**EXHIBIT10.20**

** **

**RELEASE AND SEVERANCECOMPENSATION AGREEMENT**

 

                THISRELEASE AND SEVERANCE COMPENSATION AGREEMENT (the “Agreement”) is betweenProAssurance Corporation, a Delaware corporation (“ProAssurance”), MEEMICInsurance Company, a Michigan insurance company (“MEEMIC Insurance”), MEEMICHoldings, Inc., a Michigan corporation (“MEEMIC Holdings”) and Lynn M.Kalinowski, an individual (the “Executive”). ProAssurance, MEEMIC Insurance, and MEEMIC Holdings and their respectivemajority-owned subsidiaries are hereinafter collectively referred to as the“Companies.”

 

**RECITALS:**

 

                TheExecutive is currently rendering valuable services to MEEMIC Insurance, whichis a wholly-owned subsidiary of MEEMIC Holdings.  ProAssurance has acquired, or will acquire, control of MEEMICHoldings and MEEMIC Insurance in a transaction (the “Consolidation”) that willresult in a “change of control” (the “Change of Control”) under the terms andconditions of the Change of Control Agreement among MEEMIC Insurance, MEEMICHoldings and the Executive effective as of July 1, 2000 (the “Change of ControlAgreement”).  The Companies have offeredto employ the Executive in an at will employment relationship after theConsolidation and to expand protection to the Executive in the form of severancebenefits payable on termination of employment under certain circumstances afterthe Consolidation on the condition that the Executive releases the Companiesfrom any past or future liability under the Change of Control Agreement.  The Executive desires to continue employmentwith the Companies under such terms and conditions, and with the protectionafforded to the Executive by this Agreement.

 

**AGREEMENT**

 

                **NOW,THEREFORE,** These Premises Considered, and in consideration of themutual covenants and promises in this Agreement, the sufficiency of which ishereby acknowledged, the parties agree as follows:

 

1.                Termof Agreement.  This Agreement issubject to, and conditioned upon, the closing (the “Closing”) of thetransactions (the “Consolidation”) contemplated by the Agreement to Consolidateby and between Medical Assurance, Inc. and Professionals Group, Inc. dated June22, 2000, as amended November 1, 2000. This Agreement is effective on the date of Closing which is scheduled tooccur on June 27, 2001, and shall continue in effect for a period of two yearsfrom the date of Closing (the “Initial Term”). Thereafter, this Agreement shall automatically be extended forsuccessive terms of one year (a “Renewal Term”), except this Agreement may beterminated after the first Renewal Term upon delivery of written notice of thetermination of this Agreement by any of the Companies at least six months priorto 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 asthe “Date of Termination.”

 

2.                SeveranceBenefits.  If during the term ofthis Agreement the Executive leaves the employment of the Company for GoodReason, as explained in Section 4 of this Agreement, and the Executive signsthe release (the “Release”) that is attached to and incorporated in thisAgreement, the Executive shall receive the following benefits (the “SeveranceBenefits”):

 

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

 

(b)            Anamount equal to either of whichever of the following is applicable: (i) if theDate of Termination occurs during the Initial Term, two (2) times the averagetotal annual incentive award(s) or bonus(es); or (ii) if the Date ofTermination occurs during a Renewal Term, one (1) times the average totalannual incentive award(s) or bonus(es). The “average total annual incentive award(s) or bonus(es)” shall meanthe average of the sum of (i) cash awards or bonuses earned with the Companiesby the Executive, plus (ii) the value of stock awarded to the Executive by theCompanies for each complete fiscal year during the last three years (whether ornot deferred) or, if shorter, over the Executive’s entire period of employmentwith the Companies.  The value of stockawarded to the Executive shall be calculated based on the value of the stock asof the date the stock was awarded to the Executive as annual incentivecompensation.  Notwithstanding the foregoing,the Executive’s actual total annual incentive awards or bonuses shall becalculated excluding the value of options to purchase stock which may have beenawarded to the Executive;

 

(c)             Paymentof the Executive’s monthly COBRA premiums for continued health and dentalinsurance coverage for the shorter of the following:  (i) 18 months if the Date of Termination occurs in the InitialTerm; (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 theExecutive becomes eligible for substantially similar coverage under asubsequent employer’s group health plan; and

 

(d)                Outplacementservices 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 periodthat the covenants set forth in Section 7 shall be in effect commencing uponthe Date of Termination; provided that the obligation of the Companies to pay suchcash severance benefits to the Executive shall be subject to termination underthe provisions of Section 7 hereof in the event the Executive should violatethe covenants set forth therein; and provided further that the payment of suchcash severance benefits shall be accelerated and payable in lump sum by theCompanies upon a breach of this Agreement as a result of the failure of asuccessor (herein defined) to assume this Agreement as required in Section 10of this Agreement.  The Companies shallwithhold from any amounts payable under this Agreement all federal, state, cityor other income and employment axes that shall be required.

 

The Companies shall fund the obligation to pay cashSeverance Benefits by depositing in escrow an amount equal to the sum of theamounts payable to the Executive under subparagraphs (a) and (b) hereof (the“Escrow Funds”) with SouthTrust Bank (or another financial institution withtotal assets of more than $1,000,000,000) as escrow agent (the “Escrow Agent”).  The Escrow Funds shall be held, invested anddistributed 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 bebound by the provisions of this Agreement in a separate written document.  The Escrow Agent shall invest the EscrowFunds in a money market account.  Unlessand until the Escrow Agent receives notice from ProAssurance that the Executivehas breached this Agreement, the Escrow Agent shall distribute the Escrow Fundsto the Executive in the same number of equal monthly installments as the numberof whole calendar months in the Restricted Period (as defined in Section 7hereof).  The monthly installments shallbe distributed to the Executive on the first day of each calendar month in theRestricted Period together with accrued and undistributed earnings on theEscrow Funds.  If the Company deliverswritten notice to the Escrow Agent and Executive that the cash SeveranceBenefits payable to Executive are subject to termination under Section 7 ofthis Agreement, the Escrow Agent shall distribute the balance of the EscrowFunds and accrued and undistributed earnings thereon to ProAssurance unless theEscrow Agent receives a written notice of objection from the Executive within15 days after delivery of ProAssurance’s notice.  If Executive provides a timely notice of objection, the EscrowAgent shall hold the Escrow Funds until it receives a written notice ofdistribution from the arbitrator appointed pursuant to Section 13 hereof or ajoint written notice of distribution from the Executive and ProAssurance.  The failure of the Executive or the Companyto deliver notice to the Escrow Agent as herein provided shall not be a waiverof any of their respective rights under this Agreement.

 

The Executive shall be entitled to the following inaddition to and not in limitation of the Severance Benefits:  (i) accrued and unpaid base salary as of theDate of Termination; (ii) accrued vacation and sick leave, if any, on Date ofTermination in accordance with the then current policy of the Companies withrespect to terminated employees generally; and (iii) vested benefits under theCompanies’ employee benefit plans in which the Executive was a participant onDate of Termination, which vested benefits shall be paid or provided for inaccordance with the terms of said employee benefit plans.  If the Executive has regular use of avehicle 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 purchaseprice equal to either of the following: (x) if owned by any of the Companies,the then current book value of the vehicle (cost less accumulateddepreciation), or (y) if leased by any of the Companies, the purchase priceupon the exercise of the purchase option, if any, under the lease.

 

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

 

The Executive shall be under no duty or obligation toseek or accept other employment and shall not be required to mitigate theamount of the Severance Benefits provided under the Agreement by seekingemployment or otherwise; provided, however, that the Executive shall berequired to notify the Companies if the Executive becomes covered by a healthor dental care program providing substantially similar coverage, at which timehealth or dental care continuation coverage provided under this Agreement shallcease.

 

3.                ParachutePayments.  Subject to Section 280Gof the Internal Revenue Code of 1986, as amended (“Code”), if the board ofdirectors of ProAssurance determines that an excise tax under Section 4999(“Excise Tax”) would be due, the Executive’s Severance Benefits under thisAgreement shall be limited to the amount necessary to avoid the Excise Tax onlyif applying such a limit results in a greater net benefit to the Executive thanwould have resulted had the benefits not been limited and an Excise Taxpaid.  For purposes of making suchcomputation:

 

(a)             Anyother payments or benefits received or to be received by the Executive inconnection with the Change of Control or the Executive’s termination ofemployment (whether pursuant to the terms of this Agreement or any other plan,arrangement, or agreement with the Companies, or with any person whose actionsresult 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 parachutepayments” within the meaning of Section 280G(b)(1) of the Code shall be treatedas subject to the Excise Tax, unless, in the opinion of tax counsel selected byProAssurance’s independent auditors, such other payments or benefits (in wholeor in part) do not constitute parachute payments, or such other payments or benefits(in whole or in part) represent reasonable compensation for services actuallyrendered within the meaning of Section 280G(b)(4) of the Code in excess of thebase amount within the meaning of Section 280G(b)(3) of the Code, or such otherpayments or benefits (in whole or in part) are otherwise not subject to theExcise Tax.  In the event an Excise Taxis due, because of payments made under this Agreement, the Executive shall beresponsible for paying said Excise Tax.

 

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

 

(c)             Thevalue of any noncash benefits or any deferred payment or benefit shall bedetermined by ProAssurance’s independent auditors in accordance with theprinciples of Sections 280G(d)(3) and (4) of the Code.

 

(d)            TheExecutive shall be deemed to pay federal income taxes at the highest marginalrate of federal income taxation in a calendar year in which the SeveranceBenefits are to be paid, and state and local income taxes at the highestmarginal rate of taxation in the state and locality of the Executive’sresidence on the Date of Termination, net of the maximum reduction in federalincome taxes that could be obtained from deduction of such state and localtaxes.

 

In the event the InternalRevenue Service adjusts the computation in subparagraphs (a) through (d) above,so that the Executive did not receive the greatest net benefit, the Companiesshall reimburse the Executive for the amount necessary to make the payment ofSeverance Benefits to the Executive to the extent permitted hereunder, plus amarket rate of interest as determined by the Board of Directors ofProAssurance.

 

4.                GoodReason for Termination.  In theevent that the Executive’s employment relationship with the Companies isterminated for any of the reasons described in this Section 4, the Executiveshall be entitled to Severance Benefits, subject to and described in Section 2of this Agreement.  “Good Reason” shallconstitute any of the following circumstances if they occur without the Executive’sexpress written consent during the term of this Agreement:

 

(a)             TheExecutive no longer holds an executive level position with executive levelresponsibilities with the Companies consistent with the Executive’s trainingand experience;

 

(b)            TheCompanies require that the Executive’s primary location of employment be morethan 50 miles from the location of the Executive’s primary location ofemployment on June 27, 2001;

 

(c)             Thefailure of the Companies to provide the Executive, at a level commensurate withthe Executive’s position, the incentive compensation opportunities and employeebenefits that are provided to other executives of comparable rank with theCompanies;

 

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

 

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

 

(f)             Areduction by the Companies in the Executive’s base salary in effect as of thedate of this Agreement; or

 

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

 

The Executive must provide the Companies with writtennotice no later than 45 calendar days after the Executive knows or should haveknown that Good Reason has occurred. Following the Executive’s Notice, the Companies shall have 45 calendardays 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 statingthat the circumstances cannot or shall not be rectified, the Executive shall beentitled to assert Good Reason and terminate employment on or before 90 daysafter 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 thatevent.  The Initial Term or a RenewalTerm shall not be deemed to have expired during the Notice period, however, aslong as the Executive has provided Notice within the Term.

 

5.                Disability.  For purposes of this Agreement, Disabilitymeans a serious injury or illness that requires the Executive to be under theregular care of a licensed medical physician and renders the Executiveincapable of performing the essential functions of the Executive’s position for12 months as determined by the Board of Directors of the Companies in goodfaith and upon receipt of and in reliance on competent medical advice from oneor more individuals selected by the Board of Directors, who are qualified togive professional medical advice.

 

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

 

(a)             TheExecutive has been convicted in a federal or state court of a crime classifiedas a felony;

 

(b)            Actionor inaction by the Executive (i) that constitutes embezzlement, theft,misappropriation or conversion of assets of the Companies which alone ortogether with related actions or inactions involve assets of more than a deminimis amount, or that constitutes fraud, gross malfeasance of duty, orconduct grossly inappropriate to Executive’s office; and (ii) such action orinaction has adversely affected or is likely to adversely affect the businessof the Companies or has resulted or is intended to result in direct or indirectgain or personal enrichment of the Executive to the detriment of the Companies;

 

(c)             TheExecutive has been grossly inattentive to, or in a grossly negligent mannerfailed to competently perform, Executive’s job duties and the failure was notcured within 45 days after written notice from the Companies.

 

Any termination of the Executive’s employment by theCompanies 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 thespecific termination provision of this Agreement relied upon and shall setforth in reasonable detail the facts and circumstances claimed to provide abasis for termination of the Executive’s employment under this provision.

 

7.                Non-Competition.

 

(a)             Inthe 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 ornoncompetition agreement with the Companies (or any of them) to which theExecutive was subject as of the Date of Termination (other than thenoncompetition agreement set forth in Section 7(b) hereof), or (ii) in thealternative if the Executive is not subject to a covenant not to compete ornoncompetition agreement with the Companies (or any of them) as of the Date ofTermination (other than a covenant not to compete or noncompetition agreementcontained in an employee handbook or otherwise applicable to employeesgenerally), the Executive will be bound by and subject to the noncompetitionagreement set forth in subparagraph 7(b) of this Agreement.  Upon the expiration of the Initial Term, anyand all covenants not to compete or noncompetition agreements between theExecutive and the Companies (or any of them) then in effect shall be supersededby the noncompetition agreement set forth in Section 7(b) hereof and theExecutive and the Companies shall not be bound by the provisions of any covenantnot to compete or noncompetition agreement other than the provisions of Section7(b) hereof unless specifically agreed to in a written document executed by theExecutive and the Companies (or any of them) after the Closing.

 

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

 

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

 

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

 

(iii)                solicit or induce any otheremployees of the Companies to leave such employment or accept employment withany other person or entity, or solicit or induce any insurance agent of theCompanies to offer, sell or market insurance products that target educators inMEEMIC’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 marketingany insurance product that targets educators.

 

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

 

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

 

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

 

                “Employed”includes activities as an owner, proprietor, employee, agent, solicitor,partner, member, manager, principal, shareholder (owning more than 1% of theoutstanding 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.

 

                Ifthe Executive is deemed to have materially breached the non-competitioncovenants set forth in Section 7 of this Agreement, the Companies may, inaddition to seeking an injunction or any other remedy they may have, withholdor cancel any remaining payments or benefits due to the Executive pursuant toSection 2 of this Agreement.  TheCompanies shall give prior or contemporaneous written notice of suchwithholding or cancellation of payments in accordance with Section 2hereof.  If the Executive violates anyof these restrictions, the Companies shall be further entitled to an immediatepreliminary and permanent injunctive relief, without bond, in addition to anyother remedy which may be available to the Companies.

 

                Both parties agreethat the restrictions in this Agreement are fair and reasonable in allrespects, including the geographic and temporal restrictions, and that thebenefits described in this Agreement, to the extent any separate or specialconsideration is necessary, are fully sufficient consideration for theExecutive’s obligations under this Agreement.

 

8.                Confidentiality.  Executive will remain obligated under anyconfidentiality or nondisclosure agreement with the Companies (or any of them)that is currently in effect or to which the Executive may in the future bebound.  In the event that the Executiveis at any time not the subject of a separate confidentiality or nondisclosureagreement with the Companies (or any of them), Executive expressly agrees thatExecutive shall not use for the Executive’s personal benefit, or disclose,communicate or divulge to, or use for the direct or indirect benefit of anyperson, firm, association or company any confidential or competitive materialor information of the Companies or their subsidiaries, including withoutlimitation, any information regarding insureds or other customers, actual orprospective, and the contents of their files; marketing, underwriting orfinancial plans or analyses which is not a matter of public record; claimspractices or analyses which are not matters of public record; pending or pastlitigation in which the Companies have been involved and which is not a matterof public record; and all other strategic plans, analyses of operations,computer programs, personnel information and other proprietary information withrespect to the Companies which are not matters of public record.  Executive shall return to the Companiespromptly, and in no event later than the Date of Termination, all items,documents, lists and other materials belonging to the Companies or theirsubsidiaries, including but not limited to, credit, debit or service cards, alldocuments, computer tapes, or other business records or information, keys andall other items in the Executive’s possession or control.

 

9.                Releaseof Change of Control Agreement.  Inconsideration of the continued employment of the Executive by the Companiesafter the Change of Control and the obligation of the Companies to pay theExecutive Severance Benefits as herein provided, the Executive hereby waives,releases and forever discharges the Companies and each of their direct orindirect parents, subsidiaries, affiliates and related entities, and allpresent or former employees, officers, agents, directors or representatives ofany of them, from any and all claims, charges, suits, causes of action,demands, expenses and compensation whatsoever, known or unknown, direct orindirect, on account of or growing out of the Executive’s Change of ControlAgreement, including, without limitation, the payment of severance benefits asprovided thereunder.  Executive herebyfurther agrees that he will not institute any suit or action at law, in equityor otherwise against the Companies or any of their direct or indirect parents,subsidiaries, affiliates and related entities, or the present or formeremployees, officers, agents, directors, or representatives of any of them andtheir 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, lossor 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, orwhich Executive or his successors and assigns may in the future have againstany of said persons in connection with the Change of Control Agreement of theExecutive.

 

The Executiveacknowledges and agrees that Executive has been advised in writing by thisAgreement, and otherwise, to CONSULT WITH AN ATTORNEY before Executive entersinto this Agreement.  The Executiveagrees that the Executive received and read a copy of this Agreement prior toexecuting the same.

 

10.                Successorsof ProAssurance.  ProAssurance willrequire any successor (herein defined) to assume expressly and agree to performthis Agreement in the same manner and to the same extent that the Companies wouldbe required to perform this Agreement if no such succession had takenplace.  Failure of ProAssurance toobtain such agreement prior to the effectiveness of any such succession shallbe a breach of this Agreement and shall entitle the Executive to terminateemployment for Good Reason and receive Severance Benefits as provided inSection 2 hereof.  Reference to theCompanies in this Agreement shall include any successor which assumes andagrees to perform this Agreement by operation of law or otherwise.

 

The term “successor” means any Person, as defined bySection 3(a)(9) of the Securities Exchange Act of 1934, as amended (the“Exchange Act”) other than a Person in control of the Companies immediatelyafter completion of the Change of Control transaction, that either (i) becomesthe Beneficial Owner, as defined by Rule 13d-3 of the General Rules andRegulations under the Exchange Act, directly or indirectly, of the securitiesof ProAssurance representing more than 50.1% of the combined voting power of thethen outstanding securities of ProAssurance; (ii) purchases or otherwiseacquires substantially all of the assets of the Companies such that theCompanies cease to function on a going forward basis as an insurance holdingcompany system that provides medical professional liability insurance; or (iii)survives a merger, consolidation or reorganization that results in less than50.1% of the combined voting power of ProAssurance or such surviving entitybeing owned by stockholders of ProAssurance immediately preceding such merger,consolidation or reorganization.

 

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

 
| Notice to the Executive:          |
|-----------------------------------|
|                              |
| Lynn M. Kalinowski                |
| 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.                ClaimsProcedure.

 

(a)             Theadministrator for purposes of this Agreement shall be ProAssurance(“Administrator”), whose address is 100 Brookwood Place, Birmingham, Alabama35209; Telephone: (205) 877-4400.  The“Named Fiduciary” as defined in Section 402(a)(2) or ERISA, also shall beProAssurance.  ProAssurance shall havethe right to designate one or more employees of the Companies as the Administratorand the Named Fiduciary at any time, and to change the address and telephonenumber of the same.  ProAssurance shallgive the Executive written notice of any change in the Administrator and NamedFiduciary, or in the address or telephone number of the same.

 

(b)            TheAdministrator shall make all determinations as to the right of any person toreceive 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 deliveredor mailed to the claimant within ten (10) days after receipt of the claim,unless special circumstances require an extension of time for processing theclaim.  If such an extension isrequired, written notice of the extension shall be furnished to the claimantprior to the termination of the initial 10-day period.  In no event shall such extension exceed aperiod of ten (10) days from the end of the initial period.  Any notice of denial shall set forth thespecific reasons for the denial, specific reference to pertinent provisions ofthis Agreement upon which the denial is based, a description of any additionalmaterial or information necessary for the claimant to perfect the claim, withan explanation of why such material or information is necessary, and anyexplanation of claim review procedures, written to the best of theAdministrator’s ability in a manner that may be understood without legal oractuarial counsel.

 

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

 

13.                Arbitration.  The parties to this Agreement agree that finaland binding arbitration shall be the sole recourse to settle any claim orcontroversy arising out of or relating to a breach or the interpretation ofthis Agreement, except as either party may be seeking injunctive relief.  Either party may file for arbitration.  A claimant seeking relief on a claim forbenefits, however, must first follow the procedure in Section 12 hereof and mayfile for arbitration within sixty (60) days following claimant’s receipt of theAdministrator’s written decision on review under Section 12(c) hereof, or ifthe Administrator fails to provide any written decision under Section 12hereof, within 60 days of the date on which such written decision was requiredto 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 ineffect of the American Arbitration Association; provided that if the locationcannot be agreed upon the arbitration shall be held in either Atlanta, Georgia,or Chicago, Illinois, whichever location is closer to the principal officewhere the Executive was employed on Date of Termination.  The arbitrator may award any and allremedies allowable by the cause of action subject to the arbitration, but thearbitrator’s sole authority shall be to interpret and apply the provisions ofthis Agreement.  In reaching itsdecision the arbitrator shall have no authority to change or modify anyprovision of this Agreement or other written agreement between theparties.  The arbitrator shall have thepower to compel the attendance of witnesses at the hearing.  Any court having jurisdiction may enter ajudgment based upon such arbitration. All decisions of the arbitrator shall be final and binding on theparties without appeal to any court. Upon execution of this Agreement, the Executive shall be deemed to havewaived any right to commence litigation proceedings regarding this Agreementoutside of arbitration or injunctive relief without the express consent ofProAssurance.  The Companies shall payall arbitration fees and the arbitrator’s compensation.  If the Executive prevails in the arbitrationproceeding, the Companies shall reimburse to the Executive the reasonable feesand expenses of Executive’s personal counsel for his or her professionalservices rendered to the Executive in connection with the enforcement of thisAgreement.

 

14.                Miscellaneous.

 

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

 

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

 

(c)             Nothingin this Agreement shall be deemed to create an employment agreement between theExecutive and the Companies or any of them providing for Executive’s employmentfor any fixed duration, nor shall it be deemed to modify or undercut theExecutive’s at will employment status with the Companies.

 

(d)            Neitherthe provisions of this Agreement nor the severance benefits provided hereundershall reduce any amounts otherwise payable, or in any way diminish theExecutive’s rights as an employee of the Companies, whether existing now orhereafter, under any benefit, incentive, retirement, stock option, stock bonusor stock purchase plan, or any employment agreement or other plan orarrangement.

 

(e)             ThisAgreement sets forth the entire agreement between the parties with respect tothe matters set forth herein.  ThisAgreement may not be modified or amended except by written agreement intendedas such and signed by all parties.

 

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

 

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

 

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

 

(i)              Ifany provision of this Agreement is determined to be unenforceable, at thediscretion of ProAssurance the remainder of this Agreement shall not beaffected but each remaining provision shall continue to be valid and effectiveand shall be modified so that it is enforceable to the fullest extent permittedby law.  Moreover, in the event thisAgreement is determined to be unenforceable against any of the Companies, itshall continue to be valid and enforceable against the other Companies.

 

(j)              ThisAgreement will be interpreted as a whole according to its fair terms.  It will not be construed strictly for oragainst either party.

 

(k)             Exceptto the extent that federal law controls, this Agreement is to be construedaccording to Michigan law.

 

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

 
| **EXECUTIVE:**                |
|-------------------------------|
|                          |
| /s/ Lynn M. Kalinowski        |
| Lynn M. Kalinowski            |
|                          |
| **PROASSURANCE  CORPORATION** |
|                          |   |
| By:                           | /s/ A. D. Crowe |
|                          | Its: Chairman |
|                          |   |
| **MEEMIC  INSURANCE COMPANY** |
|                          |   |
| By:                           | /s/ R. Kevin Clinton |
|                          | Its: President |
|                          | /s/ Victor T. Adamo, Chairman |
|                          |   |
| **MEEMIC  HOLDINGS, INC.**    |
|                          |   |
| By:                           | /s/ R. Kevin Clinton |
|                          | Its: President |
|                          | /s/ Victor T. Adamo, Chairman |
|                               |  |  |

** **

**RELEASE IN CONJUNCTIONWITH SEVERANCE COMPENSATION**

 

                This Release of Claims(“Release”) is between ProAssurance Corporation (“ProAssurance”), MEEMICInsurance Company, MEEMIC Holdings, Inc., and any successor company that hasassumed the Agreement to which this Release was an attachment (all suchorganizations being referred to in this Release as the "Companies")and Lynn M. Kalinowski ("Executive”).

 

                The Companies and Executive haveagreed to terminate their employment relationship. To effect an orderlytermination, the Executive, and the Companies are entering into this Release.

 

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

 

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

 

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

 

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

 

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

 

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

 

7.                Except for claims arising underthe Severance Agreement, Executive waives, releases, and forever discharges theCompanies and each of their direct or indirect parents, subsidiaries,affiliates, and any partnerships, joint ventures or other entities involving orrelated to any of the Companies, their parents, subsidiaries or affiliates, andall present or former employees, officers, agents, directors, successors,assigns and attorneys of any of these corporations, persons or entities (allcollectively referred to in this Release as the "Released") from anyand all claims, charges, suits, causes of action, demands, expenses andcompensation whatsoever, known or unknown, direct or indirect, on account of orgrowing 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 thisRelease is executed. This includes, but is not limited to, claims for breach ofany 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 civilrights or anti-discrimination statute, including specifically any claimsExecutive may have under the federal Age Discrimination in Employment Act, asamended, 29 USC §§ 621, et seq.; emotional distress; harassment;defamation; slander; and all other types of claims or causes of actionwhatsoever arising under any other state or federal statute or common law ofthe United States.

 

8.     The Executive does not waive or release anyrights or claims that may arise under the federal Age Discrimination inEmployment Act, as amended, after the date on which this Release is executed bythe Executive.

 

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

 

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

 

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

 

12.                Executive and the Companiesacknowledge that they have read and understand this Release, that they have hadadequate time to consider this Release and discuss it with their attorneys andadvisors, that they understand the consequences of entering into this Release,that they are knowingly and voluntarily entering into this Release, and thatthey are competent to enter into this Release.

 

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

 

14.   This Release, along with the attachedSeverance Agreement, sets forth the entire agreement between the parties at thetime and date these documents are executed, and fully supersedes any and allprior agreements or understandings between them pertaining to the subjectmatter in this Release. This Release may not be modified or amended except by awritten agreement intended as such, and signed by all parties.

 

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

 

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

 

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

 
|   |   | **EXECUTIVE**                 |   |
|--------|--------|-------------------------------|--------|
|   |   |                          |   |
| Dated: |   |                          |   |   |   |   |
|   |   | Lynn M. Kalinowski            |   |
|   |   |                          |   |
|   |   | **PROASSURANCE  CORPORATION** |   |
|   |   |                          |   |
| Dated: |   |                          |   | By: |   |   |   |
|   |   | Its:                          |   |   |   |
|   |   |                          |   |
|   |   |                          |   |
|   |   | **MEEMIC  HOLDINGS, INC.**    |   |
|   |   |                          |   |
| Dated: |   |                          |   | By: |   |   |   |
|   |   | Its:                          |   |   |   |
|   |   |                          |   |
|   |   |                          |   |
|   |   | **MEEMIC INSURANCE COMPANY**  |   |
|   |   |                          |   |
| Dated: |   |                          |   | By: |   |   |   |
|   |   | Its:                          |   |   |   |
|   |   |                          |   |
|        |        |                               |        |  |  |  |  |  |  |  |  |