Document:

Exhibit
4.1

Execution
Copy

 

JUNE
30, 2012 AMENDMENT TO FOUR CERTAIN

GLOBAL
AXCESS loan and security agreements

 

THIS
AMENDMENT TO GLOBAL AXCESS LOAN AND SECURITY AGREEMENTS (this “Amendment”), is entered into as of June
30, 2012 by and between: GLOBAL AXCESS CORP., a Nevada corporation (“Global”); NATIONWIDE MONEY
SERVICES, INC., a Nevada corporation (“NMS”); NATIONWIDE NTERTAINMENT SERVICES, INC., a Nevada corporation
(“NNS”); EFT INTEGRATION, INC., a Florida corporation (“EFT”); Global, NMS,
NNS and EFT being hereafter referred to individually, collectively, jointly and severally as the “Borrowers”);
and FIFTH THIRD BANK, an Ohio Banking corporation (the “Bank”).

 

WITNESSETH:

 

I.            Borrowers
and Bank have previously entered into those certain Loan and Security Agreements identified as follows:

 

A.           Loan
and Security Agreement dated as of June 18, 2010 providing a $7,000.000 Credit Facility (the “Original Agreement”),
as amended on December 17, 2010, January 6, 2012, and May 31, 2012 providing a $7.0 MM Credit Facility, part
of which is a $2,000,000 Inventory Draw Note Facility (the “$2.0 MM Inventory Facility”), pursuant to which the following
draws were funded (Draw Nos., dates and amounts are those reflected in Bank records and acknowledged by Borrowers as true and
correct):

 

1.          Draw
No. 117 (opened 01/31/11 with a draw of $271,653.42);

 

2.          Draw
No. 125 (opened 02/04/11 with a draw of $166,891.86);

 

3.          Draw
No. 133 (opened 03/18/11 with a draw of $261,862.74);

 

4.          Draw
No. 208 (opened 05/09/11 with a draw of $219,060.68); and

 

5.          Draw
No. 232 (opened 08/29/11 with a draw of $93,773.91).

 

B.           First
Amendment to the Original Agreement, amending the Original Agreement as of December 17, 2010, providing an additional $1,650,000
Customer Contract Draw Note Facility, (the “$1.65 MM Contract Facility”), pursuant to which the following draws were
funded (Draw Nos., dates and amounts are those reflected in Bank records and acknowledged by Borrowers as true and correct:

 

1.          Draw
No. 91 (opened 12/17/10 with a draw of $333,060.80);

 

2.          Draw
No. 109 (opened 01/12/11 with a draw of $700,000.00);

 

3.          Draw
No. 174 (opened 04/14/11 with a draw of $400,000.00); and

 

4.          Draw
No. 190 (opened 04/14/11 with a draw of $67,656.80).

 

    	 

    	 

    

 

C.           Global
Axcess 2011-B Loan and Security Agreement dated as of November 23, 2011, providing a $1,000,000 Customer Contract Draw
Note Facility (the “$1.0 MM Contract Facility”), pursuant to which the following draw was funded (Draw Nos., dates
and amounts are those reflected in Bank records and acknowledged by Borrowers as true and correct):

 

1.          Draw
No. 273 (opened 11/23/11 with a draw of $200,000.00).

 

D.           Global
Axcess 2011-C Loan and Security Agreement dated as of December 29, 2011, providing a New Acquisition Customer Contract
Draw Note Facility in the amount of $3,000,000 (“the $3.0 MM Contract Facility”), pursuant to which the following
draws were funded (Draw Nos., dates and amounts are those reflected in Bank records and acknowledged by Borrowers as true and
correct):

 

1.          Draw
No. 299 (opened 12/29/11 with a draw of $40,800.00; and

 

2.          Draw
No. 307 (opened 12/29/11 with a draw of $51,600.00).

 

E.           As
of May 31, 2012 Borrowers and the Bank amended the above four (4) Agreements, and the Draw Notes payable thereunder, to extend
the amortization periods and amend the Maturity Dates to be consistent with the end of the extended amortization periods and,
in consideration thereof, the Borrowers agreed to interest rate increases all as provided in the May 31, 2012 Amendment.

 

NOW,
THEREFORE, in consideration of the premises and of the mutual covenants and agreements herein contained, it is agreed that the
above Loan and Security Agreements, be, and they hereby are, amended as follows:

 

1.          Capitalized
Terms. Capitalized terms not otherwise defined herein shall continue to have the meanings given them in the above referred
to respective Agreements (the “Agreements”).

 

2.          Amendments
to the Agreements. Effective as of June 30, 2012, the Agreements and each respective Draw Note representing a draw
identified in Sections I. A – D, as amended by the May 31, 2012 Amendment, are hereby further amended as follows:

 

a.           The
following Draws under the $2.0 MM Inventory Facility of the Original Agreement are further amended as follows:

 

1.          Draw
No. 117

 

	Terms
    to be Amended	 	Current
    As of May 31, 2012 

Amendment	 	As
    Hereby Amended
	 	 	 	 	 
	Maturity Date	 	08-01-12	 	No Change
	 	 	 	 	 
	Pricing	 	LIBOR + 7.5%	 	See § 2e, Below
	 	 	 	 	 
	Loan Payment Date	 	1st

        Beginning
        August 1, 2012
	 	No Change

 

    	2

    	 

    

 

2.          Draw
No. 125

 

	Terms
    to be Amended	 	Current
    As of May 31, 2012

Amendment	 	As
    Hereby Amended
	 	 	 	 	 
	Maturity Date	 	08-01-12	 	No Change
	 	 	 	 	 
	Pricing	 	LIBOR + 7.5%	 	See § 2e, Below
	 	 	 	 	 
	Loan Payment Date	 	1st

        Beginning
        August 1, 2012
	 	No Change

 

3.          Draw
No. 133

 

	Terms
    to be Amended	 	Current
    As of May 31, 2012

Amendment	 	As
    Hereby Amended
	 	 	 	 	 
	Maturity Date	 	09-08-12	 	No Change
	 	 	 	 	 
	Pricing	 	LIBOR + 7.5%	 	See § 2e, Below
	 	 	 	 	 
	Loan Payment Date	 	1st

        Beginning
        August 1, 2012
	 	No Change

  

4.          Draw
No. 208

 

	Terms
    to be Amended	 	Current
    As of May 31, 2012

Amendment	 	As
    Hereby Amended
	 	 	 	 	 
	Maturity Date	 	10-30-12	 	No Change
	 	 	 	 	 
	Pricing	 	LIBOR + 7.5%	 	See § 2e, Below
	 	 	 	 	 
	Loan Payment Date	 	1st

        Beginning
        August 1, 2012
	 	No Change

 

    	3

    	 

    

 

5.          Draw
No. 232

 

	Terms
    to be Amended	 	Current
    As of May 31, 2012

Amendment	 	As
    Hereby Amended
	 	 	 	 	 
	Maturity Date	 	09-19-13	 	No Change
	 	 	 	 	 
	Pricing	 	LIBOR + 7.5%	 	See § 2e, Below
	 	 	 	 	 
	Loan Payment Date	 	1st

        Beginning
        August 1, 2012
	 	No Change

 

6.          Draw
No. 75 (opened 12/21/10 with a draw of $240,596.97)

 

	 	 	Current	 	As
    Hereby Amended
	 	 	 	 	 
	Maturity Date	 	06-18-12	 	05-31-15
	 	 	 	 	 
	Pricing	 	LIBOR + 5.5%	 	LIBOR + 7.5%
	 	 	 	 	 
	Loan Payment Date	 	21st	 	1st

        Beginning
        August 1, 2012

 

b.           The
following Draws under the $1.65 MM Contract Facility are further amended as follows:

 

1.          Draw
No. 91

 

	Terms
    to be Amended	 	Current
    As of May 31, 2012

Amendment	 	As
    Hereby Amended
	 	 	 	 	 
	Maturity Date	 	05-31-15	 	No Change
	 	 	 	 	 
	Amortization	 	48 months	 	No Change
	 	 	 	 	 
	Payments	 	$4,925.31	 	No Change
	 	 	 	 	 
	Pricing	 	LIBOR + 7.5%	 	See § 2e, Below
	 	 	 	 	 
	Loan Payment Date	 	1st

        Beginning
        August 1, 2012
	 	No Change

 

    	4

    	 

    

 

2.          Draw
No. 109

 

	Terms
    to be Amended	 	Current
    As of May 31, 2012

Amendment	 	As
    Hereby Amended
	 	 	 	 	 
	Maturity Date	 	05-31-15	 	No Change
	 	 	 	 	 
	Amortization	 	48 months	 	No Change
	 	 	 	 	 
	Payments	 	$10,127.32	 	No Change
	 	 	 	 	 
	Pricing	 	LIBOR + 7.5%	 	See § 2e, Below
	 	 	 	 	 
	Loan Payment Date	 	1st

        Beginning
        August 1, 2012
	 	No Change

 

3.          Draw
No. 174

 

	Terms
    to be Amended	 	Current
    As of May 31, 2012 

Amendment	 	As
    Hereby Amended
	 	 	 	 	 
	Maturity Date	 	05-31-15	 	No Change
	 	 	 	 	 
	Amortization	 	48 months	 	No Change
	 	 	 	 	 
	Payments	 	$5,982.98	 	No Change
	 	 	 	 	 
	Pricing	 	LIBOR + 7.5%	 	See § 2e, Below
	 	 	 	 	 
	Loan Payment Date	 	1st

        Beginning
        August 1, 2012
	 	No Change

 

    	5

    	 

    

 

4.          Draw
No. 190

 

	Terms
    to be Amended	 	Current
    As of May 31, 2012 

Amendment	 	As
    Hereby Amended
	 	 	 	 	 
	Maturity Date	 	05-31-15	 	No Change
	 	 	 	 	 
	Amortization	 	48 months	 	No Change
	 	 	 	 	 
	Payments	 	$946.14	 	No Change
	 	 	 	 	 
	Pricing	 	LIBOR + 7.5%	 	See § 2e, Below
	 	 	 	 	 
	Loan Payment Date	 	1st

        Beginning
        August 1, 2012
	 	No Change

 

c.           The
following Draw under the $1.0 MM Contract Facility is further amended as follows:

 

1.          Draw
No. 273

 

	Terms
    to be Amended	 	Current
    As of May 31, 2012 

Amendment	 	As
    Hereby Amended
	 	 	 	 	 
	Maturity Date	 	05-31-15	 	No Change
	 	 	 	 	 
	Amortization	 	48 months	 	No Change
	 	 	 	 	 
	Payments	 	$19,657.31	 	No Change
	 	 	 	 	 
	Pricing	 	LIBOR + 7.5%	 	See § 2e, Below
	 	 	 	 	 
	Loan Payment Date	 	1st

        Beginning
        August 1, 2012
	 	No Change

 

    	6

    	 

    

 

d.           The
following Draws under the $3.0 MM Contract Facility are further amended as follows:

 

1.          Draw
No. 299

 

	Terms
    to be Amended	 	Current
    As of May 31, 2012 

Amendment	 	As
    Hereby Amended
	 	 	 	 	 
	Loan Payment Date	 	1st

        Beginning
        August 1, 2012
	 	No Change
	 	 	 	 	 
	Pricing	 	 	 	See § 2e, Below

 

2.          Draw
No. 307

 

	Terms
    to be Amended	 	Current
    As of May 31, 2012 

Amendment	 	As
    Hereby Amended
	 	 	 	 	 
	Loan Payment Date	 	1st

        Beginning
        August 1, 2012
	 	No Change
	 	 	 	 	 
	Pricing	 	LIBOR + 6.0%	 	See § 2e, Below

 

e.           Pricing
Amendment. The above-referenced Draws funded under the Original Agreement and the 2011 Agreements, as amended, are further
amended by revising the interest payable by the Borrowers to the Bank to remain at LIBOR +7.5%; provided, however,
that upon receipt by the Bank of Borrowers’ audited Financial Statements for the period ending December 31, 2012 and for
each quarter thereafter, the interest rate shall decrease as of the beginning of the quarter next following (June 30, 2012)
the quarter for which such Financial Statements are received, to LIBOR +5.50% provided further that (i) Borrowers’ Debt
Service Coverage Ratio is greater than 1.2; (ii) its ratio of Senior Funded Debt to EBITDA is less than 2.0; and (iii) Borrowers
collectively maintain an average balance of at least $1,200,000 of unencumbered liquid assets, as measured quarterly. The periods
of applicability of any such decrease to LIBOR +5.50% or revert to LIBOR +7.5% shall be measured quarterly. All terms written
with initial capital or all capital letters shall have the meaning assigned to them in Section 1 (DEFINITIONS) and Section 10
(FINANCIAL COVENANTS) of the Original Agreement.

 

f.            Liquidity
Covenant Amendment. The Liquidity Covenant added as Section 10.4 to the Original Agreement and set forth in substituted Section
10.3 of the 2011 Agreements pursuant to the May 31, 2012 Amendment, is further amended by modifying the measurement dates and
the amount of unencumbered liquid assets as follows:

 

    	7

    	 

    

 

	 	 	Current	 	 	As Hereby Amended	 
	 	 	 	 	 	 	 	 	 
	Through
    09/30/12	 	$	850,000	 	 	 	No
                                                                                                                      Change	 
	 	 	 	 	 	 	 	 	 
	From
    10/01/12 to 3/15/15	 	$	1,200,000	 	 	 	No
                                                                                                           Change	 
	 	 	 	 	 	 	 	 	 
	From
    06/30/12 to 09/30/12	 	 	 	 	 	$	500,000	 
	 	 	 	 	 	 	 	 	 
	From
    01/01/13 to 03/31/13	 	 	 	 	 	$	300,000	 
	 	 	 	 	 	 	 	 	 
	From
    04/01/13 to 09/30/13	 	 	 	 	 	$	500,000	 
	 	 	 	 	 	 	 	 	 
	From
    10/01/13 to 12/31/13	 	 	 	 	 	$	850,000	 
	 	 	 	 	 	 	 	 	 
	From
    01/01/14 to 03/15/15	 	 	 	 	 	$	1,200,000	 

 

3.          Amendments
to Other Loan Documents. All other Loan Documents including Draw Notes shall be deemed modified as necessary to be consistent
with this Amendment. Borrowers affirm and acknowledge that this Amendment, shall be a deemed a “Loan Document” for
all purposes of the Agreements and the other Loan Documents thereunder.

 

4.          Representations
and Warranties of the Borrowers. Each Borrower, on its own behalf and with respect to said Borrower (as applicable), hereby
represents and warrants:

 

a.           Each
of the Agreements, this Amendment, the Notes and all other Loan Documents constitute legal, valid and binding joint and several
obligations of Borrowers and are enforceable against Borrowers in accordance with their terms;

 

b.           There
are no Events of Default under any of the Agreements, or under any of the other Loan Documents, nor does any circumstance or event
exist which, with the giving of notice or the passage of time, or both, would constitute an Event of Default thereunder; and

 

c.           Borrower’s
representations and warranties in each of the Agreements are and remain true and correct as of the date of this Amendment (except
for those representations and warranties which were given in any of the respective Agreements as of a specified date, which Borrowers
hereby represent remain true and correct as of said date).

 

5.          Conditions
Precedent. The effectiveness of this Amendment and all obligations of the Bank hereunder, are subject to the satisfaction
of the following:

 

a.           Borrowers
shall have executed and delivered each of the following:

 

i.            This
Amendment; and

 

    	8

    	 

    

 

ii.         Such
other certificates, financial statements, schedules, resolutions, opinions of counsel, notes and other documents which the Bank
shall require.

 

b.           The
representations and warranties of the Borrowers set forth in Section 4 above shall be true and correct in all material respects
at and as of the date hereof.

 

6.          Agreements
and Other Loan Documents (hereinafter, collectively the “Loan Documents”) in Full Force and Effect.
Each of the parties hereby expressly acknowledges and agrees that:

 

a.           Except
as specifically modified hereby, all terms and provisions of the Loan Documents are hereby ratified and confirmed in all respects
and shall remain in full force and effect.

 

b.           The
execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of Bank under
the Loan Documents, nor constitute a waiver of any provision of the Loan Documents;

 

c.           The
liens evidenced by the Loan Documents shall in no way be deemed to have been subordinated, released, modified, terminated, or
otherwise effected by this Amendment;

 

d.           The
liens created by the Loan Documents shall continue in full force and effect, shall have the same validity, priority and effect
that they had immediately prior to the execution of this Amendment (and the other documents and instruments executed and delivered
pursuant to this Amendment, if any), and shall survive (without interruption) and not be merged into the execution and delivery
of this Amendment (or any of the other documents and instruments to be executed pursuant to this Amendment, if any);

 

e.           All
covenants of Borrowers in this Amendment shall be deemed to be covenants of Borrowers under the Loan Documents (as applicable),
and all representations and warranties of Borrowers in this Amendment shall be deemed to be representations and warranties of
Borrowers under the Loan Documents (as applicable).

 

7.          Acknowledgement,
Release and Hold Harmless. Each Borrower, on its own behalf and with respect to said Borrower, hereby acknowledges and agrees
that the Bank has fulfilled any and all of its obligations under the Loan Documents to date, including without limitation any
and all obligations with respect to the Note. Each Borrower, on its own behalf and with respect to said Borrower, also hereby
releases and holds the Bank harmless from and against any and all claims, actions, lawsuits, damages, costs and expenses whatsoever
which any of the Borrowers may have had or currently may have against the Bank in connection with or related to the Loan Documents.

 

8.          Costs
and Expenses; Fees. Borrowers shall jointly and severally be responsible for any and all costs, expenses, fees, charges, taxes
(other than taxes on the income of Bank), of whatever kind and nature, incurred by Bank in connection with the transactions provided
for in this Amendment, including, without limitation, attorneys’ fees and costs and recording fees incurred in connection
with the negotiation, drafting, execution and closing of this Amendment and any follow up thereafter.

 

    	9

    	 

    

 

9.          Attorneys’
Fees; Enforcement. Each Borrower hereby acknowledges and agrees that Bank may hire or pay someone else to help enforce this
Amendment or any of the other Loan Documents. Each Borrower hereby further acknowledges and agrees the Borrowers, jointly and
severally, shall pay on demand all reasonable costs and expenses of every kind incurred by Bank in enforcing this Amendment or
any of the other Loan Documents, or for any other purpose related to this Amendment. “Costs and expenses” as used
in the preceding sentence shall include, without limitation, reasonable attorneys’ fees and reasonable legal expenses (including
all court costs and such additional fees as may be directed by the court), whether or not there is a lawsuit, incurred by Bank
in retaining counsel for advice, suit, appeal, any insolvency or bankruptcy proceedings (including efforts to modify or vacate
any automatic stay or injunction) or other proceedings, or for any other purpose specified in the preceding sentence.

 

10.         Severability.
Wherever possible, each provision of this Amendment shall be interpreted in such manner as to be effective and valid under applicable
law. Any term or provision of this Amendment that is invalid or unenforceable in any situation shall not affect the validity or
enforceability of the remaining terms and provisions hereof or the validity or enforceability of the offending term or provision
in any other situation. In the event that any clause, term, or condition of this Amendment shall be held invalid or contrary to
law: (a) this Amendment shall remain in full force and effect as to all other clauses, terms, and conditions; (b) the subject
clause, term, or condition shall be revised to the minimum extent necessary to render the modified provision valid, legal and
enforceable; and (c) the remaining provisions of this Amendment shall be amended to the minimum extent necessary so as to render
the Amendment as a whole most nearly consistent with the parties’ intentions in light of the modification or removal of
the invalid or illegal provision.

 

11.         Headings
and Construction. The section and other headings contained in this Amendment are for convenience and shall not be deemed to
limit, characterize or interpret any provision of this Amendment. Any word or defined term in this Amendment shall be read as
singular, plural, masculine, feminine or neuter as may be appropriate under the circumstances then existing.

 

12.         Successors
and Assigns. This Amendment shall be binding upon, and inure to the benefit of, the respective successors and permitted assigns
of each of the parties hereto.

 

13.         Incorporation
of Recitals; Reliance. Each of the Borrowers hereby acknowledges that the foregoing recitals to this Amendment are true and
correct, each are to be incorporated herein as an integral part hereof, and each shall be considered as substantive and not precatory
language. Each of the Borrowers also hereby recognizes and acknowledges that: (a) in accepting this Amendment and agreeing to
make the modifications contained herein, Bank is expressly relying on the truth and accuracy of each Borrower’s recitals,
warranties and representations set forth in this Amendment without any obligation to investigate the truth and accuracy thereof;
(b) such reliance exists on the part of the Bank prior hereto; (c) such recitals, warranties and representations are a material
inducement to Bank in making the modifications identified above and accepting this Amendment; and (d) Bank would not be willing
to make the modifications identified above and/or accept this Amendment in the absence of any of such recitals, warranties and
representations.

 

    	10

    	 

    

 

14.         Counterparts.
This Amendment may be executed in any number of counterparts. Each such executed counterpart shall be deemed an original hereof
and all such executed counterparts shall together constitute one and the same instrument. Copies of signatures transmitted by
mail, facsimile, or email or any other electronic method, shall be considered authentic and binding.

 

IN
WITNESS WHEREOF, the undersigned have executed this June 30, 2012 Amendment to Global Axcess Loan and Security Documents as of
the date first set forth above.

 

	BORROWERS:	 	GLOBAL AXCESS CORP, a Nevada
    corporation
	 	 	 	 
	 	 	By:	/s/
    Lock Ireland
	 	 	 	Lock Ireland, Co-Chief Executive Officer
	 	 	 
	 	 	NATIONWIDE
        MONEY SERVICES INC., a

        Nevada
        corporation

	 	 	 	 
	 	 	By:	/s/
    Lock Ireland
	 	 	 	Lock Ireland, President
	 	 	 
	 	 	NATIONWIDE NTERTAINMENT SERVICES,

    INC., a Nevada corporation
	 	 	 	 
	 	 	By:	/s/
    Lock Ireland
	 	 	 	Lock Ireland, President
	 	 	 
	 	 	EFT INTEGRATION, INC., a Nevada
    corporation
	 	 	 	 
	 	 	By:	/s/
    Lock Ireland
	 	 	 	Lock Ireland, President
	 	 	 
	 	 	FIFTH THIRD BANK, an Ohio Banking
    corporation
	 	 	 	 
	BANK:	 	By:	/s/
    Janice Kriwanek
	 	 	 	Janice Kriwanek, Senior Vice President

 

    	11Exhibit 10.1

Execution Version

 

STOCK PURCHASE AGREEMENT

 

AMONG

 

PRESIDENTIAL LIFE CORPORATION,

 

GALAC HOLDING COMPANY

 

AND

 

LOYAL AMERICAN LIFE INSURANCE COMPANY

 

    	 

    	 

    

 

TABLE OF
CONTENTS

 

	1.	Definitions.	1
	 	 	 
	2.	Purchase and Sale of GALAC Shares.	3
	 	(a)	Basic Transaction	3
	 	(b)	Purchase Price	3
	 	(c)	Closing	4
	 	(d)	Deliveries at Closing	4
	 	(e)	Purchase Price Adjustment	4
	 	 	 
	3.	Representations and Warranties Concerning Transaction.	5
	 	(a)	Seller’s Representations and Warranties	5
	 	(b)	Buyer’s Representations and Warranties	6
	 	 	 
	4.	Representations and Warranties Concerning GALAC	7
	 	(a)	Organization, Qualification, and Corporate Power	7
	 	(b)	Capitalization	7
	 	(c)	Non-contravention	8
	 	(d)	Brokers’ Fees	8
	 	(e)	Title to Assets	8
	 	(f)	Subsidiaries	8
	 	(g)	Financial Statements	8
	 	(h)	Undisclosed Liabilities	9
	 	(i)	Legal Compliance	9
	 	(j)	Governmental Authorization	9
	 	(k)	Tax Matters	9
	 	(l)	Powers of Attorney	10
	 	(m)	Litigation	10
	 	(n)	Employees	10
	 	(o)	Guaranties	10
	 	(p)	Securities Transactions	10
	 	(q)	Unclaimed Property	10
	 	(r)	In-Force Policies	10
	 	 	 
	5.	Pre-Closing Covenants	10
	 	(a)	General	10
	 	(b)	Notices and Consents	10
	 	(c)	Access	11
	 	(d)	Notice of Developments	11
	 	(e)	Exclusivity	11
	 	(f)	Reinsurance of GALAC Policies	11
	 	 	 
	6.	Post-Closing Covenants	12
	 	(a)	General	12
	 	(b)	Litigation Support	12
	 	(c)	Confidentiality	12

 

    	 

    	 

    

 

	 	(d)	Use of Name.	13
	 	(e)	Re-Domestication	13
	 	 	 
	7.	Conditions to Obligation to Close.	13
	 	(a)	Conditions to Buyer’s Obligation	13
	 	(b)	Conditions to Seller’s Obligation	15
	 	 	 
	8.	Remedies for Breaches of This Agreement.	16
	 	(a)	Survival of Representations and Warranties	16
	 	(b)	Indemnification Provisions for Buyer’s Benefit.	16
	 	(c)	Indemnification Provisions for Seller’s Benefit	17
	 	(d)	Matters Involving Third Parties.	17
	 	(e)	Determination of Adverse Consequences	18
	 	(f)	Exclusive Remedy	18
	 	 	 
	9.	Tax Matters.	18
	 	 	 
	10.	Real Property	21
	 	 	 
	11.	Termination.	21
	 	(a)	Termination of Agreement	21
	 	(b)	Effect of Termination	21
	 	 	 
	12.	Miscellaneous.	22
	 	(a)	Press Releases and Public Announcements	22
	 	(b)	No Third-Party Beneficiaries	22
	 	(c)	Entire Agreement	22
	 	(d)	Succession and Assignment	22
	 	(e)	Counterparts	22
	 	(f)	Headings	22
	 	(g)	Notices	22
	 	(h)	Governing Law	23
	 	(i)	Amendments and Waivers	23
	 	(j)	Severability	23
	 	(k)	Expenses	23
	 	(l)	Construction	24
	 	(m)	Incorporation of Exhibits, Annexes, and Schedules	24

 

Exhibit 2(b) – Example Purchase Price
Calculation

Exhibit 2(e) – Example Purchase Price
Adjustment Calculation

Exhibit 4(g) – Historical Financial
Statements

Exhibit 5(f) – Coinsurance Agreement

Annex I—Exceptions to Seller’s
Representations and Warranties Concerning Transaction

Annex II—Exceptions to Buyer’s
Representations and Warranties Concerning Transaction 

Disclosure Schedule—Exceptions to
Representations and Warranties Concerning GALAC

 

    	ii

    	 

    

 

 

STOCK
PURCHASE AGREEMENT

 

THIS STOCK PURCHASE
AGREEMENT (this “Agreement”) is entered into as of February 23, 2012 among PRESIDENTIAL LIFE CORPORATION, a Delaware
corporation (“Buyer”), GALAC HOLDING COMPANY, an Ohio corporation (“Seller”), and LOYAL AMERICAN
LIFE INSURANCE COMPANY, an Ohio corporation (“Parent”). Buyer. Seller and Parent are referred to collectively
herein as the “Parties.”

 

Recitals:

 

Parent owns all of
the outstanding capital stock of Seller.

 

Seller owns all of
the outstanding capital stock of Great American Life Assurance Company, an Ohio corporation (“GALAC”).

 

This Agreement contemplates
a transaction in which Buyer will purchase from Seller, and Seller will sell to Buyer, all of the outstanding capital stock of
GALAC in return for the consideration provided for in this Agreement.

 

NOW, THEREFORE, in
consideration of the premises and the mutual promises herein made, and in consideration of the representations, warranties, and
covenants herein contained, the Parties agree as follows.

 

1.          Definitions.

 

“Adverse Consequences”
means all actions, suits, proceedings, hearings, investigations, charges, complaints, claims, demands, injunctions, judgments,
orders, decrees, rulings, damages (but specifically excluding consequential and punitive damages except to the extent actually
paid by Buyer to third parties), dues, penalties, fines, costs, reasonable amounts paid in settlement, liabilities, obligations,
taxes, liens, losses, expenses, and fees, including court costs and reasonable attorneys’ fees and expenses.

 

“Affiliate”
has the meaning set forth in Rule 12b-2 of the regulations promulgated under the Securities Exchange Act. “Basis”
means any past or present fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident,
action, failure to act, or transaction that forms or could form the basis for any specified consequence.

 

“Buyer”
has the meaning set forth in the preface above.

 

“Closing”
has the meaning set forth in Section 2(c) below.

 

“Closing Date”
has the meaning set forth in Section 2(c) below.

 

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

 

“Confidential
Information” means any information concerning the business and affairs of GALAC that is not already generally available
to the public.

 

    	 

    	 

    

 

“Disclosure
Schedule” has the meaning set forth in Section 4 below.

 

“Financial
Statement” has the meaning set forth in Section 4(g) below.

 

“GALAC”
has the meaning set forth in the preface above.

 

“GALAC Share”
means any share of the common stock, par value $12.50 per share, of GALAC.

 

“Indemnified
Party” has the meaning set forth in Section 8(d) below.

 

“Indemnifying
Party” has the meaning set forth in Section 8(d) below.

 

“Knowledge”
means actual knowledge after reasonable investigation.

 

“Lien”
means any mortgage, pledge, lien, encumbrance, charge, or other security interest, other than (a) liens for taxes not yet due and
payable or for Taxes that the taxpayer is contesting in good faith through appropriate proceedings, (b) purchase money liens and
liens securing rental payments under capital lease arrangements, and (c) other liens arising in the Ordinary Course of Business
and not incurred in connection with the borrowing of money.

 

“Material
Adverse Effect” or “Material Adverse Change” means any effect or change that would be materially adverse
to the business, assets, condition (financial or otherwise), operating results or operations of GALAC, taken as a whole, or to
the ability of any Party to consummate timely the transactions contemplated hereby.

 

“Most Recent
Balance Sheet” means the balance sheet contained within the Most Recent Financial Statements.

 

“Most Recent
Financial Statements” has the meaning set forth in Section 4(g) below.

 

“Most Recent
Fiscal Month End” has the meaning set forth in Section 4(g) below.

 

“Most Recent
Fiscal Year End” has the meaning set forth in Section 4(g) below.

 

“ODI”
means the Ohio Department of Insurance.

 

“Ordinary
Course of Business” means the ordinary course of business consistent with past custom and practice (including with respect
to quantity and frequency).

 

“Parent”
has the meaning set forth in the preface above.

 

“Party”
has the meaning set forth in the preface above.

 

“Person”
means an individual, a partnership, a corporation, a limited liability company, an association, a joint stock company, a trust,
a joint venture, an unincorporated organization, any other business entity, or a governmental entity (or any department, agency,
or political subdivision thereof).

 

    	2

    	 

    

 

“Pre-Closing
Dividend” has the meaning set forth in Section 7(b)(v) below.

 

“Purchase
Price” has the meaning set forth in Section 2(b) below.

 

“SAP”
means the accounting procedures and practices prescribed or permitted from time to time by the National Association of Insurance
Commissions and adopted or promulgated by the ODI in a consistent manner throughout the periods involved.

 

“Securities
Act” means the Securities Act of 1933, as amended.

 

“Securities
Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

“Securities
Transactions” means the purchase and sale of bonds and other securities by an insurance company.

 

“Seller”
has the meaning set forth in the preface above.

 

“Tax”
or “Taxes” means any federal, state, local, or non-U.S. income, gross receipts, license, payroll, employment,
excise, severance, stamp, occupation, premium, environmental (including taxes under Code §59A), customs duties, capital stock,
franchise, profits, withholding, social security (or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum, estimated, or other tax of any kind whatsoever, including
any interest, penalty, or addition thereto, whether disputed or not.

 

“Tax Allocation
Agreement” means the tax allocation agreement dated as of December 31, 2005 by and between American Financial Group,
Inc., an Ohio corporation (“AFG”), and certain of its Subsidiaries, including GALAC.

 

“Tax Return”
means any return, declaration, report, claim for refund, or information return or statement relating to Taxes, including any schedule
or attachment thereto, and including any amendment thereof.

 

“Third-Party
Claim” has the meaning set forth in Section 8(d) below.

 

2.            Purchase
and Sale of GALAC Shares.

 

(a)     Basic
Transaction .  On and subject to the terms and conditions of this Agreement, Buyer agrees to purchase from Seller, and Seller
agrees to sell to Buyer, all of its GALAC Shares for the consideration specified below in this Section 2. Buyer shall, at its
sole cost and expense, effect a change in GALAC’s corporate name to a name that does not include “Great American”
effective at, or promptly after, the Closing, as provided in Section 6(d) below.

 

(b)     Purchase
Price.  Buyer agrees to pay to Seller at the Closing a cash sum equal to:

 

    	3

    	 

    

 

(i)     The
aggregate of GALAC’s Total Statutory Capital (“Capital”) and Surplus (Statutory Net Admitted Assets less Statutory
Liabilities) (“Surplus”) as reported on line 38 of page 3 of the statutory financial statements filed by GALAC with
the Ohio Department of Insurance on June 30, 2011 (the “June Statement”); plus/(less)

 

(ii)     An
amount that reflects an equitable adjustment to reflect the excess/(shortfall) between the mutually agreed upon fair market value
of deposits held with the state insurance departments at June 30, 2011 and the statutory value of deposits held with the state
insurance departments included within the above-referenced Capital and Surplus; less

 

(iii)    The
Dividend Amount as calculated per Section 7(b)(v) and valued consistent with the statutory book value of the underlying net assets
at June 30, 2011 that would be transferred if the Dividend were to take place at June 30, 2011 (and assuming there is no change
in statutory surplus upon executing the affiliated reinsurance agreement prior to the payment of the Dividend); plus

 

(iv)     The
amount of One Million Nine Hundred Thousand Dollars ($1,900,000) which represents Fifty Thousand Dollars ($50,000) multiplied by
the thirty-eight (38) states in which GALAC holds Certificates of Authority, as set forth on Schedule 4(a), in addition to the
District of Columbia, for which there will be no additional payment, ((i) - (iv) herein, collectively, the “Purchase Price”).

 

For greater clarity and the avoidance of
doubt, an example calculation of the Purchase Price is set forth on Exhibit 2(b) attached hereto. Such example on Exhibit
2(b) is for illustrative purposes only.

 

(c)            Closing.  The closing of the transactions contemplated by this Agreement (the “Closing”) shall take place at a mutually
agreed location or by exchange of executed documents on the earlier of (i) May 31, 2012, or (ii) three Business Days after receipt
of all approvals and consents needed to consummate the transaction, or such other date as Buyer and Seller may mutually determine
(the “Closing Date”).

 

(d)            Deliveries
at Closing.  At the Closing, (i) Seller will deliver to Buyer the various certificates, instruments, and documents referred
to in Section 7(a) below, (ii) Buyer will deliver to Seller the various certificates, instruments, and documents referred to in
Section 7(b) below, (iii) Seller will deliver to Buyer stock certificates representing all of its GALAC Shares, endorsed in blank
or accompanied by duly executed assignment documents, and (iv) Buyer will deliver to Seller the consideration specified in Section
2(b) above.

 

(e)            Purchase
Price Adjustment.  Within thirty (30) days of filing the GALAC’s statutory financial statement for the period ending
December 31, 2011 (the “December Statement”) with the Ohio Department of Insurance, the parties agree that the Purchase
Price shall be adjusted to reflect the difference between the Purchase Price paid at the Closing pursuant to Section 2(b) and
the following calculation:

 

    	4

    	 

    

 

(i)     The
aggregate of GALAC’s Total Statutory Capital (“Capital”) and Surplus (Statutory Net Admitted Assets less Statutory
Liabilities) (“Surplus”) as reported on line 38 of page 3 of the statutory financial statements filed by GALAC with
the Ohio Department of Insurance on December 31, 2011 (the “December Statement”), which will include the effects of
the Dividend paid pursuant to Section 7(b)(v) that will be valued consistent with the statutory book value of the underlying net
assets transferred at December 31, 2011; plus/(less)

 

(ii)     An
amount that reflects an equitable adjustment to reflect the excess/(shortfall) between the mutually agreed upon fair market value
of deposits held with the state insurance departments at December 31, 2011 and the statutory value of deposits held with the state
insurance departments included within the above;

 

(iii)    The
amount of One Million Nine Hundred Thousand Dollars ($1,900,000) which represents Fifty Thousand Dollars ($50,000) multiplied by
the thirty-eight (38) states in which GALAC holds Certificates of Authority, as set forth on Schedule 4(a), in addition to the
District of Columbia, for which there will be no additional payment, ((i)- (iii) herein, collectively, the “Purchase Price”).

 

For greater clarity and the avoidance of
doubt, an example calculation of the Purchase Price is set forth on Exhibit 2(e) attached hereto. Such example on Exhibit
2(e) is for illustrative purposes only.

 

3.            Representations
and Warranties Concerning Transaction.

 

(a)     Representations
and Warranties of Seller and Parent.  Seller and Parent jointly and severally represent and warrant to Buyer that the statements
contained in this Section 3(a) are correct and complete as of the date of this Agreement and will be correct and complete as of
the Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout
this Section 3(a)) or itself, except as set forth in Annex I attached hereto.

 

(i)     Organization
of Seller. Seller is duly organized, validly existing, and in good standing under the laws of the State of Ohio.

 

(ii)     Authorization
of Transaction. Seller has full corporate power and authority to execute and deliver this Agreement and to perform its obligations
hereunder. This Agreement constitutes the valid and legally binding obligation of Seller, enforceable in accordance with its terms
and conditions. Seller is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval
of any government or governmental agency in order to consummate the transactions contemplated by this Agreement. The execution,
delivery and performance of this Agreement and all other agreements contemplated hereby have been duly authorized by Seller.

 

    	5

    	 

    

 

(iii)     Non-contravention.
Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (A) violate
any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Seller is subject or, any provision of its Certificate of Incorporation, Bylaws or other
governing documents, (B) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which Seller is a party or by which it is bound or to which any of its assets are
subject, or (C) result in the imposition or creation of a Lien upon or with respect to GALAC Shares.

 

(iv)     Brokers’
Fees. Seller has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to
the transactions contemplated by this Agreement.

 

(v)     GALAC
Shares. Seller holds of record and owns beneficially the number of GALAC Shares set forth next to its name in Section 4(b)
of the Disclosure Schedule, free and clear of any restrictions on transfer (other than any restrictions under the Securities Act
and state securities laws), taxes, Liens, options, warrants, purchase rights, contracts, commitments, equities, claims, and demands.
Seller is not a party to any option, warrant, purchase right, or other contract or commitment (other than this Agreement) that
could require Seller to sell, transfer, or otherwise dispose of any capital stock of GALAC. Seller is not a party to any voting
trust, proxy, or other agreement or understanding with respect to the voting of any capital stock of GALAC.

 

(b)     Buyer’s
Representations and Warranties.  Buyer represents and warrants to Seller that the statements contained in this Section 3(b)
are correct and complete as of the date of this Agreement and will be correct and complete as of the Closing Date (as though made
then and as though the Closing Date were substituted for the date of this Agreement throughout this Section 3(b)), except as set
forth in Annex II attached hereto.

 

(i)     Organization
of Buyer. Buyer is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware.

 

(ii)     Authorization
of Transaction. Buyer has full power and authority to execute and deliver this Agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of Buyer, enforceable in accordance with its terms and conditions.
Buyer is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order to consummate the transactions contemplated by this Agreement. The execution, delivery and performance
of this Agreement and all other agreements contemplated hereby have been duly authorized by Buyer.

 

(iii)     Non-contravention.
Neither the execution and delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (A) violate
any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Buyer is subject or any provision of its Certificate of Incorporation, Bylaws, or other
governing documents or (B) conflict with, result in a breach of, constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract, lease,
license, instrument, or other arrangement to which Buyer is a party or by which it is bound or to which any of its assets are subject.

 

    	6

    	 

    

 

(iv)     Brokers’
Fees. Buyer has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.

 

(v)     Investment.
Buyer is not acquiring the GALAC Shares with a view to or for sale in connection with any distribution thereof within the meaning
of the Securities Act.

 

4.            Representations
and Warranties Concerning GALAC. Seller and Parent jointly and severally represent and warrant to Buyer that the statements
contained in this Section 4 are correct and complete as of the date of this Agreement and will be correct and complete as of the
Closing Date (as though made then and as though the Closing Date were substituted for the date of this Agreement throughout this
Section 4), except as set forth in the disclosure schedule delivered by Seller to Buyer on the date hereof and initialed by the
Parties (the “Disclosure Schedule”). The Disclosure Schedule will be arranged in paragraphs corresponding to
the lettered and numbered paragraphs contained in this Section 4.

 

(a)      Organization,
Qualification, and Corporate Power. GALAC is a corporation duly organized, validly existing, and in good standing under the
laws of the State of Ohio. GALAC is duly authorized to conduct business and is in good standing (or the local law equivalent) under
the laws of each jurisdiction where such qualification is required, except where the lack of such qualification would not have
a Material Adverse Effect. GALAC has full corporate power and authority to carry on the business in which it is engaged and to
own and use the properties owned and used by it. Section 4(a) of the Disclosure Schedule lists the directors and officers of GALAC
and also lists all currently effective Certificates of Authority held by GALAC.

 

(b)     Capitalization.
The entire authorized capital stock of GALAC consists of 200,000 GALAC Shares, of which 200,000 GALAC Shares are issued and outstanding
and -0- GALAC Shares are held in treasury. All of the issued and outstanding GALAC Shares have been duly authorized, are validly
issued, fully paid, and non-assessable, and are held of record by the Seller as set forth in Section 4(b) of the Disclosure Schedule.
There are no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights,
or other contracts or commitments that could require GALAC to issue, sell, or otherwise cause to become outstanding any of its
capital stock. There is no outstanding or authorized stock appreciation, phantom stock, profit participation, or similar rights
with respect to GALAC. There are no voting trusts, proxies, or other agreements or understandings with respect to the voting of
the capital stock of GALAC.

 

    	7

    	 

    

 

(c)     Non-contravention.
Neither the execution and the delivery of this Agreement, nor the consummation of the transactions contemplated hereby, will (i)
violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction
of any government, governmental agency, or court to which GALAC is subject or any provision of the Articles of Incorporation or
Code of regulations of GALAC or (ii) conflict with, result in a breach of, constitute a default under, result in the acceleration
of, create in any party the right to accelerate, terminate, modify, or cancel, or require any notice under any agreement, contract,
lease, license, instrument, or other arrangement to which GALAC is a party or by which it is bound or to which any of its assets
is subject (or result in the imposition of any Lien upon any of its assets), except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure to give notice, or Lien would not have a Material Adverse Effect.
GALAC is not required to give any notice to, make any filing with, or obtain any authorization, consent, or approval of any government
or governmental agency in order for the Parties to consummate the transactions contemplated by this Agreement, except where the
failure to give notice, to file, or to obtain any authorization, consent, or approval would not have a Material Adverse Effect.

 

(d)     Brokers’
Fees. GALAC has no liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement.

 

(e)     Title
to Assets. GALAC has good and marketable title to, or a valid leasehold interest in, the properties and assets used by them,
or shown on the Most Recent Balance Sheet or acquired after the date thereof, free and clear of all Liens, except for properties
and assets disposed of in the Ordinary Course of Business since the date of the Most Recent Balance Sheet and excepting the assets
distributed to Seller in the Pre-Closing Dividend and transferred pursuant to Section 5(f).

 

(f)     Subsidiaries.
GALAC has no Subsidiaries.

 

(g)     Financial
Statements. Attached hereto as Exhibit 4(g) are the following financial statements (collectively the “Financial
Statements”): (i) audited balance sheets and statements of income, changes in stockholders’ equity, and cash flow
as of and for the fiscal years ended December 31, 2008, December 31, 2009 and December 31, 2010, (the “Most Recent Fiscal
Year End”) for GALAC; and (ii) unaudited consolidated balance sheets and statements of income, changes in stockholders’
equity, and cash flow (the “Most Recent Financial Statements”) as of and for the six (6) months ended June 30,
2011 (the “Most Recent Fiscal Month End”) for GALAC. The Financial Statements (including the notes thereto)
have been prepared in accordance with SAP throughout the periods covered thereby and, excepting the effects of the Pre-Closing
Dividend and of the actions taken by Seller pursuant to Section 5(f), present fairly in all material respects the financial condition
of GALAC as of such dates and the results of operations of GALAC for such periods; provided, however, that the Most Recent Financial
Statements are subject to normal year-end adjustments (which will not be material individually or in the aggregate) and lack footnotes
and other presentation items and that the Financial Statements do not reflect the Pre-Closing Dividend.

 

(h)     Undisclosed
Liabilities. GALAC has no material liability (whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated, and whether due or to become due, including any liability
for taxes), except for (i) liabilities set forth on the face of the Most Recent Balance Sheet (rather than in any notes thereto)
and (ii) liabilities that have arisen after the Most Recent Fiscal Month End in the Ordinary Course of Business.

 

    	8

    	 

    

 

(i)     Legal
Compliance.  GALAC has complied with all applicable laws (including rules, regulations, codes, plans, injunctions, judgments,
orders, decrees, rulings, and charges thereunder and including the Foreign Corrupt Practices Act, 15 U.S.C. 78dd-1 et seq.)
of federal, state, local, and non-U.S. governments (and all agencies thereof), and no action, suit, proceeding, hearing, investigation,
charge, complaint, claim, demand, or notice has been filed or commenced against any of them alleging any failure so to comply,
except where the failure to comply would not have a Material Adverse Effect.

 

(j)     Governmental
Authorization.  The execution, delivery and performance by the Seller of this Agreement and all ancillary documents and the
consummation of the transactions contemplated hereby and thereby do not require any consent, exemption, authorization, approval
or deemed approval of, or filing with any governmental authority to be made or obtained by the Seller other than those set forth
on Schedule 4(j) hereto. Further, Seller represents that the California Department of Insurance has determined that GALAC is currently
exempt from any obligations of a California commercially domiciled insurer under the California Insurance Code for the year ended
2010 and no Form A filing in California is required for this transaction. The exemption is attached as part of Schedule 4(j) hereto.

 

(k)     Tax
Matters.  Except as set forth on Section 4(k) of the Disclosure Schedule:

 

(i)      All
Tax Returns required to be filed with respect to GALAC have been timely filed with the appropriate Tax authorities. All Tax Returns
are true, complete, and correct in all material respects as they relate to GALAC. All Taxes payable with respect to GALAC have
been duly paid in full or accrued for. There are no liens for Taxes (other than Taxes not yet due and payable) upon the stock or
assets of GALAC.

 

(ii)      There
is no audit, examination, or other matter in controversy with respect to any Taxes due and owing insofar as any such matter pertains
to GALAC and there is no Tax deficiency or claim assessed or, to knowledge of GALAC or Seller, proposed or threatened (whether
orally or in writing) insofar as any such deficiency or claims pertains to GALAC.

 

(iii)      All
Taxes required to have been withheld and paid in connection with amounts paid or owing to any employee, independent contractor,
creditor, stockholder, or other third party in respect of GALAC, have been withheld, and such withheld Taxes have either been duly
paid to the proper governmental authority or set aside in accounts for such purpose. Neither GALAC nor Seller has waived any statutory
period of limitations for the assessment of any Taxes relating to GALAC or agreed to any extension of time with respect to a Tax
assessment or deficiency relating to GALAC other than in the case of any such waivers or extensions in respect of an assessment
or deficiency of Tax the liability for which has been satisfied or settled.

 

    	9

    	 

    

 

 

(iv)        GALAC
has no liability for the Taxes of any person other than GALAC under Treasury Regulation Section 1.1502-6 (or any similar provision
of state, local or foreign law) or under the Tax Allocation Agreement.

 

(l)          Powers
of Attorney. To the Knowledge of Seller, there are no outstanding powers of attorney executed on behalf of GALAC.

 

(m)        Litigation.
Schedule 4(m) sets forth each instance in which GALAC (i) is subject to any outstanding injunction, judgment, order, decree, ruling,
or charge or (ii) is a party or, to the Knowledge of Seller, is threatened to be made a party to any action, suit, proceeding,
hearing, or investigation of, in, or before (or that could come before) any court or quasi-judicial or administrative agency of
any federal, state, local, or non-U.S. jurisdiction or before (or that could come before) any arbitrator.

 

(n)        Employees.
GALAC has no employees.

 

(o)        Guaranties.
GALAC is not a guarantor or otherwise is responsible for any liability or obligation (including indebtedness) of any other Person.

 

(p)        Securities
Transactions. GALAC has complied with all applicable state and federal laws and regulations in its Securities Transactions.

 

(q)       Unclaimed
Property. GALAC has complied with all applicable laws and regulations with respect to unclaimed property.

 

(r)        In-Force
Policies. GALAC has no in-force insurance policies other than those set forth in Schedule 4(r) hereto.

 

5.            Pre-Closing
Covenants. The Parties agree as follows with respect to the period between the execution of this Agreement and the Closing:

 

(a)        General.
Each of the Parties will use its reasonable best efforts to take all action and to do all things necessary, proper, or advisable
in order to consummate and make effective the transactions contemplated by this Agreement (including satisfaction, but not waiver,
of the Closing conditions set forth in Section 7 below).

 

(b)        Notices
and Consents. Seller will cause GALAC to give any notices to third parties, and will cause GALAC to use its reasonable best
efforts to obtain any third-party consents referred to in Section 4(c) above, and the items set forth in Section 5(b) of the Disclosure
Schedule. Each of the Parties will (and Seller will cause GALAC to) give any notices to, make any filings with, and use its reasonable
best efforts to obtain any authorizations, consents, and approvals of governments and governmental agencies in connection with
the matters referred to in Sections 3(a)(ii), 3(b)(ii), and 4(c) above. Each Party shall bear its own costs and expenses in pursuing
and obtaining such consents. The Parties shall begin the process of obtaining consents upon the execution of the Agreement, but
in no event more than five (5) business days following execution.

 

    	10

    	 

    

 

(c)     Access.
Seller shall permit and the seller will cause GALAC to permit, representatives of Buyer (including legal counsel and accountants)
to have reasonable access during normal business hours, to all premises, properties, personnel, books, records (including tax records),
contracts and documents of or pertaining to GALAC. Buyer will treat and hold as such any Confidential Information it receives from
Seller or GALAC in the course of the reviews contemplated by this Section 5(c), will not use any of the Confidential Information
except in connection with this Agreement, and, if this Agreement is terminated for any reason whatsoever, will return to Seller
and GALAC all tangible embodiments (and all copies) of the Confidential Information which are in its possession.

 

(d)     Notice
of Developments. Seller will give prompt written notice to Buyer of any material adverse development causing a breach of any
of the representations and warranties in Section 4 above. Each Party will give prompt written notice to the others of any material
adverse development causing a breach of any of his, her, or its own representations and warranties in Section 3 above. No disclosure
by any Party pursuant to this Section 5(d), however, shall be deemed to amend or supplement Annex I, Annex II, or the Disclosure
Schedule or to prevent or cure any misrepresentation, breach of warranty, or breach of covenant.

 

(e)     Exclusivity.
Seller will not (and Seller will not cause or permit GALAC to) (i) solicit, initiate, or encourage the submission of any proposal
or offer from any Person relating to the acquisition of any capital stock or other voting securities, or any substantial portion
of the assets, of GALAC (including any acquisition structured as a merger, consolidation, or share exchange) or (ii) participate
in any discussions or negotiations regarding, furnish any information with respect to, assist or participate in, or facilitate
in any other manner any effort or attempt by any Person to do or seek any of the foregoing. Seller will not vote its GALAC Shares
in favor of any such acquisition.

 

(f)     Reinsurance
of GALAC Policies. Prior to the Closing, Seller shall, at its sole cost and expense, have reinsured, with Great American Life
Insurance Company (the “Reinsurer”), all of the in-force life, annuity or accident and health insurance policies
and business of GALAC or, in the alternative, shall have transferred, at its sole cost and expense, all such in-force business
either to an Affiliate or to a third party reasonably acceptable to Buyer. The reinsurance treaty or agreement shall be subject
to the approval of the Buyer (which approval shall not be unreasonably withheld, conditioned or delayed). The reinsurance treaty
or agreement shall provide that Seller or the Reinsurer will be responsible for the administration of all in-force policies, including
but not limited to issuing annual statements, in force illustrations, and payment of claims. The reinsurance treaty or agreement
shall further provide that the Seller or the Reinsurer is responsible for direct payment of all claims and benefits under the policies
and contracts. In the alternative, Seller shall have transferred, at its sole cost and expense, all such in-force business either
to an Affiliate or to a third party reasonably acceptable to Buyer. The reinsurance treaty or agreement or the agreement transferring
the policies to an affiliate or third party shall provide for indemnification against all claims and Adverse Consequences related
to the in-force policies. Seller shall be responsible for obtaining all governmental consents and approvals necessary for such
reinsurance or transfer transactions, including obtaining approval for any policy form endorsements and the cost of sending all
such endorsements to the in-force policy or contract owners. For the avoidance of doubt, the assets of GALAC as of the Closing
shall not include any of such in-force insurance policies or business, all of which shall be transferred out of GALAC prior to
the Closing. Neither the assets nor liabilities of GALAC, as of the Closing Date, include any in-force insurance policies or contracts.
The Coinsurance Agreement, attached hereto as Exhibit 5(f) shall be effective as of June 30, 2011.

 

    	11

    	 

    

 

6.            Post-Closing
Covenants.  The Parties agree as follows with respect to the period following the Closing:

 

(a)     General.
In case at any time after the Closing any further actions are necessary to carry out the purposes of this Agreement, each of the
Parties will take such further actions (including the execution and delivery of such further instruments and documents) as any
other Party may reasonably request, all at the sole cost and expense of the requesting Party (unless the requesting Party is entitled
to indemnification therefor under Section 8 below). Seller acknowledges and agrees that from and after the Closing Buyer will be
entitled to possession of all documents, books, records (including copies of tax records but excluding consolidated federal and
state Income Tax Returns of AFG), agreements, and financial data of any sort relating to GALAC.

 

(b)     Litigation
Support. In the event and for so long as any Party actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with (i) any transaction contemplated under this Agreement
or (ii) any fact, situation, circumstance, status, condition, activity, practice, plan, occurrence, event, incident, action, failure
to act, or transaction on or prior to the Closing Date involving GALAC, each of the other Parties will cooperate with it and its
counsel in the contest or defense, make available his, her, or its personnel, and provide such testimony and access to his, her,
or its books and records as shall be necessary in connection with the contest or defense, all at the sole cost and expense of the
contesting or defending Party (unless the contesting or defending Party is entitled to indemnification therefor under Section 8
below).

 

(c)     Confidentiality.
Seller will treat and hold as such all of the Confidential Information, refrain from using any of the Confidential Information
except in connection with this Agreement, and deliver promptly to Buyer or destroy, at the request and option of Buyer, all tangible
embodiments (and all copies) of the Confidential Information that are in his, her, or its possession. In the event that Seller
is requested or required pursuant to oral or written question or request for information or documents in any legal proceeding,
interrogatory, subpoena, civil investigative demand, or similar process to disclose any Confidential Information, that Seller will
notify Buyer promptly of the request or requirement so that Buyer may seek an appropriate protective order or waive compliance
with the provisions of this Section 6(c). If, in the absence of a protective order or the receipt of a waiver hereunder, Seller
is, on the advice of counsel, compelled to disclose any Confidential Information to any tribunal or else stand liable for contempt,
that Seller may disclose the Confidential Information to the tribunal; provided, however, that the disclosing Seller shall use
its reasonable best efforts to obtain, at the reasonable request of Buyer, an order or other assurance that confidential treatment
will be accorded to such portion of the Confidential Information required to be disclosed as Buyer shall designate.

 

(d)     Use
of Name.

 

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(i)     In
the event Buyer shall not have sought or, if it shall have so sought, and Buyer shall not have obtained required approvals of the
applicable governmental authorities to a change of GALAC’s name effective as of the Closing Date, following the Closing Date,
Buyer shall cause GALAC to promptly undertake such actions to obtain all consents or approval of governmental authorities as shall
be necessary to change its corporate name to a name that does not include the words “Great American,” including without
limitation filings with applicable insurance regulators.

 

(ii)         Pending
the change of GALAC’s corporate name, for a period of no longer than sixty (60) days following the Closing Date, GALAC may
use the name “Great American Life Assurance Company” and reasonable variations thereof in its business in a manner
consistent with its current business practices, including without limitation the use of preprinted letterhead and forms setting
forth such name; provided that, upon written request of GALAC, such sixty (60) days period shall be extended for a reasonable time,
not to exceed an additional sixty (60) day’s time, however, in the event that GALAC’s name shall not have been changed
as contemplated by this Section 6(d) hereof despite the best efforts of GALAC and Buyer to effect such name change.

 

(e)     Re-Domestication.
After the Closing, Buyer may, at its sole cost and expense, re-domesticate GALAC to a jurisdiction of its choice within the United
States of America. If requested by Buyer, Seller shall cooperate with Purchaser to the extent reasonably necessary to effect this
re-domestication, in the form of providing documentation or authorizations and also in the form of engaging in discussions with
the Ohio Department of Insurance to facilitate re-domestication. Buyer covenants that it shall not commence marketing products
in any state pursuant to GALAC’s Certificate of Authority in such state prior to receiving all necessary regulatory approvals.

 

(f)     Filings.
After the Closing, Seller shall be responsible for all filings, including financial, actuarial, regulatory and tax filings for
all periods up to and including the Closing Date. Buyer shall be responsible for all filings including financial, regulatory and
tax filings for all periods following the Closing Date.

 

7.            Conditions
to Obligation to Close.

 

(a)     Conditions
to Buyer’s Obligation. The obligation of Buyer to consummate the transactions to be performed by it in connection with
the Closing is subject to satisfaction of the following conditions:

 

(i)     the
representations and warranties set forth in Sections 3(a) and 4 above shall be true and correct in all material respects at and
as of the Closing Date, except to the extent that such representations and warranties are qualified by the term “material,”
or contain terms such as “Material Adverse Effect” or “Material Adverse Change,” in which case such representations
and warranties (as so written, including the term “material” or “Material”) shall be true and correct in
all respects at and as of the Closing Date;

 

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(ii)     Seller
shall have performed and complied with all of its covenants hereunder in all material respects through the Closing, except to the
extent that such covenants are qualified by the term “material,” or contain terms such as “Material Adverse Effect”
or “Material Adverse Change,” in which case Seller shall have performed and complied with all of such covenants (as
so written, including the term “material” or “Material”) in all respects through the Closing;

 

(iii)     GALAC
shall have procured all of the third-party consents specified in Section 5(b) above;

 

(iv)     no
action, suit, or proceeding shall be pending before any court or quasi-judicial or administrative agency of any federal, state,
local, or non-U.S. jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the transactions contemplated by this Agreement, (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation, (C) adversely affect the right of Buyer to own GALAC Shares
and to control GALAC, or (D) materially and adversely affect the right of GALAC to own its assets and to operate its business (and
no such injunction, judgment, order, decree, ruling, or charge shall be in effect);

 

(v)     Seller
shall have delivered to Buyer a certificate to the effect that each of the conditions specified above in Section 7(a)(i)-(iv) is
satisfied in all respects;

 

(vi)     Seller,
Buyer and GALAC, as the case may be, shall have received all other material authorizations, consents, and approvals of governments
and governmental agencies referred to in Sections 3(a)(ii), 3(b)(ii), and 4(c) above;

 

(vii)     Buyer
shall have received the resignations, effective as of the Closing, of each director and officer of GALAC;

 

(viii)      all
actions to be taken by Seller in connection with consummation of the transactions contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form
and substance to Buyer;

 

(ix)     Seller
shall have delivered to Buyer copies of the certificate of incorporation of Seller and GALAC certified on or soon before the Closing
Date by the Secretary of State (or comparable officer) of the jurisdiction of each such Person’s incorporation;

 

(x)     Seller
shall have delivered to Buyer copies of the certificate of good standing of Seller and GALAC issued on or soon before the Closing
Date by the Secretary of State (or comparable officer) of the jurisdiction of each such Person’s organization; and,

 

(xi)     Seller
shall have delivered to Buyer a certificate of the secretary or an assistant secretary of GALAC, dated the Closing Date, in form
and substance reasonably satisfactory to Buyer, as to: (i) no amendments to the certificate of incorporation of GALAC since the
date specified in clause (x) above; (ii) the bylaws of GALAC; and (iii) any resolutions of the board of directors (or a duly authorized
committee thereof) of GALAC relating to this Agreement and the transactions contemplated hereby.

 

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(xii)     GALAC
and Great American Life Insurance Company will have entered into the Coinsurance Agreement, attached hereto as Exhibit 5(f).

 

(xiii)     As
applicable, Seller shall, prior to closing, have used its best efforts to cause all Certificates of Authority, used to complete
the Purchase Price in 2(b)(iv) above, to expire no earlier than July 1, 2012. Without limiting the generality of the foregoing,
the parties acknowledge that renewal processes vary by state and the intent of this provision is that Seller will have taken all
reasonably available steps to extend the expiration dates of the Certificates of Authority.

 

Buyer may waive any condition specified
in this Section 7(a) if it executes a writing so stating at or prior to the Closing.

 

(b)      Conditions
to Seller’s Obligation.  The Seller’s obligation to consummate the transactions to be performed by them in connection
with the Closing is subject to satisfaction of the following conditions

 

(i)     the
representations and warranties set forth in Section 3(b) above shall be true and correct in all material respects at and as of
the Closing Date, except to the extent that such representations and warranties are qualified by the terms “material,”
or contain terms such as “Material Adverse Effect” or “Material Adverse Change,” in which case such representations
and warranties (as so written, including the term “material” or “Material”) shall be true and correct in
all respects at and as of the Closing Date;

 

(ii)     Buyer
shall have performed and complied with all of its covenants hereunder in all material respects through the Closing, except to the
extent that such covenants are qualified by the term “material,” or contain terms such as “Material Adverse Effect”
or “Material Adverse Change,” in which case Buyer shall have performed and complied with all of such covenants (as
so written, including the term “material” or “Material”) in all respects through the Closing;

 

(iii)     no
action, suit, or proceeding shall be pending before any court or quasi-judicial or administrative agency of any federal, state,
local, or non-U.S. jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or
charge would (A) prevent consummation of any of the transactions contemplated by this Agreement or (B) cause any of the transactions
contemplated by this Agreement to be rescinded following consummation (and no such injunction, judgment, order, decree, ruling,
or charge shall be in effect);

 

(iv)     Buyer
shall have delivered to Seller a certificate to the effect that each of the conditions specified above in Section 7(b)(i)-(iii)
is satisfied in all respects;

 

(v)     GALAC
shall immediately prior to the Closing, have declared and paid to Seller a dividend equal to an amount such that GALAC’s
remaining statutory capital equals the capital deposits required by the state insurance department at Closing (the “Dividend
Amount”);

 

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(vi)     all
actions to be taken by Buyer in connection with consummation of the transactions contemplated hereby and all certificates, opinions,
instruments, and other documents required to effect the transactions contemplated hereby will be reasonably satisfactory in form
and substance to Seller.

 

Seller may waive any condition specified
in this Section 7(b) on behalf of Seller if they execute a writing so stating at or prior to the Closing.

 

8.            Remedies
for Breaches of This Agreement.

 

(a)     Survival
of Representations and Warranties. All of the representations and warranties of Seller and GALAC contained in Sections 3 and
4 above shall survive the Closing hereunder (even if Buyer knew or had reason to know of any misrepresentation or breach of warranty
at the time of Closing) and continue in full force and effect for a period of eighteen (18) months thereafter, provided that (i)
the representations and warranties of Seller and GALAC contained in Sections 3(a)(i), 3(a)(ii), 3(a)(v), 3(b)(i), 3(b)(ii), 4(a),
4(b), and 4(e) shall survive indefinitely; (ii) representations and warranties related to the reinsurance of all in-force insurance
policies shall continue in full force and effect for the duration of the policy, contract or claim plus any applicable statute
of limitations plus thirty (30) days; (iii) all representations and warranties related to tax matters shall survive the closing
and continue in full force and effect until thirty (30) days following the expiration of the applicable statute of limitations,
including any extension thereto.

 

(b)     Indemnification
Provisions for Buyer’s Benefit.

 

(i)     In
the event Seller or Parent breaches any of its representations, warranties, and covenants contained herein (other than the covenants
in Section 2(a) above and the representations and warranties in Section 3(a) above), and provided that Buyer makes a written claim
for indemnification against Seller or Parent pursuant to Section 12(g) below within the survival period (if there is an applicable
survival period pursuant to Section 8(a) above) then Seller and Parent shall be jointly and severally obligated to indemnify Buyer
from and against the entirety of any Adverse Consequences Buyer may suffer (including any Adverse Consequences Buyer may suffer
after the end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by the
breach.

 

(ii)      In
the event Seller breaches any of its covenants in Section 2(a) above or Seller or Parent breaches any of its representations and
warranties in Section 3(a) above and provided that Buyer makes a written claim for indemnification against Seller or Parent pursuant
to Section 12(g) below within the survival period (if there is an applicable survival period pursuant to Section 8(a) above), then
Seller and Parent shall be jointly and severally obligated to indemnify Buyer from and against the entirety of any Adverse Consequences
Buyer shall suffer (including any Adverse Consequences Buyer shall suffer after the end of any applicable survival period) resulting
from, arising out of, relating to, in the nature of, or caused by the breach.

 

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(c)     Indemnification
Provisions for Seller’s Benefit. In the event Buyer breaches any of its representations, warranties, and covenants contained
herein and provided that Seller makes a written claim for indemnification against Buyer pursuant to Section 12(g) below within
the survival period (if there is an applicable survival period pursuant to Section 8(a) above), then Buyer agrees to indemnify
Seller from and against the entirety of any Adverse Consequences suffered (including any Adverse Consequences suffered after the
end of any applicable survival period) resulting from, arising out of, relating to, in the nature of, or caused by the breach.
Buyer shall also reimburse Seller, on a first dollar, dollar for dollar basis, for all GALAC statutory surplus in excess of insurance
department deposits as of the Closing not distributed to Seller pursuant to the Pre-Closing Dividend.

 

(d)     Matters
Involving Third Parties.

 

(i)     If
any third party notifies any Party (the “Indemnified Party”) with respect to any matter (a “Third-Party
Claim”) that may give rise to a claim for indemnification against any other Party (the “Indemnifying Party”)
under this Section 8, then the Indemnified Party shall promptly notify each Indemnifying Party thereof in writing; provided, however,
that no delay on the part of the Indemnified Party in notifying any Indemnifying Party shall relieve the Indemnifying Party from
any obligation hereunder unless (and then solely to the extent) the Indemnifying Party is thereby prejudiced.

 

(ii)     Any
Indemnifying Party will have the right to assume the defense of the Third-Party Claim with counsel of his, her, or its choice reasonably
satisfactory to the Indemnified Party at any time within 15 days after the Indemnified Party has given notice of the Third-Party
Claim; provided, however, that the Indemnifying Party must conduct the defense of the Third-Party Claim actively and diligently
thereafter in order to preserve his, her, or its rights in this regard; and provided further that the Indemnified Party may retain
separate co-counsel at its sole cost and expense and participate in the defense of the Third-Party Claim.

 

(iii)     In
the event none of the Indemnifying Parties assumes and conducts the defense of the Third-Party Claim in accordance with Section
8(d)(ii) above, however, (A) the Indemnified Party may defend against, and consent to the entry of any judgment on or enter into
any settlement with respect to, the Third-Party Claim in any manner he, her, or it may reasonably deem appropriate (and the Indemnified
Party need not consult with, or obtain any consent from, any Indemnifying Party in connection therewith) and (B) the Indemnifying
Parties will remain responsible for any Adverse Consequences the Indemnified Party may suffer resulting from, arising out of, relating
to, in the nature of, or caused by the Third-Party Claim to the fullest extent provided in this Section 8.

 

(e)     Determination
of Adverse Consequences. Indemnification payments under this Section 8 shall be paid by the Indemnifying Party without reduction
for any tax benefits available to the Indemnified Party.

 

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(f)     Exclusive
Remedy. Buyer and Seller acknowledge and agree that the foregoing indemnification provisions in this Section 8 shall be the
exclusive remedy of Buyer and Seller with respect to GALAC and the transactions contemplated by this Agreement. Seller and Parent
each hereby agrees that it will not make any claim for indemnification against GALAC by reason of the fact that it was a shareholder
or agent of GALAC or was serving at the request of as a partner, trustee, director, officer, employee, or agent of another entity
(whether such claim is for judgments, damages, penalties, fines, costs, amounts paid in settlement, losses, expenses, or otherwise
and whether such claim is pursuant to any statute, charter document, bylaw, agreement, or otherwise) with respect to any action,
suit, proceeding, complaint, claim, or demand brought by Buyer against Seller (whether such action, suit, proceeding, complaint,
claim, or demand is pursuant to this Agreement, applicable law, or otherwise).

 

9.            Tax
Matters.

 

(i)     The
Tax Allocation Agreement as it relates to GALAC shall be applied to the period that includes the closing date and shall be terminated
as of the Closing Date and shall have no further effect for any taxable year commencing after the Closing Date.

 

(ii)     Seller
shall include the income of GALAC (including any deferred items triggered into income by Treasury Regulation Section 1.1502-13
and any excess loss account taken into income under Treasury Regulation Section 1.1502-19) on the consolidated federal income Tax
Returns of AFG and on the appropriate combined or consolidated state income tax returns for all periods though the end of the Closing
Date and pay any income Taxes attributable to such income. Such Tax Returns shall be prepared and filed in a manner consistent
with prior practice, except as required by any change in applicable law. Buyer shall cause GALAC to furnish Tax information to
Seller for inclusion in GALAC Tax Returns for the period that includes the Closing Date in accordance with GALAC’s past custom
and practice. The income of GALAC shall be apportioned to the period up to and including the Closing Date and the period after
the Closing Date by closing the books of GALAC as of the end of the Closing Date. Should the Closing Date not be the last day of
the month as described in Section 2(c), and should income not be able to be determined by closing the books, the income of GALAC
shall be apportioned to the period up to and including the Closing Date and the period after the Closing Date pursuant to the monthly
allocation method prescribed in Treasury Regulation Section 1.1502-76(b)(2)(iii). Buyer shall cause GALAC to file income Tax Returns
for all periods other than periods ending on or before the Closing Date.

 

(iii)     Buyer
agrees to indemnify Seller for any additional tax owed by Seller (including tax owed by Seller due to this indemnification payment)
resulting from any transaction engaged in by Buyer or GALAC occurring after Buyer’s purchase of GALAC’s stock.

 

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(iv)        Seller
and Buyer shall cooperate fully, as and to the extent reasonably requested by the other party and at the requesting party’s
out-of-pocket expense, in connection with the filing of any Tax Returns for GALAC, the filing and prosecution of any Tax claims
and any audit, litigation or other proceeding with respect to Taxes payable by GALAC. Seller shall be responsible for all audits
of Tax Returns filed by Seller. Buyer shall be responsible for all audits of Tax Returns filed by Buyer. Such cooperation shall
include the retention of all books and records relating to GALAC’s Taxes for a period of six (6) years after the Closing
and (upon the other party’s request and expense) the provision of records and information which are reasonably relevant to
any such audit, litigation or other proceeding and making employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.

 

(v)         After
the Closing, the Seller or the Buyer, as the case may be shall provide or shall cause to be provided reimbursement for any Taxes
paid after the Closing by one party or its Affiliates that are the responsibility of the other party or its Affiliates. Within
a reasonable time prior to the payment of any such Taxes, the indemnified party paying such taxes shall give written notice to
the indemnifying party, although failure to do so will not relieve the indemnifying party of its liability hereunder except to
the extent the indemnifying party is actually prejudiced thereby. Subject to the delivery of prior written notice regarding any
such Taxes, the party required to provide reimbursement hereunder shall pay such amount on the later to occur of (i) the date payment
is made by the party paying such Taxes and (ii) (5) Business Days after receipt of such prior written notice.

 

(vi)        For
Purposes of this Section, any liability for Taxes attributable to a taxable period that begins before and ends after the Closing
Date shall be apportioned between the Pre-Closing Period and the portion of such taxable period beginning on the day after the
Closing Date (i) in the case of real and personal property Taxes on a per diem basis and (ii) in the case of all other Taxes, other
than taxes calculated pursuant to clause (ii) of this Section, on the basis of a closing of the books as of the end of the Closing
Date.

 

(vii)       Any
Tax refunds that are received by Buyer or GALAC, and any amounts credited against Tax to which Buyer or GALAC become entitled,
that relate to Tax periods or portions thereof ending on or before the Closing Date and exceed the amount recorded on the Closing
Balance Sheet, shall be for the account of Seller, and Buyer shall pay over to Seller any such refund or the amount of any such
credit, in excess of the amount recorded on the Closing Balance Sheet within 15 days after receipt or entitlement thereto. In addition,
to the extent that a claim for refund or proceeding results in a payment or credit against Tax by a taxing authority to Buyer or
GALAC of any amount accrued on the Closing Balance Sheet, Buyer shall pay such amount in excess of that which has been recorded
on the Closing Balance sheet, to Seller within 15 days after receipt or entitlement thereto.

 

(viii)      To
the extent permitted by law, the Buyer shall cause the Company to elect to relinquish any carryback of net operating losses, net
capital losses, unused Tax credits and other deductible or creditable Tax attributes arising in a period beginning after the Closing
Date to any Pre-Closing Period. In the event Buyer or GALAC is required by law to use any carryback of net operating losses, net
capital losses, unused Tax credits and other deductible or creditable Tax attributes arising in a period after the Closing Date
and applied to any Pre-Closing Period, any Tax refunds that are received by Seller that relate to losses incurred by Buyer or GALAC
during the Post-Closing Tax periods or portions thereof shall be for the account of Buyer and Seller shall pay over to Buyer any
such refund or the amount of any such credit within 15 days after receipt or entitlement thereto.

 

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(ix)         Any
transfer, documentary, sales, use, stamp, registration and other such Taxes and fees (including, recording fees) incurred in connection
with this Agreement and the transactions contemplated hereby (“Transfer Taxes”) shall be paid one-half by Seller
and one-half by Buyer when due, and Seller will file all necessary Tax Returns and other documentation with respect to all such
transfer, documentary, sales use stamp, registration and other Taxes and fees (including record fees), if required by applicable
law. The expense of such filing or filings shall be borne by Seller.

 

(x)          (a)
The Seller and Buyer shall join in an election under Section 338(h)(10) of the Code with respect to the sale and acquisition, respectively,
of the Shares pursuant to this Agreement and any deemed or required under state or local laws comparable or corresponding to Section
338 of the Code resulting from such election under Section 338(h)(10) of the Code (collectively the “Section 338(h)(10) Elections”).
Following the Closing, the Buyer shall prepare, or cause the proper Affiliate to prepare, a duly completed and executed Form 8023,
and within one hundred fifty (150) days of the Closing, provide such Form 8023 to the Seller for approval, which may not be unreasonably
withheld, and signing.

 

(b)(i) In
connection with the Section 338(h)(10) Elections, the Buyer shall prepare IRS Forms 8883 or any successor forms (the “Forms
8883”) on which the allocation of Modified Aggregate Deemed Sale Price and Adjusted Gross Up Basis among the assets of the
Company is made which allocations shall be made in accordance with Sections 338(b) of the Code and any applicable Treasury Regulations;
(ii) within 150 days of Closing, the Buyer shall provide such Forms 8883 to the Seller for its approval, which may not be unreasonably
withheld. (iii) the Seller and the Buyer shall each timely file the Forms 8883 with the IRS; (iv) the Seller and Buyer shall be
bound by the allocations determined pursuant to this paragraph for purposes of determining any Taxes; (v) in the event that any
such allocation is disputed by any taxing authority, the party receiving notice of such dispute shall promptly notify and consult
with the other party hereto concerning resolution of such dispute; (vi) the Seller and the Buyer shall jointly (if necessary) and
timely make all Section 338(h)(10) Elections under state or local Tax law with respect to the Company; and (vii) the Seller and
the Buyer shall report the sale and acquisition, respectively, of the Shares pursuant to this Agreement consistent with the Section
338(h)(10) Elections and shall take no position to the contrary thereto in any Tax Return, any proceeding before any taxing authority
or otherwise.

 

(c) Neither
the Seller nor the Buyer shall, or shall permit any of their respective Affiliates to, take any action to modify any of the forms
or reports (including any corrections, amendments or supplements thereof) that are required for the making of the Section 338(h)(10)
Elections after their execution or to modify or revoke any of the Section 338(h)(10) Elections following the filing of the Forms
8023 by the Buyer without the written consent of the Seller or the Buyer as the case may be.

 

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10.         Real
Property. GALAC owns no real property and leases no real property.

 

11.         Termination.

 

(a)          Termination
of Agreement. Certain of the Parties may terminate this Agreement as provided below:

 

(i)          Buyer
and Seller may terminate this Agreement by mutual written consent at any time prior to the Closing;

 

(ii)         Buyer
may terminate this Agreement by giving written notice to Seller at any time prior to the Closing (A) in the event Seller has breached
any material representation, warranty, or covenant contained in this Agreement in any material respect, Buyer has notified Seller
of the breach, and the breach has continued without cure for a period of 30 days after the notice of breach or (B) if the Closing
shall not have occurred on or before May 31, 2012, by reason of the failure of any condition precedent under Section 7(a) hereof
(unless the failure results primarily from Buyer itself breaching any representation, warranty, or covenant contained in this
Agreement); and

 

(iii)        Seller
may terminate this Agreement by giving written notice to Buyer at any time prior to the Closing (A) in the event Buyer has breached
any material representation, warranty, or covenant contained in this Agreement in any material respect, Seller has notified Buyer
of the breach, and the breach has continued without cure for a period of 30 days after the notice of breach or (B) if the Closing
shall not have occurred on or before May 31, 2012, by reason of the failure of any condition precedent under Section 7(b) hereof
(unless the failure results primarily from Seller breaching any representation, warranty, or covenant contained in this Agreement).

 

(b)          Effect
of Termination. If any Party terminates this Agreement pursuant to Section 11(a) above, all rights and obligations of the
Parties hereunder shall terminate without any liability of any Party to any other Party (except for any liability of any Party
then in breach); provided, however, that the confidentiality provisions contained in Section 5(c)

above shall survive termination.

 

12.         Miscellaneous.

 

(a)          Press
Releases and Public Announcements. No Party shall issue any press release or make any public announcement relating to the
subject matter of this Agreement prior to the Closing without the prior written approval of Buyer and Seller; provided, however,
that any Party may make any public disclosure it believes in good faith is required by applicable law (including state insurance
regulators) or any listing or trading agreement concerning its publicly traded securities (in which case the disclosing Party
will use its reasonable best efforts to advise the other Parties prior to making the disclosure).

 

(b)          No
Third-Party Beneficiaries. This Agreement shall not confer any rights or remedies upon any Person other than the Parties
and their respective successors and permitted assigns.

 

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(c)          Entire
Agreement. This Agreement (including the documents referred to herein) constitutes the entire agreement among the Parties
and supersedes any prior understandings, agreements, or representations by or among the Parties, written or oral, to the
extent they relate in any way to the subject matter hereof.

 

(d)          Succession
and Assignment. This Agreement shall be binding upon and inure to the benefit of the Parties named herein and their
respective successors and permitted assigns. No Party may assign either this Agreement or any of his, her, or its rights,
interests, or obligations hereunder without the prior written approval of Buyer and Seller; provided, however, that Buyer may
(i) assign any or all of its rights and interests hereunder to one or more of its Affiliates and (ii) designate one or more
of its Affiliates to perform its obligations hereunder (in any or all of which cases Buyer nonetheless shall remain
responsible for the performance of all of its obligations hereunder).

 

(e)          Counterparts.
This Agreement may be executed in one or more counterparts (including by means of facsimile), each of which shall be deemed
an original but all of which together will constitute one and the same instrument.

 

(f)          Headings.
The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the
meaning or interpretation of this Agreement.

 

(g)          Notices.
All notices, requests, demands, claims, and other communications hereunder shall be in writing. Any notice, request, demand,
claim, or other communication hereunder shall be deemed duly given (i) when delivered personally to the recipient, (ii) 1
business day after being sent to the recipient by reputable overnight courier service (charges prepaid), (iii) 1 business day
after being sent to the recipient by facsimile transmission or electronic mail, or (iv) 4 business days after being mailed to
the recipient by certified or registered mail, return receipt requested and postage prepaid, and addressed to the intended
recipient as set forth below:

 

    	22

    	 

    

 

	If to Seller or Parent:	 	Copy to:
	 	 	 
	Mark F. Muething	 	Edward E. Steiner
	Great American Financial	 	Keating Muething & Klekamp PLL
	Resources, Inc.	 	Suite 1400
	Great American Tower	 	One East Fourth Street
	301 E. Fourth Street, 39th Floor	 	Cincinnati, Ohio 45202
	Cincinnati, Ohio 45202	 	 
	 	 	 
	If to Buyer:	 	Copy to:
	 	 	 
	Presidential Life Insurance Corporation	 	Cailie Currin, Esq.
	69 Lydecker Street	 	Currin Compliance Services, LLC
	Nyack, New York 10960	 	14 Main Street, Suite 200
	 	 	Greenwich, New York 12834

 

Any Party may change the address to which
notices, requests, demands, claims, and other communications hereunder are to be delivered by giving the other Parties notice in
the manner herein set forth.

 

(h)          Governing
Law. This Agreement shall be governed by and construed in accordance with the domestic laws of the State of Delaware
without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other
jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware.

 

(i)          Amendments
and Waivers. No amendment of any provision of this Agreement shall be valid unless the same shall be in writing and
signed by Buyer and Seller. No waiver by any Party of any provision of this Agreement or any default, misrepresentation, or
breach of warranty or covenant hereunder, whether intentional or not, shall be valid unless the same shall be in writing and
signed by the Party making such waiver nor shall such waiver be deemed to extend to any prior or subsequent default,
misrepresentation, or breach of warranty or covenant hereunder or affect in any way any rights arising by virtue of any prior
or subsequent such occurrence.

 

(j)          Severability.
Any term or provision of this Agreement that is invalid or unenforceable in any situation in any jurisdiction shall not
affect the validity or enforceability of the remaining terms and provisions hereof or the validity or enforceability of the
offending term or provision in any other situation or in any other jurisdiction.

 

(k)          Expenses.
Each Buyer, Seller and GALAC, will bear its own costs and expenses (including legal fees and expenses) incurred in connection
with this Agreement and the transactions contemplated hereby; provided, however, that Seller will also bear the cost and
expenses of GALAC (including all of their legal fees and expenses) in connection with this Agreement and the transactions
contemplated hereby in the event that the transactions contemplated by this Agreement are consummated.

 

    	23

    	 

    

 

(l)          Construction.
The Parties have participated jointly in the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the Parties and no
presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local, or non-U.S. statute or law shall be deemed also to
refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. The word
“including” shall mean including without limitation.

 

(m)          Incorporation
of Exhibits, Annexes, and Schedules. The Exhibits, Annexes, and Schedules identified in this Agreement are incorporated
herein by reference and made a part hereof.

 

    	24

    	 

    

 

IN WITNESS WHEREOF,
the Parties hereto have executed this Agreement as of the date first above written.

 

	 	PRESIDENTIAL LIFE CORPORATION
	 	 
	 	By:	/s/ Donald L. Barnes
	 	Name:	Donald L. Barnes
	 	Title: 	President/Chief Executive Officer
	 	 
	 	GALAC HOLDING COMPANY
	 	 
	 	By:	/s/ Mark F. Muething
	 	Name:	Mark F. Muething
	 	Title: 	Executive Vice President
	 	 
	 	LOYAL AMERICAN LIFE INSURANCE COMPANY
	 	 
	 	By:	/s/ Mark F. Muething
	 	Name:	Mark F. Muething
	 	Title: 	Executive Vice President

 

    	25

    	 

    

 

annex
i

 

1. Seller will be required to obtain a
necessary approval of the Ohio Department of Insurance to pay the dividend contemplated by Section 7(b)(v).

 

2. Seller will be required to obtain a
necessary approval of the Ohio Department of Insurance for the reinsurance transaction contemplated by Section 5(f).

 

    	 

    	 

    

 

annex
ii

 

Buyer will be required to obtain the consent
of the Ohio Department of Insurance.

 

    	 

    	 

    

 

EXHIBIT
2(b)

 

THIS EXAMPLE IS PROVIDED FOR PURPOSES OF
ILLUSTRATION ONLY AND IS NOT INTENDED TO BE BINDING ON BUYER OR SELLER

 

	GALAC’s Total Statutory Capital and Surplus as of June 30, 2011 (Section 2(b)(i))	 	$	7,985,477	 
	 	 	 	 	 
	Plus/Minus Mark to Market as of June 30, 2011 (Section 2(b)(ii))	 	$	593,823	 
	 	 	 	 	 
	Less Dividend Paid Post-Execution (Section 2(b)(iii))	 	$	(5,391,673	)
	 	 	 	 	 
	Plus Value of Licenses (Section 2(b)(iv))	 	$	1,900,000	 
	 	 	 	 	 
	Purchase Price	 	$	5,087,627	 

 

    	 

    	 

    

 

EXHIBIT
2(e)

 

THIS EXAMPLE IS PROVIDED FOR PURPOSES OF
ILLUSTRATION ONLY AND IS NOT INTENDED TO BE BINDING ON BUYER OR SELLER

 

	GALAC’s Total Statutory Capital and Surplus as of December 31, 2011 (Section 2(e)(i))	 	$	3,210,000	*
	 	 	 	 	 
	Plus/Minus Mark to Market as of December 31, 2011 (Section 2(3)(ii))	 	$	15,000	 
	 	 	 	 	 
	Plus Value of Licenses (Section 2(e)(iii))	 	$	1,900,000	 
	 	 	 	 	 
	Purchase Price as of December 31, 2011	 	$	5,125,000	 
	 	 	 	 	 
	Final Purchase Price Calculated Pursuant to Section 2(e)	 	$	5,125,000	 
	 	 	 	 	 
	Less Purchase Price Calculated Pursuant to Section 2(b) and Paid at Closing	 	$	5,087,627	 
	 	 	 	 	 
	If Negative Amount – Seller Pays to Buyer	 	 	N / A	 
	 	 	 	 	 
	If Positive Amount – Buyer Pays to Seller	 	$	37,373	**

 

* Statutory Capital and Surplus per line
38 of page 3 of the December Statement, which will include the effects of the Dividend Amount.

 

** Represents unrealized gain on deposits
from June 30, 2011 to December 31, 2011 of $15,000 and NIR earnings on deposit from June 30, 2011 to December 31, 2011 of $22,373.

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