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EXHIBIT 10.13
[ABN AMRO INC. LETTERHEAD]
Xx. Xxxxxxx X. Xxxxxxxxx
Chief Executive Officer
American Physicians Capital, Inc.
0000 Xxxxx Xxxxxxxx Xxxx
Xxxx Xxxxxxx, Xxxxxxxx 00000
Dear Xxxx:
ABN AMRO Incorporated ("AAI" or the "Managing Underwriter") is pleased
to set forth the terms of this engagement letter agreement (the "Agreement")
relating to our retention in connection with the proposed conversion of Mutual
Insurance Corporation of America ("MICOA") and the proposed offering of shares
of common stock (the "Shares") in American Physicians Capital, Inc. (the
"Company") in: (i) a subscription offering to policyholders, officers and
directors of the Company (the "Subscription Offering"); (ii) a best efforts
offering to other people with whom the Company has a relationship (the "Best
Efforts Offering"); and (iii) a firm commitment underwritten offering to all
other persons (the "Underwritten Offering," and, collectively with the Best
Efforts Offering and Subscription Offering, the "Offerings").
1. DESCRIPTION OF ENGAGEMENT.
(a) Conversion. The Company and AAI hereby agree that AAI will act as
Lead Advisor to the Company on its proposed conversion. In this
regard and subject to the terms of this letter, AAI will, or will
stand ready to, provide advice in connection with the Plan of
Conversion, including:
(i) the structuring of the conversion and the Offerings;
(ii) making itself available to assist management of the Company
with appropriate presentations regarding the conversion to the
Company's Board of Directors;
(iii) conducting a thorough financial review of the Company,
including an evaluation of its financial condition and
prospects;
(iv) assisting in the preparation of the Plan of Conversion and
related documentation;
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(v) assisting in the preparation of the Registration Statement
with respect to the Offerings to be filed with the Securities
and Exchange Commission;
(vi) providing advice in connection with the execution of the
Offerings, including updating management on market conditions
and pricing considerations; and
(vii) reviewing the report issued by the independent appraiser
establishing the pro forma market valuation of the converted
company and the valuation range.
(b) Offerings. The Company hereby agrees that should it proceed with the
Offerings, it shall retain AAI (through its ABN AMRO Rothschild
division) to serve, and AAI, subject to the terms of this Agreement
(including without limitation Paragraph 12 hereof), agrees to act,
as sole bookrunner and lead manager of the Underwritten Offering and
as placement agent of the Subscription Offering and the Best Efforts
Offering.
In the capacity of lead manager and subject to the terms of this
Agreement, XXX proposes to organize and manage a group of
underwriters who will purchase from the Company the Shares to be
sold in the Underwritten Offering. The Managing Underwriter will be
responsible for selecting the members of the underwriting syndicate,
and determining the role of each syndicate member, including,
without limitation, underwriting commitment, selling retention and
the allocation of syndicate expenses, sales commissions and
underwriting and management fees. AAI will not include any firm in
the underwriting syndicate without the approval of the Company,
which approval will not be unreasonably withheld.
The terms of this Agreement shall extend from the date of this
letter for a period of twelve months thereafter, and may be extended
on a month-to-month basis by mutual written consent of the parties
hereto, hereinafter as it may be extended referred to as the "Term."
2. UNDERWRITTEN OFFERING. It is presently contemplated that the Underwritten
Offering will consist of all unsold Shares remaining to be sold by the
Company, after the termination of the Subscription Offering and the Best
Efforts Offering, excluding the over-allotment. The underwriters will be
granted an option by the Company to purchase up to fifteen percent (15%) of
the total amount of Shares in the Underwritten Offering solely for the
purpose of covering over-allotments.
3. ABN AMRO BANK N.V. ROLE. In connection with providing the structuring and
advisory services hereunder, the Company acknowledges that AAI may involve
employees of ABN AMRO Bank N.V. (the "Bank") who have relevant industry
experience. The Bank shall have the full benefit of provisions 6 and 7
hereof as
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specifically provided therein as if the Bank were a party to this Agreement.
Neither the Bank nor any of its affiliates are obligated to lend money or
otherwise extend debt or equity financing in connection with this Agreement.
Any financing undertaken by the Bank or its affiliates shall be made subject
to the request of the Company and to internal approval of the Bank and shall
be made in writing under a separate letter.
4. COMPENSATION. In consideration of the structuring and advisory services
provided by AAI in connection to the Offerings, as well as other aspects of
the proposed plan of conversion, the Company hereby agrees to pay a fee (the
"Financial Advisory Fee") in the amount of $950,000 at closing of the
Offerings. The Financial Advisory Fee will be reduced by the amount of any
management fees retained by AAI as part of the underwriting discount (it
being understood that the management fee component of the underwriting
discount will be customary for a transaction of this type) agreed at the
time of the Underwritten Offering and reflected in the underwriting
agreement in connection therewith, although not to a number less than zero.
The Financial Advisory Fee shall be payable in immediately available funds
on the closing date of the Offerings regardless of whether such closing
occurs during the Term. Except as expressly provided in the last sentence of
Paragraph 11(a) hereof, the Company's obligation to pay the Financial
Advisory Fee shall be contingent solely upon the closing of the Offerings.
The Financial Advisory Fee shall not include any fees earned by AAI or
others for furnishing services other than as provided herein.
5. EXPENSES. In addition to the Financial Advisory Fee described in paragraph 4
above, the Company agrees to promptly reimburse AAI, upon request, for all
reasonable out-of-pocket expenses incurred in performing the structuring and
advisory services hereunder, regardless of whether any of the Offerings are
consummated.
6. INDEMNIFICATION. The Company agrees to: (1) indemnify and hold harmless AAI,
its directors, officers, affiliates, agents, employees, and any
individual(s) who may be deemed to control AAI (collectively, "Indemnified
Persons") against all losses, claims, damages, penalties, judgments,
liabilities and expenses of every kind whatsoever (including, without
limitation, all expenses of litigation or preparation therefor, including
reasonable attorney's fees, whether or not an Indemnified Person is a party
thereto) (collectively, "Liabilities") which any of the Indemnified Persons
may pay, be subject to or incur arising out of or relating to any
transactions or activities contemplated by this Agreement or the engagement
of AAI pursuant to, and the performance by AAI or its affiliates of the
services contemplated by, this Agreement; (2) reimburse any Indemnified
Person for all expenses (including, without limitation, fees and
disbursements of counsel) as they are incurred by AAI or any such other
Indemnified Person in connection with
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the investigation of, preparation for or defense of any pending or
threatened claim or any action or proceeding arising therefrom, whether or
not such Indemnified Person is a party; and (3) expressly and irrevocably
waives any and all rights and objections which it may have against any
Indemnified Persons in respect of any Liabilities arising out of or relating
to this Agreement or the Offerings, except to the extent that such
Liabilities arise primarily from AAI's gross negligence or willful
misconduct; provided, however, that the indemnification pursuant to this
Paragraph 6 shall remain absolute with respect to any loss, claim, damage or
liability arising out of any untrue statement of a material fact contained
in any offering documentation or the omission therefrom of a material fact
necessary in order to make the statements therein not misleading, in the
light of the circumstances under which they were made.
The Company further agrees not to settle any claim, litigation or proceeding
(whether or not any Indemnified Person is a party thereto) relating to this
Agreement or the Offerings unless: (1) such settlement releases all the
Indemnified Persons from any and all Liabilities related to this Agreement
or the Offerings; and (2) the entire settlement amount and all costs of
settlement are borne by the Company.
For the purposes of this Indemnification provision, the Company irrevocably
submits to the non-exclusive jurisdiction of any court in which a claim
relating to this Agreement or the Offerings is properly brought against an
Indemnified Person and irrevocably waives any objection as to venue or
forum.
An Indemnified Person shall have the right to employ their own counsel in
any suit, action or proceeding arising from this Agreement or the Offerings
if the Indemnified Person reasonably concludes, based on a written opinion
of counsel, that a conflict of interest exists between the Company and the
Indemnified Person which would materially impact the effective
representation of the Indemnified Person. In the event that the Indemnified
Person concludes that a conflict of interest exists, the Indemnified Person
shall have the right to: (1) assume and direct the defense of such suit,
action, or proceeding on their own behalf (provided, however, that in such
case the Company and MICOA shall be permitted to participate in such
defense); and (2) to select counsel which will represent them in any such
action, suit or proceeding, and the Company shall indemnify the Indemnified
Person for the reasonable legal fees and expenses of such counsel and other
expenses reasonably incurred by the Indemnified Person
7. PERSONS ENTITLED TO RELIANCE. The Company recognizes that AAI has been
retained only by the undersigned, and that its engagement of AAI is not
deemed to be on behalf of and is not intended to confer rights upon any
shareholder, affiliate, owner or partner of the Company or any other person
not a party hereto as against AAI or any of AAI's affiliates, the respective
directors, officers, agents and employees of AAI's affiliates or each other
person, if any, controlling AAI or any
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of AAI's affiliates. Unless otherwise expressly stated in an opinion letter
issued by AAI or otherwise expressly agreed to by AAI, no one other than the
Company is authorized to rely upon the engagement of AAI or any statements
or conduct by XXX.
8. CONDITIONS PRECEDENT. The proposed participation of AAI in the Offerings and
its proposed undertakings set forth herein are subject to Paragraph 12
hereof, and in no event shall such participation occur without the
satisfaction or waiver of the following conditions:
(a) The Company shall have taken all necessary action to authorize the
issuance of the Shares.
(b) Completion by AAI and its counsel in a manner satisfactory to AAI in its
sole discretion of the due diligence review of the Company and receipt
by the Company of all necessary or advisable consents, licenses and
approvals for the Company and AAI to meet their obligations hereunder.
(c) The Company and AAI shall have negotiated, executed and delivered any
and all documents necessary to conduct the Offerings, including, without
limitation, an Underwriting Agreement, a Placement Agent Agreement and
such other documents as are standard for a public offering, all of
which documents shall contain representations, warranties, covenants,
indemnities and such other terms and conditions as are standard for an
offering of equity securities.
(d) Any necessary governmental and regulatory approvals, consents and
filings shall have been obtained or made.
(e) From the date of the most recently available audited financial
statements until the closing of the Offerings, there shall have been no
material adverse change in the condition, financial or otherwise, or in
the earnings (without regard to the effects of the one-time settlement
with the IRS in 1999), operations, business affairs or business
prospects of the Company as reflected in such financial statements.
(f) All legal documentation, instruments and other matters in connection
with the Offerings shall be reasonably satisfactory to AAI.
(g) At any time prior to the closing of the purchase and sale of the Shares,
the financial, political, economic or regulatory conditions in the
United States or the international capital markets shall not have
undergone any change or any development involving a prospective change
(including the suspension of trading in securities on the major U.S.
stock exchanges, or the establishment of minimum prices by any such
exchange, or the establishment of any new restrictions or transactions
in securities by either such exchange) which would be such as to make
it, in AAI's sole judgement, impracticable to market the Shares or to
enforce contracts for the sale of the Shares.
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9. COOPERATION. In connection with XXX's activities pursuant to this Agreement,
the Company will cooperate with AAI and will, to the extent possible,
furnish AAI with all information and data concerning the Offerings and the
Company which AAI deems appropriate and will, to the extent possible,
provide AAI with access to the Company's respective officers, directors,
employees, financial advisors, independent accountants and legal counsel.
The Company represents and warrants that all information made available to
AAI by the Company or contained in any filing by the Company with any court
or governmental regulatory agency, commission or instrumentality with
respect to the Offerings will, at all times during the period of the
engagement of AAI hereunder, be complete and correct in all material
respects and will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
therein not misleading in the light of the circumstances under which such
statements are made. The Company further represents and warrants that any
projections provided by it to AAI will have been prepared in good faith and
will be based upon assumptions which, in light of the circumstances under
which they are made, are reasonable. The Company acknowledges and agrees
that, in rendering its services hereunder, AAI will be using and relying on
information provided by the Company or information available from public
sources and other sources deemed reliable by AAI without independent
verification thereof by AAI or independent appraisal by AAI. AAI does not
assume responsibility for the accuracy or completeness of any of this
information regarding the Company.
10. OTHER OFFERINGS. The Company shall not undertake or announce any private or
public offering of securities from the date hereof until the closing date of
the Offerings, other than the Offerings, without AAI's prior written
consent.
11. TERMINATION. (a) Termination of Engagement. This Agreement shall become
effective upon the Company's acceptance of this letter by signing where
indicated below. This Agreement may be terminated during the Term by either
AAI or the Company giving prior written notice of termination to the other.
Neither termination of this Agreement nor consummation of the Offerings
contemplated herein shall affect: (i) any compensation earned by AAI up to
and including the date of termination or consummation; (ii) the
reimbursement of expenses incurred by AAI up to the date of termination or
consummation; and (iii) Paragraphs 4-7, inclusive, of this Agreement. (b)
Termination of Offerings. If the Offerings are terminated by the Company for
any reason after work thereon has been started or if the Managing
Underwriter determines to terminate the Underwritten Offering because of the
failure of any of the conditions or covenants of the Company set forth in
this letter, the Company will pay to AAI a fee equal to $350,000. The
Company will also pay the fees and normal out-of-pocket expenses incurred by
AAI as well as those of its counsel.
12. FINANCIAL ADVISORY. Except for Paragraphs 1, 4, 5, 6 and 7, this letter is
not
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intended to constitute a binding agreement and no other liability or
obligation is created by this letter of intent. This letter cannot be
construed in any way as a binding commitment by AAI or any of its affiliates
to purchase the Shares, and AAI may, in its sole judgment and discretion,
determine at any time not to proceed with the Underwritten Offering. Except
for Paragraphs 1, 4, 5, 6 and 7, all legal obligations between the parties
relating to the offer and sale of the Shares shall be only those set forth
in the underwriting agreement or agency agreement, as applicable, and shall
arise only when a mutually satisfactory underwriting agreement and agency
agreement between the Company and AAI is executed and delivered immediately
prior to the time of the such Offerings.
13. MISCELLANEOUS.
(a) The Company may not assign this Agreement. AAI may not assign this
agreement unless such assignment is to a successor or affiliate that is
owned, directly or indirectly, by ABN AMRO Holding N.V.
(b) The Company agrees that, upon consummation of the Offerings, XXX has the
right to publish a tombstone advertisement in financial publications at
its own expense describing its services hereunder.
(c) This Agreement constitutes the entire agreement, and supersedes all
prior agreements, understandings, negotiations, representations and
discussions, whether oral or written, of the parties with respect to the
subject matter hereof. No supplement, modification or waiver of this
Agreement will be binding unless in writing and executed by the parties.
No waiver of any of the provisions of this Agreement will be deemed to
constitute a waiver of any other provision hereof nor will such waiver
constitute a continuing waiver unless expressly provided.
This Agreement may be executed in any number of counterparts and by the
parties in separate counterparts, each of which when executed shall be
deemed to be an original and all of which taken together shall
constitute one and the same agreement.
(d) This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be
performed in such State. The parities irrevocably submit to the
jurisdiction of any competent court in the place of its domicile and any
United States Federal or New York State court sitting in the Borough of
Manhattan, City and State of New York in any action or proceeding
arising out of or relating to this Agreement and irrevocably waive any
immunity from the jurisdiction thereof and any claim or defense in such
action or proceeding based on a claim or improper venue, forum non
conveniens or any similar basis to which they might otherwise be
entitled.
Please confirm that the foregoing is in accordance with your understanding
of this
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Agreement by signing and returning to us a copy of this letter. Please note
that nothing in this letter constitutes a commitment to underwrite, provide
or arrange for the placement of any Shares and that any such commitment will
be evidenced exclusively by a definitive underwriting and/or agency
agreement, which will contain customary representations, conditions and
indemnification provisions satisfactory to us.
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Very truly yours,
ABN AMRO INCORPORATED
By:
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Xxxx xxx Xxxxxx
Managing Director
ACCEPTED AND AGREED AS OF THE DATE HEREOF:
AMERICAN PHYSICIANS CAPITAL, INC.
By:
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Xxxxxxx X. Xxxxxxxxx
Chief Executive Officer
Performance of all obligations of American Physicians Capital, Inc.
is hereby guaranteed by the undersigned:
MUTUAL INSURANCE CORPORATION OF AMERICA
By:
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Xxxxxxx X. Xxxxxxxxx
Chief Executive Officer
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