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EXHIBIT 2
AMENDED AND RESTATED
PLAN AND AGREEMENT OF MERGER
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AMENDED AND RESTATED
PLAN AND AGREEMENT OF MERGER
BY AND AMONG
SCPIE HOLDINGS INC.
A DELAWARE CORPORATION,
AND
SCPIE INDEMNITY COMPANY
A CALIFORNIA CORPORATION,
AND
SOUTHERN CALIFORNIA PHYSICIANS
INSURANCE EXCHANGE
A CALIFORNIA INTER-INSURANCE EXCHANGE
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TABLE OF CONTENTS
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I THE MERGER...................................................................... 1
1.1 The Merger................................................................. 1
1.2 Effective Time of the Merger............................................... 2
1.3 Effect of the Merger....................................................... 2
1.4 Subsequent Actions......................................................... 2
1.5 Governing Documents........................................................ 2
1.6 Directors and Officers..................................................... 2
II CONVERSION OF MEMBERSHIP INTERESTS, ALLOCATION AND PAYMENT OF MERGER
CONSIDERATION................................................................... 3
2.1 Certain Definitions........................................................ 3
2.2 Conversion of Membership Interests......................................... 4
2.3 Allocation of Merger Shares................................................ 4
2.4 Adjustment of Share Numbers................................................ 5
2.5 Fractional Shares.......................................................... 5
2.6 Cancellation and Issuance of Holdings Stock................................ 5
2.7 Issuance of Consideration.................................................. 5
2.8 No Further Interest in the Company......................................... 5
III APPROVAL BY THE COMMISSIONER.................................................... 5
3.1 Commissioner's Approval.................................................... 5
IV REPRESENTATIONS AND WARRANTIES BY THE COMPANY................................... 5
4.1 Organization and Qualification............................................. 5
4.2 Authority Relative to this Plan; Recommendation to Eligible Members........ 5
4.3 Compliance................................................................. 6
V REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND NEW INSURER...................... 6
5.1 Organization and Qualification............................................. 6
5.2 Capitalization............................................................. 7
5.3 Authority Relative to this Plan............................................ 7
5.4 Compliance................................................................. 7
VI ADDITIONAL AGREEMENTS........................................................... 7
6.1 Cooperation................................................................ 7
6.2 Special Meeting of Eligible Members of the Company......................... 8
6.3 Officers' and Directors' Insurance; Indemnification........................ 9
6.4 Continuity of Obligations Regarding Policyholders.......................... 9
VII CONDITIONS PRECEDENT............................................................ 10
7.1 Conditions to Obligations of Each Party to Effect the Merger............... 10
VIII TERMINATION..................................................................... 10
8.1 Termination................................................................ 10
8.2 Effect of Termination...................................................... 11
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IX GENERAL PROVISIONS.............................................................. 11
9.1 Amendment.................................................................. 11
9.2 Extension; Waiver.......................................................... 11
9.3 Nonsurvival of Representations and Warranties.............................. 11
9.4 Entire Plan................................................................ 11
9.5 Counterparts............................................................... 11
9.6 Severability............................................................... 11
9.7 Notices.................................................................... 12
9.8 Public Announcements....................................................... 12
9.9 Section Headings........................................................... 12
9.10 Benefits and Assignment.................................................... 12
9.11 Applicable Law............................................................. 12
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THIS AMENDED AND RESTATED PLAN AND AGREEMENT OF MERGER (the "Plan"), dated
as of August 8, 1996, is among SCPIE HOLDINGS INC., a Delaware corporation
("Holdings"), SCPIE INDEMNITY COMPANY, a California corporation and a wholly
owned subsidiary of Holdings ("New Insurer"), and SOUTHERN CALIFORNIA PHYSICIANS
INSURANCE EXCHANGE, a California inter-insurance exchange (the "Company").
RECITALS
WHEREAS, the Company is a California reciprocal or inter-insurance exchange
organized pursuant to the provisions of Division I, Part 2, Chapter 3
(commencing with Section 1280) of the Insurance Code of the State of California
(the "California Insurance Law").
WHEREAS, New Insurer is a corporation of the State of California authorized
to transact insurance under the California Insurance Law.
WHEREAS, Holdings is a corporation of the State of Delaware and a wholly
owned subsidiary of the Company.
WHEREAS, the General Corporations Law of the State of California (the
"California Corporations Law") and the California Insurance Law permit a merger
of a California reciprocal or inter-insurance exchange with and into a
corporation authorized to transact insurance in California.
WHEREAS, in furtherance of such merger, it is contemplated that the
Membership Interests (as hereinafter defined) of Eligible Members (as
hereinafter defined) of the Company will be exchanged for the consideration
described herein.
WHEREAS, the Board of Governors of the Company (the "Board of Governors")
and the respective Boards of Directors of New Insurer and Holdings have each
duly approved the merger contemplated by this Plan (the "Merger") upon the terms
and subject to the conditions set forth in this Plan and in accordance with
California Corporations Law and the California Insurance Law, with the result
that the Company shall be merged with and into New Insurer and the Eligible
Members of the Company shall receive, pursuant to the Merger, shares of the
Common Stock, par value $.0001 per share, of Holdings (the "Common Stock").
WHEREAS, the Company intends to prepare and mail to all Eligible Members of
the Company a proxy statement with respect to a special meeting (the "Special
Meeting") of Members of the Company at which Eligible Members will be asked to
approve this Plan.
WHEREAS, the parties entered into a plan and agreement of merger, dated
March 21, 1996, relating to the Merger (the "Original Plan"); and
WHEREAS, the parties desire to amend and restate the Original Plan by
entering into this Plan, and the parties intend for the terms and conditions of
this Plan to supersede all terms and conditions of the Original Plan.
AGREEMENT
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained and for other good and valuable consideration the receipt and
adequacy of which are hereby acknowledged, Holdings, New Insurer and the Company
hereby agree as follows:
ARTICLE I
THE MERGER
1.1 The Merger. Subject to the conditions of Article VII being satisfied
or duly waived, and in accordance with and subject to (i) the provisions of this
Plan, (ii) the California Corporations Law and
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(iii) the California Insurance Law, the Company shall be merged with and into
New Insurer in the Merger. At and after the Effective Time, the separate
existence of the Company (except as may be continued by operation of law) shall
cease, and the New Insurer shall continue as the surviving corporation under the
corporate name it possesses immediately prior to the Effective Time. The Company
and the New Insurer are sometimes hereinafter referred to as the "Constituent
Entities" and New Insurer is sometimes hereinafter referred to as the "Surviving
Corporation."
1.2 Effective Time of the Merger. The Merger shall become effective at the
time (herein called the "Effective Time") this Plan is filed with the Secretary
of State of the State of California in the manner provided under Section 1113(g)
of the California Corporations Law and Section 1556(a) of the California
Insurance Law. The day on which the Effective Time occurs is hereinafter called
the "Effective Date." The Effective Date shall be such date as the Board of
Governors and the Boards of Directors of Holdings and New Insurer determine is
appropriate after the conditions set forth herein have been satisfied or waived.
1.3 Effect of the Merger. At the Effective Time, the effect of the Merger
shall be as provided in the applicable provisions of the California Corporations
Law and the California Insurance Law, including, without limitation, Section
1107 of California Corporations Law and Section 1557 of the California Insurance
Law. Without limiting the generality of the foregoing, and subject thereto, at
the Effective Time all the rights and property of the Company shall accrue to,
and become the rights and properties of, the Surviving Corporation, which shall
succeed to and assume all the obligations and liabilities (including
policyholder obligations and liabilities) of the Company; and all rights of
creditors (including policyholders) and liens of the Company shall become the
rights of creditors (including policyholders) and liens of the Surviving
Corporation. After the Effective Time, any reference to the Company in any
writing, including but not limited to any power or powers of attorney or agency
agreement or agreements authorizing the execution of any surety bonds or
contracts or policies of insurance, or authorizing the acceptance of service of
process or any other act on behalf of the Constituent Entities and any and all
other contracts, policies, agreements, instruments and documents to which either
Constituent Entity is a party, whether executed or taking effect before or after
the Merger, shall be deemed a reference to the Surviving Corporation if not
inconsistent with the other provisions of such writing, and all such writings
are hereby ratified, confirmed and approved by the Surviving Corporation, and
the Surviving Corporation shall be deemed to be substituted in the place and
stead of either Constituent Entity as a party thereto.
1.4 Subsequent Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger or otherwise to
carry out this Plan, the officers and directors of the Surviving Corporation
shall be authorized to execute and deliver, in the name and on behalf of the
Company, all such xxxxx, xxxx of sale, assignments and assurances and to take
and do, in the name and on behalf of such corporation or otherwise, all such
other actions and things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under such rights,
properties or assets in the Surviving Corporation or otherwise to carry out this
Plan.
1.5 Governing Documents. The Articles of Incorporation and Bylaws of New
Insurer shall be the Articles of Incorporation and Bylaws of the Surviving
Corporation, as in effect immediately prior to the Effective Time, until
thereafter amended as provided therein and under California Corporations Law.
1.6 Directors and Officers. The members of the Board of Directors of the
New Insurer immediately prior to the Effective Time will be the initial
directors of the Surviving Corporation, and the officers of the New Insurer
immediately prior to the Effective Time will be the initial officers of the
Surviving Corporation, in each case until their successors are duly elected and
qualified.
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ARTICLE II
CONVERSION OF MEMBERSHIP INTERESTS,
ALLOCATION AND PAYMENT OF MERGER CONSIDERATION
2.1 Certain Definitions. As used in this Article II and elsewhere in this
Plan, the terms listed below shall have the following meanings:
"Approval Date" means the date that the Commissioner, pursuant to Section
1552 of the California Insurance Law, approves this Plan for submission to the
Eligible Members for approval.
"Attorney-in-Fact" means SCPIE Management Company, a California corporation
that is the Company's attorney-in-fact.
"California Department" means the Department of Insurance of the State of
California.
"Commissioner" means the Commissioner of Insurance of the California
Department, or such governmental officer, body or authority as may succeed such
Commissioner as the primary regulator of the Company's insurance business under
applicable law.
"Earned Premiums" means, for the applicable period, earned premiums in
respect of a Policy.
"Eligible Member" means a Person who is a Member of the Company on the
Approval Date.
"Eligible Policy" means a Policy issued to an Eligible Member on which
premiums were earned at any time, provided, however, that with respect to a
Policy issued to an Eligible Member who was not a Member on March 21, 1996,
Earned Premiums for such a Policy shall consist only of earned premiums
following March 21, 1996, and not earned premiums at any point prior to such
date.
"Fair Market Value" means (i) the average closing price of a share of the
Common Stock on the principal exchange on which the Common Stock is then
trading, if any, on the first five trading days following the Effective Date; or
(ii) if the Common Stock is not traded on an exchange but is quoted on Nasdaq or
a successor quotation system, (1) the average last sales price (if the Common
Stock is then listed as a National Market Issue under the NASD National Market
System) or (2) the average of the mean between the closing representative bid
and asked prices (in all other cases) for the Common Stock on the first five
trading days following the Effective Date as reported by Nasdaq or such
successor quotation system.
"Initial Public Offering" means the initial public offering by Holdings of
shares of Common Stock pursuant to an effective registration statement on Form
S-1.
"Initial Stock Price" means the price per share to the public at which the
Common Stock is sold in the Initial Public Offering.
"Member," "subscriber" and "insured person." A Person is a Member of the
Company if such Person is a subscriber who is an "insured person" under the name
of the Company through the facilities of the Attorney-in-Fact acting on behalf
of the several subscribers. The term "subscriber" shall include those Persons
who have executed a Subscription Agreement and Power of Attorney or any like
agreement of the Company. The term "insured person" shall include (a) each
individual physician, surgeon, nurse anesthetist, professional medical
partnership, professional medical corporation or other health care provider to
whom or which a policy of insurance has been issued by the Company as "named
insured," and (b) each physician, surgeon, nurse anesthetist or other health
care provider to whom a certificate insert (naming such person as a "physician
member" or "certificate holder") has been issued as part of a policy of
insurance issued by the Company to a professional medical partnership,
professional medical corporation or other health care provider. A "named
insured" under a policy of insurance ceases to be an insured person, subscriber
and Member when the "policy period" of such policy terminates by expiration of
time, cancellation or any other reason and a "physician member" or "certificate
holder" ceases to be an insured person, subscriber and Member when the "coverage
period" or "certificate period" under the applicable policy terminates by
expiration of time cancellation, or any other reason.
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"Merger Shares" means the shares of Common Stock to be delivered (i) to
Members upon conversion of their Membership Interests by virtue of the Merger
and (ii) to New Insurer as consideration for the cancellation of the shares of
Common Stock held by the Company, which cancellation shall occur immediately
prior to the Merger as set forth in Section 2.5.
"Person" means an individual, corporation, joint venture, limited liability
company, partnership, association, trust, trustee, unincorporated entity,
organization or government or any department or agency thereof.
"Policy" means an insurance policy issued by the Company but does not
include (i) any agreement pursuant to which the Company has ceded or assumed
insurance or (ii) a reporting endorsement.
2.2 Conversion of Membership Interests. At the Effective Time, by virtue
of the Merger and without any action on the part of the Company, New Insurer,
Holdings, the Surviving Corporation or the holder of any of the following
securities:
(a) The rights of Members of the Company arising under the
subscription agreements between Members and the Company (the "Subscription
Agreements"), the Company's Bylaws, the California Insurance Law and
otherwise, including, without limitation, the right to vote for members of
the Board of Governors and on other matters and to participate in any
distribution of surplus on liquidation of the Company (but not including
contractual rights arising under Policies (the "Membership Interests"), in
existence immediately prior to the Effective Time shall be cancelled and
extinguished and be converted into the right to receive shares of Common
Stock as set forth in this Agreement.
(b) The Members entitled to receive Merger Shares shall be the
Eligible Members. The Merger Shares shall be allocated among the Eligible
Members as described in this Article II.
(c) Each share of common stock of New Insurer issued and outstanding
immediately prior to the Effective Time shall be converted into and become
one validly issued, fully paid and nonassessable share of common stock of
the Surviving Corporation.
2.3 Allocation of Merger Shares.
(a) The number of Merger Shares allocable to each Eligible Member
shall be determined as follows:
(i) Each Eligible Member shall be allocated a number of shares of
Common Stock equal to the product of x and y, where
"x" equals 9,000,000 shares of Common Stock and
"y" equals the ratio of the Earned Premiums of such Eligible Member
on Eligible Policies to the total Earned Premiums of all Eligible
Members on Eligible Policies during the period beginning on January 1,
1993 and ending on but including the Approval Date,
plus
(ii) Each Eligible Member who was also a Member on March 21, 1996
shall be allocated a number of shares of Common Stock equal to 1,000,000
shares of Common Stock divided by the total number of Eligible Members who
were also Members on March 21, 1996.
(b) The number of Merger Shares allocable to New Insurer shall be (i)
500,000 or (ii) such other number as the Board of Directors of Holdings and
the Board of Governors of the Company determine is appropriate in order to
insure that the Merger Shares issued to New Insurer pursuant to the Merger
have a fair market value equivalent to the fair market value of the shares
of Common Stock held by the Company which are to be cancelled in the Merger
pursuant to Section 2.5 hereof.
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2.4 Fractional Shares. No fractional shares of Common Stock shall be
issued to any Eligible Member upon surrender of Membership Interests. In lieu of
any fractional shares, each Eligible Member shall be paid an amount in cash
(without interest) rounded to the nearest cent, determined (i) by multiplying
(a) the Initial Stock Price by (b) the fractional interest to which such
Eligible Member would otherwise be entitled or (ii) in the event that the
Initial Public Offering does not occur on the Effective Date, by multiplying (a)
the Fair Market Value by (b) the fractional interest to which such Eligible
Member would otherwise be entitled.
2.5 Cancellation and Issuance of Holdings Stock. At the Effective Time, by
virtue of the Merger and without any action on the part of the Company, New
Insurer, Holdings or the Surviving Corporation:
(a) the Common Stock of Holdings held by the Company shall be
cancelled; and
(b) the Merger Shares allocable to New Insurer pursuant to Section
2.3(b) shall be issued.
2.6 Issuance of Consideration. As soon as reasonably practicable after the
Effective Date, Holdings shall prepare and issue (i) stock certificates
representing the Merger Shares allocated to each Eligible Member and to New
Insurer, and (ii) checks representing the cash paid in lieu of fractional
shares, as calculated pursuant to Section 2.4 hereof.
2.7 No Further Interest in the Company. As of the Effective Time, each
Member of the Company shall cease to be a Member, and shall have no further
interest in the Company or the Surviving Corporation, except for such interest
that each such Member may have as a holder of Common Stock.
ARTICLE III
APPROVAL BY THE COMMISSIONER
3.1 Commissioner's Approval. This Plan is subject to the approval of the
Commissioner pursuant to Sections 1552 et. seq. of the California Insurance Law.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES BY THE COMPANY
The Company represents and warrants to Holdings that, as of the date of
this Plan and as of the Effective Time:
4.1 Organization and Qualification. The Company is a reciprocal or
inter-insurance exchange duly organized, validly existing and in good standing
under the laws of the State of California. The Company has all requisite power
and authority required for it to own (or lease) and use its properties and carry
on its business as presently conducted. The Company is duly qualified or
licensed to do business, and is in good standing, in each jurisdiction where the
nature of business or the character of its properties makes necessary such
qualifications or licensing, except where the failure to so qualify would not
materially adversely affect the condition (financial or otherwise), results of
operations, business, properties or prospects of the Company taken as a whole.
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4.2 Authority Relative to this Plan; Recommendation to Eligible
Members. The Company has full right, power, and authority to execute, deliver
and perform the terms of this Plan. Subject only to favorable action by the
Company's Eligible Members at the Special Meeting referred to in Section 6.2,
the execution, delivery and performance of this Plan by the Company have been
duly and validly authorized and approved by all required action on the part of
the Company. The Company's Board of Governors has unanimously approved the
execution, delivery and performance of this Plan. Subject only to approval of
the Company's Eligible Members as described above, this Plan constitutes the
valid and binding agreement of the Company and is enforceable in accordance with
its terms.
4.3 Compliance. Neither the execution and delivery of this Plan by the
Company nor the consummation of the transactions contemplated hereby nor
compliance by the Company with any of the provisions hereof will (i) violate,
conflict with, or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or accelerate the
performance required by, or result in a right of termination or acceleration
under, or result in the creation of any lien, security interest, charge or
encumbrance upon any of the properties or assets of the Company under any of the
terms, conditions or provisions of (a) the management agreement between the
Company and the Attorney-in-Fact, or the Company's Bylaws or (b) any material
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which the Company or any direct or indirect
subsidiary of the Company is a party, or to which any of them, or any of their
respective properties or assets, may be subject, or (ii) subject to compliance
with the statutes and regulations referred to in the next paragraph, violate any
judgment, ruling, order, writ, injunction, decree, statute, rule or regulation
applicable to the Company or any direct or indirect subsidiary of the Company or
any of their respective properties or assets, except, in the case of each of
clauses (i) and (ii) above, for such violations, conflicts, breaches, defaults,
terminations, accelerations or creations of liens, security interests, charges
or encumbrances, which, in the aggregate, would not have a material adverse
effect on the transactions contemplated hereby or on the condition (financial or
other), business or operations of the Company and its subsidiaries taken as a
whole.
Other than in connection with or in compliance with the provisions of the
California Corporations Law, the California Insurance Law, the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Securities Act of
1933, as amended (the "Securities Act"), and the "takeover" or "blue sky" laws
of various states, no notice to, filing with, or authorization, consent or
approval of, any domestic or foreign public body or authority is necessary for
the consummation the Company of the transactions contemplated by this Plan,
except where failure to give such notice, make such filings, or obtain
authorizations, consents or approvals would, in the aggregate, not have a
material adverse effect on the transactions contemplated hereby or on the
condition (financial or other), business or operations of the Company taken as a
whole.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND NEW INSURER
Each of Holdings and New Insurer each, jointly and severally, represents
and warrants to the Company as follows:
5.1 Organization and Qualification. Holdings is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. New Insurer is a corporation duly organized, validly existing and in
good standing under the laws of the State of California. Each of Holdings and
New Insurer is duly qualified or licensed to do business, and is in good
standing, in each jurisdiction where the nature of their respective businesses
or the character of their respective properties makes necessary such
qualifications or licensing, except where the failure to so qualify would not
materially adversely affect the condition (financial or otherwise), results of
operations, business, properties or prospects of Holdings and New Insurer, taken
as a whole. New Insurer holds a certificate of authority from the
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Commissioner to transact specified classes of insurance in the State of
California, and such certificate of authority is in full force and effect.
5.2 Capitalization. As of the date of this Plan, Holdings has an
authorized capital stock of 1,000 shares of Common Stock, par value $.0001 per
share, of which 500 shares are duly and validly issued and outstanding, fully
paid and nonassessable, all of which are held by the Company. As of the date of
this Plan, New Insurer has an authorized capital stock of 100,000 shares of
common stock, par value $260.00 per share, of which 10,000 shares are duly and
validly issued and outstanding, fully paid, nonassessable, all of which are held
by the Company.
5.3 Authority Relative to this Plan. Each of Holdings and New Insurer has
full corporate power and authority to execute and deliver this Plan and to
perform its respective obligations hereunder. All corporate action required on
the part of Holdings and New Insurer in order to authorize such execution,
delivery and performance has been taken. This Plan constitutes the valid and
binding obligation of each of Holdings and New Insurer, enforceable against each
in accordance with its terms.
5.4 Compliance. Neither the execution and delivery of this Plan by
Holdings and New Insurer nor the consummation of the transactions contemplated
hereby nor compliance by Holdings and New Insurer with any of the provisions
hereof will (i) violate, conflict with, or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of termination or
acceleration under, or result in the creation of any lien, security interest,
charge or encumbrance upon any of the properties or assets of Holdings or New
Insurer or any other direct or indirect subsidiary under any of the terms,
conditions or provisions of (a) the respective charters or bylaws of Holdings or
New Insurer or (b) any material note, bond, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or obligation to which Holdings or
New Insurer is a party, or to which either of them, or any of their respective
properties or assets, may be subject, or (ii) subject to compliance with the
statutes and regulations referred to in the next paragraph, violate any
judgment, ruling, order, writ, injunction, decree, statute, rule or regulation
applicable to Holdings or New Insurer or any of their respective properties or
assets, except, in the case of each of clauses (i) and (ii) above, for such
violations, conflicts, breaches, defaults, terminations, accelerations or
creations of liens, security interests, charges or encumbrances, which, in the
aggregate, would not have a material adverse effect on the transactions
contemplated hereby or on the condition (financial or other), business or
operations of Holdings and its subsidiaries taken as a whole.
Other than in connection with or in compliance with the provisions of the
California Corporations Law, the California Insurance Law, the Exchange Act, the
Securities Act, and the "takeover" or "blue sky" laws of various states, no
notice to, filing with, or authorization, consent or approval of, any domestic
or foreign public body or authority is necessary for the consummation by
Holdings or New Insurer of the transactions contemplated by this Plan, except
where failure to give such notice, make such filings, or obtain authorizations,
consents or approvals would, in the aggregate, not have a material adverse
effect on the transactions contemplated hereby or on the condition (financial or
other), business or operations of Holdings and New Insurer taken as a whole.
ARTICLE VI
ADDITIONAL AGREEMENTS
6.1 Cooperation. Subject to the terms and conditions herein provided, each
of the parties hereto agrees to use all reasonable efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary,
proper or advisable to consummate and make effective as promptly as practicable
the transactions contemplated by this Plan and to cooperate with each other in
connection with the foregoing, including using its best efforts to:
(a) prepare and file with the California Department as soon as is
reasonably practicable all necessary permit applications and other
necessary registrations and filings, including, but not limited
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to, all filings and other submissions of information to governmental
authorities with respect to the transactions contemplated by this Plan, and
use its best efforts to obtain such permits and approvals as promptly as
possible;
(b) prepare and file with the SEC as soon as is reasonably practicable
a Registration Statement, including a proxy statement/prospectus (the
"Registration Statement") with respect to the transactions contemplated by
this Plan, and use its best efforts to have such Registration Statement
declared effective by the SEC under the Securities Act as promptly as
possible;
(c) mail, as soon as is reasonably practicable after receiving any
required regulatory approvals, a proxy statement, together with a form of
proxy, with respect to the meeting of the Company's Eligible Members at
which the Eligible Members of the Company will vote upon this Plan and the
Merger (the "Proxy Statement"). The term "Proxy Statement" shall mean such
proxy or information statement at the time it initially is mailed to the
Company's Eligible Members and all amendments or supplements thereto, if
any, similarly filed and mailed. The information provided and to be
provided by the Company, Holdings and New Insurer, respectively, for use in
the Proxy Statement shall, on the date the Proxy Statement is first mailed
to the Company's Eligible Members and on the date of the meeting of the
Company's Eligible Members referred to in Section 6.2, be true and correct
in all material respects and shall not omit to state any material fact
necessary in order to make such information not misleading, and each of the
Company, Holdings and New Insurer agrees to correct any information
provided by it for use in the Proxy Statement that shall have become false
or misleading;
(d) take all such actions as may be required under state blue sky or
securities laws in connection with the transactions contemplated by this
Plan;
(e) arrange for the listing of the Common Stock on a national
securities exchange;
(f) obtain all necessary waivers, consents and approvals from other
parties to material loan agreements, leases and other contracts;
(g) obtain all necessary consents, approvals and authorizations as are
required to be obtained under any Federal, state or foreign law or
regulations;
(h) defend all lawsuits or other legal proceedings, formal or
informal, challenging this Plan or the consummation of the transactions
contemplated hereby; and
(i) lift, rescind or mitigate the effect of any injunction or
restraining order or other order adversely affecting the ability of the
parties to consummate the transactions contemplated hereby.
6.2 Special Meeting of Eligible Members of the Company. (a) After approval
by the Commissioner of this Plan pursuant to Section 1552 of the California
Insurance Law, the Company shall take all action necessary, in accordance with
California Corporations Law, the California Insurance Law, the Subscription
Agreements and the Company's Bylaws, to convene the Special Meeting of the
Eligible Members as promptly as practicable to consider and vote upon this Plan
and the Merger.
(b) The record date for the Special Meeting shall be the Approval Date.
(c) Each Eligible Member shall be entitled to vote in person or by proxy in
a manner to be prescribed by the Commissioner and the Company's Bylaws;
provided, however, that any vote cast shall be by ballot and not viva voce.
(d) The Proxy Statement shall contain the recommendation of the Board of
Governors that the Eligible Members of the Company vote to adopt and approve the
Merger and this Plan.
(e) The Company shall use its best efforts to solicit from Eligible Members
proxies in favor of such adoption and approval and to take all other action
necessary or, in the reasonable judgment of the Company, helpful to secure the
vote or consent of the Eligible Members.
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(f) The Company shall mail notice of the Special Meeting to all Eligible
Members. Such notice shall set forth the reasons for the Special Meeting and the
time and place of the Special Meeting, and shall enclose a proxy for each
Eligible Member. Such notice and proxy shall be mailed by first class mail to
the address of each Eligible Member, as such address appears on the records of
the Company, at least 35 days prior to the Special Meeting, and such notice and
proxy shall be in a form satisfactory to the Commissioner. Notice of the Special
Meeting shall be accompanied by information relevant to the Special Meeting.
(g) Notice of the Special Meeting also shall be given by the Company
through publication in a newspaper of general circulation in Los Angeles County,
State of California, the county of the Company's principal place of business.
Such publication shall be made at least twice and shall be published in a
business day edition of the newspaper. Such publication shall be made at least
30 days prior to the Special Meeting.
(h) The affirmative vote of the Eligible Members required for adoption and
approval of this Plan and the Merger shall be 66 2/3% of the Eligible Members.
6.3 Officers' and Directors' Insurance; Indemnification. It is understood
and agreed that the Company shall indemnify and hold harmless and, after the
Effective Time, the Surviving Corporation will indemnify and hold harmless, each
present and former member of the Board of Governors and officer of the Company,
and each director and officer of the Attorney-in-Fact (the "Indemnified
Parties") to the full extent permitted by applicable law against any losses,
claims, damages, liabilities, costs, expenses, judgments and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to any action or omission which
arises out of or relates to the transactions contemplated by this Plan, and the
Company and the Surviving Corporation, as the case may be, will advance expenses
to each such person upon receipt of an undertaking to: (i) repay such amount if
it shall be determined ultimately that such person is not entitled to
indemnification under the applicable law; and (ii) reasonably cooperate with the
Company (of, after the Effective Time, the Surviving Corporation) concerning the
action, suit, proceeding or investigation. In the event any such claim, action,
suit, proceeding or investigation is brought against any Indemnified Party
(whether arising before or after the Effective Time), (a) the Indemnified
Parties may retain counsel satisfactory to them and the Company (or them and the
Surviving Corporation after the Effective Time), (b) the Company (or after the
Effective Time, the Surviving Corporation) shall pay all reasonable fees and
expenses of such counsel for the Indemnified Parties promptly as statements
therefor are received, and (c) the Company (or after the Effective Time, the
Surviving Corporation) will use its best efforts to assist in the vigorous
defense of any such matter, provided, that neither the Company nor the Surviving
Corporation shall be liable for any such settlement effected without their
written consent, which consent, however, shall not be unreasonably withheld. Any
Indemnified Party wishing to claim indemnification under this Section 6.3, upon
learning of any such claim, action, suit, proceeding or investigation, shall
notify the Company or the Surviving Corporation thereof and shall deliver to the
Company or the Surviving Corporation an undertaking to repay any amounts
advanced pursuant hereto when and if a court of competent jurisdiction shall
ultimately determine, after exhaustion of all avenues of appeal, that such
Indemnified Party was not entitled to indemnification under this Section. In
addition, upon the occurrence of the Effective Time, New Insurer shall be deemed
expressly to have assumed any obligations of the Company to its directors and
officers for indemnification, whether under the Company's Bylaws or the
Subscription Agreements, or otherwise, for acts or occurrences prior to the
Effective Time. This Section 6.3 shall survive the consummation of the Merger.
6.4 Continuity of Obligations Regarding Policyholders. It is understood
and agreed that after the Effective Time: (i) the Surviving Corporation shall be
a corporation of the State of California authorized to transact insurance under
the California Insurance Law, (ii) the policyholders of the Company prior to the
Effective Time shall become policyholders of the Surviving Corporation; (iii)
the Surviving Corporation shall, as required by Section 1070.6(b) of the
California Insurance Law, be available to such policyholders to obtain policy
changes and endorsements, to receive payment of premiums and refund unearned
premiums, to serve notice of claim, proof of loss, summons, process and other
papers, and for purposes
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of suit; and (iv) the Surviving Corporation shall timely file with the
Commissioner the financial statements and tax returns required by Section
1070.6(c) of the California Insurance Law, and shall timely pay all taxes found
to be due relating to the business of the Company in the State of California
during the calendar year of the Merger, in accordance with said Section
1070.6(c).
ARTICLE VII
CONDITIONS PRECEDENT
7.1 Conditions to Obligations of Each Party to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the fulfillment at or prior to the Effective Time of the following conditions:
(a) the Registration Statement shall have become effective under the
Securities Act and no stop order with respect to the Registration Statement
shall have been issued;
(b) all consents, authorizations, orders or approvals of the
California Department and any other governmental commission, board or other
regulatory body that the parties mutually agree are essential to effect the
Merger and for New Insurer to conduct the business of New Insurer and the
Company in substantially the same matter as now conducted shall have been
received;
(c) this Plan and the Merger shall have been approved and adopted by
the requisite vote or consent of the Eligible Members of the Company
required by California Corporations Law and California Insurance Law, by
the requisite vote or consent of the shareholders of New Insurer required
by California Corporations Law; and by the requisite vote or consent of the
stockholder of Holdings;
(d) the Company shall have received either a private letter ruling
from the Internal Revenue Service, or an opinion from a law firm of
recognized standing, to the effect that for Federal income tax purposes,
the Eligible Members generally will recognize no gain or loss on the
exchange of their Membership Interests for shares of Common Stock pursuant
to the Merger;
(e) the Company shall have contributed, for no consideration, all of
the outstanding shares of Common Stock of New Insurer to Holdings;
(f) no preliminary or permanent injunction or other order, decree or
ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or commission nor any statute, rule,
regulation or executive order promulgated or enacted by any governmental
authority shall be in effect, which would prevent the consummation of the
Merger or make the consummation of the Merger illegal; and
(g) prior to the Effective Time, the Company and Holdings shall have
received from an investment banking firm of recognized standing an opinion
that the exchange of the aggregate Membership Interests for the Merger
Shares and the cash in lieu of fractional shares to be paid to the Eligible
Members in the Merger in the aggregate is fair, from a financial point of
view, to the Eligible Members as a group.
ARTICLE VIII
TERMINATION
8.1 Termination. This Plan may be terminated, and the Merger contemplated
herein may be abandoned, at any time prior to the Effective Time, whether prior
to or after approval of the Merger by the Eligible Members:
(a) by mutual written consent of the Board of Directors of Holdings,
the Board of Directors of New Insurer and the Board of Governors of the
Company; or
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(b) by the Company, if New Insurer or Holdings breaches in any
material respect any of its covenants or agreements contained in this Plan;
or
(c) by Holdings, if the Company breaches in any material respect any
of its covenants or agreements contained in this Plan; or
(d) by either Holdings or the Company:
(i) if the Merger has not been consummated prior to December 31,
1996; or
(ii) if any court of competent jurisdiction or other governmental
body shall have issued an order, decree or ruling, or taken any other
action restraining, enjoining or otherwise prohibiting the Merger and
such order, decree, ruling or other action shall have become final and
non-appealable.
8.2 Effect of Termination. In the event of the termination of this Plan as
provided in Section 7.1, this Plan shall forthwith become void, and there shall
be no liability on the part of the Company, Holdings or New Insurer, except as
described in Section 6.3 and as set forth in the last sentence of this Section
8.2. Nothing contained in this Section 8.2 shall relieve the Company, Holdings
or New Insurer from liability for any breach of this Plan.
ARTICLE IX
GENERAL PROVISIONS
9.1 Amendment. This Plan may be amended by an instrument in writing signed
on behalf of each of the parties hereto; provided, however, that after approval
of the Merger by the Eligible Members, no amendment may be made which under
applicable law requires further approval of Eligible Members without such
further approval of Eligible Members.
9.2 Extension; Waiver. At any time prior to the Effective Time any party
hereto may (i) extend the time for the performance of any of the obligations or
other acts of any other party hereto; (ii) waive any inaccuracies in the
representations and warranties contained in this Plan and (iii) waive compliance
with any of the agreements of the other parties or conditions to its own
obligations contained in this Plan. Any agreement on the part of a party hereto
to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party by a duly authorized
officer.
9.3 Nonsurvival of Representations and Warranties. The respective
representations and warranties of the Company, New Insurer and Holdings
contained herein shall expire with, and be terminated and extinguished upon,
consummation of the Merger, and thereafter none of the Company, New Insurer and
Holdings or any officer, director or principal thereof shall be under any
liability whatsoever with respect to any such representation or warranty. This
Section 9.3 shall have no effect upon any other obligation of the parties
hereto, whether to be performed before or after the consummation of the Merger.
9.4 Entire Plan. This Plan contains the entire agreement among the
Company, New Insurer and Holdings with respect to the subject matter hereof and
supersedes all prior arrangements and understandings, both written and oral,
among such parties with respect thereto.
9.5 Counterparts. This Plan may be executed in one or more counterparts,
all of which shall be considered one and same agreement and shall become binding
when one or more counterparts have been signed by each of the parties and
delivered to the other parties, it being understood that all parties need not
sign the same counterpart.
9.6 Severability. It is the desire and intent of the parties that the
provisions of this Plan be enforced to the fullest extent permissible under the
law and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, in the event that any provision of this Plan would be held
in any jurisdiction to be invalid, prohibited or unenforceable for any reason,
such provision, as to such jurisdiction, shall be ineffective, without
invalidating the remaining provisions of this Plan or affecting the
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validity or enforceability of such provision in any other jurisdiction.
Notwithstanding the foregoing, if such provision could be more narrowly drawn so
as not to be invalid, prohibited or unenforceable in such jurisdiction, it
shall, as to such jurisdiction, be so narrowly drawn, without invalidating the
remaining provisions of this Plan or affecting the validity or enforceability of
such provision in any other jurisdiction.
9.7 Notices. Any notice given by any party under this Plan (each, a
"notice") shall be in writing and shall be deemed duly given (i) when personally
delivered, or (ii) when five days have elapsed after its transmittal by
registered or certified mail, postage prepaid, return receipt requested,
addressed to the party to whom directed at that party's address as it appears
below or another address of which that party has given notice as provided
herein, or (iii) when transmitted by telex or telecopy (or equivalent service),
the sender's receiving apparatus having printed the answerback (if any) of the
addressee on a copy of the telex or telecopy message. Notices of address change
shall be effective only upon receipt notwithstanding the previous sentence.
If to the Company, to:
Southern California Physicians Insurance Exchange
0000 X. Xxxxxxx Xxxxxxxxx
P.O. Box 4015
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Telecopy No.: (000) 000-0000
If to Holdings to:
SCPIE Holdings Inc.
0000 X. Xxxxxxx Xxxxxxxxx
P.O. Box 4015
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Telecopy No.: (000) 000-0000
If to New Insurer, to:
SCPIE Indemnity Company
0000 X. Xxxxxxx Xxxxxxxxx
P.O. Box 4015
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000-0000
Telecopy No.: (000) 000-0000
In each case, with copy to:
Xxxxxx & Xxxxxxx
000 "X" Xxxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
9.8 Public Announcements. Unless otherwise required by law, prior to the
Effective Time, no news release or other public announcement pertaining to the
transactions contemplated by this Plan will be made by any party without the
prior written consent of the other party hereto.
9.9 Section Headings. The section headings contained in this Plan are
inserted for reference purposes only and shall not affect the meaning or
interpretation of this Plan.
9.10 Benefits and Assignment. This Plan is not intended to convey upon any
person other than the parties any rights or remedies hereunder. This Plan shall
not be assigned by operation of law or otherwise.
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9.11 Applicable Law. This Plan and the legal relations between the parties
hereto shall be governed by and construed in accordance with the laws of the
State of California applicable to contracts made and to be performed therein.
IN WITNESS WHEREOF, each of the parties has caused this Plan to be executed
as of the date first above written, which is sometimes referred to herein as
"the date of this Plan."
SOUTHERN CALIFORNIA PHYSICIANS
INSURANCE EXCHANGE, by SCPIE
Management Company, its
Attorney-in-Fact
By /s/ XXXXXX X. XXX
------------------------------------
Xxxxxx X. Xxx
President and Chief Executive
Officer
By /s/ XXXXXXX X. XXXXXXX, M.D.
------------------------------------
Xxxxxxx X. Xxxxxxx, M.D.
Secretary
SCPIE INDEMNITY COMPANY
By /s/ XXXXXX X. XXX
------------------------------------
Xxxxxx X. Xxx
President and Chief Executive
Officer
By /s/ XXXXXXX X. XXXXXXX, M.D.
------------------------------------
Xxxxxxx X. Xxxxxxx, M.D.
Secretary
SCPIE HOLDINGS INC.
By /s/ XXXXXX X. XXX
------------------------------------
Xxxxxx X. Xxx
President and Chief Executive
Officer
By /s/ XXXXXXX X. XXXXXXX, M.D.
------------------------------------
Xxxxxxx X. Xxxxxxx, M.D.
Secretary
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