EXHIBIT 10.21

 

RELEASE AND SEVERANCE COMPENSATION AGREEMENT

 

THIS RELEASE AND SEVERANCE COMPENSATION AGREEMENT (the “Agreement”) is between
ProAssurance Corporation, a Delaware corporation (“ProAssurance”), MEEMIC
Insurance Company, a Michigan insurance company (“MEEMIC Insurance”), MEEMIC
Holdings, Inc., a Michigan corporation (“MEEMIC Holdings”) and Christine C.
Schmitt, an individual (the “Executive”).  ProAssurance, MEEMIC Insurance, and
MEEMIC Holdings and their respective majority-owned subsidiaries are hereinafter
collectively referred to as the “Companies.”

 

RECITALS:

 

The Executive is currently rendering valuable services to MEEMIC Insurance,
which is a wholly-owned subsidiary of MEEMIC Holdings.  ProAssurance has
acquired, or will acquire, control of MEEMIC Holdings and MEEMIC Insurance in a
transaction (the “Consolidation”) that will result in a “change of control” (the
“Change of Control”) under the terms and conditions of the Change of Control
Agreement among MEEMIC Insurance, MEEMIC Holdings and the Executive effective as
of July 1, 2000 (the “Change of Control Agreement”).  The Companies have offered
to employ the Executive in an at will employment relationship after the
Consolidation and to expand protection to the Executive in the form of severance
benefits payable on termination of employment under certain circumstances after
the Consolidation on the condition that the Executive releases the Companies
from any past or future liability under the Change of Control Agreement.  The
Executive desires to continue employment with the Companies under such terms and
conditions, and with the protection afforded to the Executive by this Agreement.

 

AGREEMENT

 

NOW, THEREFORE, These Premises Considered, and in consideration of the mutual
covenants and promises in this Agreement, the sufficiency of which is hereby
acknowledged, the parties agree as follows:

 

1.                Term of Agreement.  This Agreement is subject to, and
conditioned upon, the closing (the “Closing”) of the transactions (the
“Consolidation”) contemplated by the Agreement to Consolidate by and between
Medical Assurance, Inc. and Professionals Group, Inc. dated June 22, 2000, as
amended November 1, 2000.  This Agreement is effective on the date of Closing
which is scheduled to occur on June 27, 2001, and shall continue in effect for a
period of two years from the date of Closing (the “Initial Term”).  Thereafter,
this Agreement shall automatically be extended for successive terms of one year
(a “Renewal Term”), except this Agreement may be terminated after the first
Renewal Term upon delivery of written notice of the termination of this
Agreement by any of the Companies at least six months prior to the expiration of
any Renewal Term.  If the Executive’s employment is terminated during the term
of the Agreement, the date on which the Executive’s employment terminates shall
be referred to as the “Date of Termination.”

 

2.                Severance Benefits.  If during the term of this Agreement the
Executive leaves the employment of the Company for Good Reason, as explained in
Section 4 of this Agreement, and the Executive signs the release (the “Release”)
that is attached to and incorporated in this Agreement, the Executive shall
receive the following benefits (the “Severance Benefits”):

 

(a)             An amount equal to either of whichever the following is
applicable: (i) if the Date of Termination occurs during the Initial Term, two
(2) times the Executive’s annual base salary; or (ii) if the Date of Termination
occurs during a Renewal Term, one (1) times the Executive’s annual base salary. 
The “annual base salary” of the Executive shall be defined as the Executive’s
base rate of compensation in effect as of the Date of Termination, but in no
event less than the Executive’s base rate of compensation in effect as of the
end of the last calendar quarter preceding the Date of Termination;

 

(b)            An amount equal to either of whichever of the following is
applicable: (i) if the Date of Termination occurs during the Initial Term, two
(2) times the average total annual incentive award(s) or bonus(es); or (ii) if
the Date of Termination occurs during a Renewal Term, one (1) times the average
total annual incentive award(s) or bonus(es).  The “average total annual
incentive award(s) or bonus(es)” shall mean the average of the sum of (i) cash
awards or bonuses earned with the Companies by the Executive, plus (ii) the
value of stock awarded to the Executive by the Companies for each complete
fiscal year during the last three years (whether or not deferred) or, if
shorter, over the Executive’s entire period of employment with the Companies. 
The value of stock awarded to the Executive shall be calculated based on the
value of the stock as of the date the stock was awarded to the Executive as
annual incentive compensation.  Notwithstanding the foregoing, the Executive’s
actual total annual incentive awards or bonuses shall be calculated excluding
the value of options to purchase stock which may have been awarded to the
Executive;

 

(c)             Payment of the Executive’s monthly COBRA premiums for continued
health and dental insurance coverage for the shorter of the following:  (i) 18
months if the Date of Termination occurs in the Initial Term; (ii) 12 months if
the Date of Termination occurs in the Renewal Term; (iii) until the Executive no
longer has coverage under COBRA; or (iv) until the Executive becomes eligible
for substantially similar coverage under a subsequent employer’s group health
plan; and

 

(d)                Outplacement services that are customary to Executive’s
position.

 

The cash severance benefits described in subparagraphs (a) and (b) above shall
be paid in equal monthly installments during the period that the covenants set
forth in Section 7 shall be in effect commencing upon the Date of Termination;
provided that the obligation of the Companies to pay such cash severance
benefits to the Executive shall be subject to termination under the provisions
of Section 7 hereof in the event the Executive should violate the covenants set
forth therein; and provided further that the payment of such cash severance
benefits shall be accelerated and payable in lump sum by the Companies upon a
breach of this Agreement as a result of the failure of a successor (herein
defined) to assume this Agreement as required in Section 10 of this Agreement. 
The Companies shall withhold from any amounts payable under this Agreement all
federal, state, city or other income and employment axes that shall be required.

 

The Companies shall fund the obligation to pay cash Severance Benefits by
depositing in escrow an amount equal to the sum of the amounts payable to the
Executive under subparagraphs (a) and (b) hereof (the “Escrow Funds”) with
SouthTrust Bank (or another financial institution with total assets of more than
$1,000,000,000) as escrow agent (the “Escrow Agent”).  The Escrow Funds shall be
held, invested and distributed by Escrow Agent in accordance with the following
provisions.  At the time of delivery of the Escrow Funds, the Escrow Agent shall
acknowledge receipt of the Escrow Funds and agree to be bound by the provisions
of this Agreement in a separate written document.  The Escrow Agent shall invest
the Escrow Funds in a money market account.  Unless and until the Escrow Agent
receives notice from ProAssurance that the Executive has breached this
Agreement, the Escrow Agent shall distribute the Escrow Funds to the Executive
in the same number of equal monthly installments as the number of whole calendar
months in the Restricted Period (as defined in Section 7 hereof).  The monthly
installments shall be distributed to the Executive on the first day of each
calendar month in the Restricted Period together with accrued and undistributed
earnings on the Escrow Funds.  If the Company delivers written notice to the
Escrow Agent and Executive that the cash Severance Benefits payable to Executive
are subject to termination under Section 7 of this Agreement, the Escrow Agent
shall distribute the balance of the Escrow Funds and accrued and undistributed
earnings thereon to ProAssurance unless the Escrow Agent receives a written
notice of objection from the Executive within 15 days after delivery of
ProAssurance’s notice.  If Executive provides a timely notice of objection, the
Escrow Agent shall hold the Escrow Funds until it receives a written notice of
distribution from the arbitrator appointed pursuant to Section 13 hereof or a
joint written notice of distribution from the Executive and ProAssurance.  The
failure of the Executive or the Company to deliver notice to the Escrow Agent as
herein provided shall not be a waiver of any of their respective rights under
this Agreement.

 

The Executive shall be entitled to the following in addition to and not in
limitation of the Severance Benefits:  (i) accrued and unpaid base salary as of
the Date of Termination; (ii) accrued vacation and sick leave, if any, on Date
of Termination in accordance with the then current policy of the Companies with
respect to terminated employees generally; and (iii) vested benefits under the
Companies’ employee benefit plans in which the Executive was a participant on
Date of Termination, which vested benefits shall be paid or provided for in
accordance with the terms of said employee benefit plans.  If the Executive has
regular use of a vehicle provided by the Companies for business and personal use
on Date of Termination, the Companies shall offer for sale to the Executive the
vehicle at a purchase price equal to either of the following: (x) if owned by
any of the Companies, the then current book value of the vehicle (cost less
accumulated depreciation), or (y) if leased by any of the Companies, the
purchase price upon the exercise of the purchase option, if any, under the
lease.

 

The Executive shall not be entitled to receive Severance Benefits if employment
with the Companies is terminated by reason of death of Executive, retirement of
Executive pursuant to the Company’s retirement plan as then in effect, the
Executive having reached the age of mandatory retirement (if such requirement
then exists for bona fide executives) or Disability of Executive (herein
defined); or by reason of termination of employment by the Executive without
Good Reason (herein defined); or by reason of termination of employment by the
Companies with Cause (herein defined).

 

The Executive shall be under no duty or obligation to seek or accept other
employment and shall not be required to mitigate the amount of the Severance
Benefits provided under the Agreement by seeking employment or otherwise;
provided, however, that the Executive shall be required to notify the Companies
if the Executive becomes covered by a health or dental care program providing
substantially similar coverage, at which time health or dental care continuation
coverage provided under this Agreement shall cease.

 

3.                Parachute Payments.  Subject to Section 280G of the Internal
Revenue Code of 1986, as amended (“Code”), if the board of directors of
ProAssurance determines that an excise tax under Section 4999 (“Excise Tax”)
would be due, the Executive’s Severance Benefits under this Agreement shall be
limited to the amount necessary to avoid the Excise Tax only if applying such a
limit results in a greater net benefit to the Executive than would have resulted
had the benefits not been limited and an Excise Tax paid.  For purposes of
making such computation:

 

(a)             Any other payments or benefits received or to be received by the
Executive in connection with the Change of Control or the Executive’s
termination of employment (whether pursuant to the terms of this Agreement or
any other plan, arrangement, or agreement with the Companies, or with any person
whose actions result in the Change of Control) shall be treated as “parachute
payments” within the meaning of Section 280G(b)(2) of the Code, and all “excess
parachute payments” within the meaning of Section 280G(b)(1) of the Code shall
be treated as subject to the Excise Tax, unless, in the opinion of tax counsel
selected by ProAssurance’s independent auditors, such other payments or benefits
(in whole or in part) do not constitute parachute payments, or such other
payments or benefits (in whole or in part) represent reasonable compensation for
services actually rendered within the meaning of Section 280G(b)(4) of the Code
in excess of the base amount within the meaning of Section 280G(b)(3) of the
Code, or such other payments or benefits (in whole or in part) are otherwise not
subject to the Excise Tax.  In the event an Excise Tax is due, because of
payments made under this Agreement, the Executive shall be responsible for
paying said Excise Tax.

 

(b)            The amount of the Severance Benefits that will be treated as
subject to the Excise Tax shall be equal to the lesser of: (i) the total amount
of the Severance Benefits; or (ii) the amount of excess parachute payments
within the meaning of Section 280G(b)(1) (after applying subparagraph (a)
above).

 

(c)             The value of any noncash benefits or any deferred payment or
benefit shall be determined by ProAssurance’s independent auditors in accordance
with the principles of Sections 280G(d)(3) and (4) of the Code.

 

(d)            The Executive shall be deemed to pay federal income taxes at the
highest marginal rate of federal income taxation in a calendar year in which the
Severance Benefits are to be paid, and state and local income taxes at the
highest marginal rate of taxation in the state and locality of the Executive’s
residence on the Date of Termination, net of the maximum reduction in federal
income taxes that could be obtained from deduction of such state and local
taxes.

 

In the event the Internal Revenue Service adjusts the computation in
subparagraphs (a) through (d) above, so that the Executive did not receive the
greatest net benefit, the Companies shall reimburse the Executive for the amount
necessary to make the payment of Severance Benefits to the Executive to the
extent permitted hereunder, plus a market rate of interest as determined by the
Board of Directors of ProAssurance.

 

4.                Good Reason for Termination.  In the event that the
Executive’s employment relationship with the Companies is terminated for any of
the reasons described in this Section 4, the Executive shall be entitled to
Severance Benefits, subject to and described in Section 2 of this Agreement. 
“Good Reason” shall constitute any of the following circumstances if they occur
without the Executive’s express written consent during the term of this
Agreement:

 

(a)             The Executive no longer holds an executive level position with
executive level responsibilities with the Companies consistent with the
Executive’s training and experience;

 

(b)            The Companies require that the Executive’s primary location of
employment be more than 50 miles from the location of the Executive’s primary
location of employment on June 27, 2001;

 

(c)             The failure of the Companies to provide the Executive, at a
level commensurate with the Executive’s position, the incentive compensation
opportunities and employee benefits that are provided to other executives of
comparable rank with the Companies;

 

(d)                                A breach by the Companies of any provision of
this Agreement. including without limitation, the failure of a successor to
assume this Agreement as required in Section 10 hereof;

 

(e)                                The termination of the Executive’s employment
by the Companies for a reason other than: (i) death; (ii) retirement pursuant to
the Companies’ retirement plan as then in effect; (iii) Disability as explained
in Section 5 of this Agreement; (iv) the Executive has reached the age of
mandatory retirement (if such requirement then exists for bona fide executives);
(v) for Cause, as explained in Section 6 of this Agreement;

 

(f)             A reduction by the Companies in the Executive’s base salary in
effect as of the date of this Agreement; or

 

(g)            The termination or non-renewal of this Agreement by the
Companies.

 

The Executive must provide the Companies with written notice no later than 45
calendar days after the Executive knows or should have known that Good Reason
has occurred.  Following the Executive’s Notice, the Companies shall have 45
calendar days to rectify the circumstances causing the Good Reason.  If the
Company fails to rectify the event(s) causing the Good Reason within the 45 day
period after the Executive’s Notice, or if any of the Companies delivers to the
Executive written notice stating that the circumstances cannot or shall not be
rectified, the Executive shall be entitled to assert Good Reason and terminate
employment on or before 90 days after the delivery of the Executive’s Notice. 
Should Executive fail to provide the required Notice in a timely manner, Good
Reason shall not be deemed to have occurred as a result of that event.  The
Initial Term or a Renewal Term shall not be deemed to have expired during the
Notice period, however, as long as the Executive has provided Notice within the
Term.

 

5.                Disability.  For purposes of this Agreement, Disability means
a serious injury or illness that requires the Executive to be under the regular
care of a licensed medical physician and renders the Executive incapable of
performing the essential functions of the Executive’s position for 12 months as
determined by the Board of Directors of the Companies in good faith and upon
receipt of and in reliance on competent medical advice from one or more
individuals selected by the Board of Directors, who are qualified to give
professional medical advice.

 

6.                Cause.  If the Executive’s employment is terminated for Cause,
as described below in this Section, the Executive shall not be eligible for
severance benefits and all rights of the Executive and obligations of the
Companies under this Agreement shall expire.  Cause means:

 

(a)             The Executive has been convicted in a federal or state court of
a crime classified as a felony;

 

(b)            Action or inaction by the Executive (i) that constitutes
embezzlement, theft, misappropriation or conversion of assets of the Companies
which alone or together with related actions or inactions involve assets of more
than a de minimis amount, or that constitutes fraud, gross malfeasance of duty,
or conduct grossly inappropriate to Executive’s office; and (ii) such action or
inaction has adversely affected or is likely to adversely affect the business of
the Companies or has resulted or is intended to result in direct or indirect
gain or personal enrichment of the Executive to the detriment of the Companies;

 

(c)             The Executive has been grossly inattentive to, or in a grossly
negligent manner failed to competently perform, Executive’s job duties and the
failure was not cured within 45 days after written notice from the Companies.

 

Any termination of the Executive’s employment by the Companies for Cause shall
be communicated by a notice of termination (the “Notice of Termination”) to the
Executive.  The Notice of Termination shall be a written notice indicating the
specific termination provision of this Agreement relied upon and shall set forth
in reasonable detail the facts and circumstances claimed to provide a basis for
termination of the Executive’s employment under this provision.

 

7.                Non-Competition.

 

(a)             In the event the Date of Termination occurs during the Initial
Term, the Executive (i) will be bound by and subject to any covenant not to
compete or noncompetition agreement with the Companies (or any of them) to which
the Executive was subject as of the Date of Termination (other than the
noncompetition agreement set forth in Section 7(b) hereof), or (ii) in the
alternative if the Executive is not subject to a covenant not to compete or
noncompetition agreement with the Companies (or any of them) as of the Date of
Termination (other than a covenant not to compete or noncompetition agreement
contained in an employee handbook or otherwise applicable to employees
generally), the Executive will be bound by and subject to the noncompetition
agreement set forth in subparagraph 7(b) of this Agreement.  Upon the expiration
of the Initial Term, any and all covenants not to compete or noncompetition
agreements between the Executive and the Companies (or any of them) then in
effect shall be superseded by the noncompetition agreement set forth in Section
7(b) hereof and the Executive and the Companies shall not be bound by the
provisions of any covenant not to compete or noncompetition agreement other than
the provisions of Section 7(b) hereof unless specifically agreed to in a written
document executed by the Executive and the Companies (or any of them) after the
Closing.

 

(b)            In the event that either (i) the Date of Termination occurs
during the Initial Term and the provisions of Section 7(a)(ii) hereof are
binding on the Executive, or (ii) the Date of Termination occurs during a
Renewal Term, the Executive will not during the Restricted Period (herein
defined):

 

(i)                become employed by a competitor company that is underwriting,
selling or marketing insurance products that target educators in MEEMIC’s
primary market area; or

 

(ii)                assist a competitor company to develop insurance products
that target educators and that will be marketed or sold in MEEMIC’s primary
area; or

 

(iii)                solicit or induce any other employees of the Companies to
leave such employment or accept employment with any other person or entity, or
solicit or induce any insurance agent of the Companies to offer, sell or market
insurance products that target educators in MEEMIC’s primary market area, other
than on behalf of MEEMIC.

 

“Competitor company” means an insurance company, insurance agency, business, for
profit or not for profit organization (other than the Companies) which is
engaged directly or indirectly in underwriting, selling or marketing any
insurance product that targets educators.

 

“Educators” means teachers, administrators and other employees of public and
private school systems (including colleges and universities).

 

“Primary market area” means the state of Michigan and any other state in which
MEEMIC Insurance derived more than $5 million in direct written premiums from
the sale of personal auto and homeowners insurance in the most recent complete
fiscal year prior to the Date of Termination.

 

“Restricted Period” means as applicable either (i) if the Date of Termination
occurs within the Initial Term, a period of 24 months from such Date of
Termination; or (ii) if the Date of Termination occurs within a Renewal Term, a
period of 12 months from such Date of Termination.

 

“Employed” includes activities as an owner, proprietor, employee, agent,
solicitor, partner, member, manager, principal, shareholder (owning more than 1%
of the outstanding stock), consultant, officer, director or independent
contractor.

 

“Companies” means any company that is a subsidiary of ProAssurance, now or in
the future, and any other company that has succeeded to the business of any of
the Companies.

 

If the Executive is deemed to have materially breached the non-competition
covenants set forth in Section 7 of this Agreement, the Companies may, in
addition to seeking an injunction or any other remedy they may have, withhold or
cancel any remaining payments or benefits due to the Executive pursuant to
Section 2 of this Agreement.  The Companies shall give prior or contemporaneous
written notice of such withholding or cancellation of payments in accordance
with Section 2 hereof.  If the Executive violates any of these restrictions, the
Companies shall be further entitled to an immediate preliminary and permanent
injunctive relief, without bond, in addition to any other remedy which may be
available to the Companies.

 

Both parties agree that the restrictions in this Agreement are fair and
reasonable in all respects, including the geographic and temporal restrictions,
and that the benefits described in this Agreement, to the extent any separate or
special consideration is necessary, are fully sufficient consideration for the
Executive’s obligations under this Agreement.

 

8.                Confidentiality.  Executive will remain obligated under any
confidentiality or nondisclosure agreement with the Companies (or any of them)
that is currently in effect or to which the Executive may in the future be
bound.  In the event that the Executive is at any time not the subject of a
separate confidentiality or nondisclosure agreement with the Companies (or any
of them), Executive expressly agrees that Executive shall not use for the
Executive’s personal benefit, or disclose, communicate or divulge to, or use for
the direct or indirect benefit of any person, firm, association or company any
confidential or competitive material or information of the Companies or their
subsidiaries, including without limitation, any information regarding insureds
or other customers, actual or prospective, and the contents of their files;
marketing, underwriting or financial plans or analyses which is not a matter of
public record; claims practices or analyses which are not matters of public
record; pending or past litigation in which the Companies have been involved and
which is not a matter of public record; and all other strategic plans, analyses
of operations, computer programs, personnel information and other proprietary
information with respect to the Companies which are not matters of public
record.  Executive shall return to the Companies promptly, and in no event later
than the Date of Termination, all items, documents, lists and other materials
belonging to the Companies or their subsidiaries, including but not limited to,
credit, debit or service cards, all documents, computer tapes, or other business
records or information, keys and all other items in the Executive’s possession
or control.

 

9.                Release of Change of Control Agreement.  In consideration of
the continued employment of the Executive by the Companies after the Change of
Control and the obligation of the Companies to pay the Executive Severance
Benefits as herein provided, the Executive hereby waives, releases and forever
discharges the Companies and each of their direct or indirect parents,
subsidiaries, affiliates and related entities, and all present or former
employees, officers, agents, directors or representatives of any of them, from
any and all claims, charges, suits, causes of action, demands, expenses and
compensation whatsoever, known or unknown, direct or indirect, on account of or
growing out of the Executive’s Change of Control Agreement, including, without
limitation, the payment of severance benefits as provided thereunder.  Executive
hereby further agrees that he will not institute any suit or action at law, in
equity or otherwise against the Companies or any of their direct or indirect
parents, subsidiaries, affiliates and related entities, or the present or former
employees, officers, agents, directors, or representatives of any of them and
their respective successors and assigns, nor will the Executive ever institute,
prosecute, or in any way aid in the institutional prosecution of any claim,
demand, action or cause of action for damages, costs, expenses, penalties,
fines, compensation or equitable relief, for or on account of any damage, loss
or injury to either person or property or both, whether developed or
undeveloped, resulting or to result, known or unknown, which Executive ever had,
now has, or which Executive or his successors and assigns may in the future have
against any of said persons in connection with the Change of Control Agreement
of the Executive.

 

The Executive acknowledges and agrees that Executive has been advised in writing
by this Agreement, and otherwise, to CONSULT WITH AN ATTORNEY before Executive
enters into this Agreement.  The Executive agrees that the Executive received
and read a copy of this Agreement prior to executing the same.

 

10.                Successors of ProAssurance.  ProAssurance will require any
successor (herein defined) to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Companies would be
required to perform this Agreement if no such succession had taken place. 
Failure of ProAssurance to obtain such agreement prior to the effectiveness of
any such succession shall be a breach of this Agreement and shall entitle the
Executive to terminate employment for Good Reason and receive Severance Benefits
as provided in Section 2 hereof.  Reference to the Companies in this Agreement
shall include any successor which assumes and agrees to perform this Agreement
by operation of law or otherwise.

 

The term “successor” means any Person, as defined by Section 3(a)(9) of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) other than a
Person in control of the Companies immediately after completion of the Change of
Control transaction, that either (i) becomes the Beneficial Owner, as defined by
Rule 13d-3 of the General Rules and Regulations under the Exchange Act, directly
or indirectly, of the securities of ProAssurance representing more than 50.1% of
the combined voting power of the then outstanding securities of ProAssurance;
(ii) purchases or otherwise acquires substantially all of the assets of the
Companies such that the Companies cease to function on a going forward basis as
an insurance holding company system that provides medical professional liability
insurance; or (iii) survives a merger, consolidation or reorganization that
results in less than 50.1% of the combined voting power of ProAssurance or such
surviving entity being owned by stockholders of ProAssurance immediately
preceding such merger, consolidation or reorganization.

 

11.                Notice.  For purposes of this Agreement, notices and all
other communications provided for in this Agreement shall be in writing and
shall be deemed to have been duly given when delivered by hand or commercial
courier or mailed by certified or registered mail, return receipt requested,
postage prepaid, addressed to the respective addresses as set forth below or to
such other address as one party may have furnished to the other in writing in
accordance herewith.

 

 

Notice to the Executive:

 

Christine C. Schmitt

MEEMIC Insurance Company

691 Squirrel Road

Suite 200

Auburn Hills, MI  48326

 

Notice to the Companies:

 

ProAssurance Corporation

Mailing Address:

P. O. Box 590009

Birmingham, Alabama 35259-0009

Street Address:

100 Brookwood Place

Birmingham, Alabama 35209

Attention: Chairman of the Board

 

12.                Claims Procedure.

 

(a)             The administrator for purposes of this Agreement shall be
ProAssurance (“Administrator”), whose address is 100 Brookwood Place,
Birmingham, Alabama 35209; Telephone: (205) 877-4400.  The “Named Fiduciary” as
defined in Section 402(a)(2) or ERISA, also shall be ProAssurance.  ProAssurance
shall have the right to designate one or more employees of the Companies as the
Administrator and the Named Fiduciary at any time, and to change the address and
telephone number of the same.  ProAssurance shall give the Executive written
notice of any change in the Administrator and Named Fiduciary, or in the address
or telephone number of the same.

 

(b)            The Administrator shall make all determinations as to the right
of any person to receive benefits under the Agreement.  Any denial by the
Administrator of a claim for benefits by the Executive (“the claimant”) shall be
stated in writing by the Administrator and delivered or mailed to the claimant
within ten (10) days after receipt of the claim, unless special circumstances
require an extension of time for processing the claim.  If such an extension is
required, written notice of the extension shall be furnished to the claimant
prior to the termination of the initial 10-day period.  In no event shall such
extension exceed a period of ten (10) days from the end of the initial period. 
Any notice of denial shall set forth the specific reasons for the denial,
specific reference to pertinent provisions of this Agreement upon which the
denial is based, a description of any additional material or information
necessary for the claimant to perfect the claim, with an explanation of why such
material or information is necessary, and any explanation of claim review
procedures, written to the best of the Administrator’s ability in a manner that
may be understood without legal or actuarial counsel.

 

(c)             A claimant whose claim for benefits has been wholly or partially
denied by the Administrator may request, within ten (10) days following the
receipt of such denial, in a writing addressed to the Administrator, a review of
such denial.  The claimant shall be entitled to submit such issues or comments
in writing or otherwise, as the claimant shall consider relevant to a
determination of the claim, and the claimant may include a request for a hearing
in person before the Administrator.  Prior to submitting the request, the
claimant shall be entitled to review such documents as the Administrator shall
agree are pertinent to the claim.  The claimant may, at all stages of review, be
represented by counsel, legal or otherwise, of the claimant’s choice.  All
requests for review shall be promptly resolved.  The Administrator’s decision
with respect to any such review shall be set forth in writing and shall be
mailed to the claimant not later than ten (10) days following receipt by the
Administrator of the claimant’s request unless special circumstances, such as
the need to hold a hearing, require an extension of time for processing, in
which case the Administrator’s decision shall be so mailed not later than twenty
(20) days after receipt of such request.

 

13.                Arbitration.  The parties to this Agreement agree that final
and binding arbitration shall be the sole recourse to settle any claim or
controversy arising out of or relating to a breach or the interpretation of this
Agreement, except as either party may be seeking injunctive relief.  Either
party may file for arbitration.  A claimant seeking relief on a claim for
benefits, however, must first follow the procedure in Section 12 hereof and may
file for arbitration within sixty (60) days following claimant’s receipt of the
Administrator’s written decision on review under Section 12(c) hereof, or if the
Administrator fails to provide any written decision under Section 12 hereof,
within 60 days of the date on which such written decision was required to be
delivered to the claimant as therein provided.  The arbitration shall be held at
a mutually agreeable location, and shall be subject to and in accordance with
the arbitration rules then in effect of the American Arbitration Association;
provided that if the location cannot be agreed upon the arbitration shall be
held in either Atlanta, Georgia, or Chicago, Illinois, whichever location is
closer to the principal office where the Executive was employed on Date of
Termination.  The arbitrator may award any and all remedies allowable by the
cause of action subject to the arbitration, but the arbitrator’s sole authority
shall be to interpret and apply the provisions of this Agreement.  In reaching
its decision the arbitrator shall have no authority to change or modify any
provision of this Agreement or other written agreement between the parties.  The
arbitrator shall have the power to compel the attendance of witnesses at the
hearing.  Any court having jurisdiction may enter a judgment based upon such
arbitration.  All decisions of the arbitrator shall be final and binding on the
parties without appeal to any court.  Upon execution of this Agreement, the
Executive shall be deemed to have waived any right to commence litigation
proceedings regarding this Agreement outside of arbitration or injunctive relief
without the express consent of ProAssurance.  The Companies shall pay all
arbitration fees and the arbitrator’s compensation.  If the Executive prevails
in the arbitration proceeding, the Companies shall reimburse to the Executive
the reasonable fees and expenses of Executive’s personal counsel for his or her
professional services rendered to the Executive in connection with the
enforcement of this Agreement.

 

14.                Miscellaneous.

 

(a)             Except insofar as this provision may be contrary to applicable
law, no sale, transfer, alienation, assignment, pledge, collateralization or
attachment of any benefits under this Agreement shall be valid or recognized by
the Companies.

 

(b)            This Agreement is an unfunded deferred compensation arrangement
for a member of a select group of the Companies’ management and any exemptions
under ERISA, as applicable to such arrangement, shall be applicable to this
Agreement.  Nothing in this Agreement shall require or be deemed to require the
Companies or any of them to segregate, earmark or otherwise set aside any funds
or other assets to provide for any payments made or required to be made
hereunder.

 

(c)             Nothing in this Agreement shall be deemed to create an
employment agreement between the Executive and the Companies or any of them
providing for Executive’s employment for any fixed duration, nor shall it be
deemed to modify or undercut the Executive’s at will employment status with the
Companies.

 

(d)            Neither the provisions of this Agreement nor the severance
benefits provided hereunder shall reduce any amounts otherwise payable, or in
any way diminish the Executive’s rights as an employee of the Companies, whether
existing now or hereafter, under any benefit, incentive, retirement, stock
option, stock bonus or stock purchase plan, or any employment agreement or other
plan or arrangement.

 

(e)             This Agreement sets forth the entire agreement between the
parties with respect to the matters set forth herein.  This Agreement may not be
modified or amended except by written agreement intended as such and signed by
all parties.

 

(f)             This Agreement shall benefit and be binding upon the parties and
their respective directors, officers, employees, representatives, agents, heirs,
successors, assigns, devisees, and legal or personal representatives.

 

(g)            The Companies, from time to time, shall provide government
agencies with such reports concerning this Agreement as may be required by law,
and shall provide Executive with such disclosure concerning this Agreement as
may be required by law or as the Companies may deem appropriate.

 

(h)                Executive and the Companies respectively acknowledge that
each of them has read and understand this Agreement, that they have each had
adequate time to consider this Agreement and discuss it with each of their
attorneys and advisors, that each of them understands the consequences of
entering into this Agreement, that each of them is knowingly and voluntarily
entering into this Agreement, and that they are each competent to enter into
this Agreement.

 

(i)              If any provision of this Agreement is determined to be
unenforceable, at the discretion of ProAssurance the remainder of this Agreement
shall not be affected but each remaining provision shall continue to be valid
and effective and shall be modified so that it is enforceable to the fullest
extent permitted by law.  Moreover, in the event this Agreement is determined to
be unenforceable against any of the Companies, it shall continue to be valid and
enforceable against the other Companies.

 

(j)              This Agreement will be interpreted as a whole according to its
fair terms.  It will not be construed strictly for or against either party.

 

(k)             Except to the extent that federal law controls, this Agreement
is to be construed according to Michigan law.

 

IN WITNESS WHEREOF, the parties have duly executed this Agreement as of this
15th day of June, 2001.

 

EXECUTIVE:

 

/s/ Christine C. Schmitt

 

Christine C. Schmitt

 

PROASSURANCE CORPORATION

 

 

By:

/s/ Victor T. Adamo

 

Its: President

 

 

MEEMIC INSURANCE COMPANY

 

 

By:

/s/ R. Kevin Clinton

 

Its: President

 

 

MEEMIC HOLDINGS, INC.

 

 

By:

/s/ R. Kevin Clinton

 

Its: President

 

RELEASE IN CONJUNCTION WITH SEVERANCE COMPENSATION

 

This Release of Claims (“Release”) is between ProAssurance Corporation
(“ProAssurance”), MEEMIC Insurance Company, MEEMIC Holdings, Inc., and any
successor company that has assumed the Agreement to which this Release was an
attachment (all such organizations being referred to in this Release as the
"Companies") and Christine C. Schmitt ("Executive”).

 

The Companies and Executive have agreed to terminate their employment
relationship. To effect an orderly termination, the Executive, and the Companies
are entering into this Release.

 

1.     For the purposes of this Release, “Date of Termination” is the effective
date of Executive’s termination of employment from Companies.  Executive hereby
waives any and all rights Executive may otherwise have to continued employment
with or re-employment by the Companies or any parent, subsidiary or affiliate of
Companies.

 

2.                Effective with the Date of Termination, Executive is relieved
of all duties and obligations to the Companies, except as provided in this
Release or any applicable provisions of the Release and Severance Compensation
Agreement between Companies and Executive, effective as of June 27, 2001 (the
“Severance Agreement”), which survive termination of the employment
relationship.

 

3.                Executive agrees that this Release and its terms are
confidential and shall not be disclosed or published directly or indirectly to
third persons, except as necessary to enforce its terms, by Executive or to
Executive’s immediate family upon their agreement not to disclose the fact or
terms of this Release, or to Executive’s attorney, financial consultant or
accountant, except that Executive may disclose, as necessary, the fact that
Executive has terminated Executive’s employment with the Companies.

 

4.     Any fringe benefits that Executive has received or currently is receiving
from the Companies or its affiliates shall cease effective with the Date of
Termination, except as otherwise provided for in this Release, in the Severance
Agreement or by law.

 

5.     The parties agree that the terms contained and payments provided for in
the Severance Agreement are compensation for and in full consideration of
Employee's release of claims under this Release, and Executive’s
confidentiality, non-compete, non-solicitation and non-disclosure agreements
contained in the Severance Agreement.

 

6.     The Executive shall be under no duty or obligation to seek or accept
other employment and shall not be required to mitigate the amount of the
Severance Benefits (as defined and provided under the Severance Agreement) by
seeking employment or otherwise, provided, however, that the Executive shall be
required to notify the Companies if the Executive becomes covered by a health or
dental care program providing substantially similar coverage, at which time
health or dental care continuation coverage provided under the Agreement shall
cease.

 

7.                Except for claims arising under the Severance Agreement,
Executive waives, releases, and forever discharges the Companies and each of
their direct or indirect parents, subsidiaries, affiliates, and any
partnerships, joint ventures or other entities involving or related to any of
the Companies, their parents, subsidiaries or affiliates, and all present or
former employees, officers, agents, directors, successors, assigns and attorneys
of any of these corporations, persons or entities (all collectively referred to
in this Release as the "Released") from any and all claims, charges, suits,
causes of action, demands, expenses and compensation whatsoever, known or
unknown, direct or indirect, on account of or growing out of Executive’s
employment with and termination from the Companies, or relationship or
termination of such relationship with any of the Released, or arising out of
related events occurring through the date on which this Release is executed.
This includes, but is not limited to, claims for breach of any employment
contract; handbook or manual; any express or implied contract; any tort;
continued employment; loss of wages or benefits; attorney fees; employment
discrimination arising under any federal, state, or local civil rights or
anti-discrimination statute, including specifically any claims Executive may
have under the federal Age Discrimination in Employment Act, as amended, 29 USC
§§ 621, et seq.; emotional distress; harassment; defamation; slander; and all
other types of claims or causes of action whatsoever arising under any other
state or federal statute or common law of the United States.

 

8.     The Executive does not waive or release any rights or claims that may
arise under the federal Age Discrimination in Employment Act, as amended, after
the date on which this Release is executed by the Executive.

 

9.     The Executive acknowledges and agrees that Executive has been advised in
writing by this Release, and otherwise, to CONSULT WITH AN ATTORNEY before
Executive executes this Release.

 

10.   The Executive agrees that Executive received a copy of this Release prior
to executing the Agreement, that this Release incorporates the Companies’ FINAL
OFFER; that Executive has been given a period of at least twenty-two (22)
calendar days within which to consider this Release and its terms and to consult
with an attorney should Executive so elect.

 

11.   The Executive shall have seven (7) calendar days following Executive’s
execution of this Release to revoke this Release. Any revocation of this Release
shall be made in writing by the Executive and shall be received on or before the
time of close of business on the seventh calendar day following the date of the
Employee's execution of this Release at ProAssurance’s address at 100 Brookwood
Place, P. O. Box 590009, Birmingham, Alabama 35259-0009, Attention: Chairman, or
such other place as the Companies may notify Executive in writing. This Release
shall not become effective or enforceable until the eighth (8th) calendar day
following the Executive’s execution of this Release.

 

12.                Executive and the Companies acknowledge that they have read
and understand this Release, that they have had adequate time to consider this
Release and discuss it with their attorneys and advisors, that they understand
the consequences of entering into this Release, that they are knowingly and
voluntarily entering into this Release, and that they are competent to enter
into this Release.

 

13.   This Release shall benefit and be binding upon the parties and their
respective directors, officers, employees, agents, heirs, successors, assigns,
devisees and legal or personal representatives.

 

14.   This Release, along with the attached Severance Agreement, sets forth the
entire agreement between the parties at the time and date these documents are
executed, and fully supersedes any and all prior agreements or understandings
between them pertaining to the subject matter in this Release. This Release may
not be modified or amended except by a written agreement intended as such, and
signed by all parties.

 

15.                Except to the extent that federal law controls, this Release
is to be construed according to the law of the state of Michigan.

 

16.   If any provision of this Release is determined to be unenforceable, at the
discretion of ProAssurance the remainder of this Release shall not be affected
but each remaining provision or portion shall continue to be valid and effective
and shall be modified so that it is enforceable to the fullest extent permitted
by law.

 

17.   To signify their agreement to the terms of this Release, the parties have
executed it on the date set forth opposite their signatures, or those of their
authorized agents, which follow.

 

 

 

EXECUTIVE

 

 

 

 

 

Dated:

 

 

 

 

 

 

 

 

Christine C. Schmitt

 

 

 

 

 

 

 

PROASSURANCE CORPORATION

 

 

 

 

 

Dated:

 

 

 

By:

 

 

 

 

 

Its:

 

 

 

 

 

 

 

 

 

 

 

 

 

MEEMIC HOLDINGS, INC.

 

 

 

 

 

Dated:

 

 

 

By:

 

 

 

 

 

Its:

 

 

 

 

 

 

 

 

 

 

 

 

 

MEEMIC INSURANCE COMPANY

 

 

 

 

 

Dated:

 

 

 

By:

 

 

 

 

 

Its: