VOTING AGREEMENT AND IRREVOCABLE PROXY
This Voting Agreement and Irrevocable Proxy (this "Agreement") is made
as of October 25, 2000, between State Automobile Mutual Insurance Company, an
Ohio mutual insurance company ("State Auto"), and Meridian Mutual Insurance
Company, an Indiana mutual insurance company ("Meridian").
Background Information
A. Concurrently with the execution of this Agreement, State Auto, MIGI
Acquisition Corp., a wholly owned subsidiary of State Auto ("MergerCo"), and
Meridian Insurance Group, Inc., an Indiana corporation (the "Company"), are
entering into an Agreement and Plan of Merger (the "MIGI Merger Agreement"). In
addition, concurrently with the execution of this Agreement, State Auto and
Meridian are entering into an Agreement to Merge (the "Mutual Merger
Agreement"). The MIGI Merger Agreement and the Mutual Merger Agreement, as such
agreements may be hereafter amended, modified, or supplemented, are hereinafter
collectively referred to as the "Merger Agreements."
B. On the terms and subject to the conditions set forth in the MIGI Merger
Agreement, State Auto, which is already a shareholder of the Company, will
acquire all of the outstanding common shares of the Company (the "Common
Shares") pursuant to a merger of MergerCo with and into the Company (the
"Merger").
C. As a condition to State Auto entering into the Merger Agreements, and
upon the terms and subject to the conditions set forth in this Agreement,
Meridian has agreed to grant State Auto an irrevocable proxy with respect to all
of the Common Shares held by Meridian and entitled to vote on the Merger.
Statement of Agreement
The parties hereby acknowledge the accuracy of the foregoing Background
Information and, desiring to enter into a voting agreement under Section
23-1-31-2 of the Indiana Code, hereby agree as follows:
Section 1. Ownership of Common Shares. Meridian represents and warrants
that, on the date of this Agreement, Meridian (a) is the beneficial and/or
record owner of, and has sole voting power with respect to, a total of 3,811,500
Common Shares, and (b) has the complete and unrestricted power and the
unqualified right to enter into and perform the terms of this Agreement.
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Section 2. Voting Agreement; Irrevocable Proxy.
(a) Meridian (i) shall vote or cause to be voted for the approval of
the MIGI Merger Agreement and the Merger, at any meeting of shareholders of
the Company called for the purpose of voting on the MIGI Merger Agreement
or the Merger or any adjournment thereof or in any other circumstance upon
which a vote, consent or other approval with respect to the MIGI Merger
Agreement or the Merger is sought, and (ii) shall vote or cause to be voted
against the approval of any other agreement providing for a merger,
consolidation, sale of assets or other business combination of the Company
or any of its subsidiaries with any person or entity other than State Auto
and its subsidiaries or any other proposal involving the Company or any of
its subsidiaries which would in any manner hinder, impede, delay or prevent
the consummation of the Merger, all of the Common Shares that Meridian
shall be entitled to so vote, whether such Common Shares are held by
Meridian on the date of this Agreement or are subsequently acquired by
Meridian; provided, however, that the foregoing obligations shall be
suspended if, and for such time as, the Company Board (as defined in the
MIGI Merger Agreement), in full compliance with the provisions of Section
7.5(b) of the MIGI Merger Agreement, (i) resolves not to recommend, and
does not recommend, to the Company's shareholders that they vote in favor
of the approval of the MIGI Merger Agreement and the Merger, or (ii)
withdraws its recommendation to the Company's shareholders that they vote
in favor of the MIGI Merger Agreement and the Merger.
(b) In furtherance of, and in accordance with and subject to, the
foregoing, Meridian hereby appoints State Auto, which shall act by and
through Robert L. Bailey, Robert H. Moone, and John R. Lowther, and each of
them, with full power of substitution in the premises, as Meridian's proxy
to vote all of the Common Shares held by Meridian at any meeting, general
or special, of the shareholders of the Company with respect to the approval
of the MIGI Merger Agreement and the Merger and any related action.
The proxy and power of attorney granted herein shall be irrevocable during
the term of this Agreement, shall be deemed to be coupled with an interest and
shall revoke all prior proxies granted by Meridian with respect to the matters
set forth in this Agreement.
Meridian shall not grant any proxy to any person which conflicts with the
proxy granted herein and any attempt to do so shall be void.
Section 3. Restrictions on Transfer. Meridian shall not sell, assign,
transfer or otherwise dispose of or encumber (including, without limitation, by
the creation of any lien or other encumbrance) or permit to be sold, assigned,
transferred or otherwise disposed of, any Common Shares owned by Meridian,
whether such Common Shares are held by Meridian on the date of this Agreement or
are subsequently acquired, except as State Auto may otherwise agree.
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Section 4. Equitable Remedies. Meridian acknowledges and agrees that State
Auto could not be made whole by monetary damages in the event of any default by
Meridian of the terms and conditions set forth in this Agreement. It is
accordingly agreed and understood that State Auto, in addition to any other
remedy which it may have at law or in equity, shall be entitled to an injunction
or injunctions to prevent breaches of this Agreement and specifically to enforce
the terms and provisions hereof in any action instituted in any court of the
United States or in any state having appropriate jurisdiction.
Section 5. Amendment; Assignment. This Agreement may not be modified,
amended, altered or supplemented except by a writing signed by State Auto and
Meridian. No party to this Agreement may assign any of its rights or obligations
under this Agreement without the prior written consent of the other parties
herein, except that the rights and obligations of State Auto hereunder may be
assigned by State Auto to any of its affiliates, but no such transfer shall
relieve State Auto of its obligations hereunder if such transferee does not
perform such obligations.
Section 6. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but each of which
together shall constitute one and the same document.
Section 7. Governing Law. This Agreement shall be governed by such
construed in accordance with the internal laws of the State of Indiana, without
giving effect to the principles of conflicts of laws thereof.
Section 8. Binding Effect. This Agreement shall be binding upon, inure to
the benefit of, and be enforceable by the successors and assigns of the parties
herein. Nothing expressed or referred to in this Agreement is intended or shall
be construed to give any person other than the parties to this Agreement, or
their respective successors or assigns, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision contained herein.
Section 9. Entire Agreement. This Agreement constitutes the entire
agreement between the parties hereto with respect to the subject matter hereof.
Section 10. Termination. This Agreement shall terminate upon the earlier of
the effectiveness of the Merger or the termination of the MIGI Merger Agreement
in accordance with Article IX thereof. No such termination shall affect any
party's obligations with respect to any prior exercise of the proxy.
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Section 11. Severability. If any term provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid, void
or unenforceable, the remainder of the terms, provision, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
Section 12. Miscellaneous. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by
the duly authorized officers of State Auto and of Meridian as of the date first
above written.
STATE AUTOMOBILE MUTUAL INSURANCE COMPANY
By:
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MERIDIAN MUTUAL INSURANCE COMPANY
By:
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