EXHIBIT 10
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 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
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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 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
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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").
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.
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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
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.
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(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
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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 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:
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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.
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
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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 violations, breaches or defaults which would not, individually or
in the aggregate, have a material adverse effect
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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
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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
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
11
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.
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
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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.
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(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
14
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 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
15
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 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
16
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 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
17
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
18
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 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.
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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.
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
20
(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 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.
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.
21
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 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.
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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)
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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)
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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: /s/ Xxxxxx X. Xxxxx
-----------------------
Name: Xxxxxx X. Xxxxx
Title: President & CEO
MEEMIC MERGER CORP.
By: /s/ Xxxxxx X. Xxxxx
-----------------------
Name: Xxxxxx X. Xxxxx
Title: Incorporator
MEEMIC HOLDINGS, INC.
By: /s/ Xxxx X. Xxxxxxxxxx
-----------------------
Name: Xxxx X. Xxxxxxxxxx
Title: President
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