Document:

Exhibit 10.21

 

FLOATING
RATE SURPLUS NOTE DUE 2034

 

THIS SECURITY IS A
GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND
IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST COMPANY (“DTC”) OR A NOMINEE
OF DTC.  THIS SECURITY IS EXCHANGEABLE
FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN DTC OR ITS NOMINEE
ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER
OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY DTC TO A
NOMINEE OF DTC OR BY A NOMINEE OF DTC TO DTC OR ANOTHER NOMINEE OF DTC) MAY BE
REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

 

UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE
& CO. OR IN SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE
OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL
INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.

 

THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND SUCH SECURITIES,
AND ANY INTEREST THEREIN, MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.  EACH PURCHASER OF ANY SECURITIES IS HEREBY
NOTIFIED THAT THE SELLER OF THE SECURITIES MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A UNDER
THE SECURITIES ACT.

 

THE HOLDER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITIES MAY
BE OFFERED, RESOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY, (II) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER”
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (III) TO AN INSTITUTIONAL “ACCREDITED INVESTOR”
WITHIN THE MEANING OF SUBPARAGRAPH (a) (1), (2), (3) OR (7) OF RULE 501 UNDER
THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT, OR FOR
THE ACCOUNT OF AN “ACCREDITED INVESTOR,” FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY

 

 

DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, (IV)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR (V)
PURSUANT TO AN EXEMPTION FROM THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND, IN THE CASE OF (III) OR (V), SUBJECT TO THE
RIGHT OF THE COMPANY TO REQUIRE AN OPINION OF COUNSEL AND OTHER INFORMATION
SATISFACTORY TO IT AND (B) THE HOLDER WILL NOTIFY ANY PURCHASER OF ANY
SECURITIES FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.

 

THE SECURITIES WILL BE ISSUED
AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF
NOT LESS THAN $100,000. TO THE FULLEST EXTENT PERMITTED BY LAW, ANY ATTEMPTED
TRANSFER OF SECURITIES, OR ANY INTEREST THEREIN, IN A BLOCK HAVING AN AGGREGATE
PRINCIPAL AMOUNT OF LESS THAN $100,000 AND MULTIPLES OF $1,000 IN EXCESS
THEREOF SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED
NOT TO BE THE HOLDER OF SUCH SECURITIES FOR ANY PURPOSE, INCLUDING, BUT NOT
LIMITED TO, THE RECEIPT OF PRINCIPAL OF OR INTEREST ON SUCH SECURITIES, OR ANY
INTEREST THEREIN, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO
INTEREST WHATSOEVER IN SUCH SECURITIES.

 

THE HOLDER OF THIS SECURITY, OR ANY INTEREST THEREIN,
BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT
IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT
SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED (“ERISA”), OR SECTION
4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH A “PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN
ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON
INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS SECURITY OR ANY
INTEREST THEREIN. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST
THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF
THAT IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF
ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR
OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER
PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO
FINANCE SUCH PURCHASE.

 

 

Cusip No.  023414 AA 3

 

AmCOMP Preferred Insurance Company

 

Surplus Note due 2034

 

	
  No. 1

  	
   

  	
  $10,000,000

  

 

AmCOMP Preferred
Insurance Company, a stock insurance company organized and existing under the
laws of Florida (hereinafter
called the “Company,” which term includes any
successor Person under the Indenture hereinafter referred to), for value
received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of Ten Million Dollars ($10,000,000) or such other principal
amount represented hereby as may be set forth in the records of the Securities
Registrar hereinafter referred to in accordance with the Indenture on April 29,
2034.  The Company further promises to
pay interest on said principal sum from April 30, 2004, or from the most recent
Interest Payment Date to which interest has been paid or duly provided for,
quarterly in arrears on February 15, May 15, August 15, and November 15 of each
year, commencing August 15, 2004, or if any such day is not a Business Day, on
the next succeeding Business Day (and no interest shall accrue in respect of
the amounts whose payment is so delayed for the period from and after such
Interest Payment Date until such next succeeding Business Day), except that, if
such Business Day falls in the next succeeding calendar year, such payment
shall be made on the immediately preceding Business Day, in each case, with the
same force and effect as if made on the Interest Payment Date, at a variable
rate equal to LIBOR plus 4.25% per annum, until the principal hereof is paid or
duly provided for or made available for payment; provided, that the Company shall have received the prior
approval of the Applicable Insurance Regulatory Authority therefor if then
required; provided,
further, that any overdue
principal, premium, if any, and any overdue installment of interest shall bear
Additional Interest at a variable rate equal to LIBOR plus 4.25% per annum (to the extent that the payment of such
interest shall be legally enforceable), compounded quarterly, from the latter
of (a) the dates such amounts are due and (b) the dates such amounts are
approved by the Applicable Insurance Regulatory Authority until they are paid
or made available for payment, and such interest shall be payable on
demand.  Notwithstanding the foregoing or
anything to the contrary herein contained or implied, principal of and premium,
if any, and interest on the Securities shall be (i) payable solely from and to
the extent, if any, of Available Surplus, (ii) subject to the prior approval of
the Applicable Insurance Regulatory Authority therefor and (iii) subject to any
other restrictions set forth under Applicable Insurance Laws (the foregoing,
collectively, the “Payment Restrictions”). 
If not so approved or if there is insufficient Available Surplus
therefor, such principal, premium, if any, or interest shall not be due and
payable.

 

The amount of
interest payable shall be computed on the basis of a 360-day year and the
actual number of days elapsed in the relevant interest period.  The interest so payable, and punctually paid
or duly provided for out of the Available Surplus, on any Interest Payment Date
shall, as provided in the Indenture, be paid to the Person in whose name this
Security (or one or more Predecessor Securities) is registered at the close of
business on the Regular Record Date for such interest installment; provided, that the Company shall have
received the prior approval of the Applicable Insurance Regulatory Authority
therefor if then required.  Any such
interest not so punctually paid or duly provided for on the Interest Payment
Date shall forthwith cease to be payable to the Holder on such Regular Record
Date and may either be paid to the Person in whose name this Security (or one
or more Predecessor Securities) is registered at the close of

 

 

business on a Special Record Date for the payment of such Defaulted
Interest to be fixed by the Trustee, notice whereof shall be given to Holders
of Securities not less than ten (10) days prior to such Special Record Date, or
be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in the Indenture.

 

Payment of
principal of, premium, if any, and interest on this Security shall be made in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts.  Payments of principal, premium, if any, and
interest due at the Maturity of this Security shall be made at the Place of Payment upon
surrender of such Securities to the Paying Agent, and payments of interest
shall be made, subject to such surrender where applicable, by wire transfer at
such place and to such account at a banking institution in the United States as
may be designated in writing to the Paying Agent at least ten (10) Business
Days prior to the date for payment by the Person entitled thereto unless proper
written transfer instructions have not been received by the relevant record
date, in which case such payments shall be made by check mailed to the address
of such Person as such address shall appear in the Security Register.

 

The
indebtedness evidenced by this Security is, to the extent provided in the
Indenture, subordinate and junior in right of payment to the prior payment in
full of all Senior Obligations, and this Security is issued subject to the
provisions of the Indenture with respect thereto. Each Holder of this Security,
by accepting the same, (a) agrees to and shall be bound by such provisions, (b)
authorizes and directs the Trustee on his or her behalf to take such actions as
may be necessary or appropriate to effectuate the subordination so provided and
(c) appoints the Trustee his or her attorney-in-fact for any and all such
purposes. Each Holder hereof, by his or her acceptance hereof, waives all notice
of the acceptance of the subordination provisions contained herein and in the
Indenture by each holder of Senior Obligations, whether now outstanding or
hereafter incurred, and waives reliance by each such holder upon said
provisions.

 

Unless the certificate
of authentication hereon has been executed by the Trustee by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.

 

 

In Witness Whereof, the Company has duly executed this
certificate on this 29th day of April, 2004.

 

 

	
   

  	
  AmCOMP Preferred Insurance Company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Debra C.
  Ruedisili

  	
   

  
	
   

  	
   

  	
  Name: Debra
  Cerre-Ruedisili

  
	
   

  	
   

  	
  Title:
  President, Vice Chairman, Chief

  
	
   

  	
   

  	
  Operating
  Officer and Director

  

 

 

 

This is one of
the Securities referred to in the within mentioned Indenture.

 

 

Dated: April 29, 2004

 

 

	
   

  	
  JPMORGAN CHASE BANK,

  
	
   

  	
  not in its individual capacity, but solely
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Maria D. Calzado

  	
   

  
	
   

  	
   

  	
  Authorized
  Signatory

  

 

 

[REVERSE OF SECURITY]

 

This Security is
one of a duly authorized issue of securities of the Company (the “Securities”) issued under the
Indenture, dated as of April 29, 2004 (the “Indenture”), between the Company and JPMorgan Chase Bank, as
Trustee (in such capacity, the “Trustee,” which term includes any successor trustee under
the Indenture), to which Indenture and all indentures supplemental thereto
reference is hereby made for a statement of the respective rights, limitations
of rights, duties and immunities thereunder of the Company, the Trustee, the
holders of Senior Obligations and the Holders of the Securities and of the
terms upon which the Securities are, and are to be, authenticated and
delivered.

 

All terms used in
this Security that are defined in the Indenture shall have the meanings
assigned to them in the Indenture.

 

The Company may, on any Interest Payment Date, at its option, upon not
less than thirty (30) days’ nor more than sixty (60) days’ written notice to
the Holders of the Securities (unless a shorter notice period shall be
satisfactory to the Trustee) on or after April 30, 2009 and subject to the
terms and conditions of Article XI of the Indenture, redeem this
Security in whole at any time or in part from time to time at a Redemption
Price equal to one hundred percent (100%) of the principal amount hereof,
together, in the case of any such redemption, with accrued interest, including
any Additional Interest, to but excluding the date fixed for redemption;
subject to there being no, or the satisfaction of any, Payment Restrictions.

 

In the event of
redemption of this Security in part only, a new Security or Securities for the
unredeemed portion hereof will be issued in the name of the Holder hereof upon
the cancellation hereof.  If less than
all the Securities are to be redeemed, the particular Securities to be redeemed
shall be selected not more than sixty (60) days prior to the Redemption Date by
the Trustee from the Outstanding Securities not previously called for
redemption, by such method as the Trustee shall deem fair and appropriate and
which may provide for the selection for redemption of a portion of the
principal amount of any Security.

 

The Indenture
permits, with certain exceptions as therein provided, the Company and the
Trustee at any time to enter into a supplemental indenture or indentures for
the purpose of modifying in any manner the rights and obligations of the
Company and of the Holders of the Securities, with the consent of the Holders
of not less than a majority in principal amount of the Outstanding Securities.
The Indenture also contains provisions permitting Holders of specified
percentages in principal amount of the Securities, on behalf of the Holders of
all Securities, to waive compliance by the Company with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the Holder of this Security shall
be conclusive and binding upon such Holder and upon all future Holders of this
Security and of any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Security.

 

No reference
herein to the Indenture nor any provision of this Security or of the Indenture
shall alter or impair the obligation of the Company, which is absolute and
unconditional, to pay the principal of and any premium, if any, and interest,
including any Additional Interest (to the

 

 

extent legally enforceable), on this Security at the times, place and
rate and in the coin or currency herein prescribed.

 

As provided in the
Indenture and subject to certain limitations therein set forth, the transfer of
this Security is registrable in the Securities Register upon surrender of this
Security for registration of transfer at the office or agency of the Company
maintained for such purpose, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Company and the Securities
Registrar and duly executed by, the Holder hereof or such Holder’s attorney
duly authorized in writing and, thereupon, one or more new Securities of like
tenor of authorized denominations and for the same aggregate principal amount
will be issued to the designated transferee or transferees.

 

The Securities are
issuable only in registered form without coupons in minimum denominations of
$100,000 and any integral multiples of $1,000 in excess thereof.  As provided in the Indenture and subject to
certain limitations therein set forth, Securities are exchangeable for a like
aggregate principal amount of Securities and of like tenor of a different
authorized denomination as requested by the Holder surrendering the same.

 

No service charge
shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.

 

The Company, the
Trustee and any agent of the Company or the Trustee may treat the Person in
whose name this Security is registered as the owner hereof for all purposes,
whether or not this Security be overdue, and neither the Company, the Trustee
nor any such agent shall be affected by notice to the contrary.

 

The Company and,
by its acceptance of this Security or a beneficial interest herein, the Holder
of, and any Person that acquires a beneficial interest in, this Security agree
that, for United States federal, state and local tax purposes, it is intended
that this Security constitute indebtedness.

 

This Security shall be
construed and enforced in accordance with and governed by the laws of the State
of New York, without reference to its conflict of laws provisions (other than
Section 5-1401 of the General Obligations Law).Exhibit 10.22

 

 

PURCHASE AGREEMENT

 

between

 

AMCOMP
PREFERRED INSURANCE COMPANY

 

 

and

 

 

ICONS,
LTD.

 

 

Dated
as of May 26, 2004

 

 

 

 

 

PURCHASE
AGREEMENT

($12,000,000 Surplus Notes)

 

THIS PURCHASE AGREEMENT, dated as of May 26,
2004 (this “Purchase Agreement”),
is entered into between AmCOMP
Preferred Insurance Company,
a stock insurance company (the
“Company”), and ICONS, Ltd. or
its assignee (the “Purchaser”).

 

WITNESSETH:

 

WHEREAS, the Company
proposes to issue Twelve Million Dollars ($12,000,000) in principal amount of
unsecured surplus notes (the “Securities”);
and

 

WHEREAS, the Securities
will be issued pursuant to an Indenture, dated as of the Closing Date (the “Indenture”), between the Company and
JPMorgan Chase Bank, a New York banking corporation, as indenture trustee (in
such capacity, the “Indenture Trustee”).

 

NOW, THEREFORE, in
consideration of the mutual agreements and subject to the terms and conditions
herein set forth, the parties hereto agree as follows:

 

1.                                       Definitions.  This Purchase Agreement, the Indenture and
the Securities are collectively referred to herein as the “Operative Documents.”  All other capitalized terms used but not
defined in this Purchase Agreement shall have the respective meanings ascribed
thereto in the Indenture.

 

2.                                       Purchase and Sale of the Securities.

 

(a)                                  The
Company agrees to sell to the Purchaser, and the Purchaser agrees to purchase
from the Company, the Securities for an amount (the “Purchase Price”) equal to Twelve Million Dollars
($12,000,000).  The Purchaser shall be
responsible for the rating agency costs and expenses.

 

(b)                                 Delivery
or transfer of, and payment for, the Securities shall be made at 10:00 A.M.
Chicago time (11:00 A.M. New York time), on May 26, 2004 or such
later date (not later than June 26, 2004 (30 days later)) as the parties
may designate (such date and time of delivery and payment for the Securities
being herein called the “Closing Date”).  The Securities shall be transferred and
delivered to the Purchaser against the payment of the Purchase Price to the
Company made in immediately available funds on the Closing Date to a U.S.
account designated in writing by the Company at least two business days prior
to the Closing Date.

 

(c)                                  Delivery
of the Securities shall be made at such location, and in such names and
denominations, as the Purchaser shall designate at least two business days in
advance of the Closing Date.  The Company
agrees to have the Securities available for inspection and checking by the Purchaser
in Chicago, Illinois, not later than 1:00 P.M., Chicago time (2:00 P.M.
New York time), on the business day prior to the Closing Date.  The closing for the purchase and

 

 

sale of the
Securities shall occur at the offices of Mayer, Brown, Rowe & Maw LLP,
190 South LaSalle Street, Chicago, Illinois 60603, or such other place as the
parties hereto shall agree.

 

3.                                       Conditions.  The obligations of the parties under this
Purchase Agreement are subject to the following conditions:

 

(a)                                  the
representations and warranties contained herein shall be accurate as of the
date of delivery of the Securities.

 

(b)                                 [Reserved]

 

(c)                                  (i) Olshan
Grundman Frome Rosenzweig & Wolosky LLP, counsel for the Company,
Foley & Lardner LLP (regulatory counsel) and Harris &
Helgeson (Florida counsel) (collectively, the “Company Counsel”) shall have
delivered opinions, dated the Closing Date, addressed to the Purchaser and
JPMorgan Chase Bank, which opinions collectively cover the matters set out in Annex
A-I hereto and (ii) the Company shall have furnished to the Purchaser
a certificate signed by the Company’s Chief Executive Officer, President or an
Executive Vice President or its Chief Financial Officer, Treasurer or Assistant
Treasurer, dated the Closing Date, addressed to the Purchaser, in substantially
the form set out in Annex A-II hereto. 
In rendering their opinions, the Company Counsel may rely as to factual
matters upon certificates or other documents furnished by officers and
directors of the Company and by government officials (provided, however,
that copies of any such certificates or documents are delivered to the
Purchaser) and by and upon such other documents as such counsel may, in its
reasonable opinion, deem appropriate as a basis for the Company Counsel’s
opinion.  The Company Counsel may specify
the jurisdictions in which they are admitted to practice and that they are not
admitted to practice in any other jurisdiction and are not an expert in the law
of any other jurisdiction.  If any of the
Company Counsel is not admitted to practice in the State of New York, the
opinion of the Company Counsel may assume, for purposes of the opinion, that
the laws of the State of New York are substantively identical, in all respects
material to the opinion, to the internal laws of the state in which such
counsel is admitted to practice.  Such
Company Counsel opinion shall not state that it is to be governed or qualified
by, or that it is otherwise subject to, any treatise, written policy or other
document relating to legal opinions, including, without limitation, the Legal
Opinion Accord of the ABA Section of Business Law (1991).

 

(d)                                 The
Purchaser shall have been furnished the opinion of Mayer, Brown, Rowe &
Maw LLP, special tax counsel for the Purchaser, dated the Closing Date,
addressed to the Purchaser and JPMorgan Chase Bank in substantially the form
set out in Annex B hereto.

 

(e)                                  The
Purchaser shall have received the opinion of Gardere Wynne Sewell LLP, special
counsel for the Indenture Trustee, dated the Closing Date, addressed to the
Purchaser, in substantially the form set out in Annex
C hereto.

 

(f)                                    The
Company shall have furnished to the Purchaser a certificate of the Company,
signed by the Chief Executive Officer, President or an Executive Vice President
and by the Chief Financial Officer, Treasurer or Assistant Treasurer of the
Company, dated the Closing Date, as to clauses (i) and (ii) below.

 

3

 

(i)                                     the
representations and warranties in this Purchase Agreement are true and correct
on and as of the Closing Date with the same effect as if made on the Closing
Date, and the Company has complied with all the agreements and satisfied all
the conditions to be performed or satisfied at or prior to the Closing Date;
and

 

(ii)                                  since
the date of the Financial Statements, Interim Financial Statements and
Statutory Financial Statements (each as defined below), there has been no
material adverse change in the condition (financial or other), earnings,
business or assets of the Company and its subsidiaries, whether or not arising
from transactions occurring in the ordinary course of business.

 

(g)                                 Subsequent
to the execution of this Purchase Agreement, there shall not have been any
change, or any development involving a prospective change, in or affecting the
condition (financial or other), earnings, business or assets of the Company and
its subsidiaries, whether or not occurring in the ordinary course of business,
the effect of which is, in the Purchaser’s judgment, so material and adverse as
to make it impractical or inadvisable to proceed with the purchase of the
Securities.

 

(h)                                 Prior
to the Closing Date, the Company shall have furnished to the Purchaser and its
counsel such further information, certificates and documents as the Purchaser
or its counsel may reasonably request.

 

If any of the conditions specified in this Section 3
shall not have been fulfilled when and as provided in this Purchase Agreement,
or if any of the opinions, certificates and documents mentioned above or
elsewhere in this Purchase Agreement shall not be reasonably satisfactory in
form and substance to the Purchaser or its counsel, this Purchase Agreement and
all the Purchaser’s obligations hereunder may be canceled at, or at any time
prior to, the Closing Date by the Purchaser. 
Notice of such cancellation shall be given to the Company in writing or
by telephone or facsimile confirmed in writing.

 

Each
certificate signed by any officer of the Company and delivered to the Purchaser
or the Purchaser’s counsel in connection with the Operative Documents and the
transactions contemplated hereby and thereby shall be deemed to be a
representation and warranty of the Company and not by such officer in any
individual capacity.

 

4.                                       Representations and
Warranties of the Company.  The Company
represents and warrants to, and agrees with, the Purchaser as follows:

 

(a)                                  Neither
the Company nor any of its “Affiliates” (as defined in Rule 501(b) of
Regulation D (“Regulation D”)
under the Securities Act (as defined below)), nor any person acting on its or
their behalf, has, directly or indirectly, made offers or sales of any
security, or solicited offers to buy any security, under circumstances that
would require the registration of any of the Securities under the Securities
Act of 1933, as amended (the “Securities Act”).

 

(b)                                 Neither
the Company nor any of its Affiliates, nor any person acting on its or their
behalf, has engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with any offer or sale of
any of the Securities.

 

4

 

(c)                                  The
Securities (i) are not and have not been listed on a national securities
exchange registered under section 6 of the Securities Exchange Act of
1934, as amended (the “Exchange Act”),
or quoted on a U.S. automated interdealer quotation system and (ii) are
not of an open-end investment company, unit investment trust or face-amount
certificate company that are, or are required to be, registered under section 8
of the Investment Company Act of 1940, as amended (the “Investment Company Act”), and the
Securities otherwise satisfy the eligibility requirements of Rule 144A(d)(3) promulgated
pursuant to the Securities Act (“Rule 144A(d)(3)”).

 

(d)                                 Neither
the Company nor any of its Affiliates, nor any person acting on its or their
behalf, has engaged, or will engage, in any “directed selling efforts” within
the meaning of Regulation S under the Securities Act with respect to the
Securities.

 

(e)                                  The
Company is not and, immediately following consummation of the transactions
contemplated hereby and the application of the net proceeds therefrom, will not
be, an “investment company” or an entity “controlled” by an “investment
company,” in each case within the meaning of section 3(a) of the
Investment Company Act.

 

(f)                                    The
Company has not paid or agreed to pay to any person any compensation for
soliciting another to purchase any of the Securities, except for the sales
commission the Company has agreed to pay to Dekania Capital Management, LLC (or
to the Company’s introducing agent, Benfield Advisory, Inc., on behalf of
Dekania Capital Management,  LLC).

 

(g)                                 The
Indenture has been duly authorized by the Company and, on the Closing Date,
will have been duly executed and delivered by the Company and, assuming due
authorization, execution and delivery by the Indenture Trustee, will be a
legal, valid and binding obligation of the Company enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency and
similar laws affecting creditors’ rights generally and to general principles of
equity.

 

(h)                                 The
Securities have been duly authorized by the Company and, on the Closing Date,
will have been duly executed and delivered to the Indenture Trustee for
authentication in accordance with the Indenture and, when authenticated in the
manner provided for in the Indenture and delivered to the Purchaser against
payment therefor in accordance with this Agreement, will constitute legal,
valid and binding obligations of the Company entitled to the benefits of the
Indenture, enforceable against the Company in accordance with their terms,
subject to applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights generally and to general principles of equity.

 

(i)                                     This
Purchase Agreement has been duly authorized, executed and delivered by the
Company.

 

(j)                                     Except
as set forth on Schedule 4(j), neither the issue and sale of the
Securities, nor the execution and delivery of and compliance with the Operative
Documents by the Company, nor the consummation of the transactions contemplated
herein or therein, (i) will conflict with or constitute a violation or
breach of the charter or bylaws of the Company or any

 

5

 

subsidiary of the
Company or any applicable law, statute, rule, regulation, judgment, order, writ
or decree of any government, governmental authority, agency or instrumentality
or court, domestic or foreign, having jurisdiction over the Company or any of
its subsidiaries or their respective properties or assets (collectively, the “Governmental Entities”), (ii) will
conflict with or constitute a violation or breach of, or a default or Repayment
Event (as defined below) under, or result in the creation or imposition of any
pledge, security interest, claim, lien or other encumbrance of any kind (each,
a “Lien”) upon any property or
assets of the Company or any of the Company’s subsidiaries pursuant to, any
contract, indenture, mortgage, loan agreement, note, lease or other agreement
or instrument (A) to which the Company or any of its subsidiaries is a
party or by which it or any of them may be bound, or (B) to which any of
the property or assets of any of them is subject, or any judgment, order or
decree of any court, governmental authority or arbitrator, except, in the case
of this clause (ii), for such conflicts, breaches, violations, defaults,
Repayment Events (as defined below) or Liens which (x) would not, singly or in
the aggregate, adversely affect the consummation of the transactions
contemplated by the Operative Documents and (y) would not, singly or in the
aggregate, have a material adverse effect on the condition (financial or
otherwise), earnings, business, liabilities and assets (taken as a whole) or
business prospects of the Company and its subsidiaries taken as a whole,
whether or not occurring in the ordinary course of business (a “Material Adverse Effect”) or (iii) require
the consent, approval, authorization or order of any court or Governmental
Entity not already obtained provided that the payment of principal of and
premium, if any, and interest on the Securities is subject to the prior
approval of the Florida Office of
Insurance Regulation and is payable solely from Available
Surplus.  As used herein, a “Repayment Event” means any event or
condition which gives the holder of any note, debenture or other evidence of
indebtedness (or any person acting on such holder’s behalf) the right to
require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any of its subsidiaries prior to its scheduled
maturity.

 

(k)                                  The
Company has been duly incorporated and is validly existing as a stock
insurance company in good standing under the laws of Florida, with all requisite power and authority to own,
lease and operate its properties and conduct the business it transacts and
proposes to transact, and is duly qualified to transact business and is in good
standing as a foreign corporation in each jurisdiction in which the nature of
its activities requires such qualification, except when the failure of the
Company to be so qualified would not, singly or in the aggregate, have a
Material Adverse Effect.

 

(l)                                     The
Company has no subsidiaries that are material to its business, financial
condition or earnings other than those subsidiaries listed in Schedule 1
attached hereto (collectively, the “Significant
Subsidiaries”).  Each
Significant Subsidiary has been duly incorporated and is validly existing as an
organization in good standing under the laws of the jurisdiction in which it is
chartered or organized, with all requisite power and authority to own, lease
and operate its properties and conduct the business it transacts and proposes
to transact.  Each Significant Subsidiary
is duly qualified to transact business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of its activities requires
such qualification, except when the failure to be so qualified would not,
singly or in the aggregate, have a Material Adverse Effect.

 

6

 

(m)                               The
Company and each of its subsidiaries holds all necessary approvals,
authorizations, orders, licenses, consents, registrations, qualifications,
certificates and permits (including, without limitation, insurance licenses
from the insurance departments of the various states and jurisdictions in which
the Company’s insurance subsidiaries write insurance business or otherwise
conduct insurance or reinsurance business, as the case may be, or as may be
required by any applicable insurance statutes of such states or other
jurisdictions (collectively, the “Insurance
Licenses”)) (collectively, including the Insurance Licenses, the “Government Licenses”) of and from
Governmental Entities necessary to conduct their respective businesses as are
now being conducted, and neither the Company nor any of its subsidiaries has
received any notice of proceedings relating to the revocation or modification
of any such Government License, except where the failure to be so licensed or
approved, or the receipt of an unfavorable decision, ruling or finding, would
not, singly or in the aggregate, have a Material Adverse Effect; all of the
Government Licenses are valid and in full force and effect, except where the
invalidity or the failure of such Government Licenses to be in full force and
effect would not, singly or in the aggregate, have a Material Adverse Effect;
and the Company and its subsidiaries are in compliance with all applicable
laws, rules, regulations, judgments, orders, decrees and consents, except when
the failure to be in compliance would not, singly or in the aggregate, have a
Material Adverse Effect.

 

(n)                                 All of the issued and
outstanding shares of capital stock or other equity interests of the Company and
each of its subsidiaries are validly issued, fully paid and non-assessable; all
of the issued and outstanding capital stock of each subsidiary of the Company
is owned by the Company, directly or through subsidiaries, free and clear of
any Lien, claim or equitable right; and none of the issued and outstanding
capital stock of the Company or any subsidiary was issued in violation of any
preemptive or similar rights arising by operation of law, under the charter or
by-laws of such entity or under any agreement to which the Company or any of
its subsidiaries is a party.

 

(o)                                 Neither
the Company nor any of its subsidiaries is (i) in violation of its
respective charter or by-laws or similar organizational documents or (ii) in
default in the performance or observance of any obligation, agreement, covenant
or condition contained in any contract, indenture, mortgage, loan agreement,
note, lease or other agreement or instrument to which the Company or any such
subsidiary is a party or by which it or any of them may be bound or to which
any of the property or assets of any of them is subject, except, in the case of
clause (ii), when such violation or default would not, singly or in the
aggregate, have a Material Adverse Effect.

 

(p)                                 Except
as set forth on Schedule 4(p), there is no action, suit or
proceeding before or by any Governmental Entity, arbitrator or court, domestic
or foreign, now pending or, to the knowledge of the Company after due inquiry,
threatened against or affecting the Company or any of its subsidiaries, except
for such actions, suits or proceedings that, if adversely determined, would
not, singly or in the aggregate, adversely affect the consummation of the
transactions contemplated by the Operative Documents or have a Material Adverse
Effect; and the aggregate of all pending legal or governmental proceedings to
which the Company or any of its subsidiaries is a party or of which any of
their respective properties or assets is subject,

 

7

 

including ordinary
routine litigation incidental to the business, are not expected to result in a
Material Adverse Effect.

 

(q)                                 The
accountants of the Company who certified the Financial Statements (as defined
below) are independent public accountants of the Company and its subsidiaries
within the meaning of the Securities Act, and the rules and regulations of
the Securities and Exchange Commission (the “Commission”)
thereunder.

 

(r)                                    The
audited consolidated financial statements (including the notes thereto) and
schedules of the Company and its consolidated subsidiaries for the fiscal year
ended December 31, 2002 (the “Financial
Statements”) provided to the Purchaser are the most recent available
audited consolidated financial statements of the Company and its consolidated subsidiaries,
and fairly present in all material respects, in accordance with U.S. generally
accepted accounting principles (“GAAP”),
if available, the financial position of the Company and its consolidated
subsidiaries, and the results of operations and changes in financial condition
as of the dates and for the periods therein specified, subject to the
adjustments identified on Schedule 2(r). 
Such consolidated financial statements and schedules have been prepared
in accordance with GAAP consistently applied throughout the periods involved
(except as otherwise noted therein).

 

(s)                                  The
statutory financial statements dated as of March 31, 2004 (the “Statutory Financial Statements”) of each
of the Company’s insurance company subsidiaries have, for each relevant period,
been prepared in accordance with statutory accounting principles (“SAP”) prescribed or permitted by the
National Association of Insurance Commissioners and, with respect to each
insurance company subsidiary, each appropriate insurance department of the
state of domicile of such insurance company subsidiary, and such accounting
practices have been applied on a consistent basis throughout the periods
involved (whether GAAP or SAP, as applicable, the “Applicable Accounting Principles”),
subject to the adjustments identified on Schedule 2(s).

 

(t)                                    Except as identified on Schedule 4(t),
neither the Company nor any of its subsidiaries has any material liability,
whether known or unknown, whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated or unliquidated,
and whether due or to become due, including any liability for taxes (and there
is no past or present fact, situation, circumstance, condition or other basis
for any present or future action, suit, proceeding, hearing, charge, complaint,
claim or demand against the Company or its subsidiaries that could give rise to
any such liability), except for (i) liabilities set forth in the Financial
Statements or the Interim Financial Statements and (ii) normal
fluctuations in the amount of the liabilities referred to in clause (i) above
occurring in the ordinary course of business of the Company and all of its
subsidiaries since the date of the most recent balance sheet included in such
Financial Statements.

 

(u)                                 The
Statement of Actuarial
Opinion Annual Statement of the Company, dated December 31, 2003 (the “Regulatory
Reports”),
provided to the Purchaser is
the most recently available such report, and the information therein fairly
presents in all material respects the financial position of the Company and its
subsidiaries.  None of the Company or any
of its

 

8

 

subsidiaries has
been requested by a Governmental Entity to republish, restate or refile any
regulatory or financial report.

 

(v)                                 Except
as identified on Schedule 2(v), since the respective dates of the
Financial Statements, Statutory Financial Statements and Regulatory Reports,
there has not been (A) any material adverse change or development with respect
to the condition (financial or otherwise), earnings, business, assets or
business prospects of the Company and its subsidiaries, taken as a whole,
whether or not occurring in the ordinary course of business or (B) any
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock other than regular quarterly dividends on the
Company’s common stock.

 

(w)                               The
authorized capitalization of the Company and its subsidiary insurance companies
are as set forth in the Financial Statements, the Interim Financial Statements,
the Statutory Financial Statements and Regulatory Reports and meet all
applicable regulatory requirements with respect thereto.

 

(x)                                   [Reserved].

 

(y)                                 Neither the Company nor any of its
subsidiaries, or any of their respective officers, directors, employees or
representatives, is subject or is party to, or has received any notice from any
Regulatory Agency (as defined below) that any of them will become subject or
party to any investigation with respect to, any cease-and-desist order,
agreement, civil monetary penalty, consent agreement, memorandum of
understanding or other regulatory enforcement action, proceeding or order with
or by, or is a party to any commitment letter or similar undertaking to, or is
subject to any directive by, or has been a recipient of any supervisory letter
from, or has adopted any board resolutions at the request of, any Regulatory
Agency that, in any such case, currently restricts in any material respect the
conduct of their business or that in any material manner relates to their
capital and surplus adequacy, reserves, their marketing or sales practices,
their ability or authority to pay dividends or make distributions to their
shareholders or make payments of principal or interest on their debt
obligations, their management or their business (each, a “Regulatory Action”), nor has the Company
or any of its subsidiaries been advised by any Regulatory Agency that it is
considering issuing or requesting any such Regulatory Action; and there is no
unresolved violation, criticism or exception by any Regulatory Agency with
respect to any report or statement relating to any examinations of the Company
or any of its subsidiaries, except when such unresolved violation, criticism or
exception would not, singly or in the aggregate, have a Material Adverse
Effect.  As used herein, the term “Regulatory Agency” means any federal or
state agency charged with the supervision or regulation of insurance companies
or holding companies of insurance companies, or engaged in the insurance of
insurance company reserves, or any court, administrative agency or commission
or other governmental agency, authority or instrumentality having supervisory
or regulatory authority with respect to the Company or any of its subsidiaries.

 

(z)                                   No labor dispute with the employees of the
Company or any of its subsidiaries exists or, to the knowledge of the executive
officers of the Company, is imminent, except those which would not, singly or
in the aggregate, have a Material Adverse Effect.

 

9

 

(aa)                            Except as set forth on Schedule 4(aa),
no filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any Governmental Entity, other than
those that have been made or obtained, is necessary or required for the
performance by the Company of its obligations under the Operative Documents, as
applicable, or the consummation by the Company of the transactions contemplated
by the Operative Documents.

 

(bb)                          The Company and each subsidiary of the
Company has good and marketable title to all of its respective real and
personal properties, in each case free and clear of all Liens and defects,
except for those that would not, singly or in the aggregate, have a Material
Adverse Effect; and all of the leases and subleases under which the Company or
any subsidiary of the Company holds properties are in full force and effect,
except when the failure of such leases and subleases to be in full force and
effect would not, singly or in the aggregate, have a Material Adverse Effect,
and none of the Company or any subsidiary of the Company has any notice of any
claim of any sort that has been asserted by anyone adverse to the rights of the
Company or any subsidiary of the Company under any such leases or subleases, or
affecting or questioning the rights of such entity to the continued possession
of the leased or subleased premises under any such lease or sublease, except
for such claims that would not, singly or in the aggregate, have a Material
Adverse Effect.

 

(cc)                            The
information provided by the Company pursuant to this Purchase Agreement does
not, as of the date hereof, and will not, as of the Closing Date, contain any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.

 

5.                                       Representations and
Warranties of the Purchaser.   The Purchaser
represents and warrants to, and agrees with, the Company as follows:

 

(a)                                  The
Purchaser is aware that the Securities have not been and will not be registered
under the Securities Act and may not be offered or sold within the United
States or to “U.S. persons” (as defined in Regulation S under the Securities
Act) except in accordance with Rule 903 of Regulation S under the
Securities Act or pursuant to an exemption from the registration requirements
of the Securities Act.

 

(b)                                 The
Purchaser is an “accredited investor,” as such term is defined in Rule 501(a) of
Regulation D under the Securities Act.

 

(c)                                  Neither
the Purchaser, nor any of the Purchaser’s affiliates, nor any person acting on
the Purchaser’s or the Purchaser’s Affiliate’s behalf has engaged, or will
engage, in any form of “general solicitation or general advertising” (within
the meaning of Regulation D under the Securities Act) in connection with any
offer or sale of the Securities.

 

(d)                                 The
Purchaser understands and acknowledges that (i) no public market exists
for any of the Securities and that it is unlikely that a public market will
ever exist for the Securities, (ii) the Purchaser is purchasing the
Securities for its own account, for investment and not with a view to, or for
offer or sale in connection with, any distribution thereof in violation of

 

10

 

the Securities Act
or other applicable securities laws, subject to any requirement of law that the
disposition of its property be at all times within its control and subject to
its ability to resell such Securities pursuant to an effective registration
statement under the Securities Act or pursuant to an exemption therefrom or in
a transaction not subject thereto, and the Purchaser agrees to the legends and
transfer restrictions applicable to the Securities contained in the Indenture,
and (iii) the Purchaser has had the opportunity to ask questions of, and
receive answers and request additional information from, the Company and is
aware that it may be required to bear the economic risk of an investment in the
Securities.

 

(e)                                  The
Purchaser is a company with limited liability duly incorporated, validly
existing and in good standing under the laws of the jurisdiction in which it is
organized with all requisite (i) power and authority to execute, deliver
and perform the Operative Documents to which it is a party, to make the
representations and warranties specified herein and therein and to consummate
the transactions contemplated herein and (ii) right and power to purchase
the Securities.

 

(f)                                    This
Purchase Agreement has been duly authorized, executed and delivered by the
Purchaser and no filing with, or authorization, approval, consent, license,
order registration, qualification or decree of, any governmental body, agency
or court having jurisdiction over the Purchaser, other than those that have
been made or obtained, is necessary or required for the performance by the
Purchaser of its obligations under this Purchase Agreement or to consummate the
transactions contemplated herein.

 

6.                                       Agreements of the Company. 
The Company agrees with the Purchaser as follows:

 

(a)                                  During
the period from the date of this Agreement to the Closing Date, the Company
shall use its best efforts and take all action necessary or appropriate to
cause its representations and warranties contained in Section 4
hereof to be true as of the Closing Date, after giving effect to the
transactions contemplated by this Purchase Agreement, as if made on and as of
the Closing Date.

 

(b)                                 The
Company will arrange for the qualification of the Securities for sale under the
laws of such jurisdictions as the Purchaser may designate and will maintain
such qualifications in effect so long as required for the sale of the
Securities.  The Company will promptly
advise the Purchaser of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose.

 

(c)                                  The
Company will not permit any of its Affiliates to, nor will it permit any person
acting on its behalf (other than the Purchaser) to, resell any Securities that
have been acquired by any of them.

 

(d)                                 The
Company will not permit any of its Affiliates, or any person acting on its
behalf, to engage in any “directed selling efforts” within the meaning of
Regulation S under the Securities Act with respect to the Securities.

 

11

 

(e)                                  The
Company will not permit any of its Affiliates, or any person acting on its
behalf, to, directly or indirectly, make offers or sales of any security, or
solicit offers to buy any security, under circumstances that would require the
registration of any of the Securities under the Securities Act.

 

(f)                                    The
Company will not permit any of its Affiliates, or any person acting on its
behalf, to engage in any form of “general solicitation or general advertising”
(within the meaning of Regulation D) in connection with any offer or sale of
any of the Securities.

 

(g)                                 So
long as any of the Securities are outstanding, (i) the Securities shall
not be listed on a national securities exchange registered under section 6
of the Exchange Act or quoted in a U.S. automated interdealer quotation system,
(ii) the Company shall not be an open-end investment company, unit
investment trust or face-amount certificate company that is, or is required to
be, registered under section 8 of the Investment Company Act and (iii) the
Securities shall otherwise satisfy the eligibility requirements of Rule 144A(d)(3).

 

(h)                                 The
Company shall furnish to (i) the holders and subsequent holders of the
Securities, (ii) ICONS, Ltd. (at Maples
Finance Limited, PO Box 1093 GT, Queensgate House, South Church Street,
Grand Cayman, Cayman Islands, or such other address as designated by ICONS,
Ltd.) and (iii) any beneficial owner of the Securities reasonably
identified to the Company (which identification may be made by either such
beneficial owner or by ICONS, Ltd.), a duly completed and executed certificate
in the form attached hereto as Annex D, including the financial
statements referenced in such Annex, which certificate and financial statements
shall be so furnished by the Company not later than forty-five (45) days after
the end of each of the first three fiscal quarters of each fiscal year of the
Company and not later than ninety (90) days after the end of each fiscal year
of the Company.

 

(i)                                     The
Company shall, during any period in which it is not subject to and in
compliance with section 13 or 15(d) of the Exchange Act, or it is not
exempt from such reporting requirements pursuant to and in compliance with Rule 12g3-2(b) under
the Exchange Act, provide to each holder of the Securities and to each
prospective purchaser (as designated by such holder) of the Securities, upon
the request of such holder or prospective purchaser, any information required
to be provided by Rule 144A(d)(4) under the Securities Act.  If the Company is required to register under
the Exchange Act, such reports filed in compliance with Rule 12g3-2(b) shall
be sufficient information as required above. 
This covenant is intended to be for the benefit of the Purchaser, the
holders of the Securities and the prospective purchasers designated by the
Purchaser and such holders, from time to time, of the Securities.

 

(j)                                     The
Company will not, until one hundred eighty (180) days following the Closing
Date, without the Purchaser’s prior written consent, offer, sell, contract to
sell, grant any option to purchase or otherwise dispose of, directly or indirectly,
(i) any Securities or other securities of the Company having terms
substantially identical to the Securities other than as contemplated by this
Purchase Agreement or (ii) any other securities convertible into, or
exercisable or exchangeable for, any Securities or other securities of the
Company having terms substantially identical to the Securities.

 

12

 

7.                                       Payment of Expenses. 
The Company agrees to pay all costs and expenses incident to the performance
of the obligations of the Company under this Purchase Agreement, whether or not
the transactions contemplated herein are consummated or this Purchase Agreement
is terminated, including all costs and expenses incident to (i) the
authorization, issuance, sale and delivery of the Securities and any taxes
payable in connection therewith; (ii) the fees and expenses of qualifying
the Securities under the securities laws of the several jurisdictions as
provided in Section 6(b); (iii) the fees and expenses of the
counsel, the accountants and any other experts or advisors retained by the
Company; and (iv) the fees and all reasonable expenses of the Indenture
Trustee and any other trustee or paying agent appointed under the Operative
Documents, including the fees and disbursements of counsel for such trustees,
which fees shall not exceed a $2,000 acceptance fee, and $4,000 in
administrative fees annually.  Morgan,
Stanley & Co. Incorporated shall pay Mayer, Brown, Rowe & Maw
LLP $17,000 for its fees and expenses, as special counsel for the Purchaser.

 

Except as provided in this Section 7, if
the sale of the Securities provided for in this Purchase Agreement is not
consummated because any condition set forth in Section 3 hereof to
be satisfied by the Company is not satisfied, because this Purchase Agreement
is terminated pursuant to Section 9 or because of any failure,
refusal or inability on the part of the Company to perform all obligations and
satisfy all conditions on its part to be performed or satisfied hereunder other
than by reason of a default by the Purchaser, the Company will reimburse the
Purchaser upon demand for all reasonable out-of-pocket expenses (including the
fees and expenses of the Purchaser’s counsel specified in clause (v) of
the immediately preceding paragraph) that shall have been incurred by the
Purchaser in connection with the proposed purchase and sale of the
Securities.  The Company shall not in any
event be liable to the Purchaser for the loss of anticipated profits from the
transactions contemplated by this Purchase Agreement.

 

8.                                       Indemnification.  (a)  The Company agrees to
indemnify and hold harmless the Purchaser, the Purchaser’s affiliates, ICONS,
Ltd., Dekania Capital Management, LLC and Morgan Stanley & Co. Incorporated
(collectively, the “Entity Indemnified
Parties”), the Entity Indemnified Parties’ respective directors,
officers, employees and agents and each person who “controls” the Entity
Indemnified Parties within the meaning of either the Securities Act or the
Exchange Act (collectively, with the Entity Indemnified Parties, the “Indemnified Parties”) against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Securities Act, the Exchange Act or other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of, or are based upon, (i) any untrue statement or
alleged untrue statement of a material fact contained in any information or
documents furnished or made available to the Purchaser by or on behalf of the
Company, (ii) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading or (iii) the breach or alleged breach of any
representation, warranty or agreement of the Company contained herein, and the
Company agrees to reimburse each such Indemnified Party, as incurred, for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action.  This indemnity agreement will be
in addition to any liability which the Company may otherwise have.

 

13

 

(b)                                 Promptly
after receipt by an Indemnified Party of notice of the commencement of any
action, such Indemnified Party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section 8, promptly
notify the indemnifying party in writing of the commencement thereof; but the
failure to so notify the indemnifying party (i) will not relieve the
indemnifying party from liability under paragraph (a) above unless and to
the extent that such failure results in the forfeiture by the indemnifying
party of material rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any Indemnified Party
other than the indemnification obligation provided in paragraph (a) above.  Purchaser shall be entitled to appoint
counsel to represent the Indemnified Party in any action for which
indemnification is sought.  An
indemnifying party may participate at its own expense in the defense of any
such action; provided, that
counsel to the indemnifying party shall not (except with the consent of the
Indemnified Party) also be counsel to the Indemnified Party.  In no event shall the indemnifying party be
liable for fees and expenses of more than one counsel (in addition to any local
counsel) separate from its own counsel for all Indemnified Parties in
connection with any one action or separate but similar or related actions in
the same jurisdiction arising out of the same general allegations or
circumstances.  An indemnifying party
will not, without the prior written consent of the Indemnified Parties, settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not the Indemnified Parties
are actual or potential parties to such claim, action, suit or proceeding),
unless such settlement, compromise or consent includes an unconditional release
of each Indemnified Party from all liability arising out of such claim, action,
suit or proceeding.

 

9.                                       Termination. 
This Purchase Agreement shall be subject to termination in the absolute
discretion of the Purchaser, by notice given to the Company prior to delivery
of and payment for the Securities, if prior to such time (i) a downgrading
shall have occurred in the rating accorded the Company’s debt securities or
preferred stock by any “nationally recognized statistical rating organization,”
as that term is used by the Commission in Rule 15c3-1(c)(2)(vi)(F) under
the Exchange Act, or such organization shall have publicly announced that it
has under surveillance or review, with possible negative implications, its
rating of the Company’s debt securities or preferred stock, (ii) the
Company shall be unable to sell and deliver to the Purchaser at least
$12,000,000 principal amount of Securities, (iii) the Company or any of
its subsidiaries that is an insurance
company shall cease to be “adequately-capitalized” under the statutes, rules,
regulations, codes or ordinances of any Regulatory Agency within the meaning of
any applicable regulations of any Regulatory Agency, or any formal
administrative or judicial action is taken by any appropriate state or federal
insurance regulator against the Company or any of its subsidiary
insurance companies for unsafe and unsound insurance practices, or violations
of law, (iv) a suspension or material limitation in trading in securities
generally shall have occurred on the New York Stock Exchange, (v) a
suspension or material limitation in trading in any of the Company’s securities
shall have occurred on the exchange or quotation system upon which the Company’s
securities are traded, if any, (vi) a general moratorium on commercial
insurance activities shall have been declared either by federal or Florida
authorities or (vii) there shall have occurred any outbreak or escalation
of hostilities, or declaration by the United States of a national emergency or
war or other calamity or crisis, the effect of which on financial markets is such
as to make it, in the Purchaser’s judgment, impracticable or inadvisable to
proceed with the offering or delivery of the Securities.

 

14

 

10.                                 Representations and
Indemnities to Survive.  The respective agreements, representations,
warranties, indemnities and other statements of the Company or any of its
officers or trustees and of the Purchaser set forth in or made pursuant to this
Purchase Agreement will remain in full force and effect, regardless of any investigation
made by or on behalf of the Purchaser, the Company or any of their respective
officers, directors, trustees or controlling persons, and will survive delivery
of and payment for the Securities.  The
provisions of Sections 7 and 8 shall survive the termination or
cancellation of this Purchase Agreement.

 

11.                                 Amendments.  This Purchase
Agreement may not be modified, amended, altered or supplemented, except upon
the execution and delivery of a written agreement by each of the parties
hereto.

 

12.                                 Notices. 
All communications hereunder will be in writing and effective only on
receipt, and, if sent to the Purchaser, will be mailed, delivered by hand or
courier or sent by facsimile and confirmed to the Purchaser c/o ICONS, Ltd., Maples Finance Limited, PO Box 1093
GT, Queensgate House, South Church Street, Grand Cayman, Cayman Islands,
Attention: Mora Parchment,
Facsimile: +1 345 814 5821 with a copy to Sidley Austin Brown & Wood
LLP, Bank One Plaza, 10 South Dearborn Street, Chicago, Illinois 60603, Attention:
Amanda Todd, Facsimile: (312) 853-7036, or other address as
the Purchaser shall designate for such purpose in a notice to the Company; and
if sent to the Company, will be mailed, delivered by hand or courier or sent by
facsimile and confirmed to it at AmCOMP Preferred
Insurance Company, 701 U.S.
Highway One, Suite 200, North Palm Beach, Florida 33408, Attention: Kumar Gursahaney, Facsimile: (561) 863-2646.

 

13.                                 Successors and Assigns. 
This Purchase Agreement will inure to the benefit of and be binding upon
the parties hereto and their respective successors and permitted assigns.  Nothing expressed or mentioned in this
Purchase Agreement is intended or shall be construed to give any person other
than the parties hereto and the affiliates, directors, officers, employees,
agents and controlling persons referred to in Section 8 hereof and
their successors, assigns, heirs and legal representatives, any right or
obligation hereunder.  None of the rights
or obligations of the Company under this Purchase Agreement may be assigned,
whether by operation of law or otherwise, without the Purchaser’s prior written
consent.  The rights and obligations of
the Purchaser under this Purchase Agreement may be assigned by the Purchaser
without the Company’s consent; provided
that the assignee assumes the obligations of the Purchaser under this Purchase
Agreement.

 

14.                                 Applicable Law. 
THIS PURCHASE AGREEMENT WILL BE GOVERNED BY AND CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO
PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW).

 

15.                                 Submission to Jurisdiction. 
ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH
RESPECT TO OR ARISING OUT OF THIS PURCHASE AGREEMENT MAY BE BROUGHT IN OR
REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE

 

15

 

COUNTY OF NEW
YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK
(IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY
OF THIS PURCHASE AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF
ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF
OR IN CONNECTION WITH THIS PURCHASE AGREEMENT.

 

16.                                 Counterparts and Facsimile. 
This Purchase Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.  This Purchase Agreement
may be executed by any one or more of the parties hereto by facsimile.

 

16

 

IN WITNESS WHEREOF, this
Purchase Agreement has been entered into as of the date first written above.

 

 

	
   

  	
   

  	
  AMCOMP PREFERRED
  INSURANCE

  COMPANY

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/
  Debra C. Ruedisili

  
	
   

  	
   

  	
   

  	
  Name:

  	
  Debra
  Cerre-Ruedisili

  
	
   

  	
   

  	
   

  	
  Title:

  	
  President, Vice
  Chairman,

  
	
   

  	
   

  	
   

  	
  Chief Operating
  Officer and Director

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  ICONS, LTD.,

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
    /s/
  Hugh Thompson

  
	
   

  	
   

  	
   

  	
    Name:

  	
  Hugh Thompson

  
	
   

  	
   

  	
   

  	
    Title:

  	
  Director

  
						

 

17

 

SCHEDULE 1

 

List of Significant Subsidiaries

 

AmCOMP Assurance Corporation

 

18

 

SCHEDULE 2(r)

 

During the course of the Company’s current
audit by its independent auditors for the years ended December 31, 2003
and 2001 it was determined that certain adjustments will be made to the
Financial Statements.  The Company
estimates that the impact of the adjustments on the Financial Statements will
be an increase of approximately $2.6 million in stockholders equity at December 31,
2002.  This increase is primarily
attributable to adjustments of certain reinsurance related transactions.

 

19

 

SCHEDULE 2(s)

 

During the course of the Company’s current
audit by its independent auditors for the years ended December 31, 2003
and 2001, the Company determined that there were certain adjustments to the
Statutory Financial Statements.  The
Company estimates that there will be a reduction in statutory surplus of
approximately $2.4 million in the aggregate for the years 2001, 2002 and
2003.  The decrease is primarily
attributable to adjustments for certain reinsurance transactions, an adjustment
in a state assessment rate, and income tax adjustments.

 

20

 

SCHEDULE 2(t)

 

The Company has determined that included in
the audit adjustments referenced in Schedule 2(s) there are income tax
adjustments of approximately $2.3 million in the aggregate for the years ended
2001, 2002 and 2003.  The majority of the
adjustment is intercompany related and would be eliminated on the Company’s
consolidated audited financial statements for the years ended December 31,
2003, 2002 and 2001.  In addition, the
Company has determined that there is an additional liability of approximately
$1.1 million associated with the reinsurance adjustment and a reduction in
liabilities of approximately $400,000 in expenses payable.

 

21

 

SCHEDULE 2(v)

 

See disclosures under Schedules 2(r), 2(s)
and 2(t).

 

22

 

SCHEDULE 4(j)

 

•                                          The
Company has a credit facility with AmSouth Bank (“AmSouth”) which provides for
aggregate borrowing of $12.5 million (the “AmSouth Credit Facility”).  At December 31, 2003, the principal
balance of the AmSouth Credit Facility was $11,607,000.  The loan is collateralized by $25.5 million
of surplus notes issued by the Company or by its Significant Subsidiaries to
AmCOMP Incorporated and all of the outstanding stock of the Company.  The AmSouth Credit Facility contains various restrictive
covenants including provisions pertaining to levels of indebtedness.  The Company has obtained the consent from
AmSouth with respect to the sale of the Securities.

•                                          The
issuance and sale of the Securities is required to be approved by the Florida
Office of Insurance Regulation, which approval was obtained on May 25, 2004.

 

23

 

SCHEDULE 4(p)

 

•                  The Company,
AmCOMP Incorporated and AmCOMP Assurance Corporation (the “AmComp Parties”) are
defendants in identical actions commenced in Pennsylvania and Florida courts by
the Insurance Commissioner of Pennsylvania, acting in her capacity as
liquidator of Reliance Insurance Company. 
The complaints in those actions allege that preferential payments were
made by Reliance under the formerly existing reinsurance agreements with the
insurance subsidiaries and seeks damages in the amount of approximately $2.3
million.  The AmCOMP Parties have made
various motions addressed to these complaints and the time to answer the
complaints has not as yet expired.  The
AmCOMP Parties believe that they have a variety of factual and legal defenses
to the claim made in the actions.

 

24

 

SCHEDULE 4(aa)

 

•                  The issuance and
sale of the Securities is required to be approved by the Florida Office of
Insurance Regulation, which approval was obtained on May 25, 2004.

 

25

 

ANNEX A-I

 

Pursuant to Section 3(c)(i) of the Purchase
Agreement, Olshan Grundman Frome Rosenzweig & Wolosky, LLP, counsel
for the Company, Foley & Lardner LLP, regulatory counsel, and Harris &
Helgeson, Florida counsel shall deliver opinions which collectively cover the
following matters:

 

(i)                                     the
Company and each Significant Subsidiary is validly existing as a stock
insurance company in good standing under the laws of the jurisdiction in which
it is chartered or organized; each of the Company and the Significant
Subsidiaries has full corporate power and authority to own or lease its
properties and to conduct its business as such business is currently conducted
in all material respects; all outstanding shares of capital stock of the
Significant Subsidiaries have been duly authorized and validly issued, and are
fully paid and nonassessable and owned of record and beneficially, directly or
indirectly by the Company; the Company has corporate power and authority to (i) execute
and deliver, and to perform its obligations under, the Operative Documents to
which it is a party and (iii) issue and perform its obligations under the
Securities;

 

(ii)                                  neither
the issue and sale of the Securities nor the execution and delivery of and
compliance with the Operative Documents by the Company nor the consummation of
the transactions contemplated thereby will constitute a breach or violation of
the charter or by-laws of the Company;

 

(iii)                               the
Indenture has been duly authorized, executed and delivered by the Company and,
assuming the Indenture has been duly authorized, executed and delivered by the
Indenture Trustee, constitutes a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, subject
to applicable bankruptcy, insolvency and similar laws affecting creditors’
rights generally and to general principles of equity;

 

(iv)                              the
Securities have been duly authorized and executed by the Company and delivered
to the Indenture Trustee for authentication in accordance with the Indenture
and, when authenticated in accordance with the provisions of the Indenture and
delivered to the Purchaser or its designee against payment therefor, will
constitute legal, valid and binding obligations of the Company entitled to the
benefits of the Indenture and enforceable against the Company in accordance
with their terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors’ rights generally and to general principles of equity;

 

(v)                                 the
Company is not and, following the issuance of the Securities and the
consummation of the transactions contemplated by the Operative Documents and
the application of the proceeds therefrom, the Company will not be, an “investment
company” or an entity “controlled” by an “investment company,” in each case
within the meaning of Section 3(a) of the Investment Company Act;

 

(vi)                              assuming
that the Securities are sold in a manner contemplated by, and in accordance
with the Purchase Agreement, it is not necessary in connection with

 

A-I-1

 

the offer, sale and delivery of the Securities by the
Company to the Purchaser, to register any of the Securities under the
Securities Act or to require qualification of the Indenture under the Trust
Indenture Act of 1939, as amended;

 

(vii)                           the
Purchase Agreement has been duly authorized, executed and delivered by the
Company and constitutes a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors’ rights
generally and to general principles of equity;

 

(viii)                        [Reserved];

 

(ix)                                to
the best of our knowledge, neither the Company nor any Significant Subsidiaries
of the Company are in breach or violation of, or default under, with or without
notice or lapse of time or both, its articles of incorporation or charter,
by-laws or other governing documents; the execution, delivery and performance
of the Operative Documents and the consummation of the transactions
contemplated by the Purchase Agreement and the Operative Documents do not and
will not (A) result in the creation or imposition of any material lien,
claim, charge, encumbrance or restriction upon any property or assets of the
Company or the Significant Subsidiaries, or (B) conflict with, constitute
a material breach or violation of, or constitute a material default under, with
or without notice or lapse of time or both, any of the terms, provisions or
conditions of (x) the Articles of Incorporation or Charter, By-Laws or other
governing documents of the Company or its Significant Subsidiaries, or (y) to
the best of our knowledge, any material contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease, franchise, license or any other
agreement or instrument to which the Company or its Significant Subsidiaries is
a party or by which any of them or any of their respective properties may be
bound or (z) any order, decree, judgment, franchise, license, permit, rule or
regulation of any court, arbitrator, government, or governmental agency or
instrumentality, domestic or foreign, known to us having jurisdiction over the
Company or its Significant Subsidiaries or any of their respective properties
which, in the case of each of (A) or (B) above, is material to the
Company and the Significant Subsidiaries on a consolidated basis; and

 

(x)                                   except
for filings, registrations or qualifications that may be required by applicable
securities laws and except as set forth on Schedule 4(j), no
authorization, approval, consent or order of, or filing, registration or
qualification with, any person (including, without limitation, any court,
governmental body or authority) is required under the laws of the State of
Florida in connection with the transactions contemplated by the Operative
Documents in connection with the offer and sale of the Securities as
contemplated by the Operative Documents, except as have already been obtained.

 

A-I-2

 

ANNEX A-II

 

Pursuant to Section 3(c)(ii) of the Purchase
Agreement, the Company shall provide an Officers’ Certificate, to the effect
that:

 

(i)                                     all
of the issued and outstanding shares of capital stock of each Significant
Subsidiary are owned of record by the Company, and the issuance of the
Securities is not subject to any contractual preemptive rights known to such [counsel/officer];

 

(ii)                                  no
consent, approval, authorization or order of any court or governmental
authority is required for the issue and sale of the Securities, the execution
and delivery of and compliance with the Operative Documents by the Company or
the consummation of the transactions contemplated in the Operative Documents,
except such approvals (specified in such certificate) as have been obtained;

 

(iii)                               to
the best of our knowledge, except as set forth on Schedule 4(p) to
the Purchase Agreement, (A) no action, suit or proceeding at law or in
equity is pending or threatened to which the Company or the Significant
Subsidiaries are or may be a party, and (B) no action, suit or proceeding
is pending or threatened against or affecting the Company or the Significant
Subsidiaries or any of their properties, before or by any court or governmental
official, commission, board or other administrative agency, authority or body,
or any arbitrator, wherein an unfavorable decision, ruling or finding could
reasonably be expected to have a material adverse effect on the consummation of
the transactions contemplated by the Operative Documents or the issuance and
sale of the Securities, as contemplated therein, or the condition (financial or
otherwise), earnings, affairs, business, or results of operations of the
Company and the Significant Subsidiaries on a consolidated basis;

 

(iv)                              the
Company is duly registered as a stock insurance company under the [state regulatory
statute] of [state of domicile] and the regulations thereunder of the [state regulatory agency], and the capital
reserves accounts of the Company and its insurance subsidiaries are in
compliance with all applicable regulatory authorities with jurisdiction over
such entities;

 

(v)                                 the
execution, delivery and performance of the Operative Documents by the Company
and the consummation by the Company of the transactions contemplated by the
Operative Documents, (a) will not result in any violation of the charter
or bylaws of the Company or the charter or bylaws of its subsidiaries, and (b) will
not conflict with, or result in a breach of any of the terms or provisions of,
or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under, or result in the creation or
imposition of any lien, charge and encumbrance upon any assets or properties of
the Company or any Significant Subsidiary under, (x) any agreement, indenture,
mortgage or instrument that the Company or any Significant Subsidiary is a
party to or by which it may be bound or to which any of its assets or
properties may be subject, or (y) any existing applicable law, rule or
administrative

 

A-II-1

 

regulation of any court or governmental agency or
authority having jurisdiction over the Company or any Significant Subsidiary or
any of their respective assets or properties, except in case of (b), where any
such violation, conflict, breach, default, lien, charge or encumbrance, would
not have a material adverse effect on the assets, properties, business, results
of operations or financial condition of the Company and its subsidiaries, taken
as whole; and

 

(vi)                              to
the best of our knowledge, neither the Company nor any of its “Affiliates” (as
defined in Rule 501(b) of Regulation D under the Securities Act (“Regulation
D”) has, directly or indirectly, made offers or sales of any security, or
solicited offers to buy any security, under circumstances that would require
the registration of any of the Securities being issued pursuant to this
transaction under the Securities Act, engaged in any form of general
solicitation or general advertising (within the meaning of Regulation D) in
connection with any offer or sale of any of the Securities, or engaged, nor
will engage, in any “directed selling efforts” within the meaning of Regulation
S under the Securities Act with respect to the Securities.

 

A-II-2

 

ANNEX B

 

Pursuant to Section 3(d) of
the Purchase Agreement, Mayer, Brown, Rowe & Maw LLP, special tax
counsel for the Purchaser, shall deliver an opinion to the effect that, for
United States federal income tax purposes, the Securities will constitute
indebtedness of the Company.

 

In rendering such opinions, such counsel may (A) state
that its opinion is limited to the 
federal laws of the United States and (B) rely as to matters
of fact, to the extent deemed proper, on certificates of responsible officers
of the Company and public officials.

 

B-1

 

ANNEX C

 

Pursuant to Section 3(e) of the Purchase
Agreement, Gardere Wynne Sewell LLP, special counsel for the  Indenture Trustee, shall deliver an opinion
to the effect that:

 

(i)                                     JPMorgan
Chase Bank is a banking corporation with trust powers, duly and validly
existing under the laws of the State of New York, with corporate power and
authority to execute, deliver and perform its obligations under the Indenture
and to authenticate and deliver the Securities, and is duly eligible and
qualified to act as Trustee under the Indenture pursuant to Section 6.1;

 

(ii)                                  The
Indenture has been duly authorized, executed and delivered by JPMorgan Chase
Bank and constitutes the valid and binding obligation of JPMorgan Chase Bank,
enforceable against it in accordance with its terms except (A) as may be
limited by bankruptcy, fraudulent conveyance, fraudulent transfer, insolvency,
reorganization, liquidation, receivership, moratorium or other similar laws now
or hereafter in effect relating to creditors’ rights generally, and by general
equitable principles, regardless of whether considered in a proceeding in
equity or at law and (B) that the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding
therefor may be brought;

 

(iii)                               Neither
the execution or delivery by JPMorgan Chase Bank of the Indenture, the
authentication and delivery of the Securities by JPMorgan Chase Bank pursuant
to the terms of the Indenture, nor the performance by JPMorgan Chase Bank of
its obligations under the Indenture (A) requires the consent or approval
of, the giving of notice to or the registration or filing with, any
governmental authority or agency under any existing law of the State of New
York governing the banking or trust powers of JPMorgan Chase Bank or  (B) violates or conflicts with the
Restated Organization Certificate or By-laws of JPMorgan Chase Bank or any law
or regulation of the State of New York governing the banking or trust powers of
JPMorgan Chase Bank;

 

(iv)                              the
Securities have been duly authenticated and delivered by JPMorgan Chase Bank.

 

In rendering such opinions, such counsel may (A) state
that its opinion is limited to the laws of the State of New York and (B) rely
as to matters of fact, to the extent deemed proper, on certificates of
responsible officers of JPMorgan Chase Bank, the Company and public officials.

 

C-1

 

ANNEX D

 

Officer’s Financial Certificate

 

The undersigned, the [Chairman/Vice Chairman/Chief
Executive Officer/President/Vice President] [Chief Financial
Officer/Treasurer/Assistant Treasurer], hereby certifies, pursuant to Section 6(h) of
the Purchase Agreement, dated as of May 26, 2004, between AmCOMP Preferred
Insurance Company (the “Company”) and ICONS, Ltd., that, as of [date], [20   ],
the Company had the following ratios and balances:

 

[For each subsidiary insurance company provide:]

 

[INSURANCE COMPANY]

 

As of [Quarterly/Annual
Financial Dates]

 

	
  NAIC
  Risk-Based Capital Ratio (authorized control level)

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Policyholders’ Surplus

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Consolidated Debt to Total Policyholders’
  Surplus

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Total Assets

  	
   

  	
  $

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  NAIC Class 1 & 2 Rated
  Investments to Total Fixed Income Investments

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  NAIC Class 1 & 2 Rated
  Investments to Total Investments

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Return on Policyholders’ Surplus

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  [For Property & Casualty Companies also provide:]

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  [Expense Ratio]

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Loss and
  LAE Ratio

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Combined
  Ratio

  	
   

  	
   

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Net
  Premiums Written (annualized) to Policyholders’ Surplus

  	
   

  	
   

  	
  %

  

 

* A table describing the
quarterly report calculation procedures is provided on page  

 

[FOR
FISCAL YEAR END:  Attached hereto are the
audited consolidated financial statements (including the balance sheet, income
statement and statement of cash flows, and notes thereto, together with the
report of the independent accountants thereon) of the Company and its
consolidated subsidiaries for the three years ended [date], [20   ],  and all required Statutory Financial
Statements (as defined in the Purchase Agreement) of the Company and its
subsidiaries for the year ended [date], [20   ].

 

D-1

 

[FOR FISCAL QUARTER
END:  Attached hereto are the unaudited
consolidated and consolidating  financial
statements (including the balance sheet and income statement) of the Company
and its consolidated subsidiaries and all required Statutory Financial
Statements (as defined in the Purchase Agreement) of the Company and its
subsidiaries for the year ended [date], [20   ] for the fiscal
quarter ended [date], [20   ].

 

The financial statements
fairly present in all material respects, in accordance with U.S. generally
accepted accounting principles (“GAAP”), the financial position of the Company
and its consolidated subsidiaries, and the results of operations and changes in
financial condition as of the date, and for the [___ quarter interim] [annual] period ended [date], 20   , and such
financial statements have been prepared in accordance with GAAP consistently
applied throughout the period involved (expect as otherwise noted therein).

 

The above referenced financial
statements fairly present in all material respects in accordance with
Applicable Accounting Principles as defined in the Indenture) the financial
position of the subject insurance company and have been prepared in accordance
with Applicable Accounting Principles.

 

IN WITNESS WHEREOF, the undersigned has executed this
Officer’s Financial Certificate as of this          
day of                  ,
20   

 

	
   

  	
  AmCOMP Preferred
  Insurance Company

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Its:

  
	
   

  	
   

  
	
   

  	
  AmCOMP Preferred Insurance Company

  
	
   

  	
  P.O. Box 88806

  
	
   

  	
  North Palm Beach, Florida 33408

  
	
   

  	
  (561) 863-2616

  

 

D-2

 

ANNEX D

 

Definitions
for Officer’s Financial Certificate

 

	
  ITEM

  	
   

  	
  Definition/Formula

  
	
  NAIC Risk Based Capital Ratio-P&C

  	
   

  	
  (Total
  Adjusted Capital/Authorized Control Level Risk-Based Capital)/2

  
	
  NAIC Risk Based Capital Ratio-Life

  	
   

  	
  ((Total
  Adjusted Capital-Asset Valuation Reserve)/Authorized Control Level Risk-Based
  Capital)/2

  
	
  Total Capital and Surplus-Life

  	
   

  	
  Common Capital Stock +
  Preferred Capital Stock + Aggregate Write-Ins for other than special surplus
  funds + Surplus Notes +Gross Paid-In and Contributed Surplus + Aggregate
  Write-Ins for Special Surplus Funds + Unassigned Funds (Surplus) — Treasury
  Stock

  
	
  Total Capital and Surplus-P&C

  	
   

  	
  Aggregate Write-Ins for
  Special Surplus Funds + Common Capital Stock + Preferred Capital Stock +
  Aggregate Write Ins for other than special surplus funds + Surplus Notes
  +Gross Paid-In and Contributed Surplus + Unassigned Funds (Surplus) —
  Treasury Stock

  
	
  Total Class 1 & 2 Rated Investments to
  Total Fixed Income Investments

  	
   

  	
  (Total Class 1 +
  Total Class 2 Rated Investments)/Total Fixed Income Investments

  
	
  Total Class 1 & 2 Rated Investments to
  Total Investments

  	
   

  	
  (Total Class 1 +
  Total Class 2 Rated Investments)/Total Investments

  
	
  Total Assets

  	
   

  	
  Total Assets

  
	
  Return on Policyholders’ Surplus

  	
   

  	
  Net
  Income/Policyholders’ Surplus

  
	
  Expense Ratio

  	
   

  	
  Other Underwriting
  Expenses Incurred/Net premiums Earned

  
	
  Loss and LAE Ratio

  	
   

  	
  (Losses Incurred + Loss
  Expenses Incurred)/Net Premiums Earned

  
	
  Combined Ratio

  	
   

  	
  Expense Ratio + Loss
  and LAE Ratio

  
	
  Net Premiums Written (annualized) to Policyholders’
  Surplus

  	
   

  	
  Net Premiums
  Written/Policyholders’ Surplus

  

 

F-1

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