EXHIBIT 4.1
PROASSURANCE CORPORATION
STOCK OWNERSHIP PLAN
DECEMBER 1, 2002
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TABLE OF CONTENTS
Page
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1. Definitions............................................................ 1
2. Administration......................................................... 4
3. Eligibility............................................................ 4
4. Method of Participation................................................ 5
5. Accounts............................................................... 6
6. Grants from Corporation................................................ 7
7. Vesting of Grant Shares................................................ 7
8. Distribution and Withdrawal of Shares.................................. 8
9. Forfeiture of Shares................................................... 8
10. Beneficial Ownership of the Accounts................................... 9
11. Rights not Transferable................................................ 9
12. Termination or Amendment of Plan....................................... 9
13. Compliance with Rule 10b5-1............................................ 9
AMENDED AND RESTATED
PROASSURANCE CORPORATION
STOCK OWNERSHIP PLAN
Effective December 1, 1992, the Board of Directors of Mutual Assurance,
Inc. adopted the Mutual Assurance, Inc. Open Market Stock Purchase Plan (the
"Plan") to provide incentives to a broad base of employees of Mutual Assurance,
Inc. and its subsidiaries in connection with the purchase of the common stock of
Mutual Assurance, Inc. Following a corporate reorganization, MAIC Holdings, Inc.
assumed the sponsorship of the Plan. Effective August 31, 1995, the name of the
Plan was changed to the MAIC Holdings, Inc. Open Market Stock Purchase Plan,
and, effective on and after August 31, 1995, shares of the common stock of MAIC
Holdings, Inc. were purchased pursuant to the provisions of the Plan. Effective
June 21, 1996, the name of the Plan was changed to the MAIC Holdings, Inc.
Thrift Plan. Thereafter, the corporate name of MAIC Holdings, Inc. was changed
to Medical Assurance, Inc. Effective June 27, 2001, as a result of a corporate
reorganization, shares of the common stock of ProAssurance Corporation (the
"Corporation") were substituted for shares of Medical Assurance, Inc. under the
Plan. Effective January 1, 2002, the Corporation assumed the sponsorship of the
Plan, restated and amended the Plan to make certain changes and improvements
therein, and changed the name of the Plan to the ProAssurance Corporation Stock
Ownership Plan. Effective December 1, 2002, the Plan is being amended and
restated to change the method of matching employee contributions to the Plan.
1. DEFINITIONS. For purposes of this Plan, the following terms
shall have the meanings hereinafter described:
(a) The term "Account" shall mean the brokerage accounts
established with the Agent for each Participant and the Corporation in
accordance with paragraph 5 below.
(b) The term "Agent" shall mean the independent agent
appointed by the Plan Administrator to assist it in the administration
of the Plan as herein provided. Any
reference to the Plan Administrator shall be deemed to include the
Agent to the extent that the Plan Administrator has engaged the Agent
to perform its obligations hereunder.
(c) The term "Cash Deposit" shall mean the amount
deducted from the pay of a Participant at his or her election or a lump
sum payment made by a Participant for the purpose of purchasing shares
of Common Stock under the Plan.
(d) The term "Change of Control" shall occur, with
respect to the Corporation or a Participating Employer, when any
"Person," as defined in Section 3(a)(9) of the Securities Exchange Act
of 1934 (the "1934 Act"), other than a person in control of the
Corporation or a Participating Employer on the Effective Date, either
(i) becomes the "Beneficial Owner," as defined by Rule 13d-3 of the
regulations promulgated by the SEC under the 1934 Act, directly or
indirectly, of more than 50.1% of the then outstanding voting
securities of the Corporation or of a Participating Employer; or (ii)
purchases or acquires substantially all of the assets of the
Corporation or a Participating Employer with the result that the
Corporation or the Participating Employer ceases to function as part of
an insurance holding company system that offers medical professional
liability insurance; or (iii) is a party to a merger, consolidation or
reorganization with the Corporation or a Participating Employer that
results in the shareholders as of the Effective Date of the Corporation
or a Participating Employer being the Beneficial Owners of less than
50.1% of the combined voting power of the surviving entity.
(e) The term "Common Stock" shall mean the common stock
of the Corporation, having a par value of $.01 each.
(f) The term "Corporation" or "ProAssurance" shall mean
ProAssurance Corporation, a corporation organized and existing under
the laws of the State of Delaware.
(g) The term "Director" shall mean an individual who is
not an Employee and who is serving on the Board of Directors of the
Corporation or a Participating Employer.
(h) The term "Effective Date" shall mean the effective
date of this amended and restated plan which is December 1, 2002.
(i) The term "Employee" shall mean each common-law
employee of a Participating Employer who is scheduled to work at least
twenty (20) hours per week. An individual who is absent from work due
to a leave of absence which has been approved by his Participating
Employer and who, prior to the commencement of such leave of absence,
was regularly scheduled to work at least twenty (20) hours per week,
will be considered to be an Employee during such leave of absence,
provided that such individual returns to active employment immediately
following the expiration of the leave of absence.
(j) The term "Executive Officer" shall mean an officer of
the Corporation under the definition of "officer" in Rule 16a-1(f) of
the regulations promulgated by the SEC under the 1934 Act.
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(k) The term "Grant" shall mean a grant made by the
Corporation to a Participant in accordance with the terms of the Plan.
(l) The term "Grant Proceeds" shall mean the proceeds of
any Grant made by the Corporation to a Participant.
(m) The term "Grant Shares" shall mean the shares of
Common Stock purchased for the Account of a Participant with the Grant
Proceeds attributable to a Grant made to such Participant. Prior to the
December 1, 2002, Grant Shares were called Loan Shares or "Thirty-Five
Percent Shares."
(n) The term "Participant" shall mean an Employee who is
eligible to participate in the Plan and for whom an Account has been
established.
(o) The term "Participant Shares" shall mean collectively
the shares of Common Stock deposited by a Participant as Share Deposits
and the shares of Common Stock purchased for the Account of a
Participant with his Cash Deposits. Prior to January 1, 2002,
Participant Shares were called "Sixty-Five Percent Shares."
(p) The term "Participating Employer" shall mean the
Corporation and each wholly-owned (direct or indirect) subsidiary of
the Corporation which may elect to participate in the Plan for the
benefit of its eligible Employees.
(q) The term "Participation Date" shall mean each March
1st, June 1st, September 1st, and December 1st occurring on or after
the Effective Date and during the continuance of the Plan; provided,
however, that if such date is not a business day, the Participation
Date will be the next business day following such March 1st, June 1st,
September 1st, or December 1st.
(r) The term "Participation Period" shall mean each three
(3) month period commencing on a Participation Date.
(s) The term "Plan" shall mean this Amended and Restated
ProAssurance Corporation Stock Ownership Plan, as the same may from
time to time be amended.
(t) The term "Plan Administrator" shall mean the
Corporation, unless the Corporation shall elect to appoint another
entity or person as the Plan Administrator.
(u) The term "Plan Year" shall mean the calendar year.
(v) The term "Retirement" shall mean a Participant's
termination of employment at or following his attainment of the age of
fifty-five (55) or prior thereto with the consent and approval of his
Participating Employer.
(w) The term "Share Deposit" shall mean the shares of
Common Stock deposited by a Participant with the Plan Administrator in
accordance with the terms of the Plan.
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(x) The term "Value" shall mean, with respect to the
valuation of each share included in a Share Deposit on the March 1st
Participation Date, the average closing price of a share of Common
Stock as reported by the New York Stock Exchange on each business day
during the calendar month of December.
2. ADMINISTRATION. The Plan Administrator will be responsible for
the administration of the Plan including, without limitation, the determination
of the eligibility of Employees to participate in the Plan, the collection of
Cash Deposits and Share Deposits from Participants, the making of Grants, the
purchase of Shares of Common Stock, and the allocation of such shares of Common
Stock to the Accounts of Participants, and the maintenance of Account records.
The Plan Administrator shall also have the right to interpret the Plan and its
determinations shall be conclusive and binding on all parties. To assist it in
the administration of the Plan, the Corporation may appoint one or more Agents
to perform any or all of the functions of the Plan Administrator. The expenses
of the Agent(s) under the Plan shall be paid by the Company.
3. ELIGIBILITY. An Employee or Director will become eligible to
participate in the Plan in accordance with the following:
(a) Any Employee who has completed at least six (6)
months of employment with one or more Participating Employers and any
Director who has served as a member of the Board of Directors of
ProAssurance or one or more Participating Employers for at least six
(6) months during the calendar year ending December 31, 2002, is
eligible to participate in the Plan on the Effective Date.
(b) After the Effective Date, any Employee who completes
at least six (6) months of employment with one or more Participating
Employers and any Director who serves on the Board of Directors of
ProAssurance or one or more Participating Employers for at least six
(6) months will be eligible to participate in the Plan commencing with
the first day of any Participation Period thereafter, provided that he
is in the active service of the Participating Employer or on an
approved leave of absence on such date.
(c) No Employee or Director can participate in the Plan
if such Employee or Director, at any time immediately after the stock
is purchased under the Plan, owns stock possessing five percent (5%) or
more of the total combined voting power or value of all classes of
stock of the Corporation. For purposes of determining the stock
ownership percentage of an Employee and Director: (i) the Employee or
the Director shall be considered as owning the stock owned, directly or
indirectly, by or for his brothers and sisters (whether by the whole or
half blood), spouse, ancestors, and lineal descendants; and (ii) stock
owned, directly or indirectly, by or for a corporation, partnership,
estate, or trust, shall be considered as being owned proportionately by
or for its shareholders, partners, and beneficiaries.
(d) If a Participant elects to stop making Cash Deposits
during a Participation Period, such Participant must wait until the
next Plan Year to reenroll in the Plan.
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(e) Prior to participation in the Plan, each Employee
must establish one or more Accounts in the form of investment brokerage
accounts with the Agent as directed by the Plan Administrator. The
Company will bear the cost of all Accounts required to be maintained
with the Agent under the Plan.
4. METHOD OF PARTICIPATION.
(a) An Employee or Director who is eligible to
participate in the Plan may become a Participant during any
Participation Period by executing and filing with the Plan
Administrator a written enrollment form (in such form as may be
prescribed by the Plan Administrator from time to time) for any one of
the following elections:
(i) A Participant who is not an Executive
Officer or Director of the Corporation may elect to make Cash
Deposits or Share Deposits during a Participation Period by
either of the following methods:
(A) Cash Deposits through payroll
deductions may be made during a Participation Period
by completing, executing and filing an enrollment
form with the Plan Administrator at least thirty (30)
days prior to the commencement of such Participation
Period indicating thereon the total dollar amount
that such Participant desires to be deducted from his
compensation during such Participation Period. The
Cash Deposits through payroll deductions are subject
to a minimum rate of $5.00 for each regularly
scheduled compensation payment during the
Participation Period. A Participant may elect to
terminate his election to make Cash Deposits through
payroll deductions at any time by delivery of written
notice to the Plan Administrator in which event no
further installments of the Cash Deposit will be paid
from his compensation during such Participation
Period; or
(B) Lump sum Cash Deposits or Share
Deposits may be made only during the month of January
in each Plan Year, by completing, executing and
filing an enrollment form with the Plan Administrator
and making the lump sum Cash Deposit or Share Deposit
prior to the March 1st Participation Date in the
applicable Plan Year; provided that the minimum
amount of any lump sum Cash Deposit, and the minimum
Value of any lump sum Share Deposit, shall be $1000.
(ii) In order to facilitate SEC reporting of
share purchases (if necessary), a Participant who is an
Executive Officer or Director of the Corporation may elect
only to make lump sum Cash Deposits or Share Deposits. No
payroll deductions shall be made under the Plan for any
Executive Officer or Director.
(iii) The Corporation shall fund Grants with
respect to the Cash Deposits and Share Deposits made during a
Participation Period within thirty (30) days after the
expiration of such Participation Period.
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(b) On or before the later of (1) the fifth (5th)
business day following the funding of the Grant, or (2) the earliest
date on which shares of Common Stock are reasonably available for
purchase, the Plan Administrator will apply the cash held in the
Accounts at the end of the prior Participation Period toward the
purchase of such number of shares of Common Stock as can then be
purchased in ordinary brokerage transactions in the public market. The
Plan Administrator will allocate the shares so purchased (including
fractional shares) to the Accounts as provided in paragraph 5 below and
shall notify the Participant of the shares allocated to his or her
Participant Shares Subaccount and Grant Shares Account.
(c) The Plan Administrator shall make reasonable effort
to ensure that the Participants who are Executive Officers and
Directors of ProAssurance receive the notice within three (3) business
days of the purchase of the shares allocated to the Accounts of the
Participant.
5. ACCOUNTS. The Plan Administrator shall establish and maintain
the following Accounts under the Plan. The Agent and the Plan Administrator are
authorized to use and share information with each other regarding the Accounts
in connection with the administration of the Plan.
(a) Participant Accounts. The Plan Administrator shall
hold all Share Deposits, Cash Deposits and shares of Common Stock
purchased with the Cash Deposits in the Participant Accounts until
distributed in accordance with the Plan and shall cause the following
subaccounts to be established and maintained in the name of each
Participant.
(i) Cash Subaccounts. All Cash Deposits made to
a Participant Account and the earnings thereon shall be
credited to the Cash Subaccount maintained for such
Participant until applied to the purchase of Common Stock
hereunder. Pending such purchase, the funds may be invested in
short term obligations such as money market funds, savings
accounts and/or certificates of deposit, in which event
interest and other investment gains attributable to the
Participant will be credited to the Cash Subaccount.
(ii) Participant Shares Subaccounts. All Share
Deposits made by a Participant and all shares of Common Stock
purchased with funds from the Cash Subaccount of such
Participant shall be credited to the Participant Shares
Subaccount maintained for such Participant.
(b) Corporation Accounts. The Plan Administrator shall
hold all Grant Proceeds and Grant Shares in the Corporation Accounts
until sold or distributed in accordance with the Plan and shall
maintain the following subaccounts:
(i) Grant Shares Accounts. Until fully vested,
Grant Shares may be held in one or more commingled Grant Share
Accounts as designated by the Plan Administrator. The Plan
Administrator shall maintain records reflecting the number of
unvested Shares held for each Participant. All Grant Shares
allocated
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to a Participant in accordance with the Plan shall be credited
to a Grant Shares Subaccount maintained for each Participant.
(ii) Forfeiture Account. Any Grant Shares that
are forfeited under the Plan shall be credited to the
Forfeiture Account as herein provided.
6. GRANTS FROM CORPORATION. The Corporation shall make a matching
Grant to each Participant who participated in the Plan during the preceding
Participation Period on the terms and conditions hereinafter set forth:
(a) The amount of the Grant will be based on the amount
of the Cash Deposits and Share Deposits made by the Participant during
the Plan Year as follows:
(i) The Company will make a Grant to the
Participant equal to 100% of the first $2,000 of the sum of
the Cash Deposits and the Value of Share Deposits made during
any Plan Year; and
(ii) The Company will make a Grant to the
Participant equal to 50% of the next $8,000 of the sum of the
Cash Deposits and the Value of Share Deposits made during the
Plan Year.
(b) The Grant shall be funded by the Corporation in
accordance with subparagraph 4 (a) (iii) above.
(c) The Grant proceeds will be applied to the purchase of
shares of Common Stock in accordance with subparagraph 4 (b) above.
7. VESTING OF GRANT SHARES.
(a) The Grant Shares allocated to a Participant shall
become fully vested and shall not be subject to forfeiture upon the
occurrence of the sooner of the following:
(i) The Participant has been an Employee of a
Participating Employer continuously for a period of three
years from the Participation Date for the Participation Period
in which the Grant Shares are purchased; or
(ii) The Participant ceases to be an Employee of
a Participating Employer by reason of (A) a determination by
the Corporation that the Participant is disabled by illness or
injury from performing his duties as an Employee; (B) the
death of the Participant; or (C) the Retirement of the
Participant; or
(iii) The Change of Control of a Participant's
employer (other than the Corporation); unless the Participant
becomes an Employee of another Participating Employer within
thirty (30) days after such Change of Control; or
(iv) The Change of Control of the Corporation.
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(b) The Grant Shares shall be transferred to the
Participant Share Account of the Participant upon vesting, subject to
the payment of federal and state withholding requirements. The Plan
Administrator shall have the right to withhold such number of the Grant
Shares as may be necessary to generate funds to pay federal and state
withholding taxes. The Agent may cause the withheld shares to be sold
in the public market for the account of the Participant and the
proceeds of the sale shall be distributed to the Corporation to fund
the payment of such withholding taxes.
8. DISTRIBUTION AND WITHDRAWAL OF SHARES.
(a) Promptly after vesting of the Grant Shares, the Plan
Administrator shall distribute to the Participant, or to an investment
brokerage account owned by the Participant, from the Participant Shares
Account (i) the vested Grant Shares and (ii) the Participant Shares
purchased with Cash Deposits or delivered as a Share Deposit upon which
the Company made the Grant used to purchase the vested Grant Shares.
Until distributed as stated in this subparagraph (a), the shares of
Common Stock held in the Participant Shares Account shall be subject to
withdrawal in accordance with the provisions of subparagraph (b) below.
(b) A Participant may withdraw the shares of Common Stock
held in the Participant Shares Subaccount maintained for such
Participant at any time. In the event that a Participant withdraws
shares from his or her Participant Shares Account, the shares subject
to withdrawal shall be taken from the shares that have been credited to
the Participant Shares Account for the longest period of time in the
inverse order that such shares were credited to the Participant Shares
Subaccount. The withdrawal of any shares of Common Stock from a
Participant's Participant Shares Subaccount shall be subject to the
provisions of Section 9(b) hereof.
(c) Grant Shares shall be distributed from the Grant
Shares Account only upon vesting in accordance with paragraph 7 hereof
or upon forfeiture in accordance with paragraph 9 hereof.
9. FORFEITURE OF SHARES.
(a) In the event that a Participant ceases to be an
Employee of a Participating Employer (for reasons other than those
described in Section 7(a)(ii) above), all unvested Grant Shares
credited to the Participant in a Grant Shares Account shall be
forfeited and transferred to the Forfeiture Account.
(b) In the event that a Participant withdraws shares of
Common Stock from his or her Participant Shares Subaccount that were
credited to said account, any unvested Grant Shares purchased with
Grant Proceeds made with respect to the shares so withdrawn, determined
in accordance with Section 8(f) hereof, shall be forfeited and
transferred from the Participant's Grant Shares Account to the
Forfeiture Account.
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10. BENEFICIAL OWNERSHIP OF THE ACCOUNTS.
(a) The Participant will be the beneficial owner of the
Participant Shares held by the Plan Administrator for the Account of a
Participant. The Participant will have the right to vote such shares at
any meeting of the shareholders of the Corporation and will receive all
communications addressed by the Corporation to its shareholders. All
dividends (other than stock dividends) paid with respect to such shares
shall, at the option of the Corporation, either be paid to the
Participant or credited to the Cash Subaccount of a Participant. Stock
dividends or stock splits paid with respect to Participant Shares shall
be credited to the Participant Shares Subaccount. If the Corporation
shall offer any subscription rights to its shareholders, the Plan
Administrator shall to the extent it is able provide to each
Participant who then has shares of Common Stock allocated to his
Participant Shares Subaccount the right to exercise, sell, or assign,
in accordance with the terms thereof, all subscription rights issued
with respect to the shares in his Account and to receive any shares
subscribed for, free from pledge.
(b) The Corporation shall be the owner of the Grant
Shares as treasury shares until they become vested. The Corporation may
not vote, sell or withdraw any shares of Common Stock held in the Grant
Shares Account. The Corporation shall have the right to withdraw shares
of Common Stock held in the Forfeiture Account at any time free and
clear of any claims of Participants under the Plan.
11. RIGHTS NOT TRANSFERABLE. No Participant shall be permitted to
sell, assign, transfer, pledge, or otherwise dispose of or encumber either his
right to participate in the Plan or his interest in any shares of Common Stock
being held by the Plan Administrator for the Account of a Participant prior to
the withdrawal or distribution thereof as herein contemplated. Except as
otherwise provided by law, the right and interest of a Participant under the
Plan shall not be liable for or subject to the debts, contracts or liabilities
of such Participant.
12. TERMINATION OR AMENDMENT OF PLAN. The Corporation reserves the
right to amend, modify, suspend, or terminate the Plan at any time without
notice, provided that no such amendment, modification, suspension, or
termination shall adversely affect, without the Participant's written consent,
any shares of Common Stock previously issued to the Participant.
13. COMPLIANCE WITH RULE 10b5-1. It is the intention of the
Corporation that provisions of the Plan be interpreted and administered so that
purchases and sales of Common Stock under the Plan will be transactions pursuant
to a contract, instruction or written plan that satisfies the affirmative
defense conditions of Rule 10b5-1(c) promulgated by the SEC under the 1934 Act.
14. PRIOR PARTICIPANT SHARES AND LOAN SHARES. The rights and
obligations of Participants and the Corporation under the Plan prior to December
1, 2002, shall not be modified as a result of this amendment and restatement of
the Plan. The rights and obligations of Participants with respect to Participant
Shares and Loan Shares purchased and pledged prior to December 1, 2002, shall be
governed by the terms of the Plan in effect as of the date of the purchase or
deposit of the Participant Shares and the funding of the Loans, except to the
extent the Plan has been amended to reflect the assumption of the Plan by the
Corporation.
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