EXHIBIT 10.13
ESCROW AGREEMENT
This ESCROW AGREEMENT, dated as of this 16TH day of APRIL, 1999, by and
among Michigan Educational Employees Mutual Insurance Company, a Michigan mutual
insurance company ("MEEMIC"), MEEMIC Holdings, Inc., a Michigan corporation (the
"Company"), ChaseMellon Shareholder Services, L.L.C. (the "Subscription Agent"),
and The Chase Manhattan Bank, a New York state chartered bank (the "Escrow
Agent").
WITNESSETH
WHEREAS, pursuant to the Subscription Agent Agreement dated as of
________________, 1999 by and among MEEMIC, the Company and the Subscription
Agent, there is required to be deposited into escrow certain funds to be
received by the Subscription Agent in connection with the Company's subscription
offering pursuant to the Company's Plan of Conversion dated June 24, 1998 (the
"Plan"), which funds are to be held by the Escrow Agent subject to the terms and
conditions set forth herein.
NOW THEREFORE, for good and valuable consideration of the foregoing and of
the mutual covenants hereinafter set forth, the receipt and sufficiency of which
are hereby acknowledged, the Parties hereto, for themselves, their successors
and permitted assigns, hereby agree as follows:
1. APPOINTMENT OF AND ACCEPTANCE BY ESCROW AGENT. The Company hereby
appoints and designates the Escrow Agent to establish an escrow account and
serve as escrow agent hereunder, and the Escrow Agent hereby accepts such
appointment and establishes such account in accordance with the terms of this
Escrow Agreement.
2. ESTABLISHMENT OF ESCROW FUND. The Subscription Agent shall deposit all
funds received by the Subscription Agent in connection with the Company's
subscription offering with the Escrow Agent no later than the next Business Day
after receipt. For purposes of this Escrow Agreement, a "Business Day" shall be
any day (except a Saturday or Sunday) on which banks are permitted by federal
law to be open for business in the State of New York. The Escrow Agent shall
hold, subject to the terms and conditions hereof, such funds and such
investments and reinvestments as may be permitted pursuant to Section 3 hereof
(which, together with the income from such investments, are hereinafter referred
to as the "Escrow Fund").
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Page 2
3. INVESTMENT OF ESCROW FUND.
(a) During the term of this Escrow Agreement, the Escrow Fund shall
be invested and reinvested by the Escrow Agent, in The Chase Manhattan Bank's
100% U.S. Treasury Securities Money Market Mutual Fund known as the "Chase Vista
Fund."
(b) The Escrow Agent shall have the right to liquidate any
investments held, in order to provide funds necessary to make required payments
under Section 4 of this Escrow Agreement. The Escrow Agent in its capacity as
escrow agent hereunder shall not have any liability for any loss sustained as a
result of any investment or sale made pursuant to this Escrow Agreement.
4. DISBURSEMENT OF ESCROW.
The Escrow Agent shall hold the Escrow Fund in its possession until
authorized hereunder to deliver such Fund or a portion thereof upon the
happening of one of the following events:
(a) If MEEMIC determines to terminate the Plan and the conversion
prior to the effective date of the conversion, it shall give prior written
notice of such determination to the Escrow Agent and the Escrow Fund shall be
distributed to the Subscription Agent (and refunded by the Subscription Agent to
the subscribers in accordance with the Subscription Agent Agreement).
(b) With respect to any subscription which the Company has determined
to reject or permit the revocation of, the Escrow Agent shall upon receipt of
written notice from the Company, distribute the portion of the Escrow Fund
attributable to such subscription to the Subscription Agent, (which portion
shall then be refunded by the Subscription Agent to the subscriber who submitted
the rejected or revoked subscription).
(c) If the effective date of the conversion has occurred and (i)
directors and officers of MEEMIC have not purchased more than 429,779 shares in
total, (ii) no director or officer of MEEMIC has purchased more than 107,444
shares, (iii) no policyholder (other than a director or officer of MEEMIC) has
purchased more than 10,744 shares and (iv) the total number of shares subscribed
for does not exceed 4,279,791, then the Escrow Fund shall be distributed to the
Company upon written notice from the Company directing the Escrow Agent to make
such distribution.
(d) If any of the conditions described in clauses (i) through (iv) of
paragraph (c) above has occurred, and the Company or MEEMIC has reduced the
number of shares subscribed for in accordance with the provisions of the Plan
relating to oversubscriptions, then, upon written instruction and notice from
the Company, (i) that portion of the Escrow Fund relating to the subscriptions
which have been rejected pursuant to such reduction shall be distributed to the
Subscription Agent (and refunded by the Subscription Agent to the subscriber(s)
whose subscriptions
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were reduced to the extent of such reduction), and (ii) the remainder of the
Escrow Fund shall be distributed to the Company.
The date on which a distribution described in paragraph (a), (c) or (d), above,
occurs shall be deemed the "Escrow Termination Date."
All disbursements to the Company or the Subscription Agent by the Escrow
Agent, upon the Company's written request, shall be made by wire transfer of
immediately available funds no later than the second Business Day after receipt
by the Escrow Agent of such notice.
5. SUSPENSION OF PERFORMANCE OR DISBURSEMENT INTO COURT.
If, at any time, there shall exist any dispute between MEEMIC, the Company,
the Subscription Agent, the Escrow Agent, or any other person with respect to
the holding or disposition of any portion of the Escrow Fund or any other
obligations of the Escrow Agent hereunder, or if at any time the Escrow Agent is
unable to determine, to the Escrow Agent's sole satisfaction, the proper
disposition of the Escrow Fund, or any portion thereof, or the Escrow Agent's
proper actions with respect to its obligations hereunder, or if the Company and
the Subscription Agent have not, within twenty (20) Business Days of the
furnishing by the Escrow Agent of a notice of resignation pursuant to Section 6
hereof, appointed a successor escrow agent to act hereunder, then the Escrow
Agent may in its sole discretion, take either or both of the following actions:
(a) suspend the performance of any of its obligations under this
Escrow Agreement until such dispute or uncertainty shall be resolved to the sole
satisfaction of the Escrow Agent or until a successor escrow agent shall have
been appointed (as the case may be); and/or
(b) petition (by means of an interpleader action or any other
appropriate method) the court set forth in Section 10 below, for instructions
with respect to such dispute or uncertainty, and for disposition of the Escrow
Fund in accordance with the instructions of such court.
The Escrow Agent shall have no liability to MEEMIC, the Company, the
Subscription Agent or any other person with respect to any such suspension of
performance or disbursement into court, specifically including any liability or
claimed liability that may arise, to be alleged to have arisen, out of or as a
result of any delay in the disbursement of the funds held in escrow or any delay
in or with respect to any other action required or requested of the Escrow
Agent.
6. RESIGNATION AND REMOVAL OF ESCROW AGENT.
The Escrow Agent may resign from the performance of its duties hereunder at
any time by giving twenty (20) Business Days prior written notice to the Company
and the Subscription Agent
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Page 4
or may be removed, with or without cause, by the Company in writing at any
time by the giving of ten (10) days prior written notice to the Escrow Agent.
Such resignation or removal shall take effect upon the appointment of a
successor escrow agent as provided herein below. Upon any such notice of
resignation or removal, the Company shall appoint a successor escrow agent
hereunder, which shall be a commercial bank, trust company or other financial
institution having total assets in excess of $500 million. Upon the
acceptance in writing of any appointment as Escrow Agent hereunder by a
successor escrow agent, such successor escrow agent shall thereupon succeed
to and become vested with all the rights, powers, privileges and duties of
the retiring Escrow Agent, and the retiring Escrow Agent shall thereupon be
discharged from its duties and obligations under this Escrow Agreement.
After any retiring Escrow Agent's resignation or removal, the provisions of
this Escrow Agreement shall inure to its benefit as to any actions taken or
omitted to be taken by it while it was Escrow Agent under this Escrow
Agreement.
7. LIABILITY OF ESCROW AGENT.
(a) The Escrow Agent may act or refrain from acting in reliance upon
the oral advice of any authorized representative of the Company or any written
notice, advice or other writing or instrument from the Company or MEEMIC (in
each case, "Documentation") or signature of an officer of the Company or MEEMIC
that, in good faith, it believes to be genuine. The Escrow Agent also may
assume the validity and occurrence of any statement or assertion contained in
such Documentation, and may assume that any persons purporting to give any
Documentation, in connection with the provisions hereof, have been duly
authorized to do so. The Escrow Agent shall be under no duty to inquire into or
investigate the validity, accuracy or content of any Documentation. In the
event funds transfer instructions are given, whether in writing, by telecopier
or otherwise, the Escrow Agent is authorized to seek confirmation of such
instructions by telephone call-back to the person or persons designated on
Appendix II hereto, and the Escrow Agent may rely upon the confirmations of
anyone purporting to be the person or persons so designated. The persons and
telephone numbers for call-backs may be changed only in a writing actually
received and acknowledged by the Escrow Agent. The parties to this Agreement
acknowledge that such security procedure is commercially reasonable. It is
understood that the Escrow Agent and the Company's bank in any funds transfer
may rely solely upon any account numbers or similar identifying number provided
by either of the other parties hereto to identify (i) the Company, (ii) the
Company's bank, or (iii) an intermediary bank. The Escrow Agent may apply any
of the Escrow Fund for any payment order it executes using any such identifying
number, even where its use may result in a person other than the Company being
paid, or the transfer of funds to a bank other than the Company's bank, or an
intermediary bank designated by the Company. The Escrow Agent shall not be
liable in any manner for the sufficiency or correctness as to form, manner and
execution, or the validity of any Documentation deposited in escrow; and its
duties hereunder shall be limited to the safekeeping of the Escrow Fund received
by it as such escrow holder and for the disposition of the same in accordance
with the terms of this Escrow Agreement. In particular, but without limitation
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Page 5
to the generality of the foregoing, the Escrow Agent shall be entitled to
assume: (i) where the Escrow Agreement requires copies of any Documentation to
be received by other parties in addition to the Escrow Agent, that the other
party or parties have concurrently received a copy of the Documentation;
(ii) all Documentation delivered to the Escrow Agent from time to time complies
with the terms of the Escrow Agreement; and (iii) all requests for disbursements
from the Escrow Fund are for purposes permitted by the Escrow Agreement at the
relevant time. Under no circumstances shall the Escrow Agent be obligated to
affirmatively collect funds, seek the deposit of additional money or property,
solicit any payments which may be due to the Company under the Plan, hereunder
or otherwise.
(b) The Escrow Agent undertakes to perform only such duties as are
expressly set forth herein and no implied duties or obligations shall be read
into this Escrow Agreement against the Escrow Agent. The Escrow Agent shall not
act as the agent of any person and shall not assume and shall not be deemed to
have assumed any obligation as agent or trustee for, or relationship of agency
or trust with or for any person. The Escrow Agent shall not be obligated to
take or join in any proceeding against any person for the recovery of any
Documentation or moneys relating hereto, except as expressly set forth herein.
The duties and responsibilities of the Escrow Agent hereunder shall be
determined solely by the express provisions of this Escrow Agreement and no
other further duties or responsibilities shall be implied. The Escrow Agent
shall not have any liability under, nor duty to inquire into the terms and
provisions of the Plan or any other agreement or instructions, other than as
outlined herein.
(c) The Escrow Agent may rely absolutely upon, and shall have full
and complete authorization and protection for any action taken or omitted by it
hereunder in good faith based on: (i) the opinions given to it by its legal
counsel as to any legal questions arising in connection with the Escrow Agent's
duties or responsibilities under this Escrow Agreement, and (ii) its own good
faith determinations as to questions of fact. The Escrow Agent may perform its
duties through the use of accountants and other skilled persons retained by it.
(d) The Escrow Agent shall not be liable for special, indirect,
consequential, punitive, compensatory or other damages of any kind whatsoever
(including but not limited to lost profits) to any person (even if the Escrow
Agent has been advised of the likelihood of such loss or damage) and regardless
of the form of the action. The Escrow Agent's duties and obligations under this
Escrow Agreement shall be entirely administrative and not discretionary.
8. INDEMNIFICATION OF ESCROW AGENT. The Company hereby agrees to indemnify
the Escrow Agent and hold it harmless against any and all claims, demands,
costs, liabilities, damages and expenses, including all of the Escrow Agent's
out-of-pocket expenses and reasonable legal fees, as incurred, arising out of,
or in conjunction with the Escrow Agent's execution of or performance or
inaction under this Escrow Agreement expect to the extent that such loss,
liability or expense has
Escrow Agreement
Page 6
been determined by a court of competent jurisdiction to have been due to the
gross negligence or willful misconduct of the Escrow Agent. The parties
hereto acknowledge that the foregoing indeminities shall survive the
resignation or removal of the Escrow Agent or the termination of this
Agreement.
9. COMPENSATION OF ESCROW AGENT. The Company hereby agrees to (i) pay the
Escrow Agent upon execution of this Agreement the compensation for the services
to be rendered hereunder as described in APPENDIX I, attached hereto, and (ii)
advance, or reimburse, the Escrow Agent upon request for all expenses,
disbursements and advances, including reasonable attorney's fees, incurred or
made by it in connection with the preparation, execution, performance, delivery,
modification and termination of this Escrow Agreement.
10. CONSENT TO JURISDICTION AND VENUE. In the event that any party hereto
commences a lawsuit or other proceeding relating to or arising from this Escrow
Agreement, the parties hereto agree that the United States District Court for
the Southern District of New York, shall have the sole and exclusive
jurisdiction over any such proceeding. Such court shall be proper venue for any
such lawsuit or judicial proceeding and the parties hereto waive any objection
to such venue. Each party hereto irrevocably waives any objection on the
grounds of venue, forum non-conveniens or any similar grounds and irrevocably
consents to service of process by mail or in any other manner permitted by
applicable law and consents to the jurisdiction of said court.
11. TAX IDENTIFICATION NUMBER. The Company shall provide the Escrow Agent with
its Tax Identification Number (TIN) as assigned by the Internal Revenue Service.
All interest or other income earned under the Escrow Agreement shall be
allocated and paid as provided herein and reported by the recipient to the
Internal Revenue Service as having been so allocated and paid.
12. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been validly served, given or delivered (i)
personally, (ii) one (1) day after delivery to any nationally recognized
overnight courier, (iii) when transmitted by facsimile transmission facilities
and confirmed by telephone, and addressed to the party to be notified as
follows:
If to the Escrow Agent:
The Chase Manhattan Bank
Corporate Trust Group
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Escrow Administration, 10th Floor
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If to the Subscription Agent:
ChaseMellon Shareholder Services, L.L.C.
00 Xxxxxxxxxx Xxxx
Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxxx, Vice President
With a copy to:
Elias, Matz, Xxxxxxx & Xxxxxxx L.L.P.
000 00xx Xxxxxx, X.X.
00xx Xxxxx
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
If to the MEEMIC Group:
MEEMIC Holdings, Inc.
000 X. Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attn: R. Xxxxx Xxxxxxx, President
TIN: 00-0000000
and to:
Michigan Educational Employees Mutual
Insurance Company
000 X. Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxx 00000
Attn: R. Xxxxx Xxxxxxx, President
With a copy to:
Xxxxxx Xxxxxxx PLLC
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxx Xxxx, Esq.
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Page 8
or at such other address as any of the above may have been furnished to the
other parties in writing by registered mail, return receipt requested and any
such notice or communication given in the manner specified in this Section 12
shall be deemed to have been given as of the date so mailed except with respect
to the Escrow Agent as to which date shall be deemed to have been given on the
date received by the Escrow Agent. In the event that the Escrow Agent, in its
sole discretion, shall determine that an emergency exists, the Escrow Agent may
use such other means of communication as the Escrow Agent deems advisable.
13. PROCESS. If at any time the Escrow Agent is served with any judicial or
administrative order, judgment, decree, motion, writ, or other form of judicial
or administrative process which in any way effects the Escrow Fund (including
but not limited to orders of attachment or garnishment or other forms of levy or
injunctions or stays relating to the transfer of the Escrow Fund), the Escrow
Agent is authorized to comply therewith in any reasonable manner as it or its
legal counsel deems appropriate; provided that the Escrow Agent shall give
prompt notice thereof to the Company. If the Escrow Agent complies with any
such judicial or administrative order, judgment, decree, writ or other form of
judicial or administrative process, the Escrow Agent shall not be liable to any
of the parties, or to any other person or entity, even though such order,
judgment, decree, writ or process may be subsequently modified or vacated or
otherwise determined to have been without legal force or effect.
14. AMENDMENT OR WAIVER. This Escrow Agreement may be changed, waived,
discharged or terminated only by a writing signed by MEEMIC, the Company, the
Subscription Agent and the Escrow Agent. No delay or omission by any party in
exercising any right with respect hereto shall operate as a waiver. A waiver on
any one occasion shall not be construed as a bar to, or waiver of, any right or
remedy on any future occasion.
15. ASSIGNMENT. None of the rights, duties and obligations of MEEMIC, the
Company, the Subscription Agent or the Escrow Agent hereunder may be assigned
without the prior written consent of the other parties to this Agreement. Any
purported assignment without such prior written consent shall be null and void.
Notwithstanding the above, any corporation into which the Escrow Agent in its
individual capacity may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Escrow Agent in its individual capacity shall be a
party, or any corporation to which substantially all the corporate trust
business of the Escrow Agent in its individual capacity may be transferred,
shall be the Escrow Agent under this Escrow Agreement without further act.
16. SEVERABILITY. To the extent any provision of this Escrow Agreement is
prohibited by, or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or
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invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Escrow Agreement.
17. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to principles
of conflicts of laws.
18. ENTIRE AGREEMENT. This Escrow Agreement constitutes the entire agreement
between the parties relating the acceptance, collection, holding, investment and
disbursement of the Escrow Fund and sets forth in their entirety the obligations
and duties of the Escrow Agent with respect to the Escrow Fund.
19. BINDING EFFECT. All of the terms of this Escrow Agreement, as amended from
time to time, shall be binding on, inure to the benefit of and be enforceable by
the respective heirs, legal representatives, executors, administrators,
successors and permitted assigns of MEEMIC, the Company, the Subscription Agent
and the Escrow Agent.
20. EXECUTION IN COUNTERPARTS. This Escrow Agreement may be executed in two or
more counterparts, which when so executed shall constitute one and the same
agreement.
(Signatures to Follow)
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Page 10
IN WITNESS WHEREOF, the parties hereto have executed this Escrow Agreement
on the date and year first above written.
THE CHASE MANHATTAN BANK
as Escrow Agent
BY: /s/ Xxxxxx Stanislarl
NAME: Xxxxxx Stanislarl
TITLE: Vice President
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C., as Subscription Agent
BY: /s/ Xxxx Xxxxxxxxxx
NAME: Xxxx Xxxxxxxxxx
TITLE: Vice President
MEEMIC HOLDINGS, INC., the Company
BY: /s/ R. Xxxxx Xxxxxxx
NAME: R. Xxxxx Xxxxxxx
TITLE: President
MICHIGAN EDUCATIONAL EMPLOYEES
MUTUAL INSURANCE COMPANY
BY: /s/ R. Xxxxx Xxxxxxx
NAME: R. Xxxxx Xxxxxxx
TITLE: President
