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EXHIBIT 10.13
PLEDGE AND SECURITY AGREEMENT
THIS PLEDGE AND SECURITY AGREEMENT (the "Pledge Agreement"),
dated as of May 10, 2001 is made by PROASSURANCE CORPORATION, a corporation
organized under the laws of Delaware (the "Pledgor"), in favor of SOUTHTRUST
BANK, an Alabama banking corporation, as Administrative Agent (in such capacity,
the "Administrative Agent"), for the ratable benefit of itself and the financial
institutions (the "Lenders") as are, or may from time to time become, parties to
the Credit Agreement (as defined below).
RECITALS
Pursuant to a Credit Agreement, dated as of May 10, 2001
(together with all amendments and other modifications, if any, from time to time
hereafter made thereto, the "Credit Agreement"), by and among the Pledgor, as
Borrower, the Lenders, and the Administrative Agent, the Lenders have agreed to
extend Borrowings to the Pledgor as more specifically described in the Credit
Agreement.
The Pledgor is the legal and beneficial owner of (a) the
shares of Pledged Stock (as hereinafter defined) issued by certain Subsidiaries
as specified on SCHEDULE 1 attached hereto and incorporated herein by reference
(collectively, the "Issuers") and (b) the Partnership Interests (as hereinafter
defined) in the partnerships and limited liability companies listed on SCHEDULE
2 hereto (collectively, the "Partnerships").
In connection with the transactions contemplated by the Credit
Agreement and as a condition precedent thereto, the Lenders have requested, and
the Pledgor has agreed to execute and deliver, this Pledge Agreement together
with all certificates representing the Pledged Stock and the Partnership
Interests to the Administrative Agent for the ratable benefit of itself and the
Lenders.
NOW, THEREFORE, in consideration of the premises and to induce
the Administrative Agent and the Lenders to enter into the Credit Agreement and
make available Borrowings thereunder, the Pledgor hereby agrees with the
Administrative Agent for the ratable benefit of itself and Lenders as follows:
1. DEFINED TERMS. Unless otherwise defined
herein, terms which are defined in the Credit
Agreement and used herein are so used as so defined,
and the following terms shall have the following
meanings:
"Code" means the Uniform Commercial Code from time to time in
effect in the State of Alabama.
"Collateral" means the Stock Collateral and the Partnership
Collateral.
"Partnership Collateral" means all of the Partnership
Interests of the Pledgor in the Partnerships and all Proceeds
therefrom.
"Partnership Interests" means the entire partnership or
membership interest of the Pledgor in each Partnership listed on
SCHEDULE 2 hereto, including without limitation, Pledgor's capital
account, its interest as a partner or member in the net cash flow, net
profit and net loss, and items of income, gain, loss, deduction and
credit of the Partnerships, its interest in all distributions made or
to be made by the Partnerships to the Pledgor and all of the other
economic rights, titles and interests of the Pledgor as a partner or
member of the Partnerships, whether set forth in the partnership
agreement or membership agreement of the Partnerships, by separate
agreement or otherwise.
"Pledge Agreement" means this Pledge and Security Agreement,
as amended or modified.
"Pledged Stock" means the shares of capital stock of each
Issuer listed on SCHEDULE 1 hereto, together with all stock
certificates, options or rights of any nature whatsoever that may be
issued or granted by such Issuer to the Pledgor while this Pledge
Agreement is in effect.
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"Proceeds" means all "proceeds" as such term is now or
hereafter defined in the Code and, in any event, shall include, without
limitation, all dividends or other income from the Pledged Stock,
collections thereon, proceeds of sale thereof or distributions with
respect thereto.
"Stock Collateral" means the Pledged Stock and all Proceeds
therefrom.
2. PLEDGE AND GRANT OF SECURITY INTEREST. For
the purpose of creating and perfecting a security
interest in the Pledged Stock, the Pledgor hereby
delivers to the Administrative Agent, for the ratable
benefit of itself and the Lenders all the Pledged
Stock and hereby grants to the Administrative Agent,
for the ratable benefit of itself and the Lenders, a
first priority security interest in the Pledged Stock
and all other Collateral, as collateral security for
the prompt and complete payment and performance when
due (whether at the stated maturity, by acceleration
or otherwise) of the Obligation. The Administrative
Agent hereby acknowledges receipt of the certificates
representing the Pledged Stock and agrees to hold the
Pledged Stock subject to the terms of this Pledge
Agreement.
3. STOCK POWERS. Concurrently with the delivery
to the Administrative Agent of each certificate
representing one or more shares of Pledged Stock, the
Pledgor shall deliver an undated stock power covering
such certificate, duly executed in blank by the
Pledgor with, if the Administrative Agent so
requests, signature guaranteed.
4. PLEDGOR REMAINS LIABLE. Anything herein to
the contrary notwithstanding, (a) the Pledgor shall
remain liable to perform all of its duties and
obligations as a partner or member of the
Partnerships to the same extent as if this Pledge
Agreement had not been executed, (b) the exercise by
the Administrative Agent or any Lender of any of its
rights hereunder shall not release the Pledgor from
any of its duties or obligations as a partner or
member of the Partnerships, and (c) neither the
Administrative Agent nor any Lender shall have any
obligation or liability as a partner or member of the
Partnerships by reason of this Pledge Agreement.
5. REPRESENTATIONS AND WARRANTIES. To induce
the Administrative Agent and the Lenders to execute
the Credit Agreement and fund any Borrowings and to
accept the security contemplated hereby, the Pledgor
hereby represents and warrants that:
(a) the Pledgor has the corporate or partnership, as
applicable, right, power and authority and has taken all
necessary corporate or partnership, as applicable, action to
authorize its execution, delivery and performance of, and
grant of the Lien on the Collateral pursuant to, this Pledge
Agreement;
(b) this Pledge Agreement constitutes a legal, valid
and binding obligation of the Pledgor enforceable against the
Pledgor in accordance with its terms, except as such
enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar state or federal debtor
relief laws from time to time in effect which affect the
enforcement of creditors' rights generally and the
availability of equitable remedies;
(c) the execution, delivery and performance of this
Pledge Agreement will not (i) violate any applicable laws
relating to the Pledgor or any of its Subsidiaries; (ii)
conflict with, result in a breach of or constitute a default
under any Material Agreement to which Pledgor is a party or by
which any of its properties may be bound or (iii) result in
the creation or imposition of any Lien upon or with respect to
any material property now owned or hereafter acquired by the
Pledgor other than Liens arising under the Loan Documents;
(d) except as contemplated in PARAGRAPH 12 hereof, no
consent or authorization of, filing with, or other act by or
in respect of, any arbitrator, Insurance Regulator, or other
Governmental Authority and no consent of any other Person
(including, without limitation, any stockholder, other owner
or creditor
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of the Pledgor or any Issuer or any general or limited
partner, member or manager of any Partnership), is required in
connection with the execution, delivery, performance, validity
or enforceability against the Pledgor of this Pledge
Agreement, except (i) as may be required in connection with
the disposition of the Pledged Stock and the Partnership
Interests by Laws affecting the offering and sale of
securities generally, and (ii) filings under the Uniform
Commercial Code;
(e) no litigation, investigation or proceeding of or
before any arbitrator, Insurance Regulator, or other
Governmental Authority is pending or, to the knowledge of the
Pledgor, threatened by or against the Pledgor or against any
of its properties or revenues with respect to this Pledge
Agreement or any of the transactions contemplated hereby;
(f) the shares of Pledged Stock listed on SCHEDULE 1
constitute all the issued and outstanding shares of all
classes of the capital stock of each of the Issuers;
(g) all the shares of the Pledged Stock have been duly
and validly issued and are fully paid and nonassessable;
(h) the Pledgor is the record and beneficial owner of,
and has good and marketable title to, the Pledged Stock and
Partnership Interests, free of any and all Liens or options in
favor of, or claims of, any other Person, except the Lien
created by this Pledge Agreement;
(i) none of the Partnership Interests are represented by
certificates;
(j) upon (A) delivery to the Administrative Agent of the
stock certificates evidencing the Pledged Stock, the Lien
granted pursuant to this Pledge Agreement will constitute a
valid, perfected first priority Lien on the Pledged Stock and
(B) filing of UCC-1 financing statements in the appropriate
filing offices, the Lien granted pursuant to this Pledge
Agreement will constitute a valid, perfected first priority
Lien on the other Collateral, in each case enforceable as such
against all creditors of the Pledgor and any Persons
purporting to purchase any of the Collateral from the Pledgor;
and
(k) Pledgor has delivered to the Administrative Agent
true and complete copies of the partnership or membership
agreements for each of the Partnerships which partnership or
membership agreements are currently in full force and effect
and have not been amended or modified except as disclosed to
the Administrative Agent in writing.
6. CERTAIN COVENANTS AND AGREEMENTS. The
Pledgor covenants and agrees with the Administrative
Agent for the ratable benefit of itself and the
Lenders that, from and after the date of this Pledge
Agreement until the Obligation is paid in full and
the Commitments are terminated:
(a) On or before the date of execution of this Pledge
Agreement, the Pledgor shall cause each of the partners or
members of each of the Partnerships to execute a consent in
the form attached hereto evidencing the consent of the
partners or members to the pledge of the Partnership Interests
pursuant to this Pledge Agreement.
(b) The Pledgor agrees that as a partner or member in the
Partnerships it will abide by, perform and discharge each and
every material obligation, covenant and agreement to be abided
by, performed or discharged by Pledgor under the terms of the
partnership or membership agreements of the Partnerships, at
no cost or expense to the Administrative Agent or the Lenders.
(c) If the Pledgor shall, as a result of its ownership of
the Pledged Stock or any other Collateral, become entitled to
receive or shall receive any stock or other certificate
(including, without limitation, any certificate representing a
stock dividend or a distribution in connection with any
reclassification,
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increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights, whether
in addition to, in substitution of, as a conversion of, or in
exchange for any shares of the Pledged Stock or other
Collateral, or otherwise in respect thereof, the Pledgor shall
accept the same as the agent of the Administrative Agent, hold
the same in trust for the Administrative Agent and deliver the
same forthwith to the Administrative Agent in the exact form
received, duly indorsed by the Pledgor to the Administrative
Agent, if required, together with an undated stock power
covering such certificate duly executed in blank by the
Pledgor and with, if the Administrative Agent so requests,
signature guaranteed, to be held by the Administrative Agent,
subject to the terms hereof, as additional collateral security
for the Obligation.
(d) Except as expressly permitted by the Credit
Agreement, without the prior written consent of the
Administrative Agent, the Pledgor will not (i) vote to enable,
or take any other action to permit, any Issuer to issue any
stock or other equity securities of any nature or to issue any
other securities convertible into or granting the right to
purchase or exchange for any stock or other equity securities
of any nature of such Issuer, (ii) except as expressly
provided to the contrary herein, consent to any modification,
extension or alteration of the terms of any partnership or
membership agreement of the Partnerships, (iii) accept a
surrender of any partnership or membership agreement of any of
the Partnerships or waive any breach of or default under any
partnership or membership agreement of any of the Partnerships
by any other party thereto, (iv) sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with
respect to, the Pledged Stock, or (v) create, incur or permit
to exist any Lien or option in favor of, or any claim of any
Person with respect to, any of the Collateral, or any interest
therein, except for the Lien provided for by this Pledge
Agreement. The Pledgor will defend the right, title and
interest of the Administrative Agent in and to the Collateral
against the claims and demands of all Persons whomsoever.
(e) At any time and from time to time, upon the written
request of the Administrative Agent, and at the sole expense
of the Pledgor, the Pledgor will promptly and duly execute and
deliver such further instruments and documents and take such
further actions as the Administrative Agent may reasonably
request for the purposes of obtaining or preserving the full
benefits of this Pledge Agreement and of the rights and powers
herein granted. If any amount payable under or in connection
with any of the Collateral shall be or become evidenced by any
promissory note, other instrument or chattel paper, such note,
instrument or chattel paper shall be immediately delivered to
the Administrative Agent, duly endorsed in a manner
satisfactory to the Administrative Agent, to be held as
Collateral pursuant to this Pledge Agreement.
(f) The Pledgor agrees to pay, and to save the
Administrative Agent and the Lenders harmless from, any and
all liabilities with respect to, or resulting from any delay
in paying, any and all stamp, excise, sales or other similar
taxes which may be payable or determined to be payable with
respect to any of the Collateral or in connection with any of
the transactions contemplated by this Pledge Agreement.
(g) On or prior to the formation or acquisition of any
Subsidiary of the Pledgor that is or is expected to be a
Significant Subsidiary, other than MEEMIC and its
Subsidiaries, the Pledgor agrees at the request of the
Administrative Agent, to execute such amendments and
supplements to this Pledge Agreement, including without
limitation the Pledge Agreement Supplement attached hereto,
and such other documents and instruments and to take any and
all actions, all as shall be necessary, in the reasonable
judgment of the Administrative Agent, to pledge the Pledgor's
interest therein to the Administrative Agent for the ratable
benefit of itself and the Lenders.
7. CASH DIVIDENDS AND DISTRIBUTIONS; VOTING
RIGHTS. Unless an Event of Default shall have
occurred and be continuing and the Administrative
Agent shall have given notice to the Pledgor of the
Administrative Agent's intent to exercise its rights
pursuant to PARAGRAPH 8 below, the Pledgor shall be
permitted to receive all cash dividends and
shareholder, partnership and membership distributions
paid in accordance with the terms of the Credit
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Agreement in respect of the Collateral and to
exercise all voting and corporate, partnership or
membership rights, as applicable, with respect to the
Collateral; provided, that no vote shall be cast or
corporate, partnership or membership right exercised
or other action taken which, in the Administrative
Agent's reasonable judgment, would impair the
Collateral or which would result in any violation of
any provision of the Credit Agreement, the Notes, any
other Loan Documents or this Pledge Agreement.
8. RIGHTS OF THE ADMINISTRATIVE AGENT.
(a) If an Event of Default shall occur and be continuing
and the Administrative Agent shall give notice of its intent
to exercise such rights to the Pledgor, and subject to the
receipt of any applicable approvals from Insurance Regulators,
and compliance by Administrative Agent and Lenders with any
applicable filing or other requirements of the applicable
Insurance Regulators, (i) the Administrative Agent shall have
the right to receive any and all cash dividends paid in
respect of the Pledged Stock and partnership and membership
distributions in respect of the Partnership Interests and make
application thereof to the Obligation in the order set forth
in SECTION 11.8 of the Credit Agreement and (ii) all shares of
the Pledged Stock shall be registered in the name of the
Administrative Agent or its nominee, and the Administrative
Agent or its nominee may thereafter exercise (A) all voting,
corporate and other rights pertaining to such shares of the
Pledged Stock at any meeting of shareholders of the applicable
Issuer or otherwise and (B) any and all rights of conversion,
exchange, subscription, and any other rights, privileges or
options pertaining to such shares of the Pledged Stock as if
it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and
all of the Pledged Stock upon the merger, consolidation,
reorganization, recapitalization or other fundamental change
in the corporate structure of the applicable Issuer, or upon
the exercise by the Pledgor or the Administrative Agent of any
right, privilege or option pertaining to such shares of the
Pledged Stock, and in connection therewith, the right to
deposit and deliver any and all of the Pledged Stock with any
committee, depositary, transfer agent, registrar or other
designated agency upon such terms and conditions as it may
determine), all without liability except to account for
property actually received by it, but the Administrative Agent
shall have no duty to the Pledgor to exercise any such right,
privilege or option and shall not be responsible for any
failure to do so or delay in so doing.
(b) The rights of the Administrative Agent and the
Lenders hereunder shall not be conditioned or contingent upon
the pursuit by the Administrative Agent or any Lender of any
right or remedy against the Pledgor or against any other
Person which may be or become liable in respect of all or any
part of the Obligation or against any collateral security
therefor, guarantee therefor or right of offset with respect
thereto. Neither the Administrative Agent nor any Lender shall
be liable for any failure to demand, collect or realize upon
all or any part of the Collateral or for any delay in doing
so, nor shall the Administrative Agent be under any obligation
to sell or otherwise dispose of any Collateral upon the
request of the Pledgor or any other Person or to take any
other action whatsoever with regard to the Collateral or any
part thereof.
(c) Pledgor agrees to cooperate with and assist
Administrative Agent and Lenders in connection with any
filings to be with, or approvals required from, any Insurance
Regulators or other Governmental Authorities.
9. REMEDIES. If an Event of Default shall occur
and be continuing, with the consent of the Required
Lenders, and subject to the receipt of any applicable
approvals from Insurance Regulators, and compliance
by Administrative Agent and Lenders with any
applicable filing or other requirements of the
applicable Insurance Regulators, the Administrative
Agent may, and upon the request of the Required
Lenders, the Administrative Agent shall, exercise on
behalf of itself and the Lenders, all rights and
remedies granted in this Pledge Agreement and in any
other instrument or agreement securing, evidencing or
relating to the Obligation, and in addition thereto,
all rights and remedies of a secured party under the
Code. Without limiting the
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generality of the foregoing with regard to the scope
of the Administrative Agent's remedies, the
Administrative Agent, without demand of performance
or other demand, presentment, protest, advertisement
or notice of any kind (except any notice required by
law referred to below) to or upon the Pledgor, any
Issuer, any Partnership or any other Person (all and
each of which demands, defenses, advertisements and
notices are hereby waived), may in such circumstances
forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or may
forthwith sell, assign, give option or options to
purchase or otherwise dispose of and deliver the
Collateral or any part thereof (or contract to do any
of the foregoing), in one or more parcels at public
or private sale or sales, in the over-the-counter
market, at any exchange, broker's board or office of
the Administrative Agent or any Lender or elsewhere
upon such terms and conditions as it may deem
advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without
assumption of any credit risk. The Administrative
Agent or any Lender shall have the right upon any
such public sale or sales, and, to the extent
permitted by law, upon any such private sale or
sales, to purchase the whole or any part of the
Collateral so sold, free of any right or equity of
redemption in the Pledgor, which right or equity is
hereby waived or released. The Administrative Agent
shall apply any Proceeds from time to time held by it
and the net proceeds of any such collection,
recovery, receipt, appropriation, realization or
sale, after deducting all reasonable costs and
expenses of every kind incurred in respect thereof or
incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral
or the rights of the Administrative Agent and the
Lenders hereunder, including, without limitation,
reasonable attorneys' fees and disbursements of
counsel thereto, to the payment in whole or in part
of the Obligation, in the order set forth in SECTION
11.8 of the Credit Agreement, and only after such
application and after the payment by the
Administrative Agent of any other amount required by
any provision of law, including, without limitation,
Section 9-504(1)(c) of the Code (or any successor
provision), need the Administrative Agent account for
the surplus, if any, to the Pledgor. To the extent
permitted by applicable law, the Pledgor waives all
claims, damages and demands it may acquire against
the Administrative Agent or any Lender arising out of
the exercise by them of any rights hereunder. If any
notice of a proposed sale or other disposition of
Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at
least 10 days before such sale or other disposition.
10. REGISTRATION RIGHTS; PRIVATE SALES.
(a) If the Administrative Agent shall determine to
exercise its right to sell any or all of the Collateral
pursuant to PARAGRAPH 9 hereof, and if in the opinion of the
Administrative Agent it is necessary or advisable to have such
Collateral, or that portion thereof to be sold, registered
under the provisions of the Security Act of 1933, as amended
(the "Securities Act"), the Pledgor will use its best efforts
to cause the applicable Issuer or Partnership to (i) execute
and deliver, and use its best efforts to cause the directors,
officers and representatives of the applicable Issuer or
Partnership to execute and deliver, all such instruments and
documents, and do or cause to be done all such other acts as
may be, in the opinion of the Administrative Agent, necessary
or advisable to register such Collateral, or that portion
thereof to be sold, under the provisions of the Securities
Act, (ii) to use its best efforts to cause the registration
statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first
public offering of such Collateral or that portion thereof to
be sold, and (iii) to make all amendments thereto and/or to
the related prospectus which, in the opinion of the
Administrative Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the
rules and regulations of the Securities and Exchange
Commission applicable thereto. The Pledgor agrees to use its
best efforts to cause the applicable Issuer or Partnership to
comply with the provisions of the securities or "Blue Sky"
laws of any and all jurisdictions which the Administrative
Agent shall designate and to make available to its security
holders, as soon as practicable, an earnings statement (which
need not be audited) which will satisfy the provisions of
Section 11(a) of the Securities Act. For the purposes of this
SECTION 10.(A), "applicable Issuer or Partnership" shall mean
each Issuer or Partnership which is a direct or indirect
wholly-owned Subsidiary of the Pledgor.
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(b) The Pledgor recognizes that the Administrative Agent
may be unable to effect a public sale of any or all the
Collateral, by reason of certain prohibitions contained in the
Securities Act and applicable state securities laws or
otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers
which will be obliged to agree, among other things, to acquire
such securities for their own account for investment and not
with a view to the distribution or resale thereof. The Pledgor
acknowledges and agrees that any such private sale may result
in prices and other terms less favorable than if such sale
were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall be deemed to have been
made in a commercially reasonable manner. The Administrative
Agent shall be under no obligation to delay a sale of any of
the Collateral for the period of time necessary to permit the
applicable Issuer or Partnership to register such securities
for public sale under the Securities Act, or under applicable
state securities laws, even if the applicable Issuer or
Partnership would agree to do so.
(c) The Pledgor further agrees to use its best efforts to
do or cause to be done all such other acts as may be necessary
to make such sale or sales of all or any portion of the
Collateral pursuant to this PARAGRAPH 10 valid and binding and
in compliance with any and all other applicable Laws and
applicable requirements of the Insurance Regulators. The
Pledgor further agrees that a breach of any of the covenants
contained in this PARAGRAPH 10 will cause irreparable injury
to the Administrative Agent and the Lenders not compensable in
damages, that the Administrative Agent and the Lenders have no
adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this
PARAGRAPH 10 shall be specifically enforceable against the
Pledgor, and the Pledgor hereby waives and agrees not to
assert any defenses against an action for specific performance
of such covenants except for a defense that no Event of
Default has occurred under the Credit Agreement.
11. AMENDMENTS, ETC. WITH RESPECT TO THE
OBLIGATION. The Pledgor shall remain obligated
hereunder, and the Collateral shall remain subject to
the Lien granted hereby, notwithstanding that,
without any reservation of rights against the
Pledgor, and without notice to or further assent by
the Pledgor, any demand for payment of the Obligation
made by the Administrative Agent or any Lender may be
rescinded by the Administrative Agent or such Lender,
and any of the Obligations continued, and the
Obligation, or the liability of the Pledgor or any
other Person upon or for any part thereof, or any
collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time,
in whole or in part, be renewed, extended, amended,
modified, accelerated, compromised, waived,
surrendered, or released by the Administrative Agent
or any Lender, and the Credit Agreement, the Notes,
any other Loan Documents and any other documents
executed and delivered in connection therewith may be
amended, modified, supplemented or terminated, in
whole or in part, as the Lenders (or the Required
Lenders, as the case may be) may deem advisable from
time to time, and any guarantee, right of offset or
other collateral security at any time held by the
Administrative Agent or any Lender for the payment of
the Obligation may be sold, exchanged, waived,
surrendered or released. Neither the Administrative
Agent nor any Lender shall have any obligation to
protect, secure, perfect or insure any other Lien at
any time held by it as security for the Obligation or
any property subject thereto. The Pledgor waives any
and all notice of the creation, renewal, extension or
accrual of the Obligation or any part thereof and
notice of or proof of reliance by the Administrative
Agent or any Lender upon this Pledge Agreement; the
Obligation, and any part thereof, shall conclusively
be deemed to have been created, contracted or
incurred in reliance upon this Pledge Agreement; and
all dealings between the Pledgor, on the one hand,
and the Administrative Agent and the Lenders, on the
other, shall likewise be conclusively presumed to
have been had or consummated in reliance upon this
Pledge Agreement. The Pledgor waives diligence,
presentment, protest, demand for payment and notice
of default or nonpayment to or upon the Pledgor with
respect to the Obligation.
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12. REGULATORY APPROVAL. The Pledgor will, at
its expense, promptly execute and deliver, or cause
the execution and delivery of, all applications,
certificates, instruments, registration statements,
filings and all other documents and papers the
Administrative Agent may reasonably request or as may
be required by law in connection with the obtaining
of any consent, approval, registration, qualification
or authorization of any Insurance Regulator or other
Governmental Authority or of any other Person
necessary or appropriate for the effective exercise
of any rights under this Pledge Agreement. Without
limiting the generality of the foregoing, if an Event
of Default shall have occurred and be continuing, the
Pledgor shall take any action which the
Administrative Agent may reasonably request in order
to transfer and assign to the Administrative Agent,
or to such one or more third parties as the
Administrative Agent may designate, or to a
combination of the foregoing, each license and
Authorization of any Insurance Regulator or other
Governmental Authority. To enforce the provisions of
this PARAGRAPH 12, upon the occurrence and during the
continuance of an Event of Default, the
Administrative Agent is empowered to request the
appointment of a receiver from any court of competent
jurisdiction. Such receiver shall be instructed to
seek from the Insurance Regulators and all other
necessary Governmental Authorities an involuntary
transfer of control of the Pledged Stock or
Partnership Interests and Authorization from the
applicable Insurance Regulators for the purpose of
seeking a bona fide purchaser to whom control of such
property will ultimately be transferred. The Pledgor
hereby agrees to authorize such an involuntary
transfer of control upon the request of the receiver
so appointed and, if the Pledgor shall refuse to
authorize the transfer, its approval may be required
by the court. Upon the occurrence and during the
continuance of an Event of Default, the Pledgor shall
further use its best efforts to assist in obtaining
approval of any applicable Insurance Regulator, if
required, for any action or transactions contemplated
by this Pledge Agreement including, without
limitation, the preparation, execution and filing
with the applicable Insurance Regulator of the
assignor's or transferor's portion of any filings or
applications for consent to the assignment or
transfer of control necessary or appropriate under
the rules and regulations of the applicable Insurance
Regulators for the approval of the transfer or
assignment of any portion of the Collateral, together
with any other applicable Authorizations. The Pledgor
acknowledges that the assignment or transfer of such
rights is integral to the Administrative Agent's and
the Lenders' realization of the value of the
Collateral, that there is no adequate remedy at law
for failure by the Pledgor to comply with the
provisions of this PARAGRAPH 12 and that such failure
would cause irreparable injury not adequately
compensable in damages, and therefore agrees that
each and every covenant contained in this PARAGRAPH
12 may be specifically enforced, and the Pledgor
hereby waives and agrees not to assert any defenses
against an action for specific performance of such
covenants.
13. LIMITATION ON DUTIES REGARDING COLLATERAL.
The Administrative Agent's sole duty with respect to
the custody, safekeeping and physical preservation of
the Collateral in its possession, under Section 9-207
of the Code or otherwise, shall be to deal with it in
the same manner as the Administrative Agent deals
with similar securities and property for its own
account. Neither the Administrative Agent, any Lender
nor any of their respective directors, officers,
employees or agents shall be liable for failure to
demand, collect or realize upon any of the Collateral
or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any
Collateral upon the request of the Pledgor or
otherwise.
14. POWERS COUPLED WITH AN INTEREST. All
authorizations and agencies herein contained with
respect to the Collateral constitute irrevocable
powers coupled with an interest.
15. SEVERABILITY. Any provision of this Pledge
Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining
provisions hereof, and
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any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render
unenforceable such provision in any other
jurisdiction.
16. PARAGRAPH HEADINGS. The paragraph headings
used in this Pledge Agreement are for convenience of
reference only and are not to affect the construction
hereof or be take into consideration in the
interpretation hereof.
17. NO WAIVER; CUMULATIVE REMEDIES. Neither the
Administrative Agent nor any Lender shall by any act
(except by a written instrument pursuant to PARAGRAPH
18 hereof) be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default
or Potential Default or in any breach of any of the
terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of the
Administrative Agent or any Lender, any right, power
or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other
or further exercise thereof or the exercise of any
other right, power or privilege. A waiver by the
Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be
construed as a bar to any right or remedy which the
Administrative Agent or such Lender would otherwise
have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised
singly or concurrently and are not exclusive of any
other rights or remedies provided by law.
18. WAIVER AND AMENDMENTS; SUCCESSORS AND
ASSIGNS; GOVERNING LAW. None of the terms or
provisions of this Pledge Agreement may be amended,
supplemented or otherwise modified except by a
written instrument executed by the Pledgor and the
Administrative Agent; provided that any consent by
the Administrative Agent to any waiver, amendment,
supplement or modification hereto shall be subject to
approval thereof by the Lenders or Required Lenders,
as applicable, in accordance with SECTION 13.11 of
the Credit Agreement. This Pledge Agreement shall be
binding upon the successors and assigns of the
Pledgor and shall inure to the benefit of the
Administrative Agent and the Lenders and their
respective successors and assigns. This Pledge
Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State
of Alabama.
19. NOTICES. All notices and communications
hereunder shall be given to the addresses and
otherwise in accordance with SECTION 13.3 of the
Credit Agreement, with notices to Pledgor being sent
in care of Borrower.
20. IRREVOCABLE AUTHORIZATION AND INSTRUCTION TO
ISSUERS AND PARTNERSHIPS. The Pledgor hereby
authorizes and instructs each Issuer and Partnership
to comply with any instruction received by it from
the Administrative Agent in writing that (a) states
that an Event of Default has occurred and is
continuing and (b) is otherwise in accordance with
the terms of this Pledge Agreement, without any other
or further instructions from the Pledgor, and the
Pledgor agrees that such Issuer and Partnership shall
be fully protected in so complying.
21. AUTHORITY OF ADMINISTRATIVE AGENT. The
Pledgor acknowledges that the rights and
responsibilities of the Administrative Agent under
this Pledge Agreement with respect to any action
taken by the Administrative Agent or the exercise or
non-exercise by the Administrative Agent of any
option, voting right, request, judgment or other
right or remedy provided for herein or resulting or
arising out of this Pledge Agreement shall, as
between the Administrative Agent and the Lenders, be
governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from
time to time among them, but, as between the
Administrative Agent and the Pledgor, the
Administrative Agent shall be conclusively presumed
to be acting as agent for itself and the Lenders with
full and valid authority so to act or refrain from
acting, and neither the Pledgor nor any Issuer shall
be under any obligation, or entitlement, to make any
inquiry respecting such authority.
9
10
22. CONSENT TO JURISDICTION; INDEMNIFICATION.
The Pledgor hereby irrevocably consents to the
personal jurisdiction of the state and federal courts
located in Jefferson County, Alabama, in any action,
claim or other proceeding arising out of or any
dispute in connection with this Pledge Agreement, any
rights or obligations hereunder, or the performance
of such rights and obligations. The Pledgor hereby
irrevocably consents to the service of a summons and
complaint and other process in any action, claim or
proceeding brought by the Administrative Agent or any
Lender in connection with this Pledge Agreement, any
rights or obligations hereunder, or the performance
of such rights and obligations, on behalf of itself
or its property, in the manner provided in SECTION
13.10 of the Credit Agreement, and agrees to
indemnify each Agent, Lead Arranger, Co-Arranger and
each Lender as, and to the extent, provided in
SECTION 11.12 of the Credit Agreement. Nothing in
this PARAGRAPH 22 shall affect the right of the
Administrative Agent or any Lender to serve legal
process in any other manner permitted by Applicable
Law or affect the right of the Administrative Agent
or any Lender to bring any action or proceeding
against the Pledgor or its properties in the courts
of any other jurisdictions.
23. CONTROL. Notwithstanding anything in this
Pledge Agreement to the contrary, unless and until an
Event of Default shall occur and the Administrative
Agent exercises the rights and remedies granted in
this Pledge Agreement in accordance with Paragraph 9
hereof, (a) the execution and delivery of this Pledge
Agreement and the performance of Pledgor's
obligations hereunder (i) do not and will not
constitute, create, or have the effect of
constituting or creating, directly or indirectly,
actual or practical ownership of the Issuers or
Partnerships by Agents or Lenders, or control,
affirmative or negative, direct or indirect, by
Agents or Lenders over the management or any other
aspect of the operation of the Issuers or
Partnerships, which ownership or control remains
exclusively and at all times in the Issuers or
Partnerships, as applicable, and (ii) do not and will
not constitute the transfer, assignment, or
disposition in any manner, voluntary or involuntary,
directly or indirectly, of any Authorization at any
time issued by any Insurance Regulator to any Issuer
or Partnership; and (b) Administrative Agent shall
not, without first obtaining necessary approval of
each applicable Insurance Regulator, take any action
pursuant to this Pledge Agreement that would
constitute or result in any assignment of any
Authorization or any change of control of any Issuer
or Partnership, if such assignment or change of
control would require, under then existing Law
(including the written rules and regulations
promulgated by an applicable Insurance Regulator),
the prior approval of such Insurance Regulator.
24. WAIVER OF JURY TRIAL. NOTWITHSTANDING ANY
OTHER PROVISION CONTAINED HEREIN, IN THE EVENT ANY
JUDICIAL PROCEEDING IS INSTITUTED IN CONNECTION WITH
THIS PLEDGE AGREEMENT, TO THE EXTENT PERMITTED BY
LAW, THE ADMINISTRATIVE AGENT AND EACH LENDER BY
THEIR ACCEPTANCE OF THIS PLEDGE AGREEMENT OR THE
BENEFITS HEREOF AND THE PLEDGOR EACH HEREBY
IRREVOCABLY WAIVES ITS RESPECTIVE RIGHTS TO A JURY
TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER
PROCEEDING ARISING OUT OF OR RELATING TO, OR ANY
DISPUTE IN CONNECTION WITH, THIS PLEDGE AGREEMENT,
ANY RIGHTS OR OBLIGATIONS HEREUNDER, OR THE
PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
[Remainder of Page Intentionally Blank. Signature Pages Follow.]
10
11
IN WITNESS WHEREOF, the undersigned by and through their duly
authorized officers have executed and delivered this Pledge Agreement as of the
date first above written
PLEDGOR:
[CORPORATE SEAL] PROASSURANCE CORPORATION
By:
-----------------------------------------
Name: A. Xxxxxxx Xxxxx
Title: Chairman
ADMINISTRATIVE AGENT:
SOUTHTRUST BANK,
as Administrative Agent
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
11
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ACKNOWLEDGMENT AND CONSENT
OF ISSUERS
Each Issuer of Pledged Stock referred to in the foregoing
Pledge Agreement hereby acknowledges receipt of a copy thereof. Each Issuer
agrees to notify the Administrative Agent promptly in writing of the occurrence
of any of the events described in PARAGRAPH 6.(C) of the Pledge Agreement:
ISSUERS:
MAI ACQUISITION CORPORATION I
By:
-----------------------------------------
Name: A. Xxxxxxx Xxxxx
Title: President
PICM ACQUISITION CORPORATION
By:
-----------------------------------------
Name: A. Xxxxxxx Xxxxx
Title: Chairman
12
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ACKNOWLEDGMENT AND CONSENT
OF PARTNERS OR MEMBERS
The undersigned partners or members of
__________________________________ (the "Partnership") (a) hereby acknowledge
receipt of a copy of the foregoing Pledge Agreement, (b) hereby acknowledge and
consent to the pledge of the Pledgor's interest in the Partnership pursuant
thereto, and (c) agree that the Administrative Agent may freely assign its
interest thereunder without further consent of the partners or members.
----------------------------------------, -----------------------------------,
__________________ [PARTNER] [MEMBER] of ______________ [PARTNER] [MEMBER] of
----------------------------------------, -----------------------------------,
Not applicable as of May 10, 2001
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SCHEDULE 1
TO PLEDGE
AGREEMENT
----------
PLEDGOR: PROASSURANCE CORPORATION
DESCRIPTION OF PLEDGED STOCK
ISSUER CLASS OF STOCK CERTIFICATE NUMBER(S) NUMBER OF
------ -------------- --------------------- ---------
SHARES
------
MAI Acquisition Corporation I Common 1 1,000
PICM Acquisition Corporation Common 1 1,000
14
15
SCHEDULE 2
TO PLEDGE
AGREEMENT
----------
DESCRIPTION OF PARTNERSHIP INTERESTS
PARTNERSHIP PARTNERSHIP INTEREST
----------- --------------------
None as of May 10, 2001
15
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PLEDGE AGREEMENT SUPPLEMENT
PLEDGE AGREEMENT SUPPLEMENT, dated as of
________________________, 20___ (the "Supplement"), made by PROASSURANCE
CORPORATION, a corporation organized under the laws of Delaware (the "Pledgor"),
in favor of SOUTHTRUST BANK, an Alabama banking corporation, as Administrative
Agent (in such capacity, the "Administrative Agent"), under the Credit Agreement
(as defined in the Pledge Agreement referred to below) for the benefit of itself
and the Lenders (as so defined).
1. Reference is hereby made to that Pledge Agreement,
dated as of May 10, 2001, made by the Pledgor in favor of the Administrative
Agent (as amended, supplemented or otherwise modified as of the date hereof, the
"Pledge Agreement"). This Supplement supplements the Pledge Agreement, forms a
part thereof and is subject to the terms thereof. Terms defined in the Pledged
Agreement are used herein as therein defined.
[2. The Pledgor hereby confirms and reaffirms the
security interest in the Collateral granted to the Administrative Agent for the
ratable benefit of itself and the Lenders under the Pledge Agreement, and, as
additional collateral security for the prompt and complete payment when due
(whether at stated maturity, by acceleration or otherwise) of the Obligation and
in order to induce the Lenders to fund Borrowings under the Credit Agreement,
the Pledgor hereby delivers to the Administrative Agent, for the benefit of the
Lenders, all of the issued and outstanding share of capital stock of [INSERT
NAME OF NEW SUBSIDIARY] (the "New Issuer") listed below, together with all stock
certificates, options, or rights of any nature whatsoever which may be issued or
granted by the New Issuer in respect to such stock which the Pledge Agreement,
as supplemented hereby, is in force (the "Additional Pledged Stock"; as used in
the Pledge Agreement as supplemented by this Supplement, "Pledged Stock" shall
be deemed to include the Additional Pledged Stock) and hereby grants to the
Administrative Agent, for the ratable benefit of itself and the Lenders, a first
priority security interest in the Additional Pledged Stock and all Proceeds
thereof.]
or
[2. The Pledgor hereby confirms and reaffirms the
security interest in the Collateral granted to the Administrative Agent for the
ratable benefit of itself and the Lenders under the Pledge Agreement, and, as
additional collateral security for the prompt and complete payment when due
(whether at stated maturity, by acceleration or otherwise) of the Obligation and
in order to induce the Lenders to fund Borrowings under the Credit Agreement,
the Pledgor hereby grants to the Administrative Agent, for the ratable benefit
of itself and the Lenders, a first priority security interest in the entire
partnership or membership interest of Pledgor (the "Additional Partnership
Interest") in [INSERT NAME OF NEW SUBSIDIARY] (the "New Partnership") listed
below and all Proceeds thereof; as used in the Pledge Agreement as supplemented
by this Supplement, "Partnership Interests" shall be deemed to include the
Additional Partnership Interest).]
3. The Pledgor hereby represents and warrants that the
representations and warranties contained in PARAGRAPH 5 of the Pledge Agreement
are true and correct on the date of this Supplement with references therein to
the ["Pledged Stock" to include the Additional Pledged Stock] or ["Partnership
Interests" to include the Additional Partnership Interest], with references
therein to the ["Issuer" to include the New Issuer] or "Partnership" to include
the New Partnership], and with references to the "Pledge Agreement" to mean the
Pledge Agreement as supplemented by this Supplement.
4. The Pledgor shall deliver to the Administrative Agent
the Acknowledgment and Consent attached hereto duly executed by the [New Issuer]
or [New Partnership]. The Additional [Pledged Stock] [Partnership Interest] or
[Pledged Debt] pledged hereby is as follows which [Pledged Stock] [Partnership
Interest] or [Pledged Debt] shall be deemed part of SCHEDULE 1 thereto:
16
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DESCRIPTION OF PLEDGED STOCK
Issuer Class of Stock Certificate No. No. of Shares
------ -------------- --------------- -------------
New Issuer
DESCRIPTION OF PARTNERSHIP INTEREST
Partnership Partnership Interest
----------- --------------------
New Partnership
5. The Pledgor hereby agrees to deliver to the
Administrative Agent such certificates and other documents and take such other
action as shall be reasonably requested by the Administrative Agent in order to
effectuate the terms hereof and the Pledge Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Supplement
to be duly executed under seal and delivered as of the date first above written.
PLEDGOR:
[CORPORATE SEAL] PROASSURANCE CORPORATION
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
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ACKNOWLEDGMENT AND CONSENT OF NEW ISSUER
The undersigned hereby acknowledges receipt of a copy of the
foregoing Supplement and the Pledge Agreement referred to therein (the "Pledge
Agreement"). The undersigned agrees for the benefit of the Administrative Agent
and the Lenders as follows:
1. The undersigned will notify the Administrative Agent
promptly in writing of the occurrence of any of the events described in
PARAGRAPH 6.(C) of the Pledge Agreement.
[NAME OF NEW ISSUER]
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
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ACKNOWLEDGMENT AND CONSENT OF PARTNERS OR MEMBERS
OF NEW PARTNERSHIP
The undersigned partners or members of
__________________________________ (the "New Partnership") (a) hereby
acknowledge receipt of a copy of the foregoing Supplement and the Pledge
Agreement referred to therein (the "Pledge Agreement"), (b) hereby acknowledge
and consent to the pledge of the Pledgor's interest in the New Partnership
pursuant thereto, and (c) agree that the Administrative Agent may freely assign
its interest thereunder without further consent of the partners or members.
------------------------------------, --------------------------------------,
______________ [PARTNER] [MEMBER] of _________________ [PARTNER] [MEMBER] of
------------------------------------, --------------------------------------,
19
