so that such
persons will serve or continue to serve the Company, the Partnership and/or their respective subsidiaries free from undue concern that they will not be adequately indemnified; and 

        WHEREAS,
the Indemnitee is willing to serve, continue to serve and to take on additional service for and on behalf of the Company and the Partnership on the condition that the Indemnitee
is indemnified according to the terms of this Agreement; 

        NOW,
THEREFORE, in consideration of the premises and the covenants herein, the parties to this Agreement agree as follows: 

        Section 1.    Definitions and Definitional Provisions.    

        (a)   For
purposes of this Agreement: 

        "Affiliate" has the meaning Exchange Act Rule 12b-2 specifies. 

        "Board" means the Board of Directors of the Company. 

        "Charter Documents" means, with respect to any Enterprise at any time, in each case as amended, modified and supplemented at that time: 

        (1)   the
articles or certificate of formation, incorporation or organization, or the equivalent organizational documents, of that entity; 

        (2)   the
bylaws or limited liability company agreement or regulations, limited partnership agreement, or the equivalent governing documents, of that entity; and 

        (3)   each
document setting forth the designation, amount and relative rights, limitations and preferences of any class or series of that entity's capital stock or other
equity interests. 

        "Claim" means any claim for damages or a declaratory, equitable or other substantive remedy, or any other issue or matter, in any
Proceeding. 

 

        "Company Claim" means any Claim brought by or in the right of the Company, the Partnership or a Related Enterprise against Indemnitee. 

        "Court of Chancery" means the Court of Chancery of the State of Delaware. 

        "Disinterested Director" means a director of the Company who is not and was not a party to the Proceeding, or any Claim therein, in
respect of which indemnification is sought by Indemnitee hereunder. 

        "Enterprise" means any business trust, corporation, joint venture, limited liability company, partnership or other entity or enterprise,
including any operational division of any entity or any operational group of entities or divisions of entities, or any employee benefit or welfare plan or related trust. 

        "Exchange Act" means the Securities Exchange Act of 1934, as amended. 

        "Expenses" include all attorneys' fees, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, all other disbursements or expenses of the types customarily incurred in connection with prosecuting,
defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, or otherwise participating in, a Proceeding. Should any payments by the Company, the Partnership or a
Related Enterprise to or for the account of Indemnitee under this Agreement be determined to be subject to any federal, state or local income or excise tax, "Expenses" also will include such amounts
as are necessary to place Indemnitee in the same after-tax position, after giving effect to all applicable taxes, Indemnitee would have been in had no such tax been determined to apply to
those payments. 

        "Functionary" of any Enterprise means any natural person who is a director, officer, manager, administrator, employee, agent,
representative or other functionary of that Enterprise, including, in the case of any employee benefit or welfare plan, any member of any committee administering that plan or any individual to whom
the duties of that committee are delegated. 

        "Independent Counsel" means in the case of any determination under Section 6 a law
firm, or a member of a law firm that or who is experienced in matters of corporation law and neither presently is, nor in the past five years has been, retained to represent: 

        (1)   the
Company, the Partnership or any of their Affiliates or Indemnitee in any matter material to any such Person; or 

        (2)   any
other party to the Proceeding giving rise to a claim for indemnification hereunder. 

        Notwithstanding
the foregoing, the term "Independent Counsel" does not include at any time any Person who, under the applicable standards
of professional conduct then prevailing, would have a conflict of interest in representing either the Company or a Related Enterprise or Indemnitee in an action to determine Indemnitee's rights under
this Agreement. 

        "Partnership Entity" means any Related Enterprise of the Company or the Partnership, other than an employee benefit or welfare plan or its
related trust, if any. 

        "Person" means any natural person, sole proprietorship, corporation, partnership, limited liability company, business trust,
unincorporated organization or association, mutual company, joint stock company, joint venture or any other entity of any kind having a separate legal status or any estate, trust, union or employee
organization or governmental authority. 

2

 

        "Proceeding" includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution procedure,
investigation, inquiry or other threatened, actual or completed proceeding, whether of a civil, criminal, administrative, investigative or private nature and irrespective of the initiator thereof, and
any appeal in any such proceeding. 

        "Related Enterprise" means at any time any Enterprise: 

        (1)   50%
or more of the outstanding capital stock or other ownership interests of which, or the assets of which, the Company or the Partnership owns or controls, or
previously owned or controlled, directly or indirectly, at that time; 

        (2)   50%
or more of the outstanding voting power of the outstanding capital stock or other ownership interests of which the Company or the Partnership owns or controls, or
previously owned or controlled, directly or indirectly, at that time; 

        (3)   that
is, or previously was, an Affiliate of the Company or the Partnership which the Company or the Partnership controls, or previously controlled, by ownership,
contract or otherwise and whether alone or together with another Person, directly or indirectly, at that time; or 

        (4)   if
that Enterprise is an employee benefit or welfare plan or related trust, whose participants or beneficiaries are present or former employees of the Company, the
Partnership or any other Related Enterprise. 

        (b)   This
Agreement uses the words "herein," "hereof" and "hereunder" and words of similar import to refer to this Agreement as a whole and not to any provision of this
Agreement, and the words "Section" and "Preliminary Statement" refer to Sections of and the Preliminary Statement in this Agreement, unless it otherwise specifies. 

        (c)   Whenever
the context so requires, the singular number includes the plural and vice versa, and a reference to one gender includes the other gender and the neuter. 

        (d)   The
word "including," and, with correlative meaning, the word "include," means including, without limiting the generality of any description preceding that word, and the
words "shall" and "will" are used interchangeably and have the same meaning. 

        (e)   The
language this Agreement uses will be deemed to be the language the parties hereto have chosen to express their mutual intent, and no rule of strict construction will
be applied against either party hereto. 

        Section 2.    Services by Indemnitee.    Indemnitee will serve, or continue to serve, as a Functionary of the
Company or the Partnership and, as Indemnitee, the Company and the Partnership may agree, as a
Functionary of one or more Related Enterprises. Indemnitee may at any time and for any reason resign from any such service, subject to any other contractual obligation or any obligation applicable law
imposes. This Agreement is not and is not to be construed as an employment contract by the Company or any other Related Enterprise with Indemnitee or as otherwise affecting Indemnitee's status, if
any, as an employee of the Company, the Partnership or any Related Enterprise. 

        Section 3.    Indemnification.    

        (a)   Subject
to Section 12, if and whenever: 

        (1)   Indemnitee
was or is, or is threatened to be made, a party to any Proceeding by reason of: (A) the fact that Indemnitee serves or served as (i) a
Functionary of the Company or the Partnership or, at the request of the Company or the Partnership, (ii) a Functionary of a Related Enterprise; or (B) the actual or alleged service or
conduct of Indemnitee in 

3

 

Indemnitee's
capacity as that Functionary, including any act actually or allegedly done or not done by Indemnitee; 

        (2)   Indemnitee
(A) engaged in the service or conduct at issue in that Proceeding in good faith and in a manner Indemnitee reasonably believed to be in or not opposed
to the best interests of the Company or the Partnership and, in the event that Proceeding was or is a criminal action or proceeding involving Indemnitee's conduct, (B) had no reasonable cause
to believe that that conduct was unlawful, 

the
Company and the Partnership will, or will cause another Partnership Entity to, indemnify Indemnitee against, and hold Indemnitee harmless from and in respect of: 

        (1)   in
the case of each Claim in that Proceeding, other than a Company Claim, all liabilities and losses, including the amounts of all judgments, penalties and fines,
including excise taxes, and amounts paid in settlement, Indemnitee has suffered or will suffer, and all Expenses Indemnitee reasonably has incurred or will incur, as a result of or in connection with
that Claim; and 

        (2)   in
the case of each Company Claim in that Proceeding, all Expenses Indemnitee reasonably has incurred or will incur as a result of or in connection with that Company
Claim; provided, however, that the Company and the Partnership will not have any obligation under this clause (2) to, or to cause another
Partnership Entity to, indemnify Indemnitee against, or hold Indemnitee harmless from or in respect of, any Company Claim as to which Indemnitee was or is adjudged to be liable to the Company
or any Related Enterprise unless, and only to the extent that, the Court of Chancery or the court in which that Company Claim was or is brought determines on application that, despite the adjudication
of liability, but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such of those Expenses as the Court of Chancery or that other court shall
deem proper. 

        (b)   Subject
to Section 12, if and whenever Indemnitee was or is, or is threatened to be made, a party to any
Proceeding of any type to which Section 3(a) refers and has been successful, on the merits or otherwise, in defense of that Proceeding, or in
defense of any Claim therein, the Company and the Partnership will, or will cause another Partnership Entity to, indemnify Indemnitee against, and hold Indemnitee harmless from and in respect of, all
Expenses Indemnitee reasonably has incurred in connection therewith. The rights of Indemnitee under this Section 3(b) are in addition to, and
independent of, the rights of Indemnitee under Section 3(a) or Section 3(c). 

        (c)   Subject
to Section 12, if and whenever Indemnitee was, or reasonably could have been expected to have been, or is,
or reasonably could be expected to be, by reason of the knowledge of facts Indemnitee actually or allegedly has obtained in the course of his service as (1) a Functionary of the Company or the
Partnership or, at the request of the Company or the Partnership, (2) a Functionary of a Related Enterprise, a witness in or a deponent in connection with any Proceeding to which Indemnitee was
or is not a party, the Company and the Partnership will, or will cause another Partnership Entity to, indemnify Indemnitee against, and hold Indemnitee harmless from and in respect of, all Expenses
Indemnitee reasonably has incurred or will incur in connection therewith. The rights of Indemnitee under this Section 3(c) are in addition to,
and independent of, the rights of Indemnitee under Section 3(a) or Section 3(b). 

        Section 4.    Advancement of Expenses.    

        (a)   If
and whenever Indemnitee is, or is threatened to be made, a party to any Proceeding that may give rise to a right of Indemnitee to indemnification under  Section 3(a), the Company and the Partnership
will, or will cause another Partnership Entity to, advance all Expenses reasonably incurred by or
on behalf of Indemnitee in connection with that Proceeding within five (5) days after the Company or the Partnership receives a statement or statements from Indemnitee 

4

 

requesting
the advance or advances from time to time, whether prior to or after final disposition of that Proceeding. Each such statement must reasonably evidence the Expenses incurred by or on behalf
of Indemnitee and include or be preceded or accompanied by an undertaking by or on behalf of Indemnitee to repay any Expenses advanced if it ultimately is determined that Indemnitee is not entitled to
be indemnified by the Company and the Partnership under Section 3(a) against those Expenses. The Company and the Partnership will accept any such
undertaking without reference to the financial ability of Indemnitee to make repayment. If the Company, the Partnership or another Partnership Entity advances Expenses in connection with any Claim as
to which Indemnitee has requested or may request indemnification under Section 3(a) and a determination is made under  Section 6(c) that
Indemnitee is not entitled to that indemnification, Indemnitee will not be required to reimburse the Company, the Partnership
or that other Partnership Entity for those advances until the 180th day following the date of that determination; provided, however, that if Indemnitee timely commences and thereafter prosecutes in
good faith a judicial proceeding or arbitration under Section 8(a) or otherwise to obtain that indemnification, Indemnitee will not be required
to reimburse the Company, the Partnership or that other Partnership Entity for those Expenses until a determination in that proceeding or arbitration that Indemnitee is not entitled to that
indemnification has become final and nonappealable. 

        (b)   The
Company, the Partnership or another Partnership Entity may advance Expenses under Section 4(a) to Indemnitee
or, at the Company's and the Partnership's option, directly to the Person to which those Expenses are owed, and Indemnitee hereby consents to any such direct payment, to Indemnitee's legal counsel or
any other Person. 

        (c)   For
the avoidance of doubt, the parties agree that the provisions of this Section 4 shall be applicable during the
pendancy of any determination of the right of the Indemnitee to indemnification under Section 3(a), including the pendancy of any court or
arbitration proceeding contemplated by Section 8. 

        Section 5.    Notification and Defense of Claims.    

        (a)   If
Indemnitee receives notice, otherwise than from the Company or the Partnership, that Indemnitee is or will be made, or is threatened to be made, a party to any
Proceeding in respect of which Indemnitee intends to seek indemnification hereunder, Indemnitee must promptly notify the Company and the Partnership in writing of the nature and, to Indemnitee's
knowledge, status of that Proceeding. If this Section 5(a) requires Indemnitee to give such a notice, but Indemnitee fails to do so, that failure
will not relieve the Company or the Partnership from, or otherwise affect, the obligations the Company or the Partnership may have to indemnify Indemnitee under this Agreement, unless the Company and
the Partnership can establish that the failure has resulted in actual prejudice to the Company and the Partnership. 

        (b)   Except
as this Section 5(b) otherwise provides below, in the case of any Proceeding in respect of which Indemnitee
seeks indemnification hereunder: 

        (1)   the
Company, the Partnership any Related Enterprise that also may be obligated to indemnify Indemnitee in respect of that Proceeding will be entitled to participate at
its own expense in that Proceeding; 

        (2)   the
Company, the Partnership or that Related Enterprise, or either of them, will be entitled to assume the defense of all Claims, other than (i) Company Claims,
if any, and (ii) other Claims, if any, as to which Indemnitee shall reasonably reach the conclusion described in clause (C) of the next
sentence below, in that Proceeding against Indemnitee by prompt written notice of that election to Indemnitee; and 

5

 

        (3)   if
clause (2) above entitles the Company or that Related Enterprise to assume the defense of any of those Claims
and it delivers to Indemnitee notice of that assumption under clause (2), the Company and the Partnership will not be liable to Indemnitee
hereunder for any fees or expenses of legal counsel for Indemnitee which Indemnitee incurs after Indemnitee receives that notice. 

Indemnitee
will have the right to employ Indemnitee's own legal counsel in that Proceeding, but, as clause (3) of the preceding sentence
provides, will bear the fees and expenses of that counsel unless: 

        (A)    the
Company or the Partnership has authorized Indemnitee in writing to retain that counsel; 

        (B)    the
Company or the Partnership shall not within a reasonable period of time actually have employed counsel to assume the defense of those Claims; or 

        (C)    Indemnitee
shall have (i) reasonably concluded that a conflict of interest may exist between Indemnitee, on the one hand, and the Company or the Partnership, on
the other hand, as to the defense of one or more of those Claims and (ii) communicated that conclusion to the Company and the Partnership in writing. 

        (c)   The
Company and the Partnership will not be obligated hereunder to, or to cause another Partnership Entity to, indemnify Indemnitee against or hold Indemnitee harmless
from and in respect of any amounts paid, or agreed to be paid, by Indemnitee in settlement of any Claim against Indemnitee which Indemnitee effects without the Company's or the Partnership's prior
written consent. The Company and the Partnership will not settle any Claim against Indemnitee in any manner that would impose any penalty or limitation on Indemnitee without Indemnitee's prior written
consent. Neither the Company, the Partnership nor Indemnitee will unreasonably delay or withhold consent to any such settlement the other party proposes to effect. 

        Section 6.    Procedure for Determination of Entitlement to Indemnification.    

        (a)   To
obtain indemnification under this Agreement, Indemnitee must submit to the Company and the Partnership a written request therefore which includes, or is accompanied
by, such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to that indemnification.
Indemnitee may request indemnification hereunder at any time and from time to time as Indemnitee deems appropriate in Indemnitee's sole discretion. In the case of any request for indemnification under  Section 3(a)
as to any Claim which is pending or threatened at the time Indemnitee delivers that request to the Company and the Partnership and
would not be resolved with finality, whether by judgment, order, settlement or otherwise, on payment of the indemnification requested, the Company and the Partnership may defer the determination under  Section 6(c)
 of Indemnitee's entitlement to that indemnification to a date that is no later than 45 days after the effective date of that
final resolution if the Board concludes in good faith that an earlier determination would be materially prejudicial to the Company, the Partnership or a Related Enterprise. 

        (b)   On
written request by Indemnitee under Section 6(a) for indemnification under  Section 3(a), the determination of Indemnitee's entitlement to that
indemnification will be made: 

        (1)   if
Indemnitee will be a director or officer of the Company or the Partnership at the time that determination is made, under  Section 6(c) in each case; or 

        (2)   if
Indemnitee will not be a director or officer of the Company or the Partnership at the time that determination is made, under  Section 6(c) in any case, if so requested in writing by Indemnitee or so
directed by the Board, or, in the absence of that request and direction,
as the Board shall duly authorize or direct. 

6

 

        (c)   Each
determination of Indemnitee's entitlement to indemnification under Section 3(a) to which this  Section 6(c) applies will be made as follows:

        (1)   by
a majority vote of the Disinterested Directors, even though less than a quorum; or 

        (2)   by
a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum; or 

        (3)   if
(A) there are no Disinterested Directors or (B) a majority vote of the Disinterested Directors so directs, by an Independent Counsel in a written
opinion to the Board, a copy of which the Company and the Partnership will deliver to Indemnitee; provided, however, that if Indemnitee has so requested in Indemnitee's request for indemnification, an
Independent Counsel will make that determination in a written opinion to the Board, a copy of which the Company and the Partnership will deliver to Indemnitee. 

        (d)   If
it is determined that Indemnitee is entitled to indemnification under Section 3(a), the Company and the
Partnership will, or will cause another Partnership Entity to, subject to the provisions of Section 6(f): 

        (1)   within
10 days after that determination pay to Indemnitee all amounts (A) theretofore incurred by or on behalf of Indemnitee in respect of which Indemnitee
is entitled to that indemnification by reason of that determination and (B) requested from the Company or the Partnership in writing by Indemnitee; and 

        (2)   thereafter
on written request by Indemnitee, pay to Indemnitee within 10 days after that request such additional amounts theretofore incurred by or on behalf of
Indemnitee in respect of which Indemnitee is entitled to that indemnification by reason of that determination. 

Indemnitee
will cooperate with the person, persons or entity making the determination under Section 6(c) with respect to Indemnitee's entitlement
to indemnification under Section 3(a), including providing to such person, persons or entity, on reasonable advance request, any documentation or
information that is: 

        (1)   not
privileged or otherwise protected from disclosure; 

        (2)   reasonably
available to Indemnitee; and 

        (3)   reasonably
necessary to that determination. 

        (e)   If
an Independent Counsel is to make a determination under Section 6(c) of entitlement to indemnification under  Section 3(a), it will be selected by
the Company and the Partnership with the consent of the Indemnitee (which consent shall not be unreasonably
withheld). The Company and the Partnership will pay any and all reasonable fees and expenses the Independent Counsel incurs in connection with acting under  Section 6(c), and the Company and the
Partnership will pay all reasonable fees and expenses incident to the procedures this
Section 6(e) sets forth, regardless of the manner in which the Independent Counsel is selected or appointed. If Indemnitee becomes entitled to,
and does, initiate any judicial proceeding or arbitration under Section 8, the Company and the Partnership will terminate its engagement of the
person or firm acting as Independent Counsel, whereupon that person or firm will be, subject to the applicable standards of professional conduct then prevailing, relieved of any further responsibility
in the capacity of Independent Counsel. 

        (f)    The
amount of any indemnification against Expenses to which Indemnitee becomes entitled under any provision hereof, including  Section 3(a), will be determined subject to the provisions of this
Section 6(f).
Indemnitee will have the burden of showing that Indemnitee actually has incurred the Expenses for which Indemnitee requests indemnification. If the Company, the 

7

 

Partnership
or a Partnership Entity has made any advance in respect of any Expense incurred by Indemnitee without objecting in writing to Indemnitee at the time of the advance to the reasonableness
thereof, the incurrence of that Expense by Indemnitee will be deemed for all purposes hereof to have been reasonable. In the case of any Expense as to which such an objection has been made, or any
Expense for which no advance has been made, the incurrence of that Expense will be presumed to have been reasonable, and the Company and the Partnership will have the burden of proof to overcome that
presumption. 

        Subject
to the provisions of the preceding paragraph, the advancement of Expenses to Indemnitee under Section 4 will not, of
itself, create a presumption that the Proceeding or Claim therein to which those Expenses relate is a Proceeding or Claim of the type to which  Section 3(a) applies. If the Company or the
Partnership, prior to or in connection with the making any advance of Expenses under  Section 4 to or for the benefit of Indemnitee, notifies Indemnitee in writing that the Proceeding or any Claim
therein is or reasonably could be
expected to be in whole or in any specified part not one to which Section 3(a) applies, Indemnitee will, to the extent those Expenses are
reasonably allocable among the claims, issues and matters involved in that Proceeding, cause Indemnitee's counsel and other service providers to effect that allocation. 

        Section 7.    Presumptions and Effect of Certain Proceedings.    

        (a)   In
making a determination under Section 6(c) with respect to entitlement to indemnification under  Section 3(a), the person, persons or entity making
that determination must presume that Indemnitee is entitled to that indemnification if
Indemnitee has submitted a request for indemnification in accordance with Section 6(a), and the Company and the Partnership will have the burden
of proof to overcome that presumption in connection with the making by any person, persons or entity of any determination contrary to that presumption. 

        (b)   The
termination of any Proceeding or of any Claim therein, by judgment, order, settlement or conviction, or on a plea of nolo contendere or its equivalent, will not,
except as this Agreement otherwise expressly provides, of itself adversely affect the right of Indemnitee to indemnification hereunder or, in the case of any determination under  Section 6(c) of
Indemnitee's entitlement to indemnification under Section 3(a), create a
presumption that Indemnitee did not act in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company or the Partnership or, with respect to
any criminal action or proceeding, that Indemnitee had reasonable cause to believe that Indemnitee's conduct was unlawful. 

        (c)   Any
service of Indemnitee as a Functionary of the Company, the Partnership or any Related Enterprise which imposes duties on, or involves services by, Indemnitee with
respect to any Related Enterprise that is an employee benefit or welfare plan or related trust, if any, or the participants or beneficiaries of that plan or trust will be deemed for all purposes
hereof as service at the request of the Company and the Partnership. Any action Indemnitee takes or omits to take in connection with any such plan or trust will, if taken or omitted in good faith by
Indemnitee and in a manner Indemnitee reasonably believed to be in the interest of the participants in or beneficiaries of that plan or trust, be deemed to have been taken or omitted in a manner "not
opposed to the best interests of the Company and the Partnership" for all purposes hereof. 

        Service
by a person as an agent or representative of an Enterprise means service on behalf of that Enterprise in its relations with persons and entities other than the Affiliates and
Functionaries of that Enterprise. 

        (d)   For
purposes of any determination hereunder as to whether Indemnitee has performed services or engaged in conduct on behalf of any Enterprise in good faith, Indemnitee
will be deemed to have acted in good faith if Indemnitee acted in reliance on the records of the 

8

 

Enterprise
or on information, opinions, reports or statements, including financial statements and other financial information, concerning the Enterprise or any other Person which were prepared or
supplied to Indemnitee by: 

        (1)   one
or more of the officers or employees of the Enterprise; 

        (2)   appraisers,
engineers, investment bankers, legal counsel or other Persons as to matters Indemnitee reasonably believed were within the professional or expert competence
of those Persons; and 

        (3)   any
committee of the board of directors or equivalent managing body of the Enterprise of which Indemnitee is or was, at the relevant time, not a member; provided,
however, that if Indemnitee has actual knowledge as to any matter that makes any such reliance unwarranted as to that matter, this Section 7(d)
will not entitle Indemnitee to any presumption that Indemnitee acted in good faith respecting that matter. 

        (e)   For
purposes of any determination hereunder as to whether Indemnitee is entitled to indemnification under  Section 3(a), neither the knowledge nor the conduct of any other Functionary of the Company,
the Partnership or any Related Enterprise, other
than Indemnitee, shall be imputed to Indemnitee, but Indemnitee will be irrebutably presumed to have read and understood the Company's and the Partnership's code of business conduct and ethics and
either for purposes of any determination under the Charter Documents or this Agreement as to whether Indemnitee has performed services or engaged in conduct on behalf of any Enterprise in good faith. 

        (f)    Indemnitee
will be deemed a party to a Proceeding for all purposes hereof if Indemnitee is named as a defendant or respondent in a complaint or petition for relief in
that Proceeding, regardless of whether Indemnitee ever is served with process or makes an appearance in that Proceeding. 

        (g)   If
Indemnitee serves or served as a Functionary of a Related Enterprise, that service will be deemed to be "at the request of the Company and the Partnership" for all
purposes hereof notwithstanding that the request is not evidenced by a writing or shown to have been made orally. In the event the Company or the Partnership were to extend the rights of
indemnification and advancement of Expenses hereunder to Indemnitee's serving at the request of the Company or the Partnership as a Functionary of any Enterprise other than the Company, the
Partnership or a Related Enterprise, Indemnitee must show that the request was made by the Board or at its authorization. 

        Section 8.    Remedies of Indemnitee in Certain Cases.    

        (a)   If
Indemnitee makes a written request in compliance with Section 6(a) for indemnification under  Section 3(a) and either: 

        (1)   no
determination as to the entitlement of Indemnitee to that indemnification is made before the last to occur of (A) the close of business on the date, if any,
the Company or the Partnership has specified under Section 6(a) as the outside date for that determination or (B) the elapse of the
45-day period beginning the day after the date the Company or the Partnership receives that request; or 

        (2)   a
determination is made under Section 6(c) that Indemnitee is not entitled to that indemnification in whole or in
any part in respect of any Claim to which that request related, 

        Indemnitee
will be entitled to an adjudication from the Court of Chancery of Indemnitee's entitlement to that indemnification. Alternatively, Indemnitee, at Indemnitee's option, may seek
an award in arbitration to be conducted by a single arbitrator in accordance with the Commercial 

9

 

Arbitration
Rules of the American Arbitration Association. In the case of any determination under Section 6(c) that is adverse to Indemnitee,
Indemnitee must commence any such judicial proceeding or arbitration within 180 days following the date on which Indemnitee first has the right to commence that proceeding under this  Section 8(a) or Indemnitee will be bound by that determination for all purposes of this Agreement. 

        (b)   If
a determination has been made under Section 6 that Indemnitee is not entitled to indemnification hereunder, any
judicial proceeding or arbitration commenced under this Section 8 will be conducted in all respects as a de novo trial or arbitration on the
merits, and Indemnitee will not be prejudiced by reason of that adverse determination. In any judicial proceeding or arbitration commenced under this  Section 8, the Company and the Partnership will
have the burden of proving that Indemnitee is not entitled to indemnification hereunder. 

        (c)   If
a determination has been made under Section 6 that Indemnitee is entitled to indemnification hereunder, the
Company and the Partnership will be bound by that determination in any judicial proceeding or arbitration Indemnitee thereafter commences under this  Section 8 or otherwise, absent: 

        (1)   a
misstatement by Indemnitee of a material fact, or an omission by Indemnitee of a material fact necessary to make Indemnitee's statements not materially misleading, in
connection with Indemnitee's request for indemnification; or 

        (2)   a
prohibition of that indemnification under applicable law. 

        (d)   If
Indemnitee, under this Section 8 or otherwise, seeks a judicial adjudication of or an award in arbitration to
enforce Indemnitee's rights under this Agreement, Indemnitee will be entitled to recover from the Company and the Partnership, and will be indemnified by the Company and the Partnership against, any
and all Expenses reasonably incurred by or on behalf of Indemnitee in that judicial adjudication or arbitration, but only if Indemnitee prevails therein. If it is determined in that judicial
adjudication or arbitration that Indemnitee is entitled to receive part of, but not all, the indemnification or advancement of expenses sought, the expenses incurred by Indemnitee in connection with
that judicial adjudication or arbitration will be appropriately prorated between those in respect of which this Agreement entitles Indemnitee to indemnification and those Indemnitee must bear. 

        (e)   In
any judicial proceeding or arbitration under this Section 8, the Company and the Partnership: 

        (1)   will
not, and will not permit any other Person acting on its behalf to, assert that the procedures or presumptions this Agreement establishes are not valid, binding and
enforceable; and 

        (2)   will
stipulate that it is bound by all the provisions hereof. 

        Section 9.    Non-exclusivity; Survival of Rights; Insurance; Subrogation.    

        (a)   The
rights to indemnification and advancement of Expenses and the remedies this Agreement provides are not and will not be deemed exclusive of any other rights or
remedies to which Indemnitee may at any time be entitled under applicable law, the Company's or the Partnership's Charter Documents, any agreement, a vote of members of the Company or unitholders of
the Partnership or Disinterested Directors, or otherwise, but each such right or remedy hereunder will be cumulative with all such other rights and remedies. No amendment, alteration or termination of
this Agreement or any provision hereof will limit or restrict any right of Indemnitee hereunder in respect of any action Indemnitee has taken or omitted in Indemnitee's capacity as a Functionary of
the Company, the Partnership or any Related Enterprise prior to that amendment, alteration or termination. 

10

  

        (b)   If
the Company or the Partnership maintains an insurance policy or policies providing liability insurance for Functionaries of the Company, the Partnership or of any
Related Enterprise who serve or served in the same capacities as Indemnitee, Indemnitee will be covered by the policy or policies in accordance with its or their terms to the maximum extent of the
coverage available for any such Functionary under the policy or policies. If the Company or the Partnership receives written notice from any source of a pending Proceeding to which Indemnitee is a
party and in respect of which Indemnitee might be entitled to indemnification under Section 3(a) and the Company or the Partnership then
maintains any such policy of which Indemnitee is a beneficiary, the Company and the Partnership will: 

        (1)   promptly
give notice of that Proceeding to the relevant insurers in accordance with the applicable policy procedures; and 

        (2)   thereafter
take all action necessary to cause those insurers to pay, on behalf of Indemnitee, all amounts payable in accordance with the applicable policy terms as a
result of that Proceeding; 

provided,
however that the Company and the Partnership need not comply with the provisions of this sentence if its failure to do so would not actually be prejudicial to Indemnitee in any material
respect. 

        (c)   The
Company and the Partnership will not be liable under this Agreement to make or cause to be made any payment of amounts otherwise indemnifiable hereunder, or to make
or cause to be made any advance this Agreement otherwise requires it to make or cause to be made, to or for the account of Indemnitee, if and to the extent that Indemnitee has otherwise actually
received or had applied for Indemnitee's benefit that payment or advance or obtained the entire benefit therefrom under any insurance policy, any other contract or agreement or otherwise. 

        (d)   If
the Company or the Partnership makes or causes to be made any payment hereunder, it will be subrogated to the extent of that payment to all the rights of recovery of
Indemnitee, who will execute all papers required and take all action necessary to secure those rights, including execution of such documents as are necessary to enable the Company and the Partnership
to bring suit to enforce those rights. 

        (e)   The
Company's and the Partnership's obligation to make or cause to be made any payment or advance hereunder to or for the account of Indemnitee with respect to
Indemnitee's service at the
request of the Company or the Partnership as a Functionary of any Related Enterprise will be reduced by any amount Indemnitee has actually received as indemnification or advancement of expenses from
that Related Enterprise. 

        Section 10.    Duration of Agreement; Binding Effect.    This Agreement will continue until and terminate on
the later of: 

        (1)   10 years
after the date that Indemnitee has ceased to serve as a Functionary of the Company, the Partnership and each Related Enterprise that Indemnitee served at
the request of the Company or the Partnership; or 

        (2)   one
year after the final, nonappealable termination of any Proceeding then pending in respect of which Indemnitee is granted rights of indemnification or advancement of
Expenses hereunder and of any proceeding commenced by Indemnitee under Section 8 or otherwise. 

This
Agreement will be binding on the Company, the Partnership and its successors and assigns and will inure to the benefit of Indemnitee and his spouse, if Indemnitee resides in Texas or another
community property state, heirs, executors and administrators. 

11

 

        Section 11.    Severability.    If any provision or provisions hereof is or are invalid, illegal or
unenforceable for any reason whatsoever: 

        (1)   the
validity, legality and enforceability of the remaining provisions hereof, including each portion of any Section containing any such invalid, illegal or unenforceable
provision which is not itself invalid, illegal or unenforceable, will not in any way be affected or impaired thereby; 

        (2)   such
provision or provisions will be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties
hereto; and 

        (3)   to
the fullest extent possible, the provisions hereof, including each portion of any Section containing any such invalid, illegal or unenforceable provision which is not
itself invalid, illegal or unenforceable, will be construed so as to give effect to the intent manifested thereby. 

        Section 12.    Exceptions to Right of Indemnification or Advancement of Expenses.    No provision in this
Agreement will obligate the Company or the Partnership to pay or cause to be paid any indemnity to or for the account of Indemnitee, or to advance or cause to be advanced Expenses under  Section 4,
in connection with or as a result of: 

        (1)   any
Claim made against Indemnitee for an accounting of profits, under Section 16(b) of the Exchange Act or similar provision of state statutory or common law,
from the purchase and sale, or sale and purchase, by Indemnitee of securities of the Company, the Partnership or any Related Enterprise; 

        (2)   any
Company Claim made against Indemnitee for: 

        (A)  any
unauthorized conversion to personal use, embezzlement or misappropriation of assets of the Company, the Partnership or any Related Enterprise or any transaction from
which Indemnitee derived an improper personal benefit; 

        (B)  any
forgery or alteration of negotiable instruments of the Company, the Partnership or any Related Enterprise; 

        (C)  any
falsification of the records or financial statements of the Company, the Partnership or any Related Enterprise for personal or other reasons; or 

        (D)  any
breach of a contractual obligation to pay or repay or otherwise return money to the Company, the Partnership or any Related Enterprise; or 

        (3)   except
for any Claim initiated by Indemnitee, whether as a cause of action or as a defense to a cause of action under  Section 8 or otherwise, to enforce or establish, by declaratory judgment or otherwise,
Indemnitee's rights or remedies hereunder, any Claim
initiated by Indemnitee without the prior authorization of the Board against the Company, the Partnership or any Related Enterprise or any of their respective present or former Functionaries. 

        Section 13.    Counterparts.    This Agreement may be executed in one or more counterparts, each of which will
for all purposes be deemed to be an original but all of which together will constitute one and the same agreement. Only one such counterpart signed by the party against whom enforceability is sought
needs to be produced to evidence the existence of this Agreement. 

        Section 14.    Headings.    The headings of the Sections hereof are inserted for convenience only and do not
and will not be deemed to constitute part of this Agreement or to affect the construction thereof. 

12

 

        Section 15.    Modification and Waiver.    No supplement to or modification or amendment of this Agreement will
be binding unless executed in writing by the parties hereto. No waiver of any provision hereof will be deemed or will constitute a waiver of any other provision hereof, whether or not similar, nor
will any such waiver constitute a continuing waiver. 

        Section 16.    Reliance.    The Company and the Partnership confirm and agree with Indemnitee that it has
entered into this Agreement and assumed the obligations this Agreement imposes on it in order to induce Indemnitee to serve, or continue to serve, as a Functionary of the Company or a Related
Enterprise. The Company and the Partnership acknowledge that Indemnitee is relying on this Agreement in so serving. 

        Section 17.    Notices.    All notices, requests, demands and other communications hereunder must be in writing
or by electronic transmission and will be deemed delivered and received: 

        (1)   if
personally delivered or if delivered by telex, telegram, facsimile, electronic transmission or courier service, when actually received by the party to whom the notice
or communication is sent; or 

        (2)   if
delivered by mail, whether actually received or not, at the close of business on the third business day in the city in which the Company's and the Partnership's
principal executive office is located next following the day when placed in the U.S. mail, postage prepaid, certified or registered, addressed to the appropriate party at the address of that party set
forth below, or at such other address as that party may designate by notice in writing or by electronic transmission to the other party in accordance herewith: 

        (3)   If
to Indemnitee, to: 

	 	  
  
  
	 	 
	

 	

Attention:	
 	

 	
 	

 
	 	 	 	
	 	 
	 	Fax No.:	 	 	 	 
	 	 	 	
	 	 
	 	E-mail:	 	 	 	 
	 	 	 	
	 	 

with
a copy, which will not constitute notice for purposes of this Agreement, to such legal counsel, if any, as Indemnitee may designate in writing or by electronic transmission; and 

        (4)   If
to the Company or the Partnership, to: 

Abraxas
General Partner, LLC

500 North Loop 1604 East, Suite 100

San Antonio, Texas 78232

Attention: President

Fax No.: (210) 490-8816

E-mail: bstuckey@abraxaspetroleum.com 

        Section 18.    Contribution.    If it is established, under  Section 6(c) or otherwise, that Indemnitee has the right to be indemnified
under  Section 3(a) in respect of any claim, but that right is unenforceable by reason of any applicable law or public policy, then, to the fullest
extent applicable law 

13

 

permits,
the Company and the Partnership, in lieu of indemnifying or causing the indemnification of Indemnitee under Section 3(a), will, or will
cause a Partnership Entity to, contribute to the amount Indemnitee has incurred, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement or for Expenses
reasonably incurred, in connection with that Claim, in such proportion as is deemed fair and reasonable in light of all the circumstances of that Claim in order to reflect: 

        (1)   the
relative benefits Indemnitee and the Partnership have received as a result of the event(s) or transaction(s) giving rise to that Claim; or 

        (2)   the
relative fault of Indemnitee and of the Partnership and its other Functionaries in connection with those event(s) or transaction(s). 

        Section 19.    Governing Law; Submission to Jurisdiction.    This Agreement and the legal relations among the
parties will be governed by, and construed and enforced in accordance with, the laws of the State of Delaware, without regard to its conflict of laws rules. Except with respect to any arbitration
Indemnitee commences under Section 8 or as Section 3(a) expressly contemplates otherwise,
the Company, the Partnership and Indemnitee hereby irrevocably and unconditionally: 

        (1)   agree
that any action or proceeding arising out of or in connection with this Agreement will be brought only in the Court of Chancery and not in any other state or
federal court in the United States of America or any court in any other country; 

        (2)   consent
to submit to the exclusive jurisdiction of the Court of Chancery for purposes of any action or proceeding arising out of or in connection with this Agreement; 

        (3)   waive
any objection to the laying of venue of any such action or proceeding in the Court of Chancery; and 

        (4)   waive,
and agree not to plead or to make, any claim that any such action or proceeding brought in the Court of Chancery has been brought in an improper or otherwise
inconvenient forum. 

        Section 20.    Entire Agreement.    This Agreement constitutes the entire agreement and understanding among the
Company, the Partnership and Indemnitee with respect to the subject matter hereof, and supersedes all prior oral, written or implied agreements and understandings of the Company, the Partnership and
Indemnitee with respect to the subject matter hereof. 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

14

 

        IN
WITNESS WHEREOF, the parties hereto have executed this Agreement effective as of the day and year first above written. 

	 	 	ABRAXAS GENERAL PARTNER, LLC
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Barbara M. Stuckey

President and Chief Operating Officer
	

 	
 	
ABRAXAS ENERGY PARTNERS, L.P.
	

 	
 	

By:	
 	

Abraxas General Partner, LLC,

its general partner
	

 	
 	

By:	
 	

 
	 	 	 	 	
 Barbara M. Stuckey

President and Chief Operating Officer
	

 	
 	
INDEMNITEE:
	

 	
 	

 [Name]

15

QuickLinks

FORM OF INDEMNIFICATION AGREEMENT

PRELIMINARY STATEMENT

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