Document:

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                                                                   EXHIBIT 10.24

                          AGREEMENT AND PLAN OF MERGER

         AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as of July 9,
2002, by and among PRONATIONAL INSURANCE COMPANY, a Michigan insurance company
("Parent"), MEEMIC MERGER CORP., a Michigan corporation and a wholly owned
subsidiary of Parent ("Sub"), and MEEMIC HOLDINGS, INC., a Michigan corporation
(the "Company").

         WHEREAS, upon the terms and subject to the conditions of this
Agreement, including approval of this Agreement by the Company's shareholders,
the Company proposes to make a tender offer to purchase all of the issued and
outstanding shares of Common Stock of the Company other than those held by
ProNational Insurance Company (the "Offer") at a price per share of $29.00, net
to the shareholders in cash;

         WHEREAS, upon the terms and subject to the conditions of this
Agreement, including completion of the Offer, the parties intend for Sub to
merged with and into the Company and that the Company survive such merger as a
wholly owned subsidiary of Parent;

         WHEREAS the Board of Directors and sole shareholder of Sub have
approved this Agreement in accordance with the Michigan Business Corporation Act
(the "MBCA") upon the terms and subject to the conditions set forth herein;

         WHEREAS the Board of Directors of Parent deems it advisable and in the
best interests of its shareholder to consummate, and has approved, this
Agreement;

         WHEREAS the Board of Directors of the Company, upon the recommendation
of the Exploratory Committee of the Board, has unanimously (i) determined that
this Agreement and the transactions contemplated hereby are advisable and in the
best interests of its shareholders, (ii) determined that, based on the written
opinion of the Exploratory Committee's financial advisor, the consideration to
be paid to the Independent Shareholders of the Company in the transactions
contemplated by this Agreement is fair to such Independent Shareholders, (ii)
approved this Agreement and the transactions contemplated hereby and (iii)
resolved, subject to Section 6.02(a) hereof, to recommend to such shareholders
their approval of this Agreement and acceptance of the Offer;

         NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein the
parties hereto agree as follows:

                                    ARTICLE I

                                    THE OFFER

SECTION 1.01. The Offer.

                  (a)      Terms of the Offer. Provided that this Agreement
         shall not have been terminated in accordance with Article IX and none
         of the events set forth in Section 1.02 hereof (the "Tender Offer
         Conditions") shall have occurred and be continuing, as promptly as
         reasonably practicable following the receipt of the approval of
         shareholders of this Agreement described in Section 4.07, but in no
         event later than 10 business days after the public announcement of the
         receipt of such approval, the Company shall (i) commence (within the
         meaning of the applicable rules under the Securities Exchange Act of
         1934, as amended (the "Exchange Act")) the Offer at a price per share
         of $29.00, net to the shareholders in cash (the "Offer Price"), (ii)
         upon commencement of the Offer, file Schedule TO and all other
         necessary documents with the Securities and Exchange Commission (the
         "SEC") and make all deliveries, mailings and telephonic notices
         required by the applicable rules under the Exchange Act in connection
         with the Offer (the "Offer Documents") and (iii) use its

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         commercially reasonable efforts to consummate the Offer, subject to the
         terms and conditions thereof. The obligation of the Company to accept
         for payment and pay for any Company Common Stock tendered pursuant to
         the Offer will be subject to the satisfaction, or waiver by the
         Company, of the Tender Offer Conditions. The Offer shall remain open
         until the close of business on the date that is 20 business days (as
         required by Rule 13e-4 under the Exchange Act) after the commencement
         of the Offer (the "Expiration Time"), unless the Company shall have
         extended the period of time for which the Offer is open pursuant to,
         and in accordance with, this Agreement or as may be required by
         applicable law, in which event the term "Expiration Time" shall mean
         the latest time and date as the Offer, as so extended, may expire.
         Subject to the terms of the Offer and this Agreement and the
         satisfaction of all of the Tender Offer Conditions as of any Expiration
         Time, the Company will accept for payment and pay for all Company
         Common Stock validly tendered and not validly withdrawn pursuant to the
         Offer as soon as practicable after such Expiration Time of the Offer.
         Notwithstanding the foregoing and subject to the applicable rules of
         the SEC and the terms and conditions of the Offer, the Company
         expressly reserves the right to delay payment for Company Common Stock
         in order to comply in whole or in part with applicable law. Any such
         delay shall be effected in compliance with Rule 13e-4(f)(5) under the
         Exchange Act. The Parent agrees that no Company Common Stock held by
         the Parent will be tendered in the Offer. If the payment for tendered
         Company Common Stock is to be made to a person other than the person in
         whose name the surrendered certificate formerly evidencing such Company
         Common Stock is registered on the stock transfer books of the Company,
         it shall be a condition of payment that the certificate so surrendered
         shall be endorsed properly or otherwise be in proper form for transfer
         and that the person requesting such payment shall have paid all
         transfer and other taxes required by reason of the payment of the
         purchase price therefore to a person other than the registered holder
         of the certificate surrendered, or shall have established to the
         satisfaction of the Company that such taxes either have been paid or
         are not applicable.

                  (b)      Revisions to Terms of the Offer. Without the prior
         approval of the Company's Board, the Exploratory Committee and the
         Parent, the Company shall not (i) reduce the number of shares of
         Company Common Stock subject to the Offer, (ii) amend the Offer Price,
         (iii) extend the Offer if all of the Tender Offer Conditions have been
         satisfied or waived, (iv) change the form of consideration payable in
         the Offer, (v) amend, modify or add to the Tender Offer Conditions or
         (vi) amend any other term of the Offer in a manner adverse to the
         Independent Shareholders. Notwithstanding the foregoing, the Company
         may, without the consent of the Parent, (A) extend the Offer, if at the
         scheduled Expiration Time of the Offer any of the Tender Offer
         Conditions shall have not been satisfied or waived, until such time as
         such conditions are satisfied or waived, (B) extend the Offer for any
         period required by any statute, rule, regulation, interpretation or
         position of the SEC or any other governmental entity applicable to the
         Offer, (C) waive any Tender Offer Condition.

                  (c)      Offer Documents. The Company represents that the
         Offer Documents will comply in all material respects with the
         provisions of applicable federal securities laws and, on the date filed
         with the SEC and on the date first published, sent or given to the
         Company's shareholders, shall not contain any untrue statement of a
         material fact or omit to state any material fact required to be stated
         therein or necessary in order to make the statements made therein, in
         light of the circumstances under which they were made, not misleading,
         except that no representation is made by the Company with respect to
         information supplied by the Parent or Sub for inclusion in the Offer
         Documents. Each of Parent and Sub, on the one hand, and the Company, on
         the other hand, agrees promptly to correct any information provided by
         it for use in the Offer Documents if and to the extent that it shall
         have become false or misleading in any material respect prior to the
         Expiration Time, and the Company further agrees to take all steps
         necessary to cause the Offer Documents as so corrected to be filed with
         the SEC and to be disseminated to shareholders of the Company, in each
         case, as and to the extent required by applicable federal securities
         laws.

SECTION 1.02. Tender Offer Conditions. Notwithstanding any other provisions of
the Offer, the Company shall not be required to accept for payment or, subject
to any applicable rules of the SEC, pay for any tendered

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shares and may, subject to Section 1.01 and Article IX, terminate or amend the
Offer and/or delay the acceptance of shares for payment if any of the following
events shall occur and be continuing at the Expiration Time:

                  (a)      Regulatory Approval. (i) The Company shall not have
         received from the Office of Financial and Insurance Services of the
         State of Michigan approval of the Company's request for exemption from
         the Form A filing requirement in connection with the Merger and such
         approval shall be in full force and effect; or (ii) the Company shall
         not have received or obtained all authorizations, consents, orders or
         approvals of any court, arbitral tribunal, administrative agency or
         commission or other governmental or other regulatory authority or
         agency (a "Governmental Entity"), the failure to obtain which would
         have a material adverse effect on Parent and its Subsidiaries or the
         Company and its Subsidiaries, in each case taken as a whole.

                  (b)      Bank Consent. ProAssurance shall have determined that
         the transactions contemplated by this Agreement will result in the
         breach of the terms of the Credit Agreement, dated May 10, 2001, among
         ProAssurance, SouthTrust Bank, Bank of America, N.A. and the lenders
         named therein (the "ProAssurance Credit Agreement") and it shall not
         have received the necessary consent, waiver or approval, or such
         consent, waiver or approval shall not be in full force and effect at
         the Expiration Time such that the consummation of the Offer would
         result in a default thereunder.

                  (c)      No Injunctions or Restraints. There shall be in
         effect any temporary restraining order, preliminary or permanent
         injunction or other order issued by any court of competent jurisdiction
         or other legal restraint or prohibition preventing the consummation of
         the Offer or the Merger or holding that the Offer Price or the Merger
         Consideration is not adequate.

                  (d)      Confirmation of Rating. The Company and the other
         insurance Subsidiaries of ProAssurance shall be rated lower than "A-"
         by A.M. Best Company and Standard & Poors, or shall have received
         notice from A.M. Best Company or Standard & Poors of their intention to
         lower the rating of the Company or the other insurance Subsidiaries of
         ProAssurance below "A-" after giving effect to the Offer or the Merger.

                  (e)      Representations and Warranties. The representations
         and warranties of Parent and Sub set forth in this Agreement shall not
         be true and correct in all material respects as of the date of this
         Agreement and (except to the extent such representations speak as of an
         earlier date) as of the Expiration Time as though made on and as of the
         Expiration Time, except as otherwise contemplated by this Agreement.

                  (f)      Termination of the Agreement. The Agreement shall
         have been terminated pursuant to clauses (b), (c), (d) or (f) of
         Section 9.01.

                                   ARTICLE II

                                   THE MERGER

SECTION 2.01. Effective Time of the Merger. Subject to the provisions of this
Agreement, a certificate of merger (the "Certificate of Merger") shall be duly
prepared, executed and acknowledged by the Company and thereafter delivered to
the Department of Consumer and Industry Services of the State of Michigan
("Bureau") for filing, as provided in the MBCA, as soon as practicable on or
after the Closing Date (as defined below). The Merger shall become effective
upon the filing of the Certificate of Merger with the Bureau or at such time
thereafter as is agreed to between Parent and the Company and provided in the
Certificate of Merger (the "Effective Time").

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SECTION 2.02. Closing. The closing of the Merger (the "Closing") will take place
at 9:00 a.m., Detroit time, as soon as practicable but no later than the third
business day after all of the conditions set forth in Section 8.01 have been
satisfied or waived (provided that the other closing conditions set forth in
Article VIII have been met or waived as provided in Article VIII at or prior to
the Closing); or such other date and time as shall be determined by the parties
to be mutually satisfactory. The date of Closing determined pursuant to the
above is referred to herein as the "Closing Date". The Closing shall take place
at the offices of Dykema Gossett PLLC, 400 Renaissance Center, Detroit,
Michigan, unless another place is agreed to by the parties hereto.

SECTION 2.03. Effect of the Merger. Subject to the terms and conditions of this
Agreement, at the Effective Time, Sub shall be merged with and into the Company
(the "Merger") and Company shall continue as the surviving corporation (the
Company is sometimes referred to herein as the "Surviving Corporation"). The
Merger shall have the effects set forth in Section 724 of the MBCA.

SECTION 2.04. Articles of Incorporation and Bylaws.

                  (a)      The articles of incorporation of the Company, as in
         effect immediately prior to the Effective Time, shall be the articles
         of incorporation of the Surviving Corporation until thereafter changed
         or amended as provided therein or by applicable law.

                  (b)      The bylaws of the Company as in effect at the
         Effective Time shall be the bylaws of the Surviving Corporation until
         thereafter changed or amended as provided therein or by applicable law.

SECTION 2.05. Directors. The directors of Sub immediately prior to the Effective
Time shall be the directors of the Surviving Corporation until the earlier of
their resignation or removal or until their respective successors are duly
elected and qualified, as the case may be.

SECTION 2.06. Officers. The officers of the Company immediately prior to the
Effective Time shall be the officers of the Surviving Corporation until the
earlier of their resignation or removal or until their respective successors are
duly elected and qualified, as the case may be.

                                   ARTICLE III

                    CONVERSION OR CANCELLATION OF SECURITIES

SECTION 3.01. Conversion or Cancellation of Capital Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of the holder
of any shares of Common Stock, no par value, of the Company (the "Company Common
Stock") or capital stock of Sub:

                  (a)      Capital Stock of Sub. Each issued and outstanding
         share of the capital stock of Sub shall be converted into and become
         the same number of shares of fully paid and nonassessable shares of
         common stock of the Surviving Corporation.

                  (b)      Cancellation of Parent-Owned Stock. All shares of
         Company Common Stock that are owned by Parent shall be canceled and
         retired and shall cease to exist and no consideration shall be
         delivered in exchange therefor.

                  (c)      Conversion of Company Common Stock. Each share of
         Company Common Stock issued and outstanding (other than shares to be
         canceled in accordance with Section 3.01(b)) shall be converted into
         the right to receive $29.00 per share (the "Merger Consideration") in
         cash without interest. As of the Effective Time, all such shares shall
         no longer be outstanding and shall

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         automatically be canceled and shall cease to exist, and each holder of
         a certificate representing any such shares shall cease to have any
         rights with respect thereto, except the right to receive the Merger
         Consideration without interest.

                  (d)      Options to Acquire Shares of Company Stock. At the
         Effective Time, each outstanding option to acquire shares of Company
         Common Stock (a "Company Option") shall become immediately exercisable
         in full, to the extent such option has not previously been exercised,
         and shall be converted into the right to receive in full settlement
         thereof, from the Company for each share of Company Common Stock for
         which such Company Option is exercisable, an amount in cash equal to
         the excess of the Merger Consideration over the per share exercise
         price of such option, without interest (such amount being hereinafter
         referred to as the "Option Consideration"). The surrender of a Company
         Option shall be deemed a release of any and all rights the holder had
         or may have had in respect of such option.

SECTION 3.02. Exchange of Certificates.

                  (a)      Paying Agent. As soon as practicable following the
         approval by shareholders of this Agreement contemplated by Section
         4.07, the Company shall designate a bank or trust company to act as
         paying agent in the Offer and the Merger (the "Paying Agent"), and the
         Company shall make available, or cause to made available, to the Paying
         Agent funds in amounts and at the times necessary for the payment of
         the consideration to be paid in the Offer pursuant to Section 1.01, and
         the Merger Consideration and Option Consideration pursuant to Sections
         3.01(c) and 3.01(d), it being understood that any and all interest
         earned on funds made available to the Paying Agent pursuant to this
         Agreement shall be turned over to, or at the direction of, the Company.
         Such funds shall be invested by the Paying Agent as directed by the
         Company, provided that such investments shall be obligations of or
         guaranteed by the United States of America, in commercial paper
         obligations rated A-1 or P-1 or better by Moody's Investors Service,
         Inc. or Standard & Poor's Rating Services, respectively, or in deposit
         accounts, certificates of deposit, bank repurchase or reverse
         repurchase agreements or banker's acceptances of, or Eurodollar time
         deposits purchased from, commercial banks with capital exceeding $250
         million (based on the most recent financial statements of such bank
         which are then publicly available at the SEC or otherwise).

                  (b)      Exchange Procedure. As soon as reasonably practicable
         after the Effective Time, the Paying Agent shall mail to each holder of
         record (other than the Parent) of a certificate or certificates which
         immediately prior to the Effective Time represented shares of Company
         Common Stock (the "Certificates") and to each holder of Company Options
         at the Effective Time (i) a letter of transmittal (which shall specify
         that delivery shall be effected, and risk of loss and title to the
         Certificates shall pass, only upon delivery of the Certificates to the
         Paying Agent and shall be in a form and have such other provisions as
         the Company may specify) and (ii) instructions for use in effecting the
         surrender of the Certificates and Company Options in exchange for the
         Merger Consideration or Option Consideration, as applicable. Upon
         surrender of a Certificate or Company Option for cancellation to the
         Paying Agent or to such other agent or agents as may be appointed by
         the Company, together with such letter of transmittal, duly executed,
         and such other documents as may reasonably be required by the Paying
         Agent, the holder of such Certificate or Company Option, as the case
         may be, shall be entitled to receive in exchange therefor the amount of
         cash into which the shares theretofore represented by such Certificate
         or Company Option, as the case may be, shall have been converted
         pursuant to Section 3.01, and the Certificate or Company Option, as the
         case may be, so surrendered shall forthwith be canceled. In the event
         of a transfer of ownership of shares that is not registered in the
         transfer records of the Company, payment may be made to a person other
         than the person in whose name the Certificate so surrendered is
         registered, if such Certificate shall be properly endorsed or otherwise
         be in proper form for transfer and the person requesting such payment
         shall pay any transfer or other taxes required by reason of the payment
         to a person other than the registered holder of such Certificate or
         establish to the satisfaction of the Surviving Corporation that such
         tax has been paid or is not applicable. Until surrendered as
         contemplated by this Section 3.02, each Certificate and

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         Company Option shall be deemed at any time after the Effective Time to
         represent only the right to receive upon such surrender the Merger
         Consideration or Option Consideration, respectively, without interest.
         No interest will be paid or will accrue on the Merger Consideration or
         Option Consideration.

                  (c)      Return of Funds. At any time following six months
         after the Effective Time, the Surviving Corporation shall be entitled
         to require the Paying Agent to deliver to it any funds (including any
         interest and other income received with respect thereto) which has been
         made available to the Paying Agent and which have not been disbursed to
         holders of Certificates or Company Options, as the case may be, and
         thereafter such holders shall be entitled to look to the Surviving
         Corporation (subject to abandoned property, escheat or other similar
         laws) only as general creditors thereof with respect to the Merger
         Consideration or the Option Consideration, as the case may be, payable
         upon due surrender of their Certificates or Company Options, as the
         case may be.

                  (d)      No Further Ownership Rights in Company Common Stock
         or Company Options. All cash paid upon the surrender of Certificates or
         Company Options in accordance with the terms of this Article III shall
         be deemed to have been paid in full satisfaction of all rights
         pertaining to (i) the shares of Company Common Stock theretofore
         represented by such Certificates or (ii) the Company Options, as the
         case may be. At the Effective Time, the stock transfer books of the
         Company shall be closed, and there shall be no further registration of
         transfers on the stock transfer books of the Surviving Corporation of
         the shares that were outstanding immediately prior to the Effective
         Time. If, after the Effective Time, Certificates or Company Options are
         presented to the Surviving Corporation or the Paying Agent for any
         reason, they shall be canceled and exchanged as provided in this
         Article III.

                  (e)      No Liability. None of Parent, Sub, the Company, the
         Surviving Corporation or the Paying Agent shall be liable to any person
         in respect of any cash delivered to a public official pursuant to any
         applicable abandoned property, escheat or similar law.

                                   ARTICLE IV

                  REPRESENTATIONS AND WARRANTIES OF THE COMPANY

        The Company represents and warrants to Parent and Sub as follows:

SECTION 4.01. Organization. Each of the Company and its Subsidiaries is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation and has all requisite corporate power
and corporate authority and all necessary governmental approvals to own, lease
and operate its properties and to carry on its business as now being conducted,
except where the failure to be so organized, existing and in good standing or to
have such power, authority and governmental approvals would not have a material
adverse effect on the Company and its Subsidiaries, taken as a whole. The
Company and each of its Subsidiaries is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not in the aggregate have
a material adverse effect on the Company and its Subsidiaries, taken as a whole.
As used in this Agreement, "Subsidiary" means, with respect to any party, any
corporation or other organization, whether incorporated or unincorporated, of
which (i) such party or any other Subsidiary of such party is a general partner
(excluding partnerships, the general partnership interests of which held by such
party or any Subsidiary of such party do not have a majority of the voting
interest in such partnership) or (ii) at least a majority of the securities or
other interests having by their terms ordinary voting power to elect a majority
of the Board of Directors or others performing similar functions with respect to
such corporation or other organization is directly or indirectly owned or
controlled by such party or by any one or more of its Subsidiaries, or by such
party and one or more of its Subsidiaries.

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SECTION 4.02. Capitalization. As of the close of business on the date
immediately preceding the date hereof, the authorized capital stock of the
Company consists of (i) 10,000,000 shares of Company Common Stock, of which
6,683,563 shares are issued and outstanding and (ii) 120,000 shares of Company
Common Stock are reserved for issuance upon exercise of the Company Options, all
of which were granted under the Company's Stock Compensation Plan (the "Company
Stock Plan"). All of the outstanding shares of Company Common Stock are, and all
shares which may be issued pursuant to the Company Options will be, when issued
in accordance with the terms thereof, duly authorized, validly issued, fully
paid and nonassessable and free of any preemptive rights in respect thereto. As
of the date hereof, no bonds, debentures, notes or other indebtedness
convertible into securities having the right to vote ("Convertible Debt") of the
Company are issued or outstanding. Except as set forth above, as of the date
hereof, there are no existing options, warrants, calls, subscriptions or other
rights or other agreements or commitments of any character relating to the
issued or unissued capital stock or Convertible Debt of the Company or any of
its Subsidiaries or obligating the Company or any of its Subsidiaries to issue,
transfer or sell or cause to be issued, transferred or sold any shares of
capital stock or Convertible Debt of, or other equity interests in, the Company
or of any of its Subsidiaries or securities convertible into or exchangeable for
such shares or equity interests or obligating the Company or any of its
Subsidiaries to grant, extend or enter into any such option, warrant, call,
subscription or other right, agreement or commitment. As of the date hereof,
there are no outstanding contractual obligations of the Company or any of its
Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital
stock of the Company or any of its Subsidiaries other than this Agreement.

SECTION 4.03. Authority. The Company has the requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby (subject, with respect to the Merger, to the
approval and adoption of this Agreement by the affirmative vote of not less than
a majority of the outstanding shares of Company Common Stock and the affirmative
vote of a majority of the outstanding shares of Company Common Stock owned by
the Independent Shareholders. The "Independent Shareholders" are the
shareholders of the Company Common Stock other than ProAssurance Corporation
("ProAssurance") and persons who are "affiliates" or "associates" of
ProAssurance, as those terms are used in Article VIII of the Company's articles
of incorporation). The execution, delivery and performance of this Agreement and
the consummation of the Merger and of the other transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part of the
Company and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement or to consummate the transactions so
contemplated (other than as aforesaid). This Agreement has been duly executed
and delivered by the Company and constitutes a valid and binding obligation of
the Company, enforceable against the Company in accordance with its terms,
except that (a) such enforcement may be subject to applicable bankruptcy,
insolvency or other similar laws, now or hereafter in effect, affecting
creditors' rights generally, and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.

SECTION 4.04. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, state insurance laws and the
MBCA, neither the execution, delivery or performance of this Agreement by the
Company nor the consummation by the Company of the transactions contemplated
hereby nor compliance by the Company with any of the provisions hereof will (a)
violate any provision of the articles of incorporation or bylaws of the Company
or of any of its Subsidiaries, (b) require any filing with, or permit,
authorization, consent or approval of, any Governmental Entity (except where the
failure to obtain such permits, authorizations, consents or approvals or to make
such filings would not have a material adverse effect on the Company and its
Subsidiaries taken as a whole or a material adverse effect on the ability of the
Company to consummate the transactions contemplated by this Agreement), (c)
result in a violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default (or give rise to any right of termination,
amendment, cancellation or acceleration) under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, lease, license, contract,
agreement or other instrument or obligation to which the Company or any of its
Subsidiaries is a party or by which any of them or any of their properties or
assets may be bound or (d) violate any order, writ, injunction, decree, statute,
rule or regulation applicable to the Company, any of its Subsidiaries or any of
their properties or assets, except in the case of (c) or (d) for

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violations, breaches or defaults which would not, individually or in the
aggregate, have a material adverse effect on the Company and its Subsidiaries,
taken as a whole or a material adverse effect on the ability of the Company to
consummate the transactions contemplated by this Agreement.

SECTION 4.05. SEC Reports and Financial Statements. Each of the Company and its
Subsidiaries has filed with the SEC and has heretofore made available to Parent
true and complete copies of, all forms, reports, schedules, statements and other
documents required to be filed by it since July 1, 1999, under the Exchange Act
or the Securities Act of 1933, as amended (the "Securities Act") (as such
documents have been amended since the time of their filing, collectively, the
"Company SEC Documents"). The Company SEC Documents, including without
limitation any financial statements or schedules included therein, at the time
filed, (a) did not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading and (b) complied in all material respects with the
applicable requirements of the Exchange Act and the Securities Act, as the case
may be, and the applicable rules and regulations of the SEC thereunder. The
financial statements of the Company included in the Company SEC Documents comply
as to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, have
been prepared in accordance with generally accepted accounting principles
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto or, in the case of the unaudited statements, as
permitted by Form 10-Q of the SEC) and fairly present (subject, in the case of
the unaudited statements, to normal, recurring audit adjustments) the
consolidated financial position of the Company and its consolidated Subsidiaries
as at the dates thereof and the consolidated results of their operations and
cash flows for the periods then ended.

SECTION 4.06. Opinion of Financial Advisor. The Exploratory Committee of the
Company's Board of Directors has received the opinion of Raymond James &
Associates, Inc., dated June 18, 2002, to the effect that, as of such date, the
consideration to be received pursuant to the Offer and the Merger by the
Independent Shareholders is fair to the Independent Shareholders from a
financial point of view.

SECTION 4.07. Vote Required. The affirmative vote of the holders of both (a) a
majority of the outstanding shares of Company Common Stock entitled to vote
thereon and (b) a majority of the outstanding shares of Company Common Stock
held by the Independent Shareholders are the only votes of the holders of any
class or series of the Company's capital stock necessary to approve this
Agreement and the transactions contemplated hereby.

                                    ARTICLE V

                REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB

         Parent and Sub represent and warrant, jointly and severally, to the
Company as follows:

SECTION 5.01. Organization. Each of Parent and Sub is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has all requisite corporate power and
corporate authority and all necessary governmental approvals to own, lease and
operate its properties and to carry on its business as now being conducted
except where the failure to be so organized, existing and in good standing or to
have such power, authority, and governmental approvals would not have a material
adverse effect on the ability of Parent and Sub to consummate the transactions
contemplated by this Agreement. Parent is duly qualified or licensed to do
business and in good standing in each jurisdiction in which the property owned,
leased or operated by it or the nature of the business conducted by it makes
such qualification or licensing necessary, except where the failure to be so
duly qualified or licensed and in good standing would not in the aggregate have
a material adverse effect on the ability of Parent and Sub to consummate the
transactions contemplated by this Agreement.

SECTION 5.02. Authority. Parent and Sub have all requisite corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution, delivery and

                                                                               9
<PAGE>

performance of this Agreement and the consummation of the Merger and of the
other transactions contemplated hereby have been duly authorized by all
necessary corporate action on the part of Parent and Sub, and no other corporate
proceedings on the part of Parent and Sub are necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement has
been duly executed and delivered by Parent and Sub, as the case may be, and
constitutes a valid and binding obligation of each of Parent and Sub, as the
case may be, enforceable against Parent and Sub in accordance with its
respective terms, except that (a) such enforcement may be subject to applicable
bankruptcy, insolvency or other similar laws, now or hereafter in effect,
affecting creditors' rights generally, and (b) the remedy of specific
performance and injunctive and other forms of equitable relief may be subject to
equitable defenses and to the discretion of court before which any proceeding
therefor may be brought.

SECTION 5.03. Consents and Approvals; No Violations. Except for filings,
permits, authorizations, consents and approvals as may be required under, and
other applicable requirements of, the Exchange Act, state insurance laws and the
MBCA, neither the execution, delivery or performance of this Agreement by Parent
and Sub nor the consummation by Parent and Sub of the transactions contemplated
hereby nor compliance by Parent and Sub with any of the provisions hereof will
(a) violate any provision of the respective articles of incorporation or bylaws
of Parent and Sub, (b) require any filing with, or permit, authorization,
consent or approval of, any Governmental Entity (except where the failure to
obtain such permits, authorizations, consents or approvals or to make such
filings would not have a material adverse effect on the ability of Parent and
Sub to consummate the transactions contemplated by this Agreement), (c) except
for the ProAssurance Credit Agreement, result in a violation or breach of, or
constitute (with or without due notice or lapse of time or both) a default (or
give rise to any right of termination, cancellation, or acceleration) under, any
of the terms, conditions or provisions of any note, bond, mortgage, indenture,
license, lease, contract, agreement or other instrument or obligation to which
Parent or any of its Affiliates is a party or by which any of them or any of
their properties or assets may be bound or (d) violate any order, writ,
injunction, decree, statute, rule or regulation applicable to Parent, any of its
Affiliates or any of their properties or assets, except in the case of (c) and
(d) for violations, breaches or defaults which would not, individually or in the
aggregate, have a material adverse effect on the ability of Parent and Sub to
consummate the transactions contemplated by this Agreement. As used in this
Agreement, an "Affiliate" of an entity is any person or entity that directly or
indirectly through one or more intermediaries controls, is controlled by, or is
under common control with the entity.

SECTION 5.04. Information. None of the information supplied by Parent or Sub in
writing specifically for inclusion or incorporation by reference in (i) the
Company's Proxy Statement for the annual meeting of its shareholders at which
the Merger will be considered (the "Proxy Statement"), (ii) the Schedule 13E-3
or (iii) the Other Filings will, at the respective dates filed with the SEC or
such other Governmental Entity, and with respect to the Proxy Statement, on the
date mailed to shareholders and at the time of the meeting of the Company's
shareholders to be held in connection with the Merger, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading.

SECTION 5.05. Ownership and Interim Operations of Sub. The only class of capital
stock of Sub authorized for issuance is common stock. There are 100 shares of
Sub common stock issued and outstanding, all of which is directly owned by
Parent. Sub was formed solely for the purpose of engaging in the Merger, has no
assets or liabilities and has engaged in no other business activities.

SECTION 5.06. Ownership of Common Stock. Parent owns, beneficially and of
record, 5,610,045 shares of Company Common Stock. No "affiliate" or "associate"
(as those terms are used in Article VIII of the Company's articles of
incorporation) of ProAssurance, other than Parent and persons who are directors
and officers of the Company and its Subsidiaries, own, beneficially or of
record, any Company Common Stock.

                                                                              10
<PAGE>

                                   ARTICLE VI

                                    COVENANTS

SECTION 6.01. Operate in Ordinary Course. During the period from the date of
this Agreement and continuing until the Effective Time, the Company agrees that
(except as expressly contemplated or permitted by this Agreement, or to the
extent that Parent shall otherwise consent in writing) (a) the Company and its
Subsidiaries shall carry on their respective businesses in the usual, regular
and ordinary course in substantially the same manner as heretofore conducted and
use all commercially reasonable efforts to preserve intact their present
business organizations, keep available the services of their present officers
and employees and preserve their relationships with customers, suppliers and
others having business dealings with them to the end that their goodwill and
ongoing business shall not be impaired in any material respect at the Effective
Time; and (b) the Company shall not, nor shall it permit any of its Subsidiaries
to, issue, deliver or sell, or authorize or propose the issuance, delivery or
sale of, any shares of its capital stock of any class or any securities
convertible into, or any rights, warrants, calls, subscriptions or options to
acquire, any such shares or convertible securities, other than (i) the issuance
of shares of Company Common Stock upon the exercise of Company Options
outstanding on the date hereof and (ii) the issuance by a wholly owned
Subsidiary of its capital stock to its parent.

SECTION 6.02. Fiduciary Out.

                  (a)      Except as set forth in this Section 6.02(a), neither
         the Board of Directors of the Company nor any committee thereof shall
         (i) withdraw or modify, or propose to withdraw or modify, in a manner
         adverse to Parent, the approval or recommendation by such Board of
         Directors or committee of this Agreement, (ii) approve or recommend, or
         propose to approve or recommend, any Takeover Proposal, or (iii) cause
         the Company to enter into any agreement with respect to any Takeover
         Proposal. Notwithstanding the foregoing, in the event that prior to the
         Effective Time the Board of Directors of the Company or a committee
         thereof determines in good faith, after consultation with counsel, that
         it is necessary to do so in order to comply with its fiduciary duties
         to the Company's shareholders, the Board of Directors or such committee
         may withdraw or modify its approval or recommendation of this
         Agreement, approve or recommend a Takeover Proposal or cause the
         Company to enter into an agreement with respect to a Takeover Proposal.
         In evaluating any unsolicited Takeover Proposal, the Company's Board of
         Directors or any committee thereof may consider any statement or
         indication from or on behalf of Parent that it will not agree to such
         Takeover Proposal, provided that such fact shall not prevent the
         Company's Board of Directors from taking any action permitted pursuant
         to this Section 6.02(a). For purposes of this Agreement, "Takeover
         Proposal" means any inquiry, proposal or offer from any person (other
         than Parent or any of its Affiliates) relating to any direct or
         indirect acquisition or purchase of a substantial amount of assets of
         the Company or any of its Subsidiaries or of 50% or more of the shares
         of Company Common Stock, any tender offer or exchange offer that if
         consummated would result in any person beneficially owning 50% or more
         of the shares of Company Common Stock, any merger, consolidation,
         business combination, sale of substantially all the assets,
         recapitalization, liquidation, dissolution or similar transaction
         involving the Company, other than the Merger, or any other transaction
         the consummation of which could reasonably be expected to impede,
         interfere with, prevent or materially delay the Merger or which would
         reasonably be expected to dilute materially the benefits to Parent of
         the transaction contemplated hereby.

                  (b)      The Company and Parent shall each immediately advise
         the other orally and in writing of any request for information or of
         any Takeover Proposal, or any inquiry with respect to or which could
         lead to any Takeover Proposal, received by them or any of their
         Affiliates and shall (i) describe the material terms and conditions of
         such request, Takeover Proposal or inquiry and the identity of the
         person making such request, Takeover Proposal or inquiry and (ii)
         immediately deliver to the other a copy of any such request, Takeover
         Proposal or inquiry made in writing. The Company and Parent will each
         keep the other fully informed of the status and details (including
         amendments or proposed amendments) of any such request, Takeover
         Proposal or inquiry.

                                                                              11
<PAGE>

                  (c)      Nothing contained in this Section 6.02 shall prohibit
         the Company from taking and disclosing to its shareholders a position
         contemplated by Rule 14e-2(a) promulgated under the Exchange Act or
         from making any disclosure to the Company's shareholders if, in the
         opinion of the Board of Directors of the Company, after consultation
         with counsel, failure so to disclose would be inconsistent with its
         fiduciary duties to the Company's shareholders; provided, however, that
         neither the Company nor its Board of Directors nor any committee
         thereof shall, except as permitted by Section 6.02(a), withdraw or
         modify, or propose to withdraw or modify, its position with respect to
         the Merger or approve or recommend, or propose to approve or recommend,
         a Takeover Proposal.

                                   ARTICLE VII

                              ADDITIONAL AGREEMENTS

SECTION 7.01. Preparation of the Proxy Statement and Schedule 13E-3. The Company
shall promptly prepare and file with the SEC preliminary and final versions of
the Proxy Statement and a Schedule 13E-3 relating to the Merger (the "Schedule
13E-3"). The Company shall use its commercially reasonable efforts to have the
Proxy Statement cleared by the SEC and mailed to its shareholders at the
earliest practicable date. The Company shall cooperate and consult with Parent
with respect to the Proxy Statement and the Schedule 13E-3 and any related SEC
comments. The Company covenants that (a) the Proxy Statement and the Schedule
13E-3 will comply in all material respects with the requirements of the Exchange
Act and the rules and regulations thereunder and (b) as of the date of mailing
of the Proxy Statement and at the time of the meeting of the Company's
shareholders to be held in connection with the Merger, the Proxy Statement and
the Schedule 13E-3 will not contain any untrue statement of material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading; provided that no representation is made by the
Company with respect to any information included in the Proxy Statement and the
Schedule 13E-3 regarding Parent or its Subsidiaries supplied by Parent in
writing specifically for inclusion in the Proxy Statement and the Schedule
13E-3.

SECTION 7.02. Access to Information. The Company shall (and shall cause each of
its Subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of Parent, access, during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, the Company shall (and shall
cause each of its Subsidiaries to) furnish promptly to Parent (a) a copy of each
report, schedule, registration statement and other document filed or received by
it during such period pursuant to the requirements of federal securities laws
and (b) all other information concerning its business, properties and personnel
as Parent may reasonably request.

SECTION 7.03. Shareholders Meeting. The Company shall call a meeting of its
shareholders for the purpose of voting upon this Agreement and the Merger.
Subject to Section 6.02(a), the Company will, through its Board of Directors,
recommend to its shareholders approval of this Agreement and shall use its
commercially reasonable efforts to hold such meeting as soon as reasonably
practicable after the date hereof.

SECTION 7.04. Legal Conditions to Merger. Each of the Company, Parent and Sub
will take all commercially reasonable actions necessary to comply promptly with
all legal requirements which may be imposed on itself with respect to the Merger
(which actions shall include, without limitation, furnishing all information in
connection with approvals of or filings with state insurance authorities and any
other Governmental Entity) and will promptly cooperate with and furnish
information to each other in connection with any such requirements imposed upon
any of them or any of their Subsidiaries in connection with the Merger. Each of
the Company, Parent and Sub will, and will cause its Subsidiaries to, take, or
cause to be taken, all commercially reasonable actions necessary to obtain (and
will cooperate with each other in obtaining) any consent, authorization, order
or approval of, or any exemption by, any Governmental Entity or

                                                                              12
<PAGE>

other public or private third party, required to be obtained or made by Parent,
the Company or any of their Subsidiaries in connection with the Merger or the
taking of any action contemplated thereby or by this Agreement, including
without limitation, any required waiver, consent or approval under the
ProAssurance Credit Agreement.

SECTION 7.05. Expenses. Whether or not the Merger is consummated, all costs and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expense.

SECTION 7.06. Brokers or Finders. Each of Parent and the Company represents, as
to itself and its Affiliates, that, as of the date of this Agreement, no agent,
broker, investment banker, financial advisor or other firm or person is or will
be entitled to any brokers' or finder's fee or any other commission or similar
fee in connection with any of the transactions contemplated by this Agreement
except Raymond James & Associates, Inc., whose fees and expenses will be paid by
the Company in accordance with the Company's agreement with such firm (copies of
which have been delivered by the Company to Parent prior to the date of this
Agreement). Each of Parent and the Company agree to indemnify and hold the other
harmless from and against any and all claims, liabilities or obligations with
respect to any other fees, commissions or expenses asserted by any person on the
basis of any act or statement alleged to have been made by such party or its
Affiliates. In the event that Parent or any of its Affiliates engages an agent,
broker, investment banker, financial advisor or other firm or person entitled to
any brokers' or finder's fee or any other commission or similar fee in
connection with any of the transactions contemplated by this Agreement, Parent
agrees to indemnify and hold harmless the Company from and against any and all
claims, liabilities or obligations with respect to any such fees, commissions or
other expenses.

SECTION 7.07. Indemnification; Insurance.

                  (a)      For a period of three years from the Effective Time,
         the Surviving Corporation, shall maintain in its Bylaws the provisions
         with respect to indemnification set forth in the Company's Bylaws as in
         effect on the date hereof, which provisions shall not be amended,
         repealed or otherwise modified for such a period in any manner that
         would adversely affect the rights thereunder of persons who at the
         Effective Time were directors, officers, employees or agents of the
         Company (such persons being third-party beneficiaries of this Section
         7.07) with respect to actions and omissions occurring prior to the
         Effective Time, unless such modification is required by law.

                  (b)      For a period of three years from the Effective Time,
         the Surviving Corporation shall use its commercially reasonable efforts
         to maintain in effect directors' and officers' liability insurance
         covering those persons who are currently covered by the Company's
         directors' and officers' liability insurance policy with respect to
         actions and omissions occurring prior to the Effective Time on terms no
         less favorable than the terms of such current insurance coverage. The
         Surviving Corporation may provide such coverage through ProAssurance's
         directors and officers' liability insurance policy, provided such
         policy provides substantially the same coverage as the terms of the
         Company's current insurance coverage. Notwithstanding the foregoing, if
         the directors' and officers' liability insurance referred to in this
         Section 7.07(b) is unavailable for the Maximum D&O Premium (as defined
         below), the Surviving Corporation shall obtain as much insurance as can
         be obtained for a premium not in excess (on an annualized basis) of the
         Maximum D&O Premium. The Company will give to any director and officer
         covered by this Section 7.07, 30 days prior written notice of any
         reduction on coverage or cancellation of the directors' and officers'
         liability insurance referred to in this Section 7.07(b). For purposes
         of this Section 7.07(b), the "Maximum D&O Premium" shall be an amount
         not greater than 150% of the premium paid by the Company (on an
         annualized basis) for directors' and officers' liability insurance
         during the period from May 24, 2002 to the Effective Time.

SECTION 7.08. Additional Agreements. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its commercially reasonable
efforts to take, or cause to be taken, all action and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to

                                                                              13
<PAGE>

consummate and make effective the transactions contemplated by this Agreement,
including cooperating fully with the other party, providing information, making
all necessary filings under state laws, refraining from taking any action that
would cause any of the representations and warranties not to be true and correct
in all material respects at the Expiration Time and the Effective Time and using
their commercially reasonable efforts to have any restraining order, injunction
or other prohibition preventing the consummation of the Offer or the Merger
vacated. In case at any time after the Expiration Time or the Effective Time any
further action is necessary or desirable to carry out the purposes of this
Agreement including without limitation, to vest the Surviving Corporation with
full title to all properties, assets, rights, approvals, immunities and
franchises of either the Company or Sub, the proper officers and directors of
each party to this Agreement shall take all such necessary action.

SECTION 7.09. Transfer Taxes. Parent or Surviving Corporation agrees, subject to
consummation of the Merger, to pay, without deduction or withholding from any
amount payable to the holders of Company Common Stock, any Michigan or local
real property transfer taxes and any other similar taxes that become payable by
the shareholders of the Company, the Company or the Surviving Corporation in
connection with the Merger. The Company and Parent shall cooperate in the
preparation, execution and filing of any returns, questionnaires, applications
and other documents related to such taxes required or permitted to be filed on
or before the Effective Time.

SECTION 7.10. Subsequent Sale of the Company. Parent hereby represents, as of
the date of this Agreement and as of the Closing Date, that neither it nor
ProAssurance have any present intention of selling or otherwise disposing of the
Company Common Stock owned by Parent or selling or otherwise disposing of all or
substantially all of the Company's assets. Parent agrees, for itself and
ProAssurance, that if, prior to the one-year anniversary of the Expiration Time
of the Offer, either of them, directly or indirectly, sells or otherwise
disposes, or agrees to sell or otherwise dispose, of the shares of capital stock
of the Surviving Corporation or any of the Surviving Corporation's Subsidiaries
beneficially owned by them following the Offer or Merger, or all or
substantially all of the assets of the Surviving Corporation and its
Subsidiaries, other than to ProAssurance or a Subsidiary of ProAssurance, for
consideration valued (in the reasonable discretion of Parent's board of
directors) at more than the sum of (a) $29.00 multiplied by the number of shares
outstanding immediately prior to the Expiration Time, plus (b) the aggregate
Option Consideration paid or to be paid based on the number of shares subject to
Company Options outstanding immediately after the Expiration Time, then they
will pay, to the Paying Agent, or a substitute agent (which shall be a bank or
trust company) mutually satisfactory to Parent and the Company, for distribution
on a pro rata basis to the shareholders whose shares were acquired by the
Company in the Offer and, if the Effective Time has occurred, (x) the
shareholders of record of Company Common Stock other than Parent and
ProAssurance (and its Subsidiaries) at the Effective Time and (y) the holders of
Company Options at the Effective Time, an amount determined as follows:

                  (A)      If the Effective Time has not occurred, the amount
         payable shall be equal to (1) the amount by which the value of the
         consideration received by Parent and its Affiliates in such sale or
         disposition (as determined by Parent's board of directors in its
         reasonable discretion) exceeds the sum of clauses (a) and (b),
         multiplied by (2) the ratio of (i) the number of shares acquired by the
         Company pursuant to the Offer divided by (ii) the sum of the number of
         shares acquired by the Company pursuant to the Offer plus the number of
         shares outstanding immediately prior to the completion of such sale or
         disposition plus the number of shares subject to Company Options
         immediately prior to the completion of such sale or disposition.

                  (B)      If the Effective Time has occurred, the amount
         payable shall be equal to (1) the amount by which the value of the
         consideration received by Parent and its Affiliates in such sale or
         disposition (as determined by Parent's board of directors in its
         reasonable discretion) exceeds the sum of clauses (a) and (b),
         multiplied by (2) the ratio of (i) the sum of the number of shares
         acquired by the Company pursuant to the Offer plus the number of shares
         outstanding, other than those

                                                                              14
<PAGE>

         beneficially owned by Parent or ProAssurance, at the Effective Time
         plus the number of shares subject to Company Options at the Effective
         Time, divided by (ii) the sum of the number of shares acquired by the
         Company pursuant to the Offer plus the number of shares outstanding at
         the Effective Time plus the number of shares subject to Company Options
         at the Effective Time.

         The shareholders and Company Option holders who are entitled to such
payment pursuant to the foregoing provisions are expressly intended to be
third-party beneficiaries of the provisions of this Section 7.10.

SECTION 7.11. Rating Confirmation. The Company and Parent shall, and shall cause
their Affiliates to, seek and to use their commercially reasonable efforts to
obtain confirmation from A. M. Best Company and Standard & Poors that the
consummation of the Offer and Merger will not impair the current A. M. Best
Company and Standard & Poors ratings of the Company or any of the other
insurance Subsidiaries of ProAssurance.

SECTION 7.12. Other Filings. The Company, Parent and Sub, as the case may be,
shall promptly file any other filings required under the Exchange Act or any
other applicable law relating to the transactions contemplated herein (the
"Other Filings"). Each of the parties hereto shall notify the other parties
hereto promptly of the receipt by it of any comments from the SEC or its Staff
and of any request of the SEC or any other governmental officials with respect
to any Other Filings or for additional information and will supply the other
parties hereto with copies of all correspondence between it and its
representatives, on the one hand, and the SEC or the members of its Staff or any
other governmental officials, on the other hand, and will provide the other
parties and their counsel with the opportunity to participate, including by way
of discussions with the SEC or its Staff, in the response of such party to such
comments with respect to any Other Filings or the transactions contemplated
herein. Each of the Company, on the other hand, and Parent and Sub, on the
other, shall use its commercially reasonable efforts to obtain and furnish the
information required to be included in any Other Filings or the Merger.

                                  ARTICLE VIII

                                   CONDITIONS

SECTION 8.01. Conditions to Each Party's Obligation To Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction prior to the Closing Date of the following conditions:

                  (a)      Shareholder Approval. This Agreement shall have been
         approved and adopted by the affirmative vote of (i) the holders of a
         majority of the outstanding shares of Company Common Stock as required
         by the MBCA and (ii) a majority of the outstanding shares owned by the
         Independent Shareholders as required by the Company's Articles of
         Incorporation.

                  (b)      Other Approvals. (i) The Office of Financial and
         Insurance Services of the State of Michigan shall have approved the
         Company's request for exemption from the Form A filing requirement in
         connection with the Merger and such approval shall be in full force and
         effect. (ii) The determination by ProAssurance that the transaction
         contemplated by this Agreement will not result in the breach of the
         terms of the ProAssurance Credit Agreement or, if ProAssurance
         determines that such transactions will result in such a breach, the
         required consent, waiver or approval shall have been obtained in
         connection with the ProAssurance Credit Agreement and shall be in full
         force and effect such that the consummation of the Merger and the other
         transactions contemplated hereby will not result in a default
         thereunder. (iii) Other than the filing provided for by Section 2.01,
         all authorizations, consents, orders or approvals of, or declarations
         or filings with, or

                                                                              15
<PAGE>

         expirations of waiting periods imposed by, any Governmental Entity the
         failure to obtain which would have a material adverse effect on Parent
         and its Subsidiaries or the Surviving Corporation and its Subsidiaries,
         in each case taken as a whole, shall have been filed, occurred or been
         obtained.

                  (c)      No Injunctions or Restraints. There shall not be
         pending or threatened any action or proceeding by or before any court
         or other Governmental Entity seeking to restrain, prohibit, invalidate
         or collect damages arising out of the Merger or other transactions
         hereunder, and there shall be in effect no temporary restraining order,
         preliminary or permanent injunction or other order issued by any court
         of competent jurisdiction or other legal restraint or prohibition
         preventing the consummation of the Merger or holding that the Merger
         Consideration is not adequate.

                  (d)      Confirmation of Rating. The Company and the other
         insurance Subsidiaries of ProAssurance shall not be rated lower than
         "A-" by A.M. Best Company and Standard & Poors, nor shall the Company
         or ProAssurance have received notice from A.M. Best Company or Standard
         & Poors of their intention to lower the rating of the Company or any of
         the other insurance Subsidiaries of ProAssurance below "A-" after
         giving effect to the Offer or the Merger.

SECTION 8.02. Conditions of Obligations of Parent and Sub. The obligations of
Parent and Sub to effect the Merger are subject to the satisfaction of the
following conditions unless waived by Parent and Sub:

                  (a)      Representations and Warranties. The representations
         and warranties of the Company set forth in this Agreement shall be true
         and correct in all material respects as of the date of this Agreement
         and (except to the extent such representations and warranties speak as
         of an earlier date or except, as to any failure to be true and correct,
         to the extent that Parent or Sub had knowledge of such failure to be
         true and correct as of the date hereof) as of the Closing Date as
         though made on and as of the Closing Date, except as otherwise
         contemplated by this Agreement.

                  (b)      Performance of Obligations of the Company. The
         Company shall have performed in all material respects all obligations
         required to be performed by it under this Agreement at or prior to the
         Closing Date.

                  (c)      Officer's Certificate. Parent and Sub shall have
         received a certificate signed by an executive officer of the Company to
         the effect set forth in paragraphs (a) and (b) of this Section 8.02.

SECTION 8.03. Conditions of Obligations of the Company. The obligation of the
Company to effect the Merger is subject to the satisfaction of the following
conditions unless waived by the Company:

                  (a)      Representations and Warranties. The representations
         and warranties of Parent and Sub set forth in this Agreement shall be
         true and correct in all material respects as of the date of this
         Agreement and (except to the extent such representations speak as of an
         earlier date) as of the Closing Date as though made on and as of the
         Closing Date, except as otherwise contemplated by this Agreement.

                  (b) Performance of Obligations of Parent and Sub. Parent and
         Sub shall have performed in all material respects all obligations
         required to be performed by them under this Agreement at or prior to
         the Closing Date.

                  (c) Officer's Certificate. The Company shall have received a
         certificate signed by an executive officer of each of Parent and Sub to
         the effect set forth in paragraphs (a) and (b) of this Section 8.03.

                                                                              16
<PAGE>

                                   ARTICLE IX

                            TERMINATION AND AMENDMENT

SECTION 9.01. Termination. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of the matters presented in
connection with this Agreement by the shareholders of the Company:

                  (a)      by mutual consent of Parent and the Company;

                  (b)      (i) by either Parent or the Company if there shall
         have been a material breach of any representation, warranty, covenant
         or agreement on the part of the other set forth in this Agreement which
         breach shall not have been cured within two business days following
         receipt by the breaching party of notice of such breach, or (ii) by
         either Parent or the Company if any permanent injunction or other order
         of a court or other competent authority preventing the consummation of
         the Merger shall have become final and non-appealable;

                  (c)      by either Parent or the Company if the Company's
         Board of Directors takes any of the actions permitted by Section
         6.02(a); provided the Company may so terminate only if it has complied
         with all the provisions of Section 6.02(b);

                  (d)      by either Parent or the Company if the Offer or
         Merger shall not have been consummated on or before December 31, 2002;

                  (e)      by either Parent or the Company if the required
         approval of the shareholders of the Company shall not have been
         obtained by reason of the failure to obtain the required vote at a duly
         held meeting of shareholders or at any adjournment thereof; or

                  (f)      by either Parent or the Company, if any of the
         conditions to such party's obligation to consummate the transactions
         contemplated in this Agreement shall have become impossible to satisfy
         if, but only if, such party has used its commercially reasonable
         efforts and acted in good faith in attempting to satisfy all such
         conditions and if such party is not then in breach or default in any
         material respect of this Agreement.

SECTION 9.02. Effect of Termination. In the event of a termination of this
Agreement by either the Company or Parent as provided in Section 9.01 prior to
the purchase of the shares of Common Stock tendered in the Offer, this Agreement
shall forthwith become void and there shall be no liability or obligation on the
part of Parent, Sub or the Company or their respective officers or directors,
except with respect to any breach of any provision of this Agreement prior to
such termination and except that the last sentence of Section 7.02 and all of
Sections 7.05 and 7.06 shall continue in effect. In the event of a termination
of this Agreement after the purchase of the shares of Common Stock tendered in
the Offer but before the Effective Time of the Merger, such purchase shall not
be rescinded or otherwise affected, this Agreement shall forthwith become void
and there shall be no liability or obligation on the part of Parent, Sub or the
Company or their respective officers or directors, except with respect to any
breach of any provision of this Agreement prior to such termination and except
that Sections 7.02, 7.05, 7.06 and 7.10 shall continue in effect to the extent
applicable.

SECTION 9.03. Amendment. This Agreement may be amended by the parties hereto, by
action taken or authorized by their respective Boards of Directors, at any time
before or after approval of the matters presented in connection with the Merger
by the shareholders of the Company, but, after any such approval, no amendment
shall be made which by law requires further approval by such shareholders
without such further approval in accordance with Section 8.01(a). This Agreement
may not be amended except by an instrument in writing signed on behalf of each
of the parties hereto.

SECTION 9.04. Extension; Waiver. At any time prior to the Effective Time, the
parties hereto, by action taken or authorized by their respective Boards of
Directors, may, to the extent legally allowed, (a) extend the

                                                                              17
<PAGE>

time for the performance of any of the obligations or other acts of the other
parties hereto, (b) waive any inaccuracies in the representations and warranties
contained herein or in any document delivered pursuant hereto and (c) waive
compliance with any of the agreements or conditions contained herein.

                                                                              18
<PAGE>

                                    ARTICLE X

                                  MISCELLANEOUS

SECTION 10.01. Nonsurvival of Representations, Warranties and Agreements. None
of the representations, warranties and agreements in this Agreement or in any
instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Sections 3.01, 3.02, 7.05, 7.06,
7.07, 7.08, 7.09, 7.10 and this Section 10.01.

SECTION 10.02. Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (which
is confirmed) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):

                  (a)      if to Parent or Sub, to

                  ProNational Insurance Company
                  2600 Professionals Drive
                  P.O. Box 150
                  Okemos, Michigan 48805-0150
                  Attention: President
                  Telecopy No.: (517) 349-8977

                  with a copy to:

                  Burr & Forman LLP
                  420 North 20th Street, Suite 3100
                  Birmingham, Alabama 35203
                  Attention: Jack P. Stephenson, Jr.
                  Telecopy No.: (205) 458-5100

                  (b)      if to the Company, to

                  Meemic Holdings, Inc.
                  691 N. Squirrel Road
                  Suite 100
                  Auburn Hills, Michigan 48326-2849
                  Attention: President
                  Telecopy No.: (248) 373-5700

                  with a copy to

                  Dykema Gossett PLLC
                  400 Renaissance Center
                  Detroit, Michigan 48243-1668
                  Attention: Mark A. Metz, Esq.
                  Telecopy No.: (313) 568-6915

SECTION 10.03. Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (including the documents and the instruments referred
to herein) (a) constitute the entire agreement and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the

                                                                              19
<PAGE>

subject matter hereof and (b) except as provided in Sections 7.07 and 7.10, are
not intended to confer upon any person other than the parties hereto any rights
or remedies hereunder.

SECTION 10.04. Governing Law. This Agreement shall be governed and construed in
accordance with the laws of the State of Michigan without regard to applicable
conflicts of law principles.

SECTION 10.05. Publicity. Except as otherwise required by law or the rules of
the Nasdaq Stock Market or the New York Stock Exchange, for so long as this
Agreement is in effect, neither the Company nor Parent shall issue or cause the
publication of any press release or other public announcement with respect to
the transactions contemplated by this Agreement without the consent of the other
party, which consent shall not be unreasonably withheld.

SECTION 10.06. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
Parent or to any direct or indirect wholly owned Subsidiary of Parent. Subject
to the preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.

SECTION 10.07. Definitions. The following defined terms used in this Agreement
are defined in the sections set forth below:

<TABLE>
<CAPTION>
DEFINITIONS.                                              SECTION NO.
                                                          -----------
<S>                                                       <C>
Affiliates................................................  5.03
Agreement.................................................  Preamble
Bureau....................................................  2.01
Certificate of Merger.....................................  2.01
Certificates..............................................  3.02(b)
Closing...................................................  2.02
Closing Date..............................................  2.02
Company...................................................  Preamble
Company Common Stock......................................  3.01
Company's Financial Advisor...............................  1.02(b)
Company Option............................................  3.01(d)
Company Stock Plan........................................  4.02
Company SEC Documents.....................................  4.05
Convertible Debt..........................................  4.02
Effective Time............................................  2.01
Exchange Act..............................................  1.01(a)
Expiration Time...........................................  1.1(a)
Governmental Entity.......................................  1.02(a)
Independent Shareholders..................................  4.03
Maximum D&O Premium.......................................  7.07(b)
MBCA......................................................  Preamble
Merger....................................................  2.03
Merger Consideration......................................  3.01(c)
Minimum Condition.........................................  Annex 1
Offer.....................................................  Preamble
Offer Documents...........................................  1.01(a)
Offer Price...............................................  1.01(a)
Option Consideration......................................  3.01(d)
Other Filings.............................................  7.12
Parent....................................................  Preamble
Paying Agent..............................................  3.02(a)
ProAssurance..............................................  4.03
ProAssurance Credit Agreement.............................  4.03
Proxy Statement...........................................  5.04
Schedule 13E-3............................................  7.01
SEC.......................................................  1.01(a)
Securities Act............................................  4.05
Sub.......................................................  Preamble
Subsidiary................................................  4.01
Surviving Corporation.....................................  2.03
Takeover Proposal.........................................  6.02(a)
Tender Offer Conditions...................................  1.01(a)
</TABLE>

                                                                              20
<PAGE>

         IN WITNESS WHEREOF Parent, Sub and the Company have caused this
Agreement to be signed by their respective officers thereunto duly authorized as
of the date first written above.

                                        PRONATIONAL INSURANCE COMPANY
                                        By:

                                               Name: Victor T. Adamo
                                               Title: President & CEO
                                        MEEMIC MERGER CORP.
                                        By:

                                               Name: Victor T. Adamo
                                               Title: Incorporator
                                        MEEMIC HOLDINGS, INC.
                                        By:

                                               Name: Lynn M. Kalinowski
                                               Title: President

<PAGE>

                               AMENDMENT NO. 1 TO
                          AGREEMENT AND PLAN OF MERGER,
                            DATED AS OF JULY 9, 2002,
                   BY AND AMONG PRONATIONAL INSURANCE COMPANY,
                  MEEMIC MERGER CORP. AND MEEMIC HOLDINGS, INC.

         This Amendment No. 1 to the Agreement and Plan of Merger, dated as of
July 9, 2002, by and among ProNational Insurance Company, Meemic Merger Corp.
and MEEMIC Holdings, Inc. (the "Merger Agreement") is made as of this 18th day
of September, 2002.

         WHEREAS, each of the parties desires to amend Section 9.01(d) of the
Merger Agreement to change the date therein from December 31, 2002 to February
28, 2003; and

         WHEREAS, Section 9.03 of the Merger Agreement provides that an
amendment thereof must be in writing and signed by each of the parties thereto;

         NOW THEREFORE, the parties to the Merger Agreement hereby amend Section
9.01(d) of the Merger Agreement to change the date therein from December 31,
2002 to February 28, 2003.

         IN WITNESS WHEREOF, the parties have hereunto set their hands and
delivered this Amendment as of the date and year first above written.

                                        PRONATIONAL INSURANCE COMPANY
                                        By:

                                               Victor T. Adamo
                                        Its:    President
                                        MEEMIC MERGER CORP.
                                        By:

                                               Victor T. Adamo
                                        Its:    Incorporator
                                        MEEMIC HOLDINGS, INC.
                                        By:

                                               Lynn M. Kalinowski

                                        Its:    President<PAGE>

                                                                   EXHIBIT 10.54

                                 AMENDMENT NO. 1
                                       TO
                           REVOLVING CREDIT AGREEMENT

         THIS AMENDMENT NO. 1 TO REVOLVING CREDIT AGREEMENT (this "Amendment")
is made and effective as of September 30, 2002, by and among SYKES ENTERPRISES,
INCORPORATED, a Florida corporation (the "Borrower"), the several banks and
other financial institutions from time to time party hereto (the "Lenders"), and
SUNTRUST BANK, in its capacity as Administrative Agent for the Lenders (the
"Administrative Agent") and in its capacity as Collateral Agent for the Lenders
(the "Collateral Agent").

                              W I T N E S S E T H:

         WHEREAS, the Borrower, the Lenders and the Administrative Agent are
parties to that certain Revolving Credit Agreement, dated as of April 5, 2002
(the "Existing Credit Agreement"), pursuant to which the Lenders have agreed to
establish for the Borrower a revolving credit facility in the aggregate
principal amount of $60,000,000, with a letter of credit subfacility in the
aggregate principal amount of up to $15,000,000 and a swingline subfacility in
the aggregate principal amount of up to $10,000,000 thereunder, all upon the
terms and subject to the conditions specified in the Existing Credit Agreement;
and

         WHEREAS, the Lenders have agreed that a portion of such revolving
credit facility and such letter of credit subfacility may be made and issued in
certain currencies other than U.S. dollars in an aggregate principal amount of
up to the U.S. dollar equivalent of $25,000,000; and

         WHEREAS, upon request of the Borrower, the Lenders and the
Administrative Agent have agreed to modify and amend the Existing Credit
Agreement as set forth herein including, without limitation, decreasing the
amount of the revolving credit facility to $40,000,000.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the Borrower, the Lenders and the
Administrative Agent agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

         SECTION 1.1       CERTAIN DEFINITIONS. Unless otherwise defined herein
or the context otherwise requires, the following terms as used in this
Amendment, including the preamble and recitals, have the meanings set forth
below:

                  "AMENDED CREDIT AGREEMENT" shall mean the Existing Credit
         Agreement, as amended hereby.

                  "AMENDMENT NO. 1 EFFECTIVE DATE" shall have the meaning
         assigned to such term in Article III.

         SECTION 1.2       OTHER DEFINITIONS. Unless otherwise defined herein,
capitalized terms used herein and not defined herein shall have the meanings
assigned to such terms in the Existing Credit Agreement.

                                   ARTICLE II

                        AMENDMENTS TO EXISTING AGREEMENT

         SECTION 2.1       AMENDMENTS TO ARTICLE I - DEFINITIONS; CONSTRUCTIONS.
As of the Amendment No. 1 Effective Date, the Existing Credit Agreement is
hereby amended as follows:

<PAGE>

                  (a)      The terms "Aggregate Revolving Commitments,"
"Applicable Margin," "Applicable Percentage," "Consolidated EBIT," "Consolidated
Fixed Charges," "Fixed Charge Coverage Ratio," "Loan Documents," "Net Cash
Proceeds" and "Revolving Commitment" of "ARTICLE I - DEFINITIONS; CONSTRUCTION"
of the Existing Credit Agreement are hereby deleted in their entirety and the
following new terms are inserted in their respective places:

                           "AGGREGATE REVOLVING COMMITMENTS" shall mean the sum
                  of the Revolving Commitments of all Lenders at any time
                  outstanding. The Aggregate Revolving Commitments shall not
                  exceed the U.S. Dollar Equivalent of $40,000,000.

                           "APPLICABLE MARGIN" shall mean, as of any date, with
                  respect to all Eurocurrency Borrowings and Base Rate
                  Borrowings outstanding on such date, the percentage per annum
                  designated in the "Pricing Grid" attached hereto as Schedule I
                  as applicable to Eurocurrency Borrowings or Base Rate
                  Borrowings, as the case may be, based on the Leverage Ratio.
                  As of the Amendment No. 1 Effective Date through and including
                  the Borrower's fiscal quarter ending December 31, 2003, the
                  Applicable Margin for Eurocurrency Borrowings shall be 2.50%
                  and the Applicable Margin for Base Rate Borrowings shall be
                  1.50%; provided, however, if the Borrower and its Subsidiaries
                  on a consolidated basis have a Fixed Charge Coverage Ratio in
                  excess of 1.40:1.00 at the end of any two consecutive fiscal
                  quarters of the Borrower ending on or after September 30,
                  2003, as determined based on the Borrower's financial
                  statements delivered to the Administrative Agent in accordance
                  with Section 5.1(a) and (b) and the Covenant Compliance
                  Certificate delivered to the Administrative Agent in
                  accordance with Section 5.1(f), the Applicable Margin shall be
                  reset to the percentage designated in Schedule I based on the
                  Leverage Ratio as of the last day of such second consecutive
                  fiscal quarter then ended, such Applicable Margin being
                  effective as of the second Business Day following the date
                  that the Administrative Agent receives such financial
                  statements and certificate; and provided further, however,
                  that if at any time the Borrower shall have failed to deliver
                  to the Administrative Agent the Borrower's financial
                  statements required by Section 5.1(a) and (b) and the Covenant
                  Compliance Certificate required by Section 5.1(f) when due,
                  the Applicable Margin shall be at Level III until such time as
                  such financial statements and certificate are delivered, at
                  which time the Applicable Margin shall be determined as
                  provided above.

                           "APPLICABLE PERCENTAGE" shall mean, as of any date,
                  with respect to the commitment fee, the percentage per annum
                  designated in the "Pricing Grid" attached hereto as Schedule I
                  based on the Leverage Ratio. As of the Amendment No. 1
                  Effective Date through and including the Borrower's fiscal
                  quarter ending December 31, 2003, the Applicable Percentage
                  shall be 0.75%; provided, however, if the Borrower and its
                  Subsidiaries on a consolidated basis have a Fixed Charge
                  Coverage Ratio in excess of 1.40:1.00 at the end of any two
                  consecutive fiscal quarters of the Borrower ending on or after
                  September 30, 2003, as determined based on the Borrower's
                  financial statements delivered to the Administrative Agent in
                  accordance with Section 5.1(a) and (b) and the Covenant
                  Compliance Certificate delivered to the Administrative Agent
                  in accordance with Section 5.1(f), the Applicable Percentage
                  shall be reset to the percentage designated in Schedule I
                  based on the Leverage Ratio as of the last day of such second
                  consecutive fiscal quarter then ended, such Applicable Margin
                  being effective as of the second Business Day following the
                  date that the Administrative Agent receives such financial
                  statements and certificate; and provided further, however,
                  that if at any time the Borrower shall have failed to deliver
                  to the Administrative Agent the Borrower's financial
                  statements required by Section 5.1(a) and (b) and the Covenant
                  Compliance Certificate required by

                                       2
<PAGE>

                  Section 5.1(f) when due, the Applicable Percentage shall be at
                  Level III until such time as such financial statements and
                  certificate are delivered, at which time the Applicable
                  Percentage shall be determined as provided above.

                           "CONSOLIDATED EBIT" shall mean, for the Borrower and
                  its Subsidiaries for any period, an amount equal to the sum of
                  (a) Net Income for such period plus (b) to the extent deducted
                  in determining Net Income for such period, (i) Interest
                  Expense, (ii) income tax expense, (iii) for the period ending
                  on September 30, 2002 only, one-time litigation settlement
                  charges not to exceed $13,800,000 for such fiscal quarter
                  ended September 30, 2002, (iv) for the period ending on
                  December 31, 2002 only, (A) one-time restructuring charges not
                  to exceed $23,000,000 and (B) one-time accelerated
                  depreciation charges not to exceed $1,700,000, both for such
                  fiscal quarter ended December 31, 2002, and (v) for the period
                  ending on March 31, 2003 only, one-time accelerated
                  depreciation charges not to exceed $1,700,000 for such fiscal
                  quarter ended March 31, 2003, in each case, determined on a
                  consolidated basis in accordance with GAAP for the applicable
                  period.

                           "CONSOLIDATED FIXED CHARGES" shall mean, for the
                  Borrower and its Subsidiaries for any period, an amount equal
                  to the sum (without duplication) of (a) Consolidated Interest
                  Expense for such period plus (b) Consolidated Lease Expense
                  for such period plus (c) positive income tax expense for such
                  period (as reflected on the Borrower's financial statement
                  delivered to the Administrative Agent in accordance with
                  Section 5.1(b) for such period) plus (d) Capital Expenditures
                  for such period.

                           "FIXED CHARGE COVERAGE RATIO" shall mean, for any
                  period of four consecutive fiscal quarters of the Borrower and
                  its Subsidiaries on a consolidated basis, the ratio of (a)
                  Consolidated EBITDAR for such period to (b) Consolidated Fixed
                  Charges for such period.

                           "LOAN DOCUMENTS" shall mean, collectively, this
                  Agreement, the Notes (if any), the LC Documents, all Notices
                  of Borrowing and Borrowing Availability Certificates, the
                  Subsidiary Guarantee Agreement, the Indemnity and Contribution
                  Agreement, all Pledge Agreements and any and all other
                  instruments, agreements, documents and writings executed in
                  connection with any of the foregoing (excluding, however, any
                  Hedging Agreement relating to Obligations entered into with
                  any counterparty that was a Lender (or an Affiliate thereof)
                  at the time such Hedging Agreement was entered into).

                           "NET CASH PROCEEDS" shall mean the aggregate cash
                  proceeds received by the Borrower or any Subsidiary in respect
                  of any Asset Disposition or any Equity Issuance, net of (a)
                  direct costs (including, without limitation, legal, accounting
                  and investment banking fees, and sales commissions), (b)
                  amounts held in escrow to be applied as part of the purchase
                  price, or otherwise subject, pursuant to contract, to rights
                  of the purchaser as a reduction or return of the purchase
                  price, of any Asset Disposition, (c) in the case of any Asset
                  Disposition, amounts required to be paid to the holder of any
                  Indebtedness permitted by Section 7.1 and secured by a Lien on
                  the assets being sold or otherwise disposed of in such Asset
                  Disposition, or (d) taxes paid or payable as a result thereof;
                  it being understood that "Net Cash Proceeds" shall include,
                  without limitation, any cash received upon the sale or other
                  disposition of any non-cash consideration received by the
                  Borrower or any Subsidiary in any Asset Disposition or Equity
                  Issuance and any cash released from escrow or from adjustment
                  rights of the purchaser as part of the purchase price in
                  connection with any Asset Disposition.

                                       3
<PAGE>

                           "REVOLVING COMMITMENT" shall mean, with respect to
                  each Lender, the obligation of such Lender to make Revolving
                  Loans to the Borrower and to participate in Letters of Credit
                  and Swingline Loans in an aggregate principal amount not
                  exceeding the U.S. Dollar Equivalent of the amount set forth
                  with respect to such Lender on the signature pages to this
                  Agreement, or in the case of a Person becoming a Lender after
                  the Closing Date as permitted by Section 10.4, the amount of
                  the assigned "Revolving Commitment" as provided in the
                  Assignment and Acceptance Agreement executed by such Person as
                  an assignee, as the same may be changed pursuant to terms
                  hereof.

                  (b)      The terms "Account," "Account Debtor," "Borrowing
Availability," "Borrowing Availability Certificate," "Borrowing Base,"
"Consolidated EBITDAR," "Covenant Compliance Certificate," "Eligible Accounts,"
"Equity Issuance" and "Ineligible Accounts" are hereby added under the heading
"ARTICLE I - DEFINITIONS; CONSTRUCTION" of the Existing Credit Agreement in
their proper alphabetical order as follows:

                           "ACCOUNT" shall mean a right to payment of a monetary
                  obligation arising in the ordinary course of business, whether
                  or not earned by performance, (a) for property that has been
                  or is to be sold, leased, licensed, assigned, or otherwise
                  disposed of, and (b) for services rendered or to be rendered;
                  but such term shall not include (i) commercial tort claims,
                  (ii) deposit accounts, (iii) investment property, (iv)
                  letter-of-credit rights or letters of credit, or (v) rights to
                  payment for money or funds advanced or sold, other than rights
                  arising out of the use of a credit or charge card or
                  information contained on or for use with the card.

                           "ACCOUNT DEBTOR" means a Person obligated on an
                  Account.

                           "BORROWING AVAILABILITY" shall mean the greatest
                  additional amount that may be borrowed on any date by the
                  Borrower in respect of the Loans in the aggregate, with such
                  maximum amount to equal, at any date of determination (which
                  date and determination shall be in the Administrative Agent's
                  reasonable discretion), the difference between:

                           (a)      the Borrowing Base; and

                           (b)      the sum of the aggregate Revolving Credit
                  Exposures of all Lenders;

                           provided, however, that the Borrower shall not in any
                  event be permitted to borrow more than the Aggregate Revolving
                  Commitments then in effect, irrespective of the size of the
                  Borrowing Base.

                           "BORROWING AVAILABILITY CERTIFICATE" shall have the
                  meaning set forth in Section 2.1.

                           "BORROWING BASE" shall mean at any time eighty-five
                  percent (85%) of the face value of Eligible Accounts.

                           "CONSOLIDATED EBITDAR" shall mean, for the Borrower
                  and its Subsidiaries for any period, an amount equal to the
                  sum of (a) Consolidated EBITDA plus (b) Consolidated Lease
                  Expense, determined on a consolidated basis in accordance with
                  GAAP in each case for such period.

                                       4
<PAGE>

                           "COVENANT COMPLIANCE CERTIFICATE" shall have the
                  meaning set forth in Section 5.1(f).

                           "ELIGIBLE ACCOUNTS" shall mean any Account of
                  Borrower or a Subsidiary Guarantor except for Ineligible
                  Accounts.

                           "EQUITY ISSUANCE" shall mean any issuance by any Loan
                  Party to any Person which is not a Loan Party of shares of its
                  Capital Stock (excluding the issuance of any such shares by
                  the Borrower under or in connection with its employee stock
                  purchase plan or pursuant to the exercise of employee or
                  director stock options).

                           "INELIGIBLE ACCOUNTS" shall mean any Account with
                  respect to which: (i) the obligation to pay is not evidenced
                  by an invoice or the invoice is conditional, permits returns,
                  or restricts collection rights or assignments in any respect
                  (except, however, that the invoice may permit returns in the
                  ordinary course of business); (ii) the invoice permits
                  payment: (A) more than 60 days after invoice date; (B) in a
                  currency other than United States Dollars; or (C) at any
                  location outside the United States; (iii) the obligation to
                  pay is evidenced by chattel paper or any note or other
                  instrument (unless duly endorsed and delivered to the
                  Administrative Agent); (iv) the goods or services have been
                  rejected, returned, or disputed in any way, whether in whole
                  or in part, in which event the receivable shall be ineligible
                  to the extent of such rejection, return, or dispute; (v) the
                  Account Debtor has attempted to renegotiate the invoiced price
                  or asserted any right of reduction, set-off, recoupment,
                  counterclaim, or defense; (vi) 90 days or more have elapsed
                  since invoice date; (vii) the invoice or corresponding Account
                  is the subject of any financing statement, lien, or other
                  encumbrance other than in favor of the Administrative Agent;
                  (viii) the Account Debtor is an officer, employee or
                  shareholder or a direct or indirect Subsidiary or Affiliate of
                  the Borrower; (ix) the Account Debtor has commenced a
                  voluntary case under the federal bankruptcy laws, as now
                  constituted or hereafter amended, or made an assignment for
                  the benefit of creditors, or if a decree or order for relief
                  has been entered by a court having jurisdiction over the
                  Account Debtor in an involuntary case under the federal
                  bankruptcy laws, as now constituted or hereafter amended, or
                  if any other petition or other application for relief under
                  the federal bankruptcy laws has been filed by or against the
                  Account Debtor, or if the Account Debtor has failed, suspended
                  business, declared itself to be insolvent, or consented to or
                  suffered a receiver, trustee, liquidator or custodian to be
                  appointed for it or for all or a significant portion of its
                  assets or affairs; (x) the Account Debtor is any governmental
                  authority, unless an assignment of such Account has been
                  properly perfected under the Assignment of Claims Act of 1940,
                  as amended; (xi) the Account Debtor does not meet the
                  established credit standards of the Borrower; (xii) fifty
                  percent (50%) or more of the aggregate balance of the Accounts
                  owing by the Account Debtor and its Affiliates remain unpaid
                  for more than 90 days after the invoice date for such
                  Accounts; (xiii) the aggregate balance of Accounts owing by a
                  single Account Debtor that exceed 20% of the total Accounts of
                  the Borrower (except if such Account Debtor is the United
                  States government and such Account meets the eligibility
                  requirements of clause (x) of this definition); (xiv) the
                  Account Debtor's principal office is located outside of the
                  United States of America (unless such account is supported by
                  a letter of credit or credit insurance acceptable to the
                  Administrative Agent and naming the Administrative Agent as
                  beneficiary); (xv) the Account is related to any unapplied
                  credit of an Account Debtor that exceeds 90 days from the
                  invoice date; (xvi) the invoice is issued with "cash" or
                  "C.O.D." terms; (xvii) finance charges have been assessed to
                  an Account Debtor, but only to the extent of such

                                       5
<PAGE>

                  finance charges; or (xviii) the Administrative Agent otherwise
                  determines in its reasonable discretion that the Account is
                  ineligible hereunder.

                  (c)      The terms "Lender Addition Agreement," "New Lender"
and "Utilization Rate" under the heading "ARTICLE I - DEFINITIONS; CONSTRUCTION"
of the Existing Credit Agreement are hereby deleted in their entirety and not
replaced.

         SECTION 2.2       AMENDMENTS TO ARTICLE II - AMOUNT AND TERMS OF THE
COMMITMENTS. Effective as of the Amendment No. 1 Effective Date, the Existing
Credit Agreement is hereby amended as follows:

                  (a)      Section 2.1 of "ARTICLE II - AMOUNT AND TERMS OF THE
COMMITMENTS" of the Existing Credit Agreement is hereby deleted in its entirety
and the following is substituted in lieu thereof:

                           SECTION 2.1       GENERAL DESCRIPTION OF FACILITIES.

                           (a)      Subject to and upon the terms and conditions
                  herein set forth, (a) the Lenders hereby establish in favor of
                  the Borrower a revolving credit facility pursuant to which the
                  Lenders severally agree (to the extent of each Lender's Pro
                  Rata Share up to such Lender's Revolving Commitment) to make
                  Revolving Loans to the Borrower in accordance with Section
                  2.2, (b) the Swingline Lender agrees to make Swingline Loans
                  in accordance with Section 2.4, (c) the Issuing Bank agrees to
                  issue Letters of Credit in accordance with Section 2.23, and
                  (d) each Lender agrees to purchase a participation interest in
                  the Swingline Loans and the Letters of Credit pursuant to the
                  terms and conditions hereof; provided, that in no event shall
                  (x) the Revolving Credit Exposure of any Lender (determined in
                  accordance with Section 10.14) exceed at any time its
                  Revolving Commitment then in effect, (y) the sum of the
                  aggregate Revolving Credit Exposures (determined in accordance
                  with Section 10.14) exceed at any time the lesser of (i) the
                  Aggregate Revolving Commitments then in effect or (ii) the
                  Borrowing Base, or (z) the U.S. Dollar Equivalent amount of
                  outstanding Revolving Loans and LC Obligations funded and
                  issued in Foreign Currency (determined in accordance with
                  Section 10.14) exceed the Foreign Currency Commitment from
                  time to time in effect.

                           (b)      The Borrower shall furnish a certificate to
                  the Administrative Agent, substantially in the form of Exhibit
                  2.1 attached hereto (a "BORROWING AVAILABILITY CERTIFICATE"),
                  (i) if there are Revolving Loans outstanding, on a monthly
                  basis on or before the tenth (10th) Business Day of each
                  calendar month and (ii) if there are no Revolving Loans
                  outstanding, on a quarterly basis as soon as available after
                  the end of each fiscal quarter of the Borrower and, in any
                  event, at or before the time of delivery of the financial
                  statements required by Section 5.1(a) and (b), in each case,
                  duly executed and certified correct by a Responsible Officer,
                  setting forth a calculation of the Borrowing Availability as
                  of such calendar month end or such fiscal quarter end, as
                  applicable. The Administrative Agent shall determine the
                  availability of any Borrowing or the issuance of any Letter of
                  Credit based upon the most current calendar month end or the
                  most current fiscal quarter end, as applicable, Borrowing
                  Availability Certificate showing that the Borrowing
                  Availability is sufficient to support such Borrowing or the
                  issuance of such Letter of Credit. All Borrowings and issuance
                  of Letters of Credit during each calendar month or fiscal
                  quarter, as applicable, shall thereafter be reconciled by the
                  Administrative Agent upon receipt of the next succeeding
                  Borrowing Availability Certificate, and to the extent any
                  Borrowing was made or any Letter of Credit was issued without
                  the appropriate availability (as shown by such next succeeding
                  Borrowing

                                       6
<PAGE>

                  Availability Certificate) and a resulting margin imbalance has
                  occurred, the Borrower shall be required to pay down such
                  margin imbalance immediately upon telephonic notice (followed
                  by written notice) of such margin imbalance from the
                  Administrative Agent. At the option of the Administrative
                  Agent, each Borrowing Availability Certificate shall be
                  subject to verification by appropriate representatives of the
                  Administrative Agent prior to the disbursement of any monies.

                  (b)      Section 2.2 of "ARTICLE II - AMOUNT AND TERMS OF THE
COMMITMENTS" of the Existing Credit Agreement is hereby deleted in its entirety
and the following is substituted in lieu thereof:

                           SECTION 2.2       REVOLVING LOANS. Subject to the
                  terms and conditions set forth herein, each Lender severally
                  agrees to make Revolving Loans to the Borrower, from time to
                  time during the Availability Period, in the aggregate U.S.
                  Dollar Equivalent principal amount outstanding at any time
                  that will not result in (a) such Lender's Revolving Credit
                  Exposure (determined in accordance with Section 10.14)
                  exceeding such Lender's Revolving Commitment or (b) the sum of
                  the aggregate Revolving Credit Exposures of all Lenders
                  (determined in accordance with Section 10.14) exceeding the
                  lesser of (i) the Aggregate Revolving Commitments or (ii) the
                  Borrowing Base. Funding of any Revolving Loans shall be in any
                  combination of U.S. Dollars and Foreign Currency as specified
                  by the Borrower as set forth in Section 2.3; provided, that
                  subject to the further applicable limitations set forth in
                  Section 2.23(a) with regard to the issuance of Letters of
                  Credit, the U.S. Dollar Equivalent amount of outstanding
                  Revolving Loans and LC Obligations funded and issued in
                  Foreign Currency (determined, with respect to such Revolving
                  Loans and LC Obligations, in accordance with Section 10.14)
                  shall at no time exceed the Foreign Currency Commitment then
                  in effect. During the Availability Period, the Borrower shall
                  be entitled to borrow, prepay and reborrow Revolving Loans in
                  accordance with the terms and conditions of this Agreement;
                  provided, that the Borrower may not borrow or reborrow should
                  there exist a Default or Event of Default.

                  (c)      The last sentence of Section 2.3 of "ARTICLE II -
AMOUNT AND TERMS OF THE COMMITMENTS" of the Existing Credit Agreement is hereby
deleted in its entirety and the following is substituted in lieu thereof:

                  Promptly following the receipt of a Notice of Revolving
                  Borrowing in accordance herewith, and provided that the
                  Borrowing Availability based on the most current Borrowing
                  Availability Certificate furnished by the Borrower to the
                  Administrative Agent in accordance with Section 2.1 supports
                  such Revolving Borrowing, the Administrative Agent shall
                  advise each Lender of the details thereof and the amount of
                  such Lender's Revolving Loan to be made as part of the
                  requested Revolving Borrowing.

                  (d)      Section 2.4 of "ARTICLE II - AMOUNT AND TERMS OF THE
COMMITMENTS" of the Existing Credit Agreement is hereby deleted in its entirety
and the following is substituted in lieu thereof:

                           SECTION 2.4       SWINGLINE COMMITMENT. Subject to
                  the terms and conditions set forth herein, the Swingline
                  Lender agrees to make Swingline Loans to the Borrower, from
                  time to time from the Closing Date to the Swingline
                  Termination Date, in an aggregate principal amount outstanding
                  at any time not to exceed the lesser of (a) the Swingline
                  Commitment then in effect, (b) the difference between the
                  Aggregate Revolving Commitments and the sum of the aggregate
                  Revolving Credit Exposures of all Lenders and (c) the
                  Borrowing Availability; provided, that the Swingline Lender
                  shall not be

                                       7
<PAGE>

                  required to make a Swingline Loan to refinance an outstanding
                  Swingline Loan. The Borrower shall be entitled to borrow,
                  repay and reborrow Swingline Loans in accordance with the
                  terms and conditions of this Agreement.

                  (e)      Subsection (a) under Section 2.11 of "ARTICLE II -
AMOUNT AND TERMS OF THE COMMITMENTS" of the Existing Credit Agreement is hereby
deleted in its entirety and the following is substituted in lieu thereof:

                           (a)      Mandatory Prepayments. The Borrower shall be
                  required to make mandatory principal prepayments from 100% of
                  the Net Cash Proceeds (including all Net Cash Proceeds
                  received on any purchase money Indebtedness held by the
                  recipient of such Net Cash Proceeds) from any Asset
                  Disposition involving 5% or more of the total assets of the
                  Borrower and its Subsidiaries on a consolidated basis as
                  reflected on the Borrower's most recent annual consolidated
                  balance sheet delivered to the Administrative Agent pursuant
                  to Section 5.1(a), unless such Net Cash Proceeds are fully
                  reinvested by the Borrower (or, if applicable, such
                  Subsidiary) in like assets owned by the Borrower or such
                  Guarantor within twelve (12) months from the date of closing
                  such Asset Disposition. In such case, the Borrower will
                  deliver to the Administrative Agent, concurrently with such
                  prepayment, a certificate signed by a Responsible Officer, in
                  form and substance satisfactory to the Administrative Agent,
                  setting the forth the calculation of such Net Cash Proceeds.
                  All such prepayments shall be applied as follows: first, to
                  any outstanding Swingline Loans, second, to any outstanding
                  Revolving Loans (but without a corresponding permanent
                  reduction in the Revolving Commitments), and last, after all
                  Swingline Loans and all Revolving Loans have been repaid, to
                  the Borrower. Further, if at any time after the Closing Date,
                  the aggregate Revolving Credit Exposures shall exceed the
                  lesser of (i) the Aggregate Revolving Commitments or (ii) the
                  Borrowing Base, then (x) on the last day of any Interest
                  Period for any Eurocurrency Borrowing and (y) on any other
                  date in the event Base Rate Borrowings shall be outstanding,
                  the Borrower shall prepay Revolving Loans in an amount equal
                  to the lesser of (A) the amount necessary to eliminate such
                  excess (after giving effect to any other prepayment of Loans
                  on such date) and (B) the amount of the Borrowings referred to
                  in clauses (x) and (y), as applicable. Without limiting the
                  generality of the foregoing, the Borrower acknowledges that
                  such required payments may be necessary whenever the most
                  current calendar month end or the most current fiscal quarter
                  end, as applicable, Borrowing Availability Certificate
                  demonstrates that there shall then be outstanding in respect
                  of the sum of the Revolving Credit Exposures of all Lenders an
                  aggregate amount in excess of the Borrowing Base. Further, if,
                  on any Reset Date, (i) the aggregate Revolving Credit Exposure
                  exceeds 105% of the Aggregate Revolving Commitments then in
                  effect, or (ii) the sum of the U.S. Dollar Equivalent of (A)
                  the aggregate principal amount of outstanding Revolving Loans
                  denominated in a Foreign Currency, plus (B) the undrawn
                  amounts of outstanding Letters of Credit denominated in a
                  Foreign Currency, plus (C) the aggregate amount of LC
                  Disbursements denominated in a Foreign Currency that have not
                  been reimbursed by or on behalf of the Borrower exceeds 105%
                  of the Foreign Currency Commitment then in effect, then, in
                  either such case, the Borrower shall be required to make
                  mandatory principal prepayments of such Revolving Loans in an
                  aggregate amount sufficient to eliminate such excess.
                  Immediately upon determining the need to make any such
                  prepayment, the Borrower shall notify the Administrative Agent
                  of such required prepayment and of the identity of the
                  particular Revolving Loans being prepaid. If the
                  Administrative Agent shall notify the Borrower that the
                  Administrative Agent has determined that any prepayment is
                  required under this Section 2.11(a), the Borrower shall make
                  such prepayment no later than the

                                       8
<PAGE>

                  second Business Day following such notice. Any mandatory
                  prepayment of Revolving Loans pursuant hereto shall not be
                  limited by the notice provision for prepayments set forth in
                  Section 2.11(b). Each such prepayment shall be accompanied by
                  a payment of all accrued and unpaid interest on the Loans
                  prepaid and all amounts required pursuant to Sections 2.17 and
                  2.19.

                  (f)      Subsection (b) under Section 2.13 of "ARTICLE II -
AMOUNT AND TERMS OF THE COMMITMENTS" of the Existing Credit Agreement is hereby
deleted in its entirety and the following is substituted in lieu thereof:

                           (b)      Commitment Fee. The Borrower agrees to pay
                  to the Administrative Agent for the account of each Lender a
                  commitment fee, which shall accrue at the Applicable
                  Percentage (determined quarterly in accordance with Schedule
                  I) on the average daily amount of the unused Revolving
                  Commitment of such Lender during the Availability Period;
                  provided, that if such Lender continues to have any Revolving
                  Credit Exposure after the Commitment Termination Date, then
                  the commitment fee shall continue to accrue on the amount of
                  such Lender's unused Revolving Commitment from and after the
                  Commitment Termination Date to the date that all of such
                  Lender's Revolving Credit Exposure has been paid in full. As
                  of the Amendment No. 1 Effective Date, the Applicable
                  Percentage shall initially be 0.75%, but shall be reset from
                  time to time as provided in the definition of "Applicable
                  Percentage" herein. Accrued commitment fees shall be payable
                  in arrears on the last day of each March, June, September and
                  December of each year and on the Commitment Termination Date,
                  commencing on the first such date after the Closing Date;
                  provided, that any commitment fees accruing after the
                  Commitment Termination Date shall be payable on demand. For
                  purposes of computing commitment fees with respect to the
                  Revolving Commitments, the Revolving Commitment of each Lender
                  shall be deemed used to the extent of the outstanding
                  Revolving Loans and LC Exposure of such Lender (but
                  outstanding Swingline Loans shall not be deemed usage of the
                  Revolving Commitment of any Lender).

                  (g)      Subsection (a) under Section 2.23 of "ARTICLE II -
AMOUNT AND TERMS OF THE COMMITMENTS" of the Existing Credit Agreement is hereby
deleted in its entirety and the following is substituted in lieu thereof:

                           (a)      During the Availability Period, the Issuing
                  Bank, in reliance upon the agreements of the other Lenders
                  pursuant to Section 2.23(d), agrees to issue, at the request
                  and for the account of the Borrower, Letters of Credit on
                  behalf of the Borrower on the terms and conditions hereinafter
                  set forth; provided, that (i) each Letter of Credit shall
                  expire on the earlier of (A) the date one year after the date
                  of issuance of such Letter of Credit (or in the case of any
                  renewal or extension thereof, one year after such renewal or
                  extension) and (B) the date that is five (5) Business Days
                  prior to the Commitment Termination Date; (ii) each Letter of
                  Credit shall be in a stated amount of at least the U.S. Dollar
                  Equivalent of $500,000; and (iii) the Borrower may not request
                  any Letter of Credit, if, after giving effect to such issuance
                  (A) the aggregate LC Exposure would exceed the LC Commitment,
                  (B) the aggregate Revolving Credit Exposures of all Lenders
                  would exceed the lesser of (i) the Aggregate Revolving
                  Commitments or (ii) the Borrowing Base, or (C) the issuance of
                  such Letter of Credit would violate any legal or regulatory
                  restriction then applicable to the Issuing Bank or any Lender
                  as notified by the Issuing Bank or such Lender to the
                  Administrative Agent before the date of issuance of such
                  Letter of Credit. Letters of Credit may be issued in face
                  amounts of any Foreign Currency; provided, that the sum of the
                  U.S. Dollar Equivalent of (i) the

                                       9
<PAGE>

                  aggregate principal amount of outstanding Revolving Loans
                  denominated in a Foreign Currency, plus (ii) the undrawn
                  amounts of outstanding Letters of Credit denominated in a
                  Foreign Currency, plus (iii) the aggregate amount of LC
                  Disbursements denominated in a Foreign Currency that have not
                  been reimbursed by or on behalf of the Borrower shall not
                  exceed the Foreign Currency Commitment then in effect. Upon
                  the issuance of each Letter of Credit each Lender shall be
                  deemed to, and hereby irrevocably and unconditionally agrees
                  to, purchase from the Issuing Bank without recourse a
                  participation in such Letter of Credit equal to such Lender's
                  Pro Rata Share of the aggregate amount available to be drawn
                  under such Letter of Credit. Each issuance of a Letter of
                  Credit shall be deemed to utilize the Revolving Commitment of
                  each Lender by an amount equal to the amount of such
                  participation.

         SECTION 2.3       AMENDMENTS TO ARTICLE V - AFFIRMATIVE COVENANTS.
Effective as of the Amendment No. 1 Effective Date, the Existing Credit
Agreement is hereby amended as follows:

                  (a)      Subsection (c) under Section 5.1 of "ARTICLE V -
AFFIRMATIVE COVENANTS" of the Existing Credit Agreement is hereby deleted in its
entirety and the following new subsection is inserted in its place:

                           (c)      concurrently with the delivery of the
                  financial statements referred to in clauses (a) and (b) above,
                  a certificate of a Responsible Officer, (i) certifying as to
                  whether there exists a Default or Event of Default on the date
                  of such certificate, and if a Default or an Event of Default
                  then exists, specifying the details thereof and the action
                  which the Borrower has taken or proposes to take with respect
                  thereto, and (ii) stating whether any change in GAAP or the
                  application thereof has occurred since the date of the
                  Borrower's audited financial statements referred to in Section
                  4.4 and, if any change has occurred, specifying the effect of
                  such change on the financial statements accompanying such
                  certificate;

                  (b)      Subsections (e) and (f) under Section 5.1 of "ARTICLE
V - AFFIRMATIVE COVENANTS" of the Existing Credit Agreement are hereby
re-designated as subsections (g) and (h), respectively, and the following new
subsections (e) and (f) are added under said Section as follows:

                           (e)      as applicable in accordance with Section
                  2.1(b), (i) on or before the tenth (10th) Business Day of each
                  calendar month or (ii) as soon as available after the end of
                  each fiscal quarter of the Borrower and, in any event, at or
                  before the time of delivery of the financial statements
                  required by Section 5.1(a) and (b), a Borrowing Availability
                  Certificate as of the last day of the immediately preceding
                  calendar month end or fiscal quarter end, as applicable;

                           (f)      concurrently with the delivery of each
                  Borrowing Availability Certificate referred to in clause (e),
                  a certificate of a Responsible Officer (a "COVENANT COMPLIANCE
                  CERTIFICATE"), setting forth in reasonable detail calculations
                  demonstrating compliance with Article VI in the form of
                  Exhibit 5.1(f) hereto;

                  (c)      Section 5.9 of "ARTICLE V - AFFIRMATIVE COVENANTS" of
the Existing Credit Agreement is hereby amended to change the reference to
Section 7.4(c) therein to Section 7.4(a).

         SECTION 2.4       AMENDMENTS TO ARTICLE VI - FINANCIAL COVENANTS.
Effective as of the Amendment No. 1 Effective Date, the Existing Credit
Agreement is hereby amended as follows:

                  (a)      Section 6.1 of "ARTICLE VI - FINANCIAL COVENANTS" of
the Existing Credit Agreement is hereby deleted in its entirety and the
following is substituted in lieu thereof:

                                       10
<PAGE>

                           SECTION 6.1       LEVERAGE RATIO. The Borrower and
                  its Subsidiaries will have, as of the end of each fiscal
                  quarter of the Borrower, commencing with the fiscal quarter
                  ending December 31, 2002, a Leverage Ratio of not greater than
                  2.00:1.00, calculated on a rolling four-quarter basis and
                  determined in accordance with GAAP.

                  (b)      Section 6.2 of "ARTICLE VI - FINANCIAL COVENANTS" of
the Existing Credit Agreement is hereby deleted in its entirety and the
following is substituted in lieu thereof:

                           SECTION 6.2       FIXED CHARGE COVERAGE RATIO. The
                  Borrower and its Subsidiaries will have, as of the end of each
                  fiscal quarter of the Borrower, (a) commencing with the fiscal
                  quarter ending September 30, 2002 through and including the
                  fiscal quarter ending December 31, 2002, a Fixed Charge
                  Coverage Ratio of not less than 1.25:1.00; (b) for the fiscal
                  quarter ending March 31, 2003, a Fixed Charge Coverage Ratio
                  of not less than 1.20:1:00; (c) commencing with the fiscal
                  quarter ending June 30, 2003 through and including the fiscal
                  quarter ending September 30, 2003, a Fixed Charge Coverage
                  Ratio of not less than 1.05:1.00; (d) for the fiscal quarter
                  ending December 31, 2003, a Fixed Charge Coverage Ratio of not
                  less than 1.15:1.00; and (e) commencing with the fiscal
                  quarter ending March 31, 2004 and thereafter, a Fixed Charge
                  Coverage Ratio of not less than 1.25:1.00, in each case,
                  calculated on a rolling four-quarter basis and determined in
                  accordance with GAAP.

                  (c)      Section 6.3 of "ARTICLE VI - FINANCIAL COVENANTS" of
the Existing Credit Agreement is hereby deleted in its entirety and the
following is substituted in lieu thereof:

                           SECTION 6.3       CONSOLIDATED NET WORTH. The
                  Borrower and its Subsidiaries will have, as of the end of each
                  fiscal quarter of the Borrower, commencing with the fiscal
                  quarter ending December 31, 2002, a Consolidated Net Worth in
                  an amount equal to or greater than the difference between (a)
                  the sum of (i) $167,500,000, plus (ii) 50% of cumulative
                  Consolidated Net Income accrued since the end of such fiscal
                  quarter, all determined in accordance with GAAP; provided,
                  that if Consolidated Net Income is negative in any fiscal
                  quarter the amount added for such fiscal quarter shall be zero
                  and such negative Consolidated Net Income shall not reduce the
                  amount of Consolidated Net Income added from any previous
                  fiscal quarter, plus (iii) one hundred percent (100%) of the
                  aggregate Net Cash Proceeds from any Equity Issuance, minus
                  (b) an amount equal to the actual expenditure of funds by
                  Borrower on or after November 1, 2002 for the repurchase of
                  Borrower's common stock, not to exceed, however, $7,500,000 in
                  the aggregate at any time for the term of the Loans, in each
                  case calculated quarterly on the last day of each fiscal
                  quarter.

                  (d)      A new Section 6.4 is hereby added under "ARTICLE VI -
FINANCIAL COVENANTS" of the Existing Credit Agreement as follows:

                           SECTION 6.4       LIQUIDITY. The Borrower and its
                  Subsidiaries will have at all times cash and Cash Equivalents
                  in an amount equal to or greater than the U.S. Dollar
                  Equivalent of $40,000,000; provided, however, the Borrower may
                  not request or use Borrowings hereunder in order to meet such
                  liquidity requirement.

                  (e)      A new Section 6.5 is hereby added under "ARTICLE VI -
FINANCIAL COVENANTS" of the Existing Credit Agreement as follows:

                                       11
<PAGE>

                           SECTION 6.5       MINIMUM ELIGIBLE ACCOUNTS. The
                  Borrower and the Subsidiary Guarantors will have at all times
                  Eligible Accounts in an amount equal to or greater than
                  $23,750,000.

         SECTION 2.5       AMENDMENTS TO ARTICLE VII - NEGATIVE COVENANTS.
Effective as of the Amendment No. 1 Effective Date, the Existing Credit
Agreement is hereby amended as follows:

                  (a)      Subsection (h) under Section 7.1 of "ARTICLE VII -
NEGATIVE COVENANTS" of the Existing Credit Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:

                           (h)      other unsecured Indebtedness in an aggregate
                  principal amount not to exceed $2,000,000 at any time
                  outstanding.

                  (b)      Subsection (a)(iii) under Section 7.4 of "ARTICLE VII
- NEGATIVE COVENANTS" of the Existing Credit Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:

                           (iii)    Investments in the common stock or
                  securities of any other Person (including any option, warrant
                  or other right to acquire any such stock or securities) or
                  purchases, leases or other acquisitions (in one transaction or
                  a series of transactions) of any assets of any other Person;
                  provided, that (A) the aggregate cost of any such Investments
                  or acquisitions (which includes assumed Indebtedness) does not
                  exceed $10,000,000 in any single case; (B) the aggregate cost
                  of all such Investments and other acquisitions (which includes
                  assumed Indebtedness) for any period of four consecutive
                  fiscal quarters of the Borrower does not exceed $20,000,000;
                  and (C) the aggregate cost of all such Investments and other
                  acquisitions (which includes assumed Indebtedness) for the
                  term of the Loans does not exceed $50,000,000;

                  (c)      Subsections (a)(vi) and (vii) under Section 7.4 of
"ARTICLE VII - NEGATIVE COVENANTS" of the Existing Credit Agreement are hereby
amended to strike the word "and" at the end of subsection (a)(vi) and to strike
the period at the end of subsection (a)(vii) and to insert in its place "; and".

                  (d)      A new subsection (a)(viii) is hereby added under
Section 7.4 of "ARTICLE VII - NEGATIVE COVENANTS" as follows:

                           (viii)   Investments in repurchases of the capital
                  stock of the Borrower which do not exceed $5,000,000 for the
                  term of the Loans, provided, that the foregoing limitation
                  shall be increased to $7,500,000 if Consolidated EBITDAR
                  exceeds $16,000,000 as of the end of any fiscal quarter
                  commencing with the fiscal quarter ending September 30, 2003.

                  (e)      Subsection (b) under Section 7.4 of "ARTICLE VII -
NEGATIVE COVENANTS" of the Existing Credit Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:

                           (b)      The Borrower will not, and will not permit
                  any of its Subsidiaries to, make Capital Expenditures in the
                  aggregate (i) in excess of (A) $7,500,000 during any fiscal
                  quarter of the Borrower commencing with the fiscal quarter
                  ending December 31, 2002 through and including the fiscal
                  quarter ending December 31, 2003 or (B) $15,000,000 during any
                  fiscal quarter of the Borrower commencing with the fiscal
                  quarter ending March 31, 2004 and thereafter, or (ii) in
                  excess of (A) $25,000,000 for any period of four consecutive
                  fiscal quarters of the Borrower commencing with the fiscal
                  quarter ending

                                       12
<PAGE>

                  December 31, 2002 through and including the fiscal quarter
                  ending December 31, 2003 or (B) $50,000,000 for any period of
                  four consecutive fiscal quarters of the Borrower commencing
                  with the fiscal quarter ending March 31, 2004 and thereafter.

                  (f)      Section 7.5 of "ARTICLE VII - NEGATIVE COVENANTS" of
the Existing Credit Agreement is hereby deleted in its entirety and the
following is substituted in lieu thereof:

                           SECTION 7.5       RESTRICTED PAYMENTS. The Borrower
                  will not, and will not permit its Subsidiaries to, declare or
                  make, or agree to pay or make, directly or indirectly, any
                  dividend on any class of its stock, or make any payment on
                  account of, or set apart assets for a sinking or other
                  analogous fund for, the purchase, redemption, retirement,
                  defeasance or other acquisition of, any shares of common stock
                  or Indebtedness subordinated to the Obligations of the
                  Borrower or any options, warrants, or other rights to purchase
                  such common stock or such Indebtedness, whether now or
                  hereafter outstanding (each, a "RESTRICTED PAYMENT"), except
                  for (a) dividends payable by the Borrower solely in shares of
                  any class of its common stock and (b) Restricted Payments made
                  by any Subsidiary to the Borrower or to another Subsidiary
                  Loan Party.

         SECTION 2.6       AMENDMENTS TO ARTICLE VIII - EVENTS OF DEFAULT.
Effective as of the Amendment No. 1 Effective Date, the Existing Credit
Agreement is hereby amended as follows:

                  (a)      Subsection (k) under Section 8.1 of "ARTICLE VIII -
EVENTS OF DEFAULT" of the Existing Credit Agreement is hereby deleted in its
entirety and the following is substituted in lieu thereof:

                           (k)      any judgment or order for the payment of
                  money that exceeds $2,500,000 in the aggregate (excluding,
                  however, for the period ending September 30, 2002 and
                  thereafter, the settlement of that certain class action suit
                  against the Borrower identified on Schedule 4.5 in an amount
                  not exceeding $13,800,000, exclusive of insurance, pursuant to
                  the memorandum of understanding filed with the court), or that
                  has, or could reasonably be expected to have, a Material
                  Adverse Effect shall be rendered against the Borrower or any
                  Subsidiary, and either (i) enforcement proceedings shall have
                  been commenced by any creditor upon such judgment or order or
                  (ii) there shall be a period of 30 consecutive days during
                  which a stay of enforcement of such judgment or order, by
                  reason of a pending appeal or otherwise, shall not be in
                  effect; or

         SECTION 2.7       AMENDMENTS TO SCHEDULE I - PRICING GRID. Effective as
of the Amendment No. 1 Effective Date, the Existing Credit Agreement is hereby
amended as follows:

                  (a)      Schedule I of the Existing Credit Agreement
         is hereby deleted in its entirety and the new form of Schedule
         I attached hereto is substituted in lieu thereof.

         SECTION 2.8       DELETION OF EXISTING EXHIBIT 2.1 AND ADDITION OF NEW
EXHIBIT 2.1 - BORROWING AVAILABILITY CERTIFICATE. Effective as of the Amendment
No. 1 Effective Date, the Existing Credit Agreement is hereby amended as
follows:

                  (a)      Exhibit 2.1 to the Existing Credit Agreement
         is hereby deleted in its entirety and is replaced by the new
         Exhibit 2.1 - Borrowing Availability Certificate in the form
         attached hereto.

         SECTION 2.9       RE-DESIGNATION OF EXHIBIT 5.1(C) TO EXHIBIT 5.1(F) -
COVENANT COMPLIANCE CERTIFICATE. Effective as of the Amendment No. 1 Effective
Date, the Existing Credit Agreement is hereby amended as follows:

                                       13
<PAGE>

                           (a)      Exhibit 5.1(c) to the Existing Credit
                  Agreement is hereby re-designated as Exhibit 5.1(f) - Covenant
                  Compliance Certificate, and all references in the Existing
                  Credit Agreement to Section 5.1(c), from and after the
                  Amendment No. 1 Effective Date, shall be deemed to refer to
                  Section 5.1(f).

         SECTION 2.10      REDUCTION OF REVOLVING NOTE AMOUNTS. Effective as of
the Amendment No. 1 Effective Date, the Existing Credit Agreement is hereby
amended as follows:

                           (a)      Notwithstanding the fact that the face
                  amount of the Revolving Credit Note currently held by each
                  Lender is in the amount of the Lender's original Revolving
                  Commitment, the principal amount thereof shall not exceed such
                  Lender's reduced Revolving Commitment as set forth with
                  respect to each Lender on the signature pages to this
                  Amendment, and each such Revolving Credit Note and all
                  references thereto in the Existing Credit Agreement shall be
                  deemed amended accordingly effective as of the Amendment No. 1
                  Effective Date without the necessity of re-executing any
                  Revolving Credit Note.

                                  ARTICLE III

                        EFFECTIVENESS OF AMENDMENT NO. 1

         SECTION 3.1       Upon execution hereof by the Borrower, the
Administrative Agent and the Required Lenders, this Amendment shall be and
become effective as of the date hereof (the "AMENDMENT NO. 1 EFFECTIVE DATE"),
and hereafter, this Amendment shall be known, and may be referred to, as
"AMENDMENT NO. 1".

                                   ARTICLE IV

                                  MISCELLANEOUS

         SECTION 4.1       REPRESENTATIONS AND WARRANTIES. The Borrower hereby
represents and warrants to the Administrative Agent and the Lenders that, after
giving effect to this Amendment, (a) no Default or Event of Default exists under
the Existing Credit Agreement or any of the other Loan Documents, (b) all
representations and warranties of each Loan Party set forth in the Loan
Documents are true and correct in all material respects on and as of the date
hereof (except for those which expressly relate to an earlier date), (c) since
the date of the most recent financial statements of the Borrower described in
Section 5.1(a) or (b) of the Existing Credit Agreement, there has been no change
which has had or could reasonably be expected to have a Material Adverse Effect,
and (d) the Loan Documents are legal, valid and binding obligations of the
respective Loan Parties and are enforceable by the Administrative Agent and the
Lenders, as applicable, against such Loan Parties in accordance with their
respective terms.

         SECTION 4.2       CROSS REFERENCES. References in this Amendment to any
Section are, unless otherwise specified, to such Section of this Amendment.

         SECTION 4.3       INSTRUMENT PURSUANT TO EXISTING CREDIT AGREEMENT.
This Amendment is a document executed pursuant to the Existing Credit Agreement
and shall (unless otherwise expressly indicated therein) be construed,
administered and applied in accordance with the terms and provisions of the
Existing Credit Agreement.

         SECTION 4.4       LOAN DOCUMENTS. The Borrower hereby confirm and agree
that the Loan Documents are, and shall continue to be, in full force and effect
and hereby ratify and approve in all respects their obligations thereunder,
except that, upon the effectiveness of, and on and after the date of this
Amendment, all references in each Loan Document to the "CREDIT Agreement",
"thereunder", "thereof" or words of like import referring to the Existing Credit
Agreement shall mean the Amended Credit Agreement.

                                       14
<PAGE>

         SECTION 4.5       INDEMNIFICATION. The Borrower shall pay, and hold the
Administrative Agent, the Collateral Agent and each of the Lenders harmless from
and against, any and all present and future stamp, documentary, and other
similar taxes with respect to this Amendment and any other Loan Documents, any
collateral described therein, or any payments due thereunder, and save the
Administrative Agent and each Lender harmless from and against any and all
liabilities with respect to or resulting from any delay or omission to pay such
taxes. The indemnity provided herein shall survive repayment of the Loans.

         SECTION 4.6       ENTIRE AGREEMENT. This Amendment and any separate
letter agreement(s) relating to any fees payable to the Administrative Agent
constitute the entire agreement among the parties hereto and thereto regarding
the subject matters hereof and thereof and supersede all prior agreements and
understandings, oral or written, regarding such subject matters.

         SECTION 4.7       COUNTERPARTS, ETC. This Amendment may be executed by
the parties hereto in several counterparts, each of which shall be deemed to be
an original and all of which shall constitute together but one and the same
agreement. The parties may execute facsimile copies of this Amendment and the
facsimile signature of any such party shall be deemed an original and fully
binding on said party; provided, any party executing this Amendment by facsimile
signature agrees to promptly provide ten (10) original executed copies of this
Amendment to Administrative Agent.

         SECTION 4.8       GOVERNING LAW; ETC. This Amendment shall be governed
by and construed in accordance with the applicable terms and provisions of
Section 10.5 - Governing Law; Jurisdiction; Consent to Service of Process of
"ARTICLE X - MISCELLANEOUS" of the Existing Credit Agreement, which terms and
provisions are incorporated herein by reference.

         SECTION 4.9       NO OTHER MODIFICATIONS. Except as hereby amended, no
other term, condition or provision of the Existing Credit Agreement shall be
deemed modified or amended, and this Amendment shall not be considered a
novation.

         SECTION 4.10      SUCCESSORS AND ASSIGNS. This Amendment shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.

                        [Signatures follow on next page]

                                       15
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed [under seal in the case of the Borrower] by their respective duly
authorized officers as of the day and year first above written.

                                   SYKES ENTERPRISES, INCORPORATED

                                   By:  /s/ W. Michael Kipphut
                                       -----------------------------------------
                                       Name:  W. Michael Kipphut
                                       Title:    Group Executive and
                                                   Senior Vice President-Finance

                                                   [SEAL]

                                   SUNTRUST BANK, AS ADMINISTRATIVE AGENT, AS
                                   COLLATERAL AGENT, AS SWINGLINE LENDER AND AS
                                   A LENDER

                                   By : /s/ Donald T. Campisano
                                       ---------------------------------------
                                       Name:  Donald T. Campisano
                                            ----------------------------------
                                       Title:  Director
                                             ---------------------------------

                                   Revolving Commitment: $16,666,666

                                   Swingline Commitment: $10,000,000

                                      S-1
<PAGE>

                                    WACHOVIA BANK, NATIONAL ASSOCIATION, AS A
                                    LENDER

                                    By: /s/ J. Andrew Phelps
                                       ----------------------------------------
                                       Name: J. Andrew Phelps
                                            -----------------------------------
                                       Title: Vice President
                                             ----------------------------------

                                    Revolving Commitment: $13,333,333

                                      S-2
<PAGE>

                                    BNP PARIBAS, AS A LENDER

                                    By:
                                       ----------------------------------------
                                       Name:
                                            -----------------------------------
                                       Title:
                                            -----------------------------------

                                    Revolving Commitment: $10,000,000

                                      S-3
<PAGE>

                                    Accepted and Agreed to as of the Amendment
                                    No. 1 Effective Date:

                                    SYKES GLOBAL HOLDINGS, LLC
                                    SYKES LP HOLDINGS, LLC
                                    SYKES FINANCIAL SERVICES, INC.

                                    By:    /s/ W. Michael Kipphut
                                        ---------------------------------------
                                        Name:  W. Michael Kipphut
                                        Title: Senior Vice President and
                                                 Chief Financial Officer

                                    SYKES REALTY, INC.

                                    By:    /s/ W. Michael Kipphut
                                        ---------------------------------------
                                        Name:  W. Michael Kipphut
                                        Title: Vice President and
                                                 Chief Financial Officer

                                    SYKES ENTERPRISES-SOUTH AFRICA, INC.

                                    By:    /s/ W. Michael Kipphut
                                        ---------------------------------------
                                        Name:  W. Michael Kipphut
                                        Title: President

                                      S-4
<PAGE>

                                  Schedule I-1

                                  PRICING GRID

<TABLE>
<CAPTION>
         Leverage Ratio                 Applicable Margin         Applicable Percentage
                                            (per annum)                (per annum)
                                    ---------------------------------------------------
                                    Base Rate           LIBOR        Commitment Fee
                                    ---------           -----        ------------------
<S>                                 <C>                 <C>          <C>
Level I: <0.75                         0.50%            1.50%             0.50%
         -
Level II: > 0.75 and <1.50             1.00%            2.00%             0.625%
                     -
Level III: > 1.50                      1.50%            2.50%             0.75%
</TABLE>

                                  Schedule I-1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00045-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00045-of-00352.parquet"}]]