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EXHIBIT 1.1
Up to 10,000,000 Shares
AMERICAN PHYSICIANS CAPITAL, INC.
(a Michigan corporation)
Common Stock
(no par value)
AGENCY AGREEMENT
__________________, 2000
ABN AMRO INCORPORATED
1290 Avenue of the Americas
New York, New York 10104-0101
Ladies and Gentlemen:
Pursuant to the terms of this Agency Agreement (this "Agreement"),
American Physicians Capital, Inc., a Michigan corporation (the "Company"), and
Mutual Insurance Corporation of America, a Michigan mutual insurance company
("MICOA"), hereby confirm their agreement with ABN AMRO Incorporated ("the
Agent") with respect to the matters set forth herein including the offer and
sale by the Company of up to 10,000,000 shares (the "Shares") of the Company's
common stock, no par value (the "Common Stock").
The Company was formed in connection with a Plan of Conversion dated
June 28, 2000 (together with any amendments thereto, the "Plan of Conversion"),
pursuant to which MICOA is converting from a mutual insurance company to stock
company form (the "Conversion"). Upon consummation of the Conversion, the
Company will become the holding company for MICOA and its subsidiaries.
The Shares to be issued will be offered by the Company at a price of
$____ per share, subject to downward adjustment in certain circumstances as
provided in the Plan of Conversion (the "Purchase Price") in a subscription
offering (the "Subscription Offering") pursuant to nontransferable subscription
rights being granted to eligible policyholders of MICOA and to certain officers
and directors of the Company and MICOA, all on the terms and subject to the
conditions set forth in Article V of the Plan of Conversion.
Subject to the prior rights of holders of subscription rights, any
Shares not subscribed for in the Subscription Offering may be sold to certain
members of the general public at the Purchase Price in a "best efforts"
underwritten offering (the "Best Efforts Offering," and together with the
Subscription Offering, the "Subscription and Best Efforts Offerings") to be
commenced concurrently with the Subscription Offering. The Best Efforts Offering
shall be made only to
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those persons described in Section 6.1 of the Plan of Conversion, and only on
the terms and subject to the conditions set forth in the Plan of Conversion.
The Agent is being retained by the Company and MICOA to act as the
Company's subscription agent in connection with the Shares being offered in the
Subscription Offering, and to act as exclusive agent on a "best efforts" basis
in connection with the Shares being offered in the Best Efforts Offering.
Neither the Subscription Offering nor the Best Efforts Offering constitutes a
firm commitment underwritten offering, and the Agent shall have no obligation to
purchase any of the Shares offered in connection therewith.
It is currently anticipated by the Company and MICOA that any Shares
not subscribed for in the Subscription and Best Efforts Offerings will be
offered in a firm commitment underwritten offering (the "Underwritten
Offering"). The Subscription and Best Efforts Offerings and the Underwritten
Offering are sometimes hereinafter referred to collectively as the "Offerings."
SECTION 1. REPRESENTATIONS AND WARRANTIES. The Company and MICOA jointly and
severally represent and warrant to the Agent as set forth in this Section 1.
Unless the context otherwise requires, references in this Agreement to
"Subsidiaries" refers to MICOA and each of its direct and indirect majority
owned corporations and limited liability companies which will be direct or
indirect subsidiaries of the Company immediately after the Effective Date.
(i) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") in accordance with the
provisions of the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Act"), a
registration statement on Form S-1 (File No. 333-41136), including a
prospectus, relating to the Shares to be offered in the Subscription
and Best Efforts Offerings, and such registration statement has been
declared effective by the Commission, and no stop order has issued with
respect thereto and no proceedings therefor have been initiated or, to
the knowledge of the Company or MICOA, threatened by the Commission.
There have been or will promptly be delivered to the Agent three signed
copies of such registration statement and amendments, three copies of
each exhibit filed therewith, and conformed copies of such registration
statement and amendments (but without exhibits) and of the related
final prospectus. The term "Registration Statement" as used in this
Agreement shall mean such registration statement at the time such
registration statement became effective and, in the event any amendment
thereto becomes effective prior to the Closing Date (as hereinafter
defined), shall also mean such registration statement as so amended.
The term "Prospectus" as used in this Agreement shall mean the form of
prospectus included in the Registration Statement at the time it became
effective or as subsequently amended. The Securities Exchange Act of
1934, as am5ended, and the rules and regulations of the Commission
thereunder are hereinafter collectively referred to as the "Exchange
Act."
(ii) Neither the Commission nor any other court or other
governmental agency or body has issued any order preventing or
suspending the use of the Prospectus, and the Prospectus complied in
all material respects when so filed with the requirements of the Act.
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(iii) The Registration Statement in the form in which it
became effective, and the Prospectus when and in the form last filed
with the Commission as part of the Registration Statement prior to
effectiveness, and when any supplement or amendment thereto is filed
with the Commission, each will comply in all material respects with the
requirements of the Act, will not at any such time contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
This representation and warranty does not apply to statements in or
omissions from the Registration Statement or the Prospectus (or any
supplement or amendment thereto) made in reliance upon and in
conformity with information relating to the Agent furnished to the
Company in writing by or on behalf of the Agent specifically for use in
the Registration Statement.
(iv) There is no contract or other document of a character
required to be described in the Registration Statement or Prospectus or
to be filed as an exhibit to the Registration Statement which is not
described or filed as required.
(v) The accountants who have expressed their opinions with
respect to certain of the financial statements of the Company included
in the Registration Statement and the Prospectus, are independent
public accountants as required by the Act.
(vi) The consolidated financial statements, together with
the notes thereto, of the Company included in the Registration
Statement and the Prospectus comply in all material respects with the
Act and present fairly the consolidated financial position of the
Company as of the dates indicated, and the consolidated results of
operations, cash flows and changes in financial position of the Company
for the periods specified; and the supporting schedules included in the
Registration Statement present fairly the information required to be
stated therein. Such financial statements have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the entire period involved except to the
extent disclosed therein. The pro forma financial statements and other
pro forma information included in the Prospectus present fairly the
information shown therein, have been prepared in accordance with
generally accepted accounting principles and the Commission's rules and
guidelines with respect to pro forma financial statements and other pro
forma information, have been properly compiled on the pro forma basis
described therein, and, in the opinion of the Company, the assumptions
used in the preparation thereof are reasonable and the adjustments used
therein are appropriate under the circumstances.
(vii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Michigan, with full corporate power and authority to own, lease and
operate its properties and conduct its business as described in the
Registration Statement and Prospectus. The Company is duly qualified to
do business as a foreign corporation and in good standing in each
jurisdiction in which the ownership or leasing of its properties or the
conduct of its business requires such qualification, except in any such
case in which the failure to so qualify or be in good standing would
not have a material adverse effect upon the business of the Company and
its Subsidiaries, taken as a whole; and no proceeding of which the
Company or MICOA
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has knowledge has been instituted in any such jurisdiction, revoking,
limiting or curtailing, or seeking to revoke, limit or curtail, such
power and authority or qualification.
(viii) MICOA has been duly organized and is validly existing as
a mutual insurance company in good standing under the laws of the State
of Michigan, with full corporate power and authority to own, lease and
operate its properties and conduct its business as described in the
Registration Statement and Prospectus. MICOA is duly qualified to do
business as a foreign insurer and in good standing in each jurisdiction
in which the ownership or leasing of its properties or the conduct of
its business requires such qualification, except in any such case in
which the failure to so qualify or be in good standing would not have a
material adverse effect upon the business of the Company and its
Subsidiaries, taken as a whole; and no proceeding of which the Company
or MICOA has knowledge has been instituted in any such jurisdiction,
revoking, limiting or curtailing, or seeking to revoke, limit or
curtail, such power and authority or qualification. Immediately
following the Effective Date (as hereinafter defined), MICOA will be
duly organized and validly existing as a stock insurance company in
good standing under the laws of the State of Michigan.
(ix) Except for SURF (Barbados) Ltd., which would require
governmental approval to commence operations, and except as disclosed
in the Registration Statement and Prospectus, each of the Subsidiaries
has been duly organized and is validly existing and in good standing
under the laws of its jurisdiction of organization, with full power and
authority to own, lease and operate its properties and conduct its
business as described in the Registration Statement and Prospectus.
Each of the Subsidiaries is duly qualified to do business as a foreign
corporation in good standing in each jurisdiction in which the
ownership or leasing of its properties or the conduct of its business
requires such qualification, except in any such case in which the
failure to so qualify or be in good standing would not have a material
adverse effect on the business of the Company and its Subsidiaries,
taken as a whole. Except for the capital stock of the Subsidiaries and
except as otherwise described in the Prospectus, the Company does not
own any capital stock of, or other securities evidencing an equity
interest in, any corporation, partnership or other entity (other than
interests in real property partnerships or limited liability
companies). All of the issued and outstanding shares of capital stock
of the Subsidiaries have been duly and validly authorized and issued,
are fully paid and non-assessable, and except as described in the
Prospectus, are directly or indirectly owned by MICOA (other than
preferred stock issued by MICOA Indemnity (Bermuda) Ltd. in the
ordinary course of its business), free and clear of any security
interest, claim, lien, encumbrance or adverse interest of any nature
Except as described in the Prospectus, there are no outstanding
subscriptions, rights, warrants or options to acquire, or instruments
convertible into or exchangeable for, any shares of capital stock of
any of the Subsidiaries.
(x) The Company has an authorized and outstanding
capitalization as set forth in the Prospectus and the Shares conform to
the description thereof contained in the Prospectus. All of the issued
and outstanding shares of Common Stock have been duly authorized,
validly issued and are fully paid and non-assessable and free of
preemptive or other similar rights and there are no options,
agreements, contracts or other rights in
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existence to acquire from the Company any shares of Common Stock,
except as set forth in the Prospectus.
(xi) The Shares to be sold by the Company as contemplated by
this Agreement have been duly authorized and, when issued and paid for
by the purchasers thereof, will be validly issued, fully paid and
non-assessable; the holders of the Shares will not be subject to
personal liability by reason of being such holders; there are no
holders of Shares of the Company having rights, contractual or
otherwise, to registration thereof or preemptive rights to purchase
Common Stock; except as disclosed in the Registration Statement and
Prospectus, all corporate actions required to be taken for the
authorization, issue and sale of the Shares have been validly and
sufficiently taken; and upon delivery of and payment for such Shares
hereunder, the purchasers thereof will acquire valid and marketable
title thereto, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature.
(xii) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated or contemplated therein, there has not been (A) any
material adverse change in the condition (financial or otherwise),
earnings, affairs, business or prospects of the Company and its
Subsidiaries, taken as a whole, whether or not arising in the ordinary
course of business, (B) any material transaction entered into, or any
material liability or obligation incurred, by the Company or its
Subsidiaries other than in the ordinary course of business, (C) any
change in the capital stock, or material increase in the short-term
debt or long-term debt of the Company or its Subsidiaries, or (D) any
dividend or distribution of any kind declared, paid or made by the
Company or its Subsidiaries on its capital stock other than dividends
by any Subsidiary to the Company or any Subsidiary.
(xiii) The Company and each of its Subsidiaries have good
and marketable title to all properties and assets reflected as owned in
the financial statements hereinabove described or described in the
Prospectus as owned by it them, free and clear of all liens, charges,
encumbrances or restrictions of any kind, except such as are referred
to in such financial statements or the Prospectus or which are not
material to the business of the Company and its Subsidiaries, taken as
a whole; all of the leases and subleases material to the business of
the Company and its Subsidiaries, taken as a whole, or under which the
Company or its Subsidiaries holds properties are in full force and
effect; and neither the Company nor any of its Subsidiaries has
received any notice of any material claim of any sort which has been
asserted by anyone adverse to the rights of the Company or any
Subsidiary as owner or as lessee or sublessee under any of the leases
or subleases mentioned above, or affecting or questioning the rights of
the Company or such Subsidiary to the continued possession of the
leased or subleased premises under any such lease or sublease.
(xiv) Neither the Company nor any of its Subsidiaries is in
default in the observance of any provision of its Articles of
Incorporation or by-laws, or in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to
which it is a party or by which it or any of its properties may be
bound, the effect of
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which could be materially adverse to the condition (financial or
otherwise), earnings, affairs, business or prospects of the Company and
its Subsidiaries, taken as a whole.
(xv) The execution and delivery of this Agreement, the
issuance and delivery of the Shares, the consummation of the
transactions contemplated herein and in the Registration Statement and
compliance with the terms of this Agreement have been duly authorized
by all necessary corporate action and will not result in any violation
of the Articles of Incorporation or by-laws of the Company or any of
its Subsidiaries, and will not result in a breach of any of the terms
or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge, encumbrance or restriction
of any kind upon any property or assets of the Company or any of its
Subsidiaries under any material contract, indenture, mortgage, loan
agreement, note, lease or other agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries, or any of their respective properties, is
bound, or any existing applicable law, rule, regulation, judgment,
order or decree of any government, governmental instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any
of its Subsidiaries or any of their respective properties which breach
or default would have a material adverse effect upon the business of
the Company and its Subsidiaries, taken as a whole. Except for approval
of an exemption application filed with the Illinois Department of
Insurance, no approval, authorization or consent of any court,
regulatory body, administrative agency or other governmental body
having jurisdiction over the Company or any of its Subsidiaries is
required in connection with the sale of the Shares, except such as may
be required under the Act, state Blue Sky laws or from the clearance of
the offering with the National Association of Securities Dealers, Inc.
(the "NASD").
(xvi) There is no action, suit or proceeding before or by any
court or governmental agency or body, domestic or foreign, or any
arbitrator or arbitration panel, now pending or, to the knowledge of
the Company or MICOA, threatened against or affecting the Company or
any of its Subsidiaries which could result in any material adverse
change to the condition (financial or otherwise), earnings, affairs,
business or prospects of the Company and its Subsidiaries, taken as
whole; and there is no decree, judgment or order of any kind in
existence against or restraining the Company or any of its
Subsidiaries, or any of its their respective officers, employees or
directors, from taking any actions of any kind in connection with the
business of the Company or any such Subsidiary.
(xvii) The Company and each of its Subsidiaries own or possess
or have obtained all material governmental licenses, permits, consents,
orders, approvals and other authorizations necessary to lease or own,
as the case may be, and to operate their properties and to carry on
their businesses as presently conducted, except in any such case in
which the failure to have or obtain such governmental licenses,
permits, consents, orders, approvals and other authorizations would not
have a material adverse effect upon the business of the Company and its
Subsidiaries, taken as a whole, and neither the Company nor any such
Subsidiary has received any notice of proceedings related to revocation
or modification of any such licenses, permits, consents, orders,
approvals or authorizations which singly or in the aggregate, if the
subject of an unfavorable ruling or
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finding, would be materially adverse to the condition (financial or
otherwise), earnings, affairs, business or prospects of the Company and
its Subsidiaries, taken as a whole. Without limiting the generality of
the foregoing, each of MICOA and the other Subsidiaries that are
insurance companies (the "Insurance Company Subsidiaries") has all
requisite power and authority to carry on an insurance business
pursuant to and to the extent of the certificates of authority issued
them under the laws of the jurisdictions in which they conduct their
insurance business and each has all requisite power, authority and
licenses to carry on their respective businesses. Except as disclosed
in the Prospectus, the authority of each of the Insurance Company
Subsidiaries to write the classes and lines of insurance authorized by
such licenses, certificates, permits and other authorizations and
described in the Prospectus is unrestricted and none of the Insurance
Company Subsidiaries is a party to any agreement, formal or informal,
with any regulatory official or other person limiting the ability of
any of them from making full use of the licenses, certificates, permits
and other authorizations issued to them or requiring them to comply
with regulatory standards or procedures or requirements different from
those applicable to companies with comparable or similar licenses,
certificates, permits and other authorizations, except when such
restriction, limitation or requirement would not have a material
adverse effect on the financial condition, results of operations or
business affairs of the Company and its Subsidiaries, taken as a whole.
(xviii) Except with respect to matters described in (xx),
(xxvi) and (xxviii) of this Section 1 (which matters shall be governed
by such provisions), the conduct of the business of the Company and
each of its Subsidiaries is in compliance with all applicable federal,
state and local laws and regulations that regulate the business of the
Company or such Subsidiaries, where the effect of the failure to comply
would be materially adverse to the condition (financial or otherwise),
earnings, affairs, business or prospects of the Company and its
Subsidiaries, taken as a whole.
(xix) The Company together with its Subsidiaries, owns or
possesses, or can acquire on reasonable terms, all right, title and
interest in or to, or has duly licensed from third parties, all
patents, trademarks, service marks, copyrights, trade names, trade
secrets and other proprietary rights ("Trade Rights") necessary to
conduct the business now or proposed to be conducted by it, and neither
the Company nor any of its Subsidiaries has received any notice of, and
has no knowledge of, infringement of or conflict with asserted rights
of others with respect to any such Trade Rights which, singly or in the
aggregate, if the subject of any unfavorable decision, ruling or
finding, would be materially adverse to the condition (financial or
otherwise), earnings, affairs, business or prospects of the Company and
its Subsidiaries, taken as a whole.
(xx) The Company and its Subsidiaries have filed all tax
returns required to be filed and have paid all taxes which were payable
pursuant to said returns or any assessments with respect thereto, other
than any tax returns which the Company or any such Subsidiary is
contesting in good faith or which are not material to the Company and
its Subsidiaries, taken as a whole, and there is no tax deficiency that
has been, or to the knowledge of the Company or MICOA might be,
asserted against the Company or any of its properties or assets that
would or could be expected to have a material adverse affect
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upon the condition (financial or otherwise) or results of operations of
the Company and its Subsidiaries, taken as a whole.
(xxi) This Agreement has been duly executed and delivered by
each of the Company and MICOA.
(xxii) The Company has filed an application to list the
Shares on the Nasdaq National Market System and has no reason to
believe that the listing will not be approved at the conclusion of the
Offerings.
(xxiii) None of the Company nor any of the Subsidiaries is,
and none intends to conduct its business in a manner in which it would
become, an "investment company" as defined in Section 3(a) of the
Investment Company Act of 1940, as amended (the "Investment Company
Act").
(xxiv) All offers and sales of the Company's capital stock
prior to the date hereof were at all relevant times exempt from the
registration requirements of the Act and were duly registered with, or
the subject of an available exemption from, the registration
requirements of the applicable state securities or Blue Sky laws.
(xxv) Except as disclosed in the Registration Statement and
the Prospectus, no transaction has occurred between or among the
Company or any of its Subsidiaries, on the one hand, and any of their
officers or directors or any affiliate or affiliates of any such
officer or director, on the other hand, that is required to be so
disclosed, including, but not limited to, any outstanding loans,
advances or guaranties of indebtedness by the Company or any such
Subsidiary to or for the benefit of any of their affiliates, or any of
the officers or directors of the Company or any such Subsidiary, or any
family member of any of them.
(xxvi) Neither the Company nor any Subsidiary has, directly or
indirectly, at any time (A) made any contributions to any candidate for
foreign political office, or if made, failed to disclose fully any such
contribution made in violation of law, or (B) made any payment to any
state, federal or foreign governmental officer or official, or other
person charged with similar public or quasi-public duties, other than
payments or contributions required or allowed by applicable law. The
Company's internal accounting controls and procedures are sufficient to
cause the Company to comply in all material respects with the Foreign
Corrupt Practices Act of 1977, as amended.
(xxvii) RP Financial, LC, who is referred to and whose
Valuation Analysis Letter appears in the Prospectus, was, as of the
date of such Letter, and is, as of the date hereof, an independent
appraiser with respect to the Company and MICOA.
(xxviii) The Company and each of its Subsidiaries (A) are in
compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"), (B) have received
all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses
and (C) are in compliance
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with all terms and conditions of any such permit, license or approval,
except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or
approvals would not, singly or in the aggregate, have a material
adverse effect on the Company and its Subsidiaries, taken as a whole.
(xxix) The Company and each of its Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (A) transactions are executed in accordance with
management's general or specific authorizations; (B) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (C) access to assets is permitted only
in accordance with management's general or specific authorization; and
(D) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xxx) In connection with the Conversion, the Company and MICOA
have made all required filings under applicable insurance holding
company statutes required to have been made at or prior to the
Effective Date, and have received approvals of, or are exempt in
respect of, acquisition of control and/or affiliate transactions in
each jurisdiction in which such filings, approvals or exemptions are
required to have been received at or prior to the Effective Date,
except where the failure to have made such filings or receive such
approvals or exemptions in any such jurisdiction would not, singly or
in the aggregate, have a material adverse effect on the Company and its
Subsidiaries, taken as a whole; the Insurance Company Subsidiaries are
each in compliance with, and each conducts its businesses in conformity
with, all applicable insurance laws and regulations, except where the
failure to so comply or conform would not have a material adverse
effect on the Company and its Subsidiaries, taken as a whole.
(xxxi) The Plan of Conversion has been duly adopted by the
required vote of the Board of Directors of MICOA in compliance with the
applicable requirements of Chapter 59 of the Michigan Insurance Code
(the "Conversion Statute") and was submitted to the Commissioner of the
Office of Financial and Insurance Services of the State of Michigan
(the "Commissioner") in the manner, and accompanied by all information,
required by the Conversion Statute and conforms in all material
respects to the requirements of the laws of the State of Michigan
applicable to the reorganization of a mutual insurance company into a
stock insurance company and any applicable published rules, regulations
or guidelines of the Commissioner in respect thereof; on September 8,
2000 the Commissioner issued an order approving the Plan of Conversion
and on ________, 2000 the Commissioner issued an order approving an
amendment thereto; MICOA will hold a special meeting of policyholders
on _______________, 2000 in order to seek approval of the Plan of
Conversion from Eligible Policyholders (as defined in the Plan of
Conversion) in accordance with applicable provisions of the Michigan
Insurance Code and the Articles of Incorporation and Bylaws of MICOA;
the approval of the Commissioner has not been rescinded or otherwise
withdrawn; no other approvals are required to be obtained under
applicable law for the effectiveness of the Plan of Conversion (the
date of such effectiveness, the "Effective Date"); on the Effective
Date,
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the Plan of Conversion will become effective in accordance with its
terms and all aspects of the Conversion to have been completed on or
prior to the Effective Date will be completed in accordance with the
Plan of Conversion and Michigan law; and prior to or contemporaneously
with the Closing Date each of the actions required to occur and
conditions required to be satisfied on or prior to the Effective Date
pursuant to the Commissioner's order or the Plan of Conversion will
have occurred or have been satisfied.
(xxxii) The proxy statement mailed to policyholders (the
"Proxy Statement"), as of its date and as of the date of the vote of
the Eligible Policyholders, did not and will not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
(h) Any certificate signed by any officer of the Company or
MICOA and delivered to the Agent or to counsel for the Agent shall be deemed a
representation and warranty by the Company or MICOA, as applicable, to the Agent
as to the matters covered thereby.
SECTION 2. APPOINTMENT OF THE AGENT; FEES.
(a) On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
hereby appoints ABN AMRO Incorporated to act as its Agent, to consult with and
advise the Company, and to assist the Company with the solicitation of
subscriptions and purchase orders for Shares in connection with the Company's
sale of Shares in the Subscription and Best Efforts Offerings. On the basis of
the representations and warranties herein contained, and subject to the terms
and conditions herein set forth, the Agent accepts such appointment and agrees
to assist the Company in the Subscription and Best Efforts Offerings through
selling Shares on a "best efforts" basis through the Agent's distribution
system; provided, however, that the Agent shall not be obligated to (i) obtain
subscriptions or orders for any particular number of Shares, or (ii) take any
action which is inconsistent with any applicable laws, regulations, decisions or
orders.
Agent's duties hereunder shall be limited to responding to
investment-related inquiries by potential participants in the Subscription and
Best Efforts Offerings as requested on behalf of the Company by ChaseMellon
Shareholder Services, LLC, and Agent shall not be obligated to actively solicit
(via telephone or otherwise) any person in connection with such offerings. Agent
and the Company each acknowledge that Agent shall not be responsible for
administrative functions associated with the Subscription and Best Efforts
Offerings and that the Company has retained ChaseMellon Shareholder Services,
LLC to perform such functions (which functions shall include, without
limitation, mailing offering materials, staffing a toll-free dial-in center,
accepting subscriptions, maintaining records relating to the Subscription and
Best Efforts Offerings and coordinating the delivery of share certificates and,
if necessary, cash refunds of escrowed funds to participants in such offerings).
Neither the Subscription Offering nor the Best Efforts Offering constitutes a
firm commitment underwritten offering, and the Agent shall have no obligation to
purchase any of the Shares offered in connection therewith.
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Funds received from subscriptions for Shares or other offers to
purchase Shares shall be placed in a separate escrow account at a financial
institution to be designated by the Company (the "Escrow Account"). The Agent
shall remit to the Escrow Account within two business days any funds received by
it in connection with the Subscription and Best Efforts Offerings.
The appointment of the Agent hereunder shall terminate upon the
earliest to occur of (i) ninety (90) days after the last day of the Subscription
and Best Efforts Offerings, unless the Company and the Agent agree in writing to
extend such period, (ii) the receipt and acceptance of subscriptions and
purchase orders for all of the Shares, (iii) the closing of the Underwritten
Offering, (iv) the termination of the Subscription and Best Efforts Offerings
(written notice of which shall be delivered promptly to the Agent) or (v) the
termination of this Agreement pursuant to Section 9.
In the event the Company terminates the Subscription and Best Efforts
Offerings, the Company shall refund to any persons who have subscribed for any
of the Shares the full amount which it may have received from them, without
interest, and no party to this Agreement shall have any obligation to the others
hereunder, except for the obligations of the Company and MICOA as set forth in
Sections 5, 7 and 10 hereof and the obligations of the Agent as provided in
Section 7 hereof.
In addition to reimbursement of the expenses specified in Section 5 and
10 hereof, the Agent will receive the following compensation for its services
hereunder (the "Agent Fees") equal to the greater of:
(i)$25,000; or
(ii) 1.0% of the first $10,000,000 of aggregate gross
proceeds received by the Company in the Subscription and Best Efforts
Offerings (excluding sales to officers, directors and employees of the
Company) ("Gross Proceeds"), plus 0.5% of aggregate Gross Proceeds in
excess of $10,000,000.
All fees payable to the Agent hereunder shall be payable in immediately
available funds on the Closing Date, or upon the termination of this Agreement,
as the case may be.
SECTION 3. CLOSING.
A closing shall be held at such place as shall be agreed upon between
the Company and the Agent as of the close of business on a business day to be
selected by the Company and contemporaneous with the closing of the Underwritten
Offering or at such other time as shall be agreed upon between the Company and
the Agent. At the closing, the Company shall deliver to the Agent in next day
funds the fees and expenses due and owing to the Agent as set forth in Sections
2 and 4 hereof, any certificates required hereby and other documents deemed
reasonably necessary by the Agent shall be executed and delivered. The hour and
date upon which the Company shall release for delivery all of the Shares, in
accordance with the terms hereof, are referred to herein as the "Closing Date."
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SECTION 4. AGREEMENTS OF THE COMPANY AND MICOA. The Company and MICOA
each covenants and agrees with the Agent that:
(a) The Company will endeavor to cause the Registration
Statement to remain effective and will advise the Agent promptly and,
if requested by the Agent, will confirm such advice in writing, (i)
when the Registration Statement has become effective and when any
post-effective amendment to the Registration Statement becomes
effective, and of the filing of any final prospectus or supplement or
amendment to the Prospectus, (ii) of any request by the Commission for
amendments or supplements to the Registration Statement or Prospectus
or for additional information, (iii) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the Shares for
offering or sale in any jurisdiction, or the initiation or
contemplation of any proceeding for such purposes, (iv) within the
period of time referred to in paragraph (e) below, of the happening of
any event which makes any statement made in the Registration Statement
or Prospectus (as then amended or supplemented) untrue in any material
respect or which requires the making of any additions to or changes in
the Registration Statement or Prospectus (as then amended or
supplemented) in order to make the statements therein not misleading or
the necessity to amend or supplement the Prospectus to comply with the
Act or any other law, and (v) of the receipt of any communication
(whether written or oral) from the Commissioner that affects the
validity of the order approving the Plan of Conversion or that is
otherwise reasonably likely to affect the Offerings in any manner
(including any of the disclosures made in any Prospectus). If at any
time the Commission shall issue any stop order suspending the
effectiveness of the Registration Statement, or the Commissioner shall
issue any order affecting the validity of the order approving the Plan
of Conversion, the Company and MICOA will notify the Agent and make
every reasonable effort to obtain the withdrawal of such order at the
earliest possible moment.
(b) Neither the Company nor any of its Subsidiaries will, prior
to the earlier of the Closing Date or termination or expiration of this
Agreement, incur any liability or obligation, direct or contingent, or
enter into any material transaction, other than in the ordinary course
of business, except as contemplated in the Prospectus, it being
understood that changes in the investment portfolio of MICOA or the
Insurance Subsidiaries shall not be prohibited hereby.
(c) The Company will give the Agent notice of its intention to
file or prepare any amendment to the Registration Statement or Plan of
Conversion or any amendment or supplement to the Prospectus, will
furnish the Agent with copies of any such amendment or supplement a
reasonable time prior to such proposed filing or use, and will not file
or use any such amendment or supplement to the Prospectus of which the
Agent shall promptly after being so advised reasonably object in
writing.
(d) The Company has delivered or will deliver to the Agent,
without charge, copies of the Prospectus in such quantities as they
have reasonably requested or may hereafter reasonably request. The
Company consents to the use, in accordance with the provisions of the
Act and with the securities or Blue Sky laws of the jurisdictions in
which the Shares are offered by the Agent and by dealers, prior to the
effective date of the Registration Statement, of each Prospectus so
furnished by the Company.
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(e) From time to time after the date hereof and during such
period as in the opinion of counsel for the Agent a prospectus relating
to the Shares is required by law to be delivered in connection with
offers or sales of the Shares by the Agent, the Company will deliver to
the Agent, without charge, as many copies of the Registration Statement
and the Prospectus (and of any amendment or supplement to such
documents) as they may reasonably request. During such period, if any
event occurs which in the judgment of the Company, or in the written
opinion of counsel for the Agent, should be set forth in the Prospectus
in order to ensure that no part of the Prospectus includes an untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances at the time the Prospectus is delivered to a purchaser,
not misleading, the Company will forthwith prepare, submit to the
Agent, file with the Commission and deliver, without charge to the
Agent any amendments or supplements to the Prospectus so that the
statements in the Prospectus, as so amended or supplemented, will
comply with the standards set forth in this sentence. The Company
consents to the use of such Prospectus (and of any amendments or
supplements thereto) in accordance with the provisions of the Act and
with the securities or Blue Sky laws of the jurisdictions described in
the preliminary Blue Sky memorandum in which the Shares are lawfully
offered by the Agent, both in connection with the placement of the
Shares and for such period of time thereafter as the Prospectus is
required by law to be delivered in connection therewith. In case the
Agent is required to deliver a Prospectus (and any amendment or
supplement thereto) more than nine months after the first date upon
which the Shares are offered to the public, the Company will, upon
request, but at the expense of the Agent, promptly prepare and furnish
the Agent with reasonable quantities of a Prospectus complying with
Section 10(a)(3) of the Act.
(f) The Company will cooperate with the Agent and counsel for
the Agent in connection with the registration or qualification of the
Shares for placement by the Agent under the securities or Blue Sky laws
of such jurisdictions as the Agent may designate, will continue such
registrations or qualifications in effect so long as reasonably
required for the distribution of the Shares and will file such consents
to service of process or other documents as may be necessary in order
to effect such registration or qualification; provided that in no event
shall the Company be obligated (i) to qualify to do business in any
jurisdiction where it is not now so qualified, (ii) to file any general
consent to service of process, or (iii) take any action that would
subject it to income taxation in any jurisdiction where it is not so
qualified.
(g) For a period of two years after the date hereof, the
Company will furnish to the Agent (A) as soon as available, a copy of
each report of the Company of general interest mailed to any class of
its security holders (B) copies of all reports filed with the
Commission on Forms 10-K, 10-Q and 8-K and any amendment thereto or
such other similar forms as may be designated by the Commission and (C)
as soon as practicable following the release thereof, a copy of each
press release in respect of the Company.
(h) The Company will make generally available to its security
holders an earning statement of the Company, which need not be audited,
covering a twelve-month period commencing after the effective date of
the Registration Statement as soon as practicable after the end of such
period, which earning statement shall satisfy the provisions of Section
11(a) of the Act and the rules and regulations of the Commission
thereunder (including Rule 158).
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(i) The Company will apply the net proceeds from the sale of the
shares to be sold by it under this Agreement for the purposes set forth
in the Prospectus under the caption "Use of Proceeds."
(j) The Company will use its best efforts, subject to notice of
issuance, to cause the Shares to be approved for quotation on the
NASDAQ Stock Market.
(k) The Company and MICOA will conduct the Offerings in all
material respects in accordance with the Plan of Conversion, the
Conversion Statute and all other applicable regulations, decisions and
orders, including all applicable terms, requirements and conditions
precedent to the offerings imposed upon the Company or MICOA by the
Commissioner.
(l) The Company and MICOA will take such actions and furnish
such information as are reasonably requested by the Agent in order for
the Agent to ensure compliance with the "Interpretation Relating to
Free-Riding and Withholding" of the National Association of Securities
Dealers, Inc. ("NASD")
SECION 5. PAYMENT OF EXPENSES.
The Company and MICOA jointly and severally agree to pay, or
reimburse if paid by the Agent, whether or not the transactions
contemplated hereby are consummated or this Agreement is terminated,
all costs and expenses incident to the performance by it of its
obligations under this Agreement, including, without limiting the
generality of the foregoing, (a) preparation, printing, filing and
distribution (including postage, air freight charges and charges for
counting and packaging) of the original registration statement, the
Registration Statement and the Prospectus (including any exhibits and
financial statements), each amendment and/or supplement to any of the
foregoing, and this Agreement, Powers of Attorney and Agent's Powers of
Attorney and Questionnaires, (b) furnishing to the Agent copies of the
foregoing materials (provided, however, that any such copies furnished
by the Company more than nine months after the first date upon which
the Shares are offered to the public shall be at the expense of the
Agent as provided in Section 4(e) above), (c) the registrations or
qualifications referred to in Section 4(f) above (including filing fees
and fees and disbursements of counsel in connection therewith) and
expenses of printing and delivering to the Agent copies of the
preliminary and final Blue Sky memoranda, (d) the review of the terms
of the public offering of the Shares by the NASD (including the filing
fees paid to the NASD in connection therewith) and the reasonable fees
and disbursements of counsel for the Agent in connection therewith, (e)
the performance by the Company of its other obligations under this
Agreement, including the fees of the Company's counsel and accountants,
(f) the issuance of the Shares and the preparation and printing of the
stock certificates representing the Shares, including any stock issue,
stamp or transfer taxes payable in connection with the original
issuance of the Shares, (g) furnishing to the Agent copies of all
reports and information required by Section 4(g) above, including
reasonable costs of shipping and mailing, and (h) the designation of
the Common Stock as a Nasdaq National Market security.
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SECTION 6. OTHER AGREEMENTS.
The Agent and the Company agree that the Closing shall be
conditioned on the following (unless waived in writing by the Agent):
(a) That the Registration Statement shall have been declared
effective and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for
the purpose shall have been instituted or shall be pending or, to the
knowledge of the Company or MICOA, shall be contemplated by the
Commission and there shall not have come to the attention of the Agent
any facts that would cause it to believe that the Prospectus, at the
time it was required to be delivered to purchasers of the Shares,
contained any untrue statement of material fact or omitted to state any
material fact necessary in order to make the statements therein, in
light of the circumstances under which there were made, not misleading.
(b) That subsequent to the effective date of the Registration
Statement, (i) there shall not have occurred any change, or any
development involving a prospective change, in or affecting
particularly the business or properties of the Company or any of its
Subsidiaries not contemplated by the Prospectus, which, in the Agent's
opinion would materially adversely affect the market for the Shares or
make it impracticable or inadvisable to proceed with the offering or
the delivery of the Shares, as contemplated herein and in the
Prospectus, or to attempt to enforce contracts for the purchase of
Shares, and (ii) the business and operations of the Company and its
Subsidiaries and shall not have been adversely affected by strike,
fire, flood, accident or other calamity (whether or not insured).
(c) The Agent shall have received from Dykema Gossett PLLC,
counsel for the Company and MICOA, a favorable opinion as to the law of
Michigan and the federal law of the United States, dated the Closing
Date, governed by and interpreted in accordance with the Legal Opinion
Accord of the American Bar Association Section of Business Law (1991)
and reasonably satisfactory to the Agent and its counsel to the effect
that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of Michigan, with full corporate power and authority
to own, lease and operate its properties and conduct its business
as described in the Registration Statement. Based solely upon
certificates of governmental authorities, the Company is duly
qualified to do business as a foreign corporation in the following
states: __________, ___________ and ______________.
(ii) An opinion to the same general effect as clause (i)
of this subparagraph (c) in respect of each of MICOA and each of
the other Subsidiaries (except with respect to jurisdictions
outside the United States).
(iii) All of the issued and outstanding capital stock of
the Subsidiaries has been duly authorized and validly issued and,
to counsel's knowledge, is fully paid and non-assessable, and
except as disclosed in the Registration Statement or in the
representations and warranties in Section 1 hereof, MICOA owns
directly or indirectly 100 percent of the outstanding capital
stock of each Subsidiary and, to the best
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<PAGE> 16
knowledge of such counsel, such stock is owned free and clear of
any security interests, claims, liens, encumbrances or adverse
interests of any nature.
(iv) The issued and outstanding capital stock of the
Company has been duly authorized and validly issued and is fully
paid and non-assessable and free of preemptive rights.
(v) The authorized capitalization of the Company
consists entirely of ________ shares of Common Stock, of which, to
such counsel's knowledge, __________were issued and outstanding on
the date of the Prospectus and ________ shares of Preferred Stock,
of which none were issued and outstanding on the date of the
Prospectus and all of which conforms to the description thereof in
the Registration Statement and the Prospectus.
(vi) The certificates for the Shares to be delivered in
the Subscription and Best Efforts Offerings are in due and proper
form, and when duly countersigned by the Company's transfer agent
and delivered to the purchasers thereof against payment of the
agreed consideration therefor in accordance with the procedures
specified in the Plan of Conversion. The Shares, when issued and
sold in the manner described in the Registration Statement and
Prospectus, will be legally and validly issued, fully paid and
nonassessable and free of preemptive rights and to the knowledge
of such counsel, will be free of any security interest, claim,
lien, encumbrance or adverse interest of any nature, or rights of
first refusal in favor of, stockholders with respect to any of the
Shares or the issuance or sale thereof, pursuant to the Articles
of Incorporation or by laws of the Company and, to such counsel's
knowledge, there are no contractual preemptive rights, rights of
first refusal, rights of co-sale or other similar rights which
exist with respect to any of the Shares or the issuance and sale
thereof; and the Shares to be sold in the Subscription and Best
Efforts Offerings have been duly and validly authorized and, to
such counsel's knowledge, qualified for inclusion on The Nasdaq
National Market, subject to notice of issuance.
(vii) This Agreement has been duly and validly
authorized, executed and delivered by the Company and MICOA and is
a legal, valid and binding obligation of each of the Company and
MICOA, enforceable against them in accordance with its terms,
except as enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity,
and except as rights to indemnity and contribution hereunder may
be limited under applicable law.
(viii) No further authorization, approval, order or
consent of any governmental authority or agency is required for
the valid issuance and sale of the Shares, except such as may be
otherwise stated in this Agreement or as required under the Act or
state securities laws as to which such counsel need express no
opinion.
(ix) The execution, delivery and performance of this
Agreement by the Company and MICOA, the issue and sale of the
Shares, and the consummation of the transactions contemplated
hereby will not result in a breach of any of the provisions of, or
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<PAGE> 17
constitute a default under (A) their respective Articles of
Incorporation or by-laws or any material agreement, franchise,
license, indenture, mortgage, deed of trust or other instrument or
agreement known to such counsel and required to be filed as an
exhibit to the Registration Statement to which the Company, MICOA
or any of the Subsidiaries is a party or by which any of them is
bound or to which any of their respective properties is subject
and which breach or default would be material to the Company and
the Subsidiaries taken as a whole or (B) so far as known to such
counsel, any statute, order, rule or regulation applicable to the
Company, MICOA or any of the Subsidiaries of any court or other
governmental authority or body having jurisdiction over the
Company, MICOA or any of the Subsidiaries or any of their
properties.
(x) The Registration Statement has become effective
under the Act, and, to the knowledge of such counsel, no stop
order suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the Act.
(xi) The Registration Statement as amended or
supplemented (except for the financial statements and notes
thereto, the financial statement schedules and other statistical
or financial data included therein as to which such counsel need
express no opinion) and the Prospectus and any supplements or
amendments thereto (except for the financial statements and notes
thereto, the financial statement schedules and other statistical
or financial data included therein, as to which such counsel need
express no opinion) complied as to form in all material respects
with the requirements of the Act and the rules of the Commission
thereunder on the Closing Date. Counsel shall also make a
statement to the following effect: (a) in passing on the form of
the Registration Statement and the Prospectus, it has assumed the
correctness and completeness of the statements made or included
therein by the Company since it did not verify independently the
accuracy or completeness of such statements, (b) however, in the
course of preparation of the Registration Statement and the
Prospectus, counsel had conferences with officials of the Company
and its independent auditors, and with representatives of the
Agent and its counsel, and also had discussions with such
officials of the Company with a view toward a clear understanding
on their part of the requirements of the Act and the rules and
regulations with reference to the preparation of registration
statements and prospectuses, (c) counsel's examination of the
Registration Statement and the Prospectus and its discussions in
the above-mentioned conferences did not disclose to counsel any
information which gives counsel reason to believe that the
Registration Statement as amended or supplemented (except for the
financial statements and notes thereto, the financial statement
schedules and other statistical or financial data included therein
as to which such counsel need express no opinion) at the time it
became effective and at the Closing Date, contained any untrue
statement of a material fact or omitted or omits to state any
material fact required to be stated therein or necessary to make
the statements therein not misleading, or that, as of its date,
the Prospectus or any amendment or supplement thereto (except for
the financial statements and notes thereto, the financial
statement schedules and other statistical or financial data
included therein as to which such counsel need express no opinion)
included or includes any untrue statement of a material fact or
omitted or omits to state any material fact necessary to
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make the statements therein, in light of the circumstances in
which they were made, not misleading.
(xii) The statements in the Prospectus in the sections
captioned "The Conversion," "Description of Capital Stock,"
"Business--Insurance Regulatory Matters," and "Shares Eligible for
Future Sale," in each case to the extent that they constitute
matters of law or summaries of legal matters, documents or
proceedings and reflect a summary of the material legal matters
referred to therein, fairly and accurately present the information
called for by the Act and the applicable rules and regulations
promulgated thereunder in all material respects.
(xiii) To the knowledge of such counsel, there are no
statutes or regulations, provisions of the Michigan Business
Corporation Act or Michigan Insurance Code or any pending or
threatened litigation or governmental proceedings against the
Company or its Subsidiaries required to be described in the
Prospectus which are not so described, nor of any contracts or
documents of a character required to be described in or filed as a
part of the Registration Statement which are not described or
filed as required.
(xiv) To such counsel's knowledge, except as disclosed
in the Prospectus, no person has the right, contractual or
otherwise, to cause the Company to register pursuant to the Act
any shares of capital stock of the Company, upon the issuance and
sale of the Shares to be sold by the Company as contemplated by
this Agreement.
(xv) Neither the Company nor any of the Subsidiaries is
an "investment company" or a person "controlled by" an "investment
company" within the meaning of the Investment Company Act.
(xvi) To such counsel's knowledge, all offers and sales
of the Company's capital stock prior to the date hereof were at
all relevant times exempt from the registration requirements of
the Act and were duly registered or the subject of an available
exemption from the registration requirements of the applicable
state securities or blue sky laws.
(xvii) Each Insurance Company Subsidiary has all
requisite power and authority to carry on an insurance business
pursuant to and to the extent of its certificates of authority in
the manner contemplated by the Prospectus.
(xviii) The Plan of Conversion has been approved by
MICOA's Board of Directors and by the Commissioner, and no order
suspending the effectiveness of the Plan of Conversion has been
issued by the Commissioner nor, to the best of such counsel's
knowledge, has any proceeding therefor been initiated or
threatened by the Commissioner.
(xix) The Plan of Conversion complies with the
applicable requirements of the Conversion Statute, including all
documents required to be filed as exhibits thereto. The Plan of
Conversion and the Proxy Statement is, to the best of such
counsel's knowledge, truthful, accurate and complete. To the best
of such counsel's knowledge, the Company and MICOA have complied
in all material respects with the Conversion
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Statute and all regulations, decisions and orders, including all
terms, conditions, requirements and provisions precedent to the
Offerings imposed by the Commissioner or any other regulatory
authority upon the Company or MICOA, other than those which the
Commissioner or any such regulatory authority permits to be
completed after the Closing Time.
In rendering such opinion, such counsel may state that they are
relying upon the certificate of the officers of the Company and MICOA
and the transfer agent for the Common Stock, as to the number of shares
of Common Stock at any time or times outstanding, and that insofar as
their opinion under clause (xi) above relates to the accuracy and
completeness of the Prospectus and Registration Statement, it is based
upon a general review with the Company's representatives and
independent accountants of the information contained therein, without
independent verification by such counsel of the accuracy or
completeness of such information. Such counsel may also rely upon the
opinions of other competent counsel and, as to factual matters, on the
representations in this Agreement and certificates of officers of the
Company and MICOA and of state officials, in which case their opinion
is to state that they are so doing and copies of such opinions or
certificates are to be attached to the opinion unless such opinions or
certificates (or, in the case of certificates, the information therein)
have been furnished to the Agent otherwise.
(d) That the Agent shall have received on the Closing Date a
favorable opinion dated the Closing Date from Sidley & Austin, counsel
for the Agent, as to such matters as the Agent may reasonably require.
(e) That the Agent shall have received letters addressed to
the Agent and dated the date hereof and the Closing Date from
PricewaterhouseCoopers LLP, independent public accountants for the
Company, to the effect set forth in Schedule I. There shall not have
been any change or decrease specified in the letters referred to in
this subparagraph which makes it impractical or inadvisable in the
judgment of the Agent to proceed with the offering or sale of the
Shares as contemplated hereby.
(f) That (i) no stop order suspending the effectiveness of
the Registration Statement shall have been issued and no proceedings
for that purpose shall have been taken or, to the knowledge of the
Company or MICOA, shall be contemplated by the Commission at or prior
to the Closing Date; (ii) there shall not have been any change in the
capital stock of the Company nor any material increase in the short or
long-term debt of the Company or MICOA from that set forth or
contemplated in the Registration Statement; (iii) there shall not have
been, since the respective dates as to which information is given in
the Registration Statement and the Prospectus, except as may otherwise
be set forth or contemplated in the Registration Statement and the
Prospectus, any material adverse change in the financial condition or
results of operations of the Company or MICOA; (iv) the Company and
MICOA shall not have incurred any material liabilities or obligations,
direct or contingent (whether or not in the ordinary course of
business), other than those reflected in the Registration Statement,
(v) there shall not have occurred any downgrading, nor shall any notice
have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of
the possible change, in the rating accorded any of the Insurance
Company Subsidiaries' financial strength or claims paying ability by
A.M. Best Company, Inc., and (vi) all of the representations
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and warranties of the Company and MICOA contained in this Agreement
shall be true and correct in all material respects on and as of the
date hereof and the Closing Date as if made on and as of each such
date, and the Agent shall have received a certificate, dated the
Closing Date and signed by the chief executive officer and the
principal financial officer (or such other officers as are acceptable
to the Agent) to the effect set forth in this Section 6(f) and in
Section 6(g) hereof.
(g) That the Company and MICOA shall not have failed at or
prior to the Closing Date to have performed or complied in all material
respects with any of their respective agreements herein contained and
required to be performed or complied with by them at or prior to the
Closing Date.
(h) The Shares shall have been qualified for sale or exempted
from such qualification under the securities laws of such jurisdictions
as the Agent shall have designated and such qualification or exemption
shall continue in effect to and including the Closing Date.
(i) In accordance with Michigan law, the Plan of Conversion
shall have been duly adopted by the required vote of the Board of
Directors and Eligible Policyholders of MICOA and all necessary
approvals for the Plan of Conversion to become effective will have been
duly obtained from the Commissioner and any other regulatory body, all
such approvals shall be in full force and effect and no other approvals
shall be required to be obtained under any applicable law for the
effectiveness of the Plan of Conversion that are required to be
completed on or prior to the Effective Date.
(j) The Company and MICOA shall have completed in all
material respects the conditions precedent to the effectiveness of the
Plan of Conversion and the Offerings in accordance with the Plan of
Conversion, the Conversion Statute and any other applicable law.
SECTION 7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and MICOA, jointly and severally, agree to
indemnify and hold harmless the Agent and each person, if any, who
controls the Agent within the meaning of the Act or the Exchange Act
from and against any and all losses, claims, damages or liabilities,
joint or several, whatsoever (including any investigation, legal or
other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted) to
which the Agent, or such controlling person may become subject, arising
out of or based upon any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or the
Prospectus or in any amendment or supplement thereto or arising out of
or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse the Agent for any
legal or other expenses reasonably incurred by the Agent in connection
with investigating or defending any such action or claim as such
expenses are incurred, except insofar as such losses, claims, damages
or liabilities arise out of or are based upon any such untrue statement
or omission or allegation thereof which has been made therein or
omitted therefrom in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of the Agent
expressly for use therein.
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(b) If any action or claim shall be brought against the Agent
or any person controlling the Agent, in respect of which indemnity may
be sought against the Company or MICOA, the Agent or person shall
promptly notify the Company and MICOA in writing, and the Company shall
assume the defense thereof, including the employment of counsel and
payment of all fees and expenses. The Agent or any such person
controlling the Agent shall have the right to employ separate counsel
in any such action and participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the Agent or
such controlling person and shall be reimbursed as they are incurred
unless (i) the Company or MICOA has agreed in writing to pay such fees
and expenses, (ii) the Company has failed to assume the defense and
employ counsel, or (iii) the named parties to any such action
(including any impleaded party) included the Agent or controlling
person and the Company or MICOA and the Agent or controlling person
shall have been advised in writing by such counsel that there may be
one or more legal defenses available to it which are different from or
additional to those available to the Company or MICOA and which may
also result in a conflict of interest (in which case if the Agent or
controlling person notifies the Company shall not have the right to
assume the defense of such action on behalf of the Agent or controlling
person, it being understood, however, that the Company and MICOA shall
be permitted to participate in such defense and shall not, in
connection with any one such action or separate but substantially
similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances, be liable for the reasonable
fees and expenses of more than one separate firm of attorneys for the
Agent and all such controlling persons, which firm shall be designated
in writing by the Agent). The Company and MICOA shall not be liable for
any settlement or any such action effected without the written consent
of the Company and MICOA, but if settled with the written consent of
the Company and MICOA, or if there shall be a final judgment for the
plaintiff in any such action and the time for filing all appeals has
expired, each of the Company and MICOA agrees to indemnify and hold
harmless the Agent and any such controlling person from and against any
loss or liability by reason of such settlement or judgment.
(c) The Agent will indemnify and hold harmless the Company
and MICOA, and each of their respective directors, officers who sign
the Registration Statement and any person controlling the Company
within the meaning of the Act or the Exchange Act to the same extent as
the foregoing indemnity from the Company and MICOA to the Agent, but
only with respect to information relating to the Agent furnished in
writing to the Company or MICOA by or on behalf of the Agent expressly
for use in the Registration Statement or the Prospectus. If any action
or claim shall be brought or asserted against the Company or MICOA, or
any of their respective directors, such officers or any such
controlling person based on the Registration Statement or the
Prospectus and in respect of which indemnity may be sought against the
Agent, the Agent shall have the rights and duties given to the Company
pursuant to Section 7(b) hereof (except that if the Company or MICOA
shall have assumed the defense thereof, the Agent shall not be required
to do so, but may employ separate counsel therein and participate in
the defense thereof but the fees and expenses of such counsel shall be
at the expense of the Agent), and the Company and MICOA, and their
respective directors, such officers, and any such controlling person
shall have the rights and duties given to the Agent by Section 7(b)
hereof.
(d) If the indemnification provided for in this Section 7 is
unavailable as a matter of law to any indemnified party under this
Section 7 in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then the indemnifying party in lieu of
indemnifying
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such indemnified party thereunder, shall contribute to the amount paid
or payable by damages, liabilities or expenses (A) in such proportion
as is appropriate to reflect the relative benefits received by the
Company, MICOA and the Agent from the offering of the Shares or (B) if
the allocation provided by clause (A) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (A) above but also the
relative fault of the Company, MICOA and the Agent in connection with
the statements or omissions which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant
equitable considerations. The respective relative benefits received by
the Company, MICOA and the Agent shall be deemed to be in the same
proportion in the case of the Company and MICOA, as the total proceeds
of the Subscription and Best Effort Offerings paid or contributed to
the Company and MICOA for the Shares (net of Agent Fees but before
deducting expenses), and in the case of the Agent as the Agent Fees
received by them bears to the total of such amounts received by the
Company and MICOA and received by the Agent as Agent Fees. The relative
fault of the Company, MICOA and the Agent shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company,
MICOA or by the Agent and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by an indemnified
party as a result of the losses, claims, damages, liabilities and
expenses referred to in this Section shall be deemed to include,
subject to the limitations set forth in this Section, any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
(e) The Company, MICOA and the Agent agree that the
determination of contribution pursuant to this Section based on pro
rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to in the
immediately preceding paragraph would not be just and equitable.
Notwithstanding the provisions of this Section, the Agent shall not be
required to contribute any amount in excess of the aggregate Agent Fees
to which the Agent is entitled and actually paid pursuant to this
Agreement. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent
misrepresentation. The Agent's obligations to contribute pursuant to
this Section are several in proportion to their respective sales and
not joint.
(f) The indemnity and contribution agreements contained in
this Section and the representations and warranties of the Company and
MICOA set forth in this Agreement shall survive and shall remain
operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of the Agent or any person
controlling the Agent, the Company, MICOA or any of their respective
directors or officers, (or any person controlling the Company), (ii)
the sale and purchase of the Shares or (iii) any termination of this
Agreement. A successor or assign of the Agent, the Company, MICOA or
any of their respective directors or officers, and their legal and
personal agent (or of any person controlling the Agent, the Company or
MICOA) shall be entitled to the benefits of the indemnity, contribution
and reimbursement agreements contained in this Section.
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SECTION 8. EFFECTIVE DATE OF AGREEMENT.
This Agreement shall become effective immediately.
SECTION 9. TERMINATION OF AGREEMENT.
This Agreement shall terminate upon the expiration or termination
of the appointment of ABN AMRO Incorporated as Agent hereunder pursuant
to Section 2 of this Agreement. In addition, this Agreement shall be
subject to termination by notice given by the Agent to the Company and
MICOA, if (a) after the execution and delivery of this Agreement and
prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of
the New York Stock Exchange, the American Stock Exchange, the National
Association of Securities Dealers, Inc., the Chicago Board of Options
Exchange, the Chicago Mercantile Exchange or the Chicago Board of
Trade, (ii) trading of any securities of the Company shall have been
suspended on any exchange or in any over-the-counter market, (iii) a
general moratorium on commercial banking activities in New York shall
have been declared by either Federal or New York authorities or (iv)
there shall have occurred any outbreak or escalation of hostilities or
any change in financial markets or any calamity or crisis that, in the
judgment of the Agent, is material and adverse and (b) in the case of
any of the events specified in clauses (a)(i) through (iv), such event,
singly or together with any other such event, makes it, in the Agent's
judgment, impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus. Notice of such cancellation
shall be given to the Company by telecopy or telephone but shall be
subsequently confirmed by letter.
SECTION 10. REIMBURSEMENT OF AGENT'S EXPENSES.
Whether or not the sale of Shares in the Subscription and Best
Efforts Offerings on the Closing Date is consummated (unless the sale
of Shares is not consummated as a result of Agent's termination of this
Agreement pursuant to Section 9 or as a result of failure by the Agent
to satisfy the conditions or to comply with any provision hereof) the
Company and MICOA jointly and severally agree to reimburse the Agent
upon demand for all out-of-pocket expenses (including reasonable fees
and disbursements of counsel), that shall have been reasonably incurred
by the Agent and them in connection with the proposed purchase and the
sale of the Shares. Any such termination shall be without liability of
any party to any other party except that the provisions of this Section
10, Section 5 and Section 7 shall at all times be effective and shall
apply.
SECTION 11. NOTICES.
Except as otherwise provided in Section 7 hereof, notice given
pursuant to any of the provisions of this Agreement shall be in writing
and shall be delivered (a) if to the Company or MICOA, at the office of
MICOA at 1301 North Hagadorn Road, East Lansing, Michigan 48823,
Attention: President with a copy to Dykema Gossett PLLC, Attention:
Mark Metz or (b) if to the Agent, at the offices of ABN AMRO
Incorporated, 1290 Avenue of the Americas, New York, New York
10104-0101, Attention: Corporate Finance Department, with a copy to
Sidley & Austin, Bank One Plaza, 10 South Dearborn Street, Chicago,
Illinois 60603, Attention:
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Richard Clemens, or in any case to such other address as the person to
be notified may have requested in writing.
SECTION 12. SUCCESSORS.
The Agreement is made solely for the benefit of the Agent, the
Company, MICOA, their respective directors and officers and other
controlling persons referred to in Section 7 hereof, and their
respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement.
SECTION 13. PARTIAL UNENFORCEABILITY.
If any section, paragraph or provision of this Agreement is for
any reason determined to be invalid or unenforceable, such
determination shall not affect the validity or enforceability of any
other section, paragraph or provision hereof.
SECTION 14. APPLICABLE LAW.
This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
SECTION 15. COUNTERPARTS.
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
SECTION 16. ENTIRE AGREEMENT.
This Agreement represents the entire understanding of the parties
hereto with reference to the transactions contemplated hereby and
supersedes any and all other oral or written agreements heretofore made
with respect to the subject matter hereof, except for that certain
letter agreement between the Agent and the Company dated ___________,
2000 (the "Letter Agreement") which shall not be superseded by this
Agreement; provided, however, that the indemnification provisions of
this Agreement shall control as to any matter resulting in a claim for
which indemnification may be sought under both this Agreement and the
Letter Agreement. No waiver, amendment, modification or assignment of
this Agreement shall be effective unless in writing and signed by the
parties hereto.
* * * * *
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Please confirm that the foregoing correctly sets forth the agreement among the
Company and the Agent.
Very truly yours,
AMERICAN PHYSICIANS CAPITAL,
INC.
By: _____________________________
Name:
Title:
MUTUAL INSURANCE CORPORATION
OF AMERICA
By: ______________________________
Name:
Title:
ACCEPTED AND DELIVERED AS OF
THE DATE FIRST WRITTEN ABOVE.
ABN AMRO INCORPORATED
By: ________________________________
Name:
Title:
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SCHEDULE I
Comfort Letter of PricewaterhouseCoopers LLP
(1) They are independent public accountants with respect to the
Company and its Subsidiaries within the meaning of the Act.
(2) In their opinion the consolidated financial statements and
schedules of the Company and its Subsidiaries included in the
Registration Statement and the consolidated financial statements of the
Company from which the information presented under the caption
"Selected Historical Financial and Operating Data" has been derived
which are stated therein to have been examined by them comply as to
form in all material respects with the applicable accounting
requirements of the Act.
(3) On the basis of specified procedures (but not an examination
in accordance with generally accepted auditing standards), including
inquiries of certain officers of the Company, MICOA and each of the
other Subsidiaries responsible for financial and accounting matters as
to transactions and events subsequent to [December 31, 1999], a reading
of minutes of meetings of the stockholders and directors of the
Company, the policyholders and directors of MICOA, and the stockholders
and directors of the Subsidiaries since [December 31, 1999], a reading
of the latest available interim unaudited consolidated financial
statements of the Company and its Subsidiaries (with an indication of
the date thereof) and other procedures as specified in such letter,
nothing came to their attention which caused them to believe that (i)
the unaudited consolidated financial statements and the pro forma
information included under the caption "Pro Forma Data" of the Company
and its Subsidiaries included in the Registration Statement do not
comply as to form in all material respects with the applicable
accounting requirements of the Act or that such unaudited financial
statements and pro forma information are not fairly presented in
accordance with generally accepted accounting principles applied on a
basis substantially consistent with that of the audited financial
statements included in the Registration Statement, and (ii) at a
specified date not more than five days prior to the date thereof in the
case of the first letter and not more than two business days prior to
the date thereof in the case of the second letter, there was any change
in the capital stock or long-term debt or short-term debt (other than
normal payments) of the Company and its Subsidiaries on a consolidated
basis or any decrease in consolidated net current assets or
consolidated stockholders' equity as compared with amounts shown on the
latest unaudited balance sheet of the Company included in the
Registration Statement or for the period from the date of such balance
sheet to a date not more than five days prior to the day thereof in the
case of the first letter and not more than two business days prior to
the date thereof in the case of the second letter, there were any
decreases, as compared with the corresponding period of the prior year,
in consolidated total revenues, consolidated income before income taxes
or in the total or per share amounts of consolidated net income except,
in all instances, for changes or decreases which the Prospectus
discloses have occurred or may occur or which are set forth in such
letter.
(4) They have carried out specified procedures, which have been
agreed to by the Agent, with respect to certain information in the
Prospectus specified by the Agent, and on the basis of such procedures,
they have found such information to be in agreement with the general
accounting records of the Company and each of its Subsidiaries.
