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EXHIBIT 2.2
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MEDICAL ASSURANCE, INC.
STOCK OPTION AGREEMENT
This Company Stock Option Agreement (the "Agreement") dated as
of June 22, 2000, by and between Professionals Group, Inc. (the "Buyer") and
Medical Assurance, Inc. (the "Company").
WHEREAS, concurrently with the execution and delivery of this Company
Stock Option Agreement, Buyer and the Company are entering into an Agreement to
Consolidate (the "Consolidation Agreement") providing, among other things, for
the formation of a new parent company (the "Parent Company") for the Buyer and
the Company, and the merger of each of the Buyer and the Company into separate
subsidiaries of the Parent Company as a result of which the outstanding shares
of common stock of the Buyer and the Company will be converted into the right to
receive shares of the common stock of the Parent Company and/or cash and Buyer
and the Company will become wholly owned subsidiaries of the Parent Company, and
WHEREAS, as a condition to its willingness to enter into the
Consolidation Agreement, Buyer has required that the Company agree, and the
Company has agreed, to grant Buyer an option as set forth herein to purchase up
to 1,146,838 authorized and unissued shares of the Company common stock, $14.26
par value, upon the terms and conditions hereof.
NOW, THEREFORE, to induce the Buyer to enter into the Consolidation
Agreement, and in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Consolidation Agreement, the parties hereto agree as follows:
2. Grant of Option. The Company hereby grants to Buyer an
irrevocable option (the "Option") to purchase, subject to the terms hereof, up
to 1,146,838 fully paid and non-assessable shares of the Company's common stock
(the "Option Shares") at a cash price of $14.26 per share (such price, as
adjusted if applicable, the "Option Price") under the terms and conditions
hereinafter set forth; provided, however, that in no event shall the number of
shares for which this Option is exercisable exceed 4.9% of the issued and
outstanding shares of the Company's common stock. The number of shares of the
Company's common stock that may be received upon the exercise of the Option and
the Option Price are subject to adjustment as herein set forth.
3. Exercise of Option.
(a) The Buyer may exercise the Option, in whole or in part,
if, but only if, both an Initial Triggering Event (as herein defined) and a
Subsequent Triggering Event (as herein defined) shall have occurred prior to the
occurrence of an Exercise Termination Event (as hereinafter defined), provided
that the Buyer shall have sent the written notice of such exercise (as provided
in subsection (h) of this Section 2) within 6 months following such Subsequent
Triggering Event (or such later period as provided in Section 21.
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(b) The term "Exercise Termination Event" shall mean any of
the following events: (i) the Effective Date (as defined in the Consolidation
Agreement); (ii) termination of the Consolidation Agreement in accordance with
the provisions thereof if such termination occurs prior to the occurrence of an
Initial Triggering Event; (iii) the passage of six months (or such longer period
as provided in Section 21 after termination of the Consolidation Agreement if
such termination is concurrent with or follows the occurrence of an Initial
Triggering Event; (iv) the date on which the shareholders of the Buyer shall
have voted and failed to approve and adopt the Consolidation Agreement and the
transactions contemplated thereby; or (v) the date on which the Reciprocal
Option (herein defined) shall have become exercisable in accordance with its
terms. Notwithstanding anything to the contrary contained herein, (x) the Option
may not be exercised at any time when Buyer shall be in breach of any of its
covenants or agreements contained in the Consolidation Agreement such that
Company shall be entitled (without regard to any grace period provided therein)
to terminate the Consolidation Agreement pursuant to Section 10.1 thereof and
(y) this Agreement shall automatically terminate upon the termination of the
Consolidation Agreement by Company pursuant to Section 10.1 thereof as a result
of the breach by Buyer of its covenants or agreements contained in the
Consolidation Agreement.
(c) The term "Initial Triggering Event" shall mean any of the
following events or transactions occurring on or after the date hereof:
(i) The Company or any of its Subsidiaries (as
defined in the Consolidation Agreement), without having received
Buyer's prior written consent, shall have entered into an agreement to
engage in an "Acquisition Transaction" (as hereinafter defined) with
any person (the term "person" for purposes of this Agreement having the
meaning assigned thereto in Sections 3(a)(9) and 13(d)(3) of the
Securities Exchange Act of 1934 (the "1934 Act"), and the rules and
regulations thereunder) other than Buyer or any of its Subsidiaries or
the Board of Directors of Company shall have recommended that the
shareholders of Company approve or accept any Acquisition Transaction
other than as contemplated by the Consolidation Agreement;
(ii) Any person other than Buyer or any Subsidiary of the
Buyer shall have acquired beneficial ownership or the right to
acquire beneficial ownership of 10% or more of the outstanding shares
of the Company's common stock (the term "beneficial ownership" for
purposes of this Agreement having the meaning assigned thereto in
Section 13(d) of the 1934 Act, and the rules and regulations
thereunder);
(iii) The shareholders of the Company shall have voted and
failed to approve the transactions contemplated by the Consolidation
Agreement at a meeting which has been held for that purpose or any
adjournment or postponement thereof, or such meeting shall not have
been held in violation of the Consolidation Agreement or shall have
been cancelled prior to termination of the Consolidation Agreement if,
prior to either such meeting or, if such meeting shall not have been
held or shall have been cancelled, such termination, it shall have been
publicly announced that any person (other than Buyer or any of its
Subsidiaries) shall have made, or disclosed an intention to make, a
proposal to engage in an Acquisition Transaction;
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(iv) The Company's Board of Directors shall have withdrawn
or modified (or publicly announced its intention to withdraw or modify)
its recommendation that the shareholders of Company approve the
transactions contemplated by the Consolidation Agreement, or Company or
any Subsidiary of the Company, without having received Buyer's prior
written consent, shall have authorized, recommended, proposed (or
publicly announced its intention to authorize, recommend or propose) an
agreement to engage in an Acquisition Transaction with any person other
than Buyer or any of its Subsidiaries;
(v) Any person other than Buyer or any of its Subsidiaries
shall have made a proposal to the Company or its shareholders to engage
in an Acquisition Transaction and such proposal shall have been
publicly announced after the date of this Agreement;
(vi) Any person other than Buyer or any of its Subsidiaries
shall have filed with the SEC a registration statement with respect to
a potential exchange offer that would constitute an Acquisition
Transaction (or filed a preliminary proxy statement with the SEC with
respect to a potential vote by its shareholders to approve the issuance
of shares to be offered in such an exchange offer);
(vii) The Company shall have willfully breached any covenant
or obligation contained in the Consolidation Agreement in anticipation
of engaging in an Acquisition Transaction, and following such breach
Buyer would be entitled to terminate the Consolidation Agreement
(whether immediately or after the giving of notice or passage of time
or both); or
(viii) Any person other than Buyer or any of its
Subsidiaries, other than in connection with a transaction to which
Buyer has given its prior written consent, shall have filed an
application or notice with any state insurance regulatory authority,
which application or notice has been accepted for processing, for
approval to engage in an Acquisition Transaction.
(d) The term "Subsequent Triggering Event" shall mean any of the
following events or transactions occurring after the date hereof:
(i) The acquisition by any person (other than Buyer or any
Subsidiary of Buyer) of beneficial ownership of 10% or more of the then
outstanding shares of Company Common Stock; or
(ii) The completion of the Acquisition Transaction made the
subject of the Initial Triggering Event described in clause (i) of
subsection (c) of this Section 2.
(e) The term "Reciprocal Option" shall mean the option granted
pursuant to the option agreement dated the date hereof between the Buyer, as the
issuer of such option, and the Company, as the grantee of such option.
(f) The term "Acquisition Transaction" shall mean (i) a merger or
consolidation or any similar transaction, involving the Company or any
Significant Subsidiary
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(as defined in Rule 1-02 of Regulation S-X promulgated by the Securities and
Exchange Commission (the "SEC")) of the Company (other than mergers,
consolidations or similar transactions involving solely the Company and/or one
or more wholly-owned Subsidiaries of the Company and other than a merger or
consolidation as to which the common shareholders of the Company immediately
prior thereto in the aggregate own at least 70% of the common stock of the
publicly held surviving or successor corporation immediately following
consummation thereof), (ii) a purchase, lease or other acquisition of all or
substantially all of the assets of the Company or any Significant Subsidiary of
the Company, or (iii) a purchase or other acquisition (including by way of
merger, consolidation, share exchange or otherwise) of securities representing
10% or more of the voting power of Company or any Significant Subsidiary of the
Company (other than any such purchase or other acquisition by the Company and/or
one or more of its Subsidiaries of securities representing 10% or more of the
voting power of any Significant Subsidiary of the Company).
(g) Company shall notify Buyer promptly in writing of the
occurrence of any Initial Triggering Event or Subsequent Triggering Event
(together, a "Triggering Event"), it being understood that the giving of such
notice by the Company shall not be a condition to the right of the Buyer to
exercise the Option.
(h) In the event the Buyer is entitled to and wishes to exercise
the Option, it shall send to the Company a written notice (the date of which
being herein referred to as the "Notice Date") specifying (i) the total number
of shares it will purchase pursuant to such exercise and (ii) a place and date
not earlier than three business days nor later than 60 business days from the
Notice Date for the closing of such purchase (the "Closing Date"); provided that
if prior notification to or approval of any other regulatory agency is required
in connection with such purchase, the Buyer shall promptly file the required
notice or application for approval, shall promptly notify the Company of such
filing, and shall expeditiously process the same and the period of time that
otherwise would run pursuant to this sentence shall run instead from the date on
which any required notification periods have expired or been terminated or such
approvals have been obtained and any requisite waiting period or periods shall
have passed. Any exercise of the Option shall be deemed to occur on the Notice
Date relating thereto.
4. Conditions to Option Exercise. The exercise of the Option shall
be subject to the following conditions:
(a) Any waiting periods under the Hart-Scott-Rodino Antitrust
Improvement Act of 1976 (the "HSR Act"), if applicable to such exercise of the
Option, shall have expired or been terminated; and
(b) There shall be no preliminary or permanent injunction or
other order issued by any court or governmental authority of competent
jurisdiction in effect prohibiting the exercise of the Option; and
(c) The purchase of the shares upon the exercise of the Option
shall not be in violation of the provisions relating to any insurance holding
companies under any applicable state insurance code.
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5. Termination or Expiration of the Option. The Option shall expire
upon the earlier to occur of the following:
(a) the Closing (as defined in Section 9.4 of the Consolidation
Agreement); or
(b) termination of the Consolidation Agreement by either Buyer or
the Company under the provisions of any of subparagraphs (a), (b) or (c) of
Section 10.1 of the Consolidation Agreement; provided, in the case of such a
termination by the Company, an Initial Triggering Event shall not have occurred;
or
(c) termination of the Consolidation Agreement by the Company
under the provisions of subparagraph (e) of Section 10.1 of the Consolidation
Agreement; or
(d) termination of the Consolidation Agreement by Buyer under the
provisions of subparagraph (f) of Section 10.1 of the Consolidation Agreement;
or
(e) the passage of 12 months (or such longer period as is
provided in Section 21) after termination of the Consolidation Agreement by the
Company if such termination is concurrent with or follows the occurrence of an
Initial Triggering Event; or
(f) the date on which the Reciprocal Option shall have become
exercisable in accordance with its terms; or
(h) upon notice of termination of this Agreement given by Buyer
to the Company.
6. Closings.
(a) At any closing referred to in subsection (h) of Section 2,
the Buyer shall (i) pay to the Company the aggregate purchase price for the
shares of Company common stock purchased pursuant to the exercise of the Option
in immediately available funds by wire transfer to a bank account designated by
the Company, provided that failure or refusal of the Company to designate such a
bank account shall not preclude the Buyer from exercising the Option and (ii)
present and surrender this Agreement to the Company at its principal executive
offices. At such closing, simultaneously with such delivery of immediately
available funds as provided in this Agreement, the Company shall deliver to the
Buyer a certificate or certificates representing the number of shares of Company
common stock purchased by the Buyer and, if the Option should be exercised in
part only, a new option evidencing the rights of the Buyer thereof to purchase
the balance of the shares purchasable hereunder.
(b) Certificates for Common Stock delivered at a closing
hereunder may be endorsed with a restrictive legend that shall read
substantially as follows:
"The transfer of the shares represented by this certificate is
subject to certain provisions of an agreement between the
registered Buyer hereof and the Company and to resale restrictions
arising under the Securities Act of 1933, as amended. A
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copy of such agreement is on file at the principal office of
Company and will be provided to the Buyer hereof without charge
upon receipt by the Company of a written request therefore."
It is understood and agreed that: (i) the reference to the resale restrictions
of the Securities Act of 1933 (the "1933 Act") in the above legend shall be
removed by delivery of substitute certificate(s) without such reference if the
Buyer shall have delivered to the Company a copy of a letter from the staff of
the SEC, or an opinion of counsel, in form and substance reasonably satisfactory
to the Company, to the effect that such legend is not required for purposes of
the 1933 Act; (ii) the reference to the provisions of this Agreement in the
above legend shall be removed by delivery of substitute certificate(s) without
such reference if the shares have been sold or transferred in compliance with
the provisions of this Agreement and under circumstances that do not require the
retention of such reference; and (iii) the legend shall be removed in its
entirety if the condition in the preceding clauses (i) and (ii) are both
satisfied. In addition, such certificates shall bear any other legend as may be
required by law.
(c) Upon the giving by the Buyer to the Company of the written
notice of Exercise of the Option provided for under subsection (h) of Section 2
and the tender of the applicable purchase price in immediately available funds,
the Buyer shall be deemed to be the Buyer of record of the shares of Company
common stock issuable upon such exercise, notwithstanding that the stock
transfer books of Company shall then be closed or that certificates representing
such shares of Company common stock shall not then be actually delivered to the
Buyer. The Company shall pay all expenses, and any and all United States
federal, state and local taxes and other charges that may be payable in
connection with the preparation, issue and delivery of stock certificates under
this Agreement in the name of the Buyer or its assignee, transferee or designee.
(d) The Company agrees that it shall at all times maintain, free
from preemptive rights, sufficient authorized but unissued or treasury shares of
Company common stock so that the Option may be exercised without additional
authorization of Company common stock after giving effect to all other options,
warrants, convertible securities and other rights to purchase Company common
stock.
7. Representations and Warranties of the Company. The Company
represents and warrants to the Buyer that:
(a) The Company is a corporation duly organized and validly
existing and in good standing under the laws of the State of Delaware and has
the corporate power and authority to enter into this Agreement and to carry out
its obligations hereunder;
(b) The execution and delivery of this Agreement by the Company
and the consummation by the Company of the 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 any of the transactions contemplated
hereby;
(c) This Agreement has been duly executed and delivered by the
Company;
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(d) The Company has taken all necessary corporate action to
authorize and reserve for issuance and to permit it to issue upon the valid
exercise of the Option and at all times from the date hereof through the
expiration of the Option will have reserved 1,146,838 unissued shares of Company
common stock, all of which upon their issuance and delivery in accordance with
the terms of this Agreement will be validly issued, fully paid and
nonassessable; and
(e) Upon delivery of the Option Shares to Buyer upon a valid
exercise of the Option, Buyer will have good and marketable title to the Option
Shares, free and clear of all claims, liens, charges, encumbrances and security
interests of any nature whatsoever.
8. Representations and Warranties of the Buyer. Buyer represents and
warrants to the Company that:
(a) Buyer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Michigan and has the corporate
power and authority to enter into this Agreement and to carry out its
obligations hereunder;
(b) The execution and delivery of this Agreement by Buyer and the
consummation by Buyer of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Buyer and no other
corporate proceedings on the part of Buyer are necessary to authorize this
Agreement or any of the transactions contemplated hereby;
(c) This Agreement has been duly executed and delivered by Buyer;
and
(d) Buyer agrees that it will not sell or otherwise dispose of
the Option or any of the Option Shares except in compliance with the Securities
Act of 1933, as amended (the "1933 Act").
9. Registration Rights. Upon the request of Buyer, following Buyer's
exercise of the Option, the Company agrees to file, as promptly as practicable,
a registration statement ("Registration Statement"), and use its best efforts to
cause such Registration Statement to become effective, as expeditiously as
possible under the 1933 Act and any applicable state securities laws with
respect to any proposed disposition by Buyer of the Option Shares, or any
portion thereof, unless in the written opinion of counsel to the Buyer,
addressed to the Company and Buyer, registration is not required for such
proposed disposition of the Option Shares. Buyer shall have the right to demand
one such registration. The foregoing notwithstanding, if, at the time of any
request by Buyer for registration of Option Shares as provided above, Company is
in registration with respect to an underwritten public offering of shares of
Company common stock, and if in the good faith judgment of the managing
underwriter or managing underwriters, or, if none, the sole underwriter or
underwriters, of such offering the inclusion of the Option Shares would
interfere with the successful marketing of the shares of Company common stock
offered by Company, the number of Option Shares otherwise to be covered in the
registration statement contemplated hereby may be reduced; provided, however,
that after any such required reduction the number of Option Shares to be
included in such offering for the account of the Buyer shall constitute at least
25% of the total number of shares to be sold by the Buyer and Company in the
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aggregate; and provided further, however, that if such reduction occurs, then
the Company shall file a registration statement for the balance as promptly as
practicable thereafter as to which no reduction pursuant to this Section 8 shall
be permitted or occur and the Buyer shall thereafter be entitled to one
additional registration. Buyer shall provide all information reasonably
requested by the Company for inclusion in any registration statement to be filed
hereunder. If requested by any such Buyer in connection with such registration,
the Company shall become a party to any underwriting agreement relating to the
sale of such shares, but only to the extent of obligating itself in respect of
representations, warranties, indemnities and other agreements customarily
included in such underwriting agreements for the Company. The registration
effected under this Section 8 shall be effected at the Company's expense.
10. Anti-Dilution Adjustments. In the event of any change in the
number of issued and outstanding shares of the Company's common stock by reason
of any stock dividend, split-up, recapitalization, rights plan, merger or other
change in the capital structure of the Company, which will have the effect of
diluting the rights of Buyer hereunder, the number and kind of Option Shares
subject to the Option and the Option Price shall be appropriately adjusted.
11. Filings and Consents. Buyer and Company will each use its best
efforts to make all filings with, and to obtain consents of, all third parties
and governmental authorities necessary to the consummation of the transactions
contemplated by this Agreement.
12. Covenant of the Company. The Company shall not engage in any
action or omit to take any action which would have the effect of preventing or
disabling the Company from delivering the Option Shares to Buyer upon the
exercise of the Option or otherwise performing its obligations under this
Agreement.
13. Cost. Except as otherwise expressly provided herein, each of the
parties hereto shall bear and pay all costs and expenses incurred by it or on
its behalf in connection with the transactions contemplated hereunder, including
fees and expenses of its own financial consultants, investments bankers,
accountants and counsel.
14. Parties in Interest; Assignment. No party to this Agreement may
assign any of its rights or obligations under this Agreement without the prior
written consent of the other party hereto, except that the rights and
obligations of the Buyer hereunder may be assigned by the Buyer to any direct or
indirect Subsidiary of Buyer; provided, however, that (i) no such assignment
shall relieve Buyer of its obligations hereunder, and (ii) that any such
permitted assignee shall be bound by all of the provisions of this Agreement to
the same extent as Buyer was and is if such permitted assignee was an original
signatory to this Agreement. This Agreement shall be binding upon, inure to the
benefit of, and be enforceable by, the successors and permitted assigns of the
parties hereto. Except as otherwise expressly provided herein or in the
Consolidation Agreement, this Agreement contains the entire agreement between
the parties with respect to the transactions contemplated hereunder and
supersedes all prior arrangements or understandings with respect thereof,
written or oral. Nothing in this Agreement, expressed or implied, is intended to
confer upon any party, other than the parties hereto, and their respective
successors except as assignees, any rights, remedies, obligations or liabilities
under or by reason of this Agreement, except as expressly provided herein.
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15. Specific Performance. The parties hereto agree that irreparable
damage would occur to the Buyer in the event that any of the provisions of this
Agreement were not performed by the Company in accordance with the terms hereof,
and that Buyer shall be entitled to specific performance of the terms hereof, in
addition to any other remedy at law or equity. If for any reason such court or
regulatory agency determines that the Buyer is not permitted to acquire the full
number of shares of Company common stock provided in Section 1 hereof (as
adjusted pursuant to this Agreement), it is the express intention of Company to
allow the Buyer to acquire or to require Company to repurchase such lesser
number of shares as may be permissible, without any amendment or modification
hereof.
16. Amendment. This Agreement may not be amended except by an
instrument in writing signed on behalf of all the parties.
17. Notices. All notices, requests, claims, demands and other
communications hereunder, including without limitation any notice of the
exercise of the Option, shall be in writing and shall be deemed to be given if
delivered personally or by overnight courier or by facsimile and confirmed by
U.S. Mail, postage prepaid, or if mailed by registered or certified mail,
postage prepaid, return receipt requested, to the respective parties as follows:
(a) If to Buyer:
Professionals Group, Inc.
Mailing Address:
Box 150
Okemos, MI 48805-0150
Street Address:
2600 Professionals Drive
Okemos, MI 48864
Attention: Victor T. Adamo, President
Facsimile Number: (517) 349-3127
with copies to:
Miller, Canfield, Paddick & Stone, P.L.C.
840 West Long Lake Road, Suite 200
Troy, MI 48098
Attention: Brad B. Arbuckle, Principal
Facsimile Number: (248) 879-2001
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(b) If to Company:
Medical Assurance, Inc.
Mailing Address:
P. O. Box 590009
Birmingham, AL 35259-0009
Street Address:
100 Brookwood Place
Birmingham, AL 35209
Attention: A. Derrill Crowe
Facsimile Number: (205) 877-4405
with copies to:
Burr & Forman LLP
420 N. 20th Street, Suite 3100
Birmingham, AL 35203
Attention: Jack P. Stephenson, Jr.
Facsimile Number: (205) 458-5100
Or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
only be effective upon receipt.
18. Governing Law. This agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect to
the provisions thereof relating to conflicts of law.
19. Severability of Provisions. If any term, provision, covenant or
restriction of this Agreement is held by a court or a federal or state
regulatory agency of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
20. Further Assurances. The Company and the Buyer will execute and
deliver all such further documents and instruments and take all such further
action as may be necessary in order to consummate the transactions contemplated
hereby.
21. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same document.
22. Extension of Time. The period for exercising the Option shall be
extended: (i) to the extent necessary to obtain all applicable regulatory
approvals for such exercise (for so long as the Buyer is using commercially
reasonable efforts to obtain such regulatory approvals), and for
<PAGE> 12
the expiration of all statutory waiting periods; and (ii) to the extent
necessary to avoid liability under Section 16(b) of the 1934 Act by reason of
such exercise.
23. Total Profit.
(a) Notwithstanding any other provision of this Agreement: (i) in
no event shall the Buyer's Total Profit (as hereinafter defined) exceed $4.5
million and, if it otherwise would exceed such amount, the Buyer, at its sole
election, shall either (w) reduce the number of shares of Common Stock subject
to this Option, (x) deliver to the Company for cancellation Option Shares
previously purchased by Buyer, (y) pay cash to the Company, or (z) any
combination thereof, so that Buyer's actually realized Total Profit shall not
exceed $4.5 million after taking into account the foregoing actions; and (ii)
this Option may not be exercised for a number of shares as would, as of the date
of exercise, result in a Notional Total Profit (hereinafter defined) of more
than $4.5 million; provided, that nothing in this sentence shall restrict any
exercise of the Option permitted hereby on any subsequent date.
(b) As used herein, the term "Total Profit" shall mean the
aggregate amount (before taxes) of the following: (i) (x) the net cash amounts
received by Buyer pursuant to the sale of Option Shares (or any other securities
into which such Option Shares are converted or exchanged) to any unaffiliated
party, less (y) the Buyer's purchase price of such Option Shares, (ii) any
amounts received by Buyer on the transfer of the Option (or any portion thereof)
to any unaffiliated party.
(c) As used herein, the term "Notional Total Profit" with respect
to any number of shares as to which Buyer may propose to exercise this Option
shall be the Total Profit determined as of the date of such proposed exercise
assuming that this Option were exercised on such date for such number of shares
and assuming that such shares, together with all other Option Shares held by
Buyer and its affiliates as of such date, were sold for cash at the closing
market price for the Company common stock as of the close of business on the
preceding trading day (less customary brokerage commissions).
(d) The Buyer agrees, promptly following any exercise of all or
any portion of the Option, to use commercially reasonable efforts promptly to
maximize the value of Option Shares purchased taking into account market
conditions, the number of Option Shares, the potential negative impact of
substantial sales on the market price for Company Common Stock, and the
availability of an effective registration statement to permit public sale of
Option Shares.
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IN WITNESS WHEREOF, the Buyer and the Company have caused this
Agreement to be executed on its behalf by its officer thereunto duly authorized
all as of the date first above written.
BUYER:
PROFESSIONALS GROUP, INC.
By: /s/ Victor T. Adamo
-----------------------------------
Victor T. Adamo, President and
Chief Executive Officer
COMPANY:
MEDICAL ASSURANCE, INC.
By: /s/ A. Derrill Crowe
-----------------------------------
A. Derrill Crowe, Chairman of the
Board and Chief Executive Officer
