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Exhibit 2.1
STANDBY PURCHASE AND OPTION AGREEMENT
This Standby Purchase and Option Agreement (the "Agreement") is entered
into as of November 13, 1998, by and between MEEMIC Holdings, Inc., a Michigan
corporation ("MEEMIC Holdings"), ProNational Insurance Company, a Michigan
domiciled stock insurance company ("ProNational") and Professionals Group, Inc.,
a Michigan corporation ("Professionals").
RECITALS
WHEREAS, on June 24, 1998, the Board of Directors of MEEMIC approved a
Plan of Conversion that contemplates the offering of stock in MEEMIC Holdings to
Eligible Policyholders of MEEMIC in accordance with the terms of the Plan of
Conversion;
WHEREAS, on June 24, 1998, MEEMIC filed the Plan of Conversion with the
Michigan Insurance Bureau for approval;
WHEREAS, before proceeding with the Offering contemplated by the Plan
of Conversion the parties desire to commit to writing the obligation of the
Purchaser to purchase Shares of MEEMIC Holdings in certain circumstances as set
forth in this Agreement; and
WHEREAS, pursuant to the Plan of Conversion and in connection with the
transactions contemplated by the Plan of Conversion, MEEMIC Holdings desires to
grant to the Purchaser, and the Purchaser desires to obtain from MEEMIC
Holdings, an option to purchase certain additional Shares of stock of MEEMIC
Holdings upon certain terms and conditions set forth in greater detail below.
NOW, THEREFORE, in consideration of the terms and conditions set forth
in this Agreement, the receipt and sufficiency of which is hereby acknowledged,
MEEMIC Holdings, PICOM and Professionals agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS INCORPORATED BY REFERENCE. The terms set forth
in this Section 1.1 are defined in the Plan of Conversion for MEEMIC, as
approved by the Board of Directors of MEEMIC on June 24, 1998. The parties agree
that for purposes of this Agreement, the terms set forth below, whenever
initially capitalized, shall have the meaning set forth in such Plan of
Conversion. MEEMIC Holdings, PICOM and Professionals acknowledge receiving a
copy of such Plan of Conversion.
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EFFECTIVE DATE;
ELIGIBLE POLICYHOLDERS;
MEEMIC;
OFFERING;
OFFERING MAXIMUM;
OFFERING MINIMUM;
PURCHASE PRICE;
SHARES; and
SUBSCRIPTION OFFERING.
SECTION 1.2 ADDITIONAL DEFINED TERMS. In addition to the defined terms
set forth in Section 1.1, the terms set forth below, whenever initially
capitalized, shall have the meaning set forth in this Section:
"ADJUSTED PURCHASE PRICE" has the meaning set forth in Section 3.1 of
this Agreement.
"AGREEMENT" has the meaning set forth in the first paragraph of this
Agreement.
"CLOSING" has the meaning set forth in Section 4.1 of this Agreement.
"FAIR MARKET VALUE" means with respect to a Share on a given date: (a)
if the Shares are listed for trading on a national securities exchange
(including, for this purpose, the National Market System of the Nasdaq stock
market (the "National Market System") on such date, the daily closing price per
share of the Shares on such exchange (or, if there is more than one, the
principal such exchange); (b) if the Shares are not listed for trading on any
securities exchange (including the National Market System) on such date but are
reported by Nasdaq, and the market information concerning the Shares is
published on a regular basis in THE NEW YORK TIMES, THE WALL STREET JOURNAL, or
Detroit News, the average of the bid and asked price per share of the Shares as
so published; or (c) if (a) is inapplicable and market information concerning
the Shares is not regularly published as described in (b), the average of the
daily bid and asked price per share of the Shares in the over-the-counter market
as reported by Nasdaq (or, if Nasdaq does not report such prices for the Shares,
another generally accepted reporting service).
"INITIAL PRICE FOR THE OPTION SHARES" has the meaning set forth in
Section 3.1 of this Agreement.
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"ISSUANCE DATE FOR OPTION SHARES" has the meaning set forth in Section
3.2 of this Agreement.
"MEEMIC HOLDINGS" has the meaning set forth in the first paragraph of
this Agreement.
"NASDAQ" means the National Association of Securities Dealers Automated
Quotation System.
"OPTION SHARES" means the Shares of MEEMIC Holdings which the Purchaser
has the right to Purchase pursuant to Article III of this Agreement.
"PRONATIONAL" has the meaning set forth in the first paragraph of this
Agreement.
"PLAN OF CONVERSION" means the Plan of Conversion for MEEMIC, as
approved by the Board of Directors of MEEMIC on June 24, 1998.
"PROFESSIONALS" has the meaning set forth in the first paragraph of
this Agreement.
"PURCHASER" means ProNational and Professionals.
"SUBSCRIPTION AMOUNT" means the dollar amount equal to the number of
Shares purchased in the Subscription Offering times the Purchase Price.
SECTION 1.3 CAPTIONS. The captions and headings used in this Agreement
are for convenience only and shall not be used in construing the provisions of
this Agreement.
SECTION 1.4 NUMBER AND GENDER. The use of any gender in this Agreement
shall be deemed to be or include the other genders, including neuter, and the
use of the singular shall be deemed to include the plural (and vice versa)
wherever applicable.
ARTICLE II
REQUIREMENT TO PURCHASE STOCK AND
OPTION TO PURCHASE STOCK
SECTION 2.1 REQUIREMENT TO PURCHASE STOCK. Subject only to the
preconditions to Closing set forth in Article IV of this Agreement, the
Purchaser hereby unconditionally obligates itself to subscribe for, acquire and
purchase the number of Shares which, when multiplied by the Purchase Price,
equals:
The positive difference, if any, remaining after the
Subscription Amount is subtracted from the Offering Minimum.
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SECTION 2.2 RIGHT TO PURCHASE STOCK. Subject only to the preconditions
to Closing set forth in Article IV of this Agreement, MEEMIC Holdings hereby
grants to the Purchaser the right to subscribe for, acquire and purchase the
number of Shares which, when multiplied by the Purchase Price, equals:
The positive difference, if any, remaining after the greater
of (i) the Subscription Amount or (ii) the Offering Minimum
is subtracted from the Offering Maximum.
SECTION 2.3 DETERMINATION OF SUBSCRIPTION AMOUNT. (a) MEEMIC Holdings
agrees to provide written notice to the Purchaser of the Subscription Amount
within five (5) business days after the end of the period in which Participants
are allowed to purchase Shares in the Subscription Offering. In the event that
the Purchaser shall be required to purchase Shares pursuant to Section 2.1 of
this Agreement, the notice from MEEMIC Holdings to the Purchaser shall specify
the number of Shares that the Purchaser is required to purchase and the
calculations in support thereof. In the event that the Purchaser shall have the
right to purchase Shares pursuant to Section 2.2 of this Agreement, the notice
from MEEMIC Holdings to the Purchaser shall specify the number of Shares that
the Purchaser has the right to purchase pursuant to Section 2.2 and the
calculations in support thereof.
(b) The Purchaser shall have five (5) business days after it receives
the notice described in (a) above to notify MEEMIC Holdings of the number of
Shares, if any, it desires to purchase pursuant to Section 2.2 of this
Agreement. Any such notice from the Purchaser to MEEMIC Holdings shall be
irrevocable after it is delivered and after it is delivered MEEMIC Holdings
shall be obligated to deliver the Shares specified in such notice to the
Purchaser in accordance with the terms of this Agreement.
SECTION 2.4 TERMS OF PURCHASE PRICE. The price that the Purchaser shall
pay for any Shares purchased pursuant to Sections 2.1 or 2.2 of this Agreement
shall be the Purchase Price.
SECTION 2.5 FRACTIONAL SHARES. Sections 2.1 and 2.2 of this Agreement
shall not be construed as requiring or allowing the Purchaser to purchase any
fractional Shares. In the event that the calculations set forth in Sections 2.1
and 2.2 of this Agreement would otherwise provide for the purchase of fractional
Shares, then the number of Shares that the Purchaser would be required or
allowed to purchase shall be rounded up to the next whole number.
ARTICLE III
OPTION TO PURCHASE ADDITIONAL STOCK OF MEEMIC HOLDINGS
SECTION 3.1 BASIC TERMS. The Purchaser shall have the irrevocable
right, subject to the terms and conditions of this Article III, to purchase from
MEEMIC Holdings and MEEMIC
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Holdings agrees to sell to the Purchaser the number of Option Shares specified
below, at the price as established below.
Number of Option (i) .51 multiplied by the number of
Shares: outstanding Shares of MEEMIC Holdings as of
the date the Purchaser gives notice of its
intent to exercise its option to purchase the
Option Shares; plus (ii) 153,000; less (iii)
the number of Shares issued to ProNational
pursuant to Section 7.1 of the Plan of
Conversion; less (iv) the number of Shares, if
any, purchased pursuant to Sections 2.1 and 2.2
of this Agreement; less (v) any other Shares
other than those identified in (iii) and (iv)
above and owned by the Purchaser at the time
the Purchaser gives notice of its intent to
exercise its option to purchase the Option
Shares.
the sum of (i) through (v) above shall then be
divided by .49.
Price for the (a) In the event that the Purchaser gives
Option Shares: MEEMIC Holdings notice within the first 90
calendar days on or after the Effective Date of
the Purchaser's intent to purchase the Option
Shares, then on the Issuance Date of the Option
Shares the Purchaser shall pay an initial price
(the "Initial Price for the Option Shares") in
an amount equal to (i) the number of Option
Shares, times (ii) 140% of the Purchase Price.
120 calendar days after the Effective Date
MEEMIC Holdings shall calculate an adjusted
purchase price for the Option Shares (the
"Adjusted Purchase Price") which shall be the
amount equal to (i) the number of Option
Shares, times (ii) the greater of (x) the
average of the Fair Market Value of the Shares
for the 20 calendar day period commencing 71
calendar days after the Effective Date, or (y)
140% of the Purchase Price. After MEEMIC
Holdings calculates the Adjusted Purchase
Price, MEEMIC Holdings shall provide the
Purchaser with notice of the Adjusted Purchase
Price, then the Purchaser shall immediately pay
to MEEMIC Holdings the difference between the
Initial Price for the Option Shares and the
Adjusted Purchase Price, if any.
(b) In the event that the Purchaser gives
MEEMIC Holdings notice after the first 90
calendar days on or after the Effective Date,
but prior to the expiration of the one year
period
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commencing on the Effective Date, of the
Purchaser's intent to purchase the Option
Shares, then on the Issuance Date of the Option
Shares the Purchaser shall pay an amount equal
to (i) the number of Option Shares, times (ii)
the greater of (x) the average of the Fair
Market Value of the Shares for the 20 calendar
day period immediately preceding the
Purchaser's notice to MEEMIC Holdings of its
intent to purchase the Option Shares, or (y)
140% of the Purchase Price.
SECTION 3.2. METHOD OF EXERCISE; FRACTIONAL SHARES. The right to
purchase the Option Shares pursuant to this Article is exercisable at the option
of the Purchaser only in whole and only during the one year period commencing on
the Effective Date. The right to purchase the Option Shares shall be exercisable
only after the Purchaser shall have satisfied its obligations under Section 2.1
of this Agreement. The Purchaser shall be required to provide MEEMIC Holdings
with written notice of its irrevocable election to purchase the Option Shares
pursuant to Section 3.1. After such notice is provided to MEEMIC Holdings, the
Purchaser and MEEMIC Holdings shall mutually agree upon a date, which date shall
be not later than twenty (20) calendar days after such notice is provided to
MEEMIC Holdings, for the issuance of the Option Shares to the Purchaser (the
"Issuance Date for Option Shares"). On the Issuance Date for Option Shares, the
Option Shares shall be issued to the Purchaser and the Purchaser shall pay for
the Option Shares as determined by Section 3.1 of this Agreement.
SECTION 3.3. ADJUSTMENT OF SHARES PURCHASABLE. The number of Shares
purchasable pursuant to Section 3.1 and the price for such Shares are subject to
adjustment from time to time as specified in Section 3.5 of this Agreement.
SECTION 3.4. LIMITED RIGHTS OF OWNER. The options conferred by Article
III of this Agreement do not entitle the Purchaser to any voting rights or other
rights as a stockholder of MEEMIC Holdings, or to any other rights whatsoever
except the rights herein expressed. No dividends are payable or will accrue on
the Shares purchasable under Section 3.1 of this Agreement until, and then only
to the extent that, any such Shares are deemed to have been issued to the
Purchaser pursuant to this Agreement. Upon the giving by the Purchaser to MEEMIC
Holdings of the written notice of exercise of the option set forth in Article
III of this Agreement and the tender of the applicable price for such Shares in
immediately available federal funds, the Purchaser shall be deemed to be the
holder of record of the Shares issuable upon such exercise, notwithstanding that
the stock transfer books of MEEMIC Holdings shall then be closed or that
certificates representing such Shares shall not then be actually delivered to
Purchaser.
SECTION 3.5. EFFECT OF STOCK SPLIT, ETC. If MEEMIC Holdings, by stock
dividend, split, reverse split, reclassification of shares, or otherwise,
changes the number or type of outstanding Shares, then the applicable price in
effect pursuant to this Article III, and the number of Shares purchasable under
this Article III, immediately prior to the date upon which the change becomes
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effective, shall be proportionately adjusted (the price to the nearest cent) in
such manner as shall fully preserve the economic benefits provided to Purchaser
under this Agreement.
SECTION 3.6. EFFECT OF MERGER, ETC. If MEEMIC Holdings consolidates
with or merges into another corporation or entity, the Purchaser shall
thereafter be entitled on exercise to purchase, with respect to each Share
purchasable hereunder immediately before the consolidation or merger becomes
effective, the securities or other consideration to which a holder of one Share
is entitled to in the consolidation or merger without any change in or payment
in addition to the price in effect immediately prior to the merger or
consolidation. MEEMIC Holdings shall not consolidate or merge unless, prior to
consummation, the successor company (if other than, MEEMIC Holdings) assumes the
obligations of this paragraph by written instrument executed and delivered to
the Purchaser. A sale or lease of all or substantially all the assets of MEEMIC
Holdings for a consideration (apart from the assumption of obligations)
consisting primarily of securities is a consolidation or merger for the
foregoing purposes.
SECTION 3.7. NOTICE OF ADJUSTMENT. On the happening of an event
requiring an adjustment of the price or the Shares purchasable pursuant to this
Article III, MEEMIC Holdings shall forthwith give written notice to the
Purchaser of such event.
SECTION 3.8. NOTICE AND EFFECT OF DISSOLUTION, ETC. In the case that a
voluntary or involuntary dissolution, liquidation, or winding up of MEEMIC
Holdings (other than in connection with a consolidation or merger covered by
Section 3.6 hereof) is at any time proposed, MEEMIC Holdings shall give at least
30 days' prior written notice to the Purchaser. Such notice shall contain: (a)
the date on which the transaction is to take place; (b) the record date (which
shall be no sooner than 45 days after the giving of the notice) as of which
holders of the Shares will be entitled to receive distributions as a result of
the transaction; (c) a brief description of the transaction; (d) a brief
description of the distributions to be made to holders of the Shares as a result
of the transaction; and (e) an estimate of the fair value of the distributions.
ARTICLE IV
CLOSING AND PRECONDITIONS TO CLOSING
SECTION 4.1 CLOSING. The issuance and purchase of the Shares pursuant
to Sections 2.1 and 2.2 of this Agreement and the execution and delivery of all
certificates and documents contemplated by this Agreement (the "Closing") shall
be consummated on the Effective Date, provided that all of the preconditions to
Closing set forth in this Agreement have been satisfied.
SECTION 4.2 PRECONDITIONS TO CLOSING. The issuance and purchase of the
Shares contemplated by Article II of this Agreement shall only be consummated on
the Effective Date if all of the following conditions have been satisfied:
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(i) The Michigan Insurance Bureau issues an Order approving
the Plan of Conversion and such Order has not been revoked;
(ii) The Plan of Conversion is approved by the affirmative
vote of at least two-thirds (2/3) of the votes cast at the special
meeting of Eligible Policyholders of MEEMIC and becomes effective in
accordance with its terms;
(iii) All consents, approvals, authorizations, licenses and
orders of any governmental authority necessary in connection with the
issuance of the Shares are received; and
(iv) The Subscription Offering contemplated by the Plan of
Conversion is completed.
SECTION 4.3 DELIVERIES AT CLOSING. At the Closing, the parties shall
deliver the following:
(i) The Purchaser shall deliver the applicable Purchase Price
per Share for the Shares to MEEMIC Holdings, in immediately available
federal funds; and
(ii) MEEMIC Holdings shall deliver to the Purchaser stock
certificates registered in the name of ProNational or Professionals, as
directed by the Purchaser, evidencing the Shares issued and purchased
pursuant to this Agreement and such Shares shall be fully paid and
non-assessable.
SECTION 4.4. CLOSING FOR PURCHASE OF SHARES PURCHASED PURSUANT TO
ARTICLE III. On the Issuance Date for Option Shares, the parties shall deliver
the following:
(i) The Purchaser shall deliver the applicable price for the
Option Shares to MEEMIC Holdings, in immediately available federal
funds; and
(ii) MEEMIC Holdings shall deliver to the Purchaser stock
certificates registered in the name of ProNational or Professionals, as
directed by the Purchaser, evidencing the Option Shares issued and
purchased pursuant to Article III hereof and such Option Shares shall
be fully paid and non-assessable.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 REPRESENTATIONS AND WARRANTIES OF MEEMIC HOLDINGS. MEEMIC
Holdings hereby represents and warrants to Professionals and ProNational,
jointly and severally, as follows:
a. ORGANIZATION AND EXISTENCE. MEEMIC Holdings is a
Michigan corporation duly organized, validly existing and in good standing
under the laws of the State of Michigan with
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all requisite corporate power and corporate authority to carry on its
business as it is now being conducted.
b. AUTHORIZATION. MEEMIC Holdings has the requisite power
and authority to allow it to execute, deliver and perform this Agreement, and
has taken all necessary corporate action to issue, and shall reserve for
issuance, the maximum number of Shares issuable under Articles II and III of
this Agreement. The execution, delivery and performance of this Agreement have
been duly, validly and effectively authorized by all requisite action of MEEMIC
Holdings' Board of Directors, and no other proceedings on the part of MEEMIC
Holdings are necessary to authorize this Agreement or the consummation of the
transactions contemplated hereby.
c. EXECUTION AND DELIVERY; VALID AND BINDING. This
Agreement has been duly executed and delivered by MEEMIC Holdings and
constitutes the valid and binding obligations of MEEMIC Holdings, enforceable
against it in accordance with its terms.
d. NO DEFAULTS, VIOLATIONS OR CONFLICTS. MEEMIC Holdings is
not in violation of any term or provision of the Plan of Conversion, this
Agreement, its Articles of Incorporation or By-Laws which would prevent it from
fulfilling its obligations under this Agreement.
e. NO VIOLATIONS OF LAW. The execution, delivery and
performance of the terms of this Agreement and the Plan of Conversion by MEEMIC
Holdings (i) requires no action by or in respect of, or filing with, any
governmental body other than the Michigan Insurance Bureau, or agency or
official of the United States or any political subdivision thereof, except for
such notices, Registration Statements, or reports as may be required to be filed
with the Securities and Exchange Commission under the Securities Exchange Act of
1933, as amended, the Securities Exchange Act of 1934, as amended, the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, and any
applicable State blue sky laws, and (ii) will not violate any statute or any
order, rule or regulation of any court or government agency or body in the
United States or any political subdivision thereof having jurisdiction over
MEEMIC Holdings, which violation could have a material adverse effect on the
financial condition of MEEMIC Holdings or the ability of MEEMIC Holdings to
perform its obligation under this Agreement or the Plan of Conversion.
f. DELIVERY OF THE SHARES. Delivery by MEEMIC Holdings of
the Shares to ProNational or Professionals, as set forth in this Agreement, will
transfer to ProNational or Professionals valid title to such Shares, free and
clear of all liens, encumbrances, restrictions and claims of any kind, and such
Shares are not subject to any preemptive rights. MEEMIC Holdings shall at all
times reserve and hold available sufficient Shares to satisfy all rights of the
Purchaser under this Agreement.
SECTION 5.2 REPRESENTATIONS AND WARRANTIES OF PRONATIONAL. ProNational
hereby represents and warrants to MEEMIC Holdings as follows:
a. ORGANIZATION AND EXISTENCE. ProNational is a Michigan
domiciled stock insurance company, duly organized, validly existing and with all
requisite power and authority to carry on its business as it is now being
conducted.
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b. AUTHORIZATION. ProNational has the requisite power and
authority to allow it to execute, deliver and perform this Agreement. The
execution, delivery and performance of this Agreement have been duly, validly
and effectively authorized by all requisite action of ProNational's Board of
Directors, and no other proceedings on the part of ProNational are necessary to
authorize this Agreement or the consummation of the transactions contemplated
hereby.
c. EXECUTION AND DELIVERY; VALID AND BINDING. This
Agreement has been duly executed and delivered by ProNational and constitutes
the valid and binding obligations of ProNational, enforceable against
ProNational in accordance with its terms.
d. NO DEFAULTS, VIOLATIONS OR CONFLICTS. ProNational is not
in violation of any term or provision of its Articles of Incorporation or
By-Laws, which would prevent it from fulfilling its obligations under this
Agreement.
e. NO VIOLATIONS, ETC. The execution, delivery and
performance of the terms of this Agreement by ProNational (i) requires no action
by or in respect of, or filing with, any governmental body other than the
Michigan Insurance Bureau, or agency or official of the United States or any
political subdivision thereof, except for such notices, Registration Statements,
or reports as may be required to be filed with the Securities and Exchange
Commission under the Securities Exchange Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and any applicable State blue sky laws, and (ii) will
not violate any statute or any order, rule or regulation of any court or
government agency or body in the United States or any political subdivision
thereof having jurisdiction over ProNational, which violation could have a
material adverse effect on the ability of ProNational to perform any obligations
under this Agreement.
f. SECURITIES LAW REPRESENTATIONS AND WARRANTIES.
(i) SOPHISTICATION AND BACKGROUND. ProNational is an "accredited
investor" as that term is defined by Rule 501(a) promulgated
by the Securities and Exchange Commission. ProNational has
such knowledge and experience in financial, tax and business
matters to enable it to utilize the information made available
to it to evaluate the merits and risks of the prospective
investment and to make an informed investment decision with
respect to the prospective investment.
(ii) AVAILABILITY OF INFORMATION. ProNational understands that
MEEMIC Holdings has agreed to make all documents, records and
books pertaining to the Shares and its business and affairs
available for inspection by it and/or ProNational's advisors.
(iii) RISK OF INVESTMENT. ProNational recognizes that the purchase
of stock in any corporation involves substantial risks, that
no assurance or guarantee has or can be given that a
shareholder in the MEEMIC Holdings will receive a return on
the investment or realize a profit on such investment, and
that it may not be able to sell the Shares.
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SECTION 5.3 REPRESENTATIONS AND WARRANTIES OF PROFESSIONALS.
Professionals hereby represents and warrants to MEEMIC Holdings as follows:
a. ORGANIZATION AND EXISTENCE. Professionals is a Michigan
corporation, duly organized, validly existing and in good standing under the
laws of the State of Michigan with all requisite power and authority to carry on
its business as it is now being conducted in good standing under the laws of the
State of Michigan.
b. AUTHORIZATION. Professionals has the requisite power and
authority to allow it to execute, deliver and perform this Agreement. The
execution, delivery and performance of this Agreement have been duly, validly
and effectively authorized by all requisite action of Professionals' Board of
Directors, and no other proceedings on the part of Professionals are necessary
to authorize this Agreement or the consummation of the transactions contemplated
hereby.
c. EXECUTION AND DELIVERY; VALID AND BINDING. This
Agreement has been duly executed and delivered by Professionals and constitutes
the valid and binding obligations of Professionals, enforceable against
Professionals in accordance with its terms.
d. NO DEFAULTS, VIOLATIONS OR CONFLICTS. Professionals is
not in violation of any term or provision of its Articles of Incorporation or
By-Laws which would prevent it from fulfilling its obligations under this
Agreement.
e. NO VIOLATIONS, ETC. The execution, delivery and
performance of the terms of this Agreement by Professionals (i) requires no
action by or in respect of, or filing with, any governmental body other than the
Michigan Insurance Bureau, or agency or official of the United States or any
political subdivision thereof, except for such notices, Registration Statements,
or reports as may be required to be filed with the Securities and Exchange
Commission under the Securities Exchange Act of 1933, as amended, the Securities
Exchange Act of 1934, as amended, the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended, and any applicable State blue sky laws, and (ii) will
not violate any statute or any order, rule or regulation of any court or
government agency or body in the United States or any political subdivision
thereof having jurisdiction over Professionals, which violation could have a
material adverse effect on the ability of Professionals to perform any
obligations under this Agreement.
f. SECURITIES LAW REPRESENTATIONS AND WARRANTIES.
(i) SOPHISTICATION AND BACKGROUND. Professionals is an "accredited
investor" as that term is defined by Rule 501(a) promulgated
by the Securities and Exchange Commission. Professionals has
such knowledge and experience in financial, tax and business
matters to enable it to utilize the information made available
to it to evaluate the merits and risks of the prospective
investment and to make an informed investment decision with
respect to the prospective investment.
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(ii) AVAILABILITY OF INFORMATION. Professionals understands that
MEEMIC Holdings has agreed to make all documents, records and
books pertaining to the Shares and its business and affairs
available for inspection by it and/or Professionals's
advisors.
(iii) RISK OF INVESTMENT. Professionals recognizes that the purchase
of stock in any corporation involves substantial risks, that
no assurance or guarantee has or can be given that a
shareholder in the MEEMIC Holdings will receive a return on
the investment or realize a profit on such investment, and
that it may not be able to sell the Shares.
SECTION 5.4 LEGAL FEES, COSTS AND EXPENSES. Each party hereto shall
bear its own legal fees and expenses, and other costs and expenses incurred by
such party in connection with the transactions contemplated by this Agreement.
ARTICLE VI
REGISTRATION RIGHTS
SECTION 6.1 REGISTRATION RIGHTS. If MEEMIC Holdings is not permitted by
the Securities and Exchange Commission to include the Shares identified in
Sections 2.1, 2.2 and 3.1 of this Agreement in the Registration Statement
relating to the Plan of Conversion, then Purchaser shall have the right,
commencing on the date that MEEMIC Holdings is first eligible to use a
Registration Statement on Form S-3 for secondary offerings of securities by
selling shareholders, to demand (a "demand right") that MEEMIC Holdings register
such Shares as promptly as practicable, but in any event not less than 90 days
after the date of such demand. If, prior to making any such demand, MEEMIC
Holdings proposes to register a primary distribution of Shares to the public
under the Securities Act of 1933, as amended (other than pursuant to Form S-4 or
Form S-8), the Purchaser shall have the right (a "piggy back right") to include
the Shares identified in Sections 2.1, 2.2 and 3.1 of this Agreement in such
registration. MEEMIC Holdings and the Purchaser agree that the terms,
conditions, rights and obligations of the parties in the event of a demand or
piggy-back registration will be those customary in similar situations; that
MEEMIC Holdings shall bear all registration costs (other than the costs of
counsel for the Purchaser and any underwriting commissions or discounts relating
to the sale of the Note Shares); and that the Purchaser's piggy back right
shall be subject to the discretion of the managing underwriter to determine the
number of Shares that may be included, if the registration statement relates to
an underwriter offering.
ARTICLE VII
TERMINATION
SECTION 7.1 TERMINATION. This Agreement and the obligations of the
parties hereto may be terminated at any time only (a) by mutual consent of the
parties hereto, (b) by ProNational if any material representation or warranty in
this Agreement by MEEMIC Holdings proves to be untrue at the time it was made or
becomes untrue and such untrue statement is unable to be remedied, (c) by
Professionals if any material representation or warranty in this Agreement by
MEEMIC Holdings
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proves to be untrue at the time it was made or becomes untrue and such untrue
statement is unable to be remedied, (d) by MEEMIC Holdings if any material
representation or warranty in this Agreement by either ProNational or
Professionals proves to be untrue at the time it was made or becomes untrue and
such untrue statement is unable to be remedied, or (e) by any party hereto if
required by law or if the preconditions to Closing established in this Agreement
fail to be satisfied.
ARTICLE VIII
GENERAL PROVISIONS
SECTION 8.1 JOINT AND SEVERAL OBLIGATIONS OF THE PURCHASER AND RIGHTS
OF THE PURCHASER. The obligations of the Purchaser under this Agreement shall be
the joint and several obligations of ProNational and Professionals. The rights
of the Purchaser to purchase Shares pursuant to this Agreement shall be a right
that may be exercised by either ProNational or Professionals, or alternatively
by both ProNational and Professionals in such proportions, not to exceed the
total number of Shares that may be purchased by Purchaser hereunder, as may be
specified in written instructions to MEEMIC Holdings from both ProNational and
Professionals.
SECTION 8.2 GOVERNING LAW. This Agreement shall be governed by the laws
of the State of Michigan.
SECTION 8.3 ENTIRE AGREEMENT/AMENDMENT. This Agreement constitutes the
entire agreement and understanding between the parties and cannot be amended,
waived or modified unless the parties so agree in writing.
SECTION 8.4 ASSIGNMENT. None of the parties may assign any rights or
obligations under this Agreement without first obtaining the written consent of
the other parties hereto.
SECTION 8.5 SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns.
SECTION 8.6 NOTICES. All notices and statements to be given under this
Agreement shall be given in writing, delivered by hand, facsimile, overnight
express or similar service (fees prepaid), or first class United States
registered or certified mail with return receipt requested (postage prepaid), to
the following addresses (which may be changed by written notice):
ProNational: President
ProNational
0000 Xxxxxxxxxxxxx Xxxxx
Xxx 000
Xxxxxx, XX 00000-0000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
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Professionals: President
Professionals
0000 Xxxxxxxxxxxxx Xxxxx
Xxx 000
Xxxxxx, XX 00000-0000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Purchaser: President
ProNational
0000 Xxxxxxxxxxxxx Xxxxx
Xxx 000
Xxxxxx, XX 00000-0000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
-and-
President
Professionals
0000 Xxxxxxxxxxxxx Xxxxx
Xxx 000
Xxxxxx, XX 00000-0000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
MEEMIC Holdings: President
MEEMIC Holdings
000 X. Xxxxxxxx Xxxx
Xxxxx 000
P.O. Box 21709
Xxxxxx Xxxxx, XX 00000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
All written notices and statements shall be deemed given, delivered, received
and effective upon personal delivery, the same day of sending by facsimile, one
calendar day after sending by overnight express or similar service, or three
calendar days after mailing by first class United States mail.
SECTION 8.7 SEVERABILITY. If any provision of this Agreement shall be
or become in violation of any local, state or federal law, said provision shall
be considered null and void, and all other provisions shall remain in full force
and effect. Each of the parties expressly releases each of the other parties
from any liability in the event such party cannot fulfill any obligation under
this Agreement as a result of any provisions of local, state or federal law
governing such provisions.
SECTION 8.8 NO THIRD PARTY RIGHTS. This Agreement is made for the
sole benefit of the MEEMIC Holdings, Professionals and ProNational. Except
as otherwise expressly provided,
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nothing in this Agreement shall create or be deemed to create a relationship
between the parties hereto, or any of them, and any third person in the nature
of a third party beneficiary, equitable lien or fiduciary relationship.
SECTION 8.9 NO WAIVER. Failure on the part of any party to complain of
any action or non-action of another other party hereto shall not be deemed to be
a waiver of any rights under this Agreement. No waiver of any of the provisions
of this Agreement shall be deemed to be a waiver of any other provisions of this
Agreement, and a waiver at any time of any provisions of this Agreement shall
not be construed as a waiver at any subsequent time of the same provisions.
SECTION 8.10 INJUNCTIVE RELIEF. The parties acknowledge that damages
may be an inadequate remedy for a breach of this Agreement by any party hereto
and that the obligations of the parties hereto shall be enforceable by any other
party hereto through injunctive or other equitable relief in addition to any
other remedies to which such party may be entitled.
SECTION 8.11 COUNTERPARTS. This Agreement may be executed in any number
of counterparts. Each counterpart so executed shall be deemed an original, but
all such counterparts shall together constitute one and the same instrument.
SECTION 8.12 CONSTRUCTION. The parties each acknowledge that all the
terms and conditions in this Agreement have been the subject of active and
complete negotiation between the parties and represent the parties' agreement
based upon all relevant considerations. The parties agree that the terms and
conditions of this Agreement shall not be construed in favor of or against any
party by reason of the extent to which any party or its professional advisors
participated in the preparation hereof or thereof.
SECTION 8.13 FURTHER ASSURANCES. The parties agree to do such further
acts and things and to execute and deliver such additional documents,
assignments, agreements, certificates, powers and instruments as may be
reasonably required to carry into effect the purposes of this Agreement.
SECTION 8.14 FORBEARANCES. During the period from the date of this
Agreement to the earlier of (i) the Issuance Date of Option Shares or (ii) the
termination of this Agreement, except as expressly contemplated or permitted by
this Agreement or the Plan of Conversion, MEEMIC Holdings shall not, and MEEMIC
Holdings shall not permit MEEMIC or any subsidiary of MEEMIC Holdings or MEEMIC
to, without the prior written consent of the Purchaser:
(a) other than in the ordinary course of business consistent with past
practice, incur any indebtedness for borrowed money in excess of $5,000,000 or
assume, guarantee, endorse or otherwise become obligated for, any indebtedness
in excess of $5,000,000;
(b) adjust, split, combine, reclassify, any capital stock, or pay
dividends or distributions in excess of $5,000,000 with respect to the capital
stock;
(c) issue additional capital stock except as contemplated by the Plan
of Conversion;
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(d) enter into an agreement to consolidate with or merge into any
Person;
(e) sell or transfer all or substantially all of its assets to any
Person; or
(f) amend the Plan of Conversion or its Articles of Incorporation, or
its Bylaws, except as contemplated by this Agreement or the Plan of Conversion.
* * * * *
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers as of the date written on the first
page of this Agreement.
MEEMIC HOLDINGS, INC.
By: /s/ R. Xxxxx Xxxxxxx
----------------------------------------
R. Xxxxx Xxxxxxx
President
PRONATIONAL INSURANCE COMPANY
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------------
Xxxxxxx X. Xxxxx
Vice President and Secretary
PROFESSIONALS GROUP, INC.
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx
President and Chief Executive Officer
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