<PAGE>   1
                                                                  EXHIBIT 10(a)




                                U.S. $22,500,000


                                CREDIT AGREEMENT


                           DATED AS OF APRIL 4, 1997


                                    BETWEEN


                PROFESSIONALS INSURANCE COMPANY MANAGEMENT GROUP


                                AS THE BORROWER


                                      AND


                             LASALLE NATIONAL BANK


                                 AS THE LENDER





<PAGE>   2

                               TABLE OF CONTENTS


<TABLE>
<S>        <C>                                                                                    <C>
ARTICLE I         . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2
           DEFINITIONS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2
              SECTION 1.1                       Definitions . . . . . . . . . . . . . . . . . .    2
              Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2
              Adjusted LIBOR  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2
              Admitted Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2
              Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    2
              Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3
              Annual Statement  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3
              Applicable LIBOR Margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    3
              Authorized Officer  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4
              Borrower  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4
              Business Day  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    4
              Capital Expenditures  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    5
              Capitalized Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    5
              Closing Date  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    5
              Code  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    5
              Compliance Certificate  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    5
              Contingent Liability  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    5
              Continuation/Conversion Notice  . . . . . . . . . . . . . . . . . . . . . . . . .    6
              Contractual Obligation  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6
              Controlled Group  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6
              Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6
              Default Rate  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6
              Dollar(s) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6
              Claims  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    6
              Environmental Laws  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7
              ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7
              ERISA Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7
              Event of Default  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7
              Fiscal Quarter  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7
              Fiscal Year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    7
              Force Majeure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    8
              F.R.S. Board  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    8
              GAAP  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    8
              Governmental Authority  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    8
              Hazardous Material  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    8
              Hedging Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    9
              Indebtedness  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    9
              Indemnified Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    9
</TABLE>

                                      i



<PAGE>   3

<TABLE>
              <S>                                                                                 <C>
              Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    9
              Insurance Code  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    9
              Interest Expense  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    9
              Interest Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   10
              Invested Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   10
              Investment Grade Securities . . . . . . . . . . . . . . . . . . . . . . . . . . .   10
              IRIS Tests  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   10
              Lease Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   11
              Lender  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   11
              Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   11
              LIBOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   11
              LIBOR Loan  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   11
              Licenses  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   11
              Lien  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   11
              Loan  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   11
              Loan Documents  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   11
              Margin Stock  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
              Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
              MEEMIC Documents  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
              Multiemployer Plan  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
              NAIC  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   12
              Net Written Premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   13
              Note  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   13
              Operating Earnings  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   13
              Payment Date  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   13
              PBGC  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   13
              Permitted Encumbrances  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   13
              Person  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   13
              PICOM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   13
              PICOM Claims Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   13
              PICOM-ILL.  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   13
              Plan  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   13
              Prime Rate  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   14
              Projections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   14
              Property  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   14
              Regulatory Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   14
              Reinsurance Agreements  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   15
              Reportable Event  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   15
              Requirement of Law  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   15
              Risk Based Capital  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   15
              SAP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   15
              Securities  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   15
              Solvent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   16
</TABLE>

                                      ii



<PAGE>   4

<TABLE>
<S>        <C>                                                                                    <C>
              Statutory Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   16
              Subsidiary  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   16
              Surplus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   16
              Surplus Relief Reinsurance Agreements . . . . . . . . . . . . . . . . . . . . . .   17
              Tax Sharing Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   17
              Unmatured Event of Default  . . . . . . . . . . . . . . . . . . . . . . . . . . .   17
              U.S. Government Securities  . . . . . . . . . . . . . . . . . . . . . . . . . . .   17
              Welfare Plan  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   17
           SECTION 1.2                         Use of Defined Terms . . . . . . . . . . . . . .   17
           SECTION  1.3                        Cross References; Headings . . . . . . . . . . .   17
           SECTION 1.4                         Other Definitional Provisions  . . . . . . . . .   18

ARTICLE II  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   18
           AMOUNT AND TERMS OF CREDIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   18
           SECTION 2.1                         Term Loan  . . . . . . . . . . . . . . . . . . .   18
           SECTION 2.2                          . . . . . . . . . . . . . . . . . . . . . . . .   18

ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   19
           NOTE   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   19
           SECTION 3.1                         Note . . . . . . . . . . . . . . . . . . . . . .   19

ARTICLE IV  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   19
           INTEREST; CONVERSION; LIBOR LOAN . . . . . . . . . . . . . . . . . . . . . . . . . .   19
           SECTION 4.1                         Interest Rate. . . . . . . . . . . . . . . . . .   19
           4.1.4  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   21
           SECTION 4.2                         Interest Payment Dates . . . . . . . . . . . . .   21
           SECTION 4.3                         Setting of Rates . . . . . . . . . . . . . . . .   21
           SECTION 4.4                         Computation of Interest  . . . . . . . . . . . .   21
           SECTION 4.5  . . . . . . . . . . . .Continuation and Conversion Election . . . . . .   21
           SECTION 4.6                         Funding. . . . . . . . . . . . . . . . . . . . .   22
           SECTION 4.7                         LIBOR Rate Lending Unlawful. . . . . . . . . . .   23
           SECTION 4.8                         LIBOR Deposits Unavailable . . . . . . . . . . .   23
           SECTION 4.9                         Increased LIBOR Loan Costs . . . . . . . . . . .   23
           SECTION 4.10                        Funding Losses . . . . . . . . . . . . . . . . .   24

ARTICLE V   . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   25
           FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   25
           SECTION 5.1  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   25

ARTICLE VI  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   25
           MAKING OF PAYMENTS; SETOFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   25
           SECTION 6.1                         Making of Payments . . . . . . . . . . . . . . .   25
</TABLE>



                                      iii

<PAGE>   5

<TABLE>
<S><C>                                                    <C>                                    <C>
           SECTION 6.2                                    Due Date Extension  . . . . . . . . .   25
           SECTION 6.3                                    Setoff. . . . . . . . . . . . . . . .   25

ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   26
           INCREASED COSTS AND OTHER SPECIAL PROVISIONS . . . . . . . . . . . . . . . . . . . .   26
           SECTION 7.1                                    Increased Costs . . . . . . . . . . .   26
           SECTION 7.2                                    General Funding Losses. . . . . . . .   26
           SECTION 7.3                                    Discretion of Lender as to Manner of 
                  Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   27
           SECTION 7.4                                    Conclusiveness of Statements; Survival of 
                  Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   27

ARTICLE VIII      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   27
           REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . .   27
           SECTION 8.1                                    Due Organization, Authorization, etc.   
                  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   27
           SECTION 8.2                                    Certain Agreements. . . . . . . . . .   28
           SECTION 8.3                                    Statutory Financial Statements. . . .   28
           SECTION 8.4                                    Projections . . . . . . . . . . . . .   30
           SECTION 8.5                                    Borrower's Financial Information. . .   30
           SECTION 8.6                                    Litigation and Contingent Liabilities   31
           SECTION 8.7                                    Absence of Default. . . . . . . . . .   31
           SECTION 8.8                                    Employee Benefit Plans. . . . . . . .   31
           SECTION 8.9                                    Investment Company Act. . . . . . . .   31
           SECTION 8.10                                   Regulations G, U and X. . . . . . . .   32
           SECTION 8.11                                   Proceeds. . . . . . . . . . . . . . .   32
           SECTION 8.12                                   Insurance . . . . . . . . . . . . . .   32
           SECTION 8.13                                   Material Disruptions. . . . . . . . .   32
           SECTION 8.14                                   Ownership of Properties . . . . . . .   33
           SECTION 8.15                                   Business Locations. . . . . . . . . .   33
           SECTION 8.16                                   Accuracy of Information . . . . . . .   33
           SECTION 8.17                                   Subsidiaries. . . . . . . . . . . . .   33
           SECTION 8.18                                   MEEMIC Transactions . . . . . . . . .   33
           SECTION 8.19                                   Insurance Licenses  . . . . . . . . .   34
           SECTION 8.20                                   Broker or Finders Fees. . . . . . . .   34
           SECTION 8.21                                   Taxes . . . . . . . . . . . . . . . .   34
           SECTION 8.22                                   Securities Laws . . . . . . . . . . .   35
           SECTION 8.23                                   Compliance with Laws. . . . . . . . .   35
           SECTION 8.24                                   Employees and Labor . . . . . . . . .   35
           SECTION 8.25                                   Solvency. . . . . . . . . . . . . . .   35
           SECTION 8.26                                   Hazardous Material. . . . . . . . . .   35
           SECTION 8.27                                   Environmental Compliance. . . . . . .   36
</TABLE>



                                      iv

<PAGE>   6

<TABLE>
<S>         <C>                                      <C>                                         <C>
ARTICLE IX  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   37
           COVENANTS  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   37
           SECTION 9.1                               Affirmative Covenants. . . . . . . . . . .   37
           SECTION 9.1.1                             Reports, Certificates and Other Information  37
           SECTION 9.1.2                             Corporate Existence; Foreign Qualification   44
           SECTION 9.1.3                             Books, Records and Inspections . . . . . .   44
           SECTION 9.1.4                             Insurance. . . . . . . . . . . . . . . . .   44
           SECTION 9.1.5                             Taxes and Liabilities. . . . . . . . . . .   45
           SECTION 9.1.6                             Compliance with Laws . . . . . . . . . . .   45
           SECTION 9.1.7                             Maintenance of Permits . . . . . . . . . .   45
           SECTION 9.1.8                             Investments. . . . . . . . . . . . . . . .   45
           SECTION 9.1.9                             Dividends. . . . . . . . . . . . . . . . .   46
           SECTION 9.1.10                            Interest Rate Protection . . . . . . . . .   46
           SECTION 9.1.11                            Tax Return Filings . . . . . . . . . . . .   46
           SECTION 9.1.12                            Employee Benefit Plans . . . . . . . . . .   47
           SECTION 9.1.13                            Best Rating. . . . . . . . . . . . . . . .   47
           SECTION 9.1.14                            Environmental Matters. . . . . . . . . . .   47
           SECTION 9.2                               Negative Covenants . . . . . . . . . . . .   48
           SECTION 9.2.1                             Minimum Surplus. . . . . . . . . . . . . .   48
           SECTION 9.2.2                             NAIC IRIS Tests. . . . . . . . . . . . . .   48
           SECTION 9.2.3                             Net Written Premium to Surplus . . . . . .   48
           SECTION 9.2.4                             Interest Coverage. . . . . . . . . . . . .   48
           SECTION 9.2.5                             Fixed Charges Coverage Ratio . . . . . . .   48
           SECTION 9.2.6                             Funded Indebtedness to Equity. . . . . . .   49
           SECTION 9.2.7  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   49
           SECTION 9.2.8  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   49
           SECTION 9.2.9                             Guarantees, Loans, Advances and 
                Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   49
           SECTION 9.2.10                            Mergers, Consolidations and Sales. . . . .   49
           SECTION 9.2.11                            Leases . . . . . . . . . . . . . . . . . .   50
           SECTION 9.2.12                            Unconditional Purchase Obligations . . . .   50
           SECTION 9.2.13                            Regulations G, U and X . . . . . . . . . .   50
           SECTION 9.2.14                            Subsidiaries . . . . . . . . . . . . . . .   50
           SECTION 9.2.15                            Other Agreements . . . . . . . . . . . . .   50
           SECTION 9.2.16                            Business Activities. . . . . . . . . . . .   50
           SECTION 9.2.17                            Transactions with Affiliates . . . . . . .   51
           SECTION 9.2.18                            Indebtedness . . . . . . . . . . . . . . .   51
           SECTION 9.2.19                            Liens. . . . . . . . . . . . . . . . . . .   51
           SECTION 9.2.20                            Advances to or Investments in Affiliates 
                . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   52
           SECTION 9.2.21                            Restricted Payments. . . . . . . . . . . .   52
 </TABLE>




                                      v
<PAGE>   7

<TABLE>
<S>        <C>                                        <C>                                         <C>
           SECTION 9.2.22                             Negative Pledge Agreements. . . . . . . .   53
           SECTION 9.2.23                             No Amendment of Certain Documents . . . .   53
           SECTION 9.2.24                             Borrower's and Subsidiaries' Stock. . . .   53
           SECTION 9.2.25                             Restrictions on Surplus Relief Reinsurance 
                Agreements. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   53
           SECTION 9.2.26                             Borrower Property . . . . . . . . . . . .   53
           SECTION 9.2.27                             Capital Expenditures. . . . . . . . . . .   53

ARTICLE X         . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   53
           CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   54
           SECTION 10.1                               No Default. . . . . . . . . . . . . . . .   54
           SECTION 10.2                               Warranties and Representations. . . . . .   54
           SECTION 10.3                               Litigation. . . . . . . . . . . . . . . .   54
           SECTION 10.4                               Fees. . . . . . . . . . . . . . . . . . .   54
           SECTION 10.5                               Documents . . . . . . . . . . . . . . . .   54
           SECTION 10.5.1                             Certain Related Documents . . . . . . . .   54
           SECTION 10.5.2                             Resolutions . . . . . . . . . . . . . . .   54
           SECTION 10.5.3                             Incumbency and Signatures . . . . . . . .   55
           SECTION 10.5.4                             Opinion of Counsel. . . . . . . . . . . .   55
           SECTION 10.5.5                             Charter and By-Laws . . . . . . . . . . .   55
           SECTION 10.5.6                             Insurance . . . . . . . . . . . . . . . .   55
           SECTION 10.5.7                             List of Directors and Officers. . . . . .   55
           SECTION 10.5.8                             Certificates. . . . . . . . . . . . . . .   55
           SECTION 10.5.9                             Financial Statements and Information. . .   56
           SECTION 10.5.10                            Consents. . . . . . . . . . . . . . . . .   56
           SECTION 10.5.11                            Actuarial Certification . . . . . . . . .   56
           SECTION 10.5.12                            MEEMIC Transactions . . . . . . . . . . .   56
           SECTION 10.5.13                            Insurance Proceedings . . . . . . . . . .   56
           SECTION 10.5.14                            Labor Matters . . . . . . . . . . . . . .   56
           SECTION 10.5.15                            Tax Sharing Agreements. . . . . . . . . .   56
           SECTION 10.5.16                            Other . . . . . . . . . . . . . . . . . .   57

ARTICLE XI        . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   57
           EVENTS OF DEFAULT AND THEIR EFFECT . . . . . . . . . . . . . . . . . . . . . . . . .   57
           SECTION  11.1                              Events of Default . . . . . . . . . . . .   57
           SECTION 11.1.1                             Non-Payment of Loan . . . . . . . . . . .   57
           SECTION 11.1.2                             Non-Payment of Fees, etc. . . . . . . . .   57
           SECTION 11.1.3                             Non-Payment of Other Indebtedness . . . .   57
           SECTION 11.1.4                             Other Material Obligations. . . . . . . .   57
           SECTION 11.1.5                             Bankruptcy, Insolvency, etc . . . . . . .   58
</TABLE>



                                      vi
<PAGE>   8

<TABLE>
<S>        <C>                                      <C>                                          <C>
           SECTION 11.1.6                           Non-compliance With Certain Provisions. . .   58
           SECTION 11.1.7                           Non-compliance With Other Provisions. . . .   58
           SECTION 11.1.8                           Warranties and Representations. . . . . . .   58
           SECTION 11.1.9                           Tax Sharing Agreements. . . . . . . . . . .   59
           SECTION 11.1.10                          Loan Documents. . . . . . . . . . . . . . .   59
           SECTION 11.1.11                          Change in Ownership . . . . . . . . . . . .   59
           SECTION 11.1.12                          Litigation. . . . . . . . . . . . . . . . .   59
           SECTION 11.1.13                          Change in Regulation. . . . . . . . . . . .   59
           SECTION 11.1.14                          Change in Reinsurance . . . . . . . . . . .   60
           SECTION 11.1.15                          Employee Benefit Plans. . . . . . . . . . .   60
           SECTION 11.2                             Effect of Event of Default. . . . . . . . .   60

ARTICLE XII       . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   61
           SUCCESSORS; PARTICIPATIONS               . . . . . . . . . . . . . . . . . . . . . .   61
           SECTION 12.1                             . . . . . . . . . . . . . . . . . . . . . .   61

ARTICLE XIII      . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   61
           GENERAL  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   61
           SECTION 13.1                             Waiver; Amendments. . . . . . . . . . . . .   61
           SECTION 13.2                             Confirmations . . . . . . . . . . . . . . .   61
           SECTION 13.3                             Notices . . . . . . . . . . . . . . . . . .   62
           SECTION 13.4                             Cost, Expenses and Taxes. . . . . . . . . .   62
           SECTION 13.5                             Indemnification . . . . . . . . . . . . . .   62
           SECTION 13.6                             Submission to Jurisdiction. . . . . . . . .   64
           SECTION 13.7                             Governing Law . . . . . . . . . . . . . . .   64
           SECTION 13.8                             Jury Trial. . . . . . . . . . . . . . . . .   64
           SECTION 13.9                             Successors and Assigns. . . . . . . . . . .   65
           SECTION 13.10                            Counterparts. . . . . . . . . . . . . . . .   65

Exhibit A     Compliance Certificate  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    5
Exhibit B     Continuation/Conversion Notice  . . . . . . . . . . . . . . . . . . . . . . . . .    6
Exhibit C     Note  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   19
Exhibit D     Opinion of Counsel  . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   54
Exhibit E     Actuarial Appraisal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .   56
</TABLE>





                                     vii
<PAGE>   9


                                CREDIT AGREEMENT


           THIS CREDIT AGREEMENT, dated as of April 4, 1997, is entered into by
and between PROFESSIONALS INSURANCE COMPANY MANAGEMENT GROUP, a Michigan
corporation (the "Borrower"), and LASALLE NATIONAL BANK, a national banking
association having its principal office at 135 South LaSalle Street, Chicago,
Illinois  60603 ("Lender").

                              W I T N E S S E T H

           WHEREAS, pursuant to an Agreement dated as of February 7, 1997 (the
"MEEMIC Agreement"), by and among Borrower, PICOM Insurance Company ("PICOM")
and Michigan Educational Employees Mutual Insurance Company ("MEEMIC"): (i)
Borrower will contribute $21,500,000 to MEEMIC in exchange for a Surplus Note
("Surplus Note"), (ii) Borrower and MEEMIC will enter into a ten year
management services agreement, (iii) MEEMIC and PICOM will enter into a quota
share reinsurance contract, (iv) Borrower shall purchase certain equipment from
MEEMIC, and (v) certain other events shall occur (collectively, the "MEEMIC
Transactions");

           WHEREAS, Borrower intends to pursue other actions culminating in the
demutualization of MEEMIC into Borrower and acquisition of the assets of
Michigan Educators Insurance Agency, a Michigan corporation ("MEIA");

           WHEREAS, Borrower owns directly or indirectly 100% of the
outstanding capital stock of PICOM;

           WHEREAS, in order to effectuate the MEEMIC Transactions, the
Borrower desires to obtain a term loan (the "Loan") from the Lender in an
aggregate principal amount of Twenty-two Million Five Hundred Thousand Dollars
($22,500,000);

           WHEREAS, the Lender is willing to make such Loan on the terms and
conditions hereinafter set forth;

           WHEREAS, the proceeds of the Loan shall be used by the Borrower to
finance in part (i) the MEEMIC Transactions and (ii) costs or expenses incurred
by the Borrower to effect the MEEMIC Transactions and the financing represented
by this Agreement;

           NOW, THEREFORE, in consideration of the premises, which are hereby
incorporated herein as true, and the mutual covenants hereinafter contained,





<PAGE>   10

and other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, the parties hereto agree as follows:

                                   ARTICLE I

                                  DEFINITIONS

           SECTION 1.1   Definitions.  When used herein the following terms
shall have the following meanings:

           Account is defined in Section 6.1.

           Adjusted LIBOR is defined in Section 4.1.2.

           Admitted Assets shall mean as to PICOM, PICOM-ILL. or MEEMIC, as of
any date, the total amount shown on line 22, page 2, column 4 of its Annual
Statement, or the amount of assets qualifying as admitted assets under SAP,
determined in a consistent manner for any date other than one as of which an
Annual Statement is prepared.

           Affiliate of any Person shall mean (i) any director (or Person
holding the equivalent position) or officer (or Person holding the equivalent
position) of such Person or of any Affiliate of such Person, and (ii) any other
Person which, directly or indirectly, controls or is controlled by or is under
common control with such Person (excluding any trustee under, or any committee
with responsibility for administering, any Plan).  A Person shall be deemed to
be:

                (a)  "controlled by" any other Person if such other Person
      possesses, directly or indirectly, power:

                    (i)  to vote 10% or more of the securities having at the
                time of any determination hereunder voting power for the
                election of directors of such Person; or

                    (ii)  to direct or cause the direction of the management
                and policies of such Person whether by contract or otherwise; or

                (b)  "controlled by" or "under common control with" such other
      Person if such other Person is a member of the immediate family of such
      Person or is the executor, administrator, or other personal
      representative of such Person.

                                      2

<PAGE>   11
 
           Agreement shall mean this Credit Agreement, together with all
exhibits and schedules hereto, as from time to time amended, modified,
supplemented, restated or otherwise modified and in effect.

           Annual Statement shall mean the annual financial statement of PICOM,
PICOM-Ill. or MEEMIC as required to be filed with the director, division of
insurance (or similar authority) of Michigan or Illinois, as the case may be,
together with all exhibits or schedules filed therewith, prepared in conformity
with SAP.  References to amounts on particular exhibits, schedules, lines,
pages and columns of the Annual Statement are based on the format promulgated
by the NAIC for the 1996 Annual Statements.  If such format is changed in
future years so that different information is contained in such items or they
no longer exist, it is understood that the reference is to information
consistent with that reported in the referenced item in the 1996 Annual
Statement of PICOM, PICOM-Ill. or MEEMIC.

           Applicable LIBOR Margin (or "ALM" in the following grid) for
purposes of determining the interest rate on a LIBOR Loan, means initially .75%
(the "Normal LIBOR Margin"), provided however that the Normal LIBOR Margin
shall be subject to quarterly adjustment determined in accordance with the
following grid:


                                      3


<PAGE>   12


             WHEN DEBT SERVICE COVERAGE OF BORROWER AND ITS CONSOLIDATED
 SUBSIDIARIES IS:


<TABLE>
<S>                                                  <C>    <C>       <C>       <C>     <C>        <C>           
WHEN RATIO                                             >4.0x  >2.5x &   >2.0x &   >1.5x &  >1.3x &  <1.3x         
OF FUNDED                                              -      -         -         -        -                      
INDEBTEDNESS                                                 <4.0x     <2.5x     <2.0x    <1.5x                   
TO EQUITY OF                                                                                                      
BORROWER AND                                                                                                      
ITS CONSOLIDATED                            <.25:1    ALM =  ALM =     ALM =     ALM =    ALM =     ALM =         
SUBSIDIARIES IS:                            -         0.625% 0.750%    1.000%    1.250%   1.500%    1.750%        
                                                                                                                  
                                                                                                                  
                                            >.25:1 &  ALM =  ALM =     ALM =     ALM =    ALM =     ALM =         
                                            <.30:1    0.750% 0.750%    1.000%    1.250%   1.500%    1.750%        
                                            -                                                                     
                                                                                                                  
                                            >.30:1 &  ALM =  ALM =     ALM =     ALM =    ALM =     ALM =         
                                            <.35:1    1.000% 1.000%    1.000%    1.250%   1.500%    1.750%        
                                            -                                                                     
                                                                                                                  
                                            >.35:1 &  ALM =  ALM =     ALM =     ALM =    ALM =     ALM =         
                                            <.40:1    1.250% 1.250%    1.250%    1.250%   1.500%    1.750%        
                                            -                                                                     
                                                                                                                  
                                            >.40:1 &  ALM =  ALM =     ALM =     ALM =    ALM =     ALM =         
                                            <.45:1    1.500% 1.500%    1.500%    1.500%   1.500%    1.750%        
                                            -                                                                     
                                                                                                                  
                                            >.45:1    ALM =  ALM =     ALM =     ALM =    ALM =     ALM =         
                                                      1.750% 1.750%    1.750%    1.750%   1.750%    1.750%        
</TABLE>


          Authorized Officer shall mean those officers of the Borrower whose
signatures and incumbency shall have been certified to the Lender pursuant to
Section 10.5.3.

          Borrower is defined in the Preamble.

          Business Day shall mean any day of the year (other than any Saturday
or Sunday) on which the Federal Reserve Bank is open for business in Chicago,
Illinois and, with respect to LIBOR Loans, a day on which dealings in Dollars
may be carried on by the Lender or its Affiliates in the London interbank LIBOR
market.

                                      4

<PAGE>   13

                     Capital Expenditures shall mean all payments for any fixed
assets or improvements or for replacements, substitutions or additions thereto,
that have a useful life of more than one year and which are required to be
capitalized under GAAP.

                     Capitalized Lease shall mean as to any Person  any lease
by such Person as lessee which is or should be capitalized on the balance sheet
in accordance with GAAP, together with any other lease which is in substance a
financing lease, including, without limitation, any lease under which (i) such
Person has or will have an option to purchase the property subject thereto at a
nominal amount or an amount less than a reasonable estimate of the fair market
value of such property as of the date the lease is entered into, or (ii) the
terms of the lease approximates or exceeds the expected useful life of the
property leased thereunder.

                     Closing Date shall mean April 4, 1997 or such other date
as may be agreed to by the parties to this Agreement.

                     Code shall mean the Internal Revenue Code of 1986 and any
successor statute of similar import, together with the regulations thereunder,
as amended, reformed or otherwise modified and in effect from time to time.
References to sections of the Code shall be construed to also refer to
successor sections.

                     Compliance Certificate shall mean a certificate duly
executed by an Authorized Officer substantially in the form of Exhibit A, with
such changes as the Lender may from time to time reasonably request, for
purposes of monitoring the Borrower's compliance herewith.

                     Contingent Liability shall mean any agreement, undertaking
or arrangement by which any Person guarantees, endorses or otherwise becomes or
is contingently liable for (by direct or indirect agreement, contingent or
otherwise, to provide funds for payment, to supply funds to, or otherwise to
invest in, a debtor, or otherwise to assure a creditor against loss) the debt,
obligation or other liability of any other Person (other than by endorsements
of instruments in the course of collection), or for the payment of dividends or
other distributions upon the shares of any other Person, or undertakes or
agrees (contingently or otherwise) to purchase, repurchase, or otherwise
acquire or become responsible for any Indebtedness, obligation or liability or
any security therefor, or to provide funds for the payment or discharge thereof
(whether in form of loans, advances, stock purchases, capital contributions or
otherwise), or to maintain solvency, assets, level of income, or other
financial condition of any other Person, or to make payment or transfer
property to any other Person other than for value received.  The amount of any
Person's obligation under any Contingent Liability shall (subject to any
limitation set



                                      5

<PAGE>   14

forth therein) be deemed to be the outstanding principal amount (or maximum
permitted principal amount, if larger) of the debt, obligation or other
liability guaranteed or supported thereby.  Contingent Liabilities shall not
include any amount for which PICOM or MEEMIC may be or become obligated to pay
pursuant to the terms of any insurance policy, fidelity bonds or surety bonds
issued by PICOM or MEEMIC in the ordinary course of its insurance, fidelity or
surety business.

                     Continuation/Conversion Notice shall mean a notice of
continuation or conversion duly executed by an Authorized Officer substantially
in the form of Exhibit B.

                     Contractual Obligation shall mean, relative to any Person,
any provision of any instrument or undertaking to which such Person is a party
or by which it or any of its property is bound or subject.

                     Controlled Group shall mean the Borrower and any
corporation, trade or business that is, along with the Borrower, a member of a
controlled group of corporations or a controlled group of trades or businesses
as described in sections 414(b) and 414(c), respectively, of the Code, as
amended, or in Section 4001 of ERISA.

                     Debt Service Coverage shall mean with respect to the
Borrower the ratio calculated in accordance with GAAP on a consolidated basis
for the most recently concluded rolling four Fiscal Quarters, of (A) the sum of
(1) net operating income before payment of, or allowance for, all federal,
state and local income taxes; (2) Interest Expense; (3) depreciation and
amortization expense, less (B)(1) all amounts distributed to Affiliate or
stockholders, and (2) Capital Expenditures, to (C) the sum of (1) Interest
Expense and (2) all Indebtedness which is scheduled to mature within one (1)
year after the date of a Debt Service Coverage determination.

                     Default shall mean any Event of Default or any Unmatured
Event of Default.

                     Default Rate is defined in Section 4.1.2.

   Department shall mean the appropriate Governmental Authority of any Insurance
Subsidiary's state of domicile.

                     Dollar(s) and the sign "$" shall mean lawful money of the
United States of America.

                     Environmental Claims - see Section 9.2.15.

                                      6



<PAGE>   15

                     Environmental Laws shall mean any and all federal, state
or local environmental or health and safety-related laws, regulations, rules,
ordinances, orders or directives.

                     Equity shall mean as to any Person, at any time, all items
that constitute equity under GAAP, including but not limited to all of the
issued and outstanding common and preferred stock of such Person, and
additional paid-in capital.

                     ERISA shall mean the Employee Retirement Income Security
Act of 1974, as amended, and any successor statute of similar import, together
with the regulations promulgated thereunder and under the Code, in each case as
in effect from time to time.  References to sections of ERISA also refer to
successor sections.

                     ERISA Event shall mean, with respect to any Person, (a) a
Reportable Event (other than a Reportable Event not subject to the provision
for 30-day notice to the PBGC under regulations issued under Section 4043 of
ERISA), (b) the withdrawal of such Person or any Affiliate thereof from a Plan
during a plan year in which it was a "substantial employer" as defined in
Section 4001(a)(2) of ERISA, (c) the filing of a notice of intent to terminate
a Plan or the treatment of a Plan amendment as a termination under Section 4041
of ERISA, (d) the institution of proceedings to terminate a Plan by the PBGC
under Section 4042 of ERISA, (e) the failure to make required contributions
which would result in the imposition of a lien under Section 412 of the Code or
ERISA Section 302, or (f) any other event or condition which might reasonably
be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan or to
cause the imposition of any liability under Title IV of ERISA.

                     Event of Default shall mean any of the events described in
Section 11.1 hereof.

                     Fiscal Quarter shall mean any quarter of a Fiscal Year.

                     Fiscal Year shall mean any period of twelve consecutive
calendar months ending on the last day of December.

                     Fixed Charge Coverage Ratio shall mean, with respect to
the Borrower and its consolidated Subsidiaries calculated in accordance with
GAAP, the ratio for the most recently concluded rolling four Fiscal Quarters,
of (A) the sum of (1) net operating income before payment of, or allowance for,
all federal, state and local income taxes, (2) Interest Expense; (3) Lease
Obligations; (4) depreciation and



                                      7

<PAGE>   16

amortization expense, less (B) (1) all amounts distributed to Affiliates or
stockholders, and (2) Capital Expenditures, to (C) the sum of (1) Interest
Expense, (2) Lease Obligations, and (3) all Indebtedness which is scheduled to
mature within one (1) year after the date of a Fixed Charge Coverage Ratio
determination.

                     Force Majeure shall mean acts of God, acts of public
enemies, insurrection, riots, civil disturbances, strikes, boycotts, other
direct consequences of labor dispute, other industrial disturbances, fires,
explosions, volcanic eruptions, floods, epidemics, quarantine restrictions,
shortages of materials, equipment or transportation, freight embargoes, power
or utility failures, orders or acts, or failures to act, of civil or military
authority or other similar causes beyond the control of Borrower.

                     F.R.S. Board shall mean the Board of Governors of the
Federal Reserve System (or any successor thereto).

                     "Funded Indebtedness" shall mean, as to any Person, shall
mean indebtedness that matures more than one year from the date of
determination or matures within one year from such date but is renewable or
extendable, at the option of the debtor, to a date more than one year from such
date or arises under a revolving credit or similar agreement that obligates the
lender or lenders to extend credit during a period of more than one year from
such date (in each case including amounts of Funded Indebtedness required to be
paid or prepaid within one year from the date of determination).

                     GAAP shall mean generally accepted accounting principles
in the United States of America as in effect from time to time.

                     GAAP Liabilities shall mean all items which, in accordance
with GAAP, would be included as liabilities on the liability side of the
balance sheet of the Person involved.

                     Governmental Authority shall mean any nation or
government, any state or other political subdivision thereof, any municipality
or any department or division thereof, any court or tribunal of any
jurisdiction, and any other entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government,
including, without limitation, the Illinois Department and Michigan Department.

                     Hazardous Material means any chemical, substance,
material, object, condition, waste or combination thereof which is or may be
hazardous to human health or safety or to the environment due to its
radioactivity, ignitability, corrosivity, reactivity, explosivity, toxicity,
carcinogenicity, infectiousness or other


                                      8


<PAGE>   17

harmful or potentially harmful properties or effects, including, without
limitation, all of those chemicals, substances, materials, objects, conditions,
wastes or combinations thereof which are now or become listed, defined or
regulated in any manner by any federal state or local law based upon, directly
or indirectly, such properties or effects.

                     Hedging Obligations shall mean, with respect to any
Person, all liabilities of such Person under interest rate swap agreements and
interest rate collar agreements, and all other agreements or arrangements
designed to protect  such Person against fluctuations in interest rates or
currency exchange rates.

                     Illinois Department is defined in Section 8.3.

                     Indebtedness of a Person shall mean (a) all indebtedness
of such Person for borrowed money, including, without limitation, any
Liabilities (including all notes payable and drafts accepted representing
extensions of credit) and all obligations evidenced by bonds, debentures, notes
or other similar instruments of such Person, (b) indebtedness of such Person
for the deferred purchase price of services or property, (c) Lease Obligations
of such Person and obligations of such Person under Capitalized Leases, (d)
indebtedness of such Person arising under acceptance facilities, (e)
obligations of such Person with respect to judgments, awards or decrees, (f)
GAAP Liabilities, (g) net liabilities (calculated on a marked to market basis)
of such Person under all Hedging Obligations, (h) indebtedness of such Person
consisting of unpaid reimbursement obligations in respect of all drawings under
letters of credit issued for the account of such Person (including, without
limitation, with respect to each of the foregoing clauses (a) through (h), any
such indebtedness or obligation which is non-recourse to the credit of such
Person but is secured by assets of such Person) and (i) all Contingent
Liabilities of such Person in respect to any of the foregoing.

                     Indemnified Liabilities is defined in Section 13.5.

                     Indemnified Parties is defined in Section 13.5.

                     Insurance Code shall mean the Insurance Code of the state
of domicile and any successor statute of similar import, together with the
regulations thereunder, as amended or otherwise modified and in effect from
time to time.  References to sections of the Insurance Code shall be construed
to also refer to successor sections.

                     Interest Expense shall mean, for any period for any
Person, the amount which, in conformity with GAAP, would be set forth opposite
the caption "interest expense" (or any like caption) on an income statement of
such Person for


                                      9


<PAGE>   18

such period to the extent such amount represents interest payments paid in cash
during such period.

                     Interest Period shall mean, relative to any LIBOR Loan,
the period which begins on (and includes) the date on which such LIBOR Loan is
made or continued as, or converted into, a LIBOR Loan pursuant to Section 4.5
and, unless the maturity of such a LIBOR Loan is accelerated, ends on (but
excludes) the day which numerically corresponds to such date one, two, three,
six or twelve months thereafter, as the Borrower may select in its relevant
notice pursuant to Section 4.5; provided, that:

                 (a)  if there exists no numerically corresponding day in such
         month, such Interest Period shall end on the last Business Day of such
         month;

                 (b)  if such Interest Period would otherwise end on a day
         which is not a Business Day, such Interest Period shall end on the
         next following Business Day (unless such next following Business Day
         is the first Business Day of a calendar month, in which case such
         Interest Period shall end on the Business Day next preceding such
         numerically corresponding day); and

                 (c)  the Borrower shall not be permitted to select, and there
         shall not be applicable, any Interest Period that would end later than
         the maturity of the Loan.

                     Invested Assets shall mean, with respect to PICOM, PICOM,
Ill. and MEEMIC as of any date, the amount reported on line 9a, page 2, column
4 of the Annual Statement of PICOM or MEEMIC, or any amount determined in a
consistent manner in accordance with SAP for any date other than one as of
which an Annual Statement is prepared.

                     Investment Grade Securities shall mean non-equity
securities which are rated BBB- or better by Standard & Poor's Corporation,
Baa-3 by Moody's Investors Service, Inc., BBB- by Duff & Phelps Credit Rating
Co. or BBB- by Fitch Investors Service, Inc. and U.S. Government Securities,
and commercial paper rated A-1, P-1, D-1-, or F-1 (or better) by any of the
above rating agencies.

                     IRIS Tests shall mean the ratios and other financial
measurements developed by the NAIC under its Insurance Regulatory Information
System or, in



                                      10

<PAGE>   19

lieu thereof, any successor thereto, replacement thereof or substitute
implemented by the NAIC.

                     Lease Obligations shall mean, at any date, the rental
commitments of any Person under leases for real and/or personal property
(including taxes, insurance, maintenance and similar expenses which any Person
is obligated to pay under the terms of said leases) on such date, whether or
not such obligations are reflected as liabilities or commitments on a balance
sheet of such Person or in the notes thereto, excluding, however, Capitalized
Leases.

                     Lender is defined in the Preamble.

                     Liabilities shall mean all obligations and liabilities of
the Borrower and its Subsidiaries to the Lender, howsoever created, arising or
evidenced, whether direct or indirect, absolute or contingent, primary or
secondary, joint or several, recourse or non-recourse or now or hereafter
existing or due or to become due, whether for principal, interest, fees,
expenses, lease obligations, indemnities or otherwise, under or in connection
with this Agreement, the Note, or any other Loan Documents and including any
Hedging Obligations to the Lender that relate to this Agreement.

                     LIBOR  is defined in Section 4.1.2.

                     LIBOR Loan means a Loan bearing interest at the rate
specified in Section 4.1.2.

                     Licenses is defined in Section 8.19; individually a
"License."

                     Lien shall mean, when used with respect to any Person, any
interest in any real or personal property, asset or other right held, owned or
being purchased or acquired by such Person for its own use, consumption or
enjoyment which secures payment or performance of any obligation and shall
include any mortgage, lien, pledge, security interest, encumbrance, charge,
retained title of a conditional vendor or lessor, or other security agreement,
mortgage deed of trust, chattel mortgage, assignment, pledge, retention of
title, financing or similar statement or notice or arising as a matter of law,
judicial progress or otherwise.

                     Loan shall mean the term loan made by the Lender at the
Closing and thereafter pursuant to Section 2.1 hereof.

                     Loan Documents shall mean this Agreement, the Note, and
all other agreements, instruments, certificates, schedules or other written
documents relating to or delivered by the Borrower or any of its Subsidiaries
in connection with any of the foregoing or in connection with

                                      11



<PAGE>   20

any transaction or matter contemplated therein, including, without limitation,
the MEEMIC Documents, and any other deliveries pursuant to Article X hereof.

                     Margin Stock shall mean "margin stock" as defined in
Regulations G, U or X of the F.R.S. Board.

                     Material Adverse Effect shall mean, relative to any
occurrence of whatever nature (including any adverse determination in any
litigation, arbitration, or governmental investigation or proceeding), a
material adverse effect on:

                 (a)  the assets of or the then-existing or projected business,
         revenues, financial condition, operations or prospects of a Person; or

                 (b)  the ability of any Person to perform any of its payment
         or other material obligations under this Agreement, the Note, or any
         of the other Loan Documents.

Unless otherwise specifically provided herein or therein, any reference herein
or in any Loan Documents to which the Lender is a party or beneficiary to
Material Adverse Effect shall mean a Material Adverse Effect on either the
Borrower or PICOM, or on the Borrower and its Subsidiaries taken as a whole.

                     MEEMIC Documents shall mean the Agreement dated February
7, 1997 between Borrower, PICOM and MEEMIC ("MEEMIC Agreement") and all other
related agreements and documents ancillary thereto and shall be deemed to
specifically include the Form A filing and approvals relating thereto.

                     MEEMIC Transactions shall mean those referred to in the
MEEMIC Documents.

                     MEIA shall mean Michigan Educators Insurance Agency, a
Michigan corporation.

                     Michigan Department is defined in Section 8.3.

                     Multiemployer Plan shall mean a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA, and to which the Borrower or PICOM is
making, or is obligated to make, contributions, or has made, or been obligated
to make, contributions.

                     NAIC shall mean the National Association of Insurance
Commissioners, or any successor thereto.


                                      12


<PAGE>   21

                     Net Written Premium shall mean, with respect to PICOM as
of any date, the amount reported on line 32, page 9, part 2B, column 4 of the
Annual Statement of PICOM, or an amount determined in a consistent manner in
accordance with SAP for any date other than one as of which an Annual Statement
is prepared.

                     Note is defined in Section 3.1.

                     Operating Earnings shall mean, as to PICOM, as of any
date, the total amount shown on line 14, page 4, column 1 of the Annual
Statement of PICOM, or an amount determined in a consistent manner in
accordance with SAP for any date other than one as of which an Annual Statement
is prepared.

                     Payment Date shall mean (i) with respect to any LIBOR
Loan, the last day of each Interest Period with respect thereto and, if such
Interest Period is in excess of three months, the day three months after the
commencement of such Interest Period and thereafter the day three months after
each succeeding Payment Date, and (ii) with respect to any Prime Rate Loan, the
last day of each month.

          PBGC shall mean the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions.

                     Permitted Encumbrances is defined in Section 9.2.20
hereof.

                     Person shall mean any natural person, corporation, firm,
trust, association, government, governmental agency or other entity, whether
acting in an individual, fiduciary or other capacity.

                     PICOM is defined in the first recital.

                     PICOM Claims Services shall mean PICOM Claims Services
Corporation.

                     PICOM-ILL. shall mean PICOM Insurance Company of Illinois.

                     Plan shall mean any "employee pension benefit plan," as
such term is defined in ERISA, which is subject to Title IV of ERISA (other
than a "Multiemployer Plan"), and as to which any entity in the Controlled
Group has or may have any liability, including any liability by reason of
having been a substantial employer within the meaning of Section 4063 of ERISA
for any time within the preceding five years or by reason of being deemed to be
a contributing sponsor under Section 4069 of ERISA.

                                      13


<PAGE>   22

                     Prime Rate shall mean, at any time, the rate of interest
then most recently announced by the Lender at Chicago, Illinois as its
reference rate.  Each change in the interest rate on any Prime Rate Loan shall
take effect on the effective date of the change in the Prime Rate.

                     Prime Rate Loan means a Loan bearing interest at the rate
described in Section 4.1.1.

                     Projections is defined in Section 8.4.

                     Property shall mean the real estate located at:

                             4277 Okemos Rd., Okemos, MI (Home Office)
                             4295 Okemos Rd., Okemos, MI (Claims Office next
                                  door to Home Office)
                             148 E. Grand River Ave.,
                                  Williamson, MI (Disaster recovery site-
                                  Rented) 
                             Lot #5 Red Cedar Res. Pk., Meridian Twp. (Lot next
                                  to Home Office)
                             2511 Woodlake Circle, Okemos, MI (Land for
                                  proposed new Home Office)

         Regulatory Change shall mean, relative to the Lender:

         (a)     any change in (or the adoption, implementation, phase-in or
commencement of effectiveness of) any

                 (i)  United States federal or state law, rule or regulation,
         or foreign law applicable to such Lender;

                 (ii)  regulation, administration, interpretation, directive,
         requirement or request (whether or not having the force of law)
         applicable to such Lender of any court or other Governmental Authority
         charged with the interpretation or administration of any law referred
         to in clause (a)(i) or of any fiscal, monetary or other authority
         having jurisdiction over such Lender; or

         (b)   any change in the application to such Lender of any existing
   law, regulation, interpretation, directive, requirement or request referred
   to in clause (a)(i) or (a)(ii) above;

in either case, occurring after the date hereof.

                                      14


<PAGE>   23

                     Reinsurance Agreements shall mean any agreement, contract,
treaty or other arrangement (other than a Surplus Relief Reinsurance Agreement)
whereby PICOM, PICOM-Ill. or MEEMIC agrees to either (i) an assumption by
another insurer of or an indemnification by another insurer for all or part of
the liability of PICOM, PICOM-Ill. or MEEMIC under fidelity or surety bonds or
a policy or policies of insurance issued by PICOM, PICOM-Ill. or MEEMIC; or
(ii) accept all or part of the liability of another insurer under fidelity or
surety bonds or a policy or policies of insurance issued by such other insurer.

                     Reportable Event shall have the meaning given to such term
by ERISA.

                     Requirement of Law for any Person shall mean the corporate
charter and By-laws or other organizational or governing documents of such
Person, and any law, treaty, rule, ordinance or regulation or determination of
an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to which
such Person or any of its property is subject.

                     Risk Based Capital shall mean, as to any Insurance
Subsidiary, its total adjusted capital determined in accordance with the risk
based capital laws and regulations adopted by the state of domicile and the
risk based capital instructions adopted by the NAIC.

                     SAP shall mean, as to PICOM, any Insurance Subsidiary or
MEEMIC, the statutory accounting practices prescribed or permitted by the
director, division of insurance (or other similar authority) of the state of
domicile for the preparation of Annual Statements and other financial reports
by insurance corporations of the same type as PICOM, any such Insurance
Subsidiary or MEEMIC.

                     Securities shall mean common and preferred stock, joint
venture interests, partnership units and participations, notes, bonds,
debentures, trust receipts and other obligations, instruments or evidences of
indebtedness, including debt instruments of public and private issuers and
tax-exempt securities (including, without limitation, warrants, rights, put and
call options and other options relating thereto or any combination thereof),
guarantees of indebtedness, chooses in action, other property or interests
commonly regarded as securities or any form of interest or participation
therein.  Securities which the Borrower has contracted to purchase shall not be
deemed for purposes of this Agreement to be owned by the Borrower until
settlement of such purchase.


                                      15


<PAGE>   24

                     Solvent shall mean, when used with respect to any Person,
            that:
 
                     (a)     the present fair saleable value of such Person's
            assets is in excess of the total amount of such Person's
            liabilities (including all identified Contingent Liabilities);

                     (b)     such Person is able to pay its liabilities
            (including identified Contingent Liabilities) as they mature and
            become due; and

                     (c)     such Person does not have unreasonably small
            capital to carry on such Person's business as theretofore operated
            and all businesses in which such Person is about to engage.

                     For purposes of this definition, "fair saleable value" of
any Person's assets means the gross amount (without deductions for costs of
sale, taxes, or other payments) of money that might be expected to be realized,
as of the evaluation date, from a sale to an interested purchaser aware of all
relevant information by a seller, equally informed, who is interested in
disposing of all or substantially all of the Assets of such Person.

                     Statutory Liabilities shall mean, as to PICOM, PICOM-Ill.
or MEEMIC, as of any date, the total amount shown on line 21, page 3, column 1
of its Annual Statement of PICOM, or an amount determined in a consistent
manner in accordance with SAP for any date other than one as of which an Annual
Statement is prepared.

                     Subsidiary shall mean a corporation of which the indicated
Person and/or its other subsidiaries, individually or in the aggregate, own,
directly or indirectly, such number of outstanding shares as have at the time
of any determination hereunder more than 50% of the ordinary voting power for
the election of directors (or their equivalent under the laws of the
jurisdiction of organization of such corporation), and as to the Borrower,
shall specifically include PICOM, PICOM-Ill., PICOM Claims Services, and the
companies described in Section 8.17 and Schedule 8.17 hereto, as Subsidiaries
of the Borrower at all times.  "Insurance Subsidiary" shall mean any Subsidiary
which is organized as an insurance company and as to the Borrower shall include
PICOM and PICOM-Ill.

                     Surplus shall mean, as to PICOM, as of any date, the total
amount shown on line 25, page 3, column 1 of its Annual Statement as
appropriate, or an amount determined in a consistent manner in accordance with
SAP for any date other than one as of which an Annual Statement is prepared.



                                      16

<PAGE>   25

                     Surplus Relief Reinsurance Agreements shall mean any
agreement whereby Insurance Subsidiary either assumes or cedes business under a
reinsurance agreement that would be considered a "financing-type" reinsurance
agreement which is entered into solely for the purpose of impacting or
affecting the income statement of Insurance Subsidiary.

                     Tax Sharing Agreement shall mean that certain Tax Sharing
Agreement dated December 15, 1996 among Borrower, PICOM, PICOM-ILL., PICOM
Claims Services, PICOM Financial Services Corporation and American Insurance
Management Corporation.

                     "Total Capitalization" shall mean, at any time, the sum of
(x) consolidated Indebtedness of the Borrower and its consolidated
Subsidiaries, and (y) consolidated Equity of the Borrower and its consolidated
Subsidiaries, in each case determined as of such time.

                     Unmatured Event of Default shall mean any condition or
event, which, after notice or lapse of time or both, would constitute an Event
of Default.

                     U.S. Government Securities shall mean obligations of or
guaranteed as to principal and interest by, the United States Government or any
of the following agencies (i) the Federal National Mortgage Association; (ii)
the Government National Mortgage Association; (iii) the Student Loan Marketing
Association; and (iv) Federal Home Loan Mortgage Corporation, and comparable
agencies of similar credit standing.

     Welfare Plan shall mean any "employee welfare benefit plan" as such term is
defined in ERISA.

                     SECTION 1.2       Use of Defined Terms.  Unless
otherwise defined or the context otherwise requires, terms for which meanings
are provided in this Agreement shall have such meanings when used in the
Schedules hereto, the Loan Documents, the Exhibits and any other communication
delivered from time to time in connection with this Agreement.

                     SECTION  1.3      Cross References; Headings.
The words "hereof", "herein" and "hereunder" and words of similar import when
used in this Agreement or in any of the Loan Documents shall refer to this
Agreement or such Loan Document as a whole and not to any particular provision
of this Agreement or such Loan Document.  Section, Schedule and Exhibit
references contained in this Agreement are references to Sections, Schedules
and Exhibits in or to this Agreement unless otherwise specified and include all
subsections, e.g., a reference to Section 2.2 includes Section 2.2.1.  Any
reference in any Section or definition to

                                      17



<PAGE>   26

any clause is, unless otherwise specified, to such clause of such Section or
definition.  The various headings in this Agreement and the Loan Documents are
inserted for convenience only and shall not affect the meaning or
interpretation of this Agreement or such Loan Document or any provision hereof
or thereof.

                     SECTION 1.4           Other Definitional Provisions. 
Unless otherwise defined or the context otherwise requires, all financial and
accounting terms used herein or in any of the Loan Documents or any certificate
or other document made or delivered pursuant hereto with regard to PICOM, any
Insurance Subsidiary or MEEMIC shall be defined in accordance with SAP and
otherwise shall be defined in accordance with GAAP.  When used in this
Agreement, the term "financial statements" shall include the notes and schedules
thereto. 

                                   ARTICLE II

                           AMOUNT AND TERMS OF CREDIT

                     SECTION 2.1       Term Loan.  Upon and subject to the
terms and conditions hereof, the Lender agrees to make a term loan to the
Borrower on the Closing Date at the Closing in a single payment and in an
amount equal to Twenty-Two Million Five Hundred Thousand Dollars ($22,500,000)
in the aggregate.

                     SECTION 2.2       Repayments and Prepayments.  The
Borrower shall, on each date set forth below, make a scheduled repayment of the
aggregate outstanding principal amount, if any, of the Loan in an amount equal
to the amount shown below opposite such date (subject to adjustment for
voluntary prepayments as described herein):

<TABLE>
<CAPTION>
Annual Payment Dates                   Amount Per Payment
--------------------                   ------------------
 <S>                                   <C>
 April 30, 1998                        $ 2,500,000
 April 30, 1999                        $ 2,500,000
 April 30, 2000                        $ 3,000,000
 April 30, 2001                        $ 3,000,000
 April 30, 2002                        $ 3,500,000
 April 30, 2003                        $ 3,500,000
 April 30, 2004                        $ 4,500,000 or, if less, the aggregate
                                       outstanding principal amount of the Loan
                                       then outstanding.  
</TABLE>

                                      18



<PAGE>   27

                     SECTION 2.2.1     The Borrower may, from time to time on
any Business Day, make a voluntary prepayment, in whole or in part, of the
outstanding principal amount of the Loan without premium or penalty; provided,
however, that (i) all such voluntary prepayments shall require at least five
Business Days prior written notice to the Lender if such prepayment occurs on a
Payment Date or at least 30 days prior written notice if the prepayment is to
occur on a date other than a Payment Date, and (iii) all such voluntary
prepayments shall be in an aggregate minimum amount of $500,000 and an integral
multiple of $100,000 thereafter (or, if less, the outstanding principal amount
of the Loan then outstanding).  Any prepayment of the principal of the Loan
shall include accrued interest to the date of prepayment on the principal
amount being prepaid and shall be applied to the principal installments of the
Note in the inverse order of their maturities.  Any prepayment of a LIBOR Loan
shall include funding losses under Section 4.10 below.

                     SECTION 2.2.2.    The Borrower shall, immediately upon any
acceleration of the maturity date of the Loan pursuant to Section 11.2, repay
the Loan, unless, pursuant to Section 11.2, only a portion of the entire Loan
is so accelerated.

                                  ARTICLE III

                                      NOTE

                     SECTION 3.1       Note. The Loan shall be evidenced by
promissory note (collectively, herein, as from time to time supplemented,
extended or replaced, called the "Note"), in the form set forth in Exhibit C,
with appropriate insertions, dated the date hereof, payable to the order of the
Lender in the initial principal amount of  Twenty-Two Million Five Hundred
Thousand Dollars ($22,500,000).

                                   ARTICLE IV

                        INTEREST; CONVERSION; LIBOR LOAN

                     SECTION 4.1       Interest Rate

                     The Borrower shall pay interest on the unpaid principal
amount of the Loan for the period commencing on the date of such Loan until
such Loan is paid in full, at the rates per annum specified below:


                                      19


<PAGE>   28

            4.1.1  On the outstanding principal amount of the Loan maintained
from time to time as a Prime Rate Loan, interest shall accrue at the Prime Rate
from time to time in effect; or

            4.1.2  On the outstanding principal amount of the Loan maintained
from time to time as a LIBOR Loan, interest shall accrue at a rate per annum
equal to the sum of the Applicable LIBOR Margin plus the Adjusted LIBOR,
payable on the last day of the applicable Interest Period and at maturity
(whether by acceleration or otherwise), and, if the applicable Interest Period
is longer than three months, on each day occurring every three months after the
date such Loan is made.

                     "Adjusted LIBOR" means, for any Borrowing of a LIBOR Loan,
a rate per annum determined in accordance with the following formula:

                                                 LIBOR                     
                             ----------------------------------------------
            Adjusted LIBOR =           100% - LIBOR Reserve Percentage

                     "LIBOR" means, for an Interest Period for a Borrowing of
LIBOR Loan, the rate of Interest per annum (rounded upwards, if necessary, to
nearest 1/100 of 1%) at which deposits in U.S. dollars in immediately available
funds are offered by the Lender at approximately 11:00 a.m.  (London, England
time) two Business Days before the beginning of such Interest Period by prime
banks in the interbank LIBOR (London Interbank Overnight Rate) market for a
period equal to such Interest Period and in an amount equal or comparable to
the principal amount of the LIBOR Loan scheduled to be made by the Lender as
part of such Borrowing.

                     "LIBOR Reserve Percentage" means, for any Borrowing of
LIBOR Loans, the daily average for the applicable Interest Period of the
maximum rate at which reserves (including, without limitation, any
supplemental, marginal and emergency reserves) are imposed during such Interest
Period by the Board of Governors of the Federal Reserve System (or any
successor) under Regulation D on "eurocurrency liabilities," as defined in such
Board's Regulation D, (or in respect of any other category of liabilities that
includes deposits be reference to which the interest rate on LIBOR Loans is
determined or any category of extension of credit or other assets that include
loans by non-United States offices of the Lender to United States residents)
subject to any amendments of such reserve requirement by such Board or its
successor, taking into account any transitional adjustments thereto.  For
purposes of this definition, the LIBOR Loans shall be deemed to be
"eurocurrency liabilities" as defined in Regulation D.

            4.1.3    Notwithstanding the foregoing, upon the occurrence and
continuation of an Event of Default, the unpaid principal amount of the Loan
and any other monetary Liabilities shall bear interest at a rate per annum (the
"Default


                                      20


<PAGE>   29

Rate") equal to the Prime Rate from time to time in effect (but not less than
the Prime Rate as in effect at such due date) plus two percent (2.0%) per
annum; and further provided that if at any time the applicable interest rate
hereunder exceeds the maximum rate of interest permitted by applicable law,
then for such time the interest rate hereunder shall be suspended and shall be
deemed to be such maximum rate of interest during such time, but thereafter,
the interest rate applicable hereunder shall be reinstated.

            4.1.4    The Lender shall determine the interest rate applicable to
the Loan hereunder, and its determination thereof shall be conclusive and
binding except in the case of manifest error.  Not later than fifteen (15) days
after the Lender's receipt of the quarterly financial statements required by
Section 9.1.1 hereof for a given Fiscal Quarter and a letter from the Borrower
requesting a change in the Applicable LIBOR Margin (the "Margin"), accompanied
by a certificate signed by the chief financial officer of Borrower computing
the Debt Service Coverage and ratio of Funded Indebtedness to Equity as of the
close of the most recently completed Fiscal Quarter, the Lender shall determine
whether such financial information indicates such a change in the Debt Service
Coverage and ratio of Funded Indebtedness to Equity as would justify a change
in the Margin and shall then notify the Borrower of such determination and of
any change in the Margin resulting therefrom.  Any change in the Margin shall
be effective retroactively as of the close of the most recently completed
Fiscal Quarter (with any additional payment or refund of interest to be made
within two Business Days after the date the Lender so notifies the Borrower of
such change) and with such new Margin to continue in effect until the
effectiveness of the next redetermination thereof.  Any determination by the
Lender of the Debt Service Coverage and ratio of Funded Indebtedness to Equity
shall be conclusive and binding upon the Borrower provided that it has been
made reasonably in good faith.  If the Borrower fails to timely submit the
quarterly financial statements, letter and certificate referred to above, the
Margin as of the close of the most recently completed Fiscal Quarter shall be
1.750%.

                     SECTION 4.2       Interest Payment Dates.  Accrued
interest on the Loan shall be paid on the Payment Dates, commencing with the
first such date following the Closing Date.

                     SECTION 4.3       Setting of Rates.  Interest rates
hereunder shall be calculated from time to time by the Lender and each such
calculation of an interest rate shall be conclusive and binding on the Borrower
in the absence of manifest error.


                                      21


<PAGE>   30

                     SECTION 4.4       Computation of Interest.  Interest on
the Loan, whether maintained as a Prime Rate Loan or a LIBOR Loan, shall be
computed on the basis of actual days elapsed and a year consisting of 360 days.

                     SECTION 4.5       Continuation and Conversion Election.
At the election of the Borrower pursuant to a Continuation/ Conversion Notice
delivered to the Lender at or before 10:00 a.m., Chicago time, the Borrower may
elect, from time to time on not less than two nor more than five Business Days'
notice:

            4.5.1  the Loan be converted from a Prime Rate Loan into a LIBOR
Loan or, subject to Section 4.5.2, from a LIBOR Loan to a Prime Rate Loan; and

            4.5.2  on the expiration of the Interest Period applicable to any
LIBOR Loan, that all of such Loan be continued as a LIBOR Loan or converted to
a Prime Rate Loan (in the absence of delivery of such notice under either this
Section 4.5.2 or Section 4.5.1, the Borrower will be deemed to have elected
that such a LIBOR Loan be converted into a Prime Rate Loan);

provided, however, that:

                     (a)     the Loan may not be continued as, or be converted
            into, a LIBOR Loan when any Default has occurred and is continuing;
            and

                     (b)     the Loan may not be made or continued as, or be
            converted into, a LIBOR Loan if, after giving effect to such
            action, the Interest Period applicable thereto shall extend beyond
            the date of any scheduled repayment of the Loan unless a sufficient
            principal amount of such Loan is being maintained as a Prime Rate
            Loan or as a LIBOR Loan having an Interest Period ending on or
            prior to the date of any such scheduled repayment to permit such
            repayment to be applied in full to a Prime Rate Loan.

                     SECTION 4.6       Funding.  In the event the Borrower
elects to obtain a LIBOR Loan, or elects to convert the principal amount of any
Prime Rate Loan to a LIBOR Loan, the Lender may, if it so elects, fulfill its
obligation to make or continue the principal amount of the Loan as, or to
convert the principal amount of any Loan into, a LIBOR Loan in accordance with
any election made by the Borrower by causing a foreign branch or Affiliate of
the Lender or an international banking facility created by the Lender to make
such LIBOR Loan; provided, however, that in such event such LIBOR Loan shall be
deemed to have been made by the Lender,



                                      22

<PAGE>   31

and the obligation of the Borrower to repay such LIBOR Loan shall nevertheless
be to the Lender and shall be deemed to be held by it, to the extent of such
LIBOR Loan, for the account of such foreign branch, Affiliate or international
banking facility.

                     SECTION 4.7       LIBOR Rate Lending Unlawful.  If at any
time due to any new law, treaty or regulation, or any interpretation thereof by
any governmental or other regulatory authority charged with the administration
thereof, or for any other reason arising subsequent to the date hereof, it
shall become unlawful for the Lender to fund a LIBOR Loan which it has
committed to make hereunder, the obligation of the Lender to provide a LIBOR
Loan shall, upon the happening of such event, forthwith be suspended for the
duration of such illegality.  If any such change shall make it unlawful for the
Lender to maintain a LIBOR Loan previously made by it hereunder, the Lender
shall, upon the happening of such event, notify the Borrower thereof in writing
stating the reasons therefor, and the Borrower shall, on the earlier of (i) the
last day of the then current Interest Period or (ii) if required by such law,
regulation or interpretation, on such date as shall be specified in such
notice, either convert such unlawful loans to Prime Rate Loan or prepay the
entire amount of a LIBOR Loan, without any penalty whatsoever to such Lender in
full.

                     SECTION 4.8       LIBOR Deposits Unavailable.  If prior to
the date on which all or any portion of the principal amount of the Loan is to
be made or continued as, or be converted into, a LIBOR Loan, the Lender shall
have determined (and telephonic notice hereof, confirmed in writing, shall have
been given to the Borrower and the Lender) that:

                     4.8.1  Dollar deposits in the relevant amount and for the
relevant Interest Period are not available to the Lender in the interbank LIBOR
market; or

                     4.8.2  by reason of circumstances affecting the interbank
LIBOR market in Dollars, adequate means do not exist for ascertaining the
interest rate applicable hereunder to such LIBOR Loan;

then, the obligations of the Lender under Section 4.5 to make or continue the
Loan as, or to convert the Loan into a LIBOR Loan shall forthwith be suspended
until the Lender shall notify the Borrower that the circumstances causing such
suspension no longer exist.

                     SECTION 4.9       Increased LIBOR Loan Costs.  The
Borrower agrees to reimburse the Lender for any increase in the cost to the
Lender of making, continuing, or maintaining (or of its


                                      23


<PAGE>   32

obligation to make, continue, or maintain) any portion of the principal amount
of any of the Loan as, or of converting (or of its obligation to convert) any
portion of the principal amount of any of the Loan into, a LIBOR Loan and for
any reduction in the amount of any sum receivable by the Lender hereunder in
respect of making, continuing, or maintaining the principal amount of the Loan
as, or converting the principal amount of the Loan into a LIBOR Loan, which
increased cost or reduced amount (a) results from a Regulatory Change and (b)
is not attributable to any tax on or measured by the overall net income of the
Lender imposed by the jurisdiction under the laws of which it is constituted or
in which it is doing business or a tax of any jurisdiction imposed by
withholding with respect to a payment hereunder.  In any such event, the Lender
shall promptly notify the Borrower thereof, stating the reasons therefor and
the additional amount required fully to compensate the Lender for such
increased cost or reduced amount.  Such additional amounts shall be payable in
full on each Payment Date occurring after they have accrued, or, if such notice
is not given to the Borrower before payment in full of the Lender's portion of
the Loan, on demand made within 90 days thereafter.  A statement as to any such
increased cost or reduced amount or any change therein (including calculations
thereof in reasonable detail) shall be submitted by the Lender and shall, in
the absence of manifest error, be conclusive and binding on the Borrower.

                     SECTION 4.10      Funding Losses.  In the event the Lender
shall incur any loss or expense (including any loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired
by such Lender to make, continue, or maintain the principal amount of the Loan
as, or to convert the Loan into, a LIBOR Loan) as a result of:

                     (a)     repayment or prepayment of the principal amount of
            a LIBOR Loan on a date other than the scheduled last day of the
            Interest Period applicable thereto;

                     (b)     any conversion of all the outstanding principal
            amount of a LIBOR Loan to a Prime Rate Loan prior to the expiration
            of the Interest Period then applicable thereto; or

                     (c)     any portion of the Loan not being continued as, or
            converted into, a LIBOR Loan in accordance with the
            Continuation/Conversion Notice given therefor;

then, upon the request of the Lender to the Borrower, the Borrower shall pay
directly to the Lender such amount as will (in the reasonable determination of
the Lender) reimburse the Lender for such loss or expense.  A statement as to
any such



                                      24

<PAGE>   33

loss or expense (including calculations thereof in reasonable detail) shall be
submitted by the Lender to the Borrower and shall, in the absence of manifest
error, be conclusive and binding on the Borrower.

                                   ARTICLE V

                                      FEES

                     SECTION 5.1       Borrower agrees to pay on the Closing
Date to the Lender for the account of the Lender the unpaid balance of the
non-refundable initial fee in the amount agreed to in the fee letter dated the
Closing Date between Borrower and the Bank.

                                   ARTICLE VI

                           MAKING OF PAYMENTS; SETOFF

                     SECTION 6.1       Making of Payments.  All payments of
principal of, or interest on, the Note and of all fees and other Liabilities
shall be made by Borrower to the Lender in immediately available Dollars.  All
such payments shall be made to such account as the Lender may from time to time
specify ("Account"), not later than 1:00 p.m, Chicago time, on the date due.
The Lender is hereby authorized to debit such Account from time to time for the
amount of any payments due hereunder when due or at any time thereafter in the
Lender's  sole discretion.  Funds received in such Account after 1:00 p.m.,
Chicago time, shall be deemed to have been received by the Lender on the next
following Business Day.

                     SECTION 6.2       Due Date Extension.  If any payment of
principal or interest with respect to the Loan falls due on a Saturday, Sunday
or other day which is not a Business Day, then such due date shall be extended
to the next following Business Day, and additional interest shall accrue and be
payable for the period of such extension.

                     SECTION 6.3       Setoff.  Borrower agrees that the Lender
shall have all rights of set-off provided by applicable law, and in addition
thereto, Borrower agrees that at any time (a) any payment or amount owing by
Borrower under or in connection with this Agreement or the Loan Documents is
then due or (b) any Default exists, the Lender may apply to the payment of such
payment or other amount, any and all balances, credits, deposits, accounts or
moneys of Borrower then or thereafter with the Lender.  The Borrower hereby
grants a security interest to secure such payments and amounts and other
Liabilities owing by the Borrower hereunder or under the Loan Documents to the
Lender in any and


                                      25


<PAGE>   34

all balances, credits, deposits, accounts, Securities or monies of the Borrower
now or hereafter with or held by Lender.

                                  ARTICLE VII

                  INCREASED COSTS AND OTHER SPECIAL PROVISIONS

                     SECTION 7.1       Increased Costs.  If, after the date
hereof, any Regulatory Change or compliance by the Lender with any request or
directive (whether or not having the force of law) of any Governmental
Authority charged with the interpretation or administration of any applicable
law, rule or regulation, shall subject the Lender to any tax, duty or other
charge or capital adequacy requirement with respect to, or shall otherwise
increase the effective cost of the Loan or the Lender's obligation to make,
issue or maintain the Loan or shall change the basis of taxation of payments to
the Lender of the principal or interest on the Loan or any other amounts due
under this Agreement in respect of the Loan, or the Lender's obligation to make
the Loan (except for changes in the rate of tax on the overall net income of
Lender), or shall impose on Lender any other condition affecting the Loan, or
the Lender's obligation to make the Loan and the result of any of the foregoing
is to increase the cost to the Lender of making, issuing or maintaining the
Loan, or to reduce the amount of any rate of return or any sum received or
receivable by the Lender under this Agreement or under the Note with respect
thereto, then upon written notice of such occurrence to Borrower by the Lender
(which notice shall contain a statement setting forth a description of such
occurrence and a description or calculation in reasonable detail of any such
increased cost or reduced amount which shall be conclusive and binding on the
Borrower in the absence of manifest error), Borrower shall pay directly to the
Lender for such additional amount or amounts as will compensate the Lender for
such increased cost or such reduction.

                     SECTION 7.2       General Funding Losses.  Borrower hereby
agrees that upon demand by the Lender (which demand shall be accompanied by a
statement setting forth the basis for the calculations of the amount being
claimed), Borrower will indemnify the Lender against any loss or expense which
Lender may sustain or incur as reasonably determined by such Lender in
accordance with the provisions of this Section 7.2, as a result of any failure
of Borrower to borrow or repay the Loan on a date specified therefor in a
notice (whether written or oral) of borrowing or repayment pursuant to this
Agreement.  For the purposes of this Section 7.2 such loss or expense shall
include an amount equal to the present value of the excess, if any, of (a) its
cost of obtaining the funds for the Loan being repaid or not borrowed for the
period from the date of such prepayment or failure to borrow to the last day of
the then current Interest Period for such Loan (or, in the case of a failure to
borrow, the Interest Period for such Loan that would have


                                      26


<PAGE>   35

commenced on the date of such failure) over (b) the amount of interest that the
Lender would have earned had they invested the entire amount of funds so
prepaid or the entire amount of funds acquired to effect, fund or maintain the
Loan not borrowed, as the case may be, in U.S.  Government Treasury Securities
with a maturity comparable to such period or Interest Period.  The present
value of such excess shall be calculated by discounting such excess to the date
of prepayment or reborrowing at the interest rate expressly borne by such U.S.
Government Treasury Securities or, if none, the effective interest rate on such
Securities.  For this purpose, all notices to the Lender pursuant to this
Agreement shall be deemed to be irrevocable.

                     SECTION 7.3       Discretion of Lender as to Manner of
Funding.  Notwithstanding any provision of this Agreement to the contrary, the
Lender shall be entitled to fund and maintain its funding of the Loan in any
manner it sees fit, it being understood however, that for purposes of this
Agreement, all determinations hereunder shall be made as if the Lender actually
funded and maintained a LIBOR Loan during each Interest Period for the Loan
through the purchase of deposits in the interbank LIBOR market having a
maturity corresponding to such Interest Period and bearing an interest date
equal to the Interbank Rate (Reserve Adjusted) for such Interest Period.

                     SECTION 7.4       Conclusiveness of Statements; Survival
of Provisions.  In making the determinations contemplated by this Article VII,
the Lender may make such reasonable estimates, assumptions, allocations and the
like that the Lender in good faith determine to be appropriate.  Upon making
any determination pursuant to this Article VII, the Lender shall provide the
Borrower with a certificate setting forth any estimates, assumptions,
allocations or other similar calculations made by the Lender in connection with
such determination.  Subject to the foregoing, determinations and statements of
the Lender pursuant to this Article VII and any certificates delivered in
connection therewith shall be conclusive absent manifest error.  The provisions
of this Article VII shall survive termination of this Agreement.

                                  ARTICLE VIII

                         REPRESENTATIONS AND WARRANTIES

            To induce the Lender to enter into this Agreement and to make the
Loan hereunder, the Borrower represents and warrants to the Lender that:

                     SECTION 8.1       Due Organization, Authorization, etc.
Each of the Borrower and the Subsidiaries of the Borrower is (i) a corporation
duly organized, validly existing and in good standing under the laws of its
state of




                                      27
<PAGE>   36

incorporation; PICOM is a stock insurance company domiciled in the State of
Michigan and holds a certificate of authority from the departments of insurance
of Illinois, Indiana, Iowa, Michigan, Ohio and Pennsylvania; PICOM-Ill. is a
stock insurance company domiciled in the State of Illinois and holds a
certificate of authority from the Illinois Department, (ii) duly qualified as a
foreign corporation to do or transact business and in good standing in each
jurisdiction where, because of the nature of its activities or properties, such
qualification is required, (iii) has the requisite corporate power and
authority and the right to own, pledge, mortgage or otherwise encumber and
operate its properties, to lease the property it operates under lease, and to
conduct its business as now and proposed to be conducted, and (iv) has obtained
all licenses (including, without limitation, the Licenses), permits, consents
or approvals from or by, and has made all filings with, and given all notices
to, all Governmental Authorities having jurisdiction, to the extent required
for such ownership, operation and conduct (including, without limitation, the
consummation of the transactions contemplated by the MEEMIC Documents, this
Agreement and the Loan Documents) where the failure to obtain such licenses,
permits, consents or approvals or to make such filings or to give such notices
would have a Material Adverse Effect.  The execution, delivery and performance
by Borrower of this Agreement and the consummation of the transactions
contemplated hereby and thereby are within the Borrower's corporate powers,
have been duly authorized by all necessary corporate action, have received all
necessary governmental and other consents and approvals (if any shall be
required), and do not and will not contravene or conflict with, or create a
lien or right of termination or acceleration under, any Requirement of Law or
Contractual Obligation binding upon the Borrower.  This Agreement and each of
the Loan Documents to which the Borrower is a party is (or when executed and
delivered will be) the respective legal, valid, and binding obligation thereof
enforceable against the Borrower as appropriate, in accordance with its
respective terms, subject to applicable bankruptcy, insolvency, moratorium and
other similar laws affecting the enforcement of creditors' rights generally and
to general principles of equity.

                     SECTION 8.2       Certain Agreements.  Borrower has
furnished to the Lender true, correct and complete copies of the Loan
Documents, the schedules hereto, the MEEMIC Documents, and any other documents
required to be delivered herewith pursuant to Section X hereof, except to the
extent such delivery has been waived by the Lender, and none of such Loan
Documents or MEEMIC Documents have been further amended, modified or revised as
of the Closing Date.  As of the Closing Date and immediately prior to and
concurrently with the making of the Loan, all representations and warranties of
the parties hereto set forth in such documents are true and correct in all
material respects, without any waiver or modification thereof and no default of
any party exists under any such document.


                                      28

<PAGE>   37

                     SECTION 8.3       Statutory Financial Statements.  (i) The
Annual Statements of PICOM and PICOM-Ill. including, without limitation, the
provisions made therein for investments and the valuation thereof, reserves,
policy and contract claims and Statutory Liabilities, as filed with the
Michigan Insurance Bureau in the case of PICOM (the "Michigan Department") and
with the Illinois Department of Insurance (the "Illinois Department") in the
case of PICOM-Ill. and delivered to Lender prior to the execution and delivery
of this Agreement, as of, and for the 1995 and 1996 Fiscal Years (collectively,
the "Statutory Financial Statements"), have been prepared in accordance with
SAP applied on a consistent basis.  Each such Statutory Financial Statement was
in compliance with applicable law when filed.  The Statutory Financial
Statements fairly present the financial position, the results of operations,
changes in equity and change in financial position of PICOM and PICOM-Ill. as
of and for the respective dates and periods indicated therein in accordance
with SAP applied on a consistent basis, except as set forth on Schedule 8.3(i).
Except for liabilities and obligations, including, without limitation,
reserves, policy and contract claims and Statutory Liabilities (all of which
have been computed in accordance with commonly accepted actuarial standards),
disclosed or provided for in the Statutory Financial Statements, PICOM and
PICOM-Ill. have not had, as of the respective dates of each of such financial
statements, any liabilities or obligations (whether absolute or contingent and
whether due or to become due) which, in conformity with SAP, applied on a
consistent basis, would have been required to be or should be disclosed or
provided for in such financial statements.  All books of account of PICOM and
PICOM-Ill. fully and fairly disclose all of the transactions, properties,
assets, investments, liabilities and obligations of PICOM and PICOM-Ill. and
all of such books of account are in the possession of PICOM and PICOM-Ill. and
are true, correct and complete in all material respects.

                     (ii)    The investments of each of PICOM and PICOM-Ill.
reflected in its Annual Statement filed with the Department with respect to
PICOM's  and PICOM-Ill.'s 1996 Fiscal Year (the "1996 Annual Statements")
comply with all applicable requirements of the Illinois Department or Michigan
Department as well as those of any other applicable jurisdiction relating to
investments in respect of which it may invest its funds.

                     (iii) The provisions made in the 1996 Annual Statements
for reserves, policy and contract claims and Statutory Liabilities are in
compliance with the requirements of the Michigan Department and Illinois
Department as well as those of any other applicable jurisdiction, and have been
computed in accordance with reasonable actuarial standards.


                                      29


<PAGE>   38

                     (iv)    Marketable securities and short term investments
reflected in the 1996 Annual Statements are valued at cost, amortized cost or
market value, as required by applicable law.

                     SECTION 8.4       Projections.  The SAP projections are
attached hereto as Schedule 8.4 (the "Projections") and involve financial
projections of annual operating budgets on a consolidated basis, consolidated
results of operations and changes in financial position for the 1997 through
2001 Fiscal Years.

                     SECTION 8.5       Borrower's Financial Information.

                     8.5.1  Prior to the making of the Loan, Borrower will
furnish to the Lender (i) an unaudited balance sheet of the Borrower and its
Subsidiaries as of a date immediately prior to the Closing and (ii) a pro forma
balance sheet of the Borrower and its Subsidiaries as of the Closing which
gives effect to the Loan and the other transactions contemplated by this
Agreement, the Loan Documents and the MEEMIC Documents, which pro forma balance
sheets appropriately reflect the financial condition of Borrower and its
Subsidiaries as of such date and are prepared in accordance with GAAP, in good
faith and based upon stated assumptions having a reasonable basis.

                     8.5.2  Except as set forth on Schedule 8.5.2, there has
been no change which would have a Material Adverse Effect in the business,
assets, operations, prospects or financial or other condition of the Borrower
and its Subsidiaries taken as a whole since December 31, 1996.  Except as set
forth on Schedule 8.5.2 hereto, no dividends or other distributions have been
declared, paid or made upon any shares of capital stock of the Borrower or its
Subsidiaries, nor have any shares of capital stock of the Borrower or its
Subsidiaries been redeemed, retired, purchased or otherwise acquired since
December 31, 1996.

                     8.5.3  With respect to any representation and warranty
which is deemed to be made after the date hereof by the Borrower, the balance
sheet and statements of operations, of shareholders' equity and of cash flow,
which as of such date shall most recently have been furnished by or on behalf
of the Borrower to the Lender for the purpose of or in connection with this
Agreement or any transaction contemplated hereby, shall have been prepared in
accordance with GAAP consistently applied (except as disclosed therein), and
shall present fairly the consolidated financial condition of the corporations
covered thereby as at the dates thereof for the periods then ended, subject, in
the case of quarterly financial statements, to normal year end audit
adjustments.


                                      30


<PAGE>   39

                     8.5.4  The financial information concerning the Borrower
set forth in the consolidated financial statements of Borrower and its
Subsidiaries filed with the Securities and Exchange Commission as part of
Borrower's Form 10K for the year ending December 31, 1996, a copy of which has
been provided to Lender, and as part of Borrower Quarterly Report on Form 10Q
for the quarter ending September 30, 1996, are true and accurate in all
material respects.  The Borrower has no reason to believe that any of the other
financial or the other information described in these financial statements or
upon which any of the foregoing are based, or any of the conclusions reached
therein, are not true and correct in all material respects.

                     SECTION 8.6       Litigation and Contingent Liabilities.
Except as set forth (including estimates of the dollar amounts involved) in
Schedule 8.6 hereto and except for claims as to which the insurer of the
Borrower or its Subsidiaries has admitted coverage in writing provided or
delivered to the Lender on or prior to Closing and which are fully covered by
insurance, no claim, litigation (including, without limitation, derivative
actions), arbitration, governmental investigation or proceeding or inquiry is
pending or, to the best of the Borrower's knowledge, threatened against
Borrower or any of its Subsidiaries (i) which would, if adversely determined,
have a Material Adverse Effect or (ii) which relates to any of the transactions
contemplated hereby, and there is no basis known to Borrower for any of the
foregoing.  Other than any liability incident to such claims, litigation or
proceedings, Borrower has no Contingent Liabilities not provided for or
referred to in the financial statements delivered pursuant to Section 8.5,
which would have a Material Adverse Effect.

                     SECTION 8.7       Absence of Default.  Neither the
Borrower nor any of its Subsidiaries are in default under any contract or
contracts to which it is a party or by which it is bound which could have a
Material Adverse Effect.

                     SECTION 8.8       Employee Benefit Plans.  Except as
described in Schedule 8.8, neither the Borrower nor any of its Subsidiaries has
established or is liable for any amounts under any Plans, Welfare Plans or
Multiemployer Plans.  During the twelve consecutive month period prior to the
Closing Date:  (i) no ERISA Event has occurred and no steps have been taken to
terminate any Plan; and (ii) no contribution failure has incurred with respect
to any Plan sufficient to give rise to a Lien under Section 302(f)(1) of ERISA
in connection with such Plan.  No condition exists or event or transaction has
occurred with respect to any Welfare Plan which could result in the incurrence
by Borrower or any of its Subsidiaries of liabilities, fines or penalties in
excess of $100,000 in the aggregate.  Except as described in Schedule 8.8,
neither Borrower or any of its Subsidiaries has any Contingent Liability with
respect to any post-retirement benefits under a Welfare Plan, other than
liability for continuation coverage described in Part 6 of Title I of ERISA.


                                      31


<PAGE>   40

                     SECTION 8.9       Investment Company Act.  Neither
Borrower nor any of its Subsidiaries is an "investment company" or a company
"controlled by an investment company," within the meaning of the Investment
Company Act of 1940, as amended.

                     SECTION 8.10      Regulations G, U and X.  Neither
Borrower nor any of its Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying Margin Stock.  None of the Borrower, any of its
Subsidiaries, any Affiliate of any of them or any Person acting on their behalf
has taken or will take action to cause the execution, delivery or performance
of this Agreement or the Note, the making or existence of the Loan or the use
of proceeds of the Loan to violate Regulations G, U or X of the F.R.S. Board.

                     SECTION 8.11      Proceeds.  The proceeds of the Loan will
be used (i) to pay the purchase price of the $21,500,000 Surplus Note issued by
MEEMIC pursuant to the MEEMIC Documents and to effectuate the MEEMIC
Transactions, (ii) to purchase equipment and computer software from MEEMIC for
no more than $1,000,000, and (iii) to pay the costs, expenses, fees and taxes
incurred by Borrower in connection with the MEEMIC Transactions and this
Agreement.  None of such proceeds will be used in violation of applicable law,
and none of such proceeds will be used, directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of buying or carrying any
Margin Stock.  Neither the Borrower nor any of its Subsidiaries will initiate
or participate as a member of a "group" (as that term is used for the purposes
of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or the rules and regulations thereunder) or as a "participant"
or a "participant in a solicitation" (as defined in Rule 14A-11 under the
Exchange Act) in (i) a tender offer for the Securities of any Person if the
board of directors (or similar body) of such Person recommends, in a Schedule
14D-9 filed under the Exchange Act, or otherwise, that holders of Securities of
such Person not tender their Securities pursuant to such tender offer or (ii)
in any solicitation of any proxy, consent or authorization for the purposes of
opposing the board of directors (or other similar body) of any Person.

                     SECTION 8.12      Insurance.  Schedule 8.12 sets forth a
true and correct summary of all insurance carried by Borrower and its
Subsidiaries.  Borrower and its Subsidiaries are adequately insured for their
benefit under policies issued by insurers of recognized responsibility.  No
notice of any pending or threatened cancellation or premium increase has been
received by Borrower or its Subsidiaries with respect to any such insurance
policies.  Borrower and its Subsidiaries are in substantial compliance with all
material conditions contained in such insurance policies.


                                      32


<PAGE>   41

                     SECTION 8.13      Material Disruptions.  Neither the
business nor the properties of Borrower or its Subsidiaries are affected, or
anticipated to be affected, by any existing event of Force Majeure or other
existing casualty which would have a Material Adverse Effect.

                     SECTION 8.14      Ownership of Properties.  On the date of
the Loan, the Borrower and its Subsidiaries will have good and marketable title
to all of their respective significant or material properties and assets, real
and personal, of any nature whatsoever.

                     SECTION 8.15      Business Locations.  Schedule 8.15 lists
each of the locations where Borrower or any of its Subsidiaries maintains an
office, a place of business or any records.

                     SECTION 8.16      Accuracy of Information.  All factual
information heretofore or contemporaneously herewith furnished by or on behalf
of Borrower or any of its Subsidiaries or to the Lender for purposes of or in
connection with this Agreement or any transaction contemplated hereby is, and
all other such factual information hereafter furnished by or on behalf of
Borrower or any of its Subsidiaries to the Lender will be, true and accurate in
every material respect on the date as of which such information is dated or
certified and not incomplete by omitting to state any material fact necessary
to make such information not misleading.

                     SECTION 8.17      Subsidiaries.  Schedule 8.17 contains a
complete list of the Borrower's Subsidiaries as of the completion of the MEEMIC
Transactions.  PICOM Insurance Agency is an inactive Michigan insurance agency
incorporated under the laws of Michigan.  PICOM Financial Services Corporation
is an inactive business corporation incorporated under the laws of Michigan.
American Insurance Management Corporation is an Indiana corporation that serves
as the attorney-in-fact for the American Medical Insurance Exchange, an Indiana
inter-insurance reciprocal exchange.

                     SECTION 8.18      MEEMIC Transactions.  The closing of the
transactions contemplated by the MEEMIC Documents will occur promptly after
funding of the Loan, and the Borrower has not waived or amended nor shall it
waive, or in any way amend, without the prior written consent of the Lender,
any provision of or any condition to the obligations to close as set forth in
any of the MEEMIC Documents.  A true and complete copy of all the MEEMIC
Documents (including all exhibits, schedules and amendments thereto) has been
delivered to the Lender, and a true and complete copy of each document
delivered at the closing of the MEEMIC Documents will be delivered to the
Lender promptly after such closing.  None of the Borrower, PICOM or, to the
best of Borrower's


                                      33


<PAGE>   42

knowledge, MEEMIC, is in default under any of the MEEMIC Documents or under any
instrument or document to be delivered in connection therewith.  The
representations and warranties made by the Borrower, PICOM and, to the best of
Borrower's knowledge, MEEMIC in the MEEMIC Documents will be true and correct
in all material respects (except for changes expressly provided for therein or
herein) on and as of the Closing Date as though made on and as of such date.

                     SECTION 8.19      Insurance Licenses.  Schedule 8.19
attached hereto lists all of the jurisdictions in which PICOM, PICOM-Ill. or
PICOM Claims Services hold licenses (including, without limitation, licenses or
certificates of authority from applicable insurance departments), permits or
authorizations to transact an insurance business (collectively, the
"Licenses").  Except as set forth on Schedule 8.19, no such License is the
subject of a proceeding for suspension or revocation or any similar
proceedings, there is no sustainable basis for such a suspension or revocation,
and no such suspension or revocation has been, to the best of Borrower's
knowledge, threatened by any licensing authority.  Except as set forth on
Schedule 8.19, neither the Borrower nor any Subsidiary has entered into any
consent, stipulation, decree or agreement that prohibits, modifies or restricts
the authority to transact business under any of the Licenses.  Schedule 8.19
indicates the line or lines of insurance which PICOM and PICOM-Ill. is
permitted to be engaged in with respect to each License therein listed.  Except
as indicated on said Schedule 8.19, neither PICOM nor PICOM-Ill. transacts any
insurance business or any surplus lines insurance business, directly or
indirectly, in any state other than those enumerated on Schedule 8.19 hereto.

                     SECTION 8.20      Broker or Finders Fees.  The Borrower
and its Subsidiaries will not pay broker's or finder's fees or any other
commission or similar fees, directly or indirectly, in connection with any of
the transactions contemplated herein except for the fees described in Schedule
8.20.

                     SECTION 8.21      Taxes.  The Borrower and each of its
Subsidiaries has filed all tax returns that are required to be filed by it, and
has paid or provided adequate reserves for the payment of all taxes, including
without limitation, all payroll taxes and federal and state withholding taxes,
and all assessments payable by it that have become due, other than those that
are not yet delinquent or that are disclosed on Schedule 8.21 and are being
contested in good faith by appropriate proceedings and with respect to which
reserves have been established, and are being maintained, in accordance with
GAAP.  There is no ongoing audit or, to the Borrower's knowledge, other
governmental investigation of the tax liability of Borrower or any of its
Subsidiaries and there is no unresolved claim by a taxing authority concerning
Borrower's or any such Subsidiary's tax liability, for any period for which
returns have been filed or were due.  As used in this Section 8.21, the term
"taxes" includes all taxes of any nature whatsoever and


                                      34


<PAGE>   43

however denominated, including, without limitation, excise, import,
governmental tax, penalties and interest thereon, imposed by any government or
instrumentality, whether federal, state, local, foreign or other.

                     SECTION 8.22      Securities Laws.  Neither Borrower nor
any Affiliate, nor anyone acting on behalf of any such Person, has directly or
indirectly offered any interest in the Note or any other Liability for sale to,
or solicited any offer to acquire any such interest from, or has sold any such
interest to any Person that would subject the issuance or sale of the Note or
any other Liability to registration under the Securities Act of 1933, as
amended.

                     SECTION 8.23      Compliance with Laws.  Neither the
Borrower nor any of its Subsidiaries is in violation of any law, ordinance,
rule, regulation, order, policy, guideline or other requirement of any
Governmental Authority which would have a Material Adverse Effect, and, to the
best of Borrower's knowledge, no such violation has been alleged and, except
where failure to do so does not have a Material Adverse Effect, each of the
Borrower and its Subsidiaries (i) has filed in a timely manner all reports,
documents and other materials required to be filed by it with any Governmental
Authority; and the information contained in each of such filings is true,
correct and complete in all respects and (ii) has retained all records and
documents required to be retained by it pursuant to any law, ordinance, rule,
regulation, order, policy, guideline or other requirement of any Governmental
Authority.

                     SECTION 8.24      Employees and Labor.  There is no unfair
labor practice complaint against Borrower or any of its Subsidiaries pending
before the National Labor Relations Board or any state or local agency nor is
there a labor strike or other labor dispute, pending on threatened, affecting
any of the foregoing which if adversely resolved would have a Material Adverse
Effect; there is no existing representation question respecting the employees
of Borrower or any of its Subsidiaries, nor are there organizational attempts
affecting any of the employees of any of the foregoing which could have a
Material Adverse Effect; there is no grievance pending or threatened affecting
the Borrower or any of its Subsidiaries.  No customer or supplier of the
Borrower or any of its Subsidiaries is involved in, or threatened with or
affected by, any labor dispute, arbitration, lawsuit or administrative
proceeding which may have a Material Adverse Effect.

                     SECTION 8.25      Solvency.  After giving effect to the
funding of the Loan, the application of proceeds thereof as contemplated by the
Loan Documents, the transactions contemplated by this Agreement and the MEEMIC
Documents and the payment of all estimated legal, investment banking,
accounting and other fees related hereto and thereto, the Borrower and each of
its Subsidiaries will be Solvent as of and on the Closing Date.


                                      35


<PAGE>   44

                     SECTION 8.26      Hazardous Material.  Neither the
Borrower, any Subsidiary nor any other Person to the Borrower's knowledge has
ever used, generated, processed, stored, disposed of, released or discharged
any Hazardous Material in, on, under, or about the Property or transported it
to or from the Property, and none of the Property contains any underground
storage tanks.  All Hazardous Materials at the Borrower's or any Subsidiary's
facilities are handled in compliance with Environmental Laws.  All Hazardous
Material is disposed of in compliance with Environmental Laws.  Neither the
Borrower nor any Subsidiary has any knowledge, and has received no
notification, administrative order, or other notice of enforcement, cleanup,
removal or other governmental or regulatory actions completed, instituted or
threatened under any Environmental Laws, or of claims made or threatened by any
Person against the Borrower, any Subsidiary, or the Property relating to
damage, contribution, cost recovery, compensation, loss or injury resulting
from any presence, release, discharge or migration of any Hazardous Material.

                     SECTION 8.27      Environmental Compliance.  The Borrower
and its Subsidiaries have obtained all permits required under all applicable
Environmental Laws, and the Borrower, its Subsidiaries and their respective
facilities are in compliance with all applicable Environmental Laws.  Neither
the Borrower nor any Subsidiary has any reason to believe that it will be
unable to obtain all required permits or maintain compliance with all
Environmental Laws, or that inability to obtain all required permits or
maintain compliance with all Environmental Laws would have a Material Adverse
Effect.

                     SECTION 8.28      Reserves  Except as disclosed in
Schedule 8.28, the insurance reserves and liabilities reflected in each of the
Annual Statements provided to Lender hereunder and established on the books of
Borrower or an Insurance Subsidiary for all future insurance policy benefits,
dividends, losses, claims and expenses make a sufficient provision for all
reasonable anticipated matured and unmatured liabilities and obligations any
such Insurance Subsidiary, under all insurance policies and reinsurance and
coinsurance agreements or other similar contracts outstanding at the foregoing
dates pursuant to which any Insurance Subsidiary had or has any liability or
obligation.  All such reserves are computed in all material respects in
accordance with applicable statutory accounting principles and generally
accepted loss reserving practices, consistently applied, are fairly stated in
accordance with sound loss reserving principles, are based on factors relevant
to the provisions in the related insurance contracts, and are in material
compliance with the requirements of the insurance laws of the applicable
jurisdiction.  Each Insurance Subsidiary owns assets which qualify as admitted
assets under applicable state insurance laws in an amount at least equal to all
of its required insurance reserves.


                                      36


<PAGE>   45

                                   ARTICLE IX

                                   COVENANTS

                     Until the Loan and all other Liabilities are paid in full,
the Borrower agrees that, unless at any time the Lender shall otherwise
expressly consent in writing, it will:

                     SECTION 9.1       Affirmative Covenants

                     SECTION 9.1.1     Reports, Certificates and Other
Information.  Furnish or cause to be furnished to the Lender:

            9.1.1(a)  GAAP Financial Statements:

                     (i)  Within 75 days after the end of each of the first
            three Fiscal Quarters of each Fiscal Year of Borrower, (A) a copy
            of the unaudited consolidated balance sheet of Borrower and its
            Subsidiaries as of the close of such quarter and the related
            consolidated statement of income and cash flows for that portion of
            the Fiscal Year ending as of the close of such quarter, and (B) a
            copy of the consolidating work sheets used to prepare the unaudited
            consolidated balance sheet, statements of income and cash flows of
            the Borrower and its Subsidiaries for such Fiscal Quarter, all
            prepared in accordance with GAAP (subject to normal year-end
            adjustments) and accompanied by the certification of the chief
            executive officer or chief financial officer of the Borrower that
            all such financial statements are complete and correct and present
            fairly in accordance with GAAP (subject to normal year-end
            adjustments) the consolidated results of operations and cash flows
            of Borrower and its Subsidiaries as at the end of such quarter and
            for the period then ended, and that there was no Default in
            existence as of such time.

                     (ii)  Within 105 days after the close of each Fiscal Year,
            a copy of the annual audited consolidated balance sheets and
            consolidated



                                      37

<PAGE>   46

            statements of income and retained earnings and cash flows of
            Borrower and its subsidiaries, together with the consolidating work
            sheets of Borrower and its Subsidiaries, which financial statements
            and consolidating work sheets shall be prepared in accordance with
            GAAP, certified (only with respect to the consolidated financial
            statements) without material qualification by the independent
            certified public accountants regularly retained by Borrower, or any
            other firm of independent certified public accountants of
            recognized national standing selected by Borrower and reasonably
            acceptable to Lender, and accompanied by a certification of the
            chief executive officer or chief financial officer of Borrower that
            all such financial statements and consolidating work sheets are
            complete and correct and present fairly in accordance with GAAP the
            consolidated financial position, the consolidated results of
            operations and cash flows of Borrower and its Subsidiaries as at
            the end of such year and for the period then ended and that there
            was no Default in existence as of such time.  Such audited
            consolidated financial statements (or other evidence acceptable to
            the Lender) shall include a statement by the Borrower's accountants
            addressed to the Borrower acknowledging that such statements are
            being provided to the Lender.

            9.1.1(b)  If requested by the Lender, copies of all federal, state,
local and foreign tax returns and reports in respect of income, franchise or
other taxes on or measured by income (excluding sales, use or like taxes) filed
by Borrower or any of its Subsidiaries.

            9.1.1(c)  SAP Financial Statements:

                     (i)  As soon as possible, but in any event within 75 days
            after the end of each Fiscal Year of PICOM, PICOM-Ill.,  and
            MEEMIC, a copy of the Annual Statement of PICOM, PICOM-Ill., and
            MEEMIC for such Fiscal Year prepared in accordance with SAP and
            accompanied by the



                                      38

<PAGE>   47

            certification of the chief financial officer or chief executive
            officer of PICOM, PICOM-Ill., and MEEMIC that such financial
            statements are complete and correct and present fairly in
            accordance with SAP the financial positions of PICOM, PICOM--Ill.,
            and MEEMIC for the period then ended and that there was no Default
            in existence as of such time.

                     (ii)  As soon as possible, but in any event within 75 days
            after the end of each of the first three Fiscal Quarters of each
            Fiscal Year of PICOM, PICOM-Ill., and MEEMIC, a copy of the
            quarterly statement of each of PICOM, PICOM-Ill., and MEEMIC for
            such Fiscal Quarter, each prepared in accordance with SAP and
            accompanied by the certification of its chief financial officer or
            chief executive officer that all such financial statements are
            complete and correct and present fairly in accordance with SAP the
            financial position of PICOM, PICOM-Ill., and MEEMIC, as the case
            may be, for the periods then ended and that there was no Default in
            existence as of such time.

                     (iii)  By April 15 of each Fiscal Year of PICOM,
            PICOM-Ill.,  and MEEMIC, an actuarial analysis of each of PICOM,
            PICOM-Ill., and MEEMIC certifying that PICOM, PICOM-Ill., and
            MEEMIC's reserves for loss and loss adjustment expense liabilities
            are computed in accordance with commonly accepted actuarial methods
            in accordance with the actuarial reserve certification required by
            the state of domicile and are fairly stated in accordance with
            sound actuarial principles, are based upon actuarial assumptions
            which are reasonable given the coverages provided, and make good
            and sufficient provision in the aggregate for all unpaid loss and
            loss adjustment expense obligations.  Such actuarial analyses shall
            be in a format acceptable to the Lender, to be submitted


                                      39


<PAGE>   48

            to the Lender by such actuary as may be reasonably acceptable to
            Lender.

            9.1.1(d)  As soon as practicable, but in any event within one
Business Day after the Borrower becomes aware of the existence of any Default,
or any development or other information which would have a Material Adverse
Effect, telephonic or telegraphic notice specifying the nature of such Default
or development or information, including the anticipated effect thereof, which
notice shall be promptly confirmed in writing within two Business Days.

            9.1.1(e)  The following certificates and other information related
              to Borrower and any Insurance Subsidiary:

                     (i)  Not later than sixty (60) days prior to the end of
            each Fiscal Year of Borrower and any Insurance Subsidiary, a copy
            of the projections of Borrower's and any Insurance Subsidiary's
            profit plans in the forms previously presented to the Lender, such
            projections to be accompanied by a certificate of the chief
            financial officer or chief executive officer to the effect that
            such projections, subject to the revisions to be made by the end of
            April of the following year, have been prepared on the basis of
            sound financial planning and insurance practice and that such
            projections are based upon reasonable estimates and assumptions,
            all of which are fair in light of current conditions, have been
            prepared on the basis of the assumptions stated therein, and
            reflect the reasonable estimate of the Borrower and any Insurance
            Subsidiary, as the case may be, of the results of operations and
            other information projected therein.

                     (ii)  As soon as received (if prepared), a copy of the
            final financial examination reports or market conduct examination
            reports by a Governmental Authority with respect to PICOM or
            PICOM-Ill. relating to the insurance business of PICOM or
            PICOM-Ill. or, if such final form is not available within three
            months after a draft form is received, then the latest draft
            thereof.


                                      40


<PAGE>   49

                     (iii)  Copies of all Insurance Holding Company System Act
            filings with Governmental Authorities by PICOM and PICOM-Ill. not
            later than one Business Day after such filings are made, including,
            without limitation, filings which give notice of declaration and
            intent to pay dividends or seek approval of Governmental
            Authorities with respect to transactions between PICOM, PICOM-Ill.,
            and each of its Affiliates.

                     (iv)  Immediately, notice of actual or threatened
            suspension, termination or revocation of, or restriction with
            respect to, any License of Borrower or any of its Subsidiaries by
            any Governmental Authority, including any request by a Governmental
            Authority which commits Borrower or any of its Subsidiaries to
            take, or refrain from taking, any action or which otherwise affects
            the authority of Borrower or any of its Subsidiaries to conduct its
            business.

                     (v)   Immediately, notice of any pending or threatened
            investigation or regulatory proceeding by any Governmental
            Authority concerning the business, practices or operations of
            Borrower or any of its Subsidiaries, including any agent or
            managing general agent thereof.

                     (vi)  Promptly, notice of any actual or proposed changes
            in the Insurance Code which governs the investments or dividend
            practices of Michigan or Illinois domiciled insurance companies
            which would have a Material Adverse Effect.

                     (vii)  (a) Promptly, notice of any termination,
            commutation, renewal, extension or, if it would have a Material
            Adverse Effect, any change or modification of any Reinsurance
            Agreements or Surplus Relief Reinsurance Agreements whether entered
            into before or after the Closing Date including Reinsurance
            Agreements, if any, which are in a runoff mode on the Closing Date;
            (b) promptly, notice of any pending or threatened dispute,
            litigation or arbitration arising out of any Surplus Relief
            Reinsurance Agreement or Reinsurance Agreement to which PICOM,
            PICOM-Ill. or



                                      41

<PAGE>   50

            MEEMIC is a party, if such dispute, litigation or arbitration would
            have a Material Adverse Effect if determined adversely to Borrower
            or such Subsidiaries; and (c) promptly, such other financial,
            actuarial and other information with respect to Surplus Relief
            Reinsurance Agreements and Reinsurance Agreements as the Lender may
            reasonably request.

                     (viii)  Promptly upon preparation thereof but no later
            than the last day of April of any year, a copy of the revisions, if
            any, referred to in subparagraph (i) above to Borrower's, PICOM's
            and MEEMIC's projections for the prior year.

                     (ix)  Promptly after the receipt thereof by PICOM,
            PICOM-Ill. or MEEMIC from the NAIC but no later than April 31 of
            any year, a copy of the results of PICOM's, PICOM-Ill.'s and
            MEEMIC's IRIS Tests and Risk Based Capital Ratios.

            9.1.1(f)  Compliance Certificates.  Within 75 days of the end of
each of the first three Fiscal Quarters of Borrower in each Fiscal Year and
within 105 days of the end of the last Fiscal Quarter of Borrower, in each
Fiscal Year, and at any other time no later than thirty (30) Business Days
following a written request of the Lender, duly completed Compliance
Certificates, signed by the chief financial officer of Borrower, containing,
among other things, a computation of, and showing compliance with, each of the
applicable financial ratios and restrictions contained in this Section 9.1 and
in Section 9.2 and to the effect that as of such date no Default has occurred
and is continuing.


            9.1.1(g)  Auditors' Materials.  Promptly upon receipt thereof,
copies of all detailed financial and management reports, regarding Borrower or
any of its Subsidiaries submitted to any of them by independent public
accountants in connection with each annual or interim audit report made by such
accountants of the books of any of them.

            9.1.1(h)  Reports to SEC.  Promptly upon the filing or making
thereof, copies of each filing and report made by Borrower or any of its
Subsidiaries with or to any securities exchange or the Securities and Exchange
Commission.


                                      42


<PAGE>   51

            9.1.1(i)  Notice of Litigation, License and ERISA Matters.
Forthwith upon learning of the occurrence of any of the following, written
notice thereof, describing the same and the steps being taken by Borrower with
respect thereto:  (i) the institution of, or any adverse determination or
materially adverse development in, any litigation, arbitration proceeding or
governmental proceeding (including any Internal Revenue Service or Department
of Labor proceeding with respect to any Plan or Welfare Plan) which would, if
adversely determined, have a Material Adverse Effect, (ii) the failure of any
Person in the Controlled Group to make a required contribution to any Plan if
such failure is sufficient to give rise to a Lien under Section 302(f)(1) or
ERISA, (iii) the institution of any steps by any entity in the Controlled Group
to withdraw from, or the institution of any steps by the Borrower or any other
Person to terminate any Plan or the taking of any action with respect to a Plan
which could result in the requirement that the Borrower or any of its
Subsidiaries furnish a bond or other security to the Plan, or the occurrence of
any event with respect to any Plan which could result in the occurrence by the
Borrower or any of its Subsidiaries of any liability, fine or penalty in excess
of $200,000 or any increase in excess of $1,000,000 in the contingent liability
of the Borrower or any of its Subsidiaries with respect to any post-retirement
Welfare Plan benefit, (iv) the commencement of any dispute which might lead to
the modification, transfer, revocation, suspension or termination of any
License or any Loan Document or (v) any event which would have a Material
Adverse Effect.

            9.1.1(j)  Insurance Reports.  Written notification 30 days prior to
any cancellation or material change in any insurance policy carried by the
Borrower or any of its Subsidiaries and within five days after receipt of any
notice (whether formal or informal) of cancellation or material change by any
of its insurers.

            9.1.1(k)  Withdrawal Liability.  With respect to each Multiemployer
Plan as to which any company in the Controlled Group may have any liability,
(i) no less frequently than annually, a written estimate (which shall be based
on information received from each such plan, it being expressly understood that
Borrower shall take all reasonable steps to obtain such information) of the
withdrawal liability that would be incurred by the Controlled Group in the
event that all companies in the Controlled Group were to completely withdraw
from that plan, and (ii) written notice thereof, as soon as it has reason to
believe (on the basis of the most recent information available to it) that the
sum of (a) the withdrawal liability that would be incurred by the Controlled
Group if all companies in the Controlled Group completely withdrew from all
Multiemployer Plans as


                                      43


<PAGE>   52

to which any Company in the Controlled Group has an obligation to contribute,
and (b) the aggregate amount of the outstanding withdrawal liability (without
unaccrued interest) incurred by the Controlled Group to Multiemployer Plans,
would exceed $1,000,000.

            9.1.1(l)  Other Information.  From time to time such other
information concerning Borrower, any Subsidiary of Borrower, MEEMIC or MEIA, as
the Lender may reasonably request.

                     SECTION 9.1.2     Corporate Existence; Foreign
Qualification.  Do and cause to be done at all times all things necessary to
(i) maintain and preserve the corporate existence of Borrower and each
Subsidiary of Borrower as separate and independent business entities, (ii) be,
and ensure that each Subsidiary of Borrower is, duly qualified to do business
and is in good standing as a foreign corporation in each jurisdiction where the
nature of its business makes such qualification necessary, (iii) comply, and
cause its Subsidiaries to comply, with all Contractual Obligations and
Requirements of Law binding upon such entity, except to the extent that the
failure to comply therewith would not, in the aggregate, have a Material
Adverse Effect and (iv) do or cause to be done all things necessary to preserve
and keep in full force and effect PICOM's and PICOM-Ill.'s  corporate
existence, including, without limitation, all Licenses or similar
qualifications required by PICOM and PICOM-Ill. to engage in the insurance
business and the surplus lines insurance business in all jurisdictions in which
PICOM or PICOM-Ill.  is so engaged.

                     SECTION 9.1.3     Books, Records and Inspections.  (i)
Maintain, and cause each of its Subsidiaries to maintain, separate and complete
records and books of account which are maintained in accordance with generally
accepted accounting principles applied on a basis consistent with those being
applied as of the Closing Date and which completely and accurately reflect all
transactions to which such Person is a Party, (ii) permit, and cause each of
its Subsidiaries to permit, access at reasonable times by Lender to its books
and records, (iii) permit, and cause each of its Subsidiaries to permit, Lender
to inspect at reasonable times its properties and operations, and (iv) permit,
and cause each of its Subsidiaries to permit, Lender to discuss its business,
operations and financial condition with its officers.

                     SECTION 9.1.4     Insurance.  (i) Maintain, and cause each
of its Subsidiaries to maintain, such insurance as may be required by law, or
otherwise by the Lender, all to such extent and against such hazards and
liabilities as is customarily maintained by prudent companies similarly
situated, a summary of which is described in Schedule 9.1.4, (ii) maintain a
sufficient amount of insurance so that neither Borrower nor any of Borrower's
Subsidiaries will be considered a co-insurer or co-insurers, and (iii) with
respect to each liability insurance policy, (a)


                                      44


<PAGE>   53

cause such policy to provide, pursuant to endorsements in form and substance
reasonably satisfactory to the Lender, that Lender is named as an additional
insured and that the insurer will give the Lender 30 days' prior written notice
of the termination or other material modification of such policy and (b) notify
the Lender within five Business Days of obtaining any new policy, or increasing
coverage under, termination, or otherwise materially modifying any existing
policy, describing in detail in such notice any such new policy, increase,
termination or modification.

                     SECTION 9.1.5     Taxes and Liabilities.  Pay, and cause
each of its Subsidiaries to pay, (a) when due all taxes, assessments and other
material liabilities except as contested in good faith and by appropriate
proceedings with respect to which reserves have been established, and are being
maintained, in accordance with GAAP as long as such contest would not have a
Material Adverse Effect and (b) all tax payments required to be paid thereby
under the Tax Sharing Agreement into the Account, except for that amount of
such payments equal to its proportionate share of the Consolidated Group Tax
Liability to be paid pursuant to the Tax Sharing Agreement for actual tax
liability of the Consolidated Group, with "Consolidated Group Tax Liability"
and "Consolidated Group" having the meanings set forth in the Tax Sharing
Agreement.

                     SECTION 9.1.6     Compliance with Laws.  Comply, and cause
each of its Subsidiaries to comply, in all material respects, with all federal,
state and local laws, rules and regulations related to its businesses or
Property (including without limitation, the establishment of all insurance
reserves required to be established under SAP and applicable laws restricting
the investments of PICOM and PICOM-Ill.).

                     SECTION 9.1.7     Maintenance of Permits.  Maintain, and
cause each of its Subsidiaries to maintain, all permits, licenses (including,
without limitation, the Licenses) and consents as may be required for the
conduct of its business by any state, federal or local government agency or
instrumentality to the extent the failure to so maintain would have a Material
Adverse Effect.

                     SECTION 9.1.8     Investments.  Except as set forth in
Schedule 9.1.8, cause the assets of each of PICOM and PICOM-Ill. to be invested
at all times so as to be in full compliance with each of the following
guidelines:

                     (i)     All investments shall be in compliance with the
            applicable Insurance Code.

                     (ii)    At least ninety percent (90%) of the Invested
            Assets shall be invested in Investment Grade Securities.


                                      45


<PAGE>   54

                     (iii)   No more than that amount of Invested Assets equal
            to three percent (3%) of Invested Assets shall, at any time, be
            invested in the Securities of any single issuer; provided, that the
            restriction in this clause (iii) shall not apply to investments in
            U.S. Government Securities or to the Surplus Note; and further
            provided that, for purposes of this clause (iii), PICOM's or
            PICOM-III.'s investment in any mutual fund shall be deemed to be
            PICOM's or PICOM-III.'s pro rata share of the investments made by
            the mutual fund and such mutual fund shall not be deemed a "single
            issuer" for purposes of this clause;

                     (iv)    If PICOM's or PICOM-III.'s investments do not
            comply with the provisions of this Section 9.1.8 for any reason,
            then PICOM or PICOM-III., as the case may be, shall have thirty
            (30) days from the date of non-compliance to correct such
            non-compliance.

                     SECTION 9.1.9     Dividends. Cause PICOM to pay aggregate
cash dividends to Borrower to make the scheduled repayments required pursuant
to Section 2.2 hereof, and permit PICOM to pay cash dividends to Borrower as
early and as often in such Fiscal Year as permitted under the Insurance Code or
by the Department in an amount, or aggregate amounts, no less than the maximum
amount which may then be paid as a dividend by PICOM in such Fiscal Year under
the Insurance Code without seeking approval from the Department for an
extraordinary dividend, or, if such approval is sought, as permitted by the
Department.

                     SECTION 9.1.10    Interest Rate Protection.  If Borrower
elects to hedge its interest expenses, maintain such hedge through an interest
rate swap, collar or cap agreement, in form and substance satisfactory to the
Lender.

                     SECTION 9.1.11    Tax Return Filings.  File and cause each
of its Subsidiaries to file on a timely basis, and cause or permit its
Subsidiaries to take no action to prevent their filing on a timely basis, for
each taxable year a consolidated federal income tax return, and if permitted by
law, a consolidated or combined state or foreign income tax return with each
other and any other party to the Tax Sharing Agreement.

                     SECTION 9.1.12    Employee Benefit Plans.  Maintain, and
cause each of its Subsidiaries to maintain, each Plan and Welfare Plan as to
which it may have any liability, in compliance in all material respects with
all applicable Requirements of Law.

                     SECTION 9.1.13    Best Rating.  Cause PICOM to have and
maintain a rating of B+ or better from A.M. Best.


                                      46


<PAGE>   55

                     SECTION 9.1.14    Environmental Matters.  Borrower and its
Subsidiaries shall:

            (a)  Not permit the Property or any portion thereof to be involved
in the use, generation, manufacture, storage, disposal or transportation of
Hazardous Material.

            (b)  Obtain and maintain all permits required under all applicable
federal, state, and local Environmental Laws.

            (c)  Keep and maintain the Property and each portion thereof in
compliance with, and not cause or permit the Property or any portion thereof to
be in violation of, any Environmental Law.

            (d)  Immediately notify the Lender in writing of:

                     (1)  Any and all enforcement, cleanup, removal or other
            governmental or regulatory actions completed, instituted or
            threatened, or notifications of potential liability issued,
            pursuant to the application of any Environmental Laws;

                     (2)  Any and all claims made or threatened by any Person
            against the Borrower, any Subsidiary or the Property relating to
            damage, contribution, cost recovery, compensation, loss or injury
            resulting from any presence, release, discharge or migration of any
            Hazardous Material (the matters set forth in this clause (2) and
            the foregoing clause 1 being hereinafter referred to as
            "Environmental  Claims");

                     (3)  Any and all settlement agreements, consent decrees or
            other compromises which the Borrower or any Subsidiary shall enter
            into with respect to any Environmental Claims; and

                     (4)  Discovery of any occurrence or condition on any real
            property adjoining or in the vicinity of the Property that could
            cause the Property or any part thereof to be subject to any
            restrictions on the ownership, occupancy, transferability or use
            thereof under any Environmental Law.  The Lender shall have the
            right to join and participate in, as a party if it so elects, any
            legal proceedings or actions initiated in connection with any
            lawsuits, claims or governmental or regulatory actions arising out
            of Environmental Claims and the Company agrees to pay the Lender's
            reasonable attorneys' fees in connection therewith.


                                      47


<PAGE>   56

            (e)  Not take any remedial action in response to the presence of
any Hazardous Material on, under, or about the Property, nor enter into any
settlement agreement, consent decree, or other compromise in respect to any
Environmental Claims, without the Lender's advance written consent which shall
not be unreasonably withheld.

                     SECTION 9.1.15    MEEMIC Demutualization and MEIA
Acquisition.  Use its best efforts to take all actions described in Schedule
9.1.15 to effectuate the demutualization of MEEMIC and acquisition of the
assets of MEIA.

                     SECTION 9.2       Negative Covenants.

                     SECTION 9.2.1     Minimum Surplus.  Not permit  PICOM's
Surplus to be less than Eighty-five Million Dollars ($85,000,000) at any time.

                     SECTION 9.2.2     NAIC IRIS Tests.  Not permit PICOM or
PICOM-III. to fail or not be in compliance with more than three IRIS Tests in
any year; provided that for purposes of this Section 9.2.2 neither PICOM nor
PICOM-III. shall not be deemed to have failed or to not be in compliance with
IRIS Test Ratio 6, which calls for a calculation of change of surplus, if the
result of such calculation is a positive number.

                     SECTION 9.2.3     Net Written Premium to Surplus.  Not
permit PICOM's average ratio of Net Written Premium to Surplus to exceed 3:1
for any rolling four Fiscal Quarters.  Such average ratio shall be measured at
the end of each Fiscal Quarter for the period of four Fiscal Quarters then
ending.

                     SECTION 9.2.4     Interest Coverage.  Not permit the ratio
of Operating Earnings of PICOM to Interest Expense of the Borrower and its
consolidated Subsidiaries to be less than 2.5:1 for any rolling four Fiscal
Quarters.  Such ratio shall be measured at the end of each Fiscal Quarter for
the period of four Fiscal Quarters then ending.

                     SECTION 9.2.5     Fixed Charges Coverage Ratio.  Not
permit the Fixed Charge Coverage Ratio to be less than 1.5:1 for any rolling
four Fiscal Quarters.  This ratio shall be measured at the end of each Fiscal
Quarter for the period of four Fiscal Quarters then ending.

                     SECTION 9.2.6     Funded Indebtedness to Equity.  Not
permit the ratio of Funded Indebtedness to Equity to exceed 0.5:1.  Such ratio
shall be measured at the end of each Fiscal Quarter.



                                      48

<PAGE>   57

                     SECTION 9.2.7     Shareholders Equity. Not permit
Borrower's shareholder's equity on a GAAP consolidated basis, excluding changes
in unrealized gains and losses, at any time to be less than $80,000,000 plus
50% of the positive after tax net income for the preceding Fiscal Year.

                     SECTION 9.2.8     Risk Based Capital Sufficiency.  Not
permit PICOM's Risk Based Capital at any time to be less than 125% of the
company action level risk based capital as defined and determined in accordance
with the risk based capital laws and regulations adopted by the State of
Michigan and the risk based capital instructions adopted by the NAIC.

                     SECTION 9.2.9     Guarantees, Loans, Advances and
Investments.  Not, and not permit any of its Subsidiaries to, become or be a
guarantor or surety of, or otherwise incur any Contingent Liability or become
or be responsible in any manner (whether by agreement to purchase any
obligations, stock, assets, goods or services, or to supply or advance any
funds, assets, goods or services, or otherwise) with respect to, any
undertaking of any other Person, or make or permit to exist any loans or
advances to, or investments in, any other Person, except for (i) the
endorsement, in the ordinary course of collection, of instruments payable to it
or to its order, (ii) other investments existing as of the date hereof and as
set forth on Schedule 9.1.8, (iii) those investments permitted by Sections
9.1.8 hereof and (iv) investments by the Borrower in Investment Grade
Securities; provided, however, that nothing in this Section 9.2.9 shall
prohibit or restrict PICOM's or PICOM-III.'s issuance of or performance under
fidelity or surety bonds or other insurance policies issued by PICOM or
PICOM-III. in the ordinary course of PICOM's or PICOM-III.'s business.

                     SECTION 9.2.10    Mergers, Consolidations and Sales.  Not,
and not permit any of its Subsidiaries to (a) without the prior written consent
of the Lender if the transaction involves $3,000,000 or if the transaction
involves more, such consents not to be unreasonably withheld, be a party to any
merger or consolidation, or purchase or otherwise acquire all or substantially
all of the assets or stock of any class of, or any partnership or joint venture
interest in, any other Person, other than partnership or joint venture
interests acquired in the ordinary course of business or (b) sell, transfer,
convey or lease all or any substantial part of its assets or sell or assign
with or without recourse any receivables, other than any sale, transfer,
conveyance or lease in the ordinary course of business without the prior
written consent of Lender, such consent not to be unreasonably withheld.

                     SECTION 9.2.11    Leases.  Not, and not permit any of its
Subsidiaries to, incur or permit to exist any Lease Obligations (other than
Lease Obligations which are cancelable at the option of Borrower, or such
Subsidiary without penalty and on no more than 90 days' notice) which require
the payment



                                      49

<PAGE>   58

of amounts of rental in excess of an aggregate, for all such Leases at any one
time outstanding, of $500,000 in any one Fiscal Year and $1,500,000 after the
closing of the MEEMIC Transactions.

                     SECTION 9.2.12    Unconditional Purchase Obligations.
Not, and not permit any of its Subsidiaries to, enter into or be a party to any
contract for the purchase of materials, supplies or other property or services,
if such contract requires that payment be made by it regardless of whether
delivery is ever made of such materials, supplies or other property or
services; provided, however, that nothing in this Section 9.2.12 shall prohibit
or restrict PICOM's or MEEMIC's issuance of or performance under surety or
fidelity bonds or other insurance policies issued by PICOM or MEEMIC in the
ordinary course of PICOM's or MEEMIC's insurance business.

                     SECTION 9.2.13    Regulations G, U and X.  Not, and not
permit any of its Subsidiaries to, use or permit any proceeds of the Loan to be
used, either directly or indirectly, for the purpose, whether immediate,
incidental or ultimate, of purchasing or carrying Margin Stock within the
meaning of Regulations G, U or X of the F.R.S. Board.

                     SECTION 9.2.14    Subsidiaries.  Not, and not permit any
of its Subsidiaries to, create or permit to exist any Subsidiary, except those
Subsidiaries in existence on the date hereof, without the prior written consent
of the Lender which consent shall not be unreasonably withheld.

                     SECTION 9.2.15    Other Agreements.  Not, and not permit
any of its Subsidiaries to, enter into any agreement containing any provision
which would be violated or breached by the performance of obligations hereunder
or under any instrument or document delivered or to be delivered by it
hereunder or in connection herewith.

                     SECTION 9.2.16    Business Activities.  Not, and not
permit any Subsidiary to, curtail, cease or terminate its present lines of
business (except for the termination of lines of business in the regular and
ordinary course of business based upon prudent business judgment) and not, and
not permit any Subsidiary to, engage in any type of business except the
business in which it is engaged as of the date hereof, the activities
incidental and related thereto and businesses substantially related or similar
to the type of business presently being conducted, without the prior written
consent of the Lender which consent shall not be unreasonably withheld, and not
permit PICOM or PICOM-III.  to (i) grant to any Person or permit any Person to
exercise any authority to bind PICOM or PICOM-III.  on any contract of
insurance (except employees of PICOM or PICOM-III., agents for PICOM or
PICOM-III. pursuant to authority granted in the regular and ordinary


                                      50


<PAGE>   59

course of business or (ii) maintain or purchase reinsurance of PICOM's or
PICOM-III.'s insurance business with or from any insurance company except (a)
insurance companies rated "A-" or better by A.M. Best & Co., other than
Underwriters at Lloyds, CNA International Reinsurance Ltd., Terra Nova
Insurance Company Ltd., UnionAmerica Insurance Company Ltd., Zurich RE (UK)
Ltd., Eisen Und Stahl Ruckversicherung AG, and Hannover Ruckversicherung AG,
(b) other insurance companies, but only to the extent that the obligations of
such other insurance companies under Reinsurance Agreements are secured by
letters of credit, trust funds, withheld funds or other security in a form
acceptable to the Lender such that PICOM is permitted to take credit for ceded
reinsurance in accordance with SAP for financial statement reporting purposes,
or (c) other insurance companies specifically approved by the Lender, which
approval shall not be unreasonably withheld.

                     SECTION 9.2.17    Transactions with Affiliates.  Not, and
not permit any Subsidiary to, enter into, or cause, suffer or permit to exist
any transaction, arrangement or contract with any of its Affiliates (including,
without limitation those requiring any fees or other payments to be made by
Borrower or any Subsidiary to an Affiliate with respect to services or those
with respect to the purchase, sale or exchange of property); except those
entered into on or before Closing which are on terms and conditions
satisfactory to the Lender and are described on Schedule 9.2.17 hereto, and
those entered into by Borrower or any Subsidiary with any other Affiliate
pursuant to the reasonable requirements of the respective business of the
Borrower or such Subsidiary, with all such transactions to be on fair and
reasonable terms which are not less favorable to the Borrower or its Subsidiary
than those otherwise reasonably attainable in a comparable arms' length
transaction from any Person which is not such an Affiliate.

                     SECTION 9.2.18    Indebtedness.  Not, and not permit any
of its Subsidiaries to, incur or permit to exist any Indebtedness except (i)
the Loans and other Liabilities; (ii) deferred taxes; (iii) current accounts
payable arising in the ordinary course of business and not overdue; (iv)
not-current accounts payable being contested in good faith and by appropriate
proceedings, and with respect to which reserves have been established, and are
being maintained, in accordance with GAAP; (v) those Hedging Obligations
entered into as a result of the transactions hereunder; and (vi) other
Indebtedness not to exceed $2,500,000 in the aggregate at any time outstanding.

                     SECTION 9.2.19    Liens.  Not, and not permit any of its
Subsidiaries to, create or permit to exist any Lien with respect to any assets
now or hereafter existing or acquired, except the following (collectively,
"Permitted Encumbrances"):  (i) Liens for current taxes not delinquent or for
taxes being contested in good faith and by appropriate proceedings and with
respect to which adequate reserves have been established, and are being
maintained, in accordance


                                      51


<PAGE>   60

with GAAP, (ii) Liens arising in the ordinary course of business  for sums
being contested in good faith and by appropriate proceedings and with respect
to which adequate reserves have been established, and are being maintained, in
accordance with GAAP, or for sums not due, and in either case not involving any
deposits or advances for borrowed money or the deferred purchase price of
property for services, (iii) Liens in connection with the acquisition of fixed
assets after the date hereof and attaching only to the property being acquired,
if the indebtedness secured thereby does not exceed 80% of the fair market
value of such property at the time of cquisition thereof nor $1,000,000 in the
aggregate at any one time outstanding, (iv) Liens as incurred in the ordinary
course of business in connection with workers' compensation, unemployment
insurance or other forms of governmental insurance or benefits, (v) mechanics',
workers', materialmen's and other like Liens arising in the ordinary course of
business in respect of obligations which are not delinquent or which are being
contested in good faith and by appropriate proceedings and with respect to
which adequate reserve have been established, and are being maintained, in
accordance with GAAP, (vi) other Liens securing Indebtedness not to exceed
$1,000,000 in the aggregate at any time outstanding, (vii) Liens in favor of
the Lender and (viii) Liens referred to in Section 6.3 hereof.

                     SECTION 9.2.20    Advances to or Investments in
Affiliates.  Other than as reflected in Schedule 9.2.20 and (i) advances and
investments made prior to the Closing Date and revealed in the financial
statements delivered under Sections 8.3 and 8.5, (ii) advances by means of tax
payments pursuant to the Tax Sharing Agreement permitted under this Agreement
and by the Borrower in the amount of its proportionate share of the
Consolidated Group Tax Liability to be paid pursuant to the Tax Sharing
Agreement for actual tax liability of the Consolidated Group, or (iii)
aggregate capital contributions to the Insurance Subsidiaries not in excess of
$5,000,000, neither Borrower, nor any Subsidiary will make or permit to exist
any investment in, or loan, advance (including, without limitation, any tax
payments under the Tax Sharing Agreements) or contribution, to, any Affiliate
of any of them during the term of this Agreement.

                     SECTION 9.2.21    Restricted Payments.  Except as
permitted in Schedule 9.2.21, not, and not permit any Subsidiary to, purchase
or redeem any share of its stock, declare or pay any dividends thereon other
than (i) dividends to be made pursuant to Section 9.1.9 hereof, and (ii) any
other cash dividends from PICOM or PICOM-III. to the Borrower, and (iii) cash
dividends from the Borrower or make any other distribution to stockholders or
set aside any funds for any such purpose.

                     SECTION 9.2.22    Negative Pledge Agreements.  Not, and
not permit any of its Subsidiaries to, create, incur, assume or suffer to exist
any


                                      52


<PAGE>   61

agreement, other than this Agreement, the Loan Documents, or agreements with
respect to the renewal or extension of the Liabilities which places any
restrictions upon the right of the Borrower or any of its Subsidiaries to sell,
otherwise dispose of or create a Lien on any of its properties now owned or
thereafter acquired other than as permitted herein.

                     SECTION 9.2.23    No Amendment of Certain Documents.  Not
agree to, enter into or permit to exist any material amendment, revision,
modification or waiver of the MEEMIC Documents, without the prior written
consent of the Lender.

                     SECTION 9.2.24    Borrower's and Subsidiaries' Stock.  Not
and not permit any Subsidiary (i) to purchase or otherwise acquire any shares
of the stock of Borrower; or (ii) to issue or cause to be issued any shares of
stock of Borrower or its Subsidiaries or any warrants, rights or other options
therefor other than that issued and outstanding as of the date hereof; and not
take any action, or permit any Subsidiary to take any action, which will result
in a decrease in the Borrower's or any Subsidiary's ownership interest in any
Subsidiary.

                     SECTION 9.2.25    Restrictions on Surplus Relief
Reinsurance Agreements.  Not permit PICOM or PICOM-III. to enter into any
Surplus Relief Reinsurance Agreement without written consent of the Lender.

                     SECTION 9.2.26    Borrower Property.  Not own any property
other than cash, cash equivalents or Investment Grade Securities and capital
stock of the Subsidiaries.

                     SECTION 9.2.27    Capital Expenditures.  Not, and not
permit any Subsidiary to, purchase or otherwise acquire (including, without
limitation, acquisition by way of a Capitalized Lease), or commit to purchase
or otherwise acquire, any fixed asset if, after giving effect to such purchase
or other acquisition, the aggregate cost of all fixed assets purchased or
otherwise acquired by the Borrower and its Subsidiaries on a consolidated basis
in any one Fiscal Year would exceed $3,000,000 in Fiscal Year 1997 and
$2,000,000 thereafter.


                                   ARTICLE X

                                   CONDITIONS

                     The obligation of the Lender to make the Loan shall be
subject to the prior or concurrent satisfaction (in form and substance
satisfactory to the Lender) of each of the conditions precedent set forth
below:


                                      53


<PAGE>   62

                     SECTION 10.1      No Default.  No Default shall have
occurred and be continuing or will result from the making of the Loan.

                     SECTION 10.2      Warranties and Representations.  All
warranties and representations contained in this Agreement and the Loan
Documents shall be true and correct as of the date of such Loan, with the same
effect as though made on the date of and concurrently with the making of such
Loan.

                     SECTION 10.3      Litigation.  In the opinion of the
Lender, in its sole and absolute discretion, (i) no litigation (including,
without limitation, derivative actions), arbitration, governmental
investigation or proceeding or inquiry shall be, on the date of the Loan,
pending, or to the knowledge of Borrower, threatened which seeks to enjoin or
otherwise prevent the consummation of, or to recover any damages or to obtain
relief as a result of, the transactions contemplated hereunder, or would be
materially adverse to, or be detrimental to the interests of, any of the
parties to this Agreement or the Loan Documents, and (ii) no material adverse
development shall have occurred in any litigation (including, without
limitation, derivative actions), arbitration, government investigation or
proceeding or inquiry disclosed in Schedule 8.6.

                     SECTION 10.4      Fees.  The fees referred to in Article V
which are due and payable on or prior to the date of the Loan shall have been
paid to the Lender.

                     SECTION 10.5      Documents.  The Lender shall have
received all of the following, each duly executed and dated the date of Closing
(or such earlier date as shall be satisfactory to the Lender), in form and
substance satisfactory to the Lender:

                     SECTION 10.5.1    Certain Related Documents.  The Note
duly executed and appropriately completed.

                     SECTION 10.5.2    Resolutions.  Certified copies of
resolutions of the Board of Directors of Borrower, authorizing the execution,
delivery and performance, respectively, of those documents and matters required
of them with respect to this Agreement or the Loan Documents to which they are
a party.

                     SECTION 10.5.3    Incumbency and Signatures.  A
certificate of the Secretary or an Assistant Secretary of the Borrower,
certifying the names of the individual or individuals authorized to sign the
Loan Documents to which they are a party, together with a sample of the true
signature of each such individual,


                                      54


<PAGE>   63

and stating that the Lender may conclusively rely on each such certificate
until formally advised by a like certificate of any changes therein.

                     SECTION 10.5.4    Opinion of Counsel.  The opinion of
counsel for the Borrower, addressed to the Lender, in the form of Exhibit D
hereto.

                     SECTION 10.5.5    Charter and By-Laws.  Certified copies
of the corporate charter and by-laws of the Borrower and each of its
Subsidiaries, with all amendments thereto.

                     SECTION 10.5.6    Insurance.  Evidence that each of
Borrower and its Subsidiaries is maintaining insurance of the type required by
this Agreement (including, without limitation, casualty, liability and workers'
compensation insurance), together with certificates of insurance naming the
Lender as an additional insured and, with respect to the Borrower, as loss
payee.  Such evidence shall include, without limitation, a certificate, in form
and substance satisfactory to the Lender and signed by the chief financial
officer of Borrower, summarizing the insurance policies carried by the Borrower
and its Subsidiaries.  The Borrower shall also deliver at the Closing any
written evidence of any coverage admitted by an insurer of the Borrower or any
of its Subsidiaries referred to in Section 8.6 hereof.

                     SECTION 10.5.7    List of Directors and Officers.  A
complete list of the officers and directors of each of Borrower and its
Subsidiaries as at the date of the Loan.  The list delivered by the Borrower
pursuant to this Section 10.5.7  shall be updated by the Borrower within five
Business Days after any change which would affect such list.  The Borrower's
obligation to update this list shall survive the Closing Date.

                     SECTION 10.5.8    Certificates.  Certificates of
compliance for PICOM and PICOM-III. from Illinois, Michigan, Indiana, Ohio and
Pennsylvania states, and certificates of good standing for each of the
Borrower's Subsidiaries from each jurisdiction in which the business of any of
such Subsidiaries requires it to be authorized or qualified to transact
business as a foreign corporation, each to be dated within ten business days
prior to the Closing Date.

                     SECTION 10.5.9    Financial Statements and Information. 
The financial statements listed in Section 8.3 and 8.5.

                     SECTION 10.5.10   Consents.  Certified copies of all
documents evidencing any necessary corporate action and of each consent,
license and approval required in connection with (i) the execution, delivery,
performance, validity and enforceability of this Agreement, the Loan Documents
and any other document provided for hereunder and the transactions contemplated
hereby and (ii)


                                      55


<PAGE>   64

the conduct by Borrower and its Subsidiaries of their businesses after the
Closing Date; including, without limitation, the approvals of the Director,
Division of Insurance of the State of Michigan and any other Governmental
Authority whose approval is required by law.  Such consents, licenses and
approvals shall be in full force and effect and be satisfactory in form and
substance to the Lender.  Lender shall also have received evidence, in form and
substance satisfactory to it, that the foregoing consents, licenses and
approvals include all those required to be obtained from the insurance
commission or department or analogous Governmental Authority in each relevant
jurisdiction.

                     SECTION 10.5.11   Actuarial Certification.  Certification
of an actuary acceptable to Lender as to the adequacy of PICOM and PICOM-III.
reserves as set forth in its Annual Statement as of December 31, 1996,
substantially in the form of Exhibit E, as delivered to the Lender prior to the
date hereof, together with a letter from such firm addressed to the Lender
acknowledging the delivery of said appraisal to the Lender and the Lender's
reliance thereon.

                     SECTION 10.5.12   MEEMIC Transactions.  Evidence
satisfactory to the Lender that the MEEMIC Transactions have been consummated
pursuant to the terms of the MEEMIC Documents without waiver of any closing
conditions thereunder other than those consented to by the Lender which consent
shall not be unreasonably withheld.

                     SECTION 10.5.13   Insurance Proceedings.  Evidence
satisfactory to the Lender that there are no insurance regulatory proceedings
pending or, to the best knowledge of the Borrower, threatened in any state.

                     SECTION 10.5.14   Labor Matters.  Evidence satisfactory to
the Lender that no labor dispute, slowdown, enforcement action or stoppage
shall be pending or threatened against the Borrower or any of its Subsidiaries,
and the Borrower and its Subsidiaries shall be in compliance with all
provisions of ERISA.

                     SECTION 10.5.15   Tax Sharing Agreements.  Evidence
satisfactory to the Lender that the Tax Sharing Agreement has been entered into
by the Borrower and its Subsidiaries on terms and conditions satisfactory to
the Lender.

                     SECTION 10.5.16   Other.  Such other documents as the
Lender may reasonably request.




                                      56
<PAGE>   65

                                   ARTICLE XI

                       EVENTS OF DEFAULT AND THEIR EFFECT

                     SECTION  11.1     Events of Default.  Each of the
following shall constitute an Event of Default under this Agreement:

                     SECTION 11.1.1    Non-Payment of Loan.  Default in the
payment within five (5) days of when due of any principal of or interest on the
Loan.

                     SECTION 11.1.2    Non-Payment of Fees, etc.  Default in
the payment when due of any other amount payable hereunder or under the Loan
Documents (other than any amount described in Section 11.1.1) and continuance
of such default until a date which is the later of five (5) days after the due
date thereof specified in a notice sent by the Lender of such due date or one
week from the date of such notice.

                     SECTION 11.1.3    Non-Payment of Other Indebtedness.  If
there shall occur any (i) default in the payment when due (subject to any
applicable grace period), whether by acceleration or otherwise, of any other
Indebtedness of, or guaranteed by, Borrower or any of its Subsidiaries if the
aggregate amount of Indebtedness of Borrower and/or any of its Subsidiaries
which is accelerated or due and payable, or which may be accelerated or
otherwise become due and payable, by reason of such default is $1,000,000 or
more, or (ii) default in the performance or observance of any obligation or
condition with respect to any such other Indebtedness of, or guaranteed by,
Borrower and/or any of its Subsidiaries if the effect of such default is to
accelerate the maturity of any such Indebtedness of $1,000,000 or more or to
permit the holder or holders of such Indebtedness of $1,000,000 or more, or any
trustee or agent for such holders, to cause with Indebtedness to become due and
payable prior to its expressed maturity.

                     SECTION 11.1.4    Other Material Obligations.  Default in
the payment when due, or in the performance or observance of, any obligation
of, or condition agreed to by, Borrower or any of its Subsidiaries with respect
to any purchase or Lease Obligation (except only to the extent that (i) such
default would not have a Material Adverse Effect on the Borrower or any of its
Subsidiaries, (ii) the existence of any such default is being contested by
Borrower in good faith and by appropriate proceedings and (iii) Borrower has
established, and is maintaining, adequate reserves therefor in accordance with
GAAP).

                     SECTION 11.1.5    Bankruptcy, Insolvency, etc.  (a)
Borrower or any Subsidiary thereof becomes insolvent or generally fails to pay,
or admits in


                                      57


<PAGE>   66

writing its inability to pay, debts as they become due; or (b) Borrower or any
Subsidiary thereof applies for, consents to, or acquiesces in the appointment
of, a trustee, receiver or other custodian or similar Person for Borrower or
any Subsidiary or any property of any thereof, or makes a general assignment
for the benefit of creditors; or (c) in the absence of such application,
consent or acquiescence, a trustee, receiver or other custodian or similar
Person is appointed for Borrower or any Subsidiary of Borrower or for a
substantial part of the property of any thereof, unless (i) Borrower or such
Subsidiary institutes appropriate proceedings to contest or discharge such
appointment within 10 days and thereafter continuously and diligently
prosecutes such proceedings and (ii) such appointment is in fact discharged
within 60 days of such appointment; or (d) bankruptcy, reorganization, debt
arrangement, or other case or proceeding under any bankruptcy or insolvency
law, or any dissolution or liquidation proceeding is commenced in respect of
Borrower or any Subsidiary, unless (i) such case or proceeding is not commenced
by Borrower or any Subsidiary, (ii) such case or proceeding is not consented to
or acquiesced in by Borrower or any Subsidiary, (iii) Borrower or such
Subsidiary institutes appropriate proceedings to dismiss such case or
proceeding within 10 days and thereafter continuously and diligently prosecutes
such proceedings and (iv) such case or proceeding is in fact dismissed within
60 days after the commencement thereof; or (e) Borrower or any Subsidiary of
Borrower takes any action to authorize, or in furtherance of, any of the
foregoing.

                     SECTION 11.1.6    Non-compliance With Certain Provisions.
Failure of Borrower to comply (after any applicable notice or grace periods)
with the provisions of any of Sections 9.1 or 9.2 which shall be deemed an
immediate Event of Default hereunder.

                     SECTION 11.1.7    Non-compliance With Other Provisions.
Failure by Borrower to comply with or to perform any provision of this
Agreement (and not constituting any Event of Default under any of the other
provisions of this Article 11) and continuance of such failure for 30 days
after notice thereof from the Lender to the Borrower.

                     SECTION 11.1.8    Warranties and Representations.  Any
warranty or representation made by or on behalf of Borrower or any Subsidiary
herein or in any of the Loan Documents or otherwise in connection herewith or
therewith is inaccurate or incorrect or is breached or false or misleading in
any material respect as of the date such warranty or representation is made; or
any schedule, certificate, financial statement, report, notice, or other
writing furnished by or on behalf of Borrower or any Subsidiary to the Lender
or the Lenders is false or misleading in any material respect on the date as of
which the facts therein set forth are stated or certified.



                                      58

<PAGE>   67

                     SECTION 11.1.9    Tax Sharing Agreements.  Any payments
made or to be made by PICOM or the Borrower pursuant to the Tax Sharing
Agreement are determined as to PICOM to be prohibited by the Insurance Code or
the Department or recharacterized by any Governmental Authority as dividends of
any of said Persons and the effect of such prohibition or recharacterization
would be a Material Adverse Effect.

                     SECTION 11.1.10   Loan Documents. At any time after the
Loan and after any applicable notice or grace period, any "Event of Default" as
defined in any of the Loan Documents shall occur or Borrower or any party to
the Loan Documents (other than the Lender) shall fail to comply with or to
perform any provision of any of the Loan Documents or any of the Loan Documents
shall fail to remain in full force and effect; or any action shall be taken to
discontinue any of the Loan Documents or to contest the validity, binding
nature or enforceability of any thereof or any Lien thereunder in favor of the
Lender for the benefit of the Lender.

                     SECTION 11.1.11   Change in Ownership.  Borrower shall
cease to own, directly or indirectly, 100% of the issued and outstanding shares
of capital stock of PICOM, PICOM-III. and PICOM Claims Services.

                     SECTION 11.1.12   Litigation.  There shall be entered
against Borrower or any of its Subsidiaries one or more judgments, awards or
decrees, or orders of attachment, garnishment or any other writ, which exceed
$1,000,000 in the aggregate at any one time outstanding, excluding judgments,
awards, decrees, orders or writs or such portion thereof (i) for which there is
full insurance and with respect to which a creditworthy insurer has assumed
responsibility in writing (on terms satisfactory to the Lender), (ii) for which
there is full indemnification (upon terms and from creditworthy indemnitors
which are satisfactory to Lender), (iii) which have been in force for less than
the applicable period for filing an appeal so long as execution is not levied
thereunder (or in respect of which Borrower or its appropriate Subsidiary shall
at the time in good faith be prosecuting an appeal or proceeding for review and
in respect of which a stay of execution or appropriate appeal bond shall have
been obtained pending such appeal or review), or (iv) against PICOM or
PICOM-III. arising in the ordinary course of its insurance or surplus lines
insurance business unless the aggregate amount of any such outstanding
judgments, awards, decrees, orders or writs exceeds at any one time $5,000,000
in the aggregate.

                     SECTION 11.1.13   Change in Regulation.  Any change is
made in the Michigan or Illinois Insurance Code or the Code affecting the
investment or dividend practices of PICOM or PICOM-III. and which results or
which may be reasonably expected to result in a Material Adverse Effect.



                                      59

<PAGE>   68

                     SECTION 11.1.14   Change in Reinsurance.  (a)  Any change
is made to the contracts by which PICOM or PICOM-III. cedes reinsurance which
may be reasonably expected to result in a Material Adverse Effect or (b) a
reinsurer of PICOM or PICOM-III. becomes or is declared insolvent or an order
of liquidation, rehabilitation, conservation or supervision is entered against
a reinsurer of PICOM or PICOM-III., or any other kind of delinquency proceeding
is commenced against such reinsurer, if such insolvency, order or proceeding
may reasonably be expected to result in a Material Adverse Effect.

                     SECTION 11.1.15   Employee Benefit Plans.  Instigation by
Borrower or any other Person to terminate a Plan if as a result of such
termination Borrower or any of its Subsidiaries could be required to make a
contribution to such Plan, or could incur a liability or obligation to such
Plan, in excess of $1,000,000, or the occurrence of a contribution failure
occurs with respect to any Plan sufficient to give rise to a Lien under Section
3012(f)(1) of ERISA (as in effect on the Closing Date); or withdrawal by one or
more companies in the Controlled Group from one or more Multiemployer Plans to
which it or they have an obligation to contribute and the withdrawal liability
(without accrued interest) to Multiemployer Plans as a result of such
withdrawal or withdrawals (including any outstanding withdrawal liability that
the Controlled Group has incurred on the date of such withdrawal) equals or
exceeds $1,000,000.

                     SECTION 11.2      Effect of Event of Default.  If any
Event of Default described in Section 11.1.1 or Section 11.1.5 shall occur, the
Loan (if not theretofore terminated) shall immediately terminate and the Note
and all other Liabilities shall become immediately due and payable, all without
notice of any kind; and, in the case of any other Event of Default, the Lender
may declare all or any portion of the Loan (if not theretofore terminated) to
be terminated and all or such portion of the Note and all other Liabilities to
be due and payable, whereupon all or such portion of the Loan (if not
theretofore terminated) shall immediately terminate and all or such portion of
the Note and all other Liabilities shall become immediately due and payable,
all without further notice of any kind.  The Lender shall promptly advise
Borrower of any such declaration but failure to do so shall not impair the
effect of such declaration.  Notwithstanding the foregoing, the effect as an
Event of Default of any event described in Section 11.1 may be waived by the
Lender in writing, except that the effect as an Event of Default of any event
described in Section 11.1.1 may be waived only by the Lender.


                                      60


<PAGE>   69

                                  ARTICLE XII

                           SUCCESSORS; PARTICIPATIONS

                     SECTION 12.1      Successors; Participations.  This
Agreement shall, upon execution and delivery by the Borrower, and acceptance by
the Lender in Chicago, Illinois, become effective and shall be binding upon and
inure to the benefit of the Borrower, the Lender and their respective
successors and assigns, except that the Borrower may not transfer or assign any
of its rights or interest hereunder without the prior written consent of
Lender.  The Lender may, without notice or consent of any kind, sell, assign,
transfer or grant participations in the Loan.  In such event each and every
immediate and successive assignee, transferee, holder or participant in the
Loan shall have the right to enforce this Agreement, the Note, and all of the
other documents or instruments executed in connection herewith, by suit or
otherwise, for the benefit of such assignee, as fully as if such assignee,
transferee, holder or participant were herein by name specifically given such
rights, powers and benefits, but the Lender shall have an unimpaired right,
prior and superior to that of any assignee, to enforce this Agreement, the
Note, and all of the other documents or instruments executed in connection
herewith for the benefit of the Lender, as to so much of the Loan as it has not
sold, assigned or transferred.

                                  ARTICLE XIII

                                    GENERAL

                     SECTION 13.1      Waiver; Amendments.  No delay on the
part of the Lender or any holder of any of the Note or other Liability in the
exercise of any right, power or remedy shall operate as a waiver thereof, nor
shall any single or partial exercise by any of them of any right, power or
remedy preclude other or further exercise thereof, or the exercise of any other
right, power or remedy.  No amendment, modification or waiver of, or consent
with respect to, any provision of this Agreement or the Note or any Loan
Document shall in any event be effective unless the same shall be in writing
and signed and delivered by the Lender, or if such amendment, modification,
waiver or consent would (i) extend the final scheduled maturity date of the
Loan, (ii) reduce the effective interest rate, fees or commissions on the Loan,
or (iii) forgive any principal of or interest, fees or commissions payable on
the Loan.  Any such amendment, modification, waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.

                     SECTION 13.2      Confirmations.  Borrower and the Lender
(or any holders of the Note) agree from time to time, upon written request
received by


                                      61


<PAGE>   70

it from the other, to confirm to the other in writing the aggregate unpaid
principal amount of the Loan then outstanding under such Note.

                     SECTION 13.3      Notices.  (a) Notices forwarded by mail
shall be deemed to have been given three days after the date sent if sent by
registered or certified mail, postage paid to the address set forth for each
party hereto on Schedule 13.3, and (b) notices given by telegram, telex or
telecopy shall be deemed to have been given when sent if addressed to the party
to whom sent, at its address as aforesaid or, as appropriate, to the telecopy
number set forth on Schedule 13.3 hereto.  The Lender shall be entitled to rely
upon all telephone notices from Borrower and Borrower shall indemnify and hold
Lender harmless from any loss, cost or expense ensuing from any such reliance,
which indemnification shall survive any termination of this Agreement.

                     SECTION 13.4      Cost, Expenses and Taxes.  Borrower
agrees to pay on demand all reasonable costs and expenses of Lender, including
the fees and expenses of counsel for Lender (including in-house counsel who are
employees of Lender) and of local counsel, if any, who may be retained by said
counsel and all costs of appraisals, surveys, environmental reviews and the
like required to be made or completed, in connection with the preparation,
execution, delivery, administration, syndication, assignment or participation
of this Agreement, the Loan Documents and all other instruments or documents
provided for herein or delivered or to be delivered hereunder or in connection
herewith, except for such syndications, assignments or participations by a
Lender other than Lender.  Borrower further agrees to pay all costs and
expenses, including the reasonable fees and legal expenses of counsel for
Lender (including in-house counsel of Lender who are employees thereof)
incurred by Lender in connection with the enforcement, waiver or amendment of
this Agreement, the Loan Documents and any such other instruments or documents.
In addition, Borrower agrees to pay, and to save the Lender harmless from all
liability for, any document, stamp, filing, recording, mortgage or other taxes
which may be payable in connection with the execution, delivery, recording or
filing of this Agreement or any of the Loan Documents, the borrowings hereunder
or of any other instruments or documents provided for herein or delivered or to
be delivered hereunder or in connection herewith.  All obligations provided for
in this Section 13.4 shall survive any termination of this Agreement.

                     SECTION 13.5      Indemnification.  (a)  In consideration
of the Lender's execution and delivery of this Agreement and the Lender's
extension of the Loan, Borrower hereby agrees to indemnify, exonerate and hold
the Lender and the Lender's respective officers, directors, employees, persons
controlling or controlled by any of them and their respective agents,
consultants, attorneys and advisors (herein collectively called for purposes of
this Section 13.5 "Indemnified Parties" and individually called an "Indemnified
Party") free and harmless from the



                                      62

<PAGE>   71

against any and all claims, demands, actions, causes of action, suits, losses,
costs (including, without limitation, all documentary, recording, filing,
mortgage or other stamp taxes or duties), charges, liabilities, claims and
damages, and expenses in connection therewith (irrespective of whether such
Indemnified Party is a party to the action for which indemnification hereunder
is sought), and including, without limitation, reasonable legal fees,
disbursements and any reasonable out-of-pocket expenses (called in this clause
(a) the "Indemnified Liabilities"), to which any of the Indemnified Parties may
become subject, whether directly or indirectly, that result or arise from, or
relate to (i) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan or involving any Loan,
(ii) the negotiation, preparation, execution, delivery, performance or
enforcement of this Agreement, the Loan Documents and any instrument, document
or agreement executed pursuant thereto by any of Indemnified Parties, (iii) the
Indemnified Parties' furnishing of funds to the Borrower or (iv) any other
matter related thereto, except for any such Indemnified Liabilities arising on
account of the relevant Indemnified Party's gross negligence or willful
misconduct and, to the extent that the foregoing undertaking may be
unenforceable for any reason, Borrower agrees to make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.

                     (b)  Without limiting the generality of the indemnities
set out in the preceding clause (a) Borrower hereby further agrees to
indemnify, exonerate and hold Lender and all Indemnified Parties free and
harmless from and against any claims, demands, actions, causes of action,
suits, losses, costs, charges, liabilities and damages, and expenses in
connection therewith, including, without limitation, counsel fees (called in
this clause (b) the "Indemnified Liabilities") under federal or state
securities law or otherwise (i) arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement, prospectus or offering memorandum or in any preliminary
prospectus or preliminary offering memorandum or any amendment or supplement to
any thereof or in any other writing prepared by or at the direction of the
Borrower in connection with the offer, sale or resale of any securities of
Borrower or any of its respective Subsidiaries, or (ii) arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated or necessary to make the statements therein not misleading.  If
and to the extent that the foregoing undertakings in this paragraph may be
unenforceable for any reason, Borrower agrees to make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities which is
permissible under applicable law.

                     (c)  All obligations provided for in this Section 13.5
shall survive any termination of this Agreement and shall not be reduced or
impaired by any investigation made by or on behalf of the Lender or any
Indemnified Party.



                                      63

<PAGE>   72

                     SECTION 13.6      Submission to Jurisdiction.  The Lender
may enforce any claim arising out of this Agreement or the Loan Documents in
any state or federal court having subject matter jurisdiction and located in
Chicago, Illinois.  For the purpose of any action or proceeding instituted with
respect to any such claim, Borrower hereby irrevocably submits to the
jurisdiction and exclusive venue of such courts.  Borrower hereby irrevocably
designates PICOM Insurance Company of Illinois, with offices on the date hereof
at 715 Enterprise Drive, Oak Brook, IL 60521-1974, Attention:  Valerie G.
Purdy, Vice President, to receive for and on behalf of Borrower service of
process in Illinois.  Borrower further irrevocably consents to the service of
process in Illinois.  Borrower further irrevocably consents to the service of
process out of said courts by mailing a copy thereof, by registered mail,
postage prepaid, to Borrower and agrees that such service, to the fullest
extent permitted by law, (i) shall be deemed in every respect effective service
of process upon it in any such suit, action or proceeding and (ii) shall be
taken and held to be valid personal service upon and personal delivery to it.
Nothing herein contained shall affect the right of the Lender to serve process
in any other manner permitted by law or preclude the Lender from bringing an
action or proceeding in respect hereof in any other country, state or place
having jurisdiction over such action.  Borrower hereby irrevocably waives, to
the fullest extent permitted by law, any objection which it may have or
hereafter have to the laying of the venue of any such suit, action or
proceeding brought in any such court located in Chicago, Illinois and any claim
that any such suit, action or proceeding brought in such a court has been
brought in an inconvenient forum.

                     SECTION 13.7      Governing Law.  This Agreement, the Loan
Documents and the Note shall be a contract made under and governed by the
internal laws of the State of Illinois without regard to conflict of laws
principles.  Whenever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement.  All obligations of Borrower and
rights of the Lender expressed herein or in the Loan Documents shall be in
addition to and not in limitation of those provided by applicable law or in any
other written instrument or agreement relating to any of the Liabilities.

                     SECTION 13.8      Jury Trial.  THE BORROWER HEREBY
EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT OR ANY OF THE LOAN DOCUMENTS
TO WHICH IT IS A PARTY, OR UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR
AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION
THEREWITH OR


                                      64


<PAGE>   73

ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY
LOAN DOCUMENTS, AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED
BEFORE A COURT AND NOT BEFORE A JURY.

                     SECTION 13.9      Successors and Assigns.  This Agreement
shall be binding upon Borrower and the Lender and their respective successors
and assigns, and shall inure to the benefit of Borrower and the Lender and
their respective successors and assigns; provided, however, that Borrower shall
have no right to assign its rights or delegate its duties under this Agreement.
This Agreement and the Loan Documents contain the entire agreement of the
parties hereto with respect to the matters covered hereby.

                     SECTION 13.10     Counterparts.  This Agreement may be
executed in any number of counterparts, each of which shall be deemed an
original and all of which together shall constitute one original hereof.

                     Delivered at Chicago, Illinois, as of the day and year
first above written.

                           
                           PROFESSIONALS INSURANCE COMPANY MANAGEMENT GROUP


                                       By: R. Kevin Clinton
                                           --------------------------------
                                          Name: R. Kevin Clinton
                                                ---------------------------
                                          Its:  Chief Financial Officer
                                                ---------------------------

                                       LASALLE NATIONAL BANK N.A.,


                                       By:  Janet R. Gates
                                            --------------------------------
                                          Name: Janet R. Gates
                                                ----------------------------
                                          Its:  First Vice President
                                                ----------------------------


                                      65

<PAGE>   74

                         EXHIBIT A TO CREDIT AGREEMENT

               COMPLIANCE CERTIFICATE OF CHIEF FINANCIAL OFFICER



     The undersigned, Professionals Insurance Company Management Group, a
Michigan corporation (the "Borrower"), hereby certifies to LaSalle National
Bank (the "Lender")  pursuant to that certain Credit Agreement dated April 4,
1997 between the Lender and the Borrower (the "Credit Agreement"), as follows:

     1. No Default or Event of Default has occurred and is continuing without
cure or waiver in writing by the Lender under the Credit Agreement.

     2. None of the covenants or agreements of the Borrower set forth in
Section 9 of the Credit Agreement are currently being breached or violated,
including, without limitation Sections 9.18, 9.2.1, 9.2.2, 9.2.3, 9.2.4, 9.2.5,
9.2.6, 9.2.7 and 9.2.8 of the Credit Agreement for which calculations using
true and accurate financial information of the Borrower proving compliance with
such covenants are set forth below:

                          [Insert Calculations Proving
                        Compliance with Above Covenants]

     The undersigned Chief Financial Officer of the Borrower has been duly
authorized by all necessary action to execute this Certificate on behalf of the
Borrower.

Date: _______________, 1997

                                               PROFESSIONALS INSURANCE
                                               COMPANY MANAGEMENT GROUP



                                               By:______________________________

                                               Name:___________________________
                                               Title: Chief Financial Officer

<PAGE>   75

                         EXHIBIT B TO CREDIT AGREEMENT

                         CONTINUATION/CONVERSION NOTICE
                         ------------------------------

LaSalle National Bank
135 South LaSalle Street
Chicago, IL    60603

                 Re:      Credit Agreement dated April 4, 1997

Ladies and Gentlemen:

         Pursuant to Section 4.5 of the captioned Credit Agreement between us,
as Borrower, and you, as Lender thereunder (the "Credit Agreement") we hereby
give you notice of our election, to be effective on _____________, 1997 (the
"Effective Date"):

[SELECT APPLICABLE ELECTION]

(1)      to convert the Loan from a Prime Rate Loan into a LIBOR Loan, with an
Interest Period therefor beginning on the Effective Date and continuing for
[one/two/three/six/twelve] months thereafter.

(2)      to convert the LIBOR Loan for which the applicable Interest Period
therefor expires _____________, 19___, from a LIBOR Loan to a Prime Rate Loan.

(3)      to continue the LIBOR Loan for which the applicable Interest Period
therefor expires __________, 19____, as a LIBOR Loan with an Interest Period
therefor beginning on the Effective Date and continuing for
[one/two/three/six/twelve] months thereafter.

The foregoing election is subject to the provisions, restrictions and
conditions of the Credit Agreement.  Defined terms used herein are used as
defined in the Credit Agreement.

         This Notice is given not less than two nor more than five Business
Days' prior to the Effective Date.  No Default or Event of Default has occurred
and is continuing without cure or waiver in writing by the Lender under the
Credit Agreement.
<PAGE>   76

         The undersigned officer has been duly authorized by all necessary
action to execute this Notice on behalf of the Borrower.

Date:______________________


                                               PROFESSIONALS INSURANCE
                                               COMPANY MANAGEMENT GROUP



                                               By: _____________________________

                                               Name: __________________________ 
      
                                               Title: _________________________


                                     -2-
<PAGE>   77


                         EXHIBIT C TO CREDIT AGREEMENT

                                PROMISSORY NOTE


$22,500,000                                                     April 4, 1997


         Professionals Insurance Company Management Group, a Michigan
corporation ("Maker"), for value received, hereby promises to pay to the order
of LaSalle National Bank (the "Bank"), the principal sum of Twenty Two Million
Five Hundred Thousand ($22,500,000), or, if less, the aggregate unpaid
principal amount of the Loan made to the Maker by the Bank pursuant to the
Credit Agreement referenced below.  The principal amount of the Loan shall be
payable in an amount equal to the amount shown below opposite such date
(subject to adjustment for voluntary prepayments as described in the Credit
Agreement):

<TABLE>
<CAPTION>
                                  <S>                                                     <C>
                                   Annual Payment Dates                                    Amount Per Payment
                                   --------------------                                    ------------------
                                      April 30, 1998                                          $ 2,500,000
                                      April 30, 1999                                          $ 2,500,000
                                      April 30, 2000                                          $ 3,000,000
                                      April 30, 2001                                          $ 3,000,000
                                      April 30, 2002                                          $ 3,500,000
                                      April 30, 2003                                          $ 3,500,000
                                      April 30, 2004                      $ 4,500,000 or, if less, the aggregate outstanding
                                                                          principal amount of the Loan then outstanding.
</TABLE>
                                       
This Note shall bear interest (computed on the basis of a 360 day year) on any
and all principal amounts remaining unpaid hereunder from time to time, from
the date hereof until maturity, at an interest rate per annum determined in
accordance with Article IV of the Credit Agreement.  Any amount of interest or
principal hereof which is not paid when due, whether at maturity, by
acceleration or otherwise, shall bear interest payable on demand at a
fluctuating annual interest rate equal at all times to the applicable Default
Rate as defined in the Credit Agreement.  If, at any time, the applicable
interest rate hereunder is deemed by any competent court of law, governmental
agency, board, commission or tribunal, to exceed the maximum rate of interest
permitted by applicable law, then, for such time as the applicable interest
rate hereunder would be deemed excessive, such interest rate shall be
suspended, and this
<PAGE>   78


Note shall bear interest at the maximum rate permissible under such applicable
law, but thereafter, the former applicable interest rate hereunder shall be
reinstated.

         This Note may be prepaid in whole or in part at any time or from time
to time in accordance with the terms of the Credit Agreement.  All payments
hereunder shall be applied first to interest on the unpaid balance at the rate
herein specified or referred to and then to principal.  All payments of
principal and interest on this Note shall be payable in lawful money of the
United States of America at the offices of LaSalle National Bank located at 135
South LaSalle Street, Chicago, Illinois 60603, or at such other place as the
holder of this Note may designate in writing to the undersigned.  Except as
otherwise set forth in the Credit Agreement, if any payment of principal or
interest hereunder shall become due on a Saturday, Sunday or business holiday
under the laws of the State of Illinois or the United States of America, such
payments shall be made on the next succeeding business day and such extension
shall be included in computing any interest in respect of such payment.

         This Note is the Note referred to in, and evidences certain
indebtedness incurred by the Maker to the Bank under, that certain Credit
Agreement dated April 4, 1997 between the Bank and the Maker (together with any
amendments, extensions, modifications, renewals, restatements and substitutions
thereof and therefor, being referred to herein, collectively, as the "Credit
Agreement"), to which reference is hereby made for a statement of the terms and
conditions under which the due date of this Note or any payment thereon may be
accelerated.  The holder of this Note is entitled to all of the benefits and
security provided in said Credit Agreement and the Loan Documents referred to
therein.  The Maker agrees to pay all costs of collection and all reasonable
attorneys' fees paid or incurred in enforcing any of the Bank's rights
hereunder, under the Credit Agreement, or under any Loan Documents referred to
therein promptly on demand of the Bank.

         EXCEPT TO THE EXTENT PROVIDED IN THE CREDIT AGREEMENT, THE MAKER
HEREBY WAIVES DEMAND, PRESENTMENT, PROTEST, NOTICE OF PROTEST, NOTICE OF
DISHONOR OR DEFAULT AND ANY OTHER NOTICE OR DEMAND OF WHATSOEVER KIND OR NATURE
IN CONNECTION WITH THIS NOTE AND THE LOANS EVIDENCED HEREBY.  THE MAKER HEREBY
CONSENTS TO THE JURISDICTION OF ANY FEDERAL, STATE OR LOCAL COURT LOCATED
WITHIN COOK COUNTY, ILLINOIS AND WAIVES ANY RIGHT TO TRIAL BY JURY AND ANY
OBJECTION TO VENUE WITH RESPECT TO ANY ACTION INSTITUTED HEREUNDER OR UNDER THE
CREDIT AGREEMENT.  THE MAKER HEREBY FURTHER WAIVES PERSONAL SERVICE OF ANY
PROCESS OR PAPERS TO BE SERVED IN ANY SUCH ACTION AND AGREE THAT ANY SUCH
SERVICE MAY BE MADE BY MAILING SUCH PROCESS OR PAPERS, POSTAGE PREPAID AND
ADDRESSED TO THE MAKER AT THE ADDRESS SET FORTH BELOW AND TO THE MAKER'S
REGISTERED AGENTS, BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
IN WHICH





                                      -2 -
<PAGE>   79


CASE SUCH PROCESS OR PAPERS SHALL BE DEEMED RECEIVED FIVE (5) DAYS THEREAFTER,
OR BY OVERNIGHT MAIL OR EXPRESS DELIVERY SERVICE, IN WHICH CASE SUCH PROCESS OR
PAPERS SHALL BE DEEMED RECEIVED ONE (1) DAY THEREAFTER.


                                        MAKER:
      
                                        PROFESSIONALS INSURANCE COMPANY
                                        MANAGEMENT GROUP,
                                        a Michigan corporation

MAILING ADDRESS:
4295 Okemos Road                        By:
Box 2510                                    ___________________________________
Okemos, Michigan   48805-2510           Name: ________________________________
                                        Title: _________________________________





                                      -3 -
<PAGE>   80


                         EXHIBIT D TO CREDIT AGREEMENT


                        [Letterhead of Miller Canfield]




                               ____________, 1997


LaSalle National Bank
135 South LaSalle Street
Chicago, Illinois  60697

Ladies and Gentlemen:

         We have acted as counsel to Professionals Insurance Company Management
Group, a Michigan corporation ("Borrower"), in connection with the preparation,
execution and delivery of the Credit Agreement dated as of
____________________, 1997 ("Credit Agreement") (together with the documents
referred to therein as the "Loan Documents") between the Borrower and LaSalle
National Bank ("Lender"). This opinion is rendered to you pursuant to the Loan
Documents.  Capitalized terms used herein and not otherwise defined will have
the respective meanings ascribed to them in the Credit Agreement.

         In connection with this opinion, we have examined and are familiar
with originals or copies, certified or otherwise identified to our
satisfaction, of such documents as we have deemed necessary or appropriate as a
basis for the opinions hereinafter set forth.

         In examining such documents, we have assumed the genuineness of the
signatures of all parties other than the Borrower, the authenticity of all
documents purporting to be originals and the conformity to originals of all
documents purporting to be copies.

         Based upon the foregoing and subject to the qualifications set forth
below, we are of the opinion that:

        1.       Each of the Borrower and its Subsidiaries (a) is a corporation
duly organized, validly existing and in good standing under the laws of its
state of incorporation and (b) is duly qualified as a foreign corporation to do
or transact business in, and is in good standing under the laws of, each
jurisdiction in which the ownership or lease of its respective property or the
conduct of its respective 

<PAGE>   81

LaSalle National Bank
______________, 1997
Page 2 

business requires such qualification, except for jurisdictions in which failure
by it to so qualify would not have a Material Adverse Effect.

        2.       PICOM is a stock insurance company domiciled in the State of
Michigan and holds a certificate of authority from the departments of insurance
of Illinois, Indiana, Iowa, Michigan, Ohio and Pennsylvania; PICOM-Ill. is a
stock insurance company domiciled in the State of Illinois and holds a
certificate of authority from the Illinois Department.

        3.       The Borrower has the requisite power and authority (a) to own
or lease and pledge or grant a security interest in its assets or properties
and to operate its properties and to conduct its business as currently operated
and conducted; (b) has obtained all licenses (including, without limitation,
the Licenses), permits, consents or approvals from or by, and has made all
filings with, and given all notices to, all Governmental Authorities having
jurisdiction, to the extent required for such ownership, operation and conduct
(including, without limitation, the consummation of the transactions
contemplated by the MEEMIC Documents, the Credit Agreement and the Loan
Documents) where the failure to obtain such licenses, permits, consents or
approvals or to make such filings or to give such notices would have a Material
Adverse Effect; and (c) to execute, deliver and enter into, to incur and
perform its obligations under and to create such liens and security interests
in favor of the Lender as are provided for in the Loan Documents to which it is
a party or signatory.

        4.       The Loan Documents to which the Borrower is a party or
signatory, the transactions provided for therein and the Borrower's execution,
delivery and entry into, incurrence and performance of the Borrower's
respective obligations under, and creation of the liens and security interests
in favor of the Lender as are provided for in the Loan Documents to which it is
a party or signatory (a) have been duly and validly authorized by all necessary
action; (b) do not and will not violate, conflict with or result in a violation
or breach of, accelerate any performance required by the Borrower under, or
create or impose any lien, security interest or other encumbrance on any of the
Borrower's properties or assets (except as provided in and pursuant to the Loan
Documents) by reason of the terms of (i) the certificate or articles of
incorporation or bylaws of the Borrower; (ii) any law, rule or regulation of
any Governmental Authority applicable to any of or by or to which Borrower or
its properties are bound or subject; or (iii) to the best of our knowledge, any
order, writ, judgment, injunction or decree of any court or any other
Governmental Authority, or any indenture, mortgage, deed of trust, lease,


<PAGE>   82

LaSalle National Bank
______________, 1997
Page 3


security agreement or any other instrument or agreement to which the Borrower
is a party or subject or by which the Borrower or its properties is bound; and
(c) do not and will not require any consent, license, authorization, waiver,
approval, withholding of disapproval, filing with any court, Governmental
Authority or other Person not already obtained or filed as of the date hereof.

        5.       The Loan Documents have been duly executed and delivered
thereby and constitute the legal, valid and binding obligations of the
Borrower, enforceable against the Borrower in accordance with their respective
terms, subject only to (i) bankruptcy, insolvency, reorganization, moratorium,
arrangement or similar laws relating to or affect the rights of creditors
generally; and (ii) general principles of equity with respect to availability
of equitable remedies, regardless of whether enforcement is sought in
proceedings at law or in equity.

         6.      Neither Borrower nor any of its Subsidiaries is an "investment
company" or a company "controlled by an investment company," within the meaning
of the Investment Company Act of 1940, as amended.

         7.      To the best of our knowledge, (i) Schedule 8.19 attached to
the Credit Agreement lists all of the jurisdictions in which PICOM, PICOM-III.,
or PICOM Claims Services holds Licenses except where the failure to have such
License would not have a Material Adverse Effect; (ii) except as set forth on
said Schedule 8.19, no such License is the subject of a proceeding for
revocation, cancellation, modification, restriction or suspension or any
similar proceeding, and no such revocation, cancellation, modification,
restriction or suspension has been threatened by any licensing authority or any
other Governmental Authority; (iii) said Schedule 8.19 indicates the line or
lines of insurance which are permitted to be engaged in with respect to each
License therein listed; (v) the Borrower has not entered into any consent,
stipulation, decree or agreement that prohibits, modifies, or restricts the
authority to transact business under any of the Licenses.  The execution and
delivery of and performance by the Borrower of the Loan Documents will not
result in any revocation, cancellation, modification, restriction or suspension
of any such License.

         8.      Neither Borrower nor any of its Subsidiaries is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying Margin Stock.  None
of the Borrower, any of its Subsidiaries, any Affiliate of any of them or any
Person acting on their behalf has taken or will take action to cause the
execution, delivery or performance of the 


<PAGE>   83
LaSalle National Bank
______________, 1997
Page 4

Credit Agreement or the Note, the making or existence of the Loan or
the use of proceeds of the Loan to violate Regulations G, U or X of the F.R.S. 
Board.

         9.      To the best of our knowledge, neither the Borrower nor any of
its Subsidiaries is in violation of any law, ordinance, rule, regulation,
order, policy, guideline or other requirement of any Governmental Authority
which would have a Material Adverse Effect, and, to the best of Borrower's
knowledge, no such violation has been alleged and, except where failure to do
so does not have a Material Adverse Effect, each of the Borrower and its
Subsidiaries (i) has filed in a timely manner all reports, documents and other
materials required to be filed by it with any Governmental Authority; and the
information contained in each of such filings is true, correct and complete in
all respects and (ii) has retained all records and documents required to be
retained by it pursuant to any law, ordinance, rule, regulation, order, policy,
guideline or other requirement of any Governmental Authority.

         10.     To the best of our knowledge, no claim, litigation (including,
without limitation, derivative actions), arbitration, governmental
investigation or proceeding or inquiry is pending or, threatened against
Borrower or any of its Subsidiaries (i) which would, if adversely determined,
have a Material Adverse Effect or (ii) which relates to any of the transactions
contemplated in the Credit Agreement or MEEMIC Documents.

         11.     To the best of our knowledge, neither the Borrower nor any of
its Subsidiaries are in default under any contracts to which it is a party or
by which it is bound which could have a Material Adverse Effect.

         [12.    The MEEMIC Transactions have been completed in all material
respects in accordance with the terms of the MEEMIC Documents, and all
consents, authorizations, orders, or approvals of any filings with any
Governmental Authority required to be obtained or made prior to the
consummation of the MEEMIC Transactions have been so obtained or made.]

         The opinions hereinbefore expressed are limited by principles of
equity which may limit the availability of certain rights and remedies, and do
not reflect the effect of bankruptcy, insolvency, reorganization, moratorium
and other laws applicable to creditors' rights and debtors' obligations
generally.

<PAGE>   84

LaSalle National Bank
______________, 1997
Page 5

         This letter may be relied on by the Lender and its respective
successors and permitted assigns and participants.

                                           Very truly yours,
 
                                           MILLER CANFIELD