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EXHIBIT (2)(b)/(10)(b)
FIRST AMENDMENT TO FIRST AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
THIS FIRST AMENDMENT TO FIRST AMENDED AND RESTATED AGREEMENT AND PLAN
OF MERGER (the "Amendment"), dated as of April 13, 1998, by and among
PROFESSIONALS INSURANCE COMPANY MANAGEMENT GROUP, a Michigan business
corporation ("Professionals Group"), PICOM INSURANCE COMPANY, a Michigan stock
insurance company ("PICOM"), and PHYSICIANS PROTECTIVE TRUST FUND, a medical
malpractice self-insurance trust fund organized under Florida Statutes Section
627.357 ("PPTF").
WITNESSETH:
WHEREAS, the Boards of Directors of Professionals Group and PICOM
have determined that it is in the best interests of their respective companies
and their stockholders to effect a "merger of equals" of Professionals Group
and PPTF through the consummation of the business combination transactions
provided for in that certain First Amended and Restated Agreement and Plan of
Merger dated as of October 3, 1997 and executed by and among Professionals
Group, PICOM and PPTF (the "Merger Agreement"); and
WHEREAS, the Board of Trustees of PPTF has determined that it is in
the best interests of its members to effect a "merger of equals" of
Professionals Group and PPTF through the consummation of the business
combination transactions provided for in the Merger Agreement; and
WHEREAS, Professionals Group, PICOM and PPTF have agreed to certain
modifications and amendments to the Merger Agreement as contemplated by the
Merger Agreement and desire to amend the Merger Agreement so as to reflect such
modifications and amendments.
NOW, THEREFORE, in consideration of the mutual covenants,
representations, warranties and agreements contained in this Amendment, and
intending to be legally bound by this Amendment and the Merger Agreement, the
parties to this Amendment and the Merger Agreement agree as follows:
1. This Amendment is the amendment to the Merger Agreement
contemplated by, and provided for in, the Merger Agreement. Notwithstanding
anything to the contrary express or implied in this Amendment or the Merger
Agreement: (i) all capitalized terms in this Amendment that are not otherwise
defined in this Amendment shall be defined in this Amendment as in the Merger
Agreement; and (ii) in the event of any conflict between the provisions of this
Amendment and the provisions of the Merger Agreement, the provisions of this
Amendment shall control.
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2. Sections 1.5(a) - (c), inclusive, of the Merger Agreement
shall be, and they hereby are, amended and restated in their entirety so as to
read and provide as follows:
"1.5 Conversion of Membership Rights.
(a) At the XXXXX Effective Time, and except as otherwise
provided in this Agreement, by virtue of the XXXXX Merger and without
any action on the part of Professionals Group, PICOM, XXXXX, PPTF or
any Eligible Member, all Membership Rights shall be converted into
4,089,160 shares of common stock, no par value per share, of
Professionals Group ("Professionals Group Common Stock").
Notwithstanding anything express or implied to the contrary in this
Agreement or the Allocation Formula: (x) the aggregate number of
shares of Professionals Group Common Stock issuable as a result of the
XXXXX Merger shall be not more than 4,089,160 shares of Professionals
Group Common Stock; (y) no fractional shares of Professionals Group
Common Stock shall be issued to any Eligible Member and, in lieu
thereof, all of said fractional shares shall be paid the cash
equivalent value thereof based on the average of the daily closing
prices per share of Professionals Group Common Stock as reported on
the Nasdaq National Market for the period of twenty (20) business days
ending on the fifth (5th) business day prior to the Closing Date; and
(z) except as otherwise expressly provided in Section 1.28 of this
Agreement, no shares of Professionals Group Common Stock shall be
issuable or issued to any person or entity other than an Eligible
Member in connection with the XXXXX Merger.
(b) At the XXXXX Effective Time, and except as otherwise
provided in this Agreement, by virtue of the XXXXX Merger and without
any action on the part of Professionals Group, PICOM, XXXXX, PPTF or
any Eligible Member: (i) all Eligible Members shall cease to have any
rights as Eligible Members of PPTF (including the right to elect
trustees, the right to vote as to other matters, and any rights with
respect to the distribution of surplus in liquidation); and (ii) all
Membership Rights shall no longer be outstanding, and shall
automatically be cancelled and shall cease to exist; provided,
however, that at and after the XXXXX Effective Time, each individual
Membership Right shall represent the right to receive, in accordance
with the Allocation Formula, a certificate representing the number of
whole shares of Professionals Group Common Stock and cash in lieu of
any fractional share of Professionals Group Common Stock into which
such Membership Right has been converted pursuant to this Agreement.
(c) In consideration for his or her Membership Right,
each Eligible Member shall be allocated and shall
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be entitled to receive a portion of the Aggregate Merger Shares
determined in accordance with the allocation formula set forth on
Exhibit A to the Amendment (the "Allocation Formula"). Each
Membership Right shall be exchanged for certificates representing
whole shares, and cash in lieu of any fractional share, of
Professionals Group Common Stock in accordance with Article II of this
Agreement."
3. Sections 1.28(a) - (b), inclusive, of the Merger Agreement
shall be, and they hereby are, amended and restated in their entirety so as to
read and provide as follows:
"(a) On the date of the first meeting of the Board of
Directors of Professionals Group following the XXXXX Effective Time,
Professionals Group shall issue and deliver to each person identified
on Exhibit B to this Agreement as a "PPTF Trustee Participant" (each,
a "PPTF Trustee Participant") a number of shares of Professionals
Group Common Stock that is equal to 20% of the number that is set
forth opposite the name of such PPTF Trustee Participant on Exhibit B
to this Agreement. Upon and pursuant to the terms and conditions of a
PPTF Trustee Participant's Consulting Agreement (as defined in this
Section 1.28) Professionals Group shall issue and deliver Trustee
Participant a number of shares of Professionals Group Common Stock
that is equal to 80% of the number that is set forth opposite the name
of such PPTF Trustee Participant on Exhibit B to this Agreement.
(b) On the date of the first meeting of the Board of
Directors of Professionals Group following the XXXXX Effective Time,
Professionals Group shall issue and deliver to each person identified
on Exhibit B to this Agreement as a "PPTF Officer" (each, a "PPTF
Officer") a number of shares of Professionals Group Common Stock that
is equal to 20% of the number that is set forth opposite the name of
such PPTF Officer on Exhibit B to this Agreement. Upon and pursuant
to the terms and conditions of a PPTF Officer's Stock Grant Agreement
(as defined in this Section 1.28), Professionals Group shall issue and
deliver to such PPTF Officer a number of shares of Professionals Group
Common Stock that is equal to 80% of the number that is set forth
opposite the name of such PPTF Officer on Exhibit B to this
Agreement."
4. Section 6.8(b) of the Merger Agreement shall be, and it hereby
is, amended and restated in its entirety so as to read and provide as follows:
"(b) Nothing in this Section 6.8 shall be interpreted as
preventing Professionals Group from amending, modifying or terminating
any Professionals Group Benefit Plans, PPTF Benefit Plans, or other
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contracts, arrangements, commitments or understandings, in accordance
with their terms and applicable law. It is understood and agreed that
the PICOM Insurance Company Employee Retention Plan shall apply only
to those persons who are employees of PICOM and otherwise eligible
under such plan immediately prior to the XXXXX Effective Time, and
that such plan shall not apply to either employees of PICOM hired
after the XXXXX Effective Time or employees of PPTF."
5. Section 8.1(c) of the Merger Agreement shall be, and it hereby
is, amended and restated in its entirety so as to read and provide as follows:
"(c) by either Professionals Group or PPTF if (i) the
XXXXX Merger shall not have been consummated on or before August 13,
1998, unless the failure of the XXXXX Merger to be consummated by such
date shall be due to the failure of the party seeking to terminate
this Agreement to perform or observe the covenants and agreements of
such party set forth in this Agreement, and (ii) the Board of
Directors of Professionals Group or the Board of Trustees of PPTF, as
the case may be, determines to terminate this Agreement by an
affirmative vote of a majority of the members of its entire Board;"
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6. Exhibit A to the Merger Agreement shall be, and it hereby is,
amended and restated in its entirety so as to read and provide as set forth on
Exhibit A to this Amendment.
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7. It is expressly acknowledged and agreed that all parties have
been represented by counsel and have participated in the negotiation and
drafting of this Amendment and the Merger Agreement, and that there shall be no
presumption against any party on the ground that such party was responsible for
preparing this Amendment and the Merger Agreement or any part of it.
8. This Amendment may be executed in counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each of the parties and delivered to the other
parties, it being understood that all parties need not sign the same
counterpart.
9. This Amendment amends the Merger Agreement. It is the intent
and purpose of the parties to this Amendment, by executing this Amendment, to
ratify, confirm and reaffirm the Merger Agreement and all of its terms and
provisions as amended by this Amendment. This Amendment and the Merger
Agreement (including the documents and the instruments referred to in this
Amendment and the Merger Agreement) constitute the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
among the parties with respect to the subject matter of this Amendment and the
Merger Agreement.
10. This Amendment and the Merger Agreement shall be governed and
construed in accordance with the laws of the State of Michigan, without regard
to any applicable conflicts of law principles.
11. Any term or provision of this Amendment which is invalid or
unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Amendment or affecting the validity or enforceability of any of the terms or
provisions of this Amendment in any other jurisdiction. If any provision of
this Amendment is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, Professionals Group, PICOM, and PPTF have caused
this Amendment to be executed by their respective officers thereunto duly
authorized as of the date first above written.
PROFESSIONALS INSURANCE COMPANY
MANAGEMENT GROUP, a Michigan
business corporation
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx, Esq.
President and Chief Executive
Officer
PICOM INSURANCE COMPANY, a Michigan
stock insurance company
By: /s/ Xxxxxx X. Xxxxx
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Xxxxxx X. Xxxxx, Esq.
President and Chief Executive
Officer
PHYSICIANS PROTECTIVE TRUST FUND, a
medical malpractice self-
insurance trust fund
organized under Florida
Statutes Section 627.357
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx, Esq.
President and Chief Executive
Officer
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EXHIBIT A
CERTAIN DEFINITIONS,
ALLOCATION FORMULA AND RELATED PROVISIONS
CERTAIN DEFINITIONS:
As used in the Agreement, the words and phrases that follow, wherever
capitalized in the Agreement, shall have the respective meanings that follow:
"Aggregate Earned Premium" is $56,037,359 (which is the aggregate of
all Earned PPTF Policy Premiums for the 12 months ending on the PPTF Record
Date).
"Aggregate Merger Shares" means the 4,089,160 shares of Professionals
Group Common Stock into which, subject to the exercise of dissenters' rights
and the payment of cash in lieu of fractional shares, all Membership Rights
will be converted upon consummation of the transactions contemplated by the
Agreement.
"Agreement" means the First Amended and Restated Agreement and Plan of
Merger dated as of October 3, 1997 executed by and among Professionals Group,
PICOM and PPTF, as amended by the First Amendment to First Amended and Restated
Agreement and Plan of Merger dated as of April 13, 1998 executed by and among
Professionals Group, PICOM and PPTF.
"Average Price" means the average of the daily closing prices per
share of Professionals Group Common Stock as reported by the Nasdaq National
Market for the period of 20 business days ending on the fifth business day
prior to the closing date with respect to the transactions contemplated by the
Agreement.
"Earned PPTF Policy Premium" means, with respect to any Member, the
earned premium on such Member's PPTF Policy for the 12 months ending on the
PPTF Record Date.
"Eligible Member" means the person or entity who is the named insured
on a PPTF Policy.
"Member" means the person or entity who is the named insured on a PPTF
Policy.
"Membership Rights" means all of the rights of each Member under the
laws of the State of Florida, the PPTF Charter Documents, and each PPTF Policy
with respect to which such Member is a named insured.
"PPTF Record Date" means the date designated as such by the Board of
Trustees of PPTF.
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"PPTF Charter Documents" means the Amended Trust Agreement dated
January 1, 1987 and By-laws of PPTF.
"PPTF Policy" means an indemnity agreement issued by PPTF that is in
effect on the PPTF Record Date.
"Voting Member" means the person or entity who is the named insured on
a PPTF Policy.
ALLOCATION FORMULA:
Upon consummation of the XXXXX Merger, but subject to the exercise of
dissenters' rights and the payment of cash in lieu of fractional shares, all
Membership Rights will be converted into the Aggregate Merger Shares. In
consideration for all Membership Rights, the Aggregate Merger Shares will be
allocated and distributed to Members of PPTF in accordance with the formula
that follows: Each Member of PPTF who does not timely and properly exercise
dissenters' rights will be allocated a portion of the Aggregate Merger Shares
in an amount (calculated to two decimal places) determined by multiplying
4,089,160 shares of Professionals Group Common Stock by the ratio (calculated
to six decimal places) of such Member's Earned PPTF Policy Premium to the
Aggregate Earned Premium; provided, however, that in lieu of any fractional
share of Professionals Group Common Stock, such Member shall be paid the cash
equivalent value thereof based on the Average Price. Members of PPTF who
timely and properly exercise dissenters' rights will be paid the fair value of
their Membership Rights.
By way of example, under the Allocation Formula, and assuming (i) the
Aggregate Earned Premium equals $56,037,359 and (ii) he or she does not
exercise dissenters' rights, a Member of PPTF whose PPTF Policy has $24,000 of
Earned PPTF Policy Premium would be entitled to 1,754.16 Aggregate Merger
Shares, determined by multiplying 4,089,160 shares of Professionals Group
Common Stock by .000428 ($24,000 of Earned PPTF Policy Premium divided by
$56,037,359 (the Aggregate Earned Premium)). However, because fractional
shares of Professionals Group Common Stock will not be issued, such Member
would receive 1,754 whole shares of Professionals Group Common Stock and, in
lieu of the fractional share of Professionals Group Common Stock, would be paid
cash in an amount determined by multiplying the amount of such fractional share
(in this example .16) by the Average Price.
Only Members of PPTF who do not exercise dissenters' rights will be
entitled to be allocated and to receive a portion of the Aggregate Merger
Shares. Except for the shares (and cash in lieu of any fractional share)
issued to such Members of PPTF and the shares issued or issuable pursuant to
Section 1.28 of the Merger Agreement (which, subject to certain vesting
requirements, contemplates the issuance of an aggregate of 153,000 shares of
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Professionals Group Common Stock to certain PPTF trustees and officers over a
four year period), no other shares of Professionals Group Common Stock (or cash
in lieu of any fractional share) will be issued or issuable upon consummation
of the transactions contemplated by the Merger Agreement.
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