CONSISTS OF (I) 10,000,000 SHARES OF COMPANY COMMON STOCK, OF WHICH
6,683,563 SHARES ARE ISSUED AND OUTSTANDING AND (II) 120,000 SHARES OF COMPANY
COMMON STOCK ARE RESERVED FOR ISSUANCE UPON EXERCISE OF THE COMPANY OPTIONS, ALL
OF WHICH WERE GRANTED UNDER THE COMPANY'S STOCK COMPENSATION PLAN (THE "COMPANY
STOCK PLAN").
ALL OF THE OUTSTANDING SHARES OF COMPANY COMMON STOCK ARE, AND
ALL SHARES WHICH MAY BE ISSUED PURSUANT TO THE COMPANY OPTIONS WILL BE, WHEN
ISSUED IN ACCORDANCE WITH THE TERMS THEREOF, DULY AUTHORIZED, VALIDLY ISSUED,
FULLY PAID AND NONASSESSABLE AND FREE OF ANY PREEMPTIVE RIGHTS IN RESPECT
THERETO.
AS OF THE DATE HEREOF, NO BONDS, DEBENTURES, NOTES OR OTHER
INDEBTEDNESS CONVERTIBLE INTO SECURITIES HAVING THE RIGHT TO VOTE ("CONVERTIBLE
DEBT") OF THE COMPANY ARE ISSUED OR OUTSTANDING. EXCEPT AS SET FORTH ABOVE, AS
OF THE DATE HEREOF, THERE ARE NO EXISTING OPTIONS, WARRANTS, CALLS,
SUBSCRIPTIONS OR OTHER RIGHTS OR OTHER AGREEMENTS OR COMMITMENTS OF ANY
CHARACTER RELATING TO THE ISSUED OR UNISSUED CAPITAL STOCK OR CONVERTIBLE DEBT
OF THE COMPANY OR ANY OF ITS SUBSIDIARIES OR OBLIGATING THE COMPANY OR ANY OF
ITS SUBSIDIARIES TO ISSUE, TRANSFER OR SELL OR CAUSE TO BE ISSUED, TRANSFERRED
OR SOLD ANY SHARES OF CAPITAL STOCK OR CONVERTIBLE DEBT OF, OR OTHER EQUITY
INTERESTS IN, THE COMPANY OR OF ANY OF ITS SUBSIDIARIES OR SECURITIES
CONVERTIBLE INTO OR EXCHANGEABLE FOR SUCH SHARES OR EQUITY INTERESTS OR
OBLIGATING THE COMPANY OR ANY OF ITS SUBSIDIARIES TO GRANT, EXTEND OR ENTER INTO
ANY SUCH OPTION, WARRANT, CALL, SUBSCRIPTION OR OTHER RIGHT, AGREEMENT OR
COMMITMENT. AS OF THE DATE HEREOF, THERE ARE NO OUTSTANDING CONTRACTUAL
OBLIGATIONS OF THE COMPANY OR ANY OF ITS SUBSIDIARIES TO REPURCHASE, REDEEM
8
OR OTHERWISE ACQUIRE ANY SHARES OF CAPITAL STOCK OF THE COMPANY OR ANY OF ITS
SUBSIDIARIES OTHER THAN THIS AGREEMENT.
SECTION 4.03.
AUTHORITY.
THE COMPANY HAS THE REQUISITE CORPORATE POWER AND
AUTHORITY TO EXECUTE AND DELIVER THIS AGREEMENT AND TO CONSUMMATE THE
TRANSACTIONS CONTEMPLATED HEREBY (SUBJECT, WITH RESPECT TO THE MERGER, TO THE
APPROVAL AND ADOPTION OF THIS AGREEMENT BY THE AFFIRMATIVE VOTE OF NOT LESS THAN
A MAJORITY OF THE OUTSTANDING SHARES OF COMPANY COMMON STOCK AND THE AFFIRMATIVE
VOTE OF A MAJORITY OF THE OUTSTANDING SHARES OF COMPANY COMMON STOCK OWNED BY
THE INDEPENDENT SHAREHOLDERS.
THE "INDEPENDENT SHAREHOLDERS" ARE THE
SHAREHOLDERS OF THE COMPANY COMMON STOCK OTHER THAN PROASSURANCE CORPORATION
("PROASSURANCE") AND PERSONS WHO ARE "AFFILIATES" OR "ASSOCIATES" OF
PROASSURANCE, AS THOSE TERMS ARE USED IN ARTICLE VIII OF THE COMPANY'S ARTICLES
OF INCORPORATION). THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT AND
THE CONSUMMATION OF THE MERGER AND OF THE OTHER TRANSACTIONS CONTEMPLATED HEREBY
HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY CORPORATE ACTION ON THE PART OF THE
COMPANY AND NO OTHER CORPORATE PROCEEDINGS ON THE PART OF THE COMPANY ARE
NECESSARY TO AUTHORIZE THIS AGREEMENT OR TO CONSUMMATE THE TRANSACTIONS SO
CONTEMPLATED (OTHER THAN AS AFORESAID). THIS AGREEMENT HAS BEEN DULY EXECUTED
AND DELIVERED BY THE COMPANY AND CONSTITUTES A VALID AND BINDING