EXHIBIT 1
SALES AGENT
AGREEMENT
___________, 2004
Centennial Securities Company, Inc.
3075 Charlevoix Drive S.E.
P. O. Box 6217
Grand Rapids, Michigan 49516-6217
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Re:
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Fremont Michigan InsuraCorp, Inc.
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Ladies and Gentlemen:
Fremont Michigan InsuraCorp, Inc. (" Holding Company
") and Fremont Mutual Insurance Company (" Insurance Company
"), hereby confirm their agreement with you (the " Sales
Agent " or " you ") as follows:
1.
The Offering .
This Agreement sets forth the understanding,
representations, and agreements whereby you will assist in the
offer and sale, on an exclusive best efforts basis, to persons in
Michigan, of a minimum of 637,500 shares (" Minimum Offering
") and a maximum of 862,500 shares (" Maximum Offering ") of
Holding Company common stock (the " Stock " or "
Shares "), at a price of $10.00 per share (the "
Offering ").
The Offering includes three components: First, a "
Surplus Note Exchange Offering " to the holders of the
Insurance Company's surplus notes due September 30, 2007, of up to
343,125 Shares; second, a " Subscription Offering " to
eligible policy holders and officers and directors of the Insurance
Company for any and all Shares not exchanged for surplus notes; and
third, a " Community Offering " to the general public for
any and all shares not exchanged or subscribed for in the Surplus
Note Exchange Offering and the Subscription Offering. In the
Community Offering priority will accorded in the following order:
policyholders of the Insurance Company whose policies were issued
after August 25, 2003; agents of the Insurance Company and their
principals; Michigan foundations; and all other Michigan
residents.
The Offering will occur immediately after completion of the
conversion of the Insurance Company from a mutual insurance company
to a stock company owned by the Holding Company.
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In connection with the Offering, the Holding Company has
filed a Registration Statement on Form S-1 with the Securities and
Exchange Commission (" Commission ") on _____________, 2004
(Commission File No. 333-_____________) (the " Initial
Registration Statement ") covering the Shares in the Offering.
The Initial Registration Statement and all amendments and
supplements thereto and all financial statements, schedules,
exhibits and all other documents incorporated by reference therein
or filed as a part thereof are hereinafter collectively referred to
as the " Registration Statement "). The term "
preliminary prospectus " means any preliminary prospectus
included at any time as part of the Registration Statement. The
final prospectus, in the form filed with the Commission pursuant to
Rule 424(b) of the General Rules and Regulations of the Commission
under the Act (the " Regulations ") or otherwise filed with
the Commission or used as the final Prospectus is herein referred
to as the " Prospectus ." Reference made herein to any
preliminary prospectus or to the Prospectus shall be deemed to
include any document attached as an exhibit or supplement thereto
or incorporated by reference therein, as of the date of such
preliminary prospectus or the Prospectus, as the case may be.
The Insurance Company has also filed a plan of conversion,
as it may have been amended (the " Plan of Conversion ")
with the Michigan Office of Financial and Insurance Services ("
OFIS ").
2.
Representations and Warranties .
The Holding Company and the Insurance Company, jointly and
severally, represent and warrant to, and agree with you, in
addition to the representations, warranties, and agreements
contained elsewhere in this Agreement, that:
(a) Registration
Statement Form . The Holding Company is eligible to
use a registration statement on Form S-1 for the Offering under the
Securities Act of 1933, as amended (the " Act "). The
Holding Company will deliver to you any amendment(s) to the Initial
Registration Statement filed with the Commission.
(b) Registration Statement
Contents . At the time of filing thereof and on the date the
Registration Statement becomes effective (" Effective Date
"), the Registration Statement did or will, and when the Prospectus
is first filed (if required) in accordance with Rule 424(b) and on
the Closing Date, the Registration Statement and Prospectus (and
any supplements thereto) will, comply in all material respects with
the applicable requirements of the Act and the Regulations and will
contain all contracts and other documents required to be filed as
exhibits; at the time of filing thereof and on the Effective Date
and Closing Date, the Registration Statement did not and will not
contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in
order to make the statements therein not misleading; and, on the
Effective Date, the Prospectus, if not filed pursuant to Rule
424(b), did not and will not, and on the date of any filing
pursuant to Rule 424(b) and on the Closing Date, the Prospectus
(together with any supplement hereto) will not, include any
untrue
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statement of a
material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that
the Holding Company makes no representations or warranties as to
the information contained in the Registration Statement or the
Prospectus (or any supplement thereto) relating to the Sales Agent
in reliance upon and in conformity with information furnished in
writing to the Holding Company by or on behalf of the Sales Agent
specifically for inclusion in the Registration Statement or the
Prospectus (or any supplement thereto).
(c) Stop Orders .
None of the Commission, the OFIS, or the "blue sky" or securities
authority of any jurisdiction have issued or will have issued on or
before the Closing Date an order (" Stop Order ") suspending
the effectiveness of the Registration Statement, preventing or
suspending the use of any Preliminary Prospectus, the Prospectus,
or the Registration Statement, refusing to permit the effectiveness
of the Registration Statement, or suspending the registration or
qualification of the Stock, nor has any of such authority
instituted or threatened to institute any proceedings with respect
to a Stop Order.
(d) Plan of Conversion .
At the time of filing thereof and on the Closing Date, the Plan of
Conversion did and will comply in all material respects with the
applicable requirements of Chapter 59 of the Michigan Insurance
Code, as amended (the "Insurance Code"), and contained all
documents required to be filed with the Plan of Conversion. The
Plan of Conversion did not and will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading.
(e) Corporate Power
. The Holding Company and the Insurance Company have been duly
incorporated and are validly existing as corporations in good
standing under the laws of the State of Michigan, with corporate
power and authority to own, lease, and operate their properties and
to conduct their business as described in the Prospectus. None of
the Holding Company, the Insurance Company, or any Subsidiary is
required to be qualified as a foreign corporation to transact
business in any jurisdiction.
(f) Financial
Statements . The historical financial statements of the
Insurance Company and any related notes thereto, included in the
Prospectus, present fairly the financial positions of the Insurance
Company as of the dates of such financial statements and for the
periods covered thereby and comply as to form with the requirements
of applicable state and federal securities laws. Such statements
and any related notes have been prepared in accordance with
generally accepted accounting principals applied on a consistent
basis. All adjustments necessary for a fair presentation of the
results for such periods have been made.
(g) Litigation . There is
no litigation or governmental proceeding pending or, to the best
knowledge of the Insurance Company, threatened against, or
involving the
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properties or
business of the Holding Company, the Insurance Company, or any
Subsidiary or their officers, directors, agents, or employees which
might materially and adversely affect any of them or their
prospects or the Offering.
(h) Capital
Structure . The Holding Company has authorized capital stock
as set forth in the Prospectus. On the date of this Agreement ten
(10) Shares of common stock of the Holding Company are issued or
outstanding. During the term of the Offering, no additional Shares
of capital stock of the Holding Company will be issued and
outstanding, except pursuant to the Offering. The Shares offered
have been duly authorized for issuance and, when issued and
delivered by the Holding Company against payment of the
consideration described in the Prospectus or an executed order form
as described in the Prospectus, will be validly issued, fully paid,
and nonassessable. The Shares to be issued will conform to the
description thereof contained in the Prospectus. The Holding
Company has not granted any subscriptions, warrants, options, or
other rights to acquire shares of, or any securities exchangeable
for or convertible into shares of, any capital stock of the Holding
Company except as described in the Prospectus. All of the capital
stock to be issued by the Insurance Company upon its conversion
shall be owned by the Holding Company, free and clear of all liens,
encumbrances and security interests.
(i) Binding
Agreement . This Agreement has been duly authorized,
executed, and delivered by the Holding Company and Insurance
Company, and this Agreement is the valid and legally binding
obligation of the Holding Company and Insurance Company enforceable
in accordance with its terms (except as the enforceability may be
limited by bankruptcy or other laws relating to or affecting
creditors' rights generally). The execution and delivery of this
Agreement, and the performance of the transactions described in
this Agreement or the Prospectus, will not result in the breach, or
be in violation, of any provision of any agreement, franchise,
license, indenture, mortgage, deed of trust, or other instrument to
which the Holding Company or the Insurance Company is a party or by
which they are bound, except for such breaches and violations that,
alone or in the aggregate, are not material to the business or
prospects of the Holding Company or the Insurance Company.
(j) Additional
Information . Any additional written or oral information
provided to prospective investors by the Holding Company or
Insurance Company will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make
the statements therein not misleading. Copies of all such written
information will be promptly given to you.
(k) Consent ,
Approval , Etc . No consent, approval, authorization,
or other order of any court, regulatory body, administrative
agency, or other governmental body is required for the execution
and delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement or described in the
Prospectus, except the
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approvals of the OFIS
and the National Association of Securities Dealers, Inc. ("
NASD ").
(l) Conflicts with
Certificate , Law , Etc . The execution and
delivery of this Agreement and the consummation of the transactions
contemplated by this Agreement or described in the Prospectus, do
not and will not conflict with or constitute a breach or violation
of (i) the articles of incorporation or bylaws of the Holding
Company or the Insurance Company; or (ii) any law, regulation, or
administrative or court decree.
(m) Labor . No labor
dispute with the employees of the Holding Company or the Insurance
Company exists or, to their knowledge, is imminent, except where
such dispute would not have a material adverse effect on the
business or prospects of the Holding Company or the Insurance
Company.
(n) Taxes . The Holding
Company and the Insurance Company have properly filed all necessary
federal, state, and foreign income tax returns and properly paid
all taxes shown as due thereon (or have obtained appropriate
extensions). Neither the Holding Company nor the Insurance Company
has any knowledge of any tax deficiency that has been asserted or
threatened against it.
(o) Environmental
Matters .
(i) To the best knowledge of the
Holding Company and Insurance Company and except as to activities
or conditions that could reasonably be expected not to have a
material adverse effect on the business or prospects of the Holding
Company and Insurance Company;
There has been no release,
emission, discharge, or disposal of any hazardous wastes, petroleum
products, polychlorinated biphenyls, chemicals, pollutants,
contaminants, pesticides, radioactive substances, or toxic
materials, or other materials or substances regulated under any
federal or state environmental or public health laws or
regulations, including without limitation the Comprehensive
Environmental Response, Compensation and Liability Act and any
similar state law (collectively " Hazardous Substances ")
from, on, in or under any real property owned, leased, used, or
otherwise occupied by the Holding Company, the Insurance Company or
any Subsidiary or any of their predecessors, or affiliates, nor has
any such property been used for the manufacture, handling,
disposal, or storage of such substances, nor is any such property
contaminated by any such substance; and
There is no action, suit,
investigation, inquiry, or other proceeding, ruling, order, or
citation (whether formal or informal) pending, or, to the knowledge
of the Holding Company or Insurance Company, threatened, against
the Holding Company or the Insurance Company or any of their
predecessors or
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affiliates, as a
result of any actual or alleged failure to comply with any
requirement of any law (civil or common), ordinance, rule,
regulation, guideline, or order that: (i) regulates air,
water, soil, or solid waste management, including the containment,
storage, handling, disposal, transportation, or management of a
Hazardous Substance; (ii) regulates or prescribes requirements for
air, water, or soil quality; (iii) is intended to protect public
health or the environment; or (iv) establishes liability for the
investigation, removal, or cleanup of contamination, injury, or
damage caused by any Hazardous Substance.
(p) ERISA . To the best
knowledge of the Holding Company and the Insurance Company they
have not engaged in any transaction in connection with which it
could be subject to either a civil penalty assessed pursuant to
Section 502(i) of the Employee Retirement Income Security Act of
1974, as amended (" ERISA "), or a tax imposed by Section
4975 of the Internal Revenue Code.
(q) Material
Changes . Except as disclosed in the Prospectus, since the
respective dates as of which information is given in the
Prospectus, there has not been any material adverse change in
liabilities or obligations, direct or contingent, operations, or
prospects of the Holding Company or the Insurance Company. Neither
the Holding Company nor the Insurance Company has entered into any
transactions not in the ordinary course of their business that are
material to it.
(r) Properties . The
Holding Company and the Insurance Company have good and marketable
title to all the properties and assets reflected as owned by them
in the Prospectus and the financial statements therein, subject to
no lien, mortgage, pledge, charge, or encumbrance of any kind or
nature whatsoever, except as disclosed in the Prospectus. All
properties held or used by them under leases, licenses, franchises,
or other agreements are held by them under valid, binding, and
enforceable leases, franchises, licenses, or other agreements with
respect to which they are not in default, except for properties or
defaults which neither singly nor in the aggregate are material to
the business or prospects of the Holding Company or the Insurance
Company.
(s) Affiliation
with NASD Member Firm . No officer or
director of the Holding Company or Insurance Company is associated
or affiliated with any firm that is a member of the NASD.
(t) Unlawful
Contributions . Neither the Holding Company nor the
Insurance Company, nor, to the best of their knowledge, any
director, officer, agent, employee or other person associated with
them, acting on their behalves, has used any corporate funds for
any unlawful contribution, gift, entertainment, or other unlawful
expense relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or
employee from corporate funds; violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or made any
bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.
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(u) Related Party
Transactions . No material transaction has occurred, and
there is no agreement or understanding with respect to such a
transaction, between or among the Holding Company or the Insurance
Company, on the one hand, and any of their officers, directors,
organizers, 5% shareholders, or any affiliate of any such officer,
director, organizer, or shareholder, on the other hand, that is not
described in the Prospectus.
(v) Intangibles . The
Insurance Company owns adequate and enforceable rights to use any
patents, patent applications, trademarks, trademark applications,
service marks, copyrights, copyright applications and other similar
rights (collectively, " Intangibles ") necessary for the
conduct of the material aspects of its business as described in the
Prospectus and the Insurance Company has not received any notice of
infringement of, nor, to the best of its knowledge, has the
Insurance Company infringed or is it infringing on, any Intangible
of, any other person.
3.
Sale of Shares .
(a) Appointment of
Sales Agent and Sale Price . On the basis of
the representations, warranties, and agreements herein contained,
but subject to the terms and conditions herein set forth, the
Holding Company hereby appoints you sales agent and grants you the
exclusive right to offer and sell, as agent, the Shares, at a price
of $10.00 per share during the period between the date hereof and
the Final Sales Termination Date (as hereinafter defined), and you
accept such appointment and agree to use your best efforts to find
purchasers for the Shares as contemplated by this Agreement and the
Prospectus at the price and on the terms stated herein and in the
Prospectus. Your obligation to use best efforts shall be satisfied
if you conduct such selling activities as are customarily performed
by broker-dealers in offerings of similar size and nature
including, without limitation, organizing one or more "road shows",
inviting your brokers to road shows and distributing preliminary
prospectuses to your brokers as appropriate. The Sales Agent is not
obligated to buy any Shares as would be the case in a "firm
commitment" offering. Further, you shall assist the Holding Company
and Insurance Company in the conversion by providing advice to
management and staff in connection with the securities sales
aspects of the conversion, and managing the Surplus Note Exchange
Offering, Subscription Offering and Community Offering.
(b) Final Sales Termination
Date . Your agency hereunder is not terminable by the Holding
Company until the Final Sales Termination Date. The " Final
Sales Termination Date " shall be the later of the date the
Maximum Offering is sold and _______________, 2004. If you and the
Holding Company agree to terminate the Offering, or the Holding
Company terminates your appointment as sales agent on account of a
material breach of this Agreement by you, however, the Final Sales
Termination Date shall be the date of that termination.
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(c) Order
Procedures . The procedures for the sale of Shares in the
Surplus Note Exchange Offering shall be as provided in the
Prospectus. Each investor desiring to purchase Shares in the
Subscription Offering or Community Offering who is an eligible
policyholder, an officer or director, or another person with
subscription rights or who is given priority for purchases of
Shares under the Prospectus shall be required to deliver to the
Holding Company on or before the Closing a signed order form (in a
form acceptable to you and the Holding Company). Order forms will
only be distributed with a Prospectus. Other investors who shall be
members of the general public purchasing in the Community Offering
with customer accounts with the Sales Agent shall not be required
to submit an order form. The Holding Company and the Sales Agent
shall comply with the Prospectus delivery requirements under the
Act and the Securities and Exchange Act of 1934, as amended (the "
Exchange Act "). Investors desiring to purchase Shares shall
also be required to submit payment for each Share subscribed for at
the time they submit an order form or at such other times as are
described in the Prospectus. Photocopies of all order forms
received by the Holding Company shall be provided to the Sales
Agent within 2 business days of receipt of such order forms by the
Holding Company. The Holding Company shall have the right to reject
any order for Shares in whole or in part. The Sales Agent shall
also have the right to reject or cancel any order for Shares in
whole or in part if it is prohibited by applicable law, regulation,
or NASD rule from making such sale.
(d) Escrow . All
subscriptions and other payments for Shares in the Offering shall
be submitted by prospective investors directly to the escrow
account maintained with
____________________________________________ (" Escrow Agent
"). If any subscription or other payments in connection with the
Offering are received by either the Holding Company or Insurance
Company, on the one hand, or the Sales Agent, on the other hand,
each shall immediately transmit such payment to the Escrow Agent,
and no later than one business day after receipt thereof.
(e) Closing . Provided the
closing conditions set forth in this Agreement and the Prospectus
have been met, a closing (the " Closing ") shall be held at
the Holding Company's offices on a date specified by the Holding
Company upon at least three days advance written notice to the
Sales Agent and Escrow Agent, or at such other time and place
agreed to by the Holding Company and the Sales Agent (the "
Closing Date ").
(f) Permitted
States . Shares shall only be offered and sold in Michigan,
except as the parties may otherwise agree.
(g) Selling Group
Members . You are authorized at your discretion to utilize
other broker-dealers acceptable to you, including those
broker-dealers recommended by the Holding Company (collectively, "
Selling Group Members ") who are members of the NASD to
assist you in the sale of Shares upon such compensation terms and
conditions as are agreed upon by you and such Selling Group Members
(it being understood that any payments to such Selling Group
Members shall be your
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responsibility out of
fees payable to you) and to enter into agreements for the offer and
sale of Shares adopting such provisions of this Agreement for the
benefit of the Selling Group Members or you as you deem
appropriate.
4.
Covenants of Holding Company and Insurance
Company .
The Holding Company and the Insurance Company, jointly and
severally, covenant and agree that:
(a) Going Effective
. They will use their best efforts to cause the Registration
Statement to become effective as promptly as possible and notify
you immediately, and confirm such notice in writing, (A) when the
Registration Statement and any post-effective amendment thereto
become effective, (B) of the receipt of any comments from the OFIS,
Commission or the "blue sky" or securities authority of any
jurisdiction regarding the Registration Statement, any
post-effective amendment thereto, the Prospectus, or any amendment
or supplement thereto, and (C) of the receipt of any notification
with respect to a Stop Order or the initiation or threatening of
any proceeding with respect to a Stop Order. Further, they will use
their best efforts to prevent the issuance of any Stop Order and,
if any Stop Order is issued, to obtain the lifting thereof as
promptly as possible.
(b) Supplements and
Amendments . During the time when a prospectus relating to
the Shares is required to be delivered hereunder or under the Act
or the Regulations, the Holding Company shall comply with all
requirements imposed upon it by the Act, as now existing and as
hereafter amended, and by the Regulations, as from time to time in
force, so far as necessary to permit the continuance of sales of or
dealings in the Shares in accordance with the provisions hereof and
the Prospectus. If, at any time when a prospectus relating to the
Shares is required to be delivered hereunder or under the Act or
the Regulations, any event shall have occurred as a result of
which, in the reasonable opinion of counsel for the Holding Company
or counsel for the Sales Agent, the Registration Statement or the
Prospectus as then amended or supplemented contains any untrue
statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, or if, in the opinion of such counsel, it
is necessary at any time to amend or supplement the Registration
Statement or the Prospectus to comply with the Act or the
Regulations, the Holding Company will promptly prepare and file
with the Commission an appropriate amendment or supplement (in form
and substance reasonably satisfactory to the Sales Agent) which
will correct such statement or omission or which will effect such
compliance and will use its best efforts to have any such amendment
declared effective as soon as possible.
(c) Copies . They will
deliver without charge to the Sales Agent, as soon as the
Registration Statement, or any amendment thereto, becomes effective
or a supplement is filed, such number of copies of the Prospectus,
the Registration Statement, and exhibits,
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amendments and
supplements thereto, if any, as the Sales Agent may request for the
purposes contemplated by this Agreement.
(d) Blue Sky . If
required by applicable law, the Holding Company will endeavor in
good faith, in cooperation with the Sales Agent, at or prior to the
time the Registration Statement becomes effective, to qualify the
common stock for offering and sale under the "blue sky" or
securities laws of Michigan and such other jurisdictions as you and
the Holding Company may agree. In each jurisdiction where such
qualification shall be effected, the Holding Company will, unless
you agree in writing that such action is not at the time necessary
or advisable, file and make such statements or reports at such
times as are or may be required by the laws of such
jurisdiction.
(e) Approved
Amendments . The Holding Company will file no amendment or
supplement to the Registration Statement or Prospectus at any time,
whether before or after the effective date of the Registration
Statement, unless such filing shall comply with the Act and the
Regulations and unless the Sales Agent shall previously have been
furnished with a copy thereof and not reasonably objected in
writing to the filing thereof.
(f) Undertakings . The
Holding Company will comply with all provisions of all undertakings
contained in the Registration Statement.
(g) Selling Restrictions .
If the shareholders, officers, or directors of the Holding Company
are required by the "blue sky" or securities authority of any
jurisdiction or by the NASD to escrow or agree to restrict the sale
of any security of the Company owned by them for the Holding
Company to qualify or register the Shares for sale under the "blue
sky" or securities laws of any such jurisdiction or to permit the
Sales Agent to make sales, the Holding Company will cause each such
person to escrow or restrict the sale of such security on the terms
and conditions and in the form specified by the NASD or securities
administrator of such jurisdiction.
(h) Financial Statements .
For a period of three years from the Effective Date, the Holding
Company shall furnish its shareholders annual audited consolidated
financial statements with respect to the Holding Company, including
balance sheets and income statements.
(i) Exchange Act Filings .
For a period of three years from the Effective Date, the Holding
Company shall (A) timely file with the Commission, all reports and
other documents required by the Exchange Act including, without
limitation 10-Ks, 10-Qs and 8-Ks, and not seek suspension of the
duty to file with the Commission such reports and (B) prepare and
file a proxy statement and annual report conforming to the
requirements of Commission Regulation 14A and distribute such proxy
statement and annual report to record and beneficial owners in the
manner required by such Regulation.
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(j) Use of
Proceeds . The Holding Company will apply the net proceeds
from the sale of the Shares to be sold by it hereunder for the
purposes set forth in the Prospectus.
(k) Due Diligence Requests
. The Holding Company and Insurance Company agree that t
