STANDSTILL AGREEMENT
Exhibit 10
THIS STANDSTILL AGREEMENT (“Agreement”), dated the 10th day of November, 2004 (“Effective Date”), is made by and between American Physicians Capital, Inc., a Michigan corporation (“ACAP”), on the one hand, and Xxxxxxxx Value Partners II, L.P., Xxxxxxxx Value Partners V, L.P., Xxxxxxxx Associates, L.P., Xxxxxxxx Partners, L.P., Xxxxxxxx Value, LLC, Xxxxxx Xxxxxxxx, Xxxx Xxxxxxxx and Xxxxxxx X. Xxxxxxxxx (collectively, the “Xxxxxxxx Group”) on the other.
WHEREAS, ACAP and certain members of the Xxxxxxxx Group are parties to a Standstill Agreement, dated February 20, 2002, as amended (the “Original Standstill Agreement”), which expires on February 20, 2005; and
a. The Xxxxxxxx Group has beneficial ownership of 705,980 shares of common stock of ACAP and has full and complete authority to enter into this Agreement and to bind the entire number of shares of the common stock of ACAP which it holds, or may hold, including any shares purchased in the future, to the terms of this Agreement. This Agreement constitutes a valid and binding agreement of the Xxxxxxxx Group. No “affiliate” or “associate” (as such terms are defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of the Xxxxxxxx Group beneficially owns any shares or rights to acquire shares of common stock of ACAP.
b. There are no arrangements, agreements or understandings between the Xxxxxxxx Group and ACAP other than as set forth in this Agreement.
a. ACAP has full power and authority to enter into and perform its obligations under this Agreement, and the execution and delivery of this Agreement by ACAP has been duly authorized by the Board of Directors of ACAP and requires no further Board of Directors or stockholder action. The Board of Directors of ACAP may be referred to hereinafter as the “Board”. This Agreement constitutes a valid and binding obligation of ACAP and the performance of its terms does not constitute a violation of its articles of incorporation or by-laws.
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3. Xxxxxxxx Group’s Prohibited Conduct. Until the termination of this Agreement, no member of the Xxxxxxxx Group or any of their affiliates or associates, shall, directly or indirectly,
a. solicit (as such term is used in the proxy rules of the Securities and Exchange Commission) proxies or consents, or participate in any manner in the solicitation of proxies or consents, from ACAP’s stockholders to elect persons to the Board of Directors or to approve shareholder proposals,
b. make any public statement critical of ACAP, its Directors or management,
c. initiate any litigation against ACAP or any of its Directors or officers, except to enforce the terms of this Agreement,
d. make or be the proponent of any shareholder proposal, whether pursuant to Rule 14a-8 of the Exchange Act or otherwise,
e. acquire, offer or propose to acquire, or agree to acquire (except, in any case, by way of stock dividends or other distributions or offerings made available to holders of ACAP common stock generally), directly or indirectly, or retain ownership of any ACAP common stock, if when taken together with the ACAP common stock beneficially owned by the Xxxxxxxx Group would constitute more than 9.9% of the then outstanding shares of ACAP; provided that “beneficial ownership” shall have the meaning ascribed thereto under Section 13(d) of the Exchange Act,
f. make any public announcement with respect to any proposal or offer involving, or propose to enter into, or assist or encourage any other person with respect to, directly or indirectly, any merger, consolidation, business combination, tender or exchange offer, sale or purchase of assets, sale or purchase of securities, dissolution, liquidation, restructuring, recapitalization or similar transactions of or involving ACAP, or to propose as a Director any of the foregoing types of transactions, provided, however, that nothing herein shall directly or indirectly prohibit any member of the Xxxxxxxx Group from proposing any transaction listed above which does not result in a “change of control” of ACAP as defined in ACAP’s Stock Compensation Plan as it exists as of the Effective Date.
g. form, join or in any way participate in any “group” (within the meaning of Section 13(d)(3) of the Exchange Act) with respect to ACAP common stock,
h. deposit any ACAP common stock in any voting trust or subject any ACAP common stock to any arrangement or agreement with respect to the voting of any ACAP common stock,
i. execute any written consent as shareholders with respect to ACAP or its common stock, except as set forth herein,
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j. otherwise act, alone or in concert with others, to control or seek to control or influence or seek to influence the stockholders, management, the Board or policies of ACAP, other than through non-public communications with the directors of ACAP; provided, that, subject to clause (f) above, nothing herein shall limit Xxxxxx Xxxxxxxx or Xxxxxxx Xxxxxxxxx from acting in their capacities as directors of ACAP in accordance with their fiduciary duties at any meeting of the Board of Directors, including their ability to discuss and vote upon the items in clause (f) above,
k. seek, alone or in concert with others, (i) to call a meeting of shareholders, (ii) representation on the Board of ACAP or its subsidiaries, except as set forth herein, or (iii) the removal of any member of the ACAP Board or any of its subsidiaries,
l. make any publicly disclosed proposal regarding any of the foregoing,
m. publicly make any request to amend, waive or terminate any provision of this Agreement, or
n. take, or cause others to take, any action inconsistent with any of the foregoing.
x. Xxxxxxxx will be appointed to the Class of Directors of ACAP whose terms expire at the 2005 Annual Meeting of Stockholders, and be appointed to the compensation and investment committees. Xxxxxxx Xxxxxxxxx (“Xxxxxxxxx”), who was appointed to the Board pursuant to the Original Standstill Agreement, shall continue as a director pursuant to the terms set forth herein.
b. ACAP agrees to make all necessary amendments to its by-laws and/or articles of incorporation to enable Xxxxxxxx to sit on the Board, including to expand the Board.
x. Xxxxxxxx and Xxxxxxxxx will be entitled to receive the identical compensation and benefits being paid to the other non-employee directors of ACAP.
d. No member of the Xxxxxxxx Group shall accept any incentive or compensation that would influence any member of the Xxxxxxxx Group to recommend that ACAP enter into a transaction for the sale of ACAP or to recommend any other significant initiative affecting ACAP and its shareholders. For purposes of this
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subparagraph 5(c), neither an increase in the value of the Xxxxxxxx Group’s holdings in ACAP shares nor any fees earned by Xxxxxxxx in connection with managing his limited partnerships shall constitute an incentive or compensation hereunder.
e. ACAP and its Board agree to nominate and support Xxxxxxxx and Xxxxxxxxx for re-election to the Board of ACAP at the 2005 annual shareholders meeting each for a term that expires at the 2008 annual shareholders meeting. Xxxxxxxxx shall remain a member of the audit and governance committees during the rest of his current term and in his next term, and Xxxxxxxx shall remain a member of the compensation and investment committees in his next term.
f. If at any time during the term of this Agreement the Xxxxxxxx Group’s beneficial ownership of ACAP common stock becomes less than five percent of the outstanding shares of ACAP common stock, then the Xxxxxxxx Group shall, within five business days thereafter, give notice of such change in ownership to ACAP and, if requested by the Board of ACAP following a majority vote of the directors other than Xxxxxxxx and Xxxxxxxxx, either Xxxxxxxx or Xxxxxxxxx (at Xxxxxxxx’x discretion) shall immediately tender his resignation from the Board of ACAP and all committees of the Board, which resignation shall be effective upon receipt by ACAP. Such resignation shall state that it is being tendered pursuant to the terms hereof and not as a result of any disagreement with the Board or management of ACAP. Notwithstanding the foregoing, the Xxxxxxxx Group’s obligations under this subparagraph 5(f) shall not be triggered if it becomes the beneficial owner of less than five percent of the outstanding common stock of ACAP as the result of an issuance of common stock by ACAP which, by increasing the number of shares outstanding, decreases the proportionate number of shares beneficially owned by the Xxxxxxxx Group; provided, however, that if the Xxxxxxxx Group shall become the beneficial owner of less than five percent of the common stock of ACAP then outstanding by reason of a share issuance by ACAP and shall, after such share issuance by ACAP, sell or dispose of a proportionate amount of ACAP common stock that would have otherwise lowered his percentage ownership of ACAP to less than 5% of the number of shares of common stock of ACAP outstanding as of the Effective Date, then the Xxxxxxxx Group’s obligations under this subparagraph 5(f) shall be triggered.
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a. This Agreement shall terminate and Xxxxxxxx and Xxxxxxxxx shall immediately tender their resignations from the Board of ACAP, if requested by the Board of ACAP as a result of a majority vote of the directors other than Xxxxxxxx and Xxxxxxxxx in favor of such resignation by the Board of ACAP, upon the earlier of (i) the Xxxxxxxx Group having beneficial ownership of less than one percent of the outstanding shares of common stock of ACAP; (ii) any person becoming the beneficial owner of more than 50% of ACAP’s voting stock, including any merger, acquisition or other type of business combination, (iii) the dissolution, merger or any other transaction which results in the failure of Xxxxxxxx Value Partners II, L.P., Xxxxxxxx Value Partners V, L.P., Xxxxxxxx Associates, L.P., Xxxxxxxx Partners, L.P. or Xxxxxxxx Value LLC to exist as legal entities; provided that at the option of ACAP, this Agreement shall be binding on their respective successors and it shall be a condition of such dissolution or other transaction that such successor so agree, (iv) the death or incapacity of Xxxxxx Xxxxxxxx; or (v) the third anniversary of the Effective Date.
b. The Xxxxxxxx Group shall have the right to terminate this Agreement at any time upon at least 15 days’ prior written notice of such termination along with written notice of the resignation of Xxxxxxxx and Xxxxxxxxx from the Board of ACAP as of the date of termination (the “Termination and Resignation Notice”). During such 15-day period, the parties hereto shall discuss and address the proposed termination and Xxxxxxxx’x and Xxxxxxxxx’x intention to resign. If the Termination and Resignation Notice is not withdrawn by Xxxxxxxx and Xxxxxxxxx on or before the effective date thereof (which shall not be less than 15 days after delivery to ACAP), this Agreement shall terminate and Xxxxxxxx and Xxxxxxxxx shall no longer be members of the ACAP Board (or any committee thereof).
c. The Xxxxxxxx Group hereby forever waives and releases, and covenants not to xxx, any of ACAP’s current Directors or current Officers, for any claim or cause of action based on any act, omission, or failure to act by ACAP’s current Directors or current Officers, which occurs prior or subsequent to the Effective Date, however, this waiver and release and covenant not to xxx does not include the right to xxx to enforce the terms of this Agreement and does not extend to acts which are criminal. The Xxxxxxxx Group is not aware of the existence of any claims it currently possesses against ACAP. The Xxxxxxxx Group also agrees that no member of the Xxxxxxxx Group will make any public statement which directly or indirectly impugns the character, integrity or personal reputation of any of ACAP’s current Directors. The provisions of this sub-paragraph 9(c) shall survive the termination of the Agreement.
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to Xxxxxxxx and Xxxxxxxxx: however, neither party shall disclose the existence of this Agreement until the press release is issued.
ACAP: |
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Mr. R. Xxxxx Xxxxxxx | ||
0000 Xxxxx Xxxxxxxx Xxxx | ||
Xxxx Xxxxxxx, Xxxxxxxx 00000 | ||
With a copy to: |
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Xxxx X. XxXxxxxxxx, Esq. | ||
Xxxxxx Xxxxxxx PLLC | ||
124 W. Allegan | ||
000 Xxxxxxxx Xxxxxxxx Xxxxx | ||
Xxxxxxx, Xxxxxxxx 00000 |
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The Xxxxxxxx Group: |
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Xx. Xxxxxx Xxxxxxxx | ||
00 Xxxxxxxx, 00xx Xxxxx | ||
Xxx Xxxx, Xxx Xxxx 00000 | ||
With a copy to: |
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Xxxxxx Xxxx, Esq. | ||
Xxxxxxxxx Xxxxxx PLLC | ||
000 Xxxxx Xxxxxxxxxx Xxxxxx, Xxxxx 000 | ||
Xxxxxxx, Xxxxxxxx 00000-0000 |
14. Entire Agreement. This Agreement constitutes the entire agreement between the parties hereto pertaining to the subject matter hereof and supersedes all prior and contemporaneous agreements, understandings, negotiations and discussions of the parties in connection therewith not referred to herein. The Original Standstill Agreement is superceded in its entirety by this Agreement and is no longer in force.
17. Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Michigan, without regard to choice of law principles that would compel the application of the laws of any other jurisdiction.
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23. Consent to Jurisdiction. Each of the parties hereby irrevocably submits to the exclusive jurisdiction of any United States Federal or state court sitting in the State of Michigan in any action or proceeding arising out of or relating to this Agreement and each of the parties hereby irrevocably agrees that all claims in respect of such action or proceeding may be heard and determined in any such court.
[Remainder of Page Intentionally Left Blank]
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AMERICAN PHYSICIANS CAPITAL, INC. |
/s/ Xxxxxxx X. Xxxxxxxxx |
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Xxxxxxx X. Xxxxxxxxx | |||||||||
/s/ R. Xxxxx Xxxxxxx | |||||||||
/s/ Xxxxxx Xxxxxxxx | |||||||||
By: |
R. XXXXX XXXXXXX | ||||||||
President and CEO | Xxxxxx Xxxxxxxx | ||||||||
XXXXXXXX VALUE PARTNERS II, X.X. |
XXXXXXXX VALUE, LLC | ||||||||
/s/ Xxxxxx Xxxxxxxx | /s/ Xxxxxx Xxxxxxxx | ||||||||
By:
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XXXXXXXX VALUE LLC | By: | XXXXXX XXXXXXXX | ||||||
General Partner, by Xxxxxx Xxxxxxxx, | Managing and Sole Member | ||||||||
Managing and Sole Member | |||||||||
XXXXXXXX VALUE PARTNERS V, L.P. |
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/s/ Xxxxxx Xxxxxxxx | |||||||||
By:
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XXXXXXXX VALUE LLC | ||||||||
General Partner, by Xxxxxx Xxxxxxxx, | |||||||||
Managing and Sole Member | |||||||||
XXXXXXXX ASSOCIATES, L.P. |
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/s/ Xxxxxx Xxxxxxxx | |||||||||
By:
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XXXXXXXX VALUE LLC | ||||||||
General Partner, by Xxxxxx Xxxxxxxx | |||||||||
Managing and Sole Member | |||||||||
XXXXXXXX PARTNERS, L.P. |
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/s/ Xxxxxx Xxxxxxxx | |||||||||
By:
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XXXXXX XXXXXXXX | ||||||||
General Partner | |||||||||
/s/ Xxxx Xxxxxxxx | |||||||||
Xxxx Xxxxxxxx |
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ATTACHMENT A
FOR IMMEDIATE RELEASE
Contact:
Xx. Xxx Xxxxxxxx
American Physicians Capital, Inc.
0000 Xxxxx Xxxxxxxx Xxxx
Xxxx Xxxxxxx, Xxxxxxxx 00000
Phone: 000-000-0000
AMERICAN PHYSICIANS CAPITAL, INC. ADDS INVESTOR XXXXXX XXXXXXXX TO ITS BOARD OF DIRECTORS
East Lansing, Michigan, November 10, 2004 — American Physicians Capital, Inc. (APCapital) (NASDAQ: ACAP) announced that Xxxxxx Xxxxxxxx has joined the Company’s Board of Directors today. Xx. Xxxxxxxx is a New York based-private investor and his Xxxxxxxx Group is one of the Company’s largest shareholders. Xxxxxxx Xxxxxxxxx, who was appointed to the Board in 2002 as a nominee of the Xxxxxxxx Group and later elected by shareholders for a three year term, will continue as a Director.
In connection with the Xx. Xxxxxxxx’x appointment, the Xxxxxxxx Group has agreed to a new three-year standstill agreement which replaces the 2002 agreement which was set to expire in February 2005. The new agreement provides that the Xxxxxxxx Group will support the Company’s slate of directors at the 2005 annual meeting and during the term of the standstill agreement. The Company will nominate Xx. Xxxxxxxx and Xx. Xxxxxxxxx at the 2005 annual meeting for three year terms.
R. Xxxxx Xxxxxxx, APCapital President and CEO, said: “We have been working closely with the Xxxxxxxx Group for almost three years and Xx. Xxxxxxxx will bring additional expertise to our Board of Directors and further strengthen our relationships with our shareholders as we continue to maximize shareholder value by focusing on our core business line in our core markets.”
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