Exhibit 10.17


 


AMENDMENT TO


 


AGREEMENT AND
PLAN OF MERGER AND REORGANIZATION


 


THIS AMENDMENT TO AGREEMENT AND PLAN OF MERGER AND
REORGANIZATION (this “Amendment”), dated as of December 31, 2008,
is entered into by and among UNIVERSAL AMERICAN CORP., a New York corporation,
formerly known as Universal American Financial Corp. (“Parent”),
MEMBERHEALTH, LLC, a Delaware limited liability company and wholly owned
subsidiary of Parent, formerly known as MH Acquisition II LLC (the “Company”),
which is the successor by merger to MEMBERHEALTH, INC., an Ohio corporation
(the “Original Entity”) and to MH ACQUISITION I CORP., a Delaware
corporation and wholly owned subsidiary of Parent (“Merger Sub”), MHRx
LLC, a Delaware limited liability company (“MHRx”), and Welsh, Carson,
Anderson & Stowe IX, L.P., a Delaware limited partnership (“WCAS IX”),
as the Shareholder Representative hereunder.


 


RECITALS


 


WHEREAS,
Parent, MHRx, its former wholly-owned subsidiary the Original Entity, the
Company, Merger Sub, and WCAS IX are parties to that certain Agreement and Plan
of Merger and Reorganization, dated as of May 7, 2007 (the “Original
Agreement”), pursuant to which there was effected a merger of Merger Sub
with and into the Original Entity, with the Original Entity continuing as the
surviving corporation thereof, and, immediately following the effectiveness
thereof, and as part of the same plan of merger and reorganization, the merger
of the Original Entity with and into the Company, with the Company continuing
as the surviving entity thereof;


 


WHEREAS,
the Original Agreement was amended by that certain Settlement Agreement and
Amendment to Merger Agreement dated as of March 5, 2008 (the Original
Agreement, as amended thereby, the “Merger Agreement”);


 


WHEREAS,
the Merger Agreement provides that MHRx shall be entitled to receive payments
of certain Annual Earnout Amounts as additional merger consideration upon the
terms and conditions set forth therein; and


 


WHEREAS,
the Merger Agreement provides that forty-five percent (45%) of each such
payment of an Annual Earnout Amount shall be made in the form of Parent Common
Stock and the remaining fifty-five percent (55%) of each such payment shall be
made by wire transfer of immediately available funds to an account or accounts
designated by the Shareholder Representative, subject to the terms and
conditions set forth therein;


 


WHEREAS,
the Management Committee of MHRx has unanimously determined that it is in the
best interest of MHRx and its members to relinquish its rights under the Merger
Agreement to the portion of the Annual Earnout Amount that is payable in Parent
Common Stock, without thereby increasing the aggregate Annual Earnout Amount
that is payable in cash;


 


WHEREAS,
Parent has agreed to accept such relinquishment and to enter into this
Amendment to reflect the revised agreement of the parties as to the payment of
the Annual Earnout Amount; and


 


WHEREAS,
capitalized terms used herein and not defined shall have the respective
meanings ascribed thereto in the Merger Agreement.


 


NOW,
THEREFORE, in consideration of the mutual covenants contained herein and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, and intending to be legally bound, the parties hereto
agree as follows:


 


1.             Amendments.


 


A.            Section 1.1 of the Merger Agreement is
hereby revised by the deletion of the definitions set forth therein of “Annual
Earnout Amount”, “Parent Shares” and “Stock Merger Consideration”
in their entirety and the substitution therefore of the following:


 


“Annual Earnout Amount” shall mean (A) with respect to the
Annual Earnout Periods ending December 31, 2008 and December 31,
2009, an amount equal to fifty-five percent (55%) of the lesser of (i) the
amount by which Annual EBITDA for such period exceeds the EBITDA Threshold for
such period and (ii) the Annual Cap and (B) with respect to the
Annual Earnout Period ending December 31, 2010, an amount equal to
fifty-five percent (55%) of the lesser of (i) the amount by which the sum
of the Annual EBITDA for such period and the TRICARE Amount exceeds the EBITDA
Threshold for such period and (ii) the Annual Cap.  For the avoidance of doubt, to the extent
that any portion of the CMS Reconciliation Payment Amount is paid to or by the
Company, with respect to the 2006 plan year, during the Annual Earnout Periods,
any such portion of the CMS Reconciliation Payment Amount or other CMS
settlement amounts shall be excluded from the calculation of Annual EBITDA for
such Annual Earnout Period.”


 


““Parent Shares” means the Initial Parent Shares, and any Parent
Shares from time to time issued pursuant to Section 2.12 and/or Section 8.2
(it being understood that if any shares of Parent Common Stock are transferred
to Parent pursuant to Section 2.12 and/or Section 8.2,
the transfer of such shares to Parent shall be deemed to reduce the number of
Parent Shares actually and ultimately issued by Parent as Merger Consideration
hereunder).”


 


““Stock Merger Consideration” means the Initial Stock Merger
Consideration, as from time to time adjusted pursuant to Section 2.12
and/or Section 8.2 (it being understood that if any shares of
Parent Common Stock are transferred to Parent pursuant to Section 2.12
and/or Section 8.2, the transfer of such shares to Parent shall be
deemed to reduce the number of Parent Shares actually and ultimately issued by
Parent as Merger Consideration hereunder).”


 


B.            Section 2.6(a)(ii)(D) of the Merger
Agreement is hereby revised by the deletion thereof in its entirety and the


 


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substitution
therefore of the following:


 


“(D)  subject to the terms and conditions thereof, any additional
Cash Merger Consideration from time to time deliverable pursuant to Section 2.13
below.”


 


C.            Section 2.13(b)(iv) of the Merger
Agreement is hereby revised by the deletion thereof in its entirety and the
substitution therefore of the following:


 


“(iv)        Subject to Section 2.14, any
payments required to be made pursuant to this Section 2.13 shall be
paid by Parent to MHRx (or its members, if the right to receive such payment
has been distributed to such Persons by MHRx), within five (5) Business
Days after the final determination of such amount pursuant to this Section 2.13
(each an “Earnout Payment Date”) and be indefeasibly discharged in full
by the payment of such amount in cash by the wire transfer of immediately
available funds to an account or accounts designated by the Shareholder
Representative.”


 


D.            Section 2.14 of the Merger Agreement is
hereby revised by the deletion thereof in its entirety and the substitution
therefore of the following:


 


“Certain Adjustments. 
Notwithstanding anything to the contrary contained in Section 2.12
or Section 8.2(e), if Parent, MHRx or any Indemnifying Member is
required to deliver any cash or shares of Parent Common Stock to any other
Person which would be treated as an adjustment to the Merger Consideration
pursuant to Section 2.12(f) or Section 8.2(g), the
relative mix of such cash and stock to be delivered shall be adjusted (i) if
the cash and shares are being delivered to MHRx or any Indemnifying Member, by
increasing the shares and decreasing the cash to be delivered or (ii) if
the cash and shares are being delivered to Parent, by decreasing the shares and
increasing the cash to be delivered, if necessary (and only to the extent
necessary) so that, after the delivery of such cash and shares, the Fair Market
Value of all Parent Shares included in the Merger Consideration (valued as of
the trading day immediately preceding the Closing Date) is in the aggregate not
less than 40% of the total Merger Consideration (with all Parent Shares being
valued at their Fair Market Value as of the trading day immediately preceding
the Closing Date).  In each case, the required
cash payment will be adjusted up or down to the extent necessary so that the
total amount of such purchase price adjustment (based on the valuation
methodology for Parent Common Stock set forth in Section 2.12(e) or
Section 8.2(e), as applicable) is not, in the aggregate, altered.


 


2.             No Other Amendments.  Except
as expressly amended hereby, the Merger Agreement shall remain in full force
and effect in accordance with its terms. 
Neither the execution of this Amendment nor the performance of the
Merger Agreement as amended by this Amendment shall be construed as or
constitute an act of Parent that is inconsistent with Section 5.11(b) of
the Merger Agreement.


 


3.             MHRx.  If MHRx is dissolved and/or liquidated on or
after the date hereof, (i) the Shareholder Representative shall thereafter
be entitled to make all decisions under the Merger Agreement that MHRx was
previously entitled to make, (ii) any payment to be made to MHRx pursuant
to Section 2.13 of the Merger Agreement shall be made (x) to the
former members of MHRx as directed by the Shareholder Representative and (y) on
a basis consistent with the distribution provisions of the limited liability
company agreement of MHRx as in effect at the time of such dissolution and/or
liquidation (as determined by the Shareholder Representative) and (iii) all
notices to be provided to MHRx or its former members under the Merger Agreement
shall thereafter be distributed as directed by the Shareholder Representative.


 


4.             Counterparts.  This Amendment may be executed in one or more
counterparts for the convenience of the parties hereto, each of which shall be
deemed an original and all of which together will constitute one and the same
instrument.  Delivery of an executed
counterpart of a signature page to this Amendment by facsimile or other
electronic delivery shall be effective as delivery of a mutually executed
counterpart to this Amendment.


 


5.             Governing Law.  All issues and questions concerning the
construction, validity, enforcement and interpretation of this Amendment and
the schedules and exhibits hereto shall be governed by, and construed in
accordance with, the laws of the State of New York without giving effect to any
choice of law or conflict of law rules or provisions that would cause the
application of the laws of any jurisdiction other than the State of New York.


 


6.             Due Authorization.  Each of the individuals executing this
Amendment on behalf of one or more parties hereto warrants and represents that
he or she has been duly authorized and empowered to execute this Amendment on
behalf of each such respective party and to bind each such respective party to
the terms hereof.


 


7.             Jurisdiction and Venue; Waiver of Jury Trial.  Except as otherwise provided in Sections 2.12
and 2.13 of the Merger Agreement, each of the parties submits to the
exclusive jurisdiction of any state or federal court sitting in New York, New
York, in any action or proceeding arising out of or relating to this Amendment,
agrees that all claims in respect of the action or proceeding may be heard and
determined in any such court and agrees not to bring any action or proceeding
arising out of or relating to this Amendment in any other court.  Each of the parties waives any defense of
inconvenient forum to the maintenance of any action or proceeding so brought
and waives any bond, surety or other security that might be required of any
other party with respect thereto.  Each
party agrees that service of summons and complaint or any other process that
might be served in any action or proceeding may be made on such party by sending
or delivering a copy of the process to the party to be served at the address of
the party and in the manner provided for the giving of notices in Section 8.3
of the Merger Agreement.  Nothing in this
Amendment or in Section 8.8 of the Merger Agreement, however, shall
affect the right of any party to serve legal process in any other manner
permitted by law.  Each party agrees that
a final, non-appealable judgment in any action or proceeding so brought shall
be conclusive and may be enforced by suit on the judgment or in any other
manner provided by law.  EACH OF THE
PARTIES HERETO IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AMENDMENT.


 


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IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed as of the day and year first above written.


 


 


	
   

  	
  UNIVERSAL AMERICAN CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Mitchell
  J. Stier

  
	
   

  	
  Senior
  Vice President and General Counsel

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MEMBERHEALTH, LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Mitchell
  J. Stier

  
	
   

  	
  Senior
  Vice President

  
	
   

  	
   

  
	
   

  	
  MHRx
  LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WELSH,
  CARSON, ANDERSON & STOWE IX, L.P., as Shareholder Representative

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:          WCAS
  ASSOCIATES IX LLC,

  
	
   

  	
                  its
  General Partner

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  
	
  Title:

  	
   

  
						



 


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