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EXHIBIT (99)(f)
CONSULTING, CONFIDENTIALITY AND NONCOMPETITION AGREEMENT
THIS CONSULTING, CONFIDENTIALITY AND NONCOMPETITION AGREEMENT
("Agreement") is made and entered into as of the _____ day of ____________,
199___ by and between Professionals Insurance Company Management Group, Inc., a
Michigan corporation ("Professionals Group"), and ______________________ (the
"Consultant").
W I T N E S S E T H :
WHEREAS, Professionals Group desires to retain Consultant for the
period set forth in this Agreement to obtain services from the Consultant, and
Consultant is willing to be retained by Professionals Group pursuant to this
Agreement; and
WHEREAS, Consultant acknowledges (i) that Consultant's expertise will
contribute significantly to the financial success of the business of
Professionals Group and (ii) that the compensation, covenants not to compete and
confidentiality provisions in this Agreement are reasonable.
NOW, THEREFORE, in consideration of the premises, as well as for other
good and valuable consideration (the receipt and sufficiency of which is hereby
acknowledged), the parties hereby agree as follows:
1. Definitions. Capitalized terms not otherwise defined in this
Agreement shall have the meanings given to them in the First Amended and
Restated Agreement and Plan of Merger dated as of October 3, 1997, among
Professionals Group, PICOM Insurance Company ("PICOM") and Physicians Protective
Trust Fund ("PPTF").
2. Consulting Relationship. Professionals Group hereby retains
Consultant to provide Consulting Services (as defined in Section 3 of this
Agreement) for a term commencing on the date hereof (the "Effective Date") and
ending on that date that is the earlier of the date this Agreement is terminated
and the fourth anniversary of the Effective Date (the "Expiration Date").
3. Consulting Services. Consultant agrees (i) if requested by the
Chairman of the Board or Vice-Chairman of the Board of Professionals Group, to
serve as a member of the Board of Directors of Professionals Group and/or an
advisory board of Professionals Group, (ii) if requested by the Chairman of the
Board or ViceChairman of the Board of PICOM, to serve as a member of the Board
of Directors of PICOM and/or an advisory board of PICOM, (iii) if requested by
the Board of Directors of Professionals Group to serve as a member of one or
more committees of the Board of Directors of Professionals Group, (iv) if
requested by the Board of Directors of PICOM, to serve as a member of one or
more committees of the Board
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of Directors of PICOM, (v) to provide such services to Professionals Group as
may be reasonably requested from time to time by the Chairman of the Board or
the Vice-Chairman of the Board of Professionals Group, consistent with
Consultant's skills, background and experience, and (vi) to provide such
services to PICOM as may be reasonably requested from time to time by the
Chairman of the Board or the Vice-Chairman of the Board of PICOM, consistent
with Consultant's skills, background and experience. Consultant shall not be
required to devote a specific amount of time each year to the performance of his
duties, but shall spend that amount of time reasonably necessary to accomplish
the assigned tasks (including Board, advisory board and committee service)
faithfully and completely. The services of Consultant as described above are
collectively defined as the "Consulting Services."
4. Compensation.
a. In consideration of, among other things, the Consulting
Services rendered by Consultant, Professionals Group shall pay Consultant during
each calendar year during the term of this Agreement the sum of $25,000;
provided, however, that any and all fees paid to Consultant during such calendar
year for serving on the Board of Directors of Professionals Group and any
advisory board or committee thereof, and/or for serving on the Board of
Directors of PICOM and any advisory board or committee thereof, shall be
credited against, and, to the extent of the aggregate amount of such fees, shall
constitute payment of, said sum.
b. Professionals Group shall reimburse Consultant, within 30
days after Consultant submits expense receipts to the Company, for all
reasonable out-of-pocket travel expenses that are paid by Consultant in
performing the Consulting Services.
c. In consideration of Consultant's Consulting Services and
Consultant's covenants regarding confidentiality and noncompetition,
Professionals Group has granted and allocated to Consultant ___________ shares
of Professionals Group Common Stock (the "Shares").
(i) The grant and allocation of Shares to Consultant shall
be provisional, and subject to the vesting requirements of this
Agreement. Any Shares that do not vest pursuant to the terms of this
Agreement shall be canceled and forfeited.
(ii) The Shares granted and allocated to Consultant shall
vest in accordance with the schedule that follows: (A) as contemplated
by Section 1.28 of the Merger Agreement, one-fifth of the Shares
granted and allocated to Consultant shall vest on the date of the first
meeting of the Board of Directors of Professionals Group following the
XXXXX Effective Time provided this Agreement is then in effect; (B)
one-fifth of the Shares granted and allocated to Consultant shall vest
on June 2, 1999 provided this Agreement
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is then in effect; (C) one-fifth of the Shares granted and allocated to
Consultant shall vest on June 7, 2000 provided this Agreement is then
in effect; (D) one-fifth of the Shares granted and allocated to
Consultant shall vest on June 6, 2001 this Agreement is then in effect;
and (E) one-fifth of the Shares granted and allocated to Consultant
shall vest on January 30, 2002 provided this Agreement is then in
effect. Notwithstanding anything to the contrary express or implied in
this Agreement or the Merger Agreement, all Shares granted and
allocated to Consultant shall automatically vest (y) upon the death of
Consultant while this Agreement is in effect, or (z) upon a change of
control of Professionals Group prior to the termination of this
Agreement.
(iii) All Shares granted and allocated to Consultant that
vest shall cease to be subject to cancellation and forfeiture and,
except to the extent that Consultant may have pledged or otherwise
encumbered such vested Shares, Consultant shall be the full record and
beneficial owner of such vested Shares. Within 30 days of the date of
vesting of any of the Shares granted and allocated to Consultant,
Professionals Group shall deliver to Consultant certificates evidencing
full legal and beneficial ownership of the Shares vesting on such date.
Those Shares granted and allocated to Consultant that vest [shall/shall
not], at the time of such vesting, be registered with the Securities
and Exchange Commission and [shall/shall not] be freely tradeable by
the Consultant. Consultant agrees to comply with all securities laws in
connection with the retention, sale or disposition of any Shares of
Professionals Group Common Stock received by Consultant.
(iv) For purposes of this Agreement: A change of control
shall be deemed to have occurred if (A) any person or entity (other
than a person or entity in control of Professionals Group as of the
date of this Agreement, or other than a trustee or other fiduciary
holding securities under an employee benefit plan of Professionals
Group or any of its subsidiaries, or an entity owned directly or
indirectly by the stockholders of Professionals Group in substantially
the same proportions as their ownership of stock of Professionals Group
becomes the "beneficial owner" (defined herein as in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
of securities of Professionals Group representing more than 24.9% of
the combined voting power of Professionals Group's then outstanding
voting securities; or (B) during any period of two consecutive years
commencing after the date of this Agreement the stockholders of
Professionals Group approve (1) a plan of complete liquidation of
Professionals Group, or (2) an agreement for the sale or disposition of
all or substantially all of Professionals Group's assets, or (3) the
sale or reinsurance of all or substantially all of the insurance
business of PICOM so as to cause PICOM to cease to function on a going
forward basis as
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a medical professional liability insurance company, or (4) a merger,
consolidation, or reorganization of Professionals Group with or
involving any other corporation, other than a merger, consolidation, or
reorganization that would result in the voting securities of
Professionals Group outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity) at least 51% of the combined
voting power of the voting securities of Professionals Group (or such
surviving entity) outstanding immediately after such merger,
consolidation, or reorganization. Notwithstanding anything to the
contrary express or implied in this Agreement, in no event shall a
change of control be deemed to have occurred, with respect to
Consultant, if Consultant is part of a group which consummates the
change of control. Consultant shall be deemed "part of a group" for
purposes of the preceding sentence if Consultant is an equity
participant or has agreed to become an equity participant in such group
(except for passive ownership of less than 5% of the stock of such
group or ownership of equity participation in such group which is
otherwise deemed not to be significant, as determined prior to the
change of control by a majority of the nonemployee continuing directors
of Professionals Group).
(v) Upon the occurrence after the date first above
written of any dividend or other distribution (whether in cash, shares,
other securities, or other property), stock split, reverse stock split,
recapitalization, reorganization, split-up, spin-off, merger,
consolidation, share exchange, rights offering, or other change in the
capital or corporate structure of Professionals Group affecting
Professionals Group Common Stock, then the Board of Directors of
Professionals Group shall have the authority to make such adjustment,
if any, in such manner as it deems appropriate, to the number of shares
of Professionals Group Common Stock granted and allocated to
Consultant; provided, however, (i) that the number of shares of
Professionals Group Common Stock granted and allocated to Consultant
shall always be a whole number; and (ii) in the event that any award
under the Professionals Group 1996 Non-Employee Directors Stock Option
Plan is adjusted by the Board of Directors of Professionals Group
pursuant to Section 7 thereof, then an appropriate adjustment shall be
made to the number of shares of Professionals Group Common Stock
granted and allocated to Consultant.
d. It is understood and agreed that Consultant is responsible
for all tax payments. If Professionals Group, in its sole discretion, shall
determine that Professionals Group or any of its subsidiaries has incurred or
will incur any liability to withhold any federal, state or local income or other
taxes by reason of any remuneration payable to Consultant (including, without
limitation, the grant and allocation of shares of
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Professionals Group Common Stock to Consultant), then Professionals Group may
effect such withholding.
5. Right of Employment. Except as otherwise provided in this Agreement,
no person or entity other than Consultant shall have any claim or right to be
granted or allocated any Shares of Professionals Group Common Stock under this
Agreement or otherwise. Neither this Agreement nor any action taken or not taken
pursuant to this Agreement shall be construed as giving Consultant any right to
be retained, as an employee or otherwise, by Professionals Group or any of its
subsidiaries.
6. No Funding. This Agreement shall be unfunded. Professionals Group
shall not be required to establish any special or separate fund or to make any
other segregation of assets to assure the vesting of any of the Shares;
provided, however, that Professionals Group has reserved for issuance pursuant
to this Agreement that number of shares of Professionals Group Common Stock that
is equivalent to the number of shares of Professionals Group Common Stock
granted and allocated to Consultant pursuant to this Agreement.
7. Termination. This Agreement may be terminated as
follows:
a. This Agreement shall terminate one day after Consultant's
death.
b. Professionals Group may terminate this Agreement if, by
reason of a disability, Consultant has been unable to perform Consulting
Services for a period of 180 consecutive days.
c. Professionals Group may terminate this Agreement for Cause
at any time. For purposes of this Agreement "Cause" shall mean, and this
Agreement shall be deemed to have been terminated for Cause if such termination
results from, (i) willful gross misconduct on the part of Consultant that is
materially and demonstrably injurious to Professionals Group or any of its
subsidiaries as determined by the Board of Directors of Professionals Group;
provided however, that no act, or failure to act, on the part of Consultant
shall be considered willful gross misconduct unless Consultant acted, or failed
to act, other than in good faith and with a reasonable belief that such action,
or failure to act, was in the best interest of Professionals Group and its
subsidiaries; or (ii) Consultant commits any act that constitutes a felony and
that results, or is intended to result, directly or indirectly, in Consultant's
substantial personal gain or personal enrichment at the expense of Professionals
Group or any of its subsidiaries.
d. Professionals Group may terminate this Agreement if, at the
time of such termination, Consultant is not a named insured under a policy of
medical malpractice insurance (including, without
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limitation, any policy providing so-called "tail" coverage) issued
by PICOM.
e. Consultant may terminate this Agreement with cause or
without cause at any time.
8. Compensation Upon Termination. Upon termination of this Agreement
Professionals Group shall have no further obligation under this Agreement to
make any payments to Consultant or to bestow any benefits on Consultant after
the date this Agreement is terminated (the "Termination Date"), other than
payments and benefits accrued and due and payable to Consultant prior to the
Termination Date.
9. Confidentiality.
a. Consultant acknowledges (i) that as a result of
Consultant's prior service as a trustee of PPTF and his engagement by
Professionals Group, Consultant has and will become informed of, and has had and
will have access to, valuable and confidential information of Professionals
Group and its subsidiaries including, but not limited to, trade secrets,
technical information, know-how, plans, specifications, marketing and sales
information, claims handling information, investment information, and the
identity of policyholders and reinsurers (collectively, "Confidential
Information"), (ii) that the Confidential Information is the exclusive property
of Professionals Group and its subsidiaries, and (iii) that the Confidential
Information is to be held by Consultant in trust and solely for the benefit of
Professionals Group and its subsidiaries. Accordingly, Consultant shall not at
any time subsequent to the date of this Agreement, use, reveal, report, publish,
transfer or otherwise disclose to any person or entity any of the Confidential
Information without the prior consent of Professionals Group, except to officers
and employees of Professionals Group and its subsidiaries, and other persons or
entities whom Professionals Group agrees are in a contractual or fiduciary
relationship with Professionals Group or any of its subsidiaries. This provision
does not prohibit Consultant from disclosing information which legally is or
becomes of general public knowledge from authorized sources other than
Consultant.
b. If the Confidential Information known to Consultant or in
Consultant's possession is subpoenaed, is subject to a demand for production, or
is subject to any other form of legal process, by any judicial, regulatory,
administrative, legislative or governmental authority, or any other person or
entity, Consultant agrees to notify Professionals Group promptly that such
subpoena, demand or other legal process has been received. Consultant agrees to
use Consultant's best efforts, consistent with the requirements of applicable
law, to protect the Confidential Information from disclosure and to cooperate
with Professionals Group and its subsidiaries in seeking protection from
disclosure of the Confidential Information. If Consultant is required to
disclose the Confidential Information, Consultant agrees, at Professional
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Group's request and expense, to use Consultant's best efforts to obtain
assurances that the Confidential Information will be maintained on a
confidential basis and not be disclosed to a greater degree than legally
required.
c. Upon the termination of this Agreement, Consultant shall
promptly deliver to Professionals Group all originals and all copies that are in
Consultant's possession or control of the following: all customer lists,
stockholder lists, lists of names of beneficial owners, policyholder lists,
manuals, letters, notes, notebooks, reports and all other materials relating to
the business of Professionals Group and its subsidiaries. Consultant shall
represent to Professionals Group that Consultant has complied with the
provisions of this Section 9 at the time the Consultant ceases to be a
consultant to Professionals Group.
10. Noncompetition and Nonsolicitation.
a. Consultant agrees that during the term of this Agreement
and for five years after its termination (for whatever reason), Consultant shall
not, directly or indirectly, engage, participate, or assist in any business
organization by performing services related to the providing of malpractice
insurance to physicians, dentists and other persons or entities insured by
Professionals Group or any of its subsidiaries (the "Proscribed Activities") in
the states in which Professionals Group or any of its subsidiaries is then
conducting the Proscribed Activities, whether as owner, part-owner, stockholder,
partner, director, officer, trustee, employee, agent, consultant or in any other
capacity, on Consultant's own behalf or on behalf of any person or entity.
Consultant may make passive investments in a competitive enterprise the voting
equity interests of which are publicly traded, provided that Consultant's
holdings in such enterprise, together with the holdings of any of the
Consultant's affiliates (as that term is defined in Rule 405 of the Rules under
the Exchange Act) do not exceed 3% of the outstanding voting equity interests of
such enterprise.
b. Consultant agrees that during the term of this Agreement
and for five years after its termination (for whatever reason), Consultant shall
not (i) directly or indirectly solicit any person or entity in the states in
which Professionals Group or any of its subsidiaries is then conducting the
Proscribed Activities to purchase insurance products or services competitive
with the Proscribed Activities, (ii) directly or indirectly solicit any person
or entity to purchase or sell insurance products or services relating to the
Proscribed Activities, or (iii) recruit or otherwise solicit or induce any
person who is at the time an employee or consultant with Professionals Group or
any of its subsidiaries to terminate such person's employment or consulting
relationship with Professionals Group or any of its subsidiaries.
11. Restrictions Reasonable. The restrictions against
competition and solicitation set forth above are considered by the
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parties to be reasonable for the purposes of protecting the business of
Professionals Group and its subsidiaries. If any restriction is found by a court
of competent jurisdiction to be unenforceable because it extends for too long a
period of time, or over too broad a range of activities, or in too large a
geographic area, then that restriction shall be interpreted to extend only over
the maximum period of time, or range of activities, or geographic area, as to
which it may be enforceable.
12. Remedies. Consultant and Professionals Group acknowledge that
Professionals Group and its subsidiaries would not have an adequate remedy at
law for money damages if the covenants contained in Sections 9 or 10 of this
Agreement were not complied with in accordance with their terms. Because the
breach or threatened breach of any of the covenants in Sections 9 or 10 of this
Agreement will result in immediate and irreparable injury to Professionals Group
and its subsidiaries, Consultant agrees that Professionals Group and its
subsidiaries shall be entitled to an injunction restraining Consultant from
violating Sections 9 and 10 of this Agreement to the fullest extent allowed by
law. Nothing in this Agreement shall prohibit Professionals Group or any of its
subsidiaries from pursuing all other legal or equitable remedies that may be
available to it for a breach or threatened breach, including the recovery of
damages.
13. Survival. The provisions of Sections 9, 10, 11 and 12 shall survive
the termination of this Agreement and shall inure to the benefit of
Professionals Group, its successors and assigns.
14. Third-Party Agreements and Rights. Consultant confirms that
Consultant is not bound by any agreement with any other person or entity that
would restrict engagement of Consultant in any business or Consultant's use or
disclosure of information. Consultant represents that Consultant's execution of
this Agreement, engagement by Professionals Group and performance of duties
pursuant to this Agreement will not violate any obligations Consultant may have
to any other person or entity. Consultant shall not disclose or make use of
information in violation of any agreements with or rights of any other person or
entity.
15. Further Assurances. Consultant and Professionals Group agree to
execute, acknowledge, deliver and file, or cause to be executed, acknowledged,
delivered and filed, all further instruments, agreements or documents as may be
necessary to consummate the transactions provided for in this Agreement and to
do all further acts necessary to carry out the purpose and intent of this
Agreement.
16. No Waiver. No term or condition of this Agreement shall be deemed
to have been waived, nor shall there be any estoppel against the enforcement of
any provision of this Agreement, except by written instrument of the party
charged with the waiver or estoppel. No written waiver shall be deemed a
continuing waiver unless specifically stated therein, and each waiver shall
operate
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only as to the specific term or condition waived and shall not constitute a
waiver of the term or condition for the future or as to any act other than that
specifically waived. The waiver by any party of any other party's breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
subsequent breach, and the failure of any party to exercise any right or remedy
shall not operate or be construed as a waiver or bar to the exercise of such
right or remedy upon the occurrence of any subsequent breach. No delay on the
part of a party in exercising a right, power or privilege hereunder shall
operate as a waiver thereof. No waiver on the part of a party of a right, power
or privilege, or a single or partial exercise of a right, power or privilege,
shall preclude further exercise thereof or the exercise of any other right,
power or privilege. The rights and remedies of this Agreement are cumulative and
are not exclusive of the rights or remedies that a party may otherwise have at
law or in equity.
17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Michigan without reference to its
conflicts of law principles.
18. Notices. Notices required or permitted to be given under this
Agreement shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation), mailed by registered or certified mail (return
receipt requested), or delivered by an express courier (with confirmation), to
the parties at the addresses below (or at such other address for a party as
shall be specified by like notice):
a. If to Professionals Group:
Professionals Insurance Company Management Group
0000 Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attention: President
Facsimile: 000-000-0000
with a copy to:
Xxxx X. Xxxxxxxx, Esq.
Miller, Canfield, Paddock and Stone, P.L.C.
Xxxxx 000
0000 Xxxxx Xxxxxxxx
Xxxxxxxxxx Xxxxx, XX 00000
Facsimile: 000-000-0000
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b. If to Consultant:
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with a copy to:
Xxxxxx X. X'Xxxxx III, Esq.
Steel Xxxxxx & Xxxxx LLP
0000 Xxxxxxxx Xxxxx Xxxx
000 Xxxxx Xxxxxxx Xxxxx
Xxxx Xxxx Xxxxx, Xxxxxxx 00000-0000
Facsimile: 000-000-0000
19. Assignment.
a. This Agreement and all of Consultant's rights, duties and
obligations under this Agreement are personal in nature and shall not be
assignable by the Consultant. A purported assignment shall not be valid or
binding on Professionals Group.
b. This Agreement shall inure to the benefit of and be legally
binding upon all successors and assigns of Professionals Group. Professionals
Group will require a successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of Professionals Group by agreement in form and substance satisfactory to
the Consultant, to expressly assume and agree to perform this Agreement in the
same manner and to the same extent that Professionals Group would be required to
perform it if no such succession had taken place. For purposes of this Section
19, "Professionals Group" shall mean Professionals Group as defined above and
all successors to its business or assets that execute and deliver the agreement
provided for in this Section 19 or that otherwise become bound by the terms and
provisions of this Agreement by operation of law.
20. Attorneys' Fees. If litigation is brought concerning this
Agreement, the prevailing party shall be entitled to receive from the
non-prevailing party, and the non-prevailing party shall upon final judgment and
the expiration of all appeals immediately pay upon demand all reasonable
attorneys' fees and expenses of the prevailing party.
21. Entire Agreement. This Agreement constitutes the entire
understanding of the parties and supersedes all prior discussions, negotiations,
agreements and understandings, whether oral or written, with respect to its
subject matter. This Agreement may be modified only by a written instrument
properly executed by Consultant and Professionals Group.
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22. Severability. If any one or more of the provisions of this
Agreement is held invalid, illegal or unenforceable, the remaining provisions of
this Agreement shall be unimpaired, and the invalid, illegal or unenforceable
provision shall be replaced by a mutually acceptable valid, legal and
enforceable provision which comes closest to the intent of the parties.
23. Counterparts. This Agreement may be executed by the parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.
The parties have executed this Agreement effective as of the day and
year first written above.
PROFESSIONALS INSURANCE COMPANY CONSULTANT
MANAGEMENT GROUP
By:
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Xxxxxx X. Xxxxx, President Name:
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Taxpayer Identification Number
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