Exhibit 2.2
AMENDMENT TO MERGER AGREEMENT
AND
PLAN OF MERGER
This Amendment to Merger Agreement and Plan of Merger (this "Amendment")
amends that certain Merger Agreement and Plan of Merger (the "Merger Agreement")
by and among American Physicians Service Group, Inc., APSG ACQCO, Inc. and
American Physicians Insurance Exchange dated June 1, 2006.
R E C I T A L S:
Each parties' Board of Directors believes it is in its and its
prospective owners' best interests to amend the Merger Agreement as set forth in
this Amendment.
A G R E E M E N T:
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein made each APSG Party and the Insurance Company agree as follows:
1. Definitions.
A. Unless otherwise specifically defined in this Amendment,
capitalized terms shall have the definitions set forth in the Merger Agreement.
B. The definition of "Expiration Date" in Article I of the
Merger Agreement is hereby amended to mean March 31, 2007.
2. Charter and Bylaws. The Certificate of Formation of the Insurance
Company attached to the Merger Agreement as Exhibit F is hereby deleted and
replaced in its entirety with the Certificate of Formation attached as Exhibit F
to this Amendment. Furthermore, the Amended and Restated Bylaws of the Insurance
Company attached to the Merger Agreement as Exhibit G are hereby deleted and
replaced in their entirety with the Amended and Restated Bylaws attached as
Exhibit G to this Amendment. Except for the substitution of these exhibits,
Section 2.6 of the Merger Agreement shall remain in full force and effect in
accordance with its terms.
3. Effect on Capital Stock. Section 2.8 of the Merger Agreement is
hereby deleted in its entirety and replaced with the following:
2.8 Effect on Capital Stock.
At the Effective Time, because of the Merger and without any
action on the part of APSG Parent, APSG Merger Sub or the Insurance
Company:
(a) Conversion of Insurance Company Preferred Stock. Each share of
Insurance Company Preferred Stock issued pursuant to the
Conversion and outstanding immediately prior to the Effective
Time will be converted into, and exchanged for, a like number of
shares of APSG Parent Preferred Shares. The APSG Parent Preferred
Shares will have the same redemption and dividend provisions as
the Insurance Company Preferred Stock. There will not be any
certificates issued to represent the outstanding Insurance
Company Preferred Stock in the Conversion, and the holders of
Insurance Company Preferred Stock, at the Effective Time of the
Merger, will cease to have any rights with respect to the
Insurance Company Preferred Stock except the right to receive
APSG Parent Preferred Shares. Immediately following the Effective
Time, APSG will be the holder of all of the issued and
outstanding Insurance Company Preferred Stock.
(b) Conversion of Insurance Company Common Stock. Subject to Sections
2.10 and 2.12, each share of Insurance Company Common Stock
issued pursuant to the Conversion and outstanding immediately
prior to the Effective Time will be converted into, and exchanged
for, the number of APSG Parent Common Shares equal to the
Exchange Ratio. There will not be any certificates issued to
represent the outstanding Insurance Company Common Stock in the
Conversion, and the holders of Insurance Company Common Stock, at
the Effective Time of the Merger, will cease to have any rights
with respect to the Insurance Company Common Stock except the
right to receive: (i) the APSG Parent Common Shares as determined
herein and (ii) cash in lieu of fractional APSG Parent Common
Shares under Section 2.10, in each case without interest
(together with the APSG Parent Preferred Shares, collectively,
the "Merger Consideration"). Immediately following the Effective
Time, APSG will be the holder of all of the issued and
outstanding Insurance Company Common Stock.
(c) Rights Associated with Insurance Company Common Stock and
Insurance Company Preferred Stock. Since there will not be any
certificates issued to represent the outstanding Insurance
Company Common Stock or Insurance Company Preferred Stock, the
holders of Insurance Company Common Stock and Insurance Company
Preferred Stock will have only the right to receive their
respective Merger Consideration.
(d) Certain Additional Definitions. For this Agreement the following
terms will have the indicated meanings:
"Announcement Exchange Ratio" means (a) the quotient of (i)
the Purchase Price divided by (ii) the Announcement Market Price;
divided by (b) the Insurance Company Common Equity. For instance, and
purely by way of example, if the Present Value of the Redemption
Obligation is $9 million (making the Purchase Price $30 million), the
Announcement Market Price is $14.28 per share, and the Insurance
Company Common Equity resulting from the Conversion is 10 million
shares, then the Announcement Exchange Ratio would be 0.210 APSG Parent
Common Shares for every share of Insurance Company Common Stock issued
in the Conversion, as follows:
(($30,000,000 / $14.28) / 10,000,000) = 0.210
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"Announcement Market Price" means the average closing market
prices of APSG Parent Common Shares on the National Association of
Securities Dealers Automated Quotation System, as reported in The Wall
Street Journal, for the twenty (20) consecutive trading days
immediately prior to the close of the full business day immediately
prior to the date this Agreement is fully executed by all of the
Parties and announced to the public by appropriate SEC filings and the
issuance of the mutually agreed upon press release, which price is
$14.28 per share.
"Closing Exchange Ratio" means the Announcement Exchange
Ratio; provided, however, that in the event the Closing Market Price is
more than 115% of the Announcement Market Price or is less than 85% of
the Announcement Market Price, the Closing Exchange Ratio shall equal:
(i) if the Closing Market Price is more than 115% of the
Announcement Market Price, the Closing Exchange Ratio shall equal (A)
the quotient of (i) the Purchase Price multiplied by 115% divided by
(ii) the Closing Market Price; divided by (B) the Insurance Company
Common Equity. For instance, and purely by way of example, if the
Present Value of the Redemption Obligation is $9 million (making the
Purchase Price $30 million), the Announcement Market Price is $14.28
per share, the Closing Market Price is $17.14 per share and the
Insurance Company Common Equity resulting from the Conversion is 10
million shares, then the Closing Exchange Ratio would be 0.201 APSG
Parent Common Shares for every share of Insurance Company Common Stock
issued in the Conversion, as follows:
(($30,000,000 x 115%) / $17.14) / 10,000,000 = .201
(ii) if the Closing Market Price is less than 85% of the
Announcement Market Price, the Closing Exchange Ratio shall equal (A)
the quotient of (i) the Purchase Price multiplied by 85% divided by
(ii) the Closing Market Price; divided by (B) the Insurance Company
Common Equity. For instance, and purely by way of example, if the
Present Value of the Redemption Obligation is $9 million (making the
Purchase Price $30 million), the Announcement Market Price is $14.28
per share, the Closing Market Price is $11.42 per share and the
Insurance Company Common Equity resulting from the Conversion is 10
million shares, then the Closing Exchange Ratio would be 0.223 APSG
Parent Common Shares for every share of Insurance Company Common Stock
issued in the Conversion, as follows:
(($30,000,000 x 85%) / $11.42) / 10,000,000 = 0.223
"Closing Market Price" means the average closing market prices
of APSG Parent Common Shares on the National Association of Securities
Dealers Automated Quotation System, as reported in The Wall Street
Journal, for the twenty (20) consecutive trading days immediately prior
to the close of the full business day immediately prior to the Closing
Date.
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"Insurance Company Common Equity" means the aggregate number
of shares of Insurance Company Common Stock that the Subscribers and
certain policyholders of the Insurance Company become entitled to
receive in the Conversion.
"Present Value of the Redemption Obligation" means the net
present value of the stream of payments authorized by TDI (as of the
Closing) that must be made by the Insurance Company to comply with the
mandatory redemption features of the Insurance Company Preferred Stock
issued in the Conversion in full satisfaction of the Refundable Deposit
determined on the basis of a constant discount rate of 5.35%.
"Purchase Price" means $39 million, less the Present Value of
the Redemption Obligation.
4. Due Authorization. Each of the Parties represents and warrants to
the other Parties that it has the relevant entity power and authority to execute
and deliver this Amendment and has taken all necessary action to authorize the
execution and delivery of this Amendment.
5. Merger Agreement. Except as specifically amended hereby, the Merger
Agreement shall remain binding and enforceable in accordance with its terms.
[signature page follows]
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Signature Page to the Amendment to Merger Agreement
and Plan of Merger
IN WITNESS WHEREOF, the Parties have executed this Amendment as of the
25th day of August, 2006.
American Physicians Service Group, Inc.
By: /s/ Xxx Xxxxxxx
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Name: Xxx Xxxxxxx
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Title: Chairman of the Board
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APSG ACQCO, INC.
By: /s/ Xxx Xxxxxxx
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Name: Xxx Xxxxxxx
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Title: President
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American Physicians Insurance Exchange
By: /s/ Xxxxxx X. Xxxxxx, Xx. M.D.
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Name: Xxxxxx X. Xxxxxx, Xx. M.D.
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Title: Chairman of the Board
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