EXHIBIT 10.24
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of July 9,
2002, by and among PRONATIONAL INSURANCE COMPANY, a Michigan insurance company
("Parent"), MEEMIC MERGER CORP., a Michigan corporation and a wholly owned
subsidiary of Parent ("Sub"), and MEEMIC HOLDINGS, INC., a Michigan corporation
(the "Company").
WHEREAS, upon the terms and subject to the conditions of this
Agreement, including approval of this Agreement by the Company's shareholders,
the Company proposes to make a tender offer to purchase all of the issued and
outstanding shares of Common Stock of the Company other than those held by
ProNational Insurance Company (the "Offer") at a price per share of $29.00, net
to the shareholders in cash;
WHEREAS, upon the terms and subject to the conditions of this
Agreement, including completion of the Offer, the parties intend for Sub to
merged with and into the Company and that the Company survive such merger as a
wholly owned subsidiary of Parent;
WHEREAS the Board of Directors and sole shareholder of Sub have
approved this Agreement in accordance with the Michigan Business Corporation Act
(the "MBCA") upon the terms and subject to the conditions set forth herein;
WHEREAS the Board of Directors of Parent deems it advisable and in the
best interests of its shareholder to consummate, and has approved, this
Agreement;
WHEREAS the Board of Directors of the Company, upon the recommendation
of the Exploratory Committee of the Board, has unanimously (i) determined that
this Agreement and the transactions contemplated hereby are advisable and in the
best interests of its shareholders, (ii) determined that, based on the written
opinion of the Exploratory Committee's financial advisor, the consideration to
be paid to the Independent Shareholders of the Company in the transactions
contemplated by this Agreement is fair to such Independent Shareholders, (ii)
approved this Agreement and the transactions contemplated hereby and (iii)
resolved, subject to Section 6.02(a) hereof, to recommend to such shareholders
their approval of this Agreement and acceptance of the Offer;
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein the
parties hereto agree as follows:
ARTICLE I
THE OFFER
SECTION 1.01. The Offer.
(a) Terms of the Offer. Provided that this Agreement
shall not have been terminated in accordance with Article IX and none
of the events set forth in Section 1.02 hereof (the "Tender Offer
Conditions") shall have occurred and be continuing, as promptly as
reasonably practicable following the receipt of the approval of
shareholders of this Agreement described in Section 4.07, but in no
event later than 10 business days after the public announcement of the
receipt of such approval, the Company shall (i) commence (within the
meaning of the applicable rules under the Securities Exchange Act of
1934, as amended (the "Exchange Act")) the Offer at a price per share
of $29.00, net to the shareholders in cash (the "Offer Price"), (ii)
upon commencement of the Offer, file Schedule TO and all other
necessary documents with the Securities and Exchange Commission (the
"SEC") and make all deliveries, mailings and telephonic notices
required by the applicable rules under the Exchange Act in connection
with the Offer (the "Offer Documents") and (iii) use its
2
commercially reasonable efforts to consummate the Offer, subject to the
terms and conditions thereof. The obligation of the Company to accept
for payment and pay for any Company Common Stock tendered pursuant to
the Offer will be subject to the satisfaction, or waiver by the
Company, of the Tender Offer Conditions. The Offer shall remain open
until the close of business on the date that is 20 business days (as
required by Rule 13e-4 under the Exchange Act) after the commencement
of the Offer (the "Expiration Time"), unless the Company shall have
extended the period of time for which the Offer is open pursuant to,
and in accordance with, this Agreement or as may be required by
applicable law, in which event the term "Expiration Time" shall mean
the latest time and date as the Offer, as so extended, may expire.
Subject to the terms of the Offer and this Agreement and the
satisfaction of all of the Tender Offer Conditions as of any Expiration
Time, the Company will accept for payment and pay for all Company
Common Stock validly tendered and not validly withdrawn pursuant to the
Offer as soon as practicable after such Expiration Time of the Offer.
Notwithstanding the foregoing and subject to the applicable rules of
the SEC and the terms and conditions of the Offer, the Company
expressly reserves the right to delay payment for Company Common Stock
in order to comply in whole or in part with applicable law. Any such
delay shall be effected in compliance with Rule 13e-4(f)(5) under the
Exchange Act. The Parent agrees that no Company Common Stock held by
the Parent will be tendered in the Offer. If the payment for tendered
Company Common Stock is to be made to a person other than the person in
whose name the surrendered certificate formerly evidencing such Company
Common Stock is registered on the stock transfer books of the Company,
it shall be a condition of payment that the certificate so surrendered
shall be endorsed properly or otherwise be in proper form for transfer
and that the person requesting such payment shall have paid all
transfer and other taxes required by reason of the payment of the
purchase price therefore to a person other than the registered holder
of the certificate surrendered, or shall have established to the
satisfaction of the Company that such taxes either have been paid or
are not applicable.
(b) Revisions to Terms of the Offer. Without the prior
approval of the Company's Board, the Exploratory Committee and the
Parent, the Company shall not (i) reduce the number of shares of
Company Common Stock subject to the Offer, (ii) amend the Offer Price,
(iii) extend the Offer if all of the Tender Offer Conditions have been
satisfied or waived, (iv) change the form of consideration payable in
the Offer, (v) amend, modify or add to the Tender Offer Conditions or
(vi) amend any other term of the Offer in a manner adverse to the
Independent Shareholders. Notwithstanding the foregoing, the Company
may, without the consent of the Parent, (A) extend the Offer, if at the
scheduled Expiration Time of the Offer any of the Tender Offer
Conditions shall have not been satisfied or waived, until such time as
such conditions are satisfied or waived, (B) extend the Offer for any
period required by any statute, rule, regulation, interpretation or
position of the SEC or any other governmental entity applicable to the
Offer, (C) waive any Tender Offer Condition.
(c) Offer Documents. The Company represents that the
Offer Documents will comply in all material respects with the
provisions of applicable federal securities laws and, on the date filed
with the SEC and on the date first published, sent or given to the
Company's shareholders, shall not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading,
except that no representation is made by the Company with respect to
information supplied by the Parent or Sub for inclusion in the Offer
Documents. Each of Parent and Sub, on the one hand, and the Company, on
the other hand, agrees promptly to correct any information provided by
it for use in the Offer Documents if and to the extent that it shall
have become false or misleading in any material respect prior to the
Expiration Time, and the Company further agrees to take all steps
necessary to cause the Offer Documents as so corrected to be filed with
the SEC and to be disseminated to shareholders of the Company, in each
case, as and to the extent required by applicable federal securities
laws.
SECTION 1.02. Tender Offer Conditions. Notwithstanding any other provisions of
the Offer, the Company shall not be required to accept for payment or, subject
to any applicable rules of the SEC, pay for any tendered
3
shares and may, subject to Section 1.01 and Article IX, terminate or amend the
Offer and/or delay the acceptance of shares for payment if any of the following
events shall occur and be continuing at the Expiration Time:
(a) Regulatory Approval. (i) The Company shall not have
received from the Office of Financial and Insurance Services of the
State of Michigan approval of the Company's request for exemption from
the Form A filing requirement in connection with the Merger and such
approval shall be in full force and effect; or (ii) the Company shall
not have received or obtained all authorizations, consents, orders or
approvals of any court, arbitral tribunal, administrative agency or
commission or other governmental or other regulatory authority or
agency (a "Governmental Entity"), the failure to obtain which would
have a material adverse effect on Parent and its Subsidiaries or the
Company and its Subsidiaries, in each case taken as a whole.
(b) Bank Consent. ProAssurance shall have determined that
the transactions contemplated by this Agreement will result in the
breach of the terms of the Credit Agreement, dated May 10, 2001, among
ProAssurance, SouthTrust Bank, Bank of America, N.A. and the lenders
named therein (the "ProAssurance Credit Agreement") and it shall not
have received the necessary consent, waiver or approval, or such
consent, waiver or approval shall not be in full force and effect at
the Expiration Time such that the consummation of the Offer would
result in a default thereunder.
(c) No Injunctions or Restraints. There shall be in
effect any temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent jurisdiction
or other legal restraint or prohibition preventing the consummation of
the Offer or the Merger or holding that the Offer Price or the Merger
Consideration is not adequate.
(d) Confirmation of Rating. The Company and the other
insurance Subsidiaries of ProAssurance shall be rated lower than "A-"
by A.M. Best Company and Standard & Poors, or shall have received
notice from A.M. Best Company or Standard & Poors of their intention to
lower the rating of the Company or the other insurance Subsidiaries of
ProAssurance below "A-" after giving effect to the Offer or the Merger.
(e) Representations and Warranties. The representations
and warranties of Parent and Sub set forth in this Agreement shall not
be true and correct in all material respects as of the date of this
Agreement and (except to the extent such representations speak as of an
earlier date) as of the Expiration Time as though made on and as of the
Expiration Time, except as otherwise contemplated by this Agreement.
(f) Termination of the Agreement. The Agreement shall
have been terminated pursuant to clauses (b), (c), (d) or (f) of
Section 9.01.
ARTICLE II
THE MERGER
SECTION 2.01. Effective Time of the Merger. Subject to the provisions of this
Agreement, a certificate of merger (the "Certificate of Merger") shall be duly
prepared, executed and acknowledged by the Company and thereafter delivered to
the Department of Consumer and Industry Services of the State of Michigan
("Bureau") for filing, as provided in the MBCA, as soon as practicable on or
after the Closing Date (as defined below). The Merger shall become effective
upon the filing of the Certificate of Merger with the Bureau or at such time
thereafter as is agreed to between Parent and the Company and provided in the
Certificate of Merger (the "Effective Time").
4
SECTION 2.02. Closing. The closing of the Merger (the "Closing") will take place
at 9:00 a.m., Detroit time, as soon as practicable but no later than the third
business day after all of the conditions set forth in Section 8.01 have been
satisfied or waived (provided that the other closing conditions set forth in
Article VIII have been met or waived as provided in Article VIII at or prior to
the Closing); or such other date and time as shall be determined by the parties
to be mutually satisfactory. The date of Closing determined pursuant to the
above is referred to herein as the "Closing Date". The Closing shall take place
at the offices of Xxxxxx Xxxxxxx PLLC, 000 Xxxxxxxxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxx, unless another place is agreed to by the parties hereto.
SECTION 2.03. Effect of the Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, Sub shall be merged with and into the Company
(the "Merger") and Company shall continue as the surviving corporation (the
Company is sometimes referred to herein as the "Surviving Corporation"). The
Merger shall have the effects set forth in Section 724 of the MBCA.
SECTION 2.04. Articles of Incorporation and Bylaws.
(a) The articles of incorporation of the Company, as in
effect immediately prior to the Effective Time, shall be the articles
of incorporation of the Surviving Corporation until thereafter changed
or amended as provided therein or by applicable law.
(b) The bylaws of the Company as in effect at the
Effective Time shall be the bylaws of the Surviving Corporation until
thereafter changed or amended as provided therein or by applicable law.
SECTION 2.05. Directors. The directors of Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.
SECTION 2.06. Officers. The officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving Corporation until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.
ARTICLE III
CONVERSION OR CANCELLATION OF SECURITIES
SECTION 3.01. Conversion or Cancellation of Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any shares of Common Stock, no par value, of the Company (the "Company Common
Stock") or capital stock of Sub:
(a) Capital Stock of Sub. Each issued and outstanding
share of the capital stock of Sub shall be converted into and become
the same number of shares of fully paid and nonassessable shares of
common stock of the Surviving Corporation.
(b) Cancellation of Parent-Owned Stock. All shares of
Company Common Stock that are owned by Parent shall be canceled and
retired and shall cease to exist and no consideration shall be
delivered in exchange therefor.
(c) Conversion of Company Common Stock. Each share of
Company Common Stock issued and outstanding (other than shares to be
canceled in accordance with Section 3.01(b)) shall be converted into
the right to receive $29.00 per share (the "Merger Consideration") in
cash without interest. As of the Effective Time, all such shares shall
no longer be outstanding and shall
5
automatically be canceled and shall cease to exist, and each holder of
a certificate representing any such shares shall cease to have any
rights with respect thereto, except the right to receive the Merger
Consideration without interest.
(d) Options to Acquire Shares of Company Stock. At the
Effective Time, each outstanding option to acquire shares of Company
Common Stock (a "Company Option") shall become immediately exercisable
in full, to the extent such option has not previously been exercised,
and shall be converted into the right to receive in full settlement
thereof, from the Company for each share of Company Common Stock for
which such Company Option is exercisable, an amount in cash equal to
the excess of the Merger Consideration over the per share exercise
price of such option, without interest (such amount being hereinafter
referred to as the "Option Consideration"). The surrender of a Company
Option shall be deemed a release of any and all rights the holder had
or may have had in respect of such option.
SECTION 3.02. Exchange of Certificates.
(a) Paying Agent. As soon as practicable following the
approval by shareholders of this Agreement contemplated by Section
4.07, the Company shall designate a bank or trust company to act as
paying agent in the Offer and the Merger (the "Paying Agent"), and the
Company shall make available, or cause to made available, to the Paying
Agent funds in amounts and at the times necessary for the payment of
the consideration to be paid in the Offer pursuant to Section 1.01, and
the Merger Consideration and Option Consideration pursuant to Sections
3.01(c) and 3.01(d), it being understood that any and all interest
earned on funds made available to the Paying Agent pursuant to this
Agreement shall be turned over to, or at the direction of, the Company.
Such funds shall be invested by the Paying Agent as directed by the
Company, provided that such investments shall be obligations of or
guaranteed by the United States of America, in commercial paper
obligations rated A-1 or P-1 or better by Xxxxx'x Investors Service,
Inc. or Standard & Poor's Rating Services, respectively, or in deposit
accounts, certificates of deposit, bank repurchase or reverse
repurchase agreements or banker's acceptances of, or Eurodollar time
deposits purchased from, commercial banks with capital exceeding $250
million (based on the most recent financial statements of such bank
which are then publicly available at the SEC or otherwise).
(b) Exchange Procedure. As soon as reasonably practicable
after the Effective Time, the Paying Agent shall mail to each holder of
record (other than the Parent) of a certificate or certificates which
immediately prior to the Effective Time represented shares of Company
Common Stock (the "Certificates") and to each holder of Company Options
at the Effective Time (i) a letter of transmittal (which shall specify
that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the
Paying Agent and shall be in a form and have such other provisions as
the Company may specify) and (ii) instructions for use in effecting the
surrender of the Certificates and Company Options in exchange for the
Merger Consideration or Option Consideration, as applicable. Upon
surrender of a Certificate or Company Option for cancellation to the
Paying Agent or to such other agent or agents as may be appointed by
the Company, together with such letter of transmittal, duly executed,
and such other documents as may reasonably be required by the Paying
Agent, the holder of such Certificate or Company Option, as the case
may be, shall be entitled to receive in exchange therefor the amount of
cash into which the shares theretofore represented by such Certificate
or Company Option, as the case may be, shall have been converted
pursuant to Section 3.01, and the Certificate or Company Option, as the
case may be, so surrendered shall forthwith be canceled. In the event
of a transfer of ownership of shares that is not registered in the
transfer records of the Company, payment may be made to a person other
than the person in whose name the Certificate so surrendered is
registered, if such Certificate shall be properly endorsed or otherwise
be in proper form for transfer and the person requesting such payment
shall pay any transfer or other taxes required by reason of the payment
to a person other than the registered holder of such Certificate or
establish to the satisfaction of the Surviving Corporation that such
tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 3.02, each Certificate and
6
Company Option shall be deemed at any time after the Effective Time to
represent only the right to receive upon such surrender the Merger
Consideration or Option Consideration, respectively, without interest.
No interest will be paid or will accrue on the Merger Consideration or
Option Consideration.
(c) Return of Funds. At any time following six months
after the Effective Time, the Surviving Corporation shall be entitled
to require the Paying Agent to deliver to it any funds (including any
interest and other income received with respect thereto) which has been
made available to the Paying Agent and which have not been disbursed to
holders of Certificates or Company Options, as the case may be, and
thereafter such holders shall be entitled to look to the Surviving
Corporation (subject to abandoned property, escheat or other similar
laws) only as general creditors thereof with respect to the Merger
Consideration or the Option Consideration, as the case may be, payable
upon due surrender of their Certificates or Company Options, as the
case may be.
(d) No Further Ownership Rights in Company Common Stock
or Company Options. All cash paid upon the surrender of Certificates or
Company Options in accordance with the terms of this Article III shall
be deemed to have been paid in full satisfaction of all rights
pertaining to (i) the shares of Company Common Stock theretofore
represented by such Certificates or (ii) the Company Options, as the
case may be. At the Effective Time, the stock transfer books of the
Company shall be closed, and there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of
the shares that were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates or Company Options are
presented to the Surviving Corporation or the Paying Agent for any
reason, they shall be canceled and exchanged as provided in this
Article III.
(e) No Liability. None of Parent, Sub, the Company, the
Surviving Corporation or the Paying Agent shall be liable to any person
in respect of any cash delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
SECTION 4.01. Organization. Each of the Company and its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and corporate authority and all necessary governmental approvals to own, lease
and operate its properties and to carry on its business as now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority and governmental approvals would not have a material
adverse effect on the Company and its Subsidiaries, taken as a whole. The
Company and each of its Subsidiaries is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not in the aggregate have
a material adverse effect on the Company and its Subsidiaries, taken as a whole.
As used in this Agreement, "Subsidiary" means, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which (i) such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the voting
interest in such partnership) or (ii) at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the Board of Directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries.
7
SECTION 4.02. Capitalization. As of the close of business on the date
immediately preceding the date hereof, the authorized capital stock of the
Company consists of (i) 10,000,000 shares of Company Common Stock, of which
6,683,563 shares are issued and outstanding and (ii) 120,000 shares of Company
Common Stock are reserved for issuance upon exercise of the Company Options, all
of which were granted under the Company's Stock Compensation Plan (the "Company
Stock Plan"). All of the outstanding shares of Company Common Stock are, and all
shares which may be issued pursuant to the Company Options will be, when issued
in accordance with the terms thereof, duly authorized, validly issued, fully
paid and nonassessable and free of any preemptive rights in respect thereto. As
of the date hereof, no bonds, debentures, notes or other indebtedness
convertible into securities having the right to vote ("Convertible Debt") of the
Company are issued or outstanding. Except as set forth above, as of the date
hereof, there are no existing options, warrants, calls, subscriptions or other
rights or other agreements or commitments of any character relating to the
issued or unissued capital stock or Convertible Debt of the Company or any of
its Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Convertible Debt of, or other equity interests in, the Company
or of any of its Subsidiaries or securities convertible into or exchangeable for
such shares or equity interests or obligating the Company or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement or commitment. As of the date hereof,
there are no outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company or any of its Subsidiaries other than this Agreement.
SECTION 4.03. Authority. The Company has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby (subject, with respect to the Merger, to the
approval and adoption of this Agreement by the affirmative vote of not less than
a majority of the outstanding shares of Company Common Stock and the affirmative
vote of a majority of the outstanding shares of Company Common Stock owned by
the Independent Shareholders. The "Independent Shareholders" are the
shareholders of the Company Common Stock other than ProAssurance Corporation
("ProAssurance") and persons who are "affiliates" or "associates" of
ProAssurance, as those terms are used in Article VIII of the Company's articles
of incorporation). The execution, delivery and performance of this Agreement and
the consummation of the Merger and of the other transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than as aforesaid). This Agreement has been duly executed
and delivered by the Company and constitutes a valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except that (a) such enforcement may be subject to applicable bankruptcy,
insolvency or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
SECTION 4.04. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, state insurance laws and the
MBCA, neither the execution, delivery or performance of this Agreement by the
Company nor the consummation by the Company of the transactions contemplated
hereby nor compliance by the Company with any of the provisions hereof will (a)
violate any provision of the articles of incorporation or bylaws of the Company
or of any of its Subsidiaries, (b) require any filing with, or permit,
authorization, consent or approval of, any Governmental Entity (except where the
failure to obtain such permits, authorizations, consents or approvals or to make
such filings would not have a material adverse effect on the Company and its
Subsidiaries taken as a whole or a material adverse effect on the ability of the
Company to consummate the transactions contemplated by this Agreement), (c)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound or (d) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Company, any of its Subsidiaries or any of
their properties or assets, except in the case of (c) or (d) for
8
violations, breaches or defaults which would not, individually or in the
aggregate, have a material adverse effect on the Company and its Subsidiaries,
taken as a whole or a material adverse effect on the ability of the Company to
consummate the transactions contemplated by this Agreement.
SECTION 4.05. SEC Reports and Financial Statements. Each of the Company and its
Subsidiaries has filed with the SEC and has heretofore made available to Parent
true and complete copies of, all forms, reports, schedules, statements and other
documents required to be filed by it since July 1, 1999, under the Exchange Act
or the Securities Act of 1933, as amended (the "Securities Act") (as such
documents have been amended since the time of their filing, collectively, the
"Company SEC Documents"). The Company SEC Documents, including without
limitation any financial statements or schedules included therein, at the time
filed, (a) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading and (b) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder. The
financial statements of the Company included in the Company SEC Documents comply
as to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited statements, as
permitted by Form 10-Q of the SEC) and fairly present (subject, in the case of
the unaudited statements, to normal, recurring audit adjustments) the
consolidated financial position of the Company and its consolidated Subsidiaries
as at the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended.
SECTION 4.06. Opinion of Financial Advisor. The Exploratory Committee of the
Company's Board of Directors has received the opinion of Xxxxxxx Xxxxx &
Associates, Inc., dated June 18, 2002, to the effect that, as of such date, the
consideration to be received pursuant to the Offer and the Merger by the
Independent Shareholders is fair to the Independent Shareholders from a
financial point of view.
SECTION 4.07. Vote Required. The affirmative vote of the holders of both (a) a
majority of the outstanding shares of Company Common Stock entitled to vote
thereon and (b) a majority of the outstanding shares of Company Common Stock
held by the Independent Shareholders are the only votes of the holders of any
class or series of the Company's capital stock necessary to approve this
Agreement and the transactions contemplated hereby.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub represent and warrant, jointly and severally, to the
Company as follows:
SECTION 5.01. Organization. Each of Parent and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
corporate authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as now being conducted
except where the failure to be so organized, existing and in good standing or to
have such power, authority, and governmental approvals would not have a material
adverse effect on the ability of Parent and Sub to consummate the transactions
contemplated by this Agreement. Parent is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not in the aggregate have
a material adverse effect on the ability of Parent and Sub to consummate the
transactions contemplated by this Agreement.
SECTION 5.02. Authority. Parent and Sub have all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and
9
performance of this Agreement and the consummation of the Merger and of the
other transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and Sub, and no other corporate
proceedings on the part of Parent and Sub are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement has
been duly executed and delivered by Parent and Sub, as the case may be, and
constitutes a valid and binding obligation of each of Parent and Sub, as the
case may be, enforceable against Parent and Sub in accordance with its
respective terms, except that (a) such enforcement may be subject to applicable
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of court before which any proceeding
therefor may be brought.
SECTION 5.03. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, state insurance laws and the
MBCA, neither the execution, delivery or performance of this Agreement by Parent
and Sub nor the consummation by Parent and Sub of the transactions contemplated
hereby nor compliance by Parent and Sub with any of the provisions hereof will
(a) violate any provision of the respective articles of incorporation or bylaws
of Parent and Sub, (b) require any filing with, or permit, authorization,
consent or approval of, any Governmental Entity (except where the failure to
obtain such permits, authorizations, consents or approvals or to make such
filings would not have a material adverse effect on the ability of Parent and
Sub to consummate the transactions contemplated by this Agreement), (c) except
for the ProAssurance Credit Agreement, result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation, or acceleration) under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, lease, contract, agreement or other instrument or obligation to which
Parent or any of its Affiliates is a party or by which any of them or any of
their properties or assets may be bound or (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent, any of its
Affiliates or any of their properties or assets, except in the case of (c) and
(d) for violations, breaches or defaults which would not, individually or in the
aggregate, have a material adverse effect on the ability of Parent and Sub to
consummate the transactions contemplated by this Agreement. As used in this
Agreement, an "Affiliate" of an entity is any person or entity that directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with the entity.
SECTION 5.04. Information. None of the information supplied by Parent or Sub in
writing specifically for inclusion or incorporation by reference in (i) the
Company's Proxy Statement for the annual meeting of its shareholders at which
the Merger will be considered (the "Proxy Statement"), (ii) the Schedule 13E-3
or (iii) the Other Filings will, at the respective dates filed with the SEC or
such other Governmental Entity, and with respect to the Proxy Statement, on the
date mailed to shareholders and at the time of the meeting of the Company's
shareholders to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.
SECTION 5.05. Ownership and Interim Operations of Sub. The only class of capital
stock of Sub authorized for issuance is common stock. There are 100 shares of
Sub common stock issued and outstanding, all of which is directly owned by
Parent. Sub was formed solely for the purpose of engaging in the Merger, has no
assets or liabilities and has engaged in no other business activities.
SECTION 5.06. Ownership of Common Stock. Parent owns, beneficially and of
record, 5,610,045 shares of Company Common Stock. No "affiliate" or "associate"
(as those terms are used in Article VIII of the Company's articles of
incorporation) of ProAssurance, other than Parent and persons who are directors
and officers of the Company and its Subsidiaries, own, beneficially or of
record, any Company Common Stock.
10
ARTICLE VI
COVENANTS
SECTION 6.01. Operate in Ordinary Course. During the period from the date of
this Agreement and continuing until the Effective Time, the Company agrees that
(except as expressly contemplated or permitted by this Agreement, or to the
extent that Parent shall otherwise consent in writing) (a) the Company and its
Subsidiaries shall carry on their respective businesses in the usual, regular
and ordinary course in substantially the same manner as heretofore conducted and
use all commercially reasonable efforts to preserve intact their present
business organizations, keep available the services of their present officers
and employees and preserve their relationships with customers, suppliers and
others having business dealings with them to the end that their goodwill and
ongoing business shall not be impaired in any material respect at the Effective
Time; and (b) the Company shall not, nor shall it permit any of its Subsidiaries
to, issue, deliver or sell, or authorize or propose the issuance, delivery or
sale of, any shares of its capital stock of any class or any securities
convertible into, or any rights, warrants, calls, subscriptions or options to
acquire, any such shares or convertible securities, other than (i) the issuance
of shares of Company Common Stock upon the exercise of Company Options
outstanding on the date hereof and (ii) the issuance by a wholly owned
Subsidiary of its capital stock to its parent.
SECTION 6.02. Fiduciary Out.
(a) Except as set forth in this Section 6.02(a), neither
the Board of Directors of the Company nor any committee thereof shall
(i) withdraw or modify, or propose to withdraw or modify, in a manner
adverse to Parent, the approval or recommendation by such Board of
Directors or committee of this Agreement, (ii) approve or recommend, or
propose to approve or recommend, any Takeover Proposal, or (iii) cause
the Company to enter into any agreement with respect to any Takeover
Proposal. Notwithstanding the foregoing, in the event that prior to the
Effective Time the Board of Directors of the Company or a committee
thereof determines in good faith, after consultation with counsel, that
it is necessary to do so in order to comply with its fiduciary duties
to the Company's shareholders, the Board of Directors or such committee
may withdraw or modify its approval or recommendation of this
Agreement, approve or recommend a Takeover Proposal or cause the
Company to enter into an agreement with respect to a Takeover Proposal.
In evaluating any unsolicited Takeover Proposal, the Company's Board of
Directors or any committee thereof may consider any statement or
indication from or on behalf of Parent that it will not agree to such
Takeover Proposal, provided that such fact shall not prevent the
Company's Board of Directors from taking any action permitted pursuant
to this Section 6.02(a). For purposes of this Agreement, "Takeover
Proposal" means any inquiry, proposal or offer from any person (other
than Parent or any of its Affiliates) relating to any direct or
indirect acquisition or purchase of a substantial amount of assets of
the Company or any of its Subsidiaries or of 50% or more of the shares
of Company Common Stock, any tender offer or exchange offer that if
consummated would result in any person beneficially owning 50% or more
of the shares of Company Common Stock, any merger, consolidation,
business combination, sale of substantially all the assets,
recapitalization, liquidation, dissolution or similar transaction
involving the Company, other than the Merger, or any other transaction
the consummation of which could reasonably be expected to impede,
interfere with, prevent or materially delay the Merger or which would
reasonably be expected to dilute materially the benefits to Parent of
the transaction contemplated hereby.
(b) The Company and Parent shall each immediately advise
the other orally and in writing of any request for information or of
any Takeover Proposal, or any inquiry with respect to or which could
lead to any Takeover Proposal, received by them or any of their
Affiliates and shall (i) describe the material terms and conditions of
such request, Takeover Proposal or inquiry and the identity of the
person making such request, Takeover Proposal or inquiry and (ii)
immediately deliver to the other a copy of any such request, Takeover
Proposal or inquiry made in writing. The Company and Parent will each
keep the other fully informed of the status and details (including
amendments or proposed amendments) of any such request, Takeover
Proposal or inquiry.
11
(c) Nothing contained in this Section 6.02 shall prohibit
the Company from taking and disclosing to its shareholders a position
contemplated by Rule 14e-2(a) promulgated under the Exchange Act or
from making any disclosure to the Company's shareholders if, in the
opinion of the Board of Directors of the Company, after consultation
with counsel, failure so to disclose would be inconsistent with its
fiduciary duties to the Company's shareholders; provided, however, that
neither the Company nor its Board of Directors nor any committee
thereof shall, except as permitted by Section 6.02(a), withdraw or
modify, or propose to withdraw or modify, its position with respect to
the Merger or approve or recommend, or propose to approve or recommend,
a Takeover Proposal.
ARTICLE VII
ADDITIONAL AGREEMENTS
SECTION 7.01. Preparation of the Proxy Statement and Schedule 13E-3. The Company
shall promptly prepare and file with the SEC preliminary and final versions of
the Proxy Statement and a Schedule 13E-3 relating to the Merger (the "Schedule
13E-3"). The Company shall use its commercially reasonable efforts to have the
Proxy Statement cleared by the SEC and mailed to its shareholders at the
earliest practicable date. The Company shall cooperate and consult with Parent
with respect to the Proxy Statement and the Schedule 13E-3 and any related SEC
comments. The Company covenants that (a) the Proxy Statement and the Schedule
13E-3 will comply in all material respects with the requirements of the Exchange
Act and the rules and regulations thereunder and (b) as of the date of mailing
of the Proxy Statement and at the time of the meeting of the Company's
shareholders to be held in connection with the Merger, the Proxy Statement and
the Schedule 13E-3 will not contain any untrue statement of material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading; provided that no representation is made by the
Company with respect to any information included in the Proxy Statement and the
Schedule 13E-3 regarding Parent or its Subsidiaries supplied by Parent in
writing specifically for inclusion in the Proxy Statement and the Schedule
13E-3.
SECTION 7.02. Access to Information. The Company shall (and shall cause each of
its Subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of Parent, access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, the Company shall (and shall
cause each of its Subsidiaries to) furnish promptly to Parent (a) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of federal securities laws
and (b) all other information concerning its business, properties and personnel
as Parent may reasonably request.
SECTION 7.03. Shareholders Meeting. The Company shall call a meeting of its
shareholders for the purpose of voting upon this Agreement and the Merger.
Subject to Section 6.02(a), the Company will, through its Board of Directors,
recommend to its shareholders approval of this Agreement and shall use its
commercially reasonable efforts to hold such meeting as soon as reasonably
practicable after the date hereof.
SECTION 7.04. Legal Conditions to Merger. Each of the Company, Parent and Sub
will take all commercially reasonable actions necessary to comply promptly with
all legal requirements which may be imposed on itself with respect to the Merger
(which actions shall include, without limitation, furnishing all information in
connection with approvals of or filings with state insurance authorities and any
other Governmental Entity) and will promptly cooperate with and furnish
information to each other in connection with any such requirements imposed upon
any of them or any of their Subsidiaries in connection with the Merger. Each of
the Company, Parent and Sub will, and will cause its Subsidiaries to, take, or
cause to be taken, all commercially reasonable actions necessary to obtain (and
will cooperate with each other in obtaining) any consent, authorization, order
or approval of, or any exemption by, any Governmental Entity or
12
other public or private third party, required to be obtained or made by Parent,
the Company or any of their Subsidiaries in connection with the Merger or the
taking of any action contemplated thereby or by this Agreement, including
without limitation, any required waiver, consent or approval under the
ProAssurance Credit Agreement.
SECTION 7.05. Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense.
SECTION 7.06. Brokers or Finders. Each of Parent and the Company represents, as
to itself and its Affiliates, that, as of the date of this Agreement, no agent,
broker, investment banker, financial advisor or other firm or person is or will
be entitled to any brokers' or finder's fee or any other commission or similar
fee in connection with any of the transactions contemplated by this Agreement
except Xxxxxxx Xxxxx & Associates, Inc., whose fees and expenses will be paid by
the Company in accordance with the Company's agreement with such firm (copies of
which have been delivered by the Company to Parent prior to the date of this
Agreement). Each of Parent and the Company agree to indemnify and hold the other
harmless from and against any and all claims, liabilities or obligations with
respect to any other fees, commissions or expenses asserted by any person on the
basis of any act or statement alleged to have been made by such party or its
Affiliates. In the event that Parent or any of its Affiliates engages an agent,
broker, investment banker, financial advisor or other firm or person entitled to
any brokers' or finder's fee or any other commission or similar fee in
connection with any of the transactions contemplated by this Agreement, Parent
agrees to indemnify and hold harmless the Company from and against any and all
claims, liabilities or obligations with respect to any such fees, commissions or
other expenses.
SECTION 7.07. Indemnification; Insurance.
(a) For a period of three years from the Effective Time,
the Surviving Corporation, shall maintain in its Bylaws the provisions
with respect to indemnification set forth in the Company's Bylaws as in
effect on the date hereof, which provisions shall not be amended,
repealed or otherwise modified for such a period in any manner that
would adversely affect the rights thereunder of persons who at the
Effective Time were directors, officers, employees or agents of the
Company (such persons being third-party beneficiaries of this Section
7.07) with respect to actions and omissions occurring prior to the
Effective Time, unless such modification is required by law.
(b) For a period of three years from the Effective Time,
the Surviving Corporation shall use its commercially reasonable efforts
to maintain in effect directors' and officers' liability insurance
covering those persons who are currently covered by the Company's
directors' and officers' liability insurance policy with respect to
actions and omissions occurring prior to the Effective Time on terms no
less favorable than the terms of such current insurance coverage. The
Surviving Corporation may provide such coverage through ProAssurance's
directors and officers' liability insurance policy, provided such
policy provides substantially the same coverage as the terms of the
Company's current insurance coverage. Notwithstanding the foregoing, if
the directors' and officers' liability insurance referred to in this
Section 7.07(b) is unavailable for the Maximum D&O Premium (as defined
below), the Surviving Corporation shall obtain as much insurance as can
be obtained for a premium not in excess (on an annualized basis) of the
Maximum D&O Premium. The Company will give to any director and officer
covered by this Section 7.07, 30 days prior written notice of any
reduction on coverage or cancellation of the directors' and officers'
liability insurance referred to in this Section 7.07(b). For purposes
of this Section 7.07(b), the "Maximum D&O Premium" shall be an amount
not greater than 150% of the premium paid by the Company (on an
annualized basis) for directors' and officers' liability insurance
during the period from May 24, 2002 to the Effective Time.
SECTION 7.08. Additional Agreements. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its commercially reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to
13
consummate and make effective the transactions contemplated by this Agreement,
including cooperating fully with the other party, providing information, making
all necessary filings under state laws, refraining from taking any action that
would cause any of the representations and warranties not to be true and correct
in all material respects at the Expiration Time and the Effective Time and using
their commercially reasonable efforts to have any restraining order, injunction
or other prohibition preventing the consummation of the Offer or the Merger
vacated. In case at any time after the Expiration Time or the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement including without limitation, to vest the Surviving Corporation with
full title to all properties, assets, rights, approvals, immunities and
franchises of either the Company or Sub, the proper officers and directors of
each party to this Agreement shall take all such necessary action.
SECTION 7.09. Transfer Taxes. Parent or Surviving Corporation agrees, subject to
consummation of the Merger, to pay, without deduction or withholding from any
amount payable to the holders of Company Common Stock, any Michigan or local
real property transfer taxes and any other similar taxes that become payable by
the shareholders of the Company, the Company or the Surviving Corporation in
connection with the Merger. The Company and Parent shall cooperate in the
preparation, execution and filing of any returns, questionnaires, applications
and other documents related to such taxes required or permitted to be filed on
or before the Effective Time.
SECTION 7.10. Subsequent Sale of the Company. Parent hereby represents, as of
the date of this Agreement and as of the Closing Date, that neither it nor
ProAssurance have any present intention of selling or otherwise disposing of the
Company Common Stock owned by Parent or selling or otherwise disposing of all or
substantially all of the Company's assets. Parent agrees, for itself and
ProAssurance, that if, prior to the one-year anniversary of the Expiration Time
of the Offer, either of them, directly or indirectly, sells or otherwise
disposes, or agrees to sell or otherwise dispose, of the shares of capital stock
of the Surviving Corporation or any of the Surviving Corporation's Subsidiaries
beneficially owned by them following the Offer or Merger, or all or
substantially all of the assets of the Surviving Corporation and its
Subsidiaries, other than to ProAssurance or a Subsidiary of ProAssurance, for
consideration valued (in the reasonable discretion of Parent's board of
directors) at more than the sum of (a) $29.00 multiplied by the number of shares
outstanding immediately prior to the Expiration Time, plus (b) the aggregate
Option Consideration paid or to be paid based on the number of shares subject to
Company Options outstanding immediately after the Expiration Time, then they
will pay, to the Paying Agent, or a substitute agent (which shall be a bank or
trust company) mutually satisfactory to Parent and the Company, for distribution
on a pro rata basis to the shareholders whose shares were acquired by the
Company in the Offer and, if the Effective Time has occurred, (x) the
shareholders of record of Company Common Stock other than Parent and
ProAssurance (and its Subsidiaries) at the Effective Time and (y) the holders of
Company Options at the Effective Time, an amount determined as follows:
(A) If the Effective Time has not occurred, the amount
payable shall be equal to (1) the amount by which the value of the
consideration received by Parent and its Affiliates in such sale or
disposition (as determined by Parent's board of directors in its
reasonable discretion) exceeds the sum of clauses (a) and (b),
multiplied by (2) the ratio of (i) the number of shares acquired by the
Company pursuant to the Offer divided by (ii) the sum of the number of
shares acquired by the Company pursuant to the Offer plus the number of
shares outstanding immediately prior to the completion of such sale or
disposition plus the number of shares subject to Company Options
immediately prior to the completion of such sale or disposition.
(B) If the Effective Time has occurred, the amount
payable shall be equal to (1) the amount by which the value of the
consideration received by Parent and its Affiliates in such sale or
disposition (as determined by Parent's board of directors in its
reasonable discretion) exceeds the sum of clauses (a) and (b),
multiplied by (2) the ratio of (i) the sum of the number of shares
acquired by the Company pursuant to the Offer plus the number of shares
outstanding, other than those
14
beneficially owned by Parent or ProAssurance, at the Effective Time
plus the number of shares subject to Company Options at the Effective
Time, divided by (ii) the sum of the number of shares acquired by the
Company pursuant to the Offer plus the number of shares outstanding at
the Effective Time plus the number of shares subject to Company Options
at the Effective Time.
The shareholders and Company Option holders who are entitled to such
payment pursuant to the foregoing provisions are expressly intended to be
third-party beneficiaries of the provisions of this Section 7.10.
SECTION 7.11. Rating Confirmation. The Company and Parent shall, and shall cause
their Affiliates to, seek and to use their commercially reasonable efforts to
obtain confirmation from A. M. Best Company and Standard & Poors that the
consummation of the Offer and Merger will not impair the current A. M. Best
Company and Standard & Poors ratings of the Company or any of the other
insurance Subsidiaries of ProAssurance.
SECTION 7.12. Other Filings. The Company, Parent and Sub, as the case may be,
shall promptly file any other filings required under the Exchange Act or any
other applicable law relating to the transactions contemplated herein (the
"Other Filings"). Each of the parties hereto shall notify the other parties
hereto promptly of the receipt by it of any comments from the SEC or its Staff
and of any request of the SEC or any other governmental officials with respect
to any Other Filings or for additional information and will supply the other
parties hereto with copies of all correspondence between it and its
representatives, on the one hand, and the SEC or the members of its Staff or any
other governmental officials, on the other hand, and will provide the other
parties and their counsel with the opportunity to participate, including by way
of discussions with the SEC or its Staff, in the response of such party to such
comments with respect to any Other Filings or the transactions contemplated
herein. Each of the Company, on the other hand, and Parent and Sub, on the
other, shall use its commercially reasonable efforts to obtain and furnish the
information required to be included in any Other Filings or the Merger.
ARTICLE VIII
CONDITIONS
SECTION 8.01. Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions:
(a) Shareholder Approval. This Agreement shall have been
approved and adopted by the affirmative vote of (i) the holders of a
majority of the outstanding shares of Company Common Stock as required
by the MBCA and (ii) a majority of the outstanding shares owned by the
Independent Shareholders as required by the Company's Articles of
Incorporation.
(b) Other Approvals. (i) The Office of Financial and
Insurance Services of the State of Michigan shall have approved the
Company's request for exemption from the Form A filing requirement in
connection with the Merger and such approval shall be in full force and
effect. (ii) The determination by ProAssurance that the transaction
contemplated by this Agreement will not result in the breach of the
terms of the ProAssurance Credit Agreement or, if ProAssurance
determines that such transactions will result in such a breach, the
required consent, waiver or approval shall have been obtained in
connection with the ProAssurance Credit Agreement and shall be in full
force and effect such that the consummation of the Merger and the other
transactions contemplated hereby will not result in a default
thereunder. (iii) Other than the filing provided for by Section 2.01,
all authorizations, consents, orders or approvals of, or declarations
or filings with, or
15
expirations of waiting periods imposed by, any Governmental Entity the
failure to obtain which would have a material adverse effect on Parent
and its Subsidiaries or the Surviving Corporation and its Subsidiaries,
in each case taken as a whole, shall have been filed, occurred or been
obtained.
(c) No Injunctions or Restraints. There shall not be
pending or threatened any action or proceeding by or before any court
or other Governmental Entity seeking to restrain, prohibit, invalidate
or collect damages arising out of the Merger or other transactions
hereunder, and there shall be in effect no temporary restraining order,
preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Merger or holding that the Merger
Consideration is not adequate.
(d) Confirmation of Rating. The Company and the other
insurance Subsidiaries of ProAssurance shall not be rated lower than
"A-" by A.M. Best Company and Standard & Poors, nor shall the Company
or ProAssurance have received notice from A.M. Best Company or Standard
& Poors of their intention to lower the rating of the Company or any of
the other insurance Subsidiaries of ProAssurance below "A-" after
giving effect to the Offer or the Merger.
SECTION 8.02. Conditions of Obligations of Parent and Sub. The obligations of
Parent and Sub to effect the Merger are subject to the satisfaction of the
following conditions unless waived by Parent and Sub:
(a) Representations and Warranties. The representations
and warranties of the Company set forth in this Agreement shall be true
and correct in all material respects as of the date of this Agreement
and (except to the extent such representations and warranties speak as
of an earlier date or except, as to any failure to be true and correct,
to the extent that Parent or Sub had knowledge of such failure to be
true and correct as of the date hereof) as of the Closing Date as
though made on and as of the Closing Date, except as otherwise
contemplated by this Agreement.
(b) Performance of Obligations of the Company. The
Company shall have performed in all material respects all obligations
required to be performed by it under this Agreement at or prior to the
Closing Date.
(c) Officer's Certificate. Parent and Sub shall have
received a certificate signed by an executive officer of the Company to
the effect set forth in paragraphs (a) and (b) of this Section 8.02.
SECTION 8.03. Conditions of Obligations of the Company. The obligation of the
Company to effect the Merger is subject to the satisfaction of the following
conditions unless waived by the Company:
(a) Representations and Warranties. The representations
and warranties of Parent and Sub set forth in this Agreement shall be
true and correct in all material respects as of the date of this
Agreement and (except to the extent such representations speak as of an
earlier date) as of the Closing Date as though made on and as of the
Closing Date, except as otherwise contemplated by this Agreement.
(b) Performance of Obligations of Parent and Sub. Parent and
Sub shall have performed in all material respects all obligations
required to be performed by them under this Agreement at or prior to
the Closing Date.
(c) Officer's Certificate. The Company shall have received a
certificate signed by an executive officer of each of Parent and Sub to
the effect set forth in paragraphs (a) and (b) of this Section 8.03.
16
ARTICLE IX
TERMINATION AND AMENDMENT
SECTION 9.01. Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with this Agreement by the shareholders of the Company:
(a) by mutual consent of Parent and the Company;
(b) (i) by either Parent or the Company if there shall
have been a material breach of any representation, warranty, covenant
or agreement on the part of the other set forth in this Agreement which
breach shall not have been cured within two business days following
receipt by the breaching party of notice of such breach, or (ii) by
either Parent or the Company if any permanent injunction or other order
of a court or other competent authority preventing the consummation of
the Merger shall have become final and non-appealable;
(c) by either Parent or the Company if the Company's
Board of Directors takes any of the actions permitted by Section
6.02(a); provided the Company may so terminate only if it has complied
with all the provisions of Section 6.02(b);
(d) by either Parent or the Company if the Offer or
Merger shall not have been consummated on or before December 31, 2002;
(e) by either Parent or the Company if the required
approval of the shareholders of the Company shall not have been
obtained by reason of the failure to obtain the required vote at a duly
held meeting of shareholders or at any adjournment thereof; or
(f) by either Parent or the Company, if any of the
conditions to such party's obligation to consummate the transactions
contemplated in this Agreement shall have become impossible to satisfy
if, but only if, such party has used its commercially reasonable
efforts and acted in good faith in attempting to satisfy all such
conditions and if such party is not then in breach or default in any
material respect of this Agreement.
SECTION 9.02. Effect of Termination. In the event of a termination of this
Agreement by either the Company or Parent as provided in Section 9.01 prior to
the purchase of the shares of Common Stock tendered in the Offer, this Agreement
shall forthwith become void and there shall be no liability or obligation on the
part of Parent, Sub or the Company or their respective officers or directors,
except with respect to any breach of any provision of this Agreement prior to
such termination and except that the last sentence of Section 7.02 and all of
Sections 7.05 and 7.06 shall continue in effect. In the event of a termination
of this Agreement after the purchase of the shares of Common Stock tendered in
the Offer but before the Effective Time of the Merger, such purchase shall not
be rescinded or otherwise affected, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Parent, Sub or the
Company or their respective officers or directors, except with respect to any
breach of any provision of this Agreement prior to such termination and except
that Sections 7.02, 7.05, 7.06 and 7.10 shall continue in effect to the extent
applicable.
SECTION 9.03. Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the Merger
by the shareholders of the Company, but, after any such approval, no amendment
shall be made which by law requires further approval by such shareholders
without such further approval in accordance with Section 8.01(a). This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.
SECTION 9.04. Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (a) extend the
17
time for the performance of any of the obligations or other acts of the other
parties hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained herein.
18
ARTICLE X
MISCELLANEOUS
SECTION 10.01. Nonsurvival of Representations, Warranties and Agreements. None
of the representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Sections 3.01, 3.02, 7.05, 7.06,
7.07, 7.08, 7.09, 7.10 and this Section 10.01.
SECTION 10.02. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (which
is confirmed) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Parent or Sub, to
ProNational Insurance Company
0000 Xxxxxxxxxxxxx Xxxxx
X.X. Xxx 000
Xxxxxx, Xxxxxxxx 00000-0000
Attention: President
Telecopy No.: (000) 000-0000
with a copy to:
Xxxx & Xxxxxx LLP
000 Xxxxx 00xx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxxxxx, Xx.
Telecopy No.: (000) 000-0000
(b) if to the Company, to
Meemic Holdings, Inc.
000 X. Xxxxxxxx Xxxx
Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxx 00000-0000
Attention: President
Telecopy No.: (000) 000-0000
with a copy to
Xxxxxx Xxxxxxx PLLC
000 Xxxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxx X. Xxxx, Esq.
Telecopy No.: (000) 000-0000
SECTION 10.03. Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (including the documents and the instruments referred
to herein) (a) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the
19
subject matter hereof and (b) except as provided in Sections 7.07 and 7.10, are
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder.
SECTION 10.04. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Michigan without regard to applicable
conflicts of law principles.
SECTION 10.05. Publicity. Except as otherwise required by law or the rules of
the Nasdaq Stock Market or the New York Stock Exchange, for so long as this
Agreement is in effect, neither the Company nor Parent shall issue or cause the
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement without the consent of the other
party, which consent shall not be unreasonably withheld.
SECTION 10.06. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned Subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
SECTION 10.07. Definitions. The following defined terms used in this Agreement
are defined in the sections set forth below:
DEFINITIONS. SECTION NO.
-----------
Affiliates................................................ 5.03
Agreement................................................. Preamble
Bureau.................................................... 2.01
Certificate of Merger..................................... 2.01
Certificates.............................................. 3.02(b)
Closing................................................... 2.02
Closing Date.............................................. 2.02
Company................................................... Preamble
Company Common Stock...................................... 3.01
Company's Financial Advisor............................... 1.02(b)
Company Option............................................ 3.01(d)
Company Stock Plan........................................ 4.02
Company SEC Documents..................................... 4.05
Convertible Debt.......................................... 4.02
Effective Time............................................ 2.01
Exchange Act.............................................. 1.01(a)
Expiration Time........................................... 1.1(a)
Governmental Entity....................................... 1.02(a)
Independent Shareholders.................................. 4.03
Maximum D&O Premium....................................... 7.07(b)
MBCA...................................................... Preamble
Merger.................................................... 2.03
Merger Consideration...................................... 3.01(c)
Minimum Condition......................................... Annex 1
Offer..................................................... Preamble
Offer Documents........................................... 1.01(a)
Offer Price............................................... 1.01(a)
Option Consideration...................................... 3.01(d)
Other Filings............................................. 7.12
Parent.................................................... Preamble
Paying Agent.............................................. 3.02(a)
ProAssurance.............................................. 4.03
ProAssurance Credit Agreement............................. 4.03
Proxy Statement........................................... 5.04
Schedule 13E-3............................................ 7.01
SEC....................................................... 1.01(a)
Securities Act............................................ 4.05
Sub....................................................... Preamble
Subsidiary................................................ 4.01
Surviving Corporation..................................... 2.03
Takeover Proposal......................................... 6.02(a)
Tender Offer Conditions................................... 1.01(a)
20
IN WITNESS WHEREOF Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.
PRONATIONAL INSURANCE COMPANY
By:
Name: Xxxxxx X. Xxxxx
Title: President & CEO
MEEMIC MERGER CORP.
By:
Name: Xxxxxx X. Xxxxx
Title: Incorporator
MEEMIC HOLDINGS, INC.
By:
Name: Xxxx X. Xxxxxxxxxx
Title: President
AMENDMENT NO. 1 TO
AGREEMENT AND PLAN OF MERGER,
DATED AS OF JULY 9, 2002,
BY AND AMONG PRONATIONAL INSURANCE COMPANY,
MEEMIC MERGER CORP. AND MEEMIC HOLDINGS, INC.
This Amendment No. 1 to the Agreement and Plan of Merger, dated as of
July 9, 2002, by and among ProNational Insurance Company, Meemic Merger Corp.
and MEEMIC Holdings, Inc. (the "Merger Agreement") is made as of this 18th day
of September, 2002.
WHEREAS, each of the parties desires to amend Section 9.01(d) of the
Merger Agreement to change the date therein from December 31, 2002 to February
28, 2003; and
WHEREAS, Section 9.03 of the Merger Agreement provides that an
amendment thereof must be in writing and signed by each of the parties thereto;
NOW THEREFORE, the parties to the Merger Agreement hereby amend Section
9.01(d) of the Merger Agreement to change the date therein from December 31,
2002 to February 28, 2003.
IN WITNESS WHEREOF, the parties have hereunto set their hands and
delivered this Amendment as of the date and year first above written.
PRONATIONAL INSURANCE COMPANY
By:
Xxxxxx X. Xxxxx
Its: President
MEEMIC MERGER CORP.
By:
Xxxxxx X. Xxxxx
Its: Incorporator
MEEMIC HOLDINGS, INC.
By:
Xxxx X. Xxxxxxxxxx
Its: President
