EXHIBIT 99.1
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement ("Agreement") is made as of September 17,
2004, by and among the shareholders listed on Exhibit 1 hereto (collectively,
the "Sellers") and American Physicians Assurance Corporation, a Michigan stock
insurance corporation (the "Purchaser").
WHEREAS, Sellers desire to sell to Purchaser, and Purchaser desires to
purchase from Sellers, the shares of common stock, $250 par value (the "Common
Stock"), of Physicians Insurance Company of Wisconsin, Inc., a Wisconsin stock
insurance corporation (the "Issuer"), set forth opposite the names of the
Sellers on Exhibit 1 (collectively, the "Shares") subject to the approval of
such sale and purchase (herein the "Transactions") by the Wisconsin Commissioner
of Insurance (the "Commissioner") pursuant to Section 611.72(2) of the Wisconsin
Statutes or such other approval as may be necessary to effectuate the
Transactions (the "Commissioner's Approval"), and further subject to terms and
conditions of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements set forth herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties, intending to be legally bound hereby, agree as
follows:
ARTICLE 1. PURCHASE PRICE AND PAYMENT
1.1 Purchase Price. Subject to the terms and conditions hereof, Purchaser
hereby agrees to purchase, and each of the Sellers agrees to sell, the Shares
listed on Exhibit 1, free and clear of all liens, pledges and encumbrances of
any kind. The purchase price for the Shares shall be Three Thousand Eight
Hundred and No/100 Dollars ($3,800.00) per Share, without any form of adjustment
or interest (the "Purchase Price").
1.2 Payment. Except as otherwise provided in Section 1.4, the Purchase
Price for the Shares shall be paid at Closing (as defined in Section 1.4) by
wire transfer to each of the respective Sellers' designated accounts according
to irrevocable written instructions that each Seller shall provide to the
Purchaser no later than 2 business days prior to the Closing.
1.3 Delivery of Stock Certificates. At the Closing, Sellers shall deliver
to Purchaser newly issued certificates representing legal title to and
beneficial interest in the Shares in a form reasonably satisfactory to Purchaser
(the "New Certificates"). The New Certificates shall be titled either in the
name of the Seller, duly endorsed in blank or with duly executed stock powers
attached, in proper form for transfer, or titled in the name of Purchaser, in
either case with all applicable transfer taxes paid by Sellers.
1.4 Closing.
(a) The sale and purchase of the Shares contemplated by this
Agreement shall take place at a closing (the "Closing") to be held in the
offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PLLC, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
at 10:00 a.m. Eastern Time on the second business day following the satisfaction
or waiver of all conditions set forth in Sections 5.1 and 5.2, or at such other
place (including via facsimile), time or date to which the parties may mutually
agree (the day on which the Closing takes place being the "Closing Date").
(b) If all conditions to Closing have been satisfied or waived, but
the New Certificates representing all of the Shares cannot be delivered by
Sellers at Closing and the inability of Sellers to deliver the New Certificates
is not due to the Sellers' breach of their obligations under Section 4.6, then
the Closing shall occur but (i) the Purchaser shall, instead of making payment
of the Purchase Price as provided in Section 1.2, deposit an amount equal to the
aggregate Purchase Price with a Qualified Escrow Agent (as defined below) chosen
by Purchaser and reasonably acceptable to Sellers owning at least 65% of the
Shares (the "Requisite Number of Sellers"), such amount to be held in an
interest bearing account pursuant to an escrow agreement reasonably acceptable
to the Purchaser and the Sellers (the "Purchase Price Escrow Agreement"); and
(ii) Sellers shall deliver to Purchaser the certificates purporting to represent
legal title to and beneficial interest in the Shares (the "Certificates"), duly
endorsed in blank or with duly executed stock powers attached, in proper form
for transfer, with all applicable transfer taxes paid by Sellers, and an
irrevocable proxy in the form attached as Exhibit 3.
(c) The Purchase Price Escrow Agreement shall provide, among other
things, for payment of the escrowed funds as follows:
(i) to Sellers providing New Certificates in a form reasonably
satisfactory to Purchaser when Purchaser has delivered a written direction to
the escrow agent to the effect that such New Certificates have been received and
to make payment of the related amount of Purchase Price; provided that no
payment shall be made pursuant to this clause until New Certificates
representing at least Three Thousand Three Hundred (3,300) Shares have been
delivered to Purchaser in a form reasonably satisfactory to Purchaser;
(ii) to Purchaser as to any Shares with respect to which New
Certificates have not been delivered to Purchaser in a form reasonably
satisfactory to Purchaser on or before June 30, 2005, if, following such date,
Purchaser, in its sole discretion, delivers a written direction to the escrow
agent to make payment to Purchaser because such New Certificates have not been
delivered to Purchaser, unless a "Title Opinion" (as defined in Section 1.4(e))
has been delivered to Purchaser on or before such date (and, if delivered prior
to the date on which the written direction is delivered by Purchaser, is
confirmed in writing by the law firm rendering such opinion as of the date of
delivery of the written direction);
(iii) to Purchaser as to any Shares with respect to which New
Certificates have not been delivered to Purchaser in a form reasonably
satisfactory to Purchaser on or before December 31, 2005, following delivery to
the escrow agent of either (A) a written direction by
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Purchaser, or (B) a written direction by any Seller of Shares with respect to
which the Purchase Price has not been received if the inability of such Seller
to deliver the New Certificates is not due to such Seller's breach of their
obligations under Section 4.6.
With respect to Shares for which Purchaser receives payment from the Purchase
Price Escrow Agreement pursuant to clauses (ii) or (iii) of this Section 1.4(c),
Purchaser shall deliver to the relevant Seller (x) the Certificates representing
such Shares and (y) any dividends or distributions actually received by
Purchaser after the Closing with respect to such Shares in the form received
(provided that if such dividend or distribution was paid other than in cash and
Purchaser is no longer the owner thereof, Purchaser shall pay, in lieu of such
dividend or distribution, the cash proceeds, if any, received upon
disposition).. All fees and expenses charged by the escrow agent shall be borne
50% by Purchaser and 50% by Sellers (pro rata according to the number of Shares
reflected as owned on Exhibit 1). Interest on the escrowed funds shall accrue
for the benefit of and be payable to the recipient of the related escrowed funds
and shall be reportable by such persons for tax purposes in accordance with
applicable regulations of the Internal Revenue Service. Payments from the escrow
agent shall be made by wire transfer to the recipients' designated accounts
pursuant to irrevocable written instructions contained in the Purchase Price
Escrow Agreement.
(d) A "Qualified Escrow Agent" means a commercial bank, trust
company or other financial institution with a combined capital and surplus in
excess of One Hundred Million Dollars ($100,000,000).
(e) A "Title Opinion" means a legal opinion of the law firm of
▇▇▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ LLP, or another law firm reasonably acceptable to
Purchaser and the Seller or Sellers that own the Shares that are to be the
subject of the opinion, rendered to Purchaser that (i) the Certificates in fact
represent the number of outstanding Shares of Common Stock purported to be
represented thereon; (ii) transfer of the Certificates will convey legal and
beneficial ownership to Purchaser of the Shares purported on Exhibit 1 to be
owned by Seller; and (iii) the Certificates representing the Seller's Shares
contain no legend, other than the Restrictive Legend (as defined in Section
2.3), that has any legal effect to restrict the transfer of the Shares. In
rendering the Title Opinion, such law firm may rely as to factual matters upon
certificates or other documents furnished by such Seller or any officer of such
Seller, if counsel believes such reliance to be reasonable, and by government
officials. A copy of such certificates or other documents relied upon shall be
furnished to Purchaser together with the Title Opinion.
ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF SELLERS
Each Seller, severally and not jointly, makes the following
representations and warranties to Purchaser, as of the date hereof and as of the
Closing Date. Each such representation and warranty is deemed made by each of
the several Sellers with respect to only that Seller and the Shares being sold
by that Seller, and not with respect to any other Seller or any Shares being
sold by any other Seller:
2.1 Organization and Power. The Seller has full legal power, capacity and
authority to
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execute this Agreement and consummate the transactions contemplated hereby. If
the Seller is not an individual, then the Seller is a corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own or lease its assets and to carry on its business as now
conducted. This Agreement is binding upon the Seller and enforceable against the
Seller in accordance with its terms.
2.2 No Violations. Neither the execution or delivery of this Agreement by
the Seller, nor the consummation by the Seller of the transactions contemplated
hereby, will (a) violate any provision of the organizational documents of the
Seller or, to Seller's knowledge, of the Issuer, (b) with notice or lapse of
time or both, result in the creation or imposition of a lien or other
encumbrance or third party right on the Shares other than in favor of Purchaser,
(c) violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling or other restriction of any government or government
agency applicable to Seller or the transactions contemplated hereby or, to
Seller's knowledge, to the Issuer, (d) except for the Commissioner's Approval,
require approval of any government or government agency, or (e) violate any
material contract to which the Seller is a party or by which it is bound.
2.3 Ownership and Title. The Seller owns of record (except, with respect
to Mercy Health System Corporation, as set forth on Exhibit 1), and has good and
marketable title to, the number of Shares listed opposite the Seller's name on
Exhibit 1 and to the Certificates shown on Exhibit 1. The Certificates represent
the number of outstanding Shares of Common Stock purported to be represented
thereon, regardless of any incorrect designations as "Class A Common Stock" or
of incorrect par value thereon, and transfer of the Certificates (or the New
Certificates if obtained prior to Closing) to Purchaser as contemplated by this
Agreement will convey legal and beneficial ownership of the Shares purported on
Exhibit 1 to be owned by Seller. Such Shares are shares of Common Stock that
have been validly issued by the Issuer, are fully paid and nonassessable (except
as provided in 180.0622(2)(b) of the Wisconsin Statutes) and are free and clear
of all options, rights of other persons, pledges, security interests, liens,
encumbrances, voting restrictions, voting trusts and transfer restrictions,
except, in the case of transfer restrictions, (a) as may be imposed by Federal
or state securities laws, (b) as reflected on the Certificates that contain a
legend to the effect that any resale thereof by the Seller be registered under
applicable securities laws unless the Issuer obtains an opinion of its counsel
that such resale is exempt from applicable registration requirements (the
"Restrictive Legend"), and (c) the requirement to obtain the Commissioner's
Approval. Seller has no reason to believe that the Sellers will be unable to
obtain the opinion required by the Restrictive Legend. Without limiting the
foregoing, Seller confirms that the Certificates representing the Seller's
Shares contain no legend, other than the Restrictive Legend, that has any legal
effect to restrict the transfer of the Shares.
2.4 Broker's Fee. Seller has no liability or obligation to pay any
broker's or finder's fee or commission in connection with the transactions
contemplated by this Agreement for which Purchaser could become liable or
obligated. Seller has an obligation to pay a completion fee to Edelman & Co.,
Ltd., which obligation will be paid by Seller.
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2.5 Regulatory Approval. To Seller's actual knowledge, none of the grounds
for disapproval by the Commissioner as set forth in Section 611.72(3) of the
Wisconsin Statutes exists with respect to the Transactions. All information
provided and representations made to the Commissioner by the Seller in
connection with obtaining the Commissioner's Approval will be true and correct
in all material respects when made and as of the date of the Commissioner's
Approval.
2.6 No Representation Regarding Issuer. Seller makes no representation
whatsoever as to the Issuer, its business, assets, liabilities, operations,
financial condition or otherwise, including without limitation the accuracy or
completeness of any information contained in publicly-available filings made by
the Issuer.
2.7 No Other Representations Relied Upon. In selling the Shares, Seller
has relied solely and exclusively upon the representations and warranties
expressly made by Purchaser in this Agreement, and has not relied upon any other
representations, whether written or oral, that may have been made by or on
behalf of Purchaser.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Sellers as follows, as of the date
hereof and as of the Closing Date:
3.1 Organization and Power. Purchaser has full corporate power, capacity
and authority to execute this Agreement and consummate the transactions
contemplated hereby. The Purchaser is a stock insurance corporation duly
organized, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own or lease its assets and to carry on its business as now
conducted. This Agreement is binding upon the Purchaser and enforceable against
Purchaser in accordance with its terms.
3.2 No Violations. Neither the execution or delivery of this Agreement by
the Purchaser, nor the consummation by Purchaser of the transactions
contemplated hereby, will (a) violate any provision of Purchaser's articles of
incorporation or bylaws, or (b) violate any constitution, statute, regulation,
rule, injunction, judgment, order, decree, ruling or other restriction of any
government or government agency applicable to Purchaser or the transactions
contemplated hereby or, to Purchaser's knowledge, to the Issuer, (c) except for
the Commissioner's Approval, require approval of any government or government
agency, or (d) violate any material contract to which the Purchaser is a party
or by which it is bound.
3.3 Broker's Fee. Purchaser has no liability or obligation to pay any
broker's or finder's fee or commission in connection with the transactions
contemplated by this Agreement for which any of the Sellers could become liable
or obligated.
3.4 Regulatory Filings and Information.
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(a) All information contained in Purchaser's Form A Statement
Regarding the Acquisition of Control of or Merger With a Domestic Insurer ("Form
A") will be true and correct in all material respects when filed with the
Commissioner and as of the date of the Commissioner's Approval.
(b) All information provided and representations made to the
Commissioner by the Purchaser in connection with obtaining the Commissioner's
Approval will be true and correct in all material respects when filed or made
and as of the date of the Commissioner's Approval.
(c) To Purchaser's actual knowledge, none of the grounds for
disapproval by the Commissioner as set forth in Section 611.72(3) of the
Wisconsin Statutes exist with respect to the Transactions.
(d) The Purchaser is duly licensed in the State of Wisconsin under
Chapter 618 of the Wisconsin Statutes, pursuant to certificate number 12145
issued December 13, 2000, to offer insurance in the State of Wisconsin.
3.5 Securities Transfer Matters.
(a) Purchaser is aware that the Sellers may rely on the exemption
from the provisions of section 5 of the Securities Act of 1933 (the "Securities
Act") provided by Rule 144A under the Securities Act (the "Rule") and that, as a
consequence, the Shares will be deemed to be "restricted securities" within the
meaning of Rule 144(a)(3) under the Act and that Purchaser may resell the Shares
only to the persons and under the circumstances permitted by applicable
securities laws. Purchaser is a "qualified institutional buyer" as that term is
defined in subsection (a)(1)(i)(A) of the Rule.
(b) Purchaser is purchasing the Shares for its own account for
investment purposes, and not with a view to, or for offer or sale in connection
with, any distribution thereof whether in violation of the Securities Act or
otherwise.
(c) In purchasing the Shares, Purchaser has relied solely and
exclusively upon its own independent investigation and the representations and
warranties expressly made by Sellers in this Agreement, and has conducted such
due diligence concerning the Issuer and its business, affairs, financial
condition and prospects as the Purchaser has deemed necessary or desirable, and,
except for the representations and warranties expressly made by Sellers in this
Agreement, the Purchaser has not relied upon any representations, whether
written or oral, made by or on behalf of any of the Sellers.
ARTICLE 4. COVENANTS
4.1 Exclusivity. Until the Closing or the termination of this Agreement in
accordance with Section 6.1:
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(a) Each Seller agrees not to solicit, encourage or participate,
directly or indirectly, in any manner in any discussion with, or furnish or
cause to be furnished any information to, any person other than Purchaser in
connection with, or negotiate for or otherwise pursue, the sale of the Shares or
any rights thereto. The Sellers shall promptly inform Purchaser of any inquiries
or proposals with respect to the foregoing.
(b) Each Seller agrees not to, directly or indirectly, sell,
transfer, tender, pledge, convert, encumber, assign or otherwise dispose of the
Shares, or enter into any contract, option or other agreement to do any of the
above, except to Purchaser.
(c) In the event that Section 4.1(b) is violated by any Seller or
Sellers (the "Violating Sellers"), then Purchaser may elect to pursue the remedy
of specific performance as provided in Section 7.7. Should the Purchaser (i)
elect not to pursue the remedy of specific performance against any Violating
Seller, or (ii) be unsuccessful in obtaining such remedy against any Violating
Seller, then Purchaser shall be entitled to receive from such Violating Seller
or Sellers a fee of One Hundred Ninety and No/100 Dollars ($190.00) per Share
with respect to which there has been such a breach of Section 4.1(b) and for
which the remedy of specific performance is not obtained (which amount the
parties agree and stipulate is reasonable and full liquidated damages and
reasonable compensation for the involvement of Purchaser in the transactions
contemplated in this Agreement and is not a penalty or forfeiture). Purchaser's
receipt of such liquidated damages shall be in lieu of any and all other claims,
rights, damages or other remedies for breach of Section 4.1(b), and Purchaser
shall have no other rights or remedies against any Violating Seller for a breach
of Section 4.1(b) except as expressly provided in this Section 4.1(c) and
Section 7.7. Any fee required to be paid under this Section 4.1(c) will be
payable by wire transfer, within two business days after Closing, from each
Violating Seller to an account designated by Purchaser of immediately available
funds equal to the product of One Hundred Ninety and No/100 Dollars ($190.00)
multiplied by the number of Shares owned by such Violating Seller as to which
there has been a breach of Section 4.1(b). The obligation and liability to pay
any amount payable under this Section 4.1(c) shall be solely and exclusively the
several (and not joint) obligation and liability of each Violating Seller, as to
the amount payable with respect to such Violating Seller's Shares only, and no
Seller (whether or not a Violating Seller) shall have any liability hereunder
for any amount payable under this Section 4.1(c) with respect to the Shares of
any other Seller.
4.2 Escrow of Certificates. Upon the signing of this Agreement, Sellers
shall deliver the Certificates to counsel for Purchaser (at the address set
forth in Section 7.11) to be held in escrow on behalf of the parties hereto
until the earlier to occur of (a) the Closing of this Agreement pursuant to
Sections 1.1 through 1.4 (in which case the Certificates shall be delivered to
the Purchaser) or (b) termination of this Agreement pursuant to Section 6.1 (in
which case the Certificates shall be delivered to the Sellers), pursuant to a
stock escrow agreement in substantially the form attached hereto as Exhibit 2.
In connection with the Sellers' obligations under Section 4.6, the Certificates
may be delivered to the Issuer to facilitate the issuance of the New
Certificates, provided that the New Certificates, when issued, shall be
delivered or caused to be delivered to the escrow agent under
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the Stock Escrow Agreement.
4.3 Further Assurances.
(a) Sellers and Purchaser agree to use all reasonable efforts to
otherwise 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. Sellers and Purchaser shall use all reasonable and diligent
efforts, and cooperate with each other, to obtain as promptly as practicable all
approvals and any third-party consents necessary or advisable to consummate the
transactions contemplated by this Agreement.
(b) Purchaser shall, at its own expense, use its reasonable best
efforts to defend any action, suit or proceeding brought against it seeking to
restrain, prevent or delay the Closing. Sellers shall, at their own expense, use
their reasonable best efforts to defend any action, suit or proceeding brought
against them seeking to restrain, prevent or delay the Closing. Nothing in this
Agreement shall require Sellers to defend any action, suit or proceeding brought
against Purchaser, or require Purchaser to defend any action, suit or proceeding
brought against one or more Sellers
4.4 Governmental Filing.
(a) Purchaser shall, at its own expense, (i) take all actions
necessary to file, as soon as practicable after the date of this Agreement, its
Form A with the Commissioner, (ii) respond as promptly as practicable to any
inquiries received from the Commissioner for additional information or
documentation in connection with its Form A, (iii) use its reasonable best
efforts to obtain the Commissioner's Approval including, without limitation,
appearing and providing testimony and information at the public hearing with
respect thereto, preparing and filing promptly and fully all documentation to
effect all required filings, notices, petitions, statements, registrations,
submissions of information applications and other documents, and not abandoning
the approval process prior to a decision by the Commissioner on the merits, and
(iv) except as may be required by applicable law or regulation or in order to
prevent a breach of Section 3.4(b), refrain from making any statement or taking
any position in opposition to the Commissioner's Approval or, except in response
to a request from the Commissioner for information, that could otherwise provide
grounds for the Commissioner not to grant the Commissioner's Approval, in either
case in light of the circumstances in which made or taken. Purchaser shall not
be required to comply with this Section 4.4(a) if the Commissioner has approved
any other transaction involving the acquisition by a third party of control of
the Issuer, whether by merger, stock purchase or otherwise, the effect of which
transaction, if consummated, would necessarily require a transfer or other
disposition of any of the Shares by any one or more of the Sellers other than to
Purchaser as contemplated by this Agreement (an "Inconsistent Change of
Control").
(b) Sellers shall, at their own expense, (i) cooperate with
Purchaser and use their reasonable best efforts to facilitate Purchaser's
efforts to obtain the Commissioner's Approval at all times until receipt of the
Commissioner's Approval or the completion of any appeal of a failure or
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refusal of the Commissioner to grant the Commissioner's Approval, (ii) refrain
from making any statement or taking any position in opposition to the
Commissioner's Approval or, except in response to a request from the
Commissioner for information, that could otherwise provide grounds for the
Commissioner not to grant the Commissioner's Approval, in either case in light
of the circumstances in which made or taken, (iii) refrain from having any
contact, directly or indirectly, with the Commissioner other than in response to
a solicitation for information from the Commissioner or at the request of the
Purchaser, and (iv) if requested by Purchaser, appear and provide testimony and
information at the public hearing with respect thereto.
4.5 Securities Law Opinion. Without limiting the provisions of Section
4.3, Sellers shall, at their own expense, use their reasonable best efforts to
provide or cause to be provided to the Issuer all legal opinions required by the
Restrictive Legends to facilitate the Transactions.
4.6 Recertification of Shares. Each Seller shall, at the Seller's own
expense, prior to the Closing Date, use the Seller's reasonable best efforts,
following consultation with the Purchaser, to cause the Issuer to issue the New
Certificates representing the Shares (including, without limitation, New
Certificates representing Shares for which the Certificates have been lost or
destroyed).
4.7 Dividend Rights and Proxy and Tender Documents. From and after the
Closing, in the event Sellers receive any dividend or distribution on the Shares
in any form (whether in cash, in additional shares of the Common Stock, or
otherwise), Sellers shall hold such amount in trust for, and promptly pay or
remit such dividend or distribution over to Purchaser in the same form received,
without deduction of any kind; provided that a Seller whose Shares are returned
to the Seller pursuant to Section 1.4(c) shall have no further obligation under
this Section 4.7 following payment to Purchaser with respect to such Shares
pursuant to clauses (ii) or (iii) of Section 1.4(c). From and after the Closing,
the Sellers shall forward to Purchaser all proxy and tender offer materials
received by them with respect to the Issuer and all other communications
received by them as stockholders of the Issuer.
ARTICLE 5. CONDITIONS TO CLOSING
5.1 Conditions to the Obligations of Purchaser. The obligations of
Purchaser to consummate the transactions contemplated hereby are subject to the
satisfaction (or written waiver by Purchaser) of the following conditions:
(a) the representations and warranties of Sellers shall be true and
accurate in all material respects as of the Closing Date as if made at and as of
such time;
(b) Sellers shall have performed in all material respects the
obligations hereunder required to be performed by them at or prior to the
Closing Date;
(c) no arbitrator or governmental entity shall have issued any
order, decree or ruling, and there shall not be any statute, rule or regulation,
restraining, enjoining or prohibiting the
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consummation of the material transactions contemplated by this Agreement;
(d) the Commissioner's Approval shall have been obtained;
(e) the legal opinion or opinions required by the Restrictive Legend
shall have been obtained; and
(f) there shall be at least Three Thousand Three Hundred (3,300)
Shares delivered by the Sellers for sale at Closing with respect to which the
representations and warranties in Section 2.3 are true and correct at the
Closing Date.
5.2 Conditions to the Obligations of Sellers. The obligations of Sellers
to consummate the transactions contemplated hereby are subject to the
satisfaction (or written waiver by the Requisite Number of Sellers) of the
following conditions:
(a) the representations and warranties of Purchaser shall be true
and accurate in all material respects as of the Closing Date as if made at and
as of such time;
(b) Purchaser shall have performed in all material respects all of
the obligations hereunder required to be performed by Purchaser at or prior to
the Closing Date;
(c) no arbitrator or governmental entity shall have issued any
order, decree or ruling, and there shall not be any statute, rule or regulation,
restraining, enjoining or prohibiting the consummation of the material
transactions contemplated by this Agreement;
(d) the Commissioner's Approval shall have been obtained; and
(e) the legal opinion or opinions required by the Restrictive Legend
shall have been obtained.
ARTICLE 6. TERMINATION
6.1 Termination. This Agreement may be terminated and the transactions
contemplated herein may be abandoned at any time prior to the completion of the
Closing:
(a) by the mutual written consent of Purchaser and the Requisite
Number of Sellers;
(b) by the Requisite Number of Sellers or Purchaser upon the giving
of written notice by the party exercising its rights under this Section 6.1(b),
if any governmental entity shall have issued an order, decree or ruling or taken
any other action, in each case permanently restraining, enjoining or otherwise
prohibiting the material transactions contemplated by this Agreement (including
without limitation the Commissioner's failure or refusal to issue the
Commissioner's
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Approval, or the Commissioner's approval of an Inconsistent Change of Control),
and such order, decree, ruling or other action shall have become final and
non-appealable;
(c) by the Requisite Number of Sellers upon written notice to
Purchaser if (i) Purchaser breaches or fails in any material respect to perform
or comply with any of its covenants and agreements contained herein, (ii)
Purchaser breaches its representations and warranties in any material respect,
or (iii) the Closing shall not have occurred on or prior to June 30, 2005 or
such later date as shall have been agreed to by the Purchaser and the Requisite
Number of Sellers, due to the failure of any condition under Section 5.2 to be
satisfied; provided, however, that no Seller shall have the right to terminate
this Agreement ( or agree with other Sellers to terminate this Agreement) under
clause (iii) if the Seller's failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of Closing to occur
on or prior to such date; and provided, further, that termination pursuant to
clauses (i) or (ii) shall not be permitted unless the Requisite Number of
Sellers shall have given Purchaser written notice of their intention to
terminate this Agreement pursuant thereto and the specific breach or failure
giving rise to the right to terminate and Purchaser shall have failed to cure
such breach or failure within the 10-day period following Purchaser's receipt of
Sellers' notice; or
(d) by Purchaser upon written notice to Sellers if (i) any Seller (a
"Breaching Seller") breaches or fails in any material respect to perform or
comply with any of its covenants and agreements contained herein, (ii) any
Seller breaches its representations and warranties in any material respect, or
(iii) the Closing shall not have occurred on or prior to June 30, 2005 or such
later date as shall have been agreed to by the Purchaser and the Requisite
Number of Sellers, due to the failure of any condition under Section 5.1 to be
satisfied; provided, however, that Purchaser shall not have the right to
terminate this Agreement under clause (iii) if the Purchaser's failure to
fulfill any obligation under this Agreement has been the cause of, or resulted
in, the failure of Closing to occur on or prior to such date; and provided,
further, that termination pursuant to clauses (i) or (ii) shall not be permitted
unless Purchaser shall have given Sellers written notice of its intention to
terminate this Agreement pursuant thereto and the specific breach or failure
giving rise to the right to terminate and Sellers shall have failed to cure such
breach or failure within the 10-day period following Sellers' receipt of
Purchaser's notice; and provided, further, that termination pursuant to clauses
(i) or (ii) shall be permitted only with respect to the Breaching Seller or
Sellers and the Shares to be sold by them unless the total number of Shares that
would, but for such breach, have been sold by the Breaching Seller(s) hereunder
is such that the condition set forth in Section 5.1(f) would not be satisfied,
in which event termination pursuant to clauses (i) or (ii) shall be permitted
with respect to all Sellers and all Shares.
6.2 Procedure and Effect of Termination. In the event of the termination
of this Agreement by Sellers, or by Purchaser as to all Sellers, pursuant to
Section 6.1, the parties will have no further obligation or liability under this
Agreement except (a) as otherwise provided in Sections 4.1 and 6.3 and subject
to the limitation set forth in Section 6.4, and (b) for any willful breach of
any provision of this Agreement. In the event of the termination of this
Agreement by Purchaser as to one or more Breaching Sellers but not all Sellers,
the Purchaser and the Breaching Sellers as to
11
which the Agreement was terminated will have no further obligation or liability
under this Agreement to each other except (i) as otherwise provided in Section
4.1, and (ii) for any willful breach of any provision of this Agreement, and
this Agreement shall otherwise remain in full force and effect as between the
Purchaser and the remaining Sellers.
6.3 Liquidated Damages to Sellers in Certain Circumstances.
(a) If this Agreement is terminated pursuant to Section 6.1(b) due
to the failure or refusal of the Commissioner to grant the Commissioner's
Approval, and
(i) such failure or refusal is due to a "Purchaser Condition"
(as defined below), and
(ii) none of the Sellers have breached their obligations under
Sections 4.4(b)(i), 4.4(b)(iii) or 4.4(b)(iv) in any material respect or their
obligations under Section 4.4(b)(ii) in any respect,
then promptly following (x) the receipt of formal notice of such failure or
refusal from the Commissioner (if there is no disagreement among Purchaser and
the Requisite Number of Sellers as to whether a Purchaser Condition has
occurred) or (y) the parties' receipt of the arbitrator(s) written determination
that a Purchaser Condition has occurred (if there is a disagreement among
Purchaser and the Requisite Number of Sellers as to whether a Purchaser
Condition has occurred), whichever is later, Purchaser shall deposit an amount
equal to the product of One Hundred Ninety and No/100 Dollars ($190.00)
multiplied by the number of Shares with a Qualified Escrow Agent chosen by
Purchaser and reasonably acceptable to the Requisite Number of Sellers, such
amount to be held in a non-interest bearing account pursuant to an escrow
agreement reasonably acceptable to the Purchaser and the Sellers (the "Escrow
Agreement").
(b) The Escrow Agreement shall provide, among other things, for
payment of the escrowed funds as follows:
(i) As to any Shares sold by a Seller to a purchaser other
than the Purchaser, a Seller or an "affiliate" (as defined in Rule 405
promulgated under the Securities Act) of a Seller before the one year
anniversary of the date of this Agreement (each such Share, a "Sold Share"),
such Seller shall be entitled to an amount per Sold Share equal to the amount,
if any, by which Three Thousand Eight Hundred and No/100 Dollars ($3,800.00)
exceeds the price per Share at which the Sold Shares were sold by the Seller, up
to a maximum of One Hundred Ninety and No/100 Dollars ($190.00) per Share, and
Purchaser shall be entitled to an amount per Sold Share equal to the amount, if
any, by which One Hundred Ninety and No/100 Dollars ($190.00) exceeds the per
Share amount paid to such Seller. For purposes of illustration (and not
limitation), (A) if a Seller sells 100 Sold Shares for $3,700 per Sold Share,
such Seller shall be entitled to a payment from the escrow of $10,000 ($100 per
Sold Share) and Purchaser shall be entitled to a payment from the escrow of
$9,000 ($90 per Sold Share); (B) if a Seller sells 100 Sold Shares for $3,801
per Sold Share,
12
Purchaser shall be entitled to a payment from the escrow of $19,000 ($190 per
Sold Share) and such Seller shall not be entitled to a payment from the escrow
with respect to such Shares; and (C) if a Seller sells 100 Sold Shares for
$3,600 per Sold Share, such Seller shall be entitled to a payment from the
escrow of $19,000 ($190 per Sold Share) and Purchaser shall not be entitled to a
payment from the escrow with respect to such Shares.
(ii) As to any Shares which are not Sold Shares on the one
year anniversary of the date of this Agreement, the Seller owning such Shares
shall be entitled to One Hundred Ninety and No/100 Dollars ($190.00) per Share.
Payment shall be made promptly by the escrow agent, in the case of clause (i),
following delivery of reasonably satisfactory documentary evidence to Purchaser
that there has been a sale of Sold Shares and delivery of a written direction by
Purchaser to the escrow agent to make payment. Payment shall be made promptly by
the escrow agent, in the case of clause (ii), following delivery after the one
year anniversary of the date of this Agreement by the Sellers to Purchaser of
reasonably satisfactory documentary evidence of the Shares which are not Sold
Shares and delivery of a written direction by Purchaser to the escrow agent to
make payment. All fees and expenses charged by the escrow agent shall be borne
50% by Purchaser and 50% by Sellers (pro rata according to the number of Shares
reflected as owned on Exhibit 1).
(c) A "Purchaser Condition" means either (i) that one or more
"Purchaser Reasons" (defined below) collectively constitute the preponderance of
the reasons articulated by the Commissioner for its decision to refuse to issue
the Commissioner's Approval; or (ii) the Purchaser has voluntarily withdrawn its
Form A or has otherwise willfully abandoned its efforts to seek the
Commissioner's Approval, except where the Commissioner has granted approval of
an Inconsistent Change of Control.
(d) A "Purchaser Reason" means any of the following:
(i) As a result of the Closing, the Issuer or any domestic
stock insurance corporation controlled by the Issuer would not be able to
satisfy the requirements for the issuance of a license to write the line or
lines of insurance for which it is presently licensed in Wisconsin;
(ii) The financial condition of Purchaser is likely to
jeopardize the financial stability of the Issuer;
(iii) The plans or proposals which the Purchaser has to
liquidate the Issuer, sell the Issuer's assets, merge the Issuer with any
person, or make any other material change in the Issuer's business or corporate
structure or management are not fair and reasonable to the Issuer's
policyholders;
(iv) The lack of competence and integrity of the Purchaser's
directors and/or management.
13
(e) Notwithstanding any other provision in this Agreement to the
contrary, Purchaser shall not be required to make any payment under this Section
6.3 unless a Purchaser Condition exists. If any other reason or reasons
articulated by the Commissioner for its decision to refuse or fail to issue the
Commissioner's Approval constitute the preponderance of the reasons articulated
by the Commissioner for such decision (including, by way of example, the
Commissioner's refusal to permit the Seller to sell the Shares to any person, or
the Commissioner's approval of an Inconsistent Change of Control, or the
Commissioner's determination that it is not in the best interest of the
policyholders of the Issuer or in the public interest to have a non-Wisconsin
domestic shareholder, or any other reason that is not a Purchaser Reason) then a
Purchaser Reason shall be deemed not to exist.
(f) The parties agree and stipulate to the payments provided in this
Section 6.3 as reasonable and full liquidated damages and reasonable
compensation for the involvement of Sellers in the transactions contemplated in
this Agreement and is not a penalty or forfeiture. A Seller's receipt of the
amount provided in this Section 6.3 shall be in lieu of any and all other
claims, rights, damages or other remedies against Purchaser for its failure or
inability to obtain the Commissioner's Approval, and such Seller shall have no
other rights or remedies against Purchaser for Purchaser's failure or inability
to obtain the Commissioner's Approval except as provided in Section 7.7.
(g) (i) In the event of a disagreement among the parties as to
whether a Purchaser Condition exists, the parties shall attempt in good faith to
resolve such disagreement promptly by negotiation. If the disagreement has not
been resolved to the mutual satisfaction of the parties within fourteen (14)
days after the Purchaser's receipt of written notice from the Commissioner of
the failure or refusal of the Commissioner to grant the Commissioner's Approval,
then the Purchaser and the Requisite Number of Sellers shall attempt in good
faith to agree on a neutral individual who is not a party to this Agreement to
settle such disagreement by binding arbitration. If the Purchaser and the
Requisite Number of Sellers are unable to agree on a neutral individual within
fourteen (14) days after the expiration of the first 14-day period, then
arbitration shall be before a three-person panel of neutral arbitrators, one
named by the Requisite Number of Sellers, one named by the Purchaser and the
third arbitrator to be chosen by the two arbitrators named by the parties, with
the naming of the arbitrators to occur within thirty (30) days after the end of
the second 14-day period. Should either the Requisite Number of Sellers or the
Purchaser refuse or neglect to join in the appointment of the arbitrators, the
arbitrators shall be appointed in accordance with the provisions of the
Commercial Arbitration Rules of the American Arbitration Association. If any
arbitrator shall die, resign, be disqualified, or otherwise fail or become
unable to serve as an arbitrator, a replacement arbitrator shall be selected in
the same manner as such arbitrator was originally selected in accordance with
this Section 6.3(g).
(ii) Within thirty (30) days of the submission to the
arbitrator(s), the arbitrator(s) shall deliver to the parties a written
determination as to whether, in its or their opinion, the Commissioner's failure
or refusal to issue the Commissioner's Approval was due to a Purchaser
Condition. The foregoing shall be the sole issue for determination by the
arbitrator(s) and such determination shall be issued in the form of a "YES" or
"NO" answer to the question `WAS THE
14
COMMISSIONER'S FAILURE OR REFUSAL TO ISSUE THE COMMISSIONER'S APPROVAL DUE TO A
PURCHASER CONDITION?" (the "Question").
(iii) The determination of the arbitrator(s) shall be based
solely upon the evidence submitted to the Commissioner in connection with the
Form A, the record created before the Commissioner, including the Form A and
amendments thereto, correspondence to or from the Commissioner (or his designee)
related to the Form A and any amendments thereto, all documentation provided by
the Purchaser or any other person to the Commissioner, the transcript of any
hearing held by the Commissioner, any exhibits or other documents submitted to
the Commissioner at such hearing for consideration, and the written notice
provided to Purchaser by Commissioner as evidence of its failure or refusal to
grant the Commissioner's Approval along with any supporting documentation that
is included with such notice or otherwise provided to the Purchaser that
pertains to the basis for the Commissioner's decision.
(iv) The determination of the arbitrator(s) shall be final,
binding and conclusive on all parties, absent manifest error or malfeasance, and
the parties agree to abide by such determination. The parties further agree that
judgment on the determination rendered by the arbitrator(s) may be entered in
any court having jurisdiction and specific enforcement may be had in accordance
with Section 7.7.
(v) If the determination of the arbitrator(s) is that the
answer to the Question is "NO", then the condition set forth in clause (i) of
Section 6.3(a) has not occurred, Purchaser shall have no obligation to execute
the Escrow Agreement or to make the payment provided in Section 6.3(a) and
Sellers shall have no right to payment under Section 6.3(a).
(vi) The arbitrator(s) shall be entitled to a reasonable fee
commensurate with fees for professional services requiring similar time and
effort. The responsibility for paying the costs and expenses of the
arbitrator(s), shall be borne 50% by Purchaser and 50% by Sellers (pro rata
according to the number of Shares reflected as owned on Exhibit 1).
6.4 Limitation on Damages. In any action, suit or proceeding brought by
any Seller against Purchaser or by Purchaser against any Seller to enforce or to
recover for any breach of this Agreement (other than an action for rescission),
the maximum amount of monetary damages which any Seller or Purchaser may be
awarded in any such action, suit or proceeding shall not exceed an amount equal
to the product of One Hundred Ninety and No/100 Dollars ($190.00) multiplied by
the number of Shares owned by such Seller (as reflected on Exhibit 1).
ARTICLE 7. MISCELLANEOUS PROVISIONS
7.1 Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Wisconsin, without regard to its
conflicts of laws provisions.
7.2 Entire Agreement; Amendment. This Agreement constitutes the entire
agreement
15
between the parties with respect to the subject matter hereof and neither party
shall be liable or bound to the other party in any manner by any warranties,
representations, or covenants except as specifically set forth herein. This
Agreement may be amended, changed, waived, discharged, or terminated only by a
statement in writing signed by the party against which enforcement of the
amendment, change, waiver, discharge, or termination is sought; provided that
any amendment by the Sellers shall be effective against all of the Sellers if
signed by the Requisite Number of Sellers.
7.3 Survival. Each of the representations, warranties and covenants of the
parties made herein shall survive the execution and delivery of this Agreement
for so long as any claim made in respect thereof may be made under any
applicable state or federal securities law or statute of limitations.
7.4 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 instrument.
7.5 Severability. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provisions shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
7.6 Section Headings and Construction. Section headings herein have been
inserted for reference only and shall not be deemed to limit or otherwise
affect, in any matter, or be deemed to interpret in whole or in part, any of the
terms or provisions of this Agreement. References to any "Section" are to a
section of this Agreement. The terms "herein" and "hereby" refer to this
Agreement as a whole and not to any particular section. Any pronouns in this
Agreement that refer to a particular gender mean and refer to the appropriate
gender or neuter when applied to a particular party, person or entity. Each of
the Sellers and Purchaser have participated jointly in the negotiation and
drafting of this Agreement and consulted with their own legal counsel in
connection therewith. In the event an ambiguity or question of intent or
interpretation arises, this Agreement will be construed as if drafted jointly by
the parties and no presumption or burden of proof will arise favoring or
disfavoring any party by virtue of the authorship of any of the provisions of
this Agreement.
7.7 Specific Performance. Each party acknowledges and agrees that in the
event of any breach of this Agreement each non-breaching party would be
irreparably and immediately harmed and could not be made whole by monetary
damages. It is accordingly agreed that the parties will (a) waive, in any action
for specific performance, the defense of adequacy of a remedy at law and (b) be
entitled, in addition to any other remedy to which they may be entitled at law
or in equity (subject to the limitations on remedies contained in Sections 4.1,
6.3 and 6.4), to compel specific performance of this Agreement (including
without limitation the dispute resolution provision in Section 6.3(e)) in any
action instituted in accordance with the provisions of this Agreement.
16
7.8 Assignment. Neither this Agreement nor any of the rights, interests,
or obligations hereunder shall be assigned by any party (whether by operation of
law or otherwise) without the prior written consent of the other parties, which
consent shall not be unreasonably withheld. 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 permitted successors and assigns. No third
party beneficiary rights are contemplated hereby.
7.9 Expenses. Except as otherwise provided herein, all costs and expenses
incurred in connection with the transactions contemplated hereby, including
costs associated with the prosecution or defense of any action, suit or
proceeding, shall be paid by the party incurring such costs and expenses,
whether or not the transactions contemplated hereby are consummated.
7.10 Waivers. Except as otherwise provided in Agreement, any failure of
any party to comply with any obligation, covenant, agreement or condition herein
may be waived by the party or parties entitled to the benefits thereof only by a
written instrument signed by the party granting such waiver, but such waiver or
failure to insist upon strict compliance with such obligation, covenant,
agreement, or condition shall not operate as a waiver of, or estoppel with
respect to, any subsequent or other failure; provided that any waiver by the
Sellers shall be effective against all of the Sellers if signed by the Requisite
Number of Sellers.
7.11 Notices. Any notices or other communications required or permitted
hereby shall be sufficiently given if sent by United States mail, postage
prepaid; if to Purchaser, at American Physicians Assurance Corp., ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: R. ▇▇▇▇▇ ▇▇▇▇▇▇▇, President and
Chief Executive Officer, with a copy to ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PLLC,
▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇, ▇▇▇▇▇; if to any Seller, at the address
set forth opposite the Seller's name on Exhibit 1, with a copy to Seller's
counsel, if any, at the address set forth on Exhibit 1; or otherwise to such
other addresses as a party may designate to the other parties in writing.
7.12 Waiver of Trial by Jury. The Purchaser and each Seller waives any
right to a trial by jury in any action or proceeding to enforce or defend any
rights under this Agreement or arising from any relationship existing in
connection with this Agreement, and agrees that any such action or proceeding
shall be tried before a court and not before a jury.
7.13 Control. Nothing in this Agreement shall be construed or deemed an
admission by the Sellers or the Purchaser that (i) the Sellers, individually or
collectively, "control" (within the meaning of applicable Wisconsin law) the
Issuer or (ii) that Purchaser, upon consummation of the Transactions, if
consummated, will control the Issuer.
7.14 Several Liability for Breach. The parties intend and agree that each
of the several Sellers shall be liable hereunder only for his or her or its own
breach or nonperformance of this Agreement with respect to its own Shares, and
no Seller (whether or not a Breaching Seller) shall have any liability hereunder
with respect to or as result of the breach or nonperformance of this
17
Agreement by any other Seller or with respect to any Shares held by any other
Seller.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed by their respective officers thereunto duly authorized as of the date
first written above.
SELLERS: PURCHASER:
AMERICAN PHYSICIANS
▇▇▇▇ HEALTH SYSTEMS, INC. ASSURANCE CORPORATION
By: ▇▇▇▇▇ ▇. ▇▇▇▇, MD By: /s/ R. ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------ --------------------------
Name and Title: Chairman and CEO Name and Title: President
MERCY HEALTH SYSTEM CORPORATION
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name and Title: Vice President and
Chief Financial Officer
▇▇▇▇▇ ▇. ▇▇▇▇, FOR HIMSELF, AS
CUSTODIAN FOR ▇▇▇▇▇ ▇. ▇▇▇▇ UWIUTMA
AND AS TRUSTEE FOR EMERGENCY RESOURCES
GROUP 401(K) PLAN
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
AURORA MEDICAL GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
Name and Title: Vice President
THE MONROE CLINIC, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name and Title: Vice President
[SIGNATURE PAGE FOR STOCK PURCHASE AGREEMENT DATED AS OF SEPTEMBER 17, 2004]
18
EXHIBIT 1
PHYSICIAN INSURANCE COMPANY OF WISCONSIN, INC. STOCK CERTIFICATES
CERTIFICATE NAME ON CERTIFICATE
SELLER/BENEFICIAL OWNERSHIP NO. (IF DIFFERENT) NO. OF SHARES DATE ISSUED
--------------------------- --- -------------- ------------- -----------
▇▇▇▇ Health Systems, Inc. 5173 Same 1,111 07/01/2000
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇. 5174 " 900 07/01/2000
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
TOTAL ▇▇▇▇ HEALTH SYSTEMS
2,011
With a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ S.C.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Mercy Health System Corporation 327 Janesville Medical 78 12/04/1986
1000 Mineral Point, 1269 Center, Ltd. 1 10/16/1987
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 2067 " 76 03/02/1988
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇ 2501 " 3 07/28/1988
2649 " 1 09/19/1988
2986 " 66 12/29/1988
3734 " 5 04/06/1989
4197 " 7 01/16/1990
2594* " 1 ?*
*Lost certificate 2678* " 2 ?*
TOTAL MERCY HEALTH SYSTEM CORPORATION 240
1
CERTIFICATE NAME ON CERTIFICATE
SELLER/BENEFICIAL OWNERSHIP NO. (IF DIFFERENT) NO. OF SHARES DATE ISSUED
--------------------------- --- -------------- ------------- -----------
▇▇▇▇▇ ▇. ▇▇▇▇, M.D., 4668 ▇▇▇▇▇ ▇▇▇▇, M.D. 15 12/11/1995
▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇. 5179 ▇▇▇▇▇ ▇. ▇▇▇▇, M.D. 224 03/09/2001
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 5200 ▇▇▇▇▇ ▇. ▇▇▇▇, M.D. 3 09/04/2001
5201 ▇▇▇▇▇ ▇. ▇▇▇▇, M.D., 9 09/04/2001
Custodian for ▇▇▇▇▇ ▇.
▇▇▇▇ UWIUTMA
5258 ▇▇▇▇▇ ▇▇▇▇, MD, 263 09/30/2003
Trustee, Emergency
Resources Group
401(k) Plan
TOTAL ▇▇▇▇▇ ▇▇▇▇ 514
Aurora Medical Group, Inc. 4494 Same 74 01/11/1993
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇. 4474 " 428 01/22/1993
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ 4478 " 25 04/13/1993
Attention: ▇▇▇▇▇▇ ▇'▇▇▇▇▇ 4498 " 152 03/08/1994
4507 " 63 06/07/1994
4506 " 24 07/07/1994
4641 " 70 07/13/1995
4666 " 130 11/17/1995
4689 " 153 05/02/1996
4690 " 8 05/02/1996
4708 " 21 11/04/1996
4709 " 8 11/04/1996
4726 " 137 03/03/1997
TOTAL AURORA MEDICAL GROUP 1,293
The Monroe Clinic, Inc. 4806 Same 392 06/01/1998
▇▇▇ ▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
TOTAL ▇▇▇▇▇▇ CLINIC 392
2
CERTIFICATE NAME ON CERTIFICATE
SELLER/BENEFICIAL OWNERSHIP NO. (IF DIFFERENT) NO. OF SHARES DATE ISSUED
--------------------------- --- -------------- ------------- -----------
With a copy to:
Attorney ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Von Briesen & ▇▇▇▇▇ SC
▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
GRAND TOTAL 4,450 SHARES
3
EXHIBIT 2
STOCK ESCROW AGREEMENT
This Stock Escrow Agreement, dated as of September 17, 2004 ("Escrow
Agreement"), is by and between American Physicians Assurance Corporation, a
Michigan corporation ("APA"), the shareholders listed on Exhibit 1
(collectively, the "Depositors"); and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PLLC, as Escrow Agent
hereunder ("Escrow Agent").
BACKGROUND
A. APA and Depositors are parties to a Stock Purchase Agreement of even
date herewith (the "Stock Purchase Agreement");
B. The Stock Purchase Agreement requires the parties to execute an escrow
agreement in the form hereof in connection with the deposit by Depositors of the
stock certificates representing the shares to be sold to APA pursuant to the
Stock Purchase Agreement (the "Certificates");
C. Depositors desire to fulfill their obligation under the Stock Purchase
Agreement;
D. Escrow Agent has agreed to accept, hold and deliver the Certificates in
accordance with the terms of this Escrow Agreement;
E. In order to establish the escrow and to effectuate the provisions of
the Stock Purchase Agreement, the parties hereto have entered into this Escrow
Agreement.
AGREEMENT
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, for
themselves, their successors and assigns, hereby agree as follows:
1. Definitions. In addition to terms defined elsewhere in this Escrow
Agreement, the following terms shall have the following meanings when used
herein:
"Escrow Documents" shall mean the stock certificates listed on Exhibit 1
to the Stock Purchase Agreement, and any New Certificates (as defined in the
Stock Purchase Agreement) issued in replacement of such stock certificates and
delivered to Escrow Agent as required by the Stock Purchase Agreement.
"Joint Written Direction" shall mean a written direction, executed by the
Requisite
1
Number of Sellers and APA directing Escrow Agent to distribute the Escrow
Documents or to take or refrain from taking an action pursuant to this Escrow
Agreement, including without limitation pursuant to Section 4.2 of the Stock
Purchase Agreement.
"Requisite Number of Sellers" shall have the meaning set forth in the
Stock Purchase Agreement.
2. Appointment of and Acceptance by Escrow Agent. Depositors and APA
hereby appoint Escrow Agent to serve as escrow agent hereunder. Escrow Agent
hereby accepts such appointment and agrees to hold and distribute the Escrow
Documents in accordance with this Escrow Agreement. Concurrently with the
execution and delivery of this Escrow Agreement, the Escrow Documents are being
delivered into escrow with the Escrow Agent.
3. Escrow Agent Expenses. APA will pay and reimburse the Escrow Agent for
the Escrow Agent's time and out-of-pocket expenses in performing its obligations
hereunder, including, without limitation, the fees and costs of attorneys or
agents which it may find necessary to engage in performance of its duties
hereunder.
4. Distribution of Escrow Documents.
(a) Joint Written Direction. Escrow Agent shall distribute Escrow
Documents, at any time and from time to time, in accordance with a Joint Written
Direction.
(b) Notice of Closing. If APA delivers written notice, signed by
APA, to Escrow Agent and to Depositors that the Closing has occurred (as defined
in the Stock Purchase Agreement) and that payment for the Shares has occurred as
provided in the Stock Purchase Agreement, or if Depositors deliver written
notice, signed by Depositors, to Escrow Agent and to APA that the Closing has
occurred (as defined in the Stock Purchase Agreement), accompanied by evidence,
reasonably satisfactory to Escrow Agent, that payment for the Shares has
occurred as provided in the Stock Purchase Agreement, then Escrow Agent shall
deliver the Escrow Documents to APA.
(c) Notice of Termination. If Depositors deliver written notice,
signed by the Requisite Number of Sellers, to Escrow Agent and Purchaser that
the Stock Purchase Agreement has been terminated in accordance with Section 6.1
thereof and that any applicable cure period has expired without cure of the
breach or failure giving rise to the termination, then Escrow Agent shall
deliver the Escrow Documents to Depositors at the address or addresses set forth
on such notice.
5. Nature of Escrow Agent's Obligations.
(a) Duties and Obligations of the Escrow Agent. The Escrow Agent
will have no duties or obligations other than those specifically set forth in or
contemplated by this Escrow Agreement.
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(b) Failure to Perform. The Escrow Agent will not be responsible in
any manner whatsoever for any failure or inability of any other party to honor
any provision of this Escrow Agreement.
(c) Reliance Upon Documents. Except to the extent otherwise notified
in writing by an affected party, the Escrow Agent may rely on, and will be
protected in acting upon, any certificate, warrant, instrument, opinion, notice,
letter, telecopy or other document or security delivered to it and reasonably
believed by it to be genuine and to have been signed by the proper party or
parties.
(d) Errors or Omissions. The Escrow Agent will not be liable for any
act done or step taken or omitted by it in good faith or for anything which it
may do or refrain from doing in connection with this Escrow Agreement, except
for its own gross negligence or willful misconduct.
(e) Disputes. The Escrow Agent will, in the event that any dispute
will arise between the parties with respect to the distribution of any of the
documents held hereunder, be permitted to interplead all of the documents held
hereunder into a court of competent jurisdiction, and thereafter be fully
relieved from any and all liability or obligation with respect to such
interpleaded documents.
6. Indemnification. The Escrow Agent will be, and hereby is, jointly and
severally indemnified and held harmless by the Depositors and APA from all
losses, costs and expenses (including reasonable attorneys' fees) which may be
incurred by the Escrow Agent as a result of or arising out of this Escrow
Agreement, including its involvement in any litigation arising from performance
of its duties under this Escrow Agreement, other than any of the foregoing
resulting from any grossly negligent or wrongful action taken or omitted by the
Escrow Agent. Such indemnification will survive termination of this Escrow
Agreement until extinguished by any applicable statute of limitations.
7. Replacement of the Escrow Agent.
(a) Resignation or Removal. The Escrow Agent may resign as such
after giving 10 days' prior written notice to the Depositors and APA. Similarly,
the Escrow Agent may be removed and replaced after the giving of 10 days' prior
written notice from the Requisite Number of Sellers and APA. In either event,
the duties of the Escrow Agent will terminate upon the later to occur of (i) 10
days after the date of such notice or (ii) the appointment of a successor Escrow
Agent. The Escrow Agent shall transfer the Escrow Documents to the successor
Escrow Agent upon such termination of the duties of the Escrow Agent.
(b) Appointment of Successor. If APA and the Requisite Number of
Sellers are unable to agree upon a successor Escrow Agent or if APA and the
Requisite Number of Sellers have failed to appoint a successor Escrow Agent
prior to the expiration of 10 days following the date of the notice of
resignation or removal, the then acting Escrow Agent will, and APA or the
Requisite
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Number of Sellers may, petition any court of competent jurisdiction for the
appointment of a successor Escrow Agent or other appropriate relief, and any
such resulting appointment will be binding upon all of the parties to this
Escrow Agreement.
(c) Relief from Obligations. Upon acknowledgement by any successor
Escrow Agent of the receipt of the Escrow Documents, (i) the former Escrow Agent
will be fully relieved of all duties, responsibilities and obligations under
this Escrow Agreement, and (ii) the successor Escrow Agent will agree in writing
to be bound by all of the duties and obligations of the Escrow Agent under this
Escrow Agreement.
8. Termination. This Escrow Agreement will terminate upon the final
distribution of all of the Escrow Documents in accordance with Section 4, except
for any ministerial actions to be taken by the Escrow Agent thereafter.
9. Notice. All notices and other communications hereunder shall be in
writing and shall be deemed to have been validly served, given or delivered five
(5) days after deposit in the United States mails, by certified mail with return
receipt requested and postage prepaid, when delivered personally, one (1) day
after delivery to any overnight courier, or when transmitted by facsimile
transmission facilities, and addressed to the party to be notified as follows:
To APA at:
American Physicians Assurance Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTENTION: R. ▇▇▇▇▇ ▇▇▇▇▇▇▇, President
and Chief Executive Officer
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
To Depositors at: the address set forth on Exhibit 1 to the Stock
Purchase Agreement
To the Escrow Agent at:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PLLC
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTENTION: ▇▇▇▇ ▇. ▇▇▇▇
Facsimile Number: (▇▇▇) ▇▇▇-▇▇▇▇
Phone Number: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as each party may designate for itself by
like notice.
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10. Miscellaneous.
(a) Governing Law and Jurisdiction. This Escrow Agreement will be
governed by and construed in accordance with the internal laws of the State of
Michigan, without regard to principles of conflicts of laws, and each of the
parties consents to be subject to the non-exclusive personal jurisdiction of the
federal courts in the State of Michigan.
(b) Entire Agreement. This Escrow Agreement contains the entire
agreement of the parties, and supersedes any prior and contemporaneous
agreements, understandings and communications, oral and written, among the
parties, with respect to the subject matter hereof. This Escrow Agreement may
not be amended, modified, waived or terminated except by an instrument in
writing signed by an authorized representative of the party to be charged.
(c) No Third Party Beneficiaries. Except as expressly stated in this
Escrow Agreement, no person or entity not a party to this Escrow Agreement will
have any rights or duties hereunder except as specifically provided for in this
Escrow Agreement.
(d) Severability. If any provision or clause of this Escrow
Agreement or the application thereof to any person or circumstance is held
invalid or unenforceable, such invalidity or unenforceability will not affect
other provisions or applications of this Escrow Agreement, which will be given
effect without the invalid or unenforceable provision or application, and to
this end the provisions of this Escrow Agreement are declared to be several.
(e) Counterparts. This Escrow Agreement may be signed (including by
facsimile) in any number of counterparts with the same effect as if the
signatures of all parties were upon the same instrument, all of which
counterparts taken together will constitute one and the same instrument.
(f) Further Assurances. From and after the execution of this Escrow
Agreement, each of the Depositors and APA will take such actions and do all
things necessary or appropriate to carry out the intent of the parties to
accomplish the purposes of this Escrow Agreement.
(g) Dealings. Nothing herein shall preclude the Escrow Agent from
acting in any other capacity for the Depositors or APA or for any other entity.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement
to be executed as of the date first above written.
AMERICAN PHYSICIANS ASSURANCE CORPORATION
By: _______________________________
Name and Title: ______________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ PLLC, AS ESCROW AGENT
By: __________________________________
Name and Title: ______________________
▇▇▇▇ HEALTH SYSTEMS, INC. THE MONROE CLINIC, INC.
By: ________________________________ By: ____________________________
Name and Title: ______________________ Name and Title: ________________
MERCY HEALTH SYSTEM CORPORATION
By: __________________________________
Name and Title : _____________________
▇▇▇▇▇ ▇. ▇▇▇▇, FOR HIMSELF, AS
CUSTODIAN FOR ▇▇▇▇▇ ▇. ▇▇▇▇ UWIUTMA
AND AS TRUSTEE FOR EMERGENCY RESOURCES
GROUP 401(K) PLAN
______________________________________
▇▇▇▇▇ ▇. ▇▇▇▇
AURORA MEDICAL GROUP, INC.
By: __________________________________
Name and Title: ______________________
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EXHIBIT 3
IRREVOCABLE PROXY
For good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the undersigned hereby irrevocably constitutes and
appoints, for himself and his heirs and assigns, American Physicians Assurance
Corporation, with full power of substitution, as his, her or its proxy and
attorney-in-fact to vote all of the shares of common stock of Physicians
Insurance Company of Wisconsin, Inc. represented by the stock certificates
listed below (the "Shares") that the undersigned is entitled to vote at any
meeting of the holders of the capital stock of Physicians Insurance Company of
Wisconsin, Inc. or upon any proposed matter presented to such holders for action
without a meeting during the term hereof. The irrevocable proxy granted hereby
shall become effective immediately on the date hereof and shall continue in full
force and effect unless the sale of the Shares pursuant to the Stock Purchase
Agreement, dated as of September 17, 2004, by and among the undersigned, certain
other holders of Physicians Insurance Company of Wisconsin, Inc. common stock,
and American Physicians Assurance Corporation is rescinded and American
Physicians Assurance Corporation is repaid the purchase price for such shares in
accordance with clauses (ii) and (iii) of Section 1.4(c) of such Agreement. The
undersigned acknowledges that this irrevocable proxy is coupled with an interest
sufficient in law to support an irrevocable proxy and hereby revokes all prior
proxies granted with respect to the Shares.
[NAME OF SELLER]
Dated: _________, 200_ Signature:____________________________
Name _______________________________
Certificate Numbers:
____________________________ representing ________ shares
____________________________ representing ________ shares
____________________________ representing ________ shares
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