-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MMMRBgVnBnpo6QNHVIop7I9a9le7DkkLC+8f4GAT57OnFTVch8alOgGjCfKEZ3Rz Za+ttEq+vVcrNeExMhdXhw== 0000950144-98-007765.txt : 19980629 0000950144-98-007765.hdr.sgml : 19980629 ACCESSION NUMBER: 0000950144-98-007765 CONFORMED SUBMISSION TYPE: S-1 PUBLIC DOCUMENT COUNT: 82 FILED AS OF DATE: 19980625 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: INSURANCE MANAGEMENT SOLUTIONS GROUP INC CENTRAL INDEX KEY: 0001063167 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 593422536 STATE OF INCORPORATION: FL FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-1 SEC ACT: SEC FILE NUMBER: 333-57747 FILM NUMBER: 98654421 BUSINESS ADDRESS: STREET 1: 360 CENTRAL AVENUE CITY: ST PETERSBURG STATE: FL ZIP: 33701 BUSINESS PHONE: 8138234000 MAIL ADDRESS: STREET 1: 360 CENTRAL AVENUE CITY: ST PETERSBURG STATE: FL ZIP: 33701 S-1 1 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 25, 1998 REGISTRATION NO. 333- ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------------------- FORM S-1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 --------------------- INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. (Exact name of registrant as specified in its charter) FLORIDA 6748 59-3422536 (State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer incorporation or organization) Classification Code Number) Identification No.)
--------------------- 360 CENTRAL AVENUE ST. PETERSBURG, FLORIDA 33701 (813) 803-2040 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) --------------------- C. ANTHONY SEXTON ASSOCIATE GENERAL COUNSEL INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. 360 CENTRAL AVENUE ST. PETERSBURG, FLORIDA 33701 (813) 803-2040 (Name, address, including zip code, and telephone number, including area code, of agent for service) --------------------- WITH COPIES TO: G. WILLIAM SPEER, ESQ. TODD B. PFISTER, ESQ. POWELL, GOLDSTEIN, FRAZER FOLEY & LARDNER & MURPHY, LLP 100 NORTH TAMPA STREET 191 PEACHTREE STREET, N.E. SUITE 2700 16TH FLOOR TAMPA, FLORIDA 33602 ATLANTA, GEORGIA 30303
--------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [ ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of this prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] --------------------- CALCULATION OF REGISTRATION FEE
================================================================================================================= TITLE OF EACH CLASS OF PROPOSED MAXIMUM AMOUNT OF SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE - ----------------------------------------------------------------------------------------------------------------- Common Stock $.01 par value.................... $80,000,000 $23,600 =================================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933. THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE SECURITIES ACT OF 1933, AS AMENDED OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE. ================================================================================ 2 INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. SUBJECT TO COMPLETION, DATED , 1998 PROSPECTUS SHARES [LOGO] INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. COMMON STOCK ------------------------ Of the shares of Common Stock offered hereby, shares are being issued and sold by Insurance Management Solutions Group, Inc. ("IMSG" or the "Company") and shares are being sold by the Selling Shareholder. The Company will not receive any proceeds from the sale of Common Stock by the Selling Shareholder. See "Use of Proceeds" and "Principal and Selling Shareholders." Prior to this offering, there has been no public market for the Common Stock. It is currently estimated that the initial public offering price for the Common Stock will be between $ and $ per share. See "Underwriting" for a discussion of the factors to be considered in determining the initial public offering price. The Company has applied for inclusion of the Common Stock on the Nasdaq National Market under the symbol "INMG". ------------------------ SEE "RISK FACTORS" ON PAGES 5 THROUGH 11 FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS. ------------------------ THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
====================================================================================================================== UNDERWRITING PROCEEDS TO PRICE TO DISCOUNTS AND PROCEEDS TO SELLING PUBLIC COMMISSIONS(1) COMPANY(2) SHAREHOLDER - ---------------------------------------------------------------------------------------------------------------------- Per Share........................ $ $ $ $ - ---------------------------------------------------------------------------------------------------------------------- Total(3)......................... $ $ $ $ ======================================================================================================================
(1) The Company, its principal shareholder Bankers Insurance Group, Inc., and the Selling Shareholder have agreed to indemnify the Underwriters against certain liabilities, including liabilities under the Securities Act of 1933, as amended. See "Underwriting." (2) Before deducting expenses, estimated at $ , payable by the Company. (3) The Company and the Selling Shareholder have granted the Underwriters a 30-day option to purchase up to additional shares of Common Stock on the same terms and conditions set forth above to cover over-allotments, if any. If the Underwriters exercise the over-allotment option in full, the total Price to Public will be $ , the total Underwriting Discounts and Commissions will be $ , the total Proceeds to Company will be $ and the total Proceeds to the Selling Shareholder will be $ . See "Underwriting." ------------------------ The shares of Common Stock are offered by the several Underwriters subject to prior sale, when, as and if delivered to and accepted by them, and subject to certain other conditions, including the right of the Underwriters to withdraw, cancel, modify or reject any order in whole or in part. It is expected that delivery of the shares will be made on or about ,1998, at the offices of Raymond James & Associates, Inc., St. Petersburg, Florida. RAYMOND JAMES & ASSOCIATES, INC. LEHMAN BROTHERS FURMAN SELZ The date of this Prospectus is , 1998. 3 [COVER FLAP] PROPERTY & CASUALTY FINANCIAL INSURANCE COMPANIES INSTITUTIONS INSURANCE MANAGEMENT SOLUTIONS [LOGO] GROUP [PICTURE [COLLAGE [COLLAGE [COLLAGE OF OF OF OF A MAN AND TWO CAR, FLOODED TWO MEN AND A A HAND ON A WOMEN HOUSE, WOMAN COMPUTER VIEWING A BURNING HOME WORKING, AND A MOUSE, COMPUTER AND HAND HOLDING A CLOCK, SCREEN] A TELEPHONE] A MEASURING AND A COMPASS, CALENDAR] ALL OVERLAYING A CLOCK] POLICY CLAIMS FLOOD ZONE INFORMATION ADMINISTRATION ADMINISTRATION DETERMINATIONS TECHNOLOGY
--------------------- CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK, INCLUDING ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING." 4 [INSIDE SPREAD LEFT] IMSG OFFERS PROPERTY & CASUALTY COMPANIES: - Reduced overhead - Cost-effective technology - Fast, economic expansion of product lines - Enhanced customer service - Increased speed of product delivery - Accounting and regulatory reporting - Freedom to focus on strategic planning IMSG OFFERS FINANCIAL INSTITUTIONS: - Flood zone determinations - Opportunities to add profit centers in new lines of business - A simplified flood compliance regulation process - Loan portfolio protection - Increased speed of product delivery OTHER POTENTIAL MARKETS INCLUDE: - General Agencies - Virtual Insurance Companies - Governmental Agencies - Lending Institutions - Windpools - Related Affinity Groups INSURANCE [LOGO] MANAGEMENT SOLUTIONS GROUP
COMPREHENSIVE OUTSOURCING SERVICES FOR INSURANCE COMPANIES & FINANCIAL INSTITUTIONS 5 [INSIDE SPREAD RIGHT] IMSG: RESOURCES FOR STRATEGIC INSURANCE MANAGEMENT FLOOD, HOMEOWNERS & AUTOMOBILE INSURANCE PROGRAMS - Comprehensive Policy Administration - Experienced Claims Administration & Customer Service - Integrated Technological Systems & Software - Private Label Insurance Products [Collage of a flood zone map, a hand - Flood Catastrophe Assistance holding a measuring compass, a clock, a - Marketing & Advertising Support car, a burning house, a flooded house, - Agent Training & Educational Courses and two men and one woman working] - Financial & Statistical Reporting FLOOD ZONE DETERMINATIONS - Life-of-Loan Flood Compliance Tracking - Force-placed Flood Insurance - Database representing 85% of all U.S. Households - National Flood Zone Database on CD ROM
6 PROSPECTUS SUMMARY The following summary is qualified in its entirety by the more detailed information and financial statements, including the notes thereto, appearing elsewhere in this Prospectus. As used herein, the "Company" means Insurance Management Solutions Group, Inc. and its wholly-owned subsidiaries, Insurance Management Solutions, Inc. and Geotrac, Inc. (formerly Bankers Hazard Determination Services, Inc.) ("Geotrac"), unless the context otherwise requires. Unless otherwise indicated, the information in this Prospectus (i) reflects the consummation of the Company's acquisition (the "Geotrac Acquisition") of Geotrac, Inc. ("Old Geotrac"), including the issuance of shares of Common Stock pursuant thereto (assuming an initial public offering price of $ per share), and (ii) assumes that the Underwriters' over-allotment option will not be exercised. See "Geotrac Acquisition" and "Underwriting." THE COMPANY The Company provides (1) comprehensive policy and claims outsourcing services to the property and casualty ("P&C") insurance industry, with an emphasis on providing these services to the flood insurance market, and (2) flood zone determinations to financial institutions, mortgage lenders and insurance companies. The Company's outsourcing services, which are offered on either a bundled or "a la carte" basis, include policy administration, claims administration and information technology services. The Company processed approximately 575,000 insurance policies in 1997, including approximately 450,000 flood insurance policies, making it the second largest provider of flood insurance outsourcing services in the United States. The Company provides outsourcing services to its affiliate, Bankers Insurance Group, Inc. (together with its subsidiaries, "BIG"), Mobile USA Insurance Company, Inc. and AAA Auto Club South Insurance Company, as well as to insurance companies that offer flood insurance utilizing BIG as their private label servicing carrier, such as Horace Mann Insurance Company, Armed Forces Insurance Corporation and AMICA Mutual Insurance Company. In conjunction with BIG, the Company is able to offer insurance companies the ability to create a turnkey private label flood insurance product. The Company believes this product is attractive to insurance companies that desire to offer flood insurance but are not certified by the Federal Emergency Management Agency ("FEMA") to sell and service flood insurance. FEMA estimates that only 25% to 33% of U.S. properties required to be covered by flood insurance are in fact covered. Accordingly, the Company anticipates continued growth in the demand for flood insurance and related flood outsourcing and flood zone determination services over the next several years. In 1997, the Company processed approximately 1.4 million flood zone determinations for over 750 customers, including financial institutions such as SouthTrust Bank and SunTrust Bank, mortgage lenders such as ABN Amro North America, Inc. and Mortgage Corporation of America, and P&C insurance companies such as American International Group, Inc. and Royal Indemnity Company. Flood insurance is required by federal law in connection with virtually all residential mortgage loans, including refinancing loans, covering properties located within federally designated high-risk flood zones. A flood zone determination is necessary in order to ascertain a property's flood zone classification. In addition, due to more stringent underwriting criteria, P&C insurers increasingly require flood zone determinations prior to issuing commercial property policies. The Company uses its proprietary database, compiled and digitized from flood maps maintained and distributed by FEMA, to determine whether a particular property or structure is located within a flood zone classification that requires flood insurance. The Company estimates that its electronic database includes over 85% of all U.S. households. The Company is a % owned subsidiary of BIG, a holding company chartered in Florida in 1976. BIG provides multiple lines of P&C insurance, most notably flood, homeowners and automobile insurance, to individuals and businesses throughout the United States. From 1993 to 1997, BIG's total written premiums grew at a compound annual growth rate of 23.0% from $113.1 million to $259.0 million. BIG is the largest underwriter of flood insurance policies through independent agents (and the second largest overall) in the United States. Upon completion of this offering, BIG will beneficially own % of the Company's Common Stock. BIG is the Company's principal customer, accounting for approximately 56% of the Company's total revenues (on a pro forma basis) and 98% of the Company's outsourcing revenues (on a pro forma basis) in 1997. See "Risk Factors -- Reliance on Key Customer." 1 7 The Company's principal growth strategies include (1) expanding the Company's flood outsourcing business by (i) marketing flood outsourcing services to existing carriers certified by FEMA, (ii) offering its outsourcing services to potential new entrants into the flood insurance market, and (iii) marketing its ability, in conjunction with BIG, to provide and service a private label insurance product to insurance companies that desire to offer flood insurance but are not certified by FEMA to sell and service flood insurance, (2) expanding the Company's existing relationships with flood insurance outsourcing and flood zone determination customers to generate additional outsourcing business, (3) focusing on maximizing the Company's existing economies of scale to provide customers with more cost-effective services, and continuing to expand such efficiencies through greater utilization of the Company's existing infrastructure and databases, (4) expanding the Company's direct sales force and developing strategic relationships with other service providers, (5) generating recurring revenues by providing services based on long-term contractual relationships or based upon events which occur frequently in the course of a customer's business, and (6) pursuing strategic acquisitions that offer opportunities to increase market share or expand the Company's menu of outsourcing services. See "Business -- Growth Strategy." The Company is a holding company that was incorporated in the State of Florida in December, 1996 by BIG, which contributed to the Company two of its wholly-owned operating subsidiaries, Insurance Management Solutions, Inc. ("IMS") and Bankers Hazard Determination Services, Inc. ("BHDS"), that were previously formed in August, 1991 and June, 1988, respectively. The Company's principal executive offices are located at 360 Central Avenue, St. Petersburg, Florida 33701, and its telephone number is (813) 803-2040. THE OFFERING Common Stock offered by the Company.................. shares (1) Common Stock offered by the Selling Shareholder...... shares (1) Common Stock to be outstanding after the Offering................. shares (1)(2) Use of Proceeds............ To repay outstanding indebtedness, and for general corporate purposes, including capital expenditures for upgraded technology, working capital and possible acquisitions. See "Use of Proceeds." Proposed Nasdaq National Market Symbol............ INMG - --------------- (1) Excludes up to shares and shares that may be sold by the Company and the Selling Shareholder, respectively, pursuant to the Underwriters' over-allotment option. See "Underwriting." (2) Excludes (a) shares of Common Stock reserved for issuance under the Company's Long Term Incentive Plan, pursuant to which options to purchase shares will be granted immediately upon the completion of this offering, (b) shares of Common Stock reserved for issuance under the Company's Non-Employee Directors' Stock Option Plan, and (c) shares of Common Stock reserved for issuance under the Company's Non-Qualified Stock Option Plan, pursuant to which options to purchase shares will be granted immediately upon the completion of this offering. See "Management -- Long Term Incentive Plan," "-- Non-Employee Directors' Stock Option Plan" and "-- Non-Qualified Stock Option Plan." 2 8 SUMMARY HISTORICAL AND PRO FORMA CONDENSED CONSOLIDATED FINANCIAL DATA (IN THOUSANDS, EXCEPT PER SHARE DATA) The historical information presented for the years ended December 31, 1995, 1996 and 1997 was derived from the audited consolidated financial statements of the Company. The historical information presented as of March 31, 1998 and for the three months ended March 31, 1997 and 1998 was derived from the unaudited consolidated financial information of the Company. With respect to the unaudited financial information, the Company is of the opinion that all material adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the Company's interim results of operations have been included. The pro forma condensed consolidated financial data are based on assumptions and adjustments described in the notes to the pro forma condensed consolidated financial statements and are not necessarily indicative of the results of operations that may be achieved in the future. The information set forth below should be read in conjunction with "Selected Consolidated Financial Data of the Company," "Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company," the Company's Consolidated Financial Statements and the Company's Pro Forma Condensed Consolidated Financial Statements (unaudited). The results of operations presented below are not necessarily indicative of the results of operations that may be achieved in the future.
YEAR ENDED THREE MONTHS ENDED DECEMBER 31, MARCH 31, ------------------------------------ -------------------------- PRO PRO FORMA FORMA 1995 1996 1997 1997(1) 1997 1998 1998(1) ------ ------- ------- ------- ------ ------- ------- STATEMENT OF OPERATIONS DATA: Outsourcing services revenues..... $3,444 $ 5,125 29,714 30,577 6,856 8,655 8,655 Flood zone determination services revenues........................ 5,127 7,705 8,792 22,600 1,947 2,291 6,864 ------ ------- ------- ------- ------ ------- ------- Total revenues.................. 8,571 12,830 38,506 53,177 8,803 10,946 15,519 Operating expenses................ 8,083 11,742 32,807 46,281 7,422 9,495 12,539 Operating income.................. 488 1,088 5,699 6,896 1,381 1,451 2,980 Net income available for common shareholders.................... 254 617 3,410 3,968 833 1,108 1,426 Net income per common share(2).... Weighted average common shares outstanding.....................
MARCH 31, 1998 --------------------------------------- PRO FORMA, ACTUAL PRO FORMA(1) AS ADJUSTED(3) ------- ------------ -------------- BALANCE SHEET DATA: Working capital (deficiency)............................... $ (905) $ (669) $ Total assets............................................... 25,419 47,004 Long-term debt, less current portion....................... 1,921 10,805 Notes payable -- affiliate................................. 4,950 7,303 Preferred stock of subsidiary.............................. 6,750 6,750 Total shareholders' equity................................. 178 5,945
- --------------- (1) Unaudited pro forma condensed consolidated financial data as of March 31, 1998 and for the three months ended March 31, 1998 and the year ended December 31, 1997 reflect (i) the Geotrac Acquisition, which was completed in June, 1998, using the purchase method of accounting as if the Geotrac Acquisition had occurred at March 31, 1998 for the Balance Sheet Data and at January 1, 1997 for the Statement of Operations Data, (ii) the new affiliated service and administrative agreements that became effective January 1, 1998 as though the new terms were in existence on January 1, 1997, and (iii) the purchase of certain fixed assets from affiliated companies used in the business, which occurred in April, 1998, as if such purchase had occurred at March 31, 1998 for the Balance Sheet Data and at 3 9 January 1, 1997 for the Statement of Operations Data. See "Geotrac Acquisition," "Certain Transactions" and the Company's Pro Forma Condensed Consolidated Financial Statements (unaudited). (2) Supplemental net income per common share for the year ended December 31, 1997 and the three months ended March 31, 1998, giving effect to the payment of debt from a portion of the offering proceeds and the increased number of common shares, is $ and $ per common share assuming and weighted average common shares outstanding. See "Use of Proceeds." (3) Pro forma, as adjusted to reflect (i) the application of the net proceeds to be received by the Company from the issuance and sale of shares of Common Stock offered hereby (assuming an initial public offering price of $ per share), after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company, and (ii) settlement or satisfaction of intercompany accounts from funds made available to BIG by a loan from a subsidiary of the Selling Shareholder, using a portion of the net proceeds of this offering received by the Selling Shareholder. See "Use of Proceeds" and "Capitalization." 4 10 RISK FACTORS An investment in the shares of Common Stock offered hereby involves a high degree of risk. Prospective investors should consider carefully the following risk factors, as well as the other information set forth in this Prospectus, in evaluating an investment in the Common Stock offered hereby. This Prospectus includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 27E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical facts included in this Prospectus, including without limitation statements set forth under "Prospectus Summary," "Risk Factors," "Use of Proceeds," "Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company," "Management's Discussion and Analysis of Financial Condition and Results of Operations of Geotrac" and "Business," regarding the Company's financial position, business strategy and plans and objectives of management of the Company for future operations, are forward-looking statements. When used in this Prospectus, words such as "anticipate," "believe," "estimate," "expect," "intend" and similar expressions, as they relate to the Company or its management, identify forward-looking statements. Such forward-looking statements are based on the beliefs of the Company's management as well as assumptions made by and information currently available to the Company's management. Actual results could differ materially from those contemplated by the forward-looking statements as a result of certain factors, such as those disclosed under "Risk Factors," including but not limited to the Company's reliance on a key customer, dependence on economic and other factors, fluctuations in operating results, changes in legal and regulatory requirements, integration of the Geotrac Acquisition, conflicts of interest, and matters set forth elsewhere in this Prospectus. Such statements reflect the current views of the Company with respect to future events and are subject to those and other risks, uncertainties and assumptions relating to the operations, results of operations, growth strategy and liquidity of the Company. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this paragraph. RELIANCE ON KEY CUSTOMER The Company derives a substantial portion of its revenues from outsourcing services provided to its principal shareholder, BIG. For the years ended December 31, 1995, 1996, 1997 and 1997 (pro forma), revenues from services provided to BIG accounted for approximately 40%, 37%, 76% and 56%, respectively, of the Company's total revenues and approximately 100%, 93%, 98% and 98%, respectively, of the Company's revenues from outsourcing services. The Company has entered into contracts with BIG pursuant to which it will continue to provide administrative services to BIG. See "Certain Transactions -- Service Agreements." The Company's future financial condition and results of operations will depend to a significant extent upon the commercial success of BIG and its continued willingness to utilize the Company's services. Any significant downturn in the business of BIG or its commitment to utilize the Company's services could have a material adverse effect on the Company's business, financial condition and results of operations. See "Business -- Customers." DEPENDENCE ON ECONOMIC AND OTHER FACTORS; FLUCTUATIONS IN QUARTERLY OPERATING RESULTS The Company's business is dependent upon various factors, such as general economic conditions and weather patterns, that are beyond its control. For example, the demand for flood zone determinations by lenders and their customers is directly related to the affordability of mortgage financing and refinancing. Current interest rates are relatively low and therefore conducive to a higher volume of mortgage lending and flood zone determinations. An increase in interest rates could have a negative impact on mortgage lending and consequently also on the level of flood zone determinations requested. Fluctuations in interest rates will likely produce fluctuations in the Company's quarterly earnings and operating results. Likewise, natural disasters such as hurricanes, tornadoes, and floods, all of which are unpredictable, directly impact the demand for both the Company's outsourcing and flood zone determination services. 5 11 GOVERNMENT REGULATION As a provider of policy and claims processing to the flood insurance industry, the Company is subject to extensive and continuously changing guidelines of the Federal Insurance Administration. No assurance can be given with respect to the extent to which the Company may become subject to regulation in the future, the ability of the Company to comply with any such regulation, the cost of compliance or an abrupt change in the overall concept or delivery of the flood insurance product on behalf of the federal government. Moreover, if the federal government were to curtail the current federal flood program, or if as a result of the investigation of the participation of Bankers Insurance Company ("BIC"), a subsidiary of BIG, in the program, as described below, sanctions were imposed, it could have a material adverse effect on the Company's business, financial condition and results of operations. See "Business -- Market Opportunities." The P&C insurance industry is subject to extensive regulation by state governments. Because the Company markets and sells its services to P&C insurers, certain aspects of the Company's business are affected by such regulation. The Company must continuously update its software to reflect changes in regulations. In addition, changes in regulations that adversely affect the Company's existing and potential customers could have a material adverse effect on the Company's business, financial condition and results of operations. Although the Company's services are not directly subject to insurance regulations in the states where the Company currently provides such services, the Company's outsourcing services may be subject to insurance regulations in states where the Company may do business in the future. Such regulations could require the Company to obtain a license as a managing general agent or third-party administrator. Failure to perform in accordance with state regulations could result in the loss of significant insurance clients. No assurance can be given with respect to the extent to which the Company may become subject to regulation in the future, the ability of the Company to comply with any such regulation, or the cost of compliance. BIC is currently subject to an investigation by the Florida Department of Insurance (the "DOI"), the principal regulator of insurance activities in the State of Florida, stemming from BIC's use of a private investigator to gather information on a DOI employee. In addition, certain officers and employees of BIC and the Company have been subpoenaed by FEMA to produce documentation in connection with its investigation of, among other things, certain cash management practices. Although BIC has informed the Company that it has no reason to believe either of these investigations will have a material adverse effect on BIC's business, financial condition or results of operations, no assurances can be given in this regard. In the event either or both of these investigations or any consequence thereof materially adversely affects the business or operations of BIC, it could result in the loss or material decrease in the Company's business from BIC, which would have a material adverse effect on the Company's business, financial condition and results of operations. See "Business -- Legal Proceedings." INTEGRATION OF RECENT ACQUISITION On July 31, 1997 the Company acquired a 49% equity interest in Old Geotrac. On June , 1998, the Company acquired the remaining 51% equity interest in Old Geotrac. The Company is in the process of consolidating its existing flood zone determination operations with those of Old Geotrac in an effort to realize economies of scale. There can be no assurance, however, that the Company will be able to integrate the operations of Old Geotrac with its own operations, or that such economies of scale will be realized. The failure to successfully integrate its own operations with those of Old Geotrac could have a material adverse effect on the Company's business, financial condition and results of operations. See "Geotrac Acquisition." CONTROL BY PRINCIPAL SHAREHOLDER; CONFLICTS OF INTEREST Prior to this offering, BIG owned approximately % of the outstanding shares of Common Stock. After this offering, BIG will own % of the outstanding shares of Common Stock. As a result, BIG will continue to be able to elect the Company's directors and determine the outcome of other matters requiring shareholder approval. BIG's ultimate parent, Bankers International Financial Corporation, Ltd., is wholly owned by a discretionary charitable trust. David K. Meehan, the Company's Chairman of the Board, President and Chief Executive Officer, and Robert M. Menke and Robert G. Menke, directors of the Company, 6 12 presently serve on the board of directors of a corporation that possesses discretionary power with respect to this trust to (i) direct the trustee to appoint the trust fund to another trust for the benefit of one or more of the beneficiaries of the trust and (ii) remove the trustee and appoint one or more new trustees. This corporation possesses the same discretionary powers with respect to a discretionary charitable trust that wholly owns the Selling Shareholder. See "Principal and Selling Shareholders." The ownership by BIG of shares of Common Stock after this offering may discourage or prevent unsolicited mergers, acquisitions, tender offers, proxy contests or changes of incumbent management, even when shareholders other than BIG consider such a transaction or event to be in their best interests. Accordingly, holders of Common Stock may be deprived of an opportunity to sell their shares at a premium over the trading price of the shares. Certain officers and directors of the Company, including David K. Meehan, the Company's Chairman of the Board, President and Chief Executive Officer, also serve as officers and directors of BIG. Effective as of the completion of this offering, certain of these officers and directors will resign from their positions with BIG. However, Mr. Meehan will continue to serve as Vice Chairman of the Board of Directors of BIG, Robert M. Menke will continue to serve as President and Chairman of the Board of Directors of BIG, and Robert G. Menke will continue to serve as Executive Vice President of BIG. In addition, as described below, the Company will continue to have a variety of contractual relationships with BIG. As the interests of the Company and BIG may differ, Messrs. Meehan, Robert M. Menke and Robert G. Menke may face certain conflicts of interests. See "Principal and Selling Shareholders" and "Certain Transactions." The Company's relationship with BIG is governed by various agreements, including (i) an administration services agreement pursuant to which BIG provides benefits administration, cash management, and certain limited accounting and legal services to the Company, (ii) service agreements pursuant to which the Company provides policy and claims administration services for BIG, (iii) lease agreements pursuant to which BIG leases certain facilities to the Company, and (iv) an employee leasing agreement pursuant to which BIG leases certain of its employees to the Company. The agreements generally are intended to maintain the relationship between the Company and BIG in a manner consistent in material respects with past practice, except that certain changes in the fee structure for the Company's services have been implemented and the Company does not anticipate receiving any loans or capital contributions from BIG following this offering. None of these agreements resulted from arm's-length negotiations and, as a result, the terms of such agreements may be more or less favorable to the Company than could be obtained from an independent third party. See "Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company" and "Certain Transactions." DEPENDENCE ON SENIOR MANAGEMENT The success of the Company is largely dependent upon the efforts, direction and guidance of its senior management, and in particular David K. Meehan, the Company's Chairman of the Board, President and Chief Executive Officer, Jeffrey S. Bragg, the Company's Executive Vice President and Chief Operating Officer, and Daniel J. White, Geotrac's President and Chief Executive Officer. Although each of the Company's executive officers, including Messrs. Meehan, Bragg and White, is a party to an employment agreement with the Company, no assurances can be given that any of them will remain in the employment of the Company. The Company's continued growth and success depends in part on its ability to attract and retain qualified managers, and on the ability of its executive officers and key employees to manage its operations successfully. The loss of any of the Company's senior management or key personnel, or its inability to attract and retain key management personnel in the future, could have a material adverse effect on the Company's business, financial condition and results of operations. See "Management." LIMITED OPERATING HISTORY IN THIRD-PARTY OUTSOURCING Although the Company has provided outsourcing services to BIG since the Company's inception, to date it has not derived significant revenue from unaffiliated third-party outsourcing customers. A key element of the Company's growth strategy is to leverage its experience and expertise in servicing BIG's flood, 7 13 homeowners and automobile business to market its outsourcing capabilities in various P&C lines, including flood, homeowners and automobile insurance, to other insurance companies and financial institutions. There can be no assurance that the Company will be successful in implementing this growth strategy, and the failure to do so could have a material adverse effect on the business, financial condition and results of operations of the Company. See "Business -- Growth Strategy." COMPETITION The Company competes principally in three markets -- the market for flood insurance outsourcing services, the market for other P&C insurance outsourcing services and the market for flood zone determinations and related services. The markets for these services are highly competitive. The market for flood insurance outsourcing services is dominated by the Company and several principal competitors. The Company competes for these outsourcing customers largely on the basis of price, customer service and responsiveness. The market for other P&C insurance outsourcing services is fragmented. In the policy administration services segment of this market, the Company competes for customers on the basis of customer service, performance and price. The claims administration services segment of the outsourcing market is also highly fragmented, with competition from a large number of claims administration companies of varying size as well as independent contractors. Competition in this segment of the outsourcing market is principally price driven. The Company believes, however, that its most significant competition for outsourcing services comes from policy and claims administration performed in-house by insurance companies. Insurers that fulfill some or all of their policy and claims administration needs in-house typically have made a significant investment in their information processing systems and may be less likely to utilize the Company's services. In addition, insurance company personnel may have a vested interest in maintaining these responsibilities in-house. The market for flood zone determination services is dominated by the Company and several principal competitors. The Company believes that the principal competitive factors in the market for flood zone determinations include quality and reliability of services, response time and price. Certain of the Company's competitors in each of these markets have longer operating histories and significantly greater financial, technical, marketing and other resources than the Company, including name recognition with current and potential customers. As a result, these competitors may devote more resources to the development, promotion and sale of their services or products than the Company and respond more quickly to emerging technologies and changes in customer requirements. In addition, current and potential competitors may establish cooperative relationships among themselves or with third parties to increase the ability of their services and products to address customer needs. Accordingly, new competitors or alliances among competitors may emerge and rapidly acquire significant market share. There can be no assurance that the Company will be able to compete successfully against current and future competitors, or that competitive pressure faced by the Company will not have a material adverse effect on its business, financial condition and results of operations. See "Business -- Competition." IMPLEMENTATION OF ACQUISITION STRATEGY A key element of the Company's growth strategy is to pursue potential acquisitions that offer opportunities to increase market share or expand the Company's menu of outsourcing services. Nevertheless, there can be no assurance that the Company will be able to locate and consummate or, if consummated, successfully integrate future acquisitions. Acquisitions involve significant risks which could have a material adverse effect on the Company, including: (i) the diversion of management's time and attention to the negotiation of the acquisition and to the assimilation of the businesses acquired; (ii) the need to modify financial and other systems and add management resources; (iii) potential liabilities of the acquired business; (iv) unforeseen difficulties in the acquired operations; (v) possible adverse short-term effects on the Company's results of operations; (vi) the dilutive effect of the issuance of additional equity securities; and (vii) the financial reporting effects of the amortization of goodwill and other intangible assets. Furthermore, there can be no assurance that any business interest acquired in the future will achieve acceptable levels of revenue and profitability or otherwise perform as expected. Currently, the Company has no arrangements or 8 14 understandings with any party with respect to any future acquisition. The Company, however, continues to monitor potential acquisition opportunities. See "Business -- Growth Strategy." POTENTIAL LIABILITY TO CLIENTS Many of the Company's contractual engagements involve projects that are critical to the operations of its clients' business and provide benefits that may be difficult to quantify. Any failure in a client's system could result in a claim for substantial damages against the Company, regardless of the Company's responsibility for such failure. Although the Company attempts to limit contractually its liability for damages arising from negligent acts, errors, mistakes or omissions in rendering its services, there can be no assurance that the limitations of liability set forth in its service contracts will be enforceable in all instances or would otherwise protect the Company from liability for damages. Although the Company maintains general liability insurance coverage, including coverage for errors or omissions, there can be no assurance that such coverage will continue to be available on reasonable terms or in sufficient amounts to cover one or more large claims, or that the insurer will not disclaim coverage as to any future claim. The successful assertion of one or more large claims against the Company that exceed available insurance coverage, or changes in the Company's insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on the Company's business, financial condition and results of operations. DEPENDENCE ON TREND TOWARD OUTSOURCING The Company's business and growth depends in large part on the insurance industry's trend toward outsourcing administration and information technology services. There can be no assurance that this trend will continue, as organizations may elect to perform such services in-house. A significant change in the direction of this trend could have a material adverse effect on the Company's business, financial condition and results of operations. See "Business -- Market Opportunities." RELIANCE ON TECHNOLOGY AND COMPUTER SYSTEMS The Company currently licenses its primary processing systems from BIG. Under the terms of its licensing agreement, the Company is responsible for maintaining and upgrading such systems. The Company anticipates that it will be necessary to continue to invest in and develop new technology to maintain its competitiveness. Significant capital expenditures may be required to keep its technology up-to-date. The Company's future success will also depend in part on its ability to anticipate and develop information technology solutions which keep pace with evolving industry standards and changing customer demands. The temporary or permanent loss of any such equipment or systems, through operating malfunction or otherwise, could have a material adverse effect on the Company's business, financial condition and results of operations. See "Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company," "Business -- Information Systems" and "Certain Transactions." In addition, the nature of the Company's business requires that it recruit and retain qualified technical personnel. The Company generally experiences significant turnover of its information technology personnel and is continuously required to recruit and train replacement personnel. The demand for qualified personnel conversant with certain technologies is intense and may exceed supply as new and additional skills are required to keep pace with evolving computer technology. There can be no assurance that the Company will be successful in attracting and retaining the information technology personnel it requires to conduct its operations successfully. Failure to attract and retain such personnel could have a material adverse effect on the Company's business, financial condition and results of operations. See "Business -- Employees." YEAR 2000 ISSUES There is significant uncertainty regarding the impact of Year 2000 issues, which arise when computer systems do not properly recognize date-sensitive information beyond December 31, 1999, thereby generating erroneous data or failing altogether. The Company believes that its primary processing systems will function properly with respect to dates in the Year 2000 and thereafter. However, third parties that have relationships 9 15 with the Company, including suppliers, customers and creditors, may experience significant Year 2000 issues. These issues may have a serious adverse impact on the operations of such third parties, including a shut-down of operations for a period of time, which may, in turn, have a material adverse effect on the Company's business, financial condition and results of operations. In addition, competitors, and other third parties may experience significant Year 2000 issues and, as a result, seek to hire the Company's programmers and other software-related personnel at higher salaries to address these issues. The loss of certain employees or a significant number of employees could have a material adverse effect on the Company's business, financial condition and results of operations. See "Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company -- Year 2000 Compliance" and "Business -- Employees." SHARES ELIGIBLE FOR FUTURE SALE Upon the completion of this offering, the Company will have shares of Common Stock outstanding. Of these shares, the shares of Common Stock sold in this offering will be freely tradable without restriction or registration under the Securities Act by persons other than "affiliates" of the Company, as defined under the Securities Act. The remaining shares of Common Stock will be "restricted securities" within the meaning of Rule 144 under the Securities Act, and may not be sold in the absence of registration under the Securities Act unless an exemption from registration is available, including the exemptions contained in Rule 144. Upon completion of the offering, the Company will have options outstanding to purchase shares of Common Stock. In addition, and additional shares will remain available for issuance under the Company's Long Term Incentive Plan and Non-Employee Directors' Stock Option Plan, respectively. See "Management -- Long Term Incentive Plan," "-- Non-Employee Directors' Stock Option Plan" and "-- Non-Qualified Stock Option Plan" and "Shares Eligible for Future Sale." The restricted shares owned by BIG will, under Rule 144 (and subject to the conditions thereof, including volume limitations), become eligible for sale 90 days after the offering. However, BIG has agreed not to sell, contract to sell or otherwise dispose of any of these shares of Common Stock for a period of 180 days after the date of this Prospectus without the prior written consent of Raymond James & Associates, Inc., on behalf of the Underwriters. After such 180-day period, this restriction will expire and shares permitted to be sold under Rule 144 will be eligible for sale. Raymond James & Associates, Inc., on behalf of the Underwriters, may at any time and without prior notice, release all or any portion of the shares of Common Stock subject to such agreement. See "Underwriting." Prior to this offering, there has been no public market for the Common Stock and no predictions can be made of the effect, if any, that the sale or availability for sale of additional shares of Common Stock will have on the market price of the Common Stock. Nevertheless, sales of substantial amounts of such shares in the public market, or the perception that such sales could occur, could materially and adversely affect the market price of the Common Stock and could impair the Company's future ability to raise capital through an offering of its equity securities. See "Shares Eligible for Future Sale." NO PRIOR PUBLIC MARKET; VOLATILITY OF STOCK PRICE; DILUTION Prior to this offering, there has been no public market for the Common Stock, and there can be no assurance that an active trading market will develop or continue following this offering, or that the market price of the Common Stock will not decline below the initial public offering price. The initial public offering price for the Common Stock will be determined by negotiations among the Company, the Selling Shareholder and the Underwriters based on several factors, and may not be indicative of the market price for the Common Stock after this offering. See "Underwriting." The Company believes that various factors such as general economic conditions and changes or volatility in the financial markets, changing market conditions, and quarterly or annual variations in the Company's financial results, some of which are unrelated to the Company's performance, could cause the market price of the Common Stock to fluctuate substantially. 10 16 In addition, purchasers of the Common Stock offered hereby will experience immediate and substantial dilution of $ in the net tangible book value per share of Common Stock, while the net tangible book value of the shares of Common Stock owned by BIG and the Selling Shareholder will increase by $ per share. See "Dilution." BENEFITS OF THE OFFERING TO THE CURRENT SHAREHOLDERS BIG and the Selling Shareholder will benefit from this offering in that a public market will be created for their stock in the Company. The shares of Common Stock that will be owned by BIG after this offering, which were acquired at a cost of approximately $ , will have a value of approximately $ , assuming a market price equal to the initial public offering price. The shares of Common Stock that will be owned by the Selling Shareholder after this offering, which were acquired at a cost of approximately $ , will have a value of approximately $ , assuming a market price equal to the initial price to public. The Selling Shareholder will also realize a substantial profit on the shares it sells in this offering. See "Principal and Selling Shareholders." GEOTRAC ACQUISITION On July 31, 1997, the Company acquired a 49% equity interest in Geotrac, Inc., an Ohio corporation ("Old Geotrac"), from Daniel J. White and his spouse (the "Whites"), as joint tenants, for $6.75 million in cash. On June , 1998, the Company acquired the remaining 51% equity interest in Old Geotrac from the Whites in exchange for (i) shares of Common Stock (assuming an initial public offering price of $ per share), (ii) a promissory note in the principal amount of $1.5 million, and (iii) cash in the amount of $728,069. The Company also granted the Whites certain demand and piggyback registration rights with respect to the shares of Common Stock issued to them pursuant to this transaction. The transaction was effected pursuant to the merger of Old Geotrac into a wholly-owned subsidiary of the Company, with the surviving entity being known as "Geotrac, Inc.". Old Geotrac, a leading provider of flood zone determinations, began operations in 1978. Old Geotrac's revenues and operating income were $14.1 million and $2.9 million (on a combined basis), respectively, in 1997 and $4.6 million and $1.6 million, respectively, for the three months ended March 31, 1998. Old Geotrac's President, Chief Executive Officer and joint majority shareholder, Daniel J. White, now serves as President, Chief Executive Officer and a director of Geotrac and as a director of the Company. The acquisition of Old Geotrac (the "Geotrac Acquisition") strengthens the Company's position as a leader in the flood zone determination business and broadens the range of flood data services the Company is able to provide. In addition, the Company is in the process of consolidating its own flood zone determination operations with those of Old Geotrac in an effort to realize economies of scale. Finally, the Company believes that access to Old Geotrac's customer base of financial institutions and insurance companies will facilitate cross-selling opportunities and expansion of the Company's outsourcing services. USE OF PROCEEDS The net proceeds to the Company from the sale of the shares of Common Stock offered by the Company (assuming an initial public offering price of $ per share), after deducting the underwriting discounts and commissions and estimated offering expenses payable by the Company, are estimated to be approximately $ million. The Company intends to use approximately $ million of the net proceeds to repay indebtedness that is outstanding at the time of this offering. The Company intends to use the remaining net proceeds of approximately $ million for general corporate purposes, including working capital, capital expenditures on upgraded technology and possible acquisitions. The Company has no present commitments or understandings with respect to the acquisition of any business, although the Company continues to monitor potential acquisition opportunities. Pending such uses, the Company intends to invest the net proceeds of this offering in short-term, investment grade, interest-bearing securities. See "Management's 11 17 Discussion and Analysis of Financial Condition and Results of Operations of the Company -- Liquidity and Capital Resources" and "Business -- Growth Strategy". The indebtedness to be repaid with proceeds from this offering includes a term loan of Geotrac, which had an outstanding principal balance of $7,812,500 at March 31, 1998, bears interest at the current prime rate and matures June 2004, and various debt instruments of the Company including (i) a revolving line of credit with a commercial bank, which had an outstanding balance of $600,000 at March 31, 1998, bears interest at the lender's prime interest rate plus 1.0% and is payable on demand, (ii) a note payable to bank entered into December, 1997 (used to fund capital additions), which had an outstanding balance of $1,972,162 at March 31, 1998, bears interest at 8.19% and matures December, 2000, (iii) various other term loans which totaled $985,889 at March 31, 1998, bearing interest at rates ranging from 8.19% to 8.50%, maturing at various dates from December, 1999 to December, 2000 and (iv) a note payable entered into May, 1998 (used to repurchase preferred stock of a subsidiary), which has an outstanding balance of $6,750,000, bears interest at 8.5% and matures December, 1998. The Company will not receive any proceeds from the sale of shares of Common Stock by the Selling Shareholder. The net proceeds to be received by the Selling Shareholder from the sale of the shares offered by the Selling Shareholder (assuming an initial public offering price of $ per share) will be approximately $ after deducting underwriting discounts and commissions payable by the Selling Shareholder. A wholly-owned subsidiary of the Selling Shareholder has agreed to loan $17.5 million to BIG on or before September 30, 1998, in exchange for a subordinated note. It is anticipated that this loan will be funded using a portion of the net proceeds to be received by the Selling Shareholder in this offering. BIG has agreed with the Company to use a portion of such loan proceeds to satisfy outstanding accounts and note payable to the Company not later than ten business days following receipt of the loan proceeds. As of March 31, 1998 (on a pro forma basis), BIG's accounts and note payable to the Company totaled approximately $14.2 million. The balance of the loan proceeds will provide BIG with additional capital to repay other outstanding indebtedness and expand its operations. The Company, in turn, has agreed with BIG to use a portion of the funds received from BIG to satisfy accounts, income taxes and notes payable to BIG. As of March 31, 1998 (on a pro forma basis), the Company's accounts, income taxes and notes payable to BIG totaled approximately $14.8 million. See "Principal and Selling Shareholders" and "Certain Transactions." DIVIDEND POLICY In December, 1996, December, 1997, and June, 1998, the Company paid dividends of $1.0 million, $3.5 million, and $1.1 million, respectively, to BIG. The Company currently anticipates that all of its earnings will be retained for development and expansion of the Company's business and does not anticipate declaring or paying any cash dividends in the foreseeable future. 12 18 CAPITALIZATION The following table sets forth the capitalization of the Company as of March 31, 1998: (1) on an actual basis; (2) on a pro forma basis to reflect (i) the Geotrac Acquisition, which was completed in June, 1998, using the purchase method of accounting as if the Geotrac Acquisition had occurred on March 31, 1998 and (ii) the purchase of certain fixed assets from affiliated companies to be used in the business, which occurred in April 1998, as if such purchases had occurred at March 31, 1998; and (3) on a pro forma basis, as adjusted to reflect (i) the application of the net proceeds from the issuance and sale of shares of Common Stock offered hereby (assuming an initial public offering price of $ per share), after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company, and (ii) settlement or satisfaction of intercompany accounts from funds made available to BIG by a loan from a subsidiary of the Selling Shareholder, using a portion of the net proceeds of the offering received by the Selling Shareholder. See "Use of Proceeds."
MARCH 31, 1998 --------------------------------------- PRO FORMA, ACTUAL PRO FORMA AS ADJUSTED --------- ----------- ------------- (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) Current portion of long-term debt........................... $ 1,037 $ 3,060 $ Note payable................................................ 600 600 Due to affiliates........................................... 4,591 4,591 Income taxes payable to Parent.............................. 2,888 2,888 Long-term debt, less current portion........................ 1,921 10,805 Notes payable -- affiliate.................................. 4,950 7,303 Preferred stock of subsidiary............................... 6,750 6,750 Shareholders' equity: Preferred stock, $.01 par value, 20,000,000 shares authorized, no shares issued and outstanding........... -- -- Common stock, $.01 par value, 100,000,000 shares authorized; 20,000,000 shares issued and outstanding; shares issued and outstanding on a pro forma basis; and shares issued and outstanding on a pro forma basis, as adjusted(1)....... 200 205 Additional paid-in capital (deficit)...................... (30) 5,732 Retained earnings......................................... 8 8 ------- ------- ------- Total shareholders' equity................................ 178 5,945 ------- ------- ------- Total capitalization.............................. $22,915 $41,942 $ ======= ======= =======
- --------------- (1) Excludes (a) shares of Common Stock reserved for issuance under the Company's Long Term Incentive Plan, pursuant to which options to purchase shares will be granted immediately upon the completion of this offering, (b) shares of Common Stock reserved for issuance under the Company's Non-Employee Directors' Stock Option Plan, and (c) shares of Common Stock reserved for issuance under the Company's Non-Qualified Stock Option Plan, pursuant to which options to purchase shares will be granted immediately upon the completion of this offering. See "Management -- Long Term Incentive Plan," "-- Non-Employee Directors' Stock Option Plan" and "-- Non-Qualified Stock Option Plan." 13 19 DILUTION Purchasers of the Common Stock offered hereby will experience an immediate and substantial dilution in the net tangible book value (deficiency) of their Common Stock from the initial public offering price. The net tangible book value (deficiency) of the Company as of March 31, 1998 was approximately $(11.4 million), or $( ) per share. Net tangible book value (deficiency) per share represents the amount of the Company's tangible net worth (total tangible assets less total liabilities) divided by the total number of shares of Common Stock outstanding. After giving effect to the sale of shares of Common Stock by the Company in this offering and the application of the estimated net proceeds therefrom (after deduction of underwriting discounts and commissions and estimated offering expenses payable by the Company), the pro forma net tangible book value of the Company as of March 31, 1998 would have been $ million, or $ per share of Common Stock. This represents an immediate increase in pro forma net tangible book value of $ per share to the existing shareholders and an immediate dilution of $ per share to purchasers of shares of Common Stock in this offering. The following table illustrates the per share dilution: Assumed initial public offering price per share............. $ -------- Net tangible book value (deficiency) per share before this offering............................................... $ -------- Increase per share attributable to new investors.......... -------- Pro forma net tangible book value after this offering(1).... -------- Dilution in net tangible book value per share to new investors................................................. $ ========
- --------------- (1) If the Underwriters' over-allotment option is exercised in full, the net tangible book value after this offering would be $ per share, resulting in dilution to new investors in this offering of $ per share. The following table sets forth on a pro forma basis as of March 31, 1998 the number of shares of Common Stock purchased from the Company, the total consideration paid and the average price per share of Common Stock paid by the Company's existing shareholders and to be paid by new investors in this offering and before deduction of estimated underwriting discounts and commissions and estimated offering expenses (and assuming no exercise of the Underwriters' over-allotment option):
SHARES PURCHASED(1) TOTAL CONSIDERATION AVERAGE ----------------- -------------------- PER NUMBER PERCENT AMOUNT PERCENT PRICE SHARE ------- ------- ---------- ------- ----------- Existing shareholders................... % $5,937,000 % $ New investors........................... ------- --- ---------- --- -------- Total......................... 100% $ 100% $ ======= === ========== === ========
- --------------- (1) Does not reflect the sale of shares of Common Stock by the Selling Shareholder in this offering and does not include an aggregate of shares of Common Stock issuable upon the exercise of stock options to be granted upon the completion of this offering. See "Management -- Long Term Incentive Plan," "-- Non-Employee Directors' Stock Option Plan" and "-- Non-Qualified Stock Option Plan." Sales by the Selling Shareholder in this offering will reduce the number of shares held by existing shareholders to shares, or approximately %, and will increase the number of shares held by new investors to , or approximately %, of the total number of shares of Common Stock outstanding after this offering. See "Principal and Selling Shareholders." 14 20 SELECTED CONSOLIDATED FINANCIAL DATA OF THE COMPANY (IN THOUSANDS, EXCEPT PER SHARE DATA) The following selected consolidated financial data should be read in conjunction with the Consolidated Financial Statements of the Company and Notes thereto, Pro Forma Condensed Consolidated Financial Statements (unaudited) of the Company, and "Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company" included elsewhere in the Prospectus. The following selected consolidated financial data of the Company as of and for the years ended December 31, 1995, 1996, and 1997 have been derived from the Company's audited consolidated financial statements. The historical information presented as of and for the years ended December 31, 1993 and 1994 and the three months ended March 31, 1997 and 1998 was derived from the unaudited financial statements of the Company. With respect to the unaudited financial information, the Company is of the opinion that all material adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the Company's results of operations and financial position have been included. The results of operations presented below are not necessarily indicative of the results of operations that may be achieved in the future.
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, MARCH 31, --------------------------------------------------------- ---------------------------- PRO FORMA PRO FORMA 1993 1994 1995 1996 1997 1997(1) 1997 1998 1998(1) ------ ------ ------- ------- ------- --------- ------ ------- --------- STATEMENT OF OPERATIONS DATA: Revenues Outsourcing services... $1,454 $1,861 $ 3,444 $ 5,125 $29,714 $30,577 $6,857 $ 8,655 $ 8,655 Flood zone determination services............. 2,661 2,975 5,127 7,705 8,792 22,600 1,947 2,291 6,864 ------ ------ ------- ------- ------- ------- ------ ------- ------- Total revenues...... 4,115 4,836 8,571 12,830 38,506 53,177 8,804 10,946 15,519 ------ ------ ------- ------- ------- ------- ------ ------- ------- Expenses Cost of outsourcing services............. 1,000 1,586 2,955 3,896 21,989 22,097 5,019 6,428 6,146 Cost of flood zone determination services............. 2,052 1,842 3,415 5,362 4,764 10,552 975 1,192 3,067 Selling, general and administrative....... 630 990 804 1,121 3,026 5,927 727 923 1,685 Management services from Parent.......... 232 362 725 1,054 2,344 2,344 586 679 678 Deferred compensation (non-recurring item)................ -- -- -- -- -- 1,461 -- -- -- Depreciation and amortization......... 37 106 184 309 684 3,900 116 273 963 ------ ------ ------- ------- ------- ------- ------ ------- ------- Total expenses...... 3,951 4,886 8,083 11,742 32,807 46,281 7,423 9,495 12,539 ------ ------ ------- ------- ------- ------- ------ ------- ------- Operating income (loss)................. 164 (50) 488 1,088 5,699 6,896 1,381 1,451 2,980 Equity in earnings of Geotrac, Inc........... -- -- -- -- 201 -- -- 408 -- Other income (non- recurring item)........ -- -- -- -- -- 1,700 -- -- -- Interest expense......... -- (48) (72) (75) (149) (1,372) (35) (83) (369) ------ ------ ------- ------- ------- ------- ------ ------- ------- Income (loss) before income taxes........... 164 (98) 416 1,013 5,751 7,224 1,346 1,776 2,611 Provision (benefit) for income taxes........... 69 (31) 162 396 2,112 3,027 513 535 1,052 ------ ------ ------- ------- ------- ------- ------ ------- ------- Net income (loss)........ 95 (67) 254 617 3,639 4,197 833 1,241 1,559 Dividends on Preferred Stock of Subsidiary.... -- -- -- -- 229 229 -- 133 133 ------ ------ ------- ------- ------- ------- ------ ------- ------- Net income (loss) available for common shareholders........... $ 95 $ (67) $ 254 $ 617 $ 3,410 $ 3,968 $ 833 $ 1,108 $ 1,426 ====== ====== ======= ======= ======= ======= ====== ======= ======= Net income (loss) per common share(2)........ $ $ $ $ $ $ $ $ $ ====== ====== ======= ======= ======= ======= ====== ======= ======= Weighted average common shares outstanding.....
15 21
MARCH 31, --------------------------------------------- DECEMBER 31, PRO FORMA, ------------------------------------------- PRO FORMA AS ADJUSTED 1993 1994 1995 1996 1997 1997 1998 1998(1) 1998(3) ------ ------ ------ ------ ------- ------ ------- ------------ ----------- (IN THOUSANDS) BALANCE SHEET DATA: Working capital (deficiency)......... $ 28 $ (146) $ (141) $ (425) $ (148) $ 398 $ (905) $ (669) Total assets........... 1,186 1,311 2,649 3,441 19,532 8,738 25,419 47,004 Long-term debt, less current portion...... 140 278 156 894 2,187 816 1,921 10,805 Notes payable, affiliate............ -- -- -- -- -- -- 4,950 7,303 Preferred Stock of Subsidiary........... -- -- -- -- 6,750 -- 6,750 6,750 Total shareholders' equity............... 172 125 529 260 170 1,219 178 5,945
- --------------- (1) Unaudited pro forma condensed consolidated financial data as of March 31, 1998 and for the three months ended March 31, 1998 and the year ended December 31, 1997 reflect (1) the Geotrac Acquisition, which was completed in June, 1998, using the purchase method of accounting as if the Geotrac Acquisition had occurred at March 31, 1998 for the Balance Sheet Data and at January 1, 1997 for the Statement of Operations Data, (ii) the new affiliated service and administrative agreements that are effective January 1, 1998 as though the new terms were in existence on January 1, 1997 and (iii) the purchase of certain fixed assets from affiliated companies used in the business, which occurred in April, 1998, as if such purchases had occurred at March 31, 1998 for the Balance Sheet Data and at January 1, 1997 for the Statement of Operations Data. See "Geotrac Acquisition," "Certain Transactions" and the Company's Pro Forma Condensed Consolidated Financial Statements (unaudited). (2) Supplemental net income per common share for the year ended December 31, 1997 and the three months ended March 31, 1998, after giving effect to the payment of debt from a portion of the offering proceeds to be received by the Company and the increased number of common shares, is $ and $ per common share assuming and weighted average common shares outstanding. See "Use of Proceeds." (3) Pro forma, as adjusted to reflect (i) the application of the net proceeds from the issuance and sale of shares of Common Stock offered hereby (assuming an initial public offering price of $ per share), after deducting underwriting discounts and commissions and estimated offering expenses payable by the Company and (ii) settlement or satisfaction of intercompany accounts from funds made available to BIG by a loan from a subsidiary of the Selling Shareholder, using a portion of the net proceeds of the offering received by the Selling Shareholder. See "Use of Proceeds" and "Capitalization." 16 22 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF THE COMPANY The following discussion and analysis should be read in conjunction with the Company's Consolidated Financial Statements and the notes thereto included elsewhere in this Prospectus. OVERVIEW Insurance Management Solutions Group, Inc. (together with its subsidiaries, the "Company") is a holding company that was incorporated in the State of Florida in December, 1996 by Bankers Insurance Group, Inc. (together with its subsidiaries, "BIG"), which contributed to the Company two of its wholly-owned operating subsidiaries, Insurance Management Solutions, Inc. ("IMS") and Bankers Hazard Determination Services, Inc. ("BHDS"), that were previously formed in August, 1991 and June, 1988, respectively. BIG is a diversified group of P&C insurance companies with premium writings in all fifty states. BIG's principal lines of business include flood, homeowners and automobile insurance lines. From 1993 to 1997, BIG experienced substantial growth in total written premiums from $113.1 million to $259.0 million. Prior to 1997, the Company's outsourcing services principally related to information technology services provided to BIG on a cost reimbursement basis. In 1997, the Company entered into service arrangements with BIG to provide a broader menu of outsourcing services. These services primarily consisted of policy and claims administration (including policy issuance, billing and collection functions, claims adjusting and processing) and information technology services provided for BIG's flood and homeowners insurance lines of business. Revenues for these services were derived based on a percentage of direct written premiums for policy administration services and direct paid claims for claims administration services. The Company also provided claims administration services for BIG's other insurance lines, excluding flood and homeowners, on a cost reimbursement basis in 1997. Effective January 1, 1998, the Company entered into written service agreements with BIG which modified the existing arrangements to (i) expand the services provided by the Company to include policy administration for certain automobile lines of business, (ii) recognize claims outsourcing revenue based not on a cost reimbursement basis, but rather on a percentage of earned premiums and, with respect to certain types of claims, a percentage of incurred losses, and (iii) implement a change in fee structure from a percentage of incurred loss to a percentage of earned premiums with respect to homeowners claims services. These changes were negotiated in order to effect more uniform revenue recognition. To obtain BIG's agreement to such changes, the Company, in turn, agreed to the revised fee structure with respect to homeowners claims services. BIG presently accounts for approximately 98% of the Company's outsourcing services revenues and is expected to continue to account for a significant majority of the Company's outsourcing revenues in the near future. See "Risk Factors -- Reliance on Key Customer" and "Certain Transactions -- Service Agreements." In July, 1997, the Company acquired a 49% interest in Old Geotrac, a leading provider of flood zone determinations. Until June, 1998, when the remaining 51% interest was acquired, this investment was accounted for on the equity method. Outsourcing service revenues are principally derived from written and earned insurance premiums. Such premiums are affected by seasonal fluctuations in volume of new and renewal policies received. Outsourcing service revenues generated from the flood and homeowners lines of business increase in the late second quarter and peak during the third quarter in conjunction with home sales. In the Company's experience, increased levels of flood insurance purchases occur in the Southeastern United States during the second and third quarters in anticipation of the onset of the hurricane season. During periods of peak demand for flood and homeowners insurance, the number of policies waiting to be issued increases. This backlog represents future service fee income to be earned, generally within one month. Flood zone determination revenues, which are recognized as services are performed, are cyclically impacted by both changes in mortgage interest rates and trends in home sales. 17 23 The cost of outsourcing services primarily includes wages and related benefits associated with personnel who perform policy and claims administration services, as well as postage and telephone charges, data processing and other direct costs associated with providing service to customers. Cost of flood zone determination services primarily includes wages and related benefits associated with personnel who perform flood zone determination services, telephone expenses, general liability insurance, data processing and other direct costs associated with providing service to customers. Due to the ongoing automation of the Company's flood zone database, a gradual increase in the number of automated flood zone determinations, versus manually determined flood zones, has occurred. Automated flood zone determinations cost less for the Company to perform than manually generated determinations. Selling, general and administrative expenses include the wages and related benefits of sales and marketing, executive, finance and accounting personnel, as well as other general operating costs. In addition, wages and related benefits of the management staff of each processing department (i.e. Customer Service, Claims, and Information Services) are included in selling, general and administrative expenses. The Company presently purchases certain services, including human resources, internal audit and legal services, from BIG. See "Certain Transactions." If the Company develops the capability to provide these services internally, certain sales and administrative support costs may fluctuate. QUARTERLY RESULTS The following table presents unaudited quarterly operating results for the Company for the quarters included in years 1996 and 1997 and the first quarter of 1998. This information has been prepared on the same basis as the Company's Consolidated Financial Statements included elsewhere in this Prospectus, and includes all adjustments, consisting of normal recurring accruals, that the Company considers necessary for a fair presentation of the periods presented. These operating results are not necessarily indicative of the Company's future performance.
QUARTER ENDED ------------------------------------------------------------------------------------------ MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31, MARCH 31, JUNE 30, SEPTEMBER 30, 1996 1996 1996 1996 1997 1997 1997 --------- -------- ------------- ------------ --------- -------- ------------- Revenues Outsourcing services................ $1,200 $1,270 $1,279 $1,376 $6,856 $7,420 $ 7,901 Flood zone determination services... 1,822 2,237 1,888 1,758 1,948 2,393 2,241 ------ ------ ------ ------ ------ ------ ------- Total revenues................ 3,022 3,507 3,167 3,134 8,804 9,813 10,142 ------ ------ ------ ------ ------ ------ ------- Expenses Cost of outsourcing services........ 964 963 952 1,017 5,019 5,787 5,722 Cost of flood zone determination services.......................... 1,343 1,567 1,269 1,183 975 1,124 1,263 Selling, general and administrative.................... 281 269 257 314 727 768 746 Management services from Parent..... 263 264 263 264 586 586 586 Depreciation and amortization....... 67 75 80 87 116 132 195 ------ ------ ------ ------ ------ ------ ------- Total expenses................ 2,918 3,138 2,821 2,865 7,423 8,397 8,512 ------ ------ ------ ------ ------ ------ ------- Operating income..................... 104 369 346 269 1,381 1,416 1,630 Equity in earnings (loss) of Geotrac, Inc................................. -- -- -- -- -- -- (32) Interest expense..................... (19) (19) (18) (19) (35) (37) (37) ------ ------ ------ ------ ------ ------ ------- Income before income taxes........... 85 350 328 250 1,346 1,379 1,561 Provision for income taxes........... 35 136 127 98 513 526 605 ------ ------ ------ ------ ------ ------ ------- Net income........................... 50 214 201 152 833 853 956 Dividends on Preferred Stock of Subsidiary.......................... -- -- -- -- -- -- 114 ------ ------ ------ ------ ------ ------ ------- Net income available for Common Shareholders........................ $ 50 $ 214 $ 201 $ 152 $ 833 $ 853 $ 842 ====== ====== ====== ====== ====== ====== ======= QUARTER ENDED ------------------------ DECEMBER 31, MARCH 31, 1997 1998 ------------ --------- Revenues Outsourcing services................ $7,537 $ 8,655 Flood zone determination services... 2,210 2,291 ------ ------- Total revenues................ 9,747 10,946 ------ ------- Expenses Cost of outsourcing services........ 5,461 6,428 Cost of flood zone determination services.......................... 1,403 1,192 Selling, general and administrative.................... 785 923 Management services from Parent..... 586 679 Depreciation and amortization....... 241 273 ------ ------- Total expenses................ 8,476 9,495 ------ ------- Operating income..................... 1,271 1,451 Equity in earnings (loss) of Geotrac, Inc................................. 233 408 Interest expense..................... (40) (83) ------ ------- Income before income taxes........... 1,464 1,776 Provision for income taxes........... 467 535 ------ ------- Net income........................... 997 1,241 Dividends on Preferred Stock of Subsidiary.......................... 115 133 ------ ------- Net income available for Common Shareholders........................ $ 882 $ 1,108 ====== =======
18 24 RESULTS OF OPERATIONS The following table sets forth for the periods indicated certain selected historical operating results of the Company as a percentage of total revenues:
THREE MONTHS YEAR ENDED DECEMBER 31, ENDED MARCH 31, --------------------------------- ------------------------- PRO FORMA PRO FORMA 1995 1996 1997 1997 1997 1998 1998 ----- ----- ----- --------- ----- ----- --------- Revenues Outsourcing services................... 40.2% 39.9% 77.2% 57.5% 77.9% 79.1% 55.8% Flood zone determination services...... 59.8 60.1 22.8 42.5 22.1 20.9 44.2 ----- ----- ----- ----- ----- ----- ----- Total revenues.................. 100.0 100.0 100.0 100.0 100.0 100.0 100.0 ----- ----- ----- ----- ----- ----- ----- Expenses Cost of outsourcing services........... 34.5 30.4 57.1 41.6 57.0 58.7 39.6 Cost of flood zone determination services............................. 39.8 41.8 12.4 19.8 11.1 10.9 19.8 Selling, general and administrative.... 9.4 8.7 7.8 11.1 8.2 8.4 10.8 Management services from Parent........ 8.5 8.2 6.1 4.4 6.7 6.2 4.4 Deferred compensation (non-recurring item)................................ -- -- -- 2.8 -- -- -- Depreciation and amortization.......... 2.1 2.4 1.8 7.3 1.3 2.5 6.2 ----- ----- ----- ----- ----- ----- ----- Total expenses.................. 94.3 91.5 85.2 87.0 84.3 86.7 80.8 ----- ----- ----- ----- ----- ----- ----- Operating income......................... 5.7 8.5 14.8 13.0 15.7 13.3 19.2 Equity in earnings of Geotrac, Inc....... -- -- 0.5 -- -- 3.7 -- Other income (non-recurring item)........ -- -- -- 3.2 -- -- -- Interest expense......................... (0.8) (0.6) (0.4) (2.6) (0.4) (0.8) (2.4) ----- ----- ----- ----- ----- ----- ----- Income before income taxes............... 4.9 7.9 14.9 13.6 15.3 16.2 16.8 Provision for income taxes............... 1.9 3.1 5.5 5.7 5.8 4.9 6.8 ----- ----- ----- ----- ----- ----- ----- Net income............................... 3.0% 4.8% 9.4% 7.9% 9.5% 11.3% 10.0% ===== ===== ===== ===== ===== ===== =====
COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 Outsourcing Services Revenues. Outsourcing services revenue increased $1.8 million, or 26.2%, to $8.7 million in the first quarter of 1998 from $6.9 million in the first quarter of 1997. The increase was primarily attributable to (i) the expansion of the services provided to BIG to include policy administration for certain of BIG's automobile lines of insurance, (ii) the change in fee structure for claims administration (excluding BIG's flood and homeowners lines) from a cost reimbursement basis to a percentage of earned premium and, in certain instances, incurred losses, and (iii) increased services provided to BIG due to the growth in the volume of BIG's flood insurance business. The increase was partially offset by the revised fee structure pertaining to policy administration and claims administration for BIG's homeowners insurance line. Flood Zone Determination Services Revenues. Flood zone determination services revenues increased $344,000, or 17.7%, to $2.3 million in the first quarter of 1998 from $1.9 million in the first quarter of 1997. The revenue growth was primarily attributable to the increased number of flood zone determinations processed due to the large number of mortgage financings and refinancings as a result of continued low interest rates. Cost of Outsourcing Services. Cost of outsourcing services increased $1.4 million, or 28.1%, to $6.4 million in the first quarter of 1998 from $5.0 million in the first quarter of 1997. The increase in cost of outsourcing services was primarily attributable to (i) increases in staffing due to the expansion of the services provided to BIG to include policy administration for certain of BIG's automobile lines of insurance, (ii) increased services provided to BIG due to the growth in the volume of BIG's insurance business and (iii) the Company assuming responsibility for claims costs for independent adjusters and appraisers that were previously borne by BIG. Cost of Flood Zone Determination Services. Cost of flood zone determination services increased $218,000, or 22.4%, to $1.2 million in the first quarter of 1998 from $974,000 in the first quarter of 1997. As a percentage of revenues, cost of flood zone determination services increased from 50.0% in the first quarter of 1997 to 52.0% in the first quarter of 1998. The increase in cost of flood zone determination services as a percentage of revenues primarily resulted from cross-licensing fees for database management paid to Old Geotrac, which were terminated upon the merger of Old Geotrac into the Company in June, 1998, partially 19 25 offset by a reduction in insurance cost associated with the Company's life of loan program due to favorable loss experience under the life of loan program. Effective June 1, 1998, the Company terminated its insurance policy associated with its life of loan program. Consequently, from such date forward, the Company will defer a portion of each life of loan fee received in order to account for its obligation to perform future flood zone redeterminations. Selling, General and Administrative Expense. Selling, general and administrative expenses increased $196,000, or 27.0%, to $923,000 for the first quarter of 1998 from $727,000 in the first quarter of 1997. The increase is primarily related to additional wages and related benefits associated with adding executive management, accounting, sales and marketing and other administrative staff during 1997 to support the Company's expanded operations. Depreciation and Amortization Expense. Depreciation and amortization expense increased $157,000, or 135.0%, to $273,000 in the first quarter of 1998 from $116,000 in the first quarter of 1997 primarily as a result of upgrading existing data processing equipment. Equity in Earnings of Geotrac, Inc. During July 1997, the Company purchased a 49% interest in Old Geotrac. Equity in earnings of Old Geotrac contributed $408,000 to net income of the Company for the first quarter of 1998. Provision for Income Taxes. The Company's effective income tax rates were 30.1% and 38.1% for the first quarters of 1998 and 1997, respectively. Income before income taxes for the first quarter of 1998, excluding the equity in earnings of Old Geotrac, resulted in a effective income tax rate of 39.1%. The equity in earnings in Old Geotrac are presented net of tax. As a result of the Company's acquisition of the remaining 51% interest in Old Geotrac during June, 1998, the Company recorded additional goodwill that is non-deductible for income tax purposes. The annual amortization of the non-deductible goodwill will total approximately $400,000. On a pro forma basis, had the purchase occurred on January 1, 1998, the effective tax rate for the first quarter of 1998 would have been 40.3%. COMPARISON OF THE YEARS ENDED DECEMBER 31, 1997 AND 1996 Outsourcing Services Revenues. Outsourcing services revenues increased $24.6 million, or 479.8%, to $29.7 million in 1997 from $5.1 million in 1996. During 1997, outsourcing services revenue was generated primarily from the Company's service agreements with BIG to provide policy and claims administration related to its flood and homeowners insurance programs. In addition, during 1997, the Company provided claims administration services on a cost reimbursement basis for most of BIG's other lines of business, excluding flood and homeowners. During 1996, the Company provided only information technology services to its affiliated companies on a cost reimbursement basis. Flood Zone Determination Services Revenues. Flood zone determination services revenues increased $1.1 million, or 14.1%, to $8.8 million in 1997 from $7.7 million in 1996. The increase in revenues was due to the increase in determinations performed, offset by a decrease of approximately 6.0% in the average fee per determination as a result of competitive pressures. Cost of Outsourcing Services. Cost of outsourcing services increased $18.1 million, or 464.4%, to $22.0 million in 1997 from $3.9 million in 1996. The increase was primarily the result of the transfer of various policy and claims administration units from BIG to the Company, as well as upward pressure on salaries resulting from continued competition for qualified employees. Cost of Flood Zone Determination Services. Cost of flood zone determination services decreased $598,000, or 11.2%, to $4.8 million in 1997 from $5.4 million in 1996. As a percentage of flood zone determination services revenue, cost of flood zone determination services decreased from 69.6% in 1996 to 54.2% in 1997. The decrease was primarily the result of reduced insurance cost of the Company's life of loan program. Selling, General and Administrative Expense. Selling, general and administrative expenses increased $1.9 million, or 169.9%, to $3.0 million in 1997 from $1.1 million in 1996. The increase was primarily related to additional wages and related benefits associated with adding executive management, accounting, sales and marketing and other administrative staff during 1997 to support the Company's expanded operations. 20 26 Depreciation and Amortization Expense. Depreciation and amortization expense increased $375,000, or 121.1%, to $684,000 in 1997 from $309,000 in 1996 primarily as a result of upgrading existing data processing equipment. Interest Expense. Interest expense increased $74,000, or 98.2%, to $149,000 in 1997 from $75,000 in 1996 as a result of increased borrowings used to fund the Company's capital expenditures. Equity in Earnings of Geotrac, Inc. During July 1997, the Company purchased a 49% interest in Old Geotrac. Equity in earnings of Old Geotrac contributed $201,000 to the earnings of the Company in 1997. Provision for Income Taxes. The Company's effective income tax rates were 36.7% and 39.1% in 1997 and 1996, respectively. Income before provision for income taxes for 1997, excluding the equity in earnings of Old Geotrac, resulted in an effective income tax rate of 38.1%. The equity in earnings in Old Geotrac are presented net of tax. COMPARISON OF THE YEARS ENDED DECEMBER 31, 1996 AND 1995 Outsourcing Services Revenues. Outsourcing services revenues increased $1.7 million, or 48.8%, to $5.1 million in 1996 from $3.4 million in 1995 primarily as a result of an increase in the information technology services provided to BIG due to the growth in the volume of BIG's insurance business. Flood Zone Determination Services Revenues. Flood zone determination services revenue increased $2.6 million, or 50.3%, to $7.7 million in 1996 from $5.1 million in 1995, primarily as a result of significant growth in the Company's client base and in the number of requests for flood zone determinations, partially offset by a decrease in the average fee per determination due to competitive pressures. Cost of Outsourcing Services. Cost of outsourcing services increased $941,000, or 31.8%, to $3.9 million in 1996 from $3.0 million in 1995. The increase resulted primarily from additions to the Company's information technology staff due to the growth in the volume of BIG's insurance business, as well as salary adjustments due to the competitive market for qualified personnel. Cost of Flood Zone Determination Services. Cost of flood zone determination services increased $2.0 million, or 57.0%, to $5.4 million in 1996 from $3.4 million in 1995. The increase was primarily attributable to an increased demand for the Company's life of loan program, for which the Company purchases insurance to fund its obligation to update flood zone determinations under the life of loan program. Additionally, the increase in cost of flood zone determination services was attributable to the addition of flood zone determination staff to handle higher business volume levels. Selling, General and Administrative Expenses. Selling, general and administrative expenses increased $317,000 or 39.4%, to $1.1 million in 1996 from $804,000 for 1995, primarily as a result of adding additional administrative staff to support the Company's growth. Depreciation and Amortization. Depreciation and amortization increased $125,000, or 67.9%, to $309,000 in 1996 from $184,000 in 1995 primarily as a result of adding $885,000 of property and equipment in 1996. LIQUIDITY AND CAPITAL RESOURCES The Company has historically funded its operations through cash generated from operations and receipt of service fees advanced from BIG. Bank borrowings have been used to finance fixed asset purchases. Net cash provided by operating activities for the three months ended March 31, 1997 and 1998 was $2.2 million and $1.1 million, respectively. For 1995, 1996 and 1997, net cash provided by operating activities was $831,000, $963,000 and $7.7 million, respectively. The significant increase in net cash provided by operating activities in 1997 was primarily attributable to the increased level of net income, employee-related accrued expenses and income taxes payable to BIG. Net cash used in investing activities for the three months ended March 31, 1997 and 1998 was $241,000 and $233,000, respectively. For 1995, 1996 and 1997, net cash used in investing activities was $464,000, $1.0 million and $8.2 million, respectively. In July 1997, BHDS issued $6.75 million in non-cumulative, 8% Preferred Stock. The proceeds from the sale of the Preferred Stock were used to fund the purchase of the Company's 49% interest in Old Geotrac. In May 1998, the Company repurchased the outstanding Preferred 21 27 Stock in exchange for a note. The note is payable in its entirety on December 31, 1998 and accrues interest at 8.5%. The Company intends to use a portion of the net proceeds from this offering to repay the note. See "Use of Proceeds." Net cash used in financing activities for the three months ended March 31, 1997 and 1998 was $2.0 million and $979,000, respectively. For 1995, 1996 and 1997, net cash provided by (used in) financing activities was $(333,000), $12,000 and $681,000, respectively. Cash dividends were paid to BIG in 1996 and 1997 in the amount of $1.0 million and $3.5 million, respectively. Additionally, the Company paid a cash dividend of $1.1 million to BIG in June, 1998. Net advances to BIG were $1.9 million and $5.1 million for the three months ended March 31, 1997 and the year ended December 31, 1997, respectively. At December 31, 1997 and March 31, 1998 amounts due from BIG totaled $8.8 million and $9.2 million, respectively. At the same dates, amounts due to BIG and income tax payable to BIG, totaled $5.1 million and $7.5 million, respectively. In addition, at March 31, 1998, a note payable to BIG totaled $4.95 million. Upon completion of this offering, it is contemplated that intercompany balances will be satisfied. At March 31, 1998, the Company maintained a zero balance account arrangement with BIG. As a result of this funding arrangement, the Company has a negative cash balance for financial reporting purposes representing checks that have been issued but that have not yet been presented to the bank for payment. This arrangement was discontinued in June, 1998. See "Certain Transactions -- Miscellaneous." The Company believes that cash flows from operations and net proceeds from this offering will not only satisfy working capital needs for approximately one year but also be sufficient to retire or redeem most existing debts of the Company. Unanticipated rapid expansion, business or systems development, or potential acquisitions may cause the Company to require additional funds. In June, 1998, the Company received a commitment for a $5.0 million revolving line of credit with a commercial bank that will provide bridge financing for working capital or acquisition needs. The Company identifies and assesses, in the normal course of its business, technologies or businesses which it believes to strategically fit its business plan. The Company has no current commitments with respect to any such transaction. The Company may, however, enter into such transactions should opportunities present themselves in the future. NEW ACCOUNTING PRONOUNCEMENTS SFAS No. 130. In June, 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") No. 130, Reporting of Comprehensive Income, which establishes standards of reporting and displaying of comprehensive income and its components (revenues, expenses, gains and losses) in the financial statements. SFAS No. 130 requires comprehensive income to be reported with the same prominence as other items in the financial statements. This statement is effective for fiscal years beginning after December 15, 1997. Reclassification of financial statements for earlier periods presented for comparative purposes is required. The Company does not anticipate that adoption of SFAS No. 130 will have a material effect on the consolidated financial statements. YEAR 2000 COMPLIANCE The Company is currently addressing a universal situation commonly referred to as the "Year 2000 Problem." The Year 2000 Problem relates to the inability of certain computer software programs to properly recognize and process date-sensitive information relative to the Year 2000 and beyond. The Company believes it has made the necessary changes to the primary operating systems that it licenses from BIG to ensure compliance with the Year 2000 Problem. Additionally, the Company has implemented a plan requiring all third-party software vendors to certify that their software products are Year 2000 compliant. The cost of executing this plan is not expected to have a material impact on the Company's results of operations or financial condition. See "Risk Factors -- Year 2000 Issues." 22 28 SELECTED CONSOLIDATED FINANCIAL DATA OF GEOTRAC (IN THOUSANDS) The following selected financial data should be read in conjunction with the Financial Statements of SMS Geotrac, Inc. (as the predecessor to Geotrac, Inc. (formerly YoSystems, Inc.) ("Old Geotrac")) and the Notes thereto, the Financial Statements of Old Geotrac and the Notes thereto, and "Management's Discussion and Analysis of Financial Condition and Results of Operations of Geotrac" included elsewhere in this Prospectus. The following selected financial data of SMS Geotrac, Inc. for the years ended June 30, 1996 and 1997 and for the one month ended July 31, 1997 and of Old Geotrac for the years ended December 31, 1995, 1996, and 1997 have been derived from the company's audited financial statements. The selected financial data presented as of March 31, 1998 and the three months ended March 31, 1997 and 1998 were derived from the unaudited financial information of the Company. With respect to the unaudited financial information, the Company is of the opinion that all material adjustments, consisting only of normal recurring adjustments, necessary for the fair presentation of the company's interim results of operations have been included. This data should be read in conjunction with the Financial Statements of SMS Geotrac, Inc. and the Financial Statements of Old Geotrac included elsewhere in this Prospectus.
SMS GEOTRAC, INC. OLD GEOTRAC (FORMERLY YOSYSTEMS, INC.) ----------------------------- ------------------------------------------- ONE THREE MONTHS YEAR ENDED MONTH YEAR ENDED ENDED JUNE 30, ENDED DECEMBER 31, MARCH 31, ------------------ JULY 31, ---------------------- ------------------ 1996 1997 1997 1995 1996 1997 1997 1998 ------- ------- -------- ---- ---- ------ ------ ------ STATEMENT OF OPERATIONS DATA: Revenues.......................... $12,490 $12,522 $1,210 $ -- $ -- $6,336 $ -- $4,573 ------- ------- ------ ---- ---- ------ ------ ------ Expenses: Cost of revenues................. 6,219 5,914 530 -- -- 2,679 -- 1,874 Selling, general and administrative................. 3,079 2,839 227 10 30 1,319 -- 762 Deferred compensation (non- recurring item)................ -- -- -- -- -- 733 -- -- Depreciation and amortization.... 689 1,331 104 -- -- 594 -- 360 ------- ------- ------ ---- ---- ------ ------ ------ Total expenses............. 9,987 10,084 861 10 30 5,325 -- 2,996 ------- ------- ------ ---- ---- ------ ------ ------ Operating income (loss)........... 2,503 2,438 349 (10) (30) 1,011 -- 1,577 Other income (non-recurring item)............................ -- -- -- 932 -- 1,700 -- -- Interest expense.................. (82) (79) (8) -- -- (338) -- (190) ------- ------- ------ ---- ---- ------ ------ ------ Income before income taxes........ 2,421 2,359 341 922 (30) 2,373 -- 1,387 Provision for income taxes........ 1,047 1,079 148 -- -- 272 -- 554 ------- ------- ------ ---- ---- ------ ------ ------ Net income (loss)................. $ 1,374 $ 1,280 $ 193 $922 $(30) $2,101 $ -- $ 833 ======= ======= ====== ==== ==== ====== ====== ====== COMBINED GEOTRAC(A) ----------------------------------------- THREE MONTHS YEAR ENDED ENDED DECEMBER 31, MARCH 31, -------------------- ------------------ 1996 1997 1997 1998 ------- ------- ------ ------ STATEMENT OF OPERATIONS DATA: Revenues.......................... $13,375 $14,063 $2,985 $4,573 ------- ------- ------ ------ Expenses: Cost of revenues................. 6,673 6,043 1,380 1,874 Selling, general and administrative................. 3,287 2,900 649 762 Deferred compensation (non- recurring item)................ -- 733 -- -- Depreciation and amortization.... 955 1,505 308 360 ------- ------- ------ ------ Total expenses............. 10,915 11,181 2,337 2,996 ------- ------- ------ ------ Operating income (loss)........... 2,460 2,882 648 1,577 Other income (non-recurring item)............................ -- 1,700 -- -- Interest expense.................. (69) (387) (5) (190) ------- ------- ------ ------ Income before income taxes........ 2,391 4,195 643 1,387 Provision for income taxes........ 975 1,113 296 554 ------- ------- ------ ------ Net income (loss)................. $ 1,416 $ 3,082 $ 347 $ 833 ======= ======= ====== ======
OLD GEOTRAC (FORMERLY YOSYSTEMS, INC.) ----------------------------- YEAR ENDED THREE MONTHS DECEMBER 31, ENDED -------------- MARCH 31, 1996 1997 1998 ---- ------- ------------ BALANCE SHEET DATA: Working capital (deficiency)................................ $(25) $ 1,402 $ 1,828 Total assets................................................ -- 18,637 19,112 Long-term debt.............................................. -- 7,745 7,056 Total shareholders' equity (deficit)........................ (25) 7,126 7,959
- --------------- (a) SMS Geotrac, Inc. and Old Geotrac are presented on a combined basis for comparability purposes. 23 29 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF GEOTRAC The following discussion should be read in conjunction with the Financial Statements of Old Geotrac and the Notes thereto and the Financial Statements of SMS Geotrac, Inc. and the Notes thereto included elsewhere in this Prospectus. OVERVIEW During June, 1998, the Company completed the Geotrac Acquisition. The Geotrac Acquisition occurred through a series of transactions beginning in July, 1997. At that time, the Company acquired 49% of the issued and outstanding common stock of YoSystems, Inc. which had nominal net assets at the date of acquisition. YoSystems, Inc. concurrently purchased all of the issued and outstanding common stock of SMS Geotrac, Inc. ("SMS Geotrac"). SMS Geotrac subsequently merged into YoSystems, Inc., which changed its name to "Geotrac, Inc." ("Old Geotrac"). In June 1998, the Company acquired the remaining 51% of the issued and outstanding common stock of Old Geotrac. For comparative purposes, the operating results herein also reflect the combined results of SMS Geotrac and Old Geotrac for the years ended December 31, 1996 and 1997 and the three months ended March 31, 1997. As Old Geotrac is on a different accounting basis resulting from the application of purchase accounting, not all of the combined results, such as depreciation and amortization expense, are comparable. For all periods presented herein and until August 1, 1997, Old Geotrac was a relatively inactive S Corporation whose principal activity was to receive contingent earn-out payments from the prior sale of its operating assets in 1994 and to distribute these earn-out payments to its shareholders. Geotrac's primary source of revenues is derived from the performance of flood zone determinations principally for mortgage origination and P&C insurance companies. Revenues are recognized upon completion of work performed. Mortgage interest rates and weather patterns have historically impacted Geotrac's revenues. The current low level of interest rates, which has stimulated the increase in the number of mortgage financings and refinancings, and the increased awareness of severe weather occurrences have resulted in an increase in the number of determinations processed by Geotrac. Cost of revenues primarily consists of wages and related benefits for personnel who perform flood zone determinations. As Geotrac continues to migrate towards performing more automated than manual determinations, management believes cost of revenues as a percentage of revenues will decrease. Because Old Geotrac had limited operations during the year ended December 31, 1996 and for the period January 1, 1997 through July 31, 1997, the date of the acquisition of SMS Geotrac, Inc., no comparisons of the three months ended March 31, 1998 and 1997, the years ended December 31, 1997 and 1996, and the years ended December 31, 1996 and 1995 are provided. Similarly, no comparison to the prior period is provided for SMS Geotrac with respect to the one month ended July 31, 1997. 24 30 RESULTS OF OPERATIONS The following table sets forth, for the periods indicated, the percentage of revenues represented by certain income and expense items.
SMS GEOTRAC, INC. OLD GEOTRAC (FORMERLY YOSYSTEMS, INC.) COMBINED GEOTRAC(A) ------------------------- --------------------------------------- ----------------------------- THREE MONTHS THREE MONTHS YEAR ENDED ONE MONTH YEAR ENDED ENDED YEAR ENDED ENDED JUNE 30, ENDED DECEMBER 31, MARCH 31, DECEMBER 31, MARCH 31, ------------- JULY 31, ---------------------- -------------- ------------- ------------- 1996 1997 1997 1995 1996 1997 1997 1998 1996 1997 1997 1998 ----- ----- --------- ----- ----- ------ ----- ------ ----- ----- ----- ----- STATEMENT OF OPERATIONS DATA: Revenues.................... 100.0% 100.0% 100.0% 0.0% 0.0% 100.0% 0.0% 100.0% 100.0% 100.0% 100.0% 100.0% ----- ----- ----- --- --- ----- --- ----- ----- ----- ----- ----- Expenses: Cost of revenues........... 49.8 47.2 43.8 0.0 0.0 42.3 0.0 41.0 49.9 43.0 46.2 41.0 Selling, general and administrative........... 24.7 22.7 18.7 0.0 0.0 20.8 0.0 16.6 24.6 20.6 21.8 16.6 Deferred compensation (non-recurring item)..... 0.0 0.0 0.0 0.0 0.0 11.5 0.0 0.0 0.0 5.2 0.0 0.0 Depreciation and amortization............. 5.5 10.6 8.6 0.0 0.0 9.4 0.0 7.9 7.1 10.7 10.3 7.9 ----- ----- ----- --- --- ----- --- ----- ----- ----- ----- ----- Total expenses....... 80.0 80.5 71.1 0.0 0.0 84.0 0.0 65.5 81.6 79.5 78.3 65.5 ----- ----- ----- --- --- ----- --- ----- ----- ----- ----- ----- Operating income............ 20.0 19.5 28.9 0.0 0.0 16.0 0.0 34.5 18.4 20.5 21.7 34.5 Other income (non-recurring item)...................... 0.0 0.0 0.0 0.0 0.0 26.8 0.0 0.0 0.0 12.1 0.0 0.0 Interest expense............ (0.6) (0.7) (0.7) 0.0 0.0 (5.3) 0.0 (4.2) (0.5) (2.8) (0.2) (4.2) ----- ----- ----- --- --- ----- --- ----- ----- ----- ----- ----- Income before income taxes...................... 19.4 18.8 28.2 0.0 0.0 37.5 0.0 30.3 17.9 29.8 21.5 30.3 Provision for income taxes...................... 8.4 8.6 12.2 0.0 0.0 4.3 0.0 12.1 7.3 7.9 9.9 12.1 ----- ----- ----- --- --- ----- --- ----- ----- ----- ----- ----- Net income.................. 11.0% 10.2% 16.0% 0.0% 0.0% 33.2% 0.0% 18.2% 10.6% 21.9% 11.6% 18.2% ===== ===== ===== === === ===== === ===== ===== ===== ===== =====
- --------------- (a) SMS Geotrac, Inc. and Old Geotrac are presented on a combined basis for comparability purposes. 25 31 COMPARISON OF THE THREE MONTHS ENDED MARCH 31, 1998 AND 1997 ON A COMBINED BASIS -- GEOTRAC Revenues. Revenues increased $1.6 million, or 53.2%, to $4.6 million in the first quarter of 1998 from $3.0 million in the first quarter of 1997. This revenue growth was attributable to the increased number of determinations processed due to the large number of mortgage financings and refinancings as a result of continued low interest rates. Cost of Revenues. Cost of revenues increased $494,000, or 35.8%, to $1.9 million in the first quarter of 1998 from $1.4 million in the first quarter of 1997. As a percentage of revenues, cost of revenues decreased to 41.0% in the first quarter of 1998 from 46.2% in the first quarter of 1997. The effect of the efficiencies associated with the increased volume of determinations, coupled with the greater proportion of automated determinations, resulted in the improvement in this percentage in the first quarter of 1998. Selling, General and Administrative Expense. Selling, general and administrative increased $113,000, or 17.4%, to $762,000 in the first quarter of 1998 from $649,000 in the first quarter of 1997. As a percentage of revenues, selling, general and administrative expenses decreased to 16.7% in the first quarter of 1998 from 21.7% in the first quarter of 1997. This percentage decrease was primarily due to spreading certain fixed costs over a larger revenue base. Depreciation and Amortization. Depreciation and amortization increased $52,000, or 16.9%, to $360,000 in the first quarter of 1998 from $308,000 in the first quarter of 1997. The amortization of intangibles related to Old Geotrac's July, 1997 acquisition of SMS Geotrac accounted for the increase in the first quarter of 1998. Interest Expense. Interest expense increased $185,000, to $190,000 in the first quarter of 1998 from $5,000 in the first quarter of 1997. The increase principally relates to interest on the July, 1997 bank borrowings used to fund a portion of the July, 1997 acquisition. Provision for Income Taxes. The effective income tax rate was 40.0% for 1998 and 46.0% for 1997, reflecting additional provision for state income taxes in the first quarter of 1997. COMPARISON OF YEARS ENDED DECEMBER 31, 1997 AND 1996 ON A COMBINED BASIS -- GEOTRAC Revenues. Revenues increased $688,000, or 5.1%, to $14.1 million in 1997 from $13.4 million in 1996. Most of this revenue growth occurred after SMS Geotrac, Inc. was acquired in July, 1997, as a result of the increased number of determinations processed due to the large number of mortgage financings and refinancings as a result of continued low interest rates. Cost of Revenues. Cost of revenues decreased $630,000, or 9.4%, to $6.0 million in 1997 from $6.7 million in 1996. As a percentage of revenues, cost of revenues decreased to 43.0% in 1997 from 49.9% in 1996. The decrease, in both actual dollar amount and as a percentage of revenues, resulted primarily from (i) efficiencies associated with an increased volume of determinations, (ii) a greater proportion of automated determinations, and (iii) higher expenses incurred in 1996 related to the expansion of Old Geotrac's automated database. Selling, General & Administrative Expense. Selling, general and administrative expenses decreased $387,000, or 11.8%, to $2.9 million in 1997 from $3.3 million in 1996. As a percentage of revenues, selling, general and administrative expenses decreased from 24.6% in 1996 to 20.6% in 1997. This decrease was the result of a reduction of bad debt expense in 1997 resulting from improved billing and collection procedures. Deferred Compensation (Non-Recurring Item). On September 11, 1997, Old Geotrac's Board of Directors, recognizing the nonbinding commitment of the president of SMS Geotrac, which commitment originated prior to the acquisition of SMS Geotrac, approved and granted bonuses to certain current and former employees of SMS Geotrac. Such bonuses were principally related to prior services rendered by these employees and resulted in additional compensation in 1997 of $732,795, which amount is separately disclosed in the statement of operations as deferred compensation (non-recurring item) and of which approximately $362,000 and $371,000 relate to cost of revenues and selling, general and administrative expenses, respectively. These amounts are to be paid to the individuals on or before December 31, 1998. 26 32 Prior to and at the time of the acquisition of SMS Geotrac, the president of SMS Geotrac also had a nonbinding commitment to grant to certain former and current employees options to purchase shares of Old Geotrac common stock held jointly by the president and his spouse, for prior employee services rendered. On May 12, 1998, the president and his spouse awarded 46.45 shares of their common stock to these individuals. In conjunction with the agreement and plan of merger with the Company, Old Geotrac acquired the common stock held by these individuals for approximately $728,069. In May, 1998, Old Geotrac will record additional compensation expense (non-recurring item) of $728,069 and an increase to contributed capital of $728,069. Depreciation and Amortization. Depreciation and amortization increased $550,000 or 57.6%, to $1.5 million in 1997 from $955,000 in 1996. The depreciation and amortization in 1997 of the additional computer equipment, furniture and fixtures and maps acquired in 1997 and 1996 principally accounted for this increase. In addition, amortization of intangibles related to the July, 1997 acquisition approximated $260,000 in 1997. Interest Expense. Interest expense increased $318,000 to $387,000 from $69,000 in 1996. This increase relates to the interest on the bank borrowings used to fund a portion of the July, 1997 acquisition. Other Income (Non-Recurring Item). In 1997, Old Geotrac received a contingent earn-out of $1,700,000, representing the final payment under a 1994 sale agreement. No payment was received in 1996. Provision for Income Taxes. The effective income tax rate was 26.5% in 1997 and 40.8% in 1996. The lower rate in 1997 principally reflects that the other income of $1,700,000 was not subject to income tax as Old Geotrac was an S Corporation at the time the amount was received and earned. COMPARISON OF THE YEAR ENDED JUNE 30, 1997 AND 1996 -- SMS GEOTRAC, INC. Revenues. Revenues remained relatively unchanged at $12.5 million in fiscal 1997 and 1996. The flat revenues were primarily attributable to a lack of marketing emphasis. Cost of Revenues. Cost of revenues decreased $305,000, or 4.9%, to $5.9 million in fiscal 1997 from $6.2 million for fiscal 1996. As a percentage of revenues, cost of revenues decreased to 47.2% in fiscal 1997 from 49.8% in fiscal 1996. Management attributes this decrease to a greater proportion of automated determinations, which are less costly than manual determinations. Selling, General and Administrative Expense. Selling, general and administrative expense decreased $240,000, or 7.8%, to $2.8 million in fiscal 1997 from $3.1 million in fiscal 1996. As a percentage of revenues, selling, general and administrative expense decreased to 22.7% in fiscal 1997 from 24.7% in fiscal 1996. The reduction of bad debt expense in 1997, resulting from improved billing and collections procedures, accounted for the decrease in the dollar amount and percentage. Depreciation and Amortization. Depreciation and amortization increased $642,000, or 93.2%, to $1.3 million for fiscal 1997 from $689,000 for fiscal 1996. The depreciation and amortization of the additional computer equipment, furniture and fixtures and maps acquired in 1997 and 1996 accounted for this increase. Provision for Income Taxes. The effective income tax rate was 45.8% in fiscal 1997 and 43.2% in fiscal 1996, reflecting an additional provision for state income taxes in 1997. LIQUIDITY AND CAPITAL RESOURCES Historically, Geotrac has funded its operations primarily through cash generated from operations and to a lesser extent from capital leases and a revolving line of credit. The July, 1997 acquisition of SMS Geotrac was funded by BHDS' contribution of $6,750,000 in cash and proceeds of a new seven year term note of $8,750,000 entered into by Old Geotrac. The note, which had an outstanding balance of $7,812,500 at March 31, 1998, bears interest at prime rate and is collateralized by substantially all of the assets of Old Geotrac. It is anticipated that the note will be repaid from a portion of the offering proceeds. In conjunction with BHDS' purchase of the remaining 51% of Old Geotrac, BHDS was the surviving company and changed its name to "Geotrac, Inc." Accordingly, Geotrac is presently a wholly-owned subsidiary of the Company. As such, the above information should be read in conjunction with "Selected Consolidated Financial Data of the Company," "Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company," the Company's Consolidated Financial Statements and the Company's Pro Forma Condensed Consolidated Financial Statements (unaudited). 27 33 BUSINESS GENERAL The Company provides (1) comprehensive policy and claims outsourcing services to the property and casualty ("P&C") insurance industry, with an emphasis on providing these services to the flood insurance market, and (2) flood zone determinations to financial institutions, mortgage lenders and insurance companies. The Company's outsourcing services, which are offered on either a bundled or "a la carte" basis, include policy administration, claims administration and information technology services. The Company processed approximately 575,000 insurance policies in 1997, including approximately 450,000 flood insurance policies, making it the second largest provider of flood administration services in the United States. The Company currently provides flood outsourcing services to its affiliate, Bankers Insurance Group, Inc. (together with its subsidiaries, "BIG"), Mobile USA Insurance Company, Inc. and AAA Auto Club South Insurance Company, as well as to insurance companies that offer flood insurance utilizing BIG as their private label servicing carrier, such as Horace Mann Insurance Company, Armed Forces Insurance Corporation and AMICA Mutual Insurance Company. In conjunction with BIG, the Company is able to offer insurance companies the ability to create a turnkey private label flood insurance product. The Company believes this product is attractive to insurance companies that desire to offer flood insurance but are not certified by the Federal Emergency Management Agency ("FEMA") to sell and service flood insurance. FEMA estimates that only 25% to 33% of U.S. properties required to be covered by flood insurance are in fact covered. The Company anticipates continued growth in the demand for flood insurance, and related flood outsourcing and flood zone determination services, over the next several years. In 1997, the Company processed approximately 1.4 million flood zone determinations for over 750 customers, including financial institutions such as SouthTrust Bank and SunTrust Bank, mortgage lenders such as ABN Amro North America, Inc. and Mortgage Corporation of America, and P&C insurance companies such as American International Group, Inc., and Royal Indemnity Company. Flood insurance is required by federal law in connection with virtually all residential mortgage loans, including refinancing loans, covering properties located within federally designated high-risk flood zones. A flood zone determination is necessary in order to ascertain a property's flood zone classification. In addition, due to more stringent underwriting criteria, P&C insurers increasingly require flood zone determinations prior to issuing commercial property policies. The Company uses its proprietary database, compiled and digitized from flood maps distributed by FEMA, to determine whether a particular property or structure is located within a flood zone classification that requires flood insurance. The Company estimates that its electronic database includes over 85% of all U.S. households. The Company is a % owned subsidiary of BIG, a holding company chartered in Florida in 1976. BIG provides multiple lines of P&C insurance, most notably flood, homeowners and automobile insurance, to individuals and businesses throughout the United States. From 1993 to 1997, BIG's premiums grew at a compound annual growth rate of 23.0% from $113.1 million to $259.0 million. BIG is the largest underwriter of flood insurance policies through independent agents (and the second largest overall) in the United States. Upon completion of this offering, BIG will beneficially own % of the Company's Common Stock. BIG is the Company's principal customer, accounting for approximately 56% of the Company's total revenues (on a pro forma basis) and 98% of the Company's outsourcing revenues (on a pro forma basis) in 1997. OVERVIEW OF THE FEDERAL FLOOD INSURANCE PROGRAM The U.S. flood insurance market is regulated by FEMA, which launched the National Flood Insurance Program (the "Flood Program") in 1968. FEMA created the Flood Program to provide federally-backed flood insurance to residents in designated floodplain communities, on the condition that such communities comply with the Flood Program's floodplain management requirements. The Flood Program, as it exists today, is administered by the Federal Insurance Administration ("FIA"). The Flood Program was launched in 1968, and in 1983, FIA opened the flood insurance market to private insurance companies by establishing the National Flood Insurance Write Your Own ("WYO") program. The 28 34 WYO program permits private insurance companies who meet FEMA requirements to sell flood insurance underwritten by the federal government and subject to federal regulation. In 1994, Congress passed the National Flood Insurance Reform Act of 1994 (the "1994 Reform Act"). The 1994 Reform Act clarified and strengthened the obligations of mortgage lenders to oversee and ensure the purchase of flood insurance by borrowers who obtain federally-insured residential mortgage loans on properties located in federally designated high-risk flood zones. Under the 1994 Reform Act, mortgage lenders must notify borrowers when flood insurance is required, require flood insurance as a condition to making certain loans, and place flood insurance premiums in escrow. Lenders who fail to comply with the 1994 Reform Act are subject to substantial monetary penalties. MARKET OPPORTUNITIES Growth in the Flood Market. The U.S. flood insurance market has grown significantly in recent years. Currently, almost 19,000 communities participate in the Flood Program, and approximately 100 insurance companies are registered to offer WYO flood insurance. The following table illustrates the growth in flood insurance policies and premiums under the Flood Program since 1987 and highlights the Company's increased penetration of this growing market:
PERCENTAGE OF ANNUAL TOTAL FLOOD NUMBER OF FLOOD PROGRAM FLOOD PREMIUMS TOTAL NUMBER OF FLOOD POLICIES TOTAL ANNUAL PREMIUMS ADMINISTERED POLICIES IN ADMINISTERED BY FLOOD ADMINISTERED BY BY THE AS OF SEPTEMBER 30, FLOOD PROGRAM THE COMPANY PREMIUMS THE COMPANY COMPANY - ------------------- --------------- --------------- ------------- --------------- ------------- (IN 000'S) (IN 000'S) (IN 000'S) (IN 000'S) 1987.......... 2,023 58 $ 554,249 $ 16,185 2.9% 1988.......... 2,052 68 571,265 17,918 3.1 1989.......... 2,167 75 623,409 21,277 3.4 1990.......... 2,341 88 658,359 27,055 4.1 1991.......... 2,459 107 716,650 33,171 4.7 1992.......... 2,530 121 779,746 37,723 4.8 1993.......... 2,690 146 859,128 49,191 5.7 1994.......... 2,805 211 946,898 60,739 6.4 1995.......... 3,265 274 1,114,059 79,960 7.2 1996.......... 3,546 376 1,209,178 102,047 8.4 1997.......... 3,811 453 1,390,015 132,041 9.5
The following table illustrates the growth in the number of flood zone determinations performed by the Company from 1994 through 1997:
TOTAL NUMBER OF TOTAL NUMBER OF FLOOD ZONE DETERMINATIONS 1-4 FAMILY MORTGAGE YEAR GENERATED BY THE COMPANY LOAN ORIGINATIONS IN U.S. - ---- ------------------------- -------------------------- 1994..................................... 449,789 7,484,600 1995..................................... 744,454 5,976,700 1996..................................... 1,191,182 6,882,300 1997..................................... 1,384,089 7,192,000
The Company believes that the demand for flood outsourcing services and flood zone determinations will continue to grow as a result of the following factors: - Higher Levels of Compliance with Federal Flood Laws. The 1994 Reform Act has compelled mortgage lenders to enforce federal flood insurance requirements or be subject to substantial monetary penalties. As a result, a higher percentage of purchasers of residential property located in federally designated high-risk flood zones are being required to purchase flood insurance as a condition to receiving mortgage financing from a federally-backed financial institution. Based on a FEMA estimate that only 25% to 33% of U.S. properties required to be covered by flood insurance 29 35 are in fact covered, and given that only approximately 3.8 million U.S. properties were covered as of September 30, 1997, management estimates that approximately 11.4 million to 15.2 million U.S. properties are in fact required to be covered by flood insurance. The Company believes the demand for flood insurance outsourcing services will grow as compliance with federal flood insurance requirements increases. The Company also believes such compliance will result in greater demand for flood zone determinations, since a flood zone determination is necessary in order to determine whether a property is located in a high-risk flood zone. - Increase in Voluntary Purchase of Flood Insurance. The Company expects the number of property owners who purchase flood insurance on a voluntary basis to increase over the next several years. Management believes consumers are increasingly aware that affordable flood insurance is available to them through the Flood Program. Management attributes this growing awareness to a number of factors, including (1) the Flood Program's national advertising campaign, known as Cover America, which began in 1995, (2) increasing consumer awareness that the typical homeowners' policy does not cover flood damage, and (3) the occurrence of several recent flooding disasters, such as the Mississippi River floods of 1993 and the Red River floods of 1997. Similarly, the substantial media attention given the El Nino phenomenon and the resulting severe weather patterns, have heightened the public's awareness that flood insurance may be necessary even for properties not located in high-risk flood zone classifications. Approximately 25% to 30% of flood damage claims paid relate to properties located outside such flood zone classifications. According to the National Flood Insurance Program Bureau and Statistical Agency, the number of flood insurance policies purchased by homeowners on a voluntary basis has increased from 118,000 policies as of September 30, 1994 to 442,000 policies as of September 30, 1997, a compound annual growth rate of 55.3%. - Growth in Commercial Flood Zone Determination Business. The demand for flood zone determinations by commercial property insurers and commercial mortgage lenders has increased recently and the Company expects this growth pattern to continue. Commercial property insurance policies generally cover floods and similar events. As public attention has focused more closely on severe weather patterns in recent years and insurers have become increasingly aware of the importance of flood coverage, P&C insurers that issue such policies have been developing more stringent underwriting criteria. Trend Toward Outsourcing in the P&C Industry. The P&C industry provides financial protection for individuals, businesses and others against losses of property or losses by third parties for which the insured is liable. P&C insurers underwrite policies that cover various types of risk, which can generally be divided into personal lines of insurance covering individuals and commercial lines of insurance covering businesses. Personal lines are comprised primarily of automobile and homeowners insurance. Commercial lines cover a wide range of commercial risks that affect businesses. The P&C industry is highly competitive, with insurance companies competing primarily on the basis of price, consumer satisfaction and the ability to pay claims. According to A.M. Best, as of December 31, 1997, there were approximately 3,300 P&C insurance companies in the United States. These companies generated approximately $277 billion in annual premium revenues in 1997, 41% of which were written by the top ten insurers. According to A.M. Best, premium revenues in the P&C industry have increased by an average of 3.5% annually since 1990. 30 36 Over the past decade, many P&C insurance companies have begun using third-party vendors to provide certain policy and claims administration services that were traditionally performed in-house. This outsourcing of services allows insurers to focus on their core competencies, reduce costs and eliminate capital expenditures for the development, installation, operation and maintenance of information management and automation systems. Insurance companies historically have invested less in information technology than companies in other industries. In 1996, for example, insurance companies spent only 2.4% of revenues on information technology, as compared to 6.6% for banking firms and 2.9% for all industry sectors combined. The Company believes that insurance companies will increase their levels of outsourcing as they determine that policy and claims administration and regulatory compliance are complicated and too costly to perform efficiently in-house. According to forecasts published by The Yankee Group, the amount spent annually by insurers on outsourcing is expected to increase from $5 billion in 1997 to $13 billion within the next five years. The Company believes it will have significant opportunities to market its outsourcing services for the following reasons: - Consolidation and Drive for Cost Efficiencies. Providers of outsourcing services are able to consolidate large volumes of business into automated and effective processing systems, thereby creating significant cost efficiencies. The Company believes insurance companies typically outsource administrative services because outsource providers can provide better quality services at a lower cost. - Technological Challenges and Complexities. The investment in the specialized technical knowledge required to develop, install and operate information systems necessary for P&C insurers to remain competitive is often cost prohibitive, particularly for smaller companies and new entrants to the market. Insurance companies can take advantage of the economies of technology created by an outsource provider's investment in information systems. For example, the Company believes the Year 2000 issue will generate additional demand for outsourcing services because many insurance companies will resolve the Year 2000 issue by either purchasing new software systems or outsourcing some or all of their policy and claims requirements. - Changing Distribution Channels. The Company believes that demand for outsourcing services will increase as banks, credit unions and other financial service companies enter the P&C market. These new entrants were generally precluded from selling insurance until the U.S. Supreme Court decision in Barnett Bank v. Nelson in 1996. The Company believes that, following this decision, and despite continuing restrictions and pressure from state regulators, banks and other financial institutions will enter the P&C market at an increasing rate, often forming joint ventures and other alliances with certain insurers to sell P&C insurance. Many new entrants lack the technology, expertise or desire to perform policy and claims processing in-house. These so-called "virtual insurance companies" often focus their resources on the core marketing, underwriting and financial aspects of the P&C business and seek to outsource their policy and claims administration to third-party vendors. The Company believes that it is well-positioned to provide services to new entrants to the P&C market. - Regulatory Reporting Requirements. State insurance regulators closely regulate the product offerings, claims processes and premium rate structures of insurance companies. To comply with such regulations, companies must file annual and other reports relating to their financial condition. Third-party vendors with effective policy and claims administration systems can facilitate compliance with many regulatory requirements by automating statutory reporting and other compliance tasks. THE IMSG SOLUTION The Company believes it has positioned itself to capitalize on the foregoing market opportunities in the following ways: - Flood Insurance Experience. The Company believes it is currently the second largest provider of flood insurance outsourcing services in the United States, currently servicing over 450,000 flood 31 37 insurance policies. As a result, the Company has developed substantial expertise and scale in virtually all aspects of the flood insurance servicing business. - Flexible, Comprehensive, Turnkey Solutions. The Company offers a comprehensive range of outsourcing services, both individually and on a bundled basis, giving clients flexibility in selecting and matching services to their needs. The Company's turnkey solutions allow clients to focus on core competencies and better manage costs and allow new market entrants an opportunity to offer insurance products on a cost-effective basis by leveraging the Company's systems and business processes. - Insurance Industry Expertise. Unlike certain of its competitors, the Company's senior management has substantial experience in the insurance industry. See "Management." As a result of this core competence, management believes the Company is better suited to understand and address its customers' needs. - Flood Zone Determination Services. The Company offers a highly automated flood zone determination service based on its proprietary national database. This service provides an accurate, prompt and relatively low cost determination of a residential or commercial property's status with respect to national flood zones. Insurance companies, credit unions, banks and other financial institutions use this service to comply with federal laws requiring mortgage lenders to oversee and ensure the purchase of flood insurance by certain borrowers, create a competitive advantage in loan approval/insurance underwriting response time and generate additional fees from their borrowers. - Modular, Integrated and Real-time Systems. The Company's information systems are table-driven and modular in design, enabling the Company to provide systems that address the specific needs of the client, such as distinct underwriting rules. The core system permits integration of a client's database, thereby eliminating the need for data re-entry for multiple applications. The system provides real-time processing of key functions, such as policy processing and endorsements, that enhances completeness and accuracy in processing. The Company's system also has a proven track record of reliability and low system "down-time." The Company is committed to upgrading and maintaining its systems in an effort to remain competitive. - Customer Service to Independent Agent Networks and Policyholders. Because residential flood insurance rates are set by FEMA and therefore are not directly subject to competitive pressures, the Company believes customer service is a critical consideration for independent sales agents in determining which carrier's flood insurance policies to sell. BIG is the largest underwriter of flood insurance policies through independent agents in the United States, and the Company processes and services all of BIG's flood insurance policies. The Company believes that as a result of its affiliation with BIG it has developed a customer service-oriented culture that strengthens its clients' relationships with their independent sales agent networks and policyholders. The Company focuses on providing superior service, such as timely policy issuance and rapid and professional response to agent and policyholder inquiries. The Company maintains and monitors quality service standards and continually seeks to measures customer satisfaction. The Company believes that its focus on customer service has enabled it to retain all of its principal outsourcing customers since 1994. GROWTH STRATEGY The Company's objectives are (1) to become a leading provider of outsourcing services to the P&C industry and (2) to become the leading provider of flood zone determinations to financial institutions, mortgage lenders and P&C insurers. The Company's principal strategies for achieving these objectives are as follows: - Expand Flood Outsourcing Business. The Company has extensive experience and expertise in virtually all aspects of the flood insurance servicing business and occupies a leading position in that 32 38 market. Key aspects of the Company's growth strategy include (1) marketing flood outsourcing services to existing WYO carriers that it believes will benefit for cost or infrastructure reasons from the Company's services, (2) offering its outsourcing services to new entrants that lack the infrastructure or expertise necessary to service flood insurance customers, and (3) marketing its ability, in conjunction with BIG, to provide and service a private label insurance product to insurance companies that desire to offer flood insurance but are not certified by FEMA to sell and service flood insurance. - Expand Relationships with Existing Customers. The Company intends to capitalize on its existing flood insurance outsourcing customer base and substantial flood zone determination customer base by cross-marketing its flood, homeowners and automobile outsourcing services to certain of these customers. Management believes these marketing opportunities are especially prevalent today, given that recent regulatory changes have permitted non-traditional insurance companies -- most notably banks, credit unions and other financial services companies -- to enter the P&C insurance industry. These new entrants -- many of which are existing flood zone determination customers of the Company -- often do not have the necessary infrastructure or expertise in place and are natural candidates for outsourcing. See "-- Market Opportunities." - Focus on Maximizing Economies of Scale. The Company believes that demand for P&C insurance outsourcing services will grow as such services become more affordable and cost effective. To achieve such affordability and cost effectiveness, a P&C outsourcing provider must develop certain economies of scale. The Company currently services over 575,000 insurance policies annually. As a result, it has developed a large number of efficiencies in most aspects of its operations, from the receipt of policy applications to billings and collections. By deploying internally developed applications software, rating disks for applications input, lockbox and cash office processing, automated voice response, computerized forms and automated policy assembly, the Company has attained expense efficiencies that management believes are characteristic of insurers processing substantially greater policy volumes. As a consequence, the Company believes it is well-positioned to capitalize on the growing trend toward outsourcing administrative functions in the P&C industry by offering insurers better quality and more cost-effective "back office" operations. Moreover, the Company intends to continue expanding these efficiencies by increasing the utilization of its existing infrastructure and databases. - Expand Direct Sales Force and Develop Strategic Relationships. The Company has recently begun to develop a direct sales force and sales support organization to focus on new customer opportunities and generate additional business from the Company's current customer base. The Company is also seeking to develop new business opportunities by creating additional strategic distribution and marketing alliances. For example, the Company's flood zone determination business targets credit unions of all sizes through its marketing alliance with CUNA Mutual Group, the largest provider of insurance products to credit unions, and large mortgage lenders through its marketing alliance with Equifax Mortgage Services, the nation's largest mortgage credit reporting agency. See "-- Services." - Generate Recurring Revenues. The Company seeks to generate recurring revenues by entering into contractual relationships (typically one to three years) with its outsourcing customers and by offering services that are structured to generate revenues based on events that occur frequently in the normal course of a customer's business, such as claims, mortgage applications and insurance policy renewals. - Pursue Strategic Acquisitions. A key element of the Company's growth strategy is to pursue potential acquisitions that offer opportunities to increase market share or expand the Company's line of outsourcing services. The Company's recent Geotrac Acquisition enabled it to solidify its position as a leader in the flood zone determination business and broaden the range of ancillary services the Company is able to provide. Moreover, the Company is currently in the process of 33 39 consolidating its own flood zone determination operations with those of Old Geotrac. See "Geotrac Acquisition." SERVICES Outsourcing Services. The Company's outsourcing services include policy administration, claims administration and information technology services. The Company works with each customer in an effort to ensure a seamless integration of the customer's in-house and outsourced activities. Policy administration describes the range of services the Company offers customers that are considering outsourcing their policy administration functions. When policy administration is outsourced, the customer retains all financial risk and works with the Company to set underwriting and rating guidelines. The Company typically receives a percentage of premiums for performing policy administration services. The Company's policy administration menu includes the following services: policy processing and related data entry; policy issuance and acceptance; premium management and distribution; accounting, billing and collections; customer service phone center for policyholders and agents; and data collection, statutory reporting and regulatory compliance. Claims administration describes the range of services the Company offers in connection with the management of insurance claims. In reviewing a claim, the Company performs a thorough claim analysis and, if warranted, prepares a check for payment of the claim. The Company has a special investigative unit that assists in detecting and deterring fraud in the claim review process. The Company also offers a fully automated, stand-alone catastrophe claims operation, distinguishing its outsourcing services in the P&C insurance market. The Company is typically compensated for claims administration services on either a percentage of earned premiums or claims-paid basis. The Company's claims administration menu includes the following services: toll-free claim reporting; initial coverage confirmation services; loss investigation and determination; review and appraisal of claims; special investigation services, including fraud detection; adjustment of claims and vendor management; litigation management; and settlement and payment of claims. The Company also offers a range of information technology services to assist customers in operating, maintaining and enhancing information systems. The Company integrates the customer's system platform with the Company's processing platform, including the installation of all necessary hardware components, depending on the customer's needs. This integration allows the customer to administer its policies and claims internally by using the Company's systems and software. The Company typically receives a percentage of premiums as compensation, subject to a minimum fee. The Company's information technology menu includes the following services: information management via integrated, secure computer systems; document imaging; on-line rating and underwriting services; monetary systems services, including payment processing; automated printing, packaging and distribution of documents; generation of agent commission statements and production reports; security administration and access control; software application enhancement and maintenance; problem resolution and reporting; and data backup and disaster recovery functions. Because the Company is affiliated with and provides comprehensive outsourcing services to BIG, a certified WYO carrier under the Flood Program, it emphasizes to prospective customers its ability to provide third-party administration outsourcing for flood insurance. The Company offers its flood outsourcing services, including software and processing functions, policy administration, claims administration and statistical reporting, on either a bundled or "a la carte" basis. New market entrants and certain other insurers may prefer to purchase unbundled services, allowing them to retain in-house control over specific aspects of their businesses. The Company makes available virtually any combination of outsourcing services required by the customer. The Company also offers flood outsourcing services to insurance companies that seek to provide flood insurance, but do not want to become certified WYO carriers. In this case, the services are provided in conjunction with a proprietary flood product. An insurance company can establish a private label insurance product written through BIG whereby the customer's name and logo appear on the policy documents, while BIG acts as the servicing carrier. The Company also intends to market its outsourcing services to banks, credit unions and other financial institutions as they become increasingly involved in the sale of insurance. 34 40 Flood Zone Determination Business. For a fixed fee, the Company will provide a customer -- typically a mortgage loan originator or an insurance company -- with a determination as to whether a specified property is located within a federally-designated flood zone classification. The Company uses its proprietary national flood zone database to make flood zone determinations. This database, which is continually updated, allows the Company to determine if a particular structure is located within the special flood hazard areas established by FEMA. These determinations assist mortgage lenders in complying with federal regulations under which they must require borrowers to purchase the appropriate level of flood insurance. Management estimates that approximately 85% of all U.S. households are captured in the Company's flood zone database. For approximately 70% of determinations requested, the Company is able to perform automated flood zone determinations in a matter of seconds. Determinations made on a fully-automated basis are significantly more cost effective than manual determinations. In some cases, particularly where a property is not clearly within or outside a flood hazard area, the database search will not produce an automatic determination, or "hit," and a manual search becomes necessary. Manual searches require extra time and labor and are not nearly as cost effective as fully-automated searches. The Company provides both one-time and life-of-loan flood zone determinations. Under a "life of loan" determination, the Company is responsible for updating the initial flood zone determination based on revisions to the federal flood maps occurring during the term of the loan. The Company also provides portfolio analyses and audits for mortgage service agencies by reviewing blocks of loans that usually require between 100 and 50,000 flood zone determinations. In addition to flood zone determinations, the Company provides flood-related ancillary services. For example, the Company provides a standard flood compliance packet to lenders which includes information on community status, mapping, specific structure location, amount of flood insurance required, secondary market and government program restrictions, and floodway and coastal zone barrier restrictions. The life-of-loan product tracks both community status and FEMA map changes on a daily basis for the life of the loan. If changes occur that affect the subject property, a new report is automatically generated for no additional charge. Certain ancillary services are transferable if the mortgage loan for which the flood zone determination was done is sold or transferred. Through its GeoCompass(R) service, the Company provides certain CD-ROM services on-site at customer locations. The CD-ROM delivery system offers customers the ability to perform certain flood zone determinations at their own desktops. The Company also actively seeks to leverage its expertise in mapping technology by providing ancillary mapping services. For example, the Company has been engaged by various municipalities to digitize manual property tax maps and then integrate these maps with appraisal data. Most municipality property tax maps have not been digitized and the Company believes there is a significant opportunity to penetrate this market. Additionally, the Company was recently hired by the Columbus, Ohio Police Department to digitize property records and then integrate these records with crime statistics in order to better monitor crime trend activity. The Company believes there are numerous other related opportunities to apply its core mapping technology expertise. The Company has established a relationship with Kirloskar Computer Services ("KCS"), located in India, which the Company believes can provide certain services that will increase the efficiency of the Company's flood zone determination business. KCS currently builds databases and creates digitized maps that the Company uses in connection with its flood zone determination business. In addition, KCS is able to perform manual flood zone determination searches at costs significantly below U.S. market rates. The Company currently plans to capitalize on its relationship with KCS by implementing a pilot program pursuant to which the Company will outsource approximately 20% of its manual searches to KCS over the next several years. This pilot program is subject to change based upon political and economic conditions in India. The Company uses different pricing and contractual arrangements for one-time and life-of-loan flood zone determinations. The Company performs flood zone determinations for both residential and commercial properties, with determinations for residential properties comprising approximately 85% of such business. 35 41 CUSTOMER SUPPORT AND INSTALLATION The Company's outsourcing services are provided from two separate customer service centers in St. Petersburg, Florida -- one for policy and claims administration and one for catastrophic claims administration. The policy administration center has approximately 200 employees, most of whom are trained customer service representatives. Customer service representatives are responsible for the timely handling and resolution of incoming phone calls related to underwriting, rating, billing, policy status and other policy administration matters. While most calls come from insurance agents, the phone center also handles calls from mortgage companies, policyholders and insureds. The policy administration phone center handles an average of approximately 7,000 calls per week. The claims administration customer service center is responsible primarily for handling calls from claimants and insureds reporting property losses. The center also handles calls from agents and others related to coverage of existing claims. The center has approximately 170 employees, approximately half of which are licensed claims representatives responsible for the adjustment of claims. Incoming calls are taken by 15 customer service representatives who are trained to handle all types of insurance claims. Unlike many other claims administration centers, the Company's service center is able to immediately assign each claim to a licensed adjuster for processing. The claims administration switchboard is open weekdays from 7:30 a.m. to 9:00 p.m. (Eastern time), and customer service representatives and licensed adjusters are available 24 hours a day, seven days a week, to handle emergency claims. The Company currently maintains two separate customer service centers relating exclusively to its flood zone determination business, one of which was acquired as part of the acquisition of Geotrac. The Company is currently in the process of consolidating its own flood zone determination operations with those of Geotrac. See "Geotrac Acquisition." The Company believes the service center acquired as part of the Geotrac Acquisition is one of the largest flood zone determination service centers in the industry. A team comprised of a senior manager and up to four service representatives is assigned to each customer account. The team advises the customer in all matters of flood compliance and will train a customer's staff at their own or the Company's offices. The team also provides direct support to their customers' independent direct sales agent networks. The Company installs its GeoCompass(R) CD-ROM system on site at customer locations. GeoCompass(R), which enables customers to make their own flood zone determinations, is based on the Windows operating system, operates on the customer's network and is relatively simple for customers to learn to use. SALES AND MARKETING The Company seeks to market its outsourcing capabilities by leveraging its existing expertise in flood insurance administration, expanding its relationships with existing flood zone determination customers and targeting prospective customers, such as insurers with high expense ratios or limited expertise in certain P&C lines. The Company recently formed a sales and marketing division dedicated to direct sales of its outsourcing services. The Company began staffing its sales and marketing division in 1997. This division now includes a senior vice president, two full-time sales representatives, two project managers and a marketing assistant. The Company plans to add two additional full-time sales representatives and a marketing vice president in the near future. In addition to direct marketing, the Company markets its P&C outsourcing services through insurance brokers, reinsurers and other strategic partners. The Company also advertises in various trade publications and participates in industry conventions and trade shows to enhance the penetration of its flood and non-flood markets. The Company markets its flood zone determination services both directly through its own sales personnel and indirectly through its alliances with other service providers. For example, the Company targets credit unions of all sizes through its alliance with CUNA Mutual Group, the nation's largest provider of insurance products to credit unions, and large mortgage lenders through its alliance with Equifax Mortgage Services, believed by the Company to be the largest mortgage credit reporting agency in the U.S. 36 42 INFORMATION SYSTEMS The Company utilizes fully-integrated, real-time, processing systems at its St. Petersburg facilities to provide many of its outsourcing services. These systems, which run on an IBM AS/400 platform coupled with a relational database, enable the Company to provide on-line ratings and underwriting information, issue required insurance forms to policyholders and agents and produce renewal and non-renewal notices. The processing systems interface with a disbursement system which enables the Company to generate checks automatically. A separate IBM AS/400 is used to develop, enhance, and test new and existing systems. In the event of a power failure, the AS/400 site is supported by a fully-functional backup system that provides additional processing time of one hour under full load. Insurance policies and related documents are scanned to optical disks, and are retrievable at most LAN workstations. The Company also has an optical jukebox that can store approximately 10 million documents. The Company data center has controls to ensure security and a disaster recovery plan which is tested regularly. The Company also utilizes computer systems at its Geotrac location, including two IBM AS/400 processors. Geotrac also has several major production systems, including GeoCompass(R) and life-of-loan tracking. The Company is capable of developing modifications or enhancements to its licensed software to meet its outsourcing customers' particular needs. Business analysts from the Company work with each customer to ensure that the Company understands the customer's system requirements. Once the system requirements have been documented, the Company dedicates a team of systems analysts to develop the appropriate modifications or enhancements to its software system. The Company believes that the principal computer equipment and software currently used by the Company will function properly with respect to dates in the year 2000 and thereafter. See "Risk Factors -- Year 2000 Issues." CUSTOMERS The Company currently provides outsourcing services to 18 companies. The Company's largest customer, BIG, accounted for approximately 40%, 37%, 76% and 56%, respectively, of the Company's revenues in 1995, 1996, 1997 and 1997 (pro forma). Any material decrease in the outsourcing business from BIG would have a material adverse effect on the Company's business, financial condition and results of operations. See "Risk Factors -- Reliance on Key Customer." The Company provides outsourcing services to other WYO carriers, including AAA Auto Club South Insurance Company and Mobile USA Insurance Company, Inc. The Company also provides outsourcing services to various insurance companies, such as Horace Mann Insurance Company, Armed Forces Insurance Corporation and AMICA Mutual Insurance Company, that utilize BIG as their servicing carrier. The Company provides flood zone determination services to over 750 banks, credit unions, mortgage lenders, insurance companies and, other financial institutions. The Company's principal financial institution customers for such services include SouthTrust Bank and SunTrust Bank. The Company's principal insurance company customers for such services include American International Group, Inc., and Royal Indemnity Company. In addition, the Company provides flood zone determination services to numerous credit unions, a number of which became customers as a result of the Company's alliance with CUNA Mutual Group, the nation's largest provider of insurance products to credit unions. The Company also provides such services to mortgage lenders such as ABN Amro North America, Inc. and Mortgage Corporation of America primarily through its alliance with Equifax Mortgage Services, believed by the Company to be the largest mortgage credit reporting agency in the U.S. 37 43 COMPETITION The Company competes principally in three markets: (1) the market for flood insurance outsourcing services, (2) the market for other P&C insurance outsourcing services and (3) the market for flood zone determination services. The markets for these services are highly competitive. The market for flood insurance outsourcing services is dominated by the Company and several principal competitors, including National Con-Serv, Inc. and Electronic Data Systems, Inc. The Company competes for these outsourcing customers largely on the basis of price, customer service and responsiveness. The market for other P&C insurance outsourcing services is fragmented. In the policy administration services segment of this market, principal competitors include Policy Management Services Corporation and INSpire Insurance Solutions, Inc. In this segment of the market, the Company competes for customers on the basis of customer service, performance and price. The claims administration services segment of the P&C outsourcing market also is highly fragmented, with competition from a large number of claims administration companies of varying size, as well as independent contractors. Competition in this segment of the outsourcing market is principally price driven. Competitors include Lindsey Morden Claim Services, Inc., Crawford & Company, Inc. and INSpire Insurance Solutions, Inc. The Company believes, however, that its most significant competition for P&C insurance outsourcing services comes from policy and claims administration performed in-house by insurance companies. Insurers that fulfill some or all of their policy and claims administration needs in-house typically have made a significant investment in their information processing systems and may be less likely to utilize the Company's services. In addition, insurance company personnel have a vested interest in maintaining these responsibilities in-house. The market for flood zone determination services is dominated by the Company and several principal competitors, including First American Financial, Pinnacle Data Corporation (a subsidiary of National Insurance Group), TransAmerica and Palma Lazar & Ulsh. The Company believes that the principal competitive factors in the market for flood zone determinations include price, quality and reliability of services, and response time. Certain of the Company's competitors in each of these markets have longer operating histories and significantly greater financial, technical, marketing and other resources than the Company, including name recognition with current and potential customers. As a result, these competitors may devote more resources to the development, promotion and sale of their services or products than the Company and respond more quickly to emerging technologies and changes in customer requirements. There can be no assurance that the Company will be able to compete successfully against current and future competitors, or that competitive pressure faced by the Company will not have a material adverse effect on its business, financial condition and results of operations. 38 44 FACILITIES The following table sets forth certain information with respect to the principal facilities used in the Company's operations:
SQUARE LOCATION FEET FUNCTION LEASE EXPIRATION -------- ------ -------- ---------------- St. Petersburg, Florida(1)............ 76,700 Corporate Headquarters December 1999(2) St. Petersburg, and Outsourcing Florida(1)............ 7,400 Outsourcing December 1999(2) St. Petersburg, Florida(1)............ 6,600 Flood Zone Determination May 1999(3) Norwalk, Ohio........... 12,400 Flood Zone Determination August 1999(4) Norwalk, Ohio........... 21,000 Flood Zone Determination November 2002(4)
- --------------- (1) Each of these facilities is leased or subleased from BIG. See "Certain Transactions." (2) The Company has the option to renew each of these leases for an additional two-year period. (3) The Company is currently negotiating with BIG to reassign this lease to BIG as of the end of 1998. No assurances can be given that such assignment will occur. (4) The Company has the option to renew each of these leases for an additional five-year period. The Company believes that its existing facilities and additional or alternate space available to it are adequate to meet its requirements for the foreseeable future. EMPLOYEES As of June 1, 1998, the Company had 800 full-time employees, consisting of 14 in sales and marketing, 444 in customer service and support, 310 in technical support, and 32 in management, administration and finance. None of the Company's employees is subject to a collective bargaining agreement, and the Company considers its relations with its employees generally to be good. LEGAL PROCEEDINGS The Company is not involved in any pending legal proceedings other than routine litigation arising in the ordinary course of business. The Company does not believe that the results of such litigation, even if the outcome were unfavorable to the Company, would have a material adverse effect on the Company's business, financial condition or results of operations. Bankers Insurance Company ("BIC"), a subsidiary of BIG, the Company's principal shareholder and customer, is currently subject to an investigation by the Florida Department of Insurance (the "DOI"), the principal regulator of insurance activities in the State of Florida, stemming from BIC's use of a private investigator to gather information on a DOI employee. In addition, BIC and certain of its employees (one of whom is now an officer of IMS and several of whom are now employees of the Company) have been subpoenaed on behalf of FEMA to produce documentation in connection with its investigation of, among other things, certain of BIC's cash management practices. Although BIC has informed the Company that it has no reason to believe either of these investigations will have a material adverse effect on BIC's business, financial condition or result of operations, no assurances can be given in this regard. In the event either or both of these investigations or any consequence thereof materially adversely affects the business or operations of BIC, it could result in the loss of or material decrease in the Company's business from BIC, which would have a material adverse effect on the Company's business, financial condition and results of operations. 39 45 MANAGEMENT DIRECTORS AND EXECUTIVE OFFICERS The Company's Board of Directors consists of eight members divided into three classes, with the members of each class serving three-year terms expiring at the third annual meeting of shareholders. The following table sets forth information, as of the date of this Prospectus, regarding the directors and executive officers of the Company.
TERM AS DIRECTOR NAME AGE POSITION EXPIRES - ---- --- -------- -------- David K. Meehan........................... 51 Chairman of the Board, President, Chief 1999 Executive Officer and Director Jeffrey S. Bragg.......................... 49 Executive Vice President, Chief Operating 1998 Officer and Director Kelly K. King............................. 40 Vice President, Treasurer, Chief Financial Officer and Secretary Daniel J. White........................... 48 President and Chief Executive Officer of 1999 Geotrac and Director Robert M. Menke........................... 65 Director 2000 Robert G. Menke........................... 36 Director 1998 John A. Grant, Jr......................... 54 Director 1999 William D. Hussey......................... 64 Director 2000 E. Ray Solomon............................ 69 Director 2000
David K. Meehan has served as the Chairman of the Board, Chief Executive Officer and a director of the Company since December, 1996. Mr. Meehan joined BIG in 1976 as Corporate Secretary. He was appointed President of BIG in 1979 and will serve in such capacity until the completion of this offering. He is currently Vice Chairman of the Board of BIG and Bankers Insurance Company. Mr. Meehan has served on the Board of Governors of each of the Florida Joint Underwriting Association, the Florida Property and Casualty Joint Underwriting Association and the Florida Residential Property and Casualty Joint Underwriting Association. Mr. Meehan is Director/Vice Chairman of the Florida Insurance Council and past Chairman and President of the Florida Association of Domestic Insurance Companies. Jeffrey S. Bragg has served as Executive Vice President and Chief Operating Officer of the Company since November, 1997 and as a director of the Company since May, 1997. Mr. Bragg has 20 years experience in the insurance and insurance related information technology industries. He was with Policy Management Systems Corporation from 1987 to 1995, most recently serving as Senior Vice President and Group Manager. He was also appointed by President Reagan in 1981 to head the Federal Insurance Administration, with responsibility for administering the Flood Program, Federal Crime Insurance program, and Federal Riot Reinsurance programs. Mr. Bragg has served on Legislating and Advising Boards for the Alliance of American Insurance and the National Association of Mutual Insurance Companies. Kelly K. King has served as Vice President, Treasurer and Chief Financial Officer of the Company since December, 1996 and as Secretary of the Company since May, 1998. Mr. King joined BIG in 1992 and served as Vice President and Chief Financial Officer from February, 1993 to October, 1997. Prior to 1992, he was employed in various capacities with Integon Insurance Corporation, NAC Re Corporation, A.M. Best Company and Kemper Group. He is a CPA and a Chartered Property Casualty Underwriter. Daniel J. White has served as a director of the Company since May, 1998. Mr. White founded Geotrac in 1977 and has served as President of Geotrac since August, 1987 and as Chief Executive Officer of Geotrac since September, 1994. Mr. White also currently serves as a director of Independent Community Bank Corp. 40 46 Robert M. Menke has served as a Director of the Company since December, 1996. Mr. Menke founded BIG in 1976 and has been the Chairman of the Board since 1979. He was honored as "Insurance Man Of The Year" in 1986 by the Florida Association of Domestic Insurance Companies. Mr. Menke is also a member of the Florida Insurance Council. Mr. Menke is currently Chairman of the Board and President of First Community Insurance Company, Bankers Security Insurance Company, Bankers Life Insurance Company and Bankers Insurance Company, all affiliates of BIG and the Company. He is also a director of the Florida Windstorm Association and First Community Bank of America. Robert G. Menke has served as a Director of the Company since December, 1996. Mr. Menke, the son of Robert M. Menke, joined BIG in 1985 and has held positions as programmer, systems analyst, systems manager, manager of information services, and Vice President and Senior Vice President of Corporate Services. He is currently Executive Vice-President of BIG and has served in such capacity since October, 1997. John A. Grant, Jr. has served as a Director of the Company since December, 1996. Mr. Grant has been a partner with the St. Petersburg, Florida-based law firm of Harris, Barrett, Mann, and Dew since 1989. Since 1986, he has also been a member of the Florida State Senate, where he currently serves as Chairman of the Education Committee and where he previously served as the Chairman of the Banking & Insurance, Commerce, Criminal Justice, Judiciary, and Government Reform committees. He was a former Advisory Board Member of the United States Small Business Administration and served on the Graduate Fellows Board of the United States Department of Education. William D. Hussey has served as a Director of the Company since December, 1996. Mr. Hussey is a retired President and Chief Executive Officer of the Florida League of Financial Institutions and is an advisor with the Florida Bankers Association. E. Ray Solomon, Ph.D., CLU, has served as a Director of the Company since December, 1996. Dr. Solomon is a retired Professor and the former Dean of the School of Business at Florida State University. Messrs. Robert M. Menke, Meehan and Hussey are also members of the Board of Directors of First Community Insurance Company (a company owned 72% by BIG and 28% by Bankers Life Insurance Company). Messrs. Robert M. Menke and Meehan are on the Board of Directors of Bankers Security Insurance Company, which is wholly-owned indirectly by BIG. Messrs. Robert M. Menke and Meehan are on the Board of Directors of each of Bankers Insurance Company and Bankers Life Insurance Company, which are owned directly or indirectly by BIG. KEY EMPLOYEES Kathleen M. Batson has served as Senior Vice President of Insurance Management Solutions, Inc., the Company's outsourcing subsidiary ("IMS"), since December, 1996. She also served as Senior Vice President of the Company from December, 1996 to June, 1998. Mrs. Batson joined BIG in 1983 and most recently served as Senior Vice President of BIG from June, 1992 to December, 1996. Prior to such time, she was employed with Colonial Penn Insurance Company as Sales Manager from 1977 to 1983. Mrs. Batson was the founding Director and Secretary and past President of the Flood Insurance Servicing Companies Association of America, Inc. and is a member of the National Write Your Own (WYO) Flood Marketing Committee and the Institute for Business and Home Safety Flood Committee. S. Kyle Moll has served as Vice President and Chief Information Officer of IMS since December, 1996. He also served as Vice President and Chief Information Officer of the Company from December, 1996 to June, 1998. Mr. Moll joined BIG in 1993 and served as its Vice President and Chief Information Officer from October, 1996 to October, 1997. Prior to joining BIG, he was employed by Electronic Data Systems from July, 1985 to September, 1993 as Systems Engineer Manager. Robert G. Gantley has served as Vice President -- Claims of IMS since August, 1997. He also served as Vice President-Claims of the Company from August, 1997 to June, 1998. Mr. Gantley joined BIC in October, 1996 and will serve as Vice President -- Claims until the completion of this offering. Prior to joining BIC, 41 47 Mr. Gantley was the Assistant Director of the Massachusetts State Lottery from 1993 to 1996 and a Territorial Claims Manager with Allstate Insurance Company from 1989 to 1993. Howard B. Davis has served as Vice President -- Customer Service and Residual Markets of IMS since December, 1996. He also served as Vice President -- Customer Service and Residential Markets of the Company from August, 1997 to June, 1998. Mr. Davis joined BIG in 1988 and served as its Vice President -- Customer Service and Residual Markets from 1990 to 1997. He was appointed Executive Vice President of Universal Acceptance Corporation in 1991 and will continue to serve in such capacity until the completion of this offering. Prior to joining BIG, Mr. Davis was with Colonial Penn Insurance Company. He is a past President of the Florida Premium Finance Association and past Chairman of the Florida Auto Joint Underwriting Association Operating Committee. Karen R. Kiedrowicz has served as Vice President -- Human Resources of Geotrac since January, 1996. Ms. Kiedrowicz joined Geotrac in September, 1993 and served as Training Leader from September, 1993 to May, 1995 and as Human Resources Manager from May, 1995 to January, 1996. Prior to joining Geotrac, she served as Recruiting and Training Manager of KPMG Peat Marwick, LLP from September, 1989 to July, 1992. Thomas Becker has served as Vice President -- Production and Operations of Geotrac since March, 1996. Prior to joining Geotrac, Mr. Becker spent over 15 years with Equifax, Inc., most recently as Regional Office Manager from October, 1988 to February, 1996. James J. Andrews has served as Vice President -- Information Systems of Geotrac since March, 1998. Mr. Andrews joined Geotrac in June, 1996 as AS/400 Project Leader and served in such capacity until March, 1998. Prior to joining Geotrac, Mr. Andrews was President and owner of Andrews Technical Services, Inc., a computer consulting firm, from May, 1995 to June, 1996, and MIS Manager of Green Circle Growers, Inc. and Express Seed Company from August, 1984 to May, 1995. EXECUTIVE COMPENSATION The following table sets forth certain information concerning compensation paid to or earned by the Company's Chairman of the Board and Chief Executive Officer and each of the Company's three other current executive officers for the year ended December 31, 1997. SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION -------------------------------------- OTHER NAME AND ANNUAL PRINCIPAL POSITION SALARY BONUS COMPENSATION(1) ------------------ -------- ------- --------------- David K. Meehan Chairman of the Board and Chief Executive Officer(2).......................................... $220,999 $58,000 -- Jeffrey S. Bragg Executive Vice President and Chief Operating Officer(3).......................................... 84,806 10,000 -- Kelly K. King Vice President, Treasurer, Chief Financial Officer and Secretary(4).................................... 56,151 7,500 -- Daniel J. White President and Chief Executive Officer of Geotrac(5).......................................... -- -- --
- --------------- (1) Does not include the value of the perquisites provided to certain of the named executive officers which in the aggregate did not exceed 10% of such officer's salary and bonus. Also excludes benefits, if any, 42 48 accruing to Messrs. Meehan, Bragg and King under the Executive Phantom Stock Plan of Bankers Financial Corporation, the parent of BIG. Upon completion of this offering, no officers or directors of the Company (with the exception of Robert G. Menke) will be eligible to receive additional grants under such Phantom Stock Plan. (2) During the year ended December 31, 1997, certain of the executive officers of the Company were also executive officers or employees of BIG, and BIG paid a portion of their respective compensation. Consequently, Mr. Meehan was the only executive officer of the Company who was paid in excess of $100,000 by the Company in 1997. (3) Mr. Bragg joined the Company in May, 1997. (4) Excludes $56,151 in salary and $7,500 in bonus paid to Mr. King by BIG for his service as an executive officer of BIG during the year ended December 31, 1997. (5) Mr. White did not join the Company as an officer until the consummation of the Geotrac Acquisition on June , 1998. EMPLOYMENT AGREEMENTS The Company has entered into employment agreements with each of Messrs. Meehan, Bragg and King, which shall become effective as of the completion of this offering. The initial annual base salary payable to these executive officers under their respective employment agreements are as follows: David K. Meehan, $245,000; Jeffrey S. Bragg, $145,000; and Kelly K. King, $125,000. The remaining terms of each of the employment agreements are substantially the same. Each employment agreement provides for an initial term of three years, subject to automatic continuation until terminated by either party. Each agreement further provides that, if the employee is terminated by the Company without cause (as defined therein), the employee shall be entitled to severance payments, payable in accordance with the Company's usual payroll practices, equal to the employee's then current annual base salary. In the event the employee secures employment during the twelve months following termination, then the Company shall be entitled to a credit against its obligation to make severance payments in the amount of 75% of the base salary paid to the employee by his or her new employer during the twelve-month period following termination by the Company. Each employment agreement provides that the employee shall be provided benefits, such as health, life and disability insurance, on the same basis as the Company's other employees. In addition, to the extent authorized by the Board of Directors, the employee also shall be entitled to participate in the Company's bonus, stock option and other plans, if any. Each agreement further provides that, during the term of the agreement and for a period of two years thereafter, the employee will not, directly or indirectly, compete with the Company by engaging in certain proscribed activities. In connection with the Geotrac Acquisition, Geotrac entered into an employment agreement with Daniel J. White pursuant to which Mr. White will continue to serve as President and Chief Executive Officer of Geotrac. This agreement provides for an initial term of four years and shall continue in effect thereafter until terminated by either party upon 90 days prior written notice. The agreement provides for an initial annual base salary of $150,000, subject to annual review by Geotrac's board of directors. To the extent authorized by Geotrac's board of directors, Mr. White shall be entitled to participate in any bonus programs established by Geotrac. Mr. White shall also be entitled comparable benefits, including health, life and disability insurance, as are offered to any of Geotrac's other executive officers. In the event of Mr. White's death or disability, Geotrac's obligations under the agreement will automatically terminate, except that Mr. White shall be entitled to severance equal to his then current annual base salary. The agreement further provides that, in the event of termination by Geotrac without cause (as defined therein) or by Mr. White for good reason (as defined therein), or in the event the agreement is not renewed for any reason other than death, disability or for cause, then Geotrac shall pay Mr. White at the rate of his annual base salary then in effect for the longer of (i) the remainder of the term of the agreement and (ii) one year after such termination date, subject to a credit of up to 75% of the base salary paid to Mr. White by his new employer, if any. This agreement also provides that, for a period of two years following Mr. White's termination of employment other than by Mr. White for good reason or by Geotrac without cause, Mr. White will not, directly or indirectly, engage (or have an interest) in the flood zone compliance business nor in any other 43 49 business engaged or planned to be engaged in by Geotrac within any state or country in which Geotrac is doing or plans to do business. Finally, the agreement provides that, during the term of the agreement and for a period of two years thereafter, Mr. White will not, directly or indirectly, employ, attempt to employ, or solicit for employment, any of Geotrac's employees. LONG TERM INCENTIVE PLAN The Company currently maintains a Long Term Incentive Plan (the "Incentive Plan") to attract, retain and motivate participating employees of the Company and its subsidiaries through awards of shares of Common Stock, options to purchase shares of Common Stock and stock appreciation rights ("SARs"). A total of shares of Common Stock may be issued pursuant to the Incentive Plan. The Incentive Plan has been adopted by the Company's Board of Directors and is expected to be approved by the shareholders of the Company prior to the consummation of this offering. The Incentive Plan provides for the grant of incentive or nonqualified stock options to purchase shares of Common Stock. Upon the completion of this offering, the executive officers of the Company will be granted options to purchase a total of shares of Common Stock at the initial public offering price as follows: David K. Meehan, shares; Jeffrey S. Bragg, shares; Kelly K. King, shares; and Daniel J. White, shares. All employees of the Company as a group, including these executive officers, will be granted options to purchase a total shares of Common Stock at the initial public offering price. All of such options expire on the tenth anniversary of the date of grant. Options shall become exercisable over a period of five years in equal amounts. The Incentive Plan is administered by the Compensation Committee of the Board of Directors. NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN The Company also maintains a Non-Employee Directors' Stock Option Plan (the "Non-Employee Director Plan") to secure for the Company and its shareholders the benefits of the incentive inherent in increased Common Stock ownership by the members of the Company's Board of Directors who are not employees of the Company. The Non-Employee Director Plan has been adopted by the Company's Board of Directors and is expected to be approved by the shareholders of the Company prior to the consummation of this offering. The Non-Employee Director Plan provides for the grant of nonqualified stock options to purchase up to shares of Common Stock to members of the Board of Directors who are not employees of the Company. As of the date of this Prospectus, such members held no options under the Non-Employee Director Plan. Each non-employee director shall be granted options to purchase shares of Common Stock as of the adjournment of each annual meeting of shareholders of the Company. In addition, each non-employee director shall be granted options to purchase an additional 400 shares of Common Stock ( shares in the event the non-employee director is absent from, arrives late for, or departs early from, such meeting) upon the adjournment of each regularly scheduled quarterly meeting of the Board of Directors (other than following the annual meeting of shareholders). Notwithstanding the foregoing, neither Robert M. Menke nor Robert G. Menke will accept any option grants under the Non-Employee Director Plan. All options granted will have an exercise price equal to the fair market value of the Common Stock as of the date of grant, will become exercisable on the date of grant, and will expire on the sixth anniversary of the date of grant. The Non- Employee Director Plan is a formula plan and accordingly is intended to be self-governing. To the extent that questions of interpretation arise, they will be resolved by the Board of Directors. NON-QUALIFIED STOCK OPTION PLAN The Company's Board of Directors also has adopted a Non-Qualified Stock Option Plan (the "Non-Qualified Plan"), which plan is expected to be approved by the shareholders of the Company prior to the consummation of this offering. The Non-Qualified Plan provides for the grant of non-qualified stock options to purchase up to shares of Common Stock. Upon the completion of this offering, options to purchase shares of Common Stock at the initial public offering price will be granted to certain executive 44 50 officers of BIG, including options to purchase shares each to Messrs. Robert M. Menke and Robert G. Menke, directors of the Company. All of such options expire on the tenth anniversary of the date of grant. Options shall become exercisable over a period of five years in equal amounts. The Non-Qualified Plan is administered by the Compensation Committee of the Board of Directors of the Company. DIRECTOR COMPENSATION Directors who are executive officers of the Company receive no compensation as such for service as members of either the Board of Directors or committees thereof. Directors who are not executive officers of the Company receive $1,000 per Board meeting attended and $150 ($200 in the case of a committee chairperson) per committee meeting attended, plus reimbursement of reasonable expenses. The outside directors are also eligible to receive options to purchase Common Stock under the Company's 1998 Non-Employee Directors' Stock Option Plan. See " -- Stock Option Plans -- 1998 Non-Employee Directors' Stock Option Plan." COMMITTEES OF THE BOARD The Board of Directors has established committees whose responsibilities are summarized as follows: Audit Committee. The Audit Committee is comprised of Messrs. Solomon, Hussey and Grant and is responsible for reviewing the independence, qualifications and activities of the Company's independent certified public accountants and the Company's financial policies, control procedures and accounting staff. The Audit Committee recommends to the Board the appointment of the independent certified public accountants and reviews and approves the Company's financial statements. The Audit Committee is also responsible for the review of transactions between the Company and any Company officer, director or entity in which a Company officer or director has a material interest. Compensation Committee. The Compensation Committee is comprised of Messrs. Solomon, Hussey and Grant and is responsible for establishing the compensation of the Company's directors, officers and other managerial personnel, including salaries, bonuses, termination arrangements, and other executive officer benefits. In addition, the Compensation Committee is responsible for the administration of the Employee Plan, including the recipients, amounts and terms of stock option grants thereunder. COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION The Company's Compensation Committee recently was established in connection with this offering. Except for David K. Meehan, no officer or employee of the Company has participated in deliberations of the Board of Directors prior to this offering concerning executive officer compensation. 45 51 PRINCIPAL AND SELLING SHAREHOLDERS The following table sets forth certain information regarding the beneficial ownership of Common Stock as of the date of this Prospectus, and as adjusted to reflect the sale of Common Stock offered hereby, with respect to: (i) each of the Company's directors and the executive officers named in the Summary Compensation Table; (ii) all directors and executive officers of the Company as a group; and (iii) each person known by the Company to own beneficially more than 5% of the Common Stock. Each of the shareholders listed below has sole voting and investment power over the shares beneficially owned.
SHARES BENEFICIALLY SHARES BENEFICIALLY OWNED OWNED PRIOR TO OFFERING SHARES AFTER OFFERING ------------------- BEING ------------------- NAME SHARES PERCENT OFFERED SHARES PERCENT - ---- -------- -------- ------- -------- -------- Bankers Insurance Group, Inc.(1)............... % -- % Venture Capital Corporation(2)................. David K. Meehan(3)............................. -- -- -- -- -- Jeffrey S. Bragg............................... -- -- -- -- -- Kelly K. King.................................. -- -- -- -- -- Daniel J. White................................ (4) -- (4) Robert M. Menke(3)............................. -- -- -- -- -- Robert G. Menke................................ -- -- -- -- -- John A. Grant, Jr.............................. -- -- -- -- -- William D. Hussey.............................. -- -- -- -- -- E. Ray Solomon................................. -- -- -- -- -- All directors and executive officers as a group (9 persons)(3)(4)............................ -- -- -- -- --
- --------------- * Less than 1%. (1) The business address of Bankers Insurance Group, Inc. is 360 Central Avenue, St. Petersburg, Florida 33701. Bankers Insurance Group, Inc. is an indirect subsidiary of Bankers International Financial Corporation, Ltd. ("BIFC"), a Cayman Islands corporation wholly owned by Bankers International Financial Corporation II Trust, a discretionary charitable trust. The sole trustee of this trust is Ansbacher (Cayman) Limited, a Cayman Islands corporation unaffiliated with BIG, the Company or their respective officers or directors. Pursuant to the trust's declaration of trust, Independent Foundation for the Pursuit of Charitable Endeavors, Ltd., a not for profit Cayman Islands corporation ("IFPCE"), possesses the discretionary power to (i) direct the trustee to appoint the trust fund to another trust for the benefit of one or more of the beneficiaries of the trust and (ii) remove the trustee and appoint one or more new trustees outside the Cayman Islands. A majority vote of the directors of IFPCE is required to take either of these actions. The Articles of Association of IFPCE provide that the Board of Directors shall consist of seven members, three of whom shall be the top three executives of Bankers International Financial Corporation, a Florida corporation and subsidiary of BIFC, three of whom shall be Mr. Robert M. Menke and his lineal descendants, and one of whom shall be a director elected by a majority vote of the remaining six directors (or, if they cannot agree, appointed by a court of competent jurisdiction). Until his death or adjudication of incompetency, Robert M. Menke shall have five votes and all other directors shall have one vote, and Robert M. Menke's presence at a meeting shall be required for a quorum. As of the date of this Prospectus, the directors of IFPCE include David K. Meehan, Robert M. Menke and Robert G. Menke. (2) The business address of Venture Capital Corporation is Bank America Building, Fort Street, Georgetown, Grand Cayman, British West Indies. Venture Capital Corporation is a Cayman Islands corporation wholly owned by Venture II Trust, a discretionary charitable trust. The sole trustee of this trust is Cayman National Bank, a Cayman bank unaffiliated with BIG, the Company or their respective officers or directors. Pursuant to the trust's declaration of trust, IFPCE possesses the same discretionary powers as described in note (1) above. 46 52 (3) Excludes shares held by Bankers Insurance Group, Inc. and shares held by Venture Capital Corporation. See Notes (1) and (2) above. (4) Held jointly with his spouse. Constitutes the number of shares of Common Stock issued jointly to the Whites in connection with the Geotrac Acquisition, assuming an initial public offering price of $ . If the initial public offering price is greater or less than $ , the number of shares held jointly by the Whites will be adjusted proportionately. See "Geotrac Acquisition." CERTAIN TRANSACTIONS ADMINISTRATION SERVICES AGREEMENT Effective as of January 1, 1998, the Company and BIG entered into an Administration Services Agreement (the "Administration Agreement") pursuant to which BIG (i) provides the Company with various administrative and support services, including benefits administration, accounting, legal, cash management and investment services, requested by the Company from time to time and reasonably necessary in the conduct of its operations, and (ii) makes available its facilities to the Company as requested by the Company from time to time and as reasonably necessary to the conduct of its operations. The Company reimburses BIG for all direct and directly allocable expenses determined by BIG to be attributable to the provision of such services and facilities, plus an agreed upon assessment for direct overhead. For the services and facilities being provided in 1998, the Company shall pay BIG a quarterly fee of $392,500, subject to renegotiation by either party. In addition, the Company shall pay BIG at established hourly rates or negotiated fees for any legal and corporate communications services provided. The term of the Administration Agreement expires on March 31, 1999. The Administration Agreement memorializes the administrative service arrangements that existed between the Company and BIG prior to such time. SERVICE AGREEMENTS During 1995, 1996 and 1997, the Company provided information technology services to BIG based generally on actual cost incurred (including selling, general and administrative expenses), which amounted to $3,443,628, $4,787,772 and $3,236,255 in outsourcing revenue for 1995, 1996 and 1997, respectively. Under the terms of its service arrangements with BIG in 1997, the Company charged a monthly fee for its policy and claims administration services based on certain factors. For policy and claims administration, the Company charged a fee based on a percentage of direct written premiums and a percentage of direct paid losses for certain lines of business, respectively. The fee ranged from 8.5% to 9.0% for services rendered in connection with policy administration and 0.5% to 15.0% for claims administration services related to these policies. Also, in 1997, the Company processed claims for BIG and its other affiliates related to those lines of business not covered under the service agreement and provided other miscellaneous services on a cost reimbursement basis. Charges related to this claims processing and other miscellaneous services amounted to $9,518,525 for 1997. Effective as of January 1, 1998, the Company entered into a separate Service Agreement (each a "Service Agreement") with each of Bankers Insurance Company, First Community Insurance Company and Bankers Security Insurance Company, all direct or indirect subsidiaries of BIG, pursuant to which the Company will continue to provide policy administration, claims administration and data processing services to such entities in connection with their flood, homeowners and automobile lines of business, and claims administration and data processing services for all such entities' other P&C lines of business. Under the Service Agreements, each entity pays the Company as follows: (1) for its policy administration services a monthly fee based upon direct written premiums for the flood, homeowners and automobile insurance programs; (2) for its claims administration services a monthly fee based upon direct earned premiums for the property, casualty, automobile property, automobile casualty, flood, and workers' compensation insurance programs (In addition, a monthly fee based upon direct incurred losses is charged for flood claims administration and a reimbursement not to exceed 5% of direct incurred losses from a single event in excess of $2 million is charged to property claims.); (3) for its data processing services, a monthly fee based upon direct 47 53 earned premiums for all insurance programs; and (4) for certain customer services such as mailroom, policy assembly and cash office a monthly fee based upon direct earned premiums (except, if provided in connection with their flood, homeowner and automobile insurance lines, where no such fees are imposed). The term of each Service Agreement shall expire on June 1, 2001, provided that it shall thereafter be automatically extended until terminated upon 90 days prior notice by either party. PROPERTY LEASES The Company currently leases from BIC approximately 76,700 square feet of office space in St. Petersburg, Florida at a monthly rate of approximately $76,700. The initial term of this lease expires on December 31, 1999. The Company has an option to renew this lease for an additional two-year term at a monthly rate not to exceed approximately $83,200. The Company currently leases from BIG approximately 7,400 square feet of office space in St. Petersburg, Florida at a monthly rate of approximately $7,400. The initial term of this lease also expires on December 31, 1999, subject to the Company's right to renew the lease for an additional two-year period at a monthly rate not to exceed approximately $8,000. Effective January 1, 1998, BIG assigned to the Company a lease of approximately 6,600 square feet of office space in St. Petersburg, Florida. This lease expires on May 31, 1999, subject to the Company's right to renew the lease for four successive one-year terms. The current monthly rental rate under this lease is approximately $2,500. The Company is currently negotiating with BIG to reassign this lease to BIG as of the end of 1998. No assurances can be given that such assignment will occur. EMPLOYEE LEASING AGREEMENT Effective as of January 1, 1998, the Company entered into an Employee Leasing Agreement with BIC (the "Employee Leasing Agreement") pursuant to which the Company continues to lease customer service personnel from BIC. The number of employees to be leased will vary depending on the needs of the Company and the availability of employees from BIC. The Company shall be responsible for all expenses associated with such leased employees, including salaries, bonuses and benefits. The Company may terminate any leased employee for disloyalty, misconduct or other similar cause. The Employee Leasing Agreement is terminable by either the Company or BIC upon 60 days prior notice. SALES AND ASSIGNMENT AGREEMENT In May, 1998, the Company entered into a sales and assignment agreement with BIG and certain affiliated companies whereby certain assets were transferred and assigned to the Company, effective retroactively to April, 1998, for use in its business. The assets, including, but not limited to, telephone equipment, computer hardware and software, and service marks were transferred at their net book value as of the date of transfer. The Company paid consideration consisting of $325,075 in cash and entered into two promissory notes amounting to $2,802,175. The notes require monthly installment payments of $10,417 plus accrued interest and mature on April 1, 1999 and December, 2000. In addition, the Company assumed the existing leases with unaffiliated third parties relating to various computer equipment. SOFTWARE LICENSING AGREEMENT Effective January 1, 1998, the Company entered into a non-exclusive license agreement with BIG and BIC pursuant to which the Company licenses its primary operating systems from BIG and BIC in exchange for a nominal fee. The term of the license is perpetual. The license agreement provides that the Company shall be solely responsible for maintaining and upgrading the systems and shall have the authority to sell or license such systems to third parties. 48 54 GEOTRAC TRANSACTIONS During the year ended June 30, 1996 and on July 30, 1997, SMS Geotrac, Inc. ("SMS Geotrac") made payments of $932,222 and $1,700,000, respectively, to SMS Geotrac's former owner in conjunction with the August 1, 1994 purchase of SMS Geotrac. The amounts were recorded as an increase to goodwill and an additional capital contribution to SMS Geotrac. During the year ended June 30, 1997, SMS Geotrac and its parent agreed to treat all outstanding amounts owed to the parent, $1,611,140, as an additional capital contribution. In addition, the parent contributed $500,000 to SMS Geotrac. During the one month period ended July 31, 1997, SMS Geotrac, Inc. advanced $796,596 to YoSystems, Inc. ("YoSystems"). On July 31, 1997, the Company, through its subsidiary, BHDS, acquired a 49% interest in YoSystems. YoSystems concurrently acquired all of the issued and outstanding shares of capital stock of SMS Geotrac. SMS Geotrac merged into YoSystems, with YoSystems being the surviving entity and changing its name to Geotrac. The Company acquired its 49% interest in YoSystems for $6,750,000 in cash. YoSystems acquired SMS Geotrac for $15,000,000, consisting of $6,750,000 in cash and a term note in the principal amount of $8,250,000. In connection with the Company's purchase of a 49% interest in YoSystems, BHDS issued 675,000 shares of non-cumulative 8% preferred stock to Heritage Hotel Holding Company ("Heritage"), a corporation owned by the half brother of Robert M. Menke, a director of the Company. Heritage funded the preferred stock purchase by entering into a note agreement with a commercial bank for $6,750,000, with the preferred stock serving as collateral. On May 8, 1998, the Company purchased the outstanding preferred stock of BHDS in exchange for a note to Heritage in the principal amount of $6,750,000. The note is payable in its entirety on December 31, 1998 and accrues interest at a rate of 8.5%. After May 8, 1998, the preferred stock of BHDS held by the Company was exchanged for 675,000 shares of 8.5% cumulative preferred stock of BHDS. The shares of non-cumulative 8% preferred stock were then retired. The new preferred stock serves as collateral on the note payable to the commercial bank. On June , 1998, the Company acquired the remaining 51% interest in Old Geotrac pursuant to the merger of Old Geotrac with and into BHDS, with the surviving entity being known as "Geotrac, Inc." In connection with this transaction, Geotrac entered into an employment agreement with Daniel J. White pursuant to which Mr. White will serve as President and Chief Executive Officer of Geotrac. See "Geotrac Acquisition" and "Management -- Employment Agreements." Geotrac currently leases a 12,400 square-foot facility in Norwalk, Ohio from DanYo LLC, a limited liability company wholly owned by Daniel J. White and his spouse. This lease is for a term of five years, expiring on August 31, 1999, and provides for monthly rental payments of approximately $8,717, plus payment of utilities, real estate taxes and assessments, insurance, repairs and similar expenses. MISCELLANEOUS A wholly-owned subsidiary of the Selling Shareholder has agreed to loan $17.5 million to BIG on or before September 30, 1998, in exchange for a subordinated note. It is anticipated that this loan will be funded by using a portion of the net proceeds to be received by the Selling Shareholder in this offering. BIG has agreed with the Company to use a portion of such loan proceeds to satisfy outstanding accounts and note payable to the Company not later than ten business days following receipt of the loan proceeds. As of March 31, 1998 (on a pro forma basis), BIG's accounts and note payable to the Company totaled approximately $14.2 million. The balance of the loan proceeds will provide BIG with additional capital to repay other outstanding indebtedness and expand its operations. The Company, in turn, has agreed with BIG to use a portion of the funds received from BIG to satisfy accounts, income taxes and notes payable to BIG. As of March 31, 1998 (on a pro forma basis), the Company's accounts, income taxes and notes payable to BIG totaled approximately $14.8 million. See "Use of Proceeds" and "Principal and Selling Shareholders." 49 55 The Audit Committee of the Board of Directors is responsible for reviewing all future transactions between the Company and any officer or director of the Company or any entity in which an officer or director has a material interest. Any such transactions must be on terms no less favorable than those that could be obtained on an arms-length basis from independent third parties. DESCRIPTION OF CAPITAL STOCK GENERAL The authorized capital stock of the Company consists of 100,000,000 shares of Common Stock, par value $.01 per share, and 20,000,000 shares of Preferred Stock, par value $.01 per share. As of the date of this Prospectus, there were issued and outstanding shares of Common Stock and no shares of Preferred Stock. See "Principal and Selling Shareholders." The following description is qualified in its entirety by reference to the Company's Amended and Restated Articles of Incorporation (the "Articles of Incorporation") and Amended and Restated Bylaws (the "Bylaws"), which are filed as exhibits to the Registration Statement of which this Prospectus is a part. COMMON STOCK The holders of Common Stock are entitled to one vote for each share held of record on all matters submitted to a vote of shareholders. Cumulative voting in the election of directors is not permitted. Subject to preferences that may be granted to holders of Preferred Stock, holders of Common Stock are entitled to receive ratably such dividends as may be declared by the Board of Directors out of funds legally available therefor. See "Dividend Policy." In the event of liquidation, dissolution or winding up of the Company, holders of Common Stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preference, if any, which may be granted to the holders of Preferred Stock. Holders of Common Stock have no conversion, preemptive or other rights to subscribe for additional shares or other securities, and there are no redemption or sinking fund provisions with respect to such shares. The issued and outstanding shares of Common Stock are, and the shares offered hereby will be upon payment therefor, fully paid and nonassessable. PREFERRED STOCK The Board of Directors has the authority to issue up to 20,000,000 shares of Preferred Stock in one or more series and to fix the number of shares constituting any such series and the rights and preferences thereof, including dividend rates, terms of redemption (including sinking fund provisions), redemption price or prices, voting rights, conversion rights and liquidation preferences of the shares constituting such series, without any further vote or action by the Company's shareholders. The issuance of Preferred Stock by the Board of Directors could adversely affect the rights of holders of Common Stock. For example, an issuance of Preferred Stock could result in a class of securities outstanding that would have preferences over the Common Stock with respect to dividends and liquidations, and that could (upon conversion or otherwise) enjoy all of the rights appurtenant to Common Stock. CERTAIN STATUTORY AND OTHER PROVISIONS The Florida Business Corporation Act (the "Florida Act"), the Company's Articles of Incorporation and the Company's Bylaws contain provisions that could have an anti-takeover effect. These provisions are intended to enhance the likelihood of continuity and stability in the composition of the Board and in the policies formulated by the Board and to discourage certain types of transactions described below, which may involve an actual or threatened change of control of the Company. The provisions are designed to encourage any person interested in acquiring the Company to negotiate with and obtain the approval of the Board in connection with the transaction. However, certain of these provisions may discourage a future acquisition of the Company not approved by the Board in which shareholders might receive the maximum value for their shares or which a substantial number and perhaps even a majority of the Company's shareholders believes to 50 56 be in the best interests of all shareholders. As a result, shareholders who might desire to participate in such a transaction may not have the opportunity to do so. See "Risk Factors -- Anti-Takeover Considerations." Statutory Provisions. The Company is subject to several anti-takeover provisions under Florida law that apply to a public corporation organized under Florida law unless the corporation has elected to opt out of such provisions in its Articles of Incorporation or (depending on the provision in question) its Bylaws. The Company has not elected to opt out of these provisions. The Florida Act contains a provision that prohibits the voting of shares in a publicly held Florida corporation which are acquired in a "control share acquisition" unless the board of directors approves the control share acquisition or the holders of a majority of the corporation's voting shares (exclusive of shares held by officers of the corporation, inside directors or the acquiring party) approve the granting of voting rights as to the shares acquired in the control share acquisition. A control share acquisition is defined as an acquisition that immediately thereafter entitles the acquiring party to vote in the election of directors within each of the following ranges of voting power: (i) one-fifth or more but less than one-third of such voting power, (ii) one third or more but less than a majority of such voting power and (iii) a majority or more of such voting power. This statutory voting restriction is not applicable in certain circumstances set forth in the Florida Act. The Florida Act also contains an "affiliated transaction" provision that prohibits a publicly-held Florida corporation from engaging in a broad range of business combinations or other extraordinary corporate transactions with an "interested shareholder" unless (i) the transaction is approved by a majority of disinterested directors before the person becomes an interested shareholder, (ii) the interested shareholder has owned at least 80% of the Company's outstanding voting shares for at least five years, or (iii) the transaction is approved by the holders of two-thirds of the Company's voting shares other than those owned by the interested shareholder. An interested shareholder is defined as a person who, together with affiliates and associates, beneficially owns (as defined in Section 607.0901(1)(e), Florida Statutes) more than 10% of the Company's outstanding voting shares. Classified Board of Directors. Under the Company's Articles of Incorporation and Bylaws, the Board of Directors of the Company is divided into three classes, with staggered terms of three years each. Each year the term of one class expires. The Company's Articles of Incorporation provide that any vacancies on the Board of Directors shall be filled only by the affirmative vote of a majority of the directors then in office, even if less than a quorum. The Articles of Incorporation of the Company also provide that any director may be removed from office, with or without cause. Special Voting Requirements. The Company's Articles of Incorporation provide that all actions taken by shareholders must be taken at an annual or special meeting of the shareholders or by unanimous written consent. The Articles of Incorporation provide that special meetings of shareholders may be called by only a majority of the members of the Board of Directors, the Chairman of the Board or the holders of not less than 10% of the Company's outstanding voting shares. Under the Company's Bylaws, shareholders will be required to comply with advance notice provisions with respect to any proposal submitted for shareholder vote, including nominations for elections to the Board of Directors. The Articles of Incorporation and Bylaws of the Company contain provisions requiring the affirmative vote of the holders of at least two-thirds of the Common Stock to amend certain provisions thereof. Indemnification and Limitation of Liability. The Florida Act authorizes Florida corporations to indemnify any person who was or is a party to any proceeding (other than an action by, or in the right of, the corporation), by reason of the fact that he or she is or was a director, officer, employee, or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee, or agent of another corporation or other entity, against liability incurred in connection with such proceeding, including any appeal thereof, if he or she acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. In the case of an action by or on behalf of a corporation, indemnification may not be made if the person seeking indemnification is adjudged liable, unless the court in which such action was brought determines such person is fairly and reasonably entitled to indemnification. The indemnification provisions of the Florida Act require indemnification if a director or 51 57 officer has been successful on the merits or otherwise in defense of any action, suit or proceeding to which he or she was a party by reason of the fact that he or she is or was a director or officer of the corporation. The indemnification authorized under Florida law is not exclusive and is in addition to any other rights granted to officers and directors under the Articles of Incorporation or Bylaws of the corporation or any agreement between officers and directors and the corporation. A corporation may purchase and maintain insurance or furnish similar protection on behalf of any officer or director against any liability asserted against the officer or director and incurred by the officer or director in such capacity, or arising out of the status, as an officer or director, whether or not the corporation would have the power to indemnify him or her against such liability under the Florida Act. The Company's Articles of Incorporation provide for the indemnification of directors, officers, employees and agents of the Company to the maximum extent permitted by Florida law and for the advancement of expenses incurred in connection with the defense of any action, suit or proceeding that the director, officer, employee or agent was a party to by reason of the fact that he or she is or was a director or executive officer of the Company so long as he or she has undertaken to repay such amount if it is ultimately determined that such person is not entitled to indemnification. Under the Florida Act, a director is not personally liable for monetary damages to the Company or any other person for acts or omissions in his or her capacity as a director except in certain limited circumstances such as certain violations of criminal law and transactions in which the director derived an improper personal benefit. As a result, shareholders may be unable to recover monetary damages against directors for actions taken by them which constitute negligence or gross negligence or which are in violation of their fiduciary duties, although injunctive or other equitable relief may be available. The foregoing provisions of the Florida Act and the Company's Articles of Incorporation and Bylaws could have the effect of preventing or delaying a person from acquiring or seeking to acquire a substantial equity interest in, or control of, the Company. TRANSFER AGENT AND REGISTRAR The transfer agent and registrar for the Common Stock is Firstar Trust Company, Milwaukee, Wisconsin. SHARES ELIGIBLE FOR FUTURE SALE Upon the completion of this offering, the Company will have shares of Common Stock outstanding. Of these shares, the shares of Common Stock sold in this offering will be freely tradable by persons other than affiliates of the Company, without restriction under the Securities Act of 1933, as amended (the "Securities Act"). The remaining shares of Common Stock will be "restricted" securities within the meaning of Rule 144 under the Securities Act and may not be sold in the absence of registration under the Securities Act unless an exemption from registration is available, including the exemptions contained in Rule 144. All of the restricted shares beneficially owned by BIG will be eligible for public sale pursuant to Rule 144 commencing 90 days after the date of this Prospectus, subject to the volume restrictions discussed below. However, BIG has agreed not to sell, contract to sell or otherwise dispose of any shares of Common Stock for a period of 180 days after the date of this Prospectus without the prior written consent of the Underwriters. In general, under Rule 144 as currently in effect, a person (or persons whose shares are aggregated), including an affiliate of the Company, who has beneficially owned his or her shares for at least one year (including the prior holding period of any prior owner other than an affiliate) is entitled to sell within any three-month period that number of shares which does not exceed the greater of 1% of the outstanding shares of the Common Stock, or the average weekly trading volume during the four calendar weeks preceding each such sale. Sales under Rule 144 also are subject to certain manner of sale provisions, notice requirements and the availability of current public information about the Company. A person (or persons whose shares are aggregated) who is not or has not been deemed an "affiliate" of the Company for at least three months, and who has beneficially owned shares for at least two years (including the holding period of any prior owner other 52 58 than an affiliate) would be entitled to sell such shares under Rule 144 without regard to the limitations discussed above. Prior to this offering, there has been no public market for the Common Stock. Sales of substantial amounts of Common Stock in the public market could adversely affect prevailing market prices. 53 59 UNDERWRITING Subject to the terms and conditions set forth in the Underwriting Agreement, the Company and the Selling Shareholder have agreed to sell to each of the Underwriters listed below, and the Underwriters, for whom Raymond James & Associates, Inc., Lehman Brothers Inc. and Furman Selz LLC are acting as representatives (the "Representatives"), have severally agreed to purchase, the respective number of shares of Common Stock set forth opposite their names below:
UNDERWRITERS NUMBER OF SHARES ------------ ---------------- Raymond James & Associates, Inc............................. Lehman Brothers Inc......................................... Furman Selz LLC............................................. -------- Total............................................. ========
Raymond James & Associates, Inc. and Lehman Brothers Inc. are acting as Joint Lead Managers and Joint Lead Bookrunners of this offering. The Underwriting Agreement provides that the obligations of the several Underwriters thereunder are subject to approval of certain legal matters by their counsel and to various other conditions. The Underwriters are obligated to purchase all the shares of Common Stock offered hereby, excluding shares covered by the over-allotment option granted to the Underwriters, if any are purchased. The Company and the Selling Shareholder have been advised by the Representatives that the Underwriters propose to offer the Common Stock to the public at the initial public offering price set forth on the cover page of this Prospectus and to certain dealers at such price, less a concession of not in excess of $ per share, and that the Underwriters and such dealers may re-allow a concession of not in excess of $ per share to other dealers. The public offering price and concessions and re-allowances to dealers may be changed by the Representatives after the initial public offering. The Company and the Selling Shareholder have granted to the Underwriters an option, exercisable within 30 days after the date of the initial public offering, to purchase up to an additional shares of Common Stock to cover over-allotments, at the same price per share to be paid by the Underwriters for the other shares offered hereby. If the Underwriters purchase any such additional shares pursuant to this option, each of the Underwriters will be committed to purchase such additional shares in approximately the same proportion as set forth in the above table. The Underwriters may purchase such shares only to cover over-allotments, if any, in connection with the offering. This offering of Common Stock is made for delivery when, as and if accepted by the Underwriters and subject to prior sale and to withdrawal, cancellation or modification of this offering without notice. The Underwriters reserve the right to reject an order for the purchase of shares in whole or in part. Until the distribution of Common Stock in this offering is completed, rules of the Securities and Exchange Commission may limit the ability of the Underwriters and certain selling group members to bid for and purchase the Common Stock. As an exception to these rules, the Representatives are permitted to engage in certain transactions that stabilize the price of the Common Stock. Such transactions consist of bids or purchases for the purpose of pegging, fixing or maintaining the price of the Common Stock. If the Underwriters create a short position in the Common Stock in connection with this offering, i.e., if they sell more shares of Common Stock than are set forth on the cover page of this Prospectus, the Representatives may reduce the short position by purchasing Common Stock in the open market. The Representatives may also elect to reduce any short position by exercising all or part of the over-allotment option described above. The Representatives may also impose a penalty bid on certain Underwriters and selling group members. This means that if the Representatives purchase shares of Common Stock in the open market to reduce the Underwriters' short position or to stabilize the price of the Common Stock, they may reclaim the amount of the selling concession from the Underwriters and selling group members who sold those shares as part of this offering. In general, purchases of a security for the purpose of stabilization or to reduce a short position could 54 60 cause the price of the security to be higher than it might be in the absence of such purchases. The imposition of a penalty bid might also have an effect on the price of a security to the extent that it discouraged resales of any security. Neither the Company, the Selling Shareholder nor any of the Underwriters makes any representations or predictions as to the direction or magnitude of any effect that the transactions described above may have on the price of the Common Stock. In addition, neither the Company, the Selling Shareholder nor any of the Underwriters makes any representation that the Representatives will engage in such transactions or that such transactions, once commenced, will not be discontinued without notice. The Company, BIG, the Selling Shareholder and certain officers and directors of the Company have agreed that they will not, without the prior written consent of Raymond James & Associates, Inc., sell, offer to sell, contract to sell or otherwise transfer or dispose of any shares of Common Stock (other than the shares offered by the Selling Shareholder in this offering), options, rights or warrants to acquire shares of Common Stock, or securities exchangeable for or convertible into shares of Common Stock, during the 180-day period commencing on the date of this Prospectus, except that the Company may grant additional options under the Incentive Plan and the Non-Employee Director Plan, provided that without the prior written consent of Raymond James & Associates, Inc., such additional options shall not be exercisable during such period. See "Shares Eligible for Future Sale." Prior to this offering, there has been no public market for the Common Stock. The initial public offering price was determined by negotiation among the Company, the Selling Shareholder and the Representatives. The factors considered in determining the initial public offering price include the history of and prospects for the business in which the Company operates, past and present operations, revenues and earnings of the Company and the trend of such earnings, the prospects for such earnings, the general condition of the securities markets at the time of the offering and the demand for similar securities of reasonably comparable companies. The Representatives have informed the Company that the Underwriters do not intend to make sales to any accounts over which they exercise discretionary authority. The Company, BIG, the Selling Shareholder and the Underwriters have agreed to indemnify, or to contribute to payments made by, each other against certain civil liabilities, including certain civil liabilities under the Securities Act. LEGAL MATTERS The validity of the issuance of the shares of Common Stock offered hereby will be passed upon for the Company by Foley & Lardner, Tampa, Florida. Certain legal matters in connection with the sale of the Common Stock offered hereby will be passed upon for the Underwriters by Powell, Goldstein, Frazer & Murphy LLP, Atlanta, Georgia. EXPERTS The consolidated financial statements of Insurance Management Solutions Group, Inc. as of December 31, 1996 and 1997 and for each of the three years in the period ended December 31, 1997 appearing in this Prospectus and in the Registration Statement, have been audited by Grant Thornton LLP, independent certified public accountants, as set forth in their report thereon appearing elsewhere herein and in the Registration Statement, and are included herein in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. The financial statements of Geotrac, Inc. (formerly YoSystems, Inc.) as of December 31, 1996 and 1997 and for each of the three years in the period ended December 31, 1997 appearing in this Prospectus and in the Registration Statement, have been audited by Grant Thornton LLP, independent certified public accountants, as set forth in their report thereon appearing elsewhere herein and in the Registration Statement, and are included herein in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. 55 61 The financial statements of SMS Geotrac, Inc. for each of the two years in the period ended June 30, 1997 and for the one month period ended July 31, 1997 appearing in this Prospectus and in the Registration Statement, have been audited by Grant Thornton LLP, independent certified public accountants, as set forth in their report thereon appearing elsewhere herein and in the Registration Statement, and are included herein in reliance upon such report given upon the authority of such firm as experts in accounting and auditing. AVAILABLE INFORMATION The Company has filed with the Securities and Exchange Commission (the "Commission") a Registration Statement (of which this Prospectus is a part) under the Securities Act with respect to the securities offered hereby. This Prospectus does not contain all the information set forth in the Registration Statement, certain portions of which have been omitted as permitted by the rules and regulations of the Commission. Statements contained in the Prospectus as to the contents of any contract or other document are not necessarily complete, and in each instance reference is made to the copy of such contract or other document filed as an exhibit to the Registration Statement, each such statement being qualified in all respects by such reference and the exhibits and schedules thereto. For further information regarding the Company and the Common Stock offered hereby, reference is hereby made to the Registration Statement and such exhibits and schedules which may be obtained from the Commission at the public reference facilities maintained by the Commission at 450 Fifth Street, N. W., Washington, D. C. 20549, at prescribed rates. The Commission maintains a web site that contains reports, proxy and information statements and other information regarding registrants, including the Company, that file electronically with the Commission. The address of such web site is http://www.sec.gov. The Company intends to furnish its shareholders with annual reports containing audited financial statements certified by an independent public accounting firm and quarterly reports containing unaudited financial statements for the first three quarters of each fiscal year. 56 62 INDEX TO FINANCIAL STATEMENTS
PAGE ---- PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Pro forma Condensed Consolidated Financial Information...... F-2 Pro forma Condensed Consolidated Financial Statements: Balance Sheet as of March 31, 1998 and Notes to Pro Forma Balance Sheet.......................................... F-3 Statement of Income for the year ended December 31, 1997 and for the three months ended March 31, 1998 and Notes to Pro Forma Statements of Income...................... F-6 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. CONSOLIDATED FINANCIAL STATEMENTS Report of Independent Certified Public Accountants.......... F-11 Consolidated Balance Sheets as of December 31, 1996 and 1997, and March 31, 1998 (unaudited)...................... F-12 Consolidated Statements of Income for the years ended December 31, 1995, 1996 and 1997, and for the three months ended March 31, 1997 and 1998 (unaudited)................. F-13 Consolidated Statements of Shareholders' Equity for the years ended December 31, 1995, 1996 and 1997, and for the three months ended March 31, 1998 (unaudited)............. F-14 Consolidated Statements of Cash Flows for the years ended December 31, 1995, 1996 and 1997, and for the three months ended March 31, 1997 and 1998 (unaudited)................. F-15 Notes to Consolidated Financial Statements.................. F-16 GEOTRAC, INC. (FORMERLY YOSYSTEMS, INC.) FINANCIAL STATEMENTS Report of Independent Certified Public Accountants.......... F-31 Balance Sheets as of December 31, 1996 and 1997, and March 31, 1998 (unaudited)...................................... F-32 Statements of Operations for the years ended December 31, 1995, 1996 and 1997, and for the three months ended March 31, 1998 (unaudited)...................................... F-33 Statement of Shareholders' Equity (Deficit) for the years ended December 31, 1995, 1996 and 1997, and for the three months ended March 31, 1998 (unaudited)................... F-34 Statements of Cash Flows for the years ended December 31, 1995, 1996 and 1997, and for the three months ended March 31, 1998 (unaudited)...................................... F-35 Notes to Financial Statements............................... F-37 SMS GEOTRAC, INC. FINANCIAL STATEMENTS Report of Independent Certified Public Accountants.......... F-45 Statements of Income for the years ended June 30, 1996 and 1997, and for the one month period ended July 31, 1997.... F-46 Statement of Shareholder's Equity for the years ended June 30, 1996 and 1997, and for the one month period ended July 31, 1997.................................................. F-47 Statements of Cash Flows for the years ended June 30, 1996 and 1997, and for the one month period ended July 31, 1997...................................................... F-48 Notes to Financial Statements............................... F-49
F-1 63 PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION INTRODUCTION The accompanying unaudited pro forma condensed consolidated balance sheet as of March 31, 1998, and the unaudited pro forma condensed consolidated statements of income for the year ended December 31, 1997 and for the three months ended March 31, 1998 reflect (i) the acquisition of Geotrac, Inc., which was completed in June 1998, using the purchase method of accounting as if the acquisition of Geotrac, Inc. had occurred at March 31, 1998 for balance sheet purposes and at January 1, 1997 for income statement purposes, (ii) the new affiliated service and administrative agreements that are effective January 1, 1998 as though the new terms were in existence on January 1, 1997 and (iii) fixed asset purchases from affiliated companies, consisting of telephone equipment and computer hardware and software, to be used in operating the business, which occurred in April 1998, as if the purchase had occurred at March 31, 1998 for balance sheet purposes and at January 1, 1997 for income statement purposes. The unaudited pro forma condensed consolidated statements of income are based on currently available information and do not purport to represent what the Company's results of operations would have been if the events referred to occurred on the above dates, or to project the Company's results of operations for any future periods. The pro forma condensed consolidated financial statements should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company," "Management's Discussion and Analysis of Financial Condition and Results of Operations of Geotrac," the Company's Consolidated Financial Statements, Geotrac, Inc.'s (formerly YoSystems, Inc.) Financial Statements and SMS Geotrac, Inc.'s financial statements. F-2 64 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) MARCH 31, 1998
INSURANCE MANAGEMENT SOLUTIONS GROUP PRO FORMA PRO AND SUBSIDIARIES GEOTRAC, INC. COMBINED ADJUSTMENTS FORMA(1) ---------------- ------------- ----------- ------------ ------------ ASSETS CURRENT ASSETS Cash and cash equivalents........ $ -- $ 2,073,279 $ 2,073,279 $ (728,069)(a) (379,598)(c) $ 965,612 Accounts receivable, trade....... 1,251,564 2,844,241 4,095,805 -- 4,095,805 Due from affiliates.............. 9,220,150 -- 9,220,150 -- 9,220,150 Deferred tax assets and other current assets................. 242,984 548,128 791,112 -- 791,112 ----------- ----------- ----------- ------------ ----------- Total current assets...... 10,714,698 5,465,648 16,180,346 (1,107,667) 15,072,679 PROPERTY AND EQUIPMENT, net........ 2,334,409 3,312,670 5,647,079 3,545,249(c) 9,192,328 INVESTMENT IN GEOTRAC, INC......... 7,244,397 -- 7,244,397 7,994,250(a) -- (15,238,647)(b) GOODWILL, net...................... -- 8,552,215 8,552,215 7,279,911(b) 15,832,126 NOTE RECEIVABLE -- AFFILIATE....... 4,950,000 -- 4,950,000 -- 4,950,000 OTHER NON-CURRENT ASSETS, net...... 175,021 1,781,868 1,956,889 -- 1,956,889 ----------- ----------- ----------- ------------ ----------- Total assets.............. $25,418,525 $19,112,401 $44,530,926 $ 2,473,096 $47,004,022 =========== =========== =========== ============ =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt........................... $ 1,037,404 $ 1,538,952 $ 2,576,356 $ 484,100(c) $ 3,060,456 Note payable..................... 600,000 -- 600,000 -- 600,000 Accounts payable, trade.......... 318,357 224,183 542,540 -- 542,540 Due to affiliates................ 4,590,788 -- 4,590,788 -- 4,590,788 Accrued expenses................. 2,090,817 1,312,737 3,403,554 -- 3,403,554 Income taxes payable............. 2,888,160 562,000 3,450,160 -- 3,450,160 Deferred revenue................. 93,993 -- 93,993 -- 93,993 ----------- ----------- ----------- ------------ ----------- Total current liabilities............. 11,619,519 3,637,872 15,257,391 484,100 15,741,491 LONG-TERM DEBT..................... 1,920,647 7,055,793 8,976,440 1,500,000(a) 328,127(c) 10,804,567 NOTES PAYABLE -- AFFILIATE......... 4,950,000 -- 4,950,000 2,353,424(c) 7,303,424 DEFERRED REVENUE................... -- 460,000 460,000 -- 460,000 PREFERRED STOCK OF SUBSIDIARY...... 6,750,000 -- 6,750,000 -- 6,750,000 SHAREHOLDERS' EQUITY............... 178,359 7,958,736 8,137,095 5,766,181(a) (7,958,736)(b) 5,944,540 ----------- ----------- ----------- ------------ ----------- Total liabilities and shareholders' equity.... $25,418,525 $19,112,401 $44,530,926 $ 2,473,096 $47,004,022 =========== =========== =========== ============ ===========
See accompanying notes. F-3 65 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) MARCH 31, 1998 (1) See the introduction to Pro Forma Condensed Consolidated Financial Information. (2) The following pro forma adjustments were made to reflect the June 1998 acquisition of the remaining 51% interest in Geotrac, Inc. using the purchase method of accounting as if it had occurred at March 31, 1998. (a) To record the Company's investment in Geotrac as a result of acquiring, in June 1998, the remaining 51% of outstanding shares of Common Stock not held by the Company. In July 1997, the Company acquired a 49% interest in Geotrac, Inc. and, accordingly, is reflected in the historical balance sheet at March 31, 1998. A summary of the total consideration paid for the 51% interest consists of the following: shares of Company's Common Stock valued at per share, the estimated initial public offering price........ $5,766,000 Promissory note............................................. 1,500,000 Cash........................................................ 728,000 ---------- $7,994,000 ==========
The following is a summary of the Company's total investment in Geotrac at March 31, 1998 assuming the remaining 51% was acquired on March 31, 1998: Initial July 1997 investment (including goodwill $3,442,500)............................................... $ 6,750,000 49% share in equity earnings, net of amortization of goodwill.................................................. 494,000 ----------- March 31, 1998 historical basis............................. 7,244,000 Additional June 1998 investment............................. 7,994,000 ----------- March 31, 1998 investment on pro forma basis................ $15,238,000 ===========
In July 1997, Geotrac, Inc. acquired 100% of SMS Geotrac's outstanding Common Stock for $15,000,000, with $6,750,000 of the Company's contributed cash along with a note of $8,250,000. The purchase price was allocated based upon estimated fair value as follows: Current assets.............................................. $ 3,026,000 Property and equipment...................................... 3,547,000 Goodwill.................................................... 8,847,000 Customer contracts.......................................... 1,600,000 Other assets................................................ 288,000 Liabilities assumed......................................... (2,308,000) ----------- $15,000,000 ===========
In June 1998, the Company paid $7,994,000 to purchase the remaining 51% of Geotrac, of which approximately $7,280,000 has been allocated to goodwill, with the remaining $714,000 being associated with the identifiable net assets acquired. Accordingly, on a pro forma basis, as if the July 1997 and June 1998 transactions occurred January 1, 1997, aggregate goodwill would have been approximately $16,127,000 (unamortized goodwill of $15,830,000 at March 31, 1998) consisting of the July 1997 component of $8,847,000 and the June 1998 component of $7,280,000. In addition to goodwill, the Company also has assigned $1,600,000 (unamortized balance of approximately $1,467,000 included in other assets at March 31, 1998) of the total purchase price to customer contracts. Based on various factors including the nature of the product or service provided, the Company's strong market position, historical and projected operating results, management intends to F-4 66 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED) -- (CONTINUED) amortize these assets using the straight-line method over 20 years for goodwill (approximately $805,000 a year) and 8 years for customer contracts ($200,000 a year). (b) Eliminate the Company's investment in Geotrac, Inc. and reflect the results of Geotrac, Inc. on a consolidated basis. (c) Reflect certain assets, consisting of telephone equipment, computer hardware and software, transferred and assigned to the Company for use in its business. The Company paid consideration consisting of $325,075 in cash, entered into two promissory notes amounting to $2,802,175, and assumed the existing leases relating to various computer equipment. (3) The following is provided for informational purposes only: As a result of the acquisition of Geotrac, the Company will write-off (charge to expense) approximately $130,000 of duplicate database costs in June 1998. F-5 67 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) FOR THE YEAR ENDED DECEMBER 31, 1997
INSURANCE MANAGEMENT COMBINED/ SOLUTIONS GROUP CONFORMED PRO FORMA PRO FORMA AND SUBSIDIARIES GEOTRAC, INC.(2) COMBINED ADJUSTMENTS(3) ADJUSTMENTS(4) PRO FORMA(1) ---------------- ---------------- ----------- -------------- -------------- ------------ REVENUES Outsourcing services... $29,714,044 $ -- $29,714,044 $ -- $ 862,756(g) $ 30,576,800 Flood zone determination services............. 8,791,935 14,062,665 22,854,600 (254,683)(a) -- 22,599,917 ----------- ----------- ----------- ----------- ----------- ------------ Total revenues... 38,505,979 14,062,665 52,568,644 (254,683) 862,756 53,176,717 ----------- ----------- ----------- ----------- ----------- ------------ EXPENSES Cost of outsourcing services............. 21,988,824 -- 21,988,824 -- 1,124,810(h) (1,016,349)(i) 22,097,285 Cost of flood zone determination services............. 4,763,723 6,042,664 10,806,387 (254,683)(a) -- 10,551,704 Selling, general and administrative....... 3,026,388 2,900,281 5,926,669 -- -- 5,926,669 Management services from Parent.......... 2,343,866 -- 2,343,866 -- -- 2,343,866 Deferred compensation (non-recurring item)................ -- 732,795 732,795 728,069(b) -- 1,460,864 Depreciation and amortization......... 683,672 1,505,484 2,189,156 694,383(c) 1,016,349(i) 3,899,888 ----------- ----------- ----------- ----------- ----------- ------------ 32,806,473 11,181,224 43,987,697 1,167,769 1,124,810 46,280,276 ----------- ----------- ----------- ----------- ----------- ------------ Operating income....... 5,699,506 2,881,441 8,580,947 (1,422,452) (262,054) 6,896,441 Equity in earnings of Geotrac, Inc......... 201,009 -- 201,009 (201,009)(d) -- -- Interest expense....... (149,345) (386,730) (536,075) (437,891)(e-1) (127,500)(e-2) (270,619)(j) (1,372,085) Other income (non- recurring item)...... -- 1,700,000 1,700,000 -- -- 1,700,000 ----------- ----------- ----------- ----------- ----------- ------------ Income before income taxes................ 5,751,170 4,194,711 9,945,881 (2,188,852) (532,673) 7,224,356 Provision for income taxes................ 2,112,200 1,112,900 3,225,100 2,000(f) (200,400)(k) 3,026,700 ----------- ----------- ----------- ----------- ----------- ------------ Net income............. 3,638,970 3,081,811 6,720,781 (2,190,852) (332,273) 4,197,656 Dividends on Preferred Stock of Subsidiary........... 229,315 -- 229,315 -- -- 229,315 ----------- ----------- ----------- ----------- ----------- ------------ Net income available for common shareholders......... $ 3,409,655 $ 3,081,811 $ 6,491,466 $(2,190,852) $ (332,273) $ 3,968,341 =========== =========== =========== =========== =========== ============ Net income per common share................ $ .17 $ =========== ============ Weighted average common shares outstanding... 20,000,000 =========== ============
See accompanying notes. F-6 68 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) FOR THE YEAR ENDED DECEMBER 31, 1997 (1) See the introduction to Pro Forma Condensed Consolidated Financial Information. (2) Represents the combined historical financial statements of SMS Geotrac, Inc. and Geotrac, Inc. (formerly YoSystems, Inc.) to reflect the combined 1997 operations of the two entities on a calendar year basis. Geotrac, Inc. acquired SMS Geotrac on July 31, 1997 and accordingly SMS Geotrac, Inc. is reflected in Geotrac, Inc.'s results of operations for the five months ended December 31, 1997. In order to reflect SMS Geotrac, Inc.'s operations for an entire year for pro forma purposes, SMS Geotrac, Inc.'s results of operations for the seven months ended July 31, 1997 have been combined with Geotrac, Inc.'s results of operations. As a result of the July 1997 acquisition, the accounting basis of SMS Geotrac, Inc. and Geotrac, Inc. are different principally relating to goodwill amortization. SMS Geotrac, Inc. had a June 30th fiscal year end, which has been conformed to a calendar year in order to facilitate the combination. A summary of the combining and conforming for selected captions follows:
COMBINED/ CONFORMED SMS GEOTRAC, INC. GEOTRAC, INC. GEOTRAC ------------------------------------------------- ----------------- ----------------- SIX MONTHS ONE MONTH YEAR ENDED ENDED ENDED YEAR ENDED YEAR ENDED JUNE 30, 1997 DECEMBER 31,1996 JULY 31, 1997 DECEMBER 31, 1997 DECEMBER 31,1997 (AUDITED)(1) (UNAUDITED)(2) (AUDITED)(3) (AUDITED)(4) (UNAUDITED)(5) ------------- ----------------- ------------- ----------------- ----------------- Total Revenues....... $12,521,507 $6,004,546 $1,209,679 $6,336,025 $14,062,665 Operating Income..... 2,437,398 916,387 349,236 1,011,194 2,881,441 Net Income........... 1,279,448 491,461 193,021 2,100,803 3,081,811
Columns (1) -- (2) + (3) + (4) = (5) (3) The following pro forma adjustments were made to reflect the results of operations as though Geotrac, Inc. was purchased in its entirety on January 1, 1997. (a) Eliminate intercompany transactions between the Company and Geotrac, Inc. related to the Cross-License Agreement. (b) In conjunction with the acquisition, Geotrac, Inc.'s shareholders granted 46.45 shares of Common Stock to certain former and current employees for prior employee services rendered while employed at Geotrac. These shares were granted immediately prior to the closing of this transaction. In accordance with the purchase agreement, the Company is to reacquire for $728,000 the stock held for these individuals. Accordingly, the compensation expense has been reflected. This will be recognized in Geotrac's historical financial statements in May 1998. (c) Reflect amortization of goodwill and customer contracts assuming Geotrac, Inc. was purchased in its entirety on January 1, 1997. Goodwill of approximately $16,127,000 and customer contracts of approximately $1,600,000 are being amortized using the straight-line method over a 20 and 8 year amortization period, respectively. (d) Eliminate the equity in earnings of Geotrac, Inc. which has been reflected historically on the equity method of accounting. (e-1) Reflect interest, at a rate of 9.5%, on a promissory note, of which $8,250,000 was used as partial consideration to acquire SMS Geotrac, Inc. on July 31, 1997. (e-2) Reflect interest, at a rate of 8.5%, on a $1,500,000 promissory note issued as partial purchase consideration for the acquisition of the remaining 51% interest in Geotrac, Inc. in June 1998. F-7 69 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) -- (CONTINUED) (f) Reflect the income tax effect of combining the Company and Geotrac, Inc., and of recognizing the pro forma adjustments: Total pro forma adjustments (loss) before income taxes...... $(2,189,000) Equity in earnings.......................................... 201,000 Non-deductible goodwill amortization........................ 293,000 S Corporation earnings not previously taxed *............... 1,700,000 ----------- Additional pre-tax earnings................................. $ 5,000 ===========
- --------------- * Prior to August 1, 1997 Geotrac, Inc. was an S Corporation. Since the above items relate to Geotrac, Inc., its statutory rate of approximately 40% was used to calculate the income tax effect. (4) The following pro forma adjustments were made to reflect the results of operations for the year ended December 31, 1997 under the Company's new service agreements, which were effective January 1, 1998: (g) Reflects outsourcing revenues based on the revised policy and claims administration agreements adopted January 1, 1998. The adjustment reflects (i) a change in the service fee percentage charged for policy administration for certain lines of business, (ii) a change in the claims service fee from a cost reimbursement basis to percentage of earned premium for certain lines of business, (iii) a change in the claims service fee from a percentage of direct incurred losses to a percentage of direct earned premium for certain lines of business, and (iv) claims administration revenue related to the Florida Automobile Joint Underwriting Association ("FAJUA") and the Florida Residential Property and Casualty Joint Underwriting Association ("FRPCJUA"). The FAJUA and FRPCJUA contracts are currently in run-off and were charged on a cost reimbursement basis during 1997. Also included is a Pro Forma adjustment to reflect a deferral of claims service fee income based on the 1998 service agreement as claims service fees are being charged on an earned premium basis, which is in advance of the total claims expense that will be recognized by the Company. (h) Reflects additional claims adjustment expenses that would have been recognized by the Company during 1997 had it operated under the provisions of the 1998 service agreements. Such expenses were previously passed through to the affiliated companies under the 1997 service agreements. (i) Reclassify amounts previously charged to the Company related to fixed assets that were owned by affiliated companies and purchased at their net book value by the Company. (j) Reflect interest, at a rate of 8.5%, on two promissory notes entered into to fund equipment purchases from affiliated companies. (k) Represents the income tax effects on the year ended December 31, 1997 pro forma adjustments at the statutory rate of 37.63%. (5) The following is provided for informational purposes only: (A) As a result of the acquisition of Geotrac, in June 1998 the Company will write-off (charge to expense) approximately $130,000 of duplicate database costs. (B) Effective January 1, 1998, the Company began servicing its affiliated companies automobile lines of insurance under its servicing agreements. Had this servicing commenced January 1, 1997, outsourcing service revenue and cost of outsourcing services would have increased by approximately $2,670,000 and $2,472,000, respectively, for the year ended December 31, 1997. F-8 70 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 1998
INSURANCE MANAGEMENT SOLUTIONS GROUP AND PRO FORMA SUBSIDIARIES GEOTRAC, INC. COMBINED ADJUSTMENTS(2) PRO FORMA(1) ------------ ------------- ----------- -------------- ------------ REVENUES Outsourcing services....... $ 8,655,019 $ -- $ 8,655,019 $ -- $ 8,655,019 Flood zone determination services................ 2,290,920 4,572,866 6,863,786 -- 6,863,786 ----------- ---------- ----------- --------- ----------- Total revenues..... 10,945,939 4,572,866 15,518,805 -- 15,518,805 ----------- ---------- ----------- --------- ----------- EXPENSES Cost of outsourcing services................ 6,427,537 -- 6,427,537 (282,015)(a) 6,145,522 Cost of flood zone determination services................ 1,192,462 1,874,263 3,066,725 -- 3,066,725 Selling, general and administrative.......... 922,976 761,866 1,684,842 -- 1,684,842 Management services from Parent.................. 678,572 -- 678,572 -- 678,572 Depreciation and amortization............ 272,921 360,196 633,117 282,015(a) 47,961(b) 963,093 ----------- ---------- ----------- --------- ----------- 9,494,468 2,996,325 12,490,793 47,961 12,538,754 ----------- ---------- ----------- --------- ----------- Operating income............. 1,451,471 1,576,541 3,028,012 (47,961) 2,980,051 Equity in earnings of Geotrac, Inc............... 408,138 -- 408,138 (408,138)(c) -- Interest expense............. (83,190) (189,607) (272,797) (31,800)(d-1) (64,177)(d-2) (368,774) ----------- ---------- ----------- --------- ----------- Income before income taxes... 1,776,419 1,386,934 3,163,353 (552,076) 2,611,277 Provision for income taxes... 534,900 554,000 1,088,900 (36,900)(e) 1,052,000 ----------- ---------- ----------- --------- ----------- Net income................... 1,241,519 832,934 2,074,453 (515,176) 1,559,277 Dividends on Preferred Stock of Subsidiary.............. 133,151 -- 133,151 -- 133,151 ----------- ---------- ----------- --------- ----------- Net income available for common shareholders........ $ 1,108,368 $ 832,934 $ 1,941,302 $(515,176) $ 1,426,126 =========== ========== =========== ========= =========== Net income per common share.. $ .06 $ =========== =========== Weighted average common shares outstanding......... 20,000,000 =========== ===========
See accompanying notes. F-9 71 NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) FOR THE THREE MONTHS ENDED MARCH 31, 1998 (1) See the introduction to Pro Forma Condensed Consolidated Financial Information. (2) The following pro forma adjustments were made to reflect the results of operations as though Geotrac was purchased in its entirety on January 1, 1997. (a) Reclassify amounts previously charged to the Company related to fixed assets that were owned by affiliated companies and purchased at their net book value by the Company. (b) Reflects amortization additional goodwill assuming Geotrac was purchased in its entirety on January 1, 1997. Goodwill is being amortized using the straight-line method over a 20 year amortization period. (c) Eliminate the equity in earnings of Geotrac, which has been reflected historically on the equity method of accounting. (d-1) Reflect interest, at a rate of 8.5%, on a $1,500,000 promissory note issued as partial purchase consideration for the acquisition of the remaining 51% interest in Geotrac, Inc. (d-2) Reflect interest, at a rate of 8.5%, on two promissory notes entered into to fund equipment purchases from affiliated companies. (e) Represents the income tax effects on the three months ended March 31, 1998 pro forma adjustments, not including the equity in earnings of $408,138 and non-deductible goodwill amortization of $47,961, at the statutory rate of 40%. F-10 72 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To the Board of Directors of Insurance Management Solutions Group, Inc. We have audited the accompanying consolidated balance sheets of Insurance Management Solutions Group, Inc. and subsidiaries as of December 31, 1996 and 1997, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Insurance Management Solutions Group, Inc. and subsidiaries as of December 31, 1996 and 1997, and the consolidated results of their operations and their cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. GRANT THORNTON LLP Tampa, Florida May 29, 1998 (Except for Notes 1 and 3 as to which the date is June , 1998) The foregoing auditors report is in form which will be signed upon the consummation of the purchase transaction described in Notes 1 and 3 of the financial statements. GRANT THORNTON LLP Tampa, Florida June 24, 1998 F-11 73 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
DECEMBER 31, ------------------------ MARCH 31, 1996 1997 1998 ---------- ----------- ----------- (UNAUDITED) ASSETS CURRENT ASSETS Cash................................................. $ -- $ 115,070 $ -- Accounts receivable, trade........................... 894,323 1,218,741 1,251,564 Due from affiliates.................................. 903,789 8,834,733 9,220,150 Prepaid expenses and other assets.................... 63,119 108,150 242,984 ---------- ----------- ----------- Total current assets......................... 1,861,231 10,276,694 10,714,698 PROPERTY AND EQUIPMENT, net............................ 1,446,376 2,331,336 2,334,409 INVESTMENT IN GEOTRAC, INC............................. -- 6,879,291 7,244,397 OTHER ASSETS Note receivable -- affiliate......................... -- -- 4,950,000 Deferred tax assets.................................. 128,700 -- 111,800 Other................................................ 4,935 44,384 63,221 ---------- ----------- ----------- Total assets................................. $3,441,242 $19,531,705 $25,418,525 ========== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Current portion of long-term debt.................... $ 315,500 $ 1,522,822 $ 1,037,404 Note payable......................................... 600,000 600,000 600,000 Accounts payable, trade.............................. 53,519 271,165 318,357 Due to affiliates.................................... 26,303 2,889,212 4,590,788 Employee related accrued expenses.................... 570,312 1,850,553 1,486,691 Other accrued expenses............................... 241,257 596,424 604,126 Income taxes payable to Parent....................... 472,729 2,239,058 2,888,160 Deferred revenue..................................... 6,811 455,827 93,993 ---------- ----------- ----------- Total current liabilities.................... 2,286,431 10,425,061 11,619,519 LONG-TERM DEBT, less current portion................... 894,475 2,186,653 1,920,647 NOTE PAYABLE -- AFFILIATE.............................. -- -- 4,950,000 COMMITMENTS AND CONTINGENCIES PREFERRED STOCK OF SUBSIDIARY.......................... -- 6,750,000 6,750,000 SHAREHOLDERS' EQUITY Preferred Stock, $.01 par value; 20,000,000 shares authorized, no shares issued and outstanding...... -- -- -- Common Stock, $.01 par value; 100,000,000 shares authorized, 20,000,000 shares issued and outstanding....................................... 200,000 200,000 200,000 Additional paid-in capital (deficit)................. 60,336 (30,009) (30,009) Retained earnings.................................... -- -- 8,368 ---------- ----------- ----------- Total shareholders' equity................... 260,336 169,991 178,359 ---------- ----------- ----------- Total liabilities and shareholders' equity... $3,441,242 $19,531,705 $25,418,525 ========== =========== ===========
The accompanying notes are an integral part of these consolidated statements. F-12 74 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, MARCH 31, --------------------------------------- ------------------------- 1995 1996 1997 1997 1998 ----------- ----------- ----------- ----------- ----------- (UNAUDITED) REVENUES Outsourcing services -- affiliated...... $ 3,443,628 $ 4,787,772 $29,114,601 $ 6,764,655 $ 8,493,788 Outsourcing services.................... -- 337,458 599,443 91,702 161,231 ----------- ----------- ----------- ----------- ----------- 3,443,628 5,125,230 29,714,044 6,856,357 8,655,019 Flood zone determination services....... 5,126,926 7,705,240 8,791,935 1,947,193 2,290,920 ----------- ----------- ----------- ----------- ----------- Total revenues................... 8,570,554 12,830,470 38,505,979 8,803,550 10,945,939 ----------- ----------- ----------- ----------- ----------- EXPENSES Cost of outsourcing services............ 2,954,766 3,895,801 21,988,824 5,019,131 6,427,537 Cost of flood zone determination services.............................. 3,415,023 5,362,154 4,763,723 974,046 1,192,462 Selling, general and administrative..... 804,003 1,121,467 3,026,388 726,877 922,976 Management services from Parent......... 724,904 1,053,546 2,343,866 585,966 678,572 Depreciation and amortization........... 184,155 309,188 683,672 116,133 272,921 ----------- ----------- ----------- ----------- ----------- Total expenses................... 8,082,851 11,742,156 32,806,473 7,422,153 9,494,468 ----------- ----------- ----------- ----------- ----------- OPERATING INCOME.......................... 487,703 1,088,314 5,699,506 1,381,397 1,451,471 EQUITY IN EARNINGS OF GEOTRAC, INC. ...... -- -- 201,009 -- 408,138 INTEREST EXPENSE.......................... 71,493 75,350 149,345 35,466 83,190 ----------- ----------- ----------- ----------- ----------- INCOME BEFORE PROVISION FOR INCOME TAXES................................... 416,210 1,012,964 5,751,170 1,345,931 1,776,419 PROVISION FOR INCOME TAXES................ 162,400 396,000 2,112,200 512,900 534,900 ----------- ----------- ----------- ----------- ----------- NET INCOME................................ 253,810 616,964 3,638,970 833,031 1,241,519 DIVIDENDS ON PREFERRED STOCK OF SUBSIDIARY.............................. -- -- 229,315 -- 133,151 ----------- ----------- ----------- ----------- ----------- NET INCOME AVAILABLE FOR COMMON SHAREHOLDERS............................ $ 253,810 $ 616,964 $ 3,409,655 $ 833,031 $ 1,108,368 =========== =========== =========== =========== =========== NET INCOME PER COMMON SHARE............... $ .01 $ .03 $ .17 $ .04 $ .06 =========== =========== =========== =========== =========== Weighted average common shares outstanding............................. 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 =========== =========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated statements. F-13 75 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
ADDITIONAL PAID-IN RETAINED COMMON CAPITAL EARNINGS STOCK (DEFICIT) (DEFICIT) TOTAL -------- ---------- ----------- ----------- Balance at January 1, 1995...................... $200,000 $ (9,000) $ (66,138) $ 124,862 Capital contribution from Parent.............. -- 150,000 -- 150,000 Net income.................................... -- -- 253,810 253,810 -------- --------- ----------- ----------- Balance at December 31, 1995.................... 200,000 141,000 187,672 528,672 Capital contribution from Parent.............. -- 114,700 -- 114,700 Cash dividends to Parent...................... -- (195,364) (804,636) (1,000,000) Net income.................................... -- -- 616,964 616,964 -------- --------- ----------- ----------- Balance at December 31, 1996.................... 200,000 60,336 -- 260,336 Cash dividends to Parent...................... -- (90,345) (3,409,655) (3,500,000) Cash dividend declared on Preferred Stock of Subsidiary................................. -- -- (229,315) (229,315) Net income.................................... -- -- 3,638,970 3,638,970 -------- --------- ----------- ----------- Balance at December 31, 1997.................... 200,000 (30,009) -- 169,991 Cash dividend declared on Preferred Stock of Subsidiary (unaudited)..................... -- -- (133,151) (133,151) Cash dividend declared to Parent (unaudited)................................ -- -- (1,100,000) (1,100,000) Net income (unaudited)........................ -- -- 1,241,519 1,241,519 -------- --------- ----------- ----------- Balance at March 31, 1998 (unaudited)........... $200,000 $ (30,009) $ 8,368 $ 178,359 ======== ========= =========== ===========
The accompanying notes are an integral part of this consolidated statement. F-14 76 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, MARCH 31, ------------------------------------- ------------------------ 1995 1996 1997 1997 1998 --------- ----------- ----------- ----------- ---------- (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES: Net income................................. $ 253,810 $ 616,964 $ 3,638,970 $ 833,031 $1,241,519 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization............ 184,155 309,188 683,672 116,133 272,921 Loss on disposal of property and equipment.............................. 7,124 72,726 2,329 -- -- Equity in earnings of Geotrac, Inc....... -- -- (201,009) -- (408,138) Deferred income taxes, net............... (4,200) (119,800) 131,000 35,300 (114,100) Changes in assets and liabilities: Accounts receivable.................... (379,694) (179,713) (324,418) (164,706) (32,823) Prepaid expenses and other current assets.............................. (7,075) (11,751) (45,031) (9,618) (134,834) Other assets........................... -- (4,935) (40,394) 1,391 (18,837) Accounts payable, trade................ 290,755 (301,090) 217,646 631,626 47,192 Employee related accrued expenses...... 196,858 136,210 1,280,241 424,470 (363,862) Other accrued expenses................. 147,516 79,591 123,552 (81,042) (123,149) Income taxes payable to Parent......... 137,127 365,515 1,766,329 371,351 649,102 Deferred revenue....................... 4,861 (153) 449,016 62,328 81,870 --------- ----------- ----------- ----------- ---------- Net cash provided by operating activities........................ 831,237 962,752 7,681,903 2,220,264 1,096,861 --------- ----------- ----------- ----------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Investment in Geotrac, Inc................. -- -- (6,750,000) -- -- Purchases of property and equipment........ (464,048) (1,011,807) (1,498,298) (240,979) (232,962) --------- ----------- ----------- ----------- ---------- Net cash used in investing activities........................ (464,048) (1,011,807) (8,248,298) (240,979) (232,962) --------- ----------- ----------- ----------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings under line of credit........ 213,000 -- -- -- -- Proceeds from issuance of Preferred Stock of Subsidiary............................ -- -- 6,750,000 -- -- Proceeds from the issuance of debt......... -- 1,054,000 2,815,000 -- -- Repayment of debt.......................... (122,000) (122,025) (315,500) (78,875) (751,424) Cash dividends paid to Parent.............. -- (1,000,000) (3,500,000) -- -- Capital contribution from Parent........... 150,000 114,700 -- -- -- Net advances to affiliates................. (573,847) (34,886) (5,068,035) (1,900,410) (227,545) --------- ----------- ----------- ----------- ---------- Net cash provided by (used in) financing activities.............. (332,847) 11,789 681,465 (1,979,285) (978,969) --------- ----------- ----------- ----------- ---------- INCREASE (DECREASE) IN CASH.................. 34,342 (37,266) 115,070 -- (115,070) CASH, beginning of year...................... 2,924 37,266 -- -- 115,070 --------- ----------- ----------- ----------- ---------- CASH, end of year............................ $ 37,266 $ -- $ 115,070 $ -- $ -- ========= =========== =========== =========== ========== SUPPLEMENTAL DISCLOSURES OF CASH FLOW ACTIVITIES: Cash paid for: Interest................................. $ 71,493 $ 75,350 $ 149,345 $ 35,466 $ 83,190 ========= =========== =========== =========== ========== Income taxes............................. $ 50,000 $ 150,290 $ 214,743 $ -- $ -- ========= =========== =========== =========== ========== Non-cash financing activities: Preferred Stock dividend accrual......... $ -- $ -- $ 229,315 $ -- $ 133,151 ========= =========== =========== =========== ========== Dividend declared to Parent.............. $ -- $ -- $ -- $ -- $1,100,000 ========= =========== =========== =========== ==========
The accompanying notes are an integral part of these consolidated statements. F-15 77 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. DESCRIPTION OF ORGANIZATION AND BUSINESS Insurance Management Solutions Group, Inc. ("IMSG") is a holding company that was incorporated in the State of Florida in December 1996 by its parent, Bankers Insurance Group ("BIG" or the "Parent"), which contributed to IMSG two of its wholly-owned operating subsidiaries, Insurance Management Solutions, Inc. ("IMS") and Bankers Hazard Determination Services, Inc. ("BHDS"), which were previously formed in August 1991 and June 1988, respectively. IMSG, IMS and BHDS are hereinafter collectively known as the "Company". In July 1997, the Company acquired a 49% interest in Geotrac, Inc. and, in June 1998 acquired the remaining 51% interest. The Company operates in two major business segments: providing outsourcing services to the property and casualty insurance industry with an emphasis on flood insurance; and providing flood zone determinations primarily to insurance companies and financial institutions. The Company's outsourcing services, which are provided by IMS, include policy and claims administration (policy issuance, billing and collection functions, claims adjusting and processing) and information technology services. The Company's flood zone determination services are provided by BHDS and Geotrac, Inc. Prior to 1997, the Company's outsourcing services principally related to information technology services provided to BIG and its other affiliates on a cost reimbursement basis. Commencing in 1997, the Company also provided, on a fee basis, policy and claims administration services, previously provided by BIG and its other affiliates, related to flood and homeowners insurance lines accounting for approximately 55% of total outsourcing revenues for 1997, and 51% and 95% for the three months ended March 31, 1997 and 1998, respectively. Starting in 1998, the automobile insurance line has also been added to these services. During 1997, the Company also provided claims administration services to its affiliates on all other insurance lines on a cost reimbursement basis accounting for approximately 29% of total outsourcing revenues. In 1998, the company receives a fee for claims administration on these insurance lines similar to that for flood, homeowners and automobile lines. In addition, in 1998, third-party claims adjustment costs, such as outside appraisers, are recognized by the Company. In 1997, these costs were paid and absorbed by the Company's affiliates. The Company is substantially dependent on the business of its affiliated insurance companies under the common control of BIG as the Company derives a substantial portion of its revenue from outsourcing services provided to these affiliated companies and its Parent. See Notes 2 and 12 for further organization and business information. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The formation of IMSG as described in Note 1, is reflected in the financial statements retroactively on a historical cost basis as if the entities under common control had been consolidated for all years presented. IMSG, IMS and BHDS have historically maintained separate accounting records as their operations have generally been on a stand-alone basis in regards to BIG and its other affiliates. The Company, under a management agreement with BIG, is charged a management fee for common costs that are incurred by its Parent on behalf of all affiliated companies. Management services include human resources, legal, corporate planning and communications, cash management, certain executive management and rent. The basis of allocation for the management services is employee head counts and estimates of time incurred, which management believes to be a reasonable basis of allocation. In January 1998, the Board of Directors increased the amount of the Company's authorized shares of Common Stock from 1,000,000 to 100,000,000 shares and changed the Common Stock's par value from $1.00 to $.01 per share. Effective May 8, 1998, the Company declared a stock dividend of 40,000 shares of Common F-16 78 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) Stock for each share of Common Stock then outstanding, resulting in an increase in the number of outstanding shares of Common Stock from 500 to 20,000,000 shares. This recapitalization has been retroactively reflected in the financial statements. In May 1998, the Board of Directors declared a cash dividend payable to its Parent in the amount of $1,100,000. This dividend has been reflected at March 31, 1998 in the accompanying consolidated balance sheet. Principles of Consolidation The consolidated financial statements include the accounts of Insurance Management Solutions Group, Inc. and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. Prior to June 1998, the Company's investment in Geotrac, Inc. was accounted for using the equity method since the Company owns less than 50% and has a significant but not controlling influence (See Note 3). Use of Estimates The preparation of the financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. There were no cash equivalents at December 31, 1995, 1996 and 1997, and March 31, 1998. The Company maintains a zero balance account arrangement with its Parent. As a result of this funding arrangement, the Company has a negative cash balance for financial reporting purposes representing checks that have been issued but that have not yet been presented to the bank for payment. Such negative cash balances have been reclassified to accounts payable in the accompanying consolidated balance sheets. Accounts Receivable, Trade and Concentration of Credit Risk Accounts receivable, trade represents amounts due from BHDS' customers. BHDS provides flood zone determination services to insurance companies and financial institutions. Credit is granted to customers of BHDS based on management's assessment of their credit worthiness. There was no allowance for doubtful accounts related to accounts receivable, trade for all periods presented in the accompanying consolidated financial statements. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are provided for using the straight-line method over the assets' estimated service lives. Accelerated methods are used for tax purposes. F-17 79 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) Impairment of Long-Lived Assets The Company evaluates the recoverability of its long-lived assets (including goodwill) in accordance with Statement of Financial Accounting Standards No. 121, ("SFAS No. 121"), Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of. SFAS No. 121 requires long-lived assets to be reviewed for impairment whenever circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment is recognized to the extent the sum of undiscounted estimated future cash flows expected to result from the use of the asset is less than the carrying value. Revenue Recognition and Deferred Revenue Revenue generated from outsourcing and flood zone determination services are recognized as services are provided. In 1997, the Company's affiliated service arrangements, as they pertain to policy administration, resulted in deferred revenue being recorded as the related fees are billed and payable based on a percentage of the customers' premiums written which is in advance of a portion of the administrative services being performed by the Company. In 1998, the service arrangements were changed so that fees related to policy administration services are billed based on a percentage of written and earned premiums, which generally eliminates the need for any deferral. The transition from the 1997 service arrangements to the 1998 service agreements resulted in the Company reclassifying on January 1, 1998 deferred revenue of $443,704 recorded at December 31, 1997 to due to affiliates. In 1998, the affiliated service agreements as they pertain to claims administration, resulted in deferred revenue being recorded as the related fees are billed and payable based on a percentage of the customers' earned premiums which is in advance of a portion of the total claims expense that will be incurred by the Company. In 1997, deferred revenue related to claims administration was not recorded, as the Company was paid, either on a fee or cost reimbursement basis, as the claims and related expenses were incurred. The Company, in 1998, estimates the deferred revenue amounts based on several factors including actual historical claims expense and related development factors. The transition from the 1997 to the 1998 service agreements resulted in the Company recording, at January 1, 1998, deferred revenue of approximately $2,138,000 along with a due from affiliates for the same amount, representing the Company's estimated future cost of servicing claims associated with premiums earned prior to December 31, 1997. Under the affiliated claims service agreements, the payment of claim costs associated with the litigation of the claims remains the customers' responsibility. In addition, the agreements contain a catastrophe provision under which the Company would be reimbursed for costs associated with independent adjusters and appraisers when indemnity losses from a single event exceed $2,000,000, subject to a cap of 5% of direct incurred losses from that storm. In connection with the Company's outsourcing and flood zone determination services, the Company has recorded deferred revenues totaling $2,231,993 at March 31, 1998, of which $2,138,000 represents amounts billed and due from its affiliates. As such, for financial statement reporting purposes, the $2,138,000 amount has been netted against due from affiliates at March 31, 1998. Income Taxes The Company accounts for income taxes on the liability method, as provided by SFAS No. 109, Accounting for Income Taxes. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates F-18 80 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) which will be in effect when these differences reverse. Deferred tax expense is the result of changes in deferred tax assets and liabilities. The Company's results of operations are included in the consolidated federal and state income tax returns of its Parent. As provided by SFAS No. 109 and in accordance with the intercompany tax sharing/allocation agreement with its Parent and affiliates, income taxes are determined by the amount that would have been due and payable had the Company filed a separate income tax return. Income taxes payable, in the accompanying consolidated balance sheets, represents amounts due to the Company's Parent. Net Income Per Common Share Net income per common share, which represents both basic and diluted earnings per share since no dilutive securities were outstanding for all periods presented, is computed by dividing net income available to common shareholders by the weighted average common shares outstanding. Fair Value of Financial Instruments The carrying amount of the Company's financial instruments, which include cash, accounts receivable, due from affiliates, accounts payable, due to affiliates and debt, approximate fair value due to the short maturity of those instruments. The Company considers the fixed and variable rate debt instruments to be representative of current market interest rates and, accordingly, the recorded amounts approximate their present fair market value. New Accounting Pronouncement Not Yet Adopted In June 1997, the Financial Accounting Standards Board issued SFAS No. 130, Reporting of Comprehensive Income, which establishes standards of reporting and displaying of comprehensive income and its components (revenues, expenses, gains and losses) in the financial statements. SFAS No. 130 requires comprehensive income to be reported with the same prominence as other items in the financial statements. This statement is effective for fiscal years beginning after December 15, 1997. Reclassification of financial statements for earlier periods presented for comparative purposes is required. The Company does not anticipate that adoption of SFAS No. 130 will have a material effect on the consolidated financial statements. Unaudited Financial Statements The unaudited financial statements and the related notes thereto for March 31, 1997 and 1998 include all normal and recurring adjustments, which in the opinion of management are necessary for a fair presentation and are prepared on the same basis as the audited annual financial statements. The interim results are not necessarily indicative of the results that may be expected for the full year. NOTE 3. INVESTMENT IN GEOTRAC, INC. On July 31, 1997, the Company, through its subsidiary, BHDS, acquired a 49% interest in YoSystems, Inc. ("YoSystems"). YoSystems concurrently acquired all of the issued and outstanding shares of capital stock of SMS Geotrac, Inc. SMS Geotrac, Inc. merged into YoSystems, with YoSystems becoming the surviving entity, which then changed its name to Geotrac, Inc. The Company acquired its 49% interest in YoSystems for $6,750,000 in cash. YoSystems entered into a term note for $8,750,000 to provide additional funds required to fund the total purchase price of $15,000,000. F-19 81 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 3. INVESTMENT IN GEOTRAC, INC. -- (CONTINUED) The following table represents summarized financial information of Geotrac, Inc. for the period August 1, 1997 to December 31, 1997 and the three-month period ended March 31, 1998:
FOR THE PERIOD THREE AUGUST 1, MONTHS 1997 TO ENDED DECEMBER 31, MARCH 31, 1997 1998 -------------- ----------- (UNAUDITED) Condensed Statements of Income: Total revenues............................................ $ 6,336,025 $ 4,572,866 Operating income.......................................... 1,001,775 1,576,541 Net income................................................ 410,222 832,934 Condensed Balance Sheets: Current assets............................................ 4,693,232 5,465,648 Noncurrent assets......................................... 13,943,450 13,646,753 Current liabilities....................................... 3,291,024 3,637,872 Non-current liabilities................................... 8,219,856 7,515,793 Shareholders' equity...................................... 7,125,802 7,958,736
The investment in Geotrac, Inc. includes unamortized goodwill of $3,442,500 recognized on August 1, 1997. Goodwill is being amortized on a straight-line basis over its estimated economic useful life of 20 years. Accumulated amortization amounted to $71,718 and $114,750 at December 31, 1997 and March 31, 1998, respectively. In connection with the acquisition, the Company and Geotrac, Inc. entered into a Cross-License Agreement in which the flood zone databases of each company were made available to one another in exchange for specified license fees. In addition to the use of each Company's database, Geotrac, Inc. is primarily responsible for the development, modification and maintenance of the respective databases. Total amounts incurred during 1997 and the three months ended March 31, 1998 for maintenance of the databases amounted to $129,056 and $74,736, respectively. The Company incurred $125,627 and $77,437 for usage of Geotrac, Inc.'s database for 1997 and the three months ended March 31, 1998, respectively. In June 1998, the Company, acquired the remaining 51% of the outstanding shares of Geotrac, Inc.'s common stock for a total consideration of $7,994,250 consisting of: shares of the Company's common stock valued at $ per share, the estimated initial public offering price..................................................... $5,766,181 Promissory note............................................. 1,500,000 Cash........................................................ 728,069 ---------- $7,994,250 ==========
This transaction, along with the July 1997 investment in Geotrac, Inc. resulted in goodwill of approximately $16,000,000 being recognized on a consolidated basis. Goodwill is being amortized using the straight-line method over a 20 year period. Geotrac, Inc. merged into BHDS, with BHDS as the surviving company, which subsequently changed its name to Geotrac, Inc. In addition, the Cross-License Agreement with BHDS, referred to above, has been terminated along with any amounts due to each other, which were not insignificant. F-20 82 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 4. PROPERTY AND EQUIPMENT Property and equipment consists of the following:
DECEMBER 31, LIFE ------------------------ MARCH 31, (YEARS) 1996 1997 1998 ------- ---------- ----------- ----------- (UNAUDITED) Computer equipment and acquired software............................... 3-5 $1,475,970 $ 2,864,348 $ 3,061,970 Office furniture and equipment........... 5 545,773 575,940 610,090 Leasehold improvements................... 5 31,673 31,673 31,673 Maps and map database.................... 5 107,633 194,954 194,954 ---------- ----------- ----------- 2,161,049 3,666,915 3,898,687 Less -- accumulated depreciation and amortization........................... (714,673) (1,335,579) (1,564,278) ---------- ----------- ----------- $1,446,376 $ 2,331,336 $ 2,334,409 ========== =========== ===========
Depreciation and amortization expense was $184,155, $309,188, and $611,954 in 1995, 1996 and 1997, respectively, and $116,133 and $229,889 for the three months ended March 31, 1997 and 1998, respectively. NOTE 5. NOTE PAYABLE The Company has a revolving line of credit agreement with a bank that provides for borrowings of up to $600,000 subject to 80% of eligible receivables, as defined. Interest is payable monthly at the bank's prime rate plus 1% (9.5% at December 31, 1997). The principal balance plus accrued interest are due on demand. The note is collateralized by the eligible receivables. NOTE 6. NOTE RECEIVABLE AND PAYABLE -- AFFILIATE On March 31, 1998, the Company entered into a promissory note with an affiliate that had previously advanced funds to the Company. This note has an interest rate of 8.5%, with principal and accrued interest due in April 1999. On April 1, 1998, the Company entered into a note receivable from an affiliate for a portion of the due from affiliate balance at March 31, 1998 totaling $4.95 million. This note has an interest rate of 8.5% with principal and accrued interest due to the Company in April 1999. At March 31, 1998, this portion of the due from affiliate balance representing the $4.95 million has been reflected in the financial statements as a non-current note receivable. In May 1998, the Company entered into a sales and assignment agreement with certain affiliated companies whereby certain assets were transferred and assigned to the Company, effective April 1998, for use in its business. The assets, consisting of telephone equipment and computer hardware and software, were transferred at their net book value as of the date of transfer. The Company paid consideration consisting of $325,075 in cash and entered into two promissory notes amounting to $2,802,175. The notes require monthly installment payments of $10,417 plus accrued interest and mature on April 1, 1999 and December 2000. In addition, the Company assumed the existing leases relating to various computer equipment. F-21 83 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 7. LONG-TERM DEBT Long-term debt consists of the following:
DECEMBER 31, ---------------------- MARCH 31, 1996 1997 1998 -------- ---------- ----------- (UNAUDITED) Note payable to bank, interest at a fixed rate of 8.19%, due in monthly principal and interest installments of $66,965, with the final payment due December 2000, collateralized by certain fixed assets of the Company..................... $ -- $2,131,000 $1,972,162 Note payable to bank, interest at the lender's base lending rate (8.5% at December 31, 1997), due in monthly principal installments of $16,854, plus accrued interest thereon, with the final payment due December 2000, collateralized by certain fixed assets of the Company and guaranteed by the Company's Parent.............. 809,000 606,750 556,187 Promissory note to bank, interest at a fixed rate of 8.19%, due at maturity on February 28, 1998, collateralized by certain fixed assets of the Company......................................... -- 500,000 -- Notes payable to banks, interest at both fixed (8.19%) and at the lender's base lending rate (8.5% at December 31, 1997), due in monthly principal installments ranging from $1,000 to $5,104, with the final payments due ranging from December 1999 to 2000, collateralized by certain fixed assets of the Company, with certain notes guaranteed by the Company's Parent.............. 400,975 471,725 429,702 --------- ---------- ---------- 1,209,975 3,709,475 2,958,051 Less current maturities........................... 315,500 1,522,822 1,037,404 --------- ---------- ---------- $ 894,475 $2,186,653 $1,920,647 ========= ========== ==========
Certain of the Company's debt agreements contain cross-default provisions whereby the Company's debt instruments could be in default if any of the Company's affiliates are in default on debt instruments with the same financial institution. In the opinion of management, all debt of the Company and of BIG and its affiliates was in compliance with required debt covenants. The Company anticipates it will repay all of its debt instruments containing cross-default provisions from the proceeds received from the contemplated initial public offering. Aggregate maturities of long-term debt are as follows for the years ended December 31: 1998........................................................ $1,522,822 1999........................................................ 1,083,819 2000........................................................ 1,102,834 ---------- $3,709,475 ==========
NOTE 8. PREFERRED STOCK OF SUBSIDIARY In connection with the Company's purchase of a 49% interest in Geotrac, Inc., BHDS issued non-cumulative, 8% Preferred Stock to a corporation owned by the half-brother of a director of the Company. The F-22 84 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 8. PREFERRED STOCK OF SUBSIDIARY -- (CONTINUED) related party funded the Preferred Stock purchase by entering into a note agreement with a bank. The Preferred Stock served as collateral on the bank note and the Company acts as a guarantor. On May 8, 1998, IMSG repurchased the outstanding Preferred Stock of BHDS in exchange for a note in the same amount. The note is payable in its entirety on December 31, 1998 and accrues interest at 8.5%. Subsequent to May 8, 1998, the Preferred Stock of BHDS, currently held by IMSG, was exchanged for 675,000 shares of 8 1/2% cumulative Preferred Stock of BHDS. The non-cumulative 8% Preferred Stock was then retired. The new Preferred Stock serves as collateral on the bank note held by the related party. Dividends declared on the Preferred Stock for 1997 and the three months ended March 31, 1998 were $229,315 and $133,151, respectively. NOTE 9. SHAREHOLDERS' EQUITY Long Term Incentive Plan The Long-Term Incentive Plan (the "Incentive Plan") has been adopted by the Company's Board of Directors and is expected to be approved by the shareholders of the Company prior to the consummation of the contemplated initial public offering. A total of shares of Common Stock may be issued pursuant to the Incentive Plan. The Incentive Plan provides for the grant of incentive or nonqualified stock options to purchase shares of Common Stock. Upon the completion of the contemplated initial public offering, the executive officers of the Company will be granted options to purchase a total of shares of Common Stock at the initial public offering price. The options expire on the tenth anniversary of the date of grant. Options shall become exercisable over a period of five years in equal amounts. Non-Employee Directors' Stock Option Plan The Non-Employee Directors' Stock Option Plan (the "Non-Employee Director Plan") has been adopted by the Company's Board of Directors and is expected to be approved by the shareholders of the Company prior to the consummation of the contemplated initial public offering. The Non-Employee Director Plan provides for the grant of nonqualified stock options to purchase up to shares of Common Stock to members of the Board of Directors who are not employees of the Company. Each non-employee director shall be granted options to purchase shares of Common Stock as of the adjournment of each annual meeting of shareholders of the Company. In addition, each non-employee director shall be granted options to purchase an additional shares of Common Stock ( shares in the event the non-employee director is absent from, arrives late for, or departs early from, such meeting) upon the adjournment of each regularly scheduled quarterly meeting of the Board of Directors (other than following the annual meeting of shareholders). All options granted will have an exercise price equal to the fair market value of the Common Stock as of the date of grant, will become exercisable on the date of grant, and will expire on the sixth anniversary of the date of grant. Non-Qualified Stock Option Plan The Non-Qualified Stock Option Plan (the "Non-Qualified Plan") has been adopted by the Company's Board of Directors and is expected to be approved by the shareholders of the Company prior to the consummation of the contemplated initial public offering. The Non-Qualified Plan provides for the grant of non-qualified stock options to purchase up to shares of Common Stock. Upon the completion of the contemplated initial public offering, options to purchase shares of Common Stock at the initial public offering price will be granted to certain executive officers of BIG. All of such options expire on the tenth anniversary of the date of grant. Options shall become exercisable over a period of five years in equal amounts. F-23 85 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 9. SHAREHOLDERS' EQUITY -- (CONTINUED) Preferred Stock The Company is authorized to issue 20,000,000 shares of Preferred Stock, $.01 par value per share. The Board of Directors has the authority, without any further vote or action by the Company's shareholders, to issue Preferred Stock in one or more series and to fix the number of shares, designations, relative rights (including voting rights), preferences, and limitations of those series to the full extent now or hereafter permitted by Florida law. The Company has no present intention to issue shares of Preferred Stock, although it may determine to do so in the future. NOTE 10. INCOME TAXES The provision for income taxes is summarized as follows:
THREE MONTHS YEAR ENDED DECEMBER 31, ENDED MARCH 31, -------------------------------- ------------------- 1995 1996 1997 1997 1998 -------- -------- ---------- -------- -------- (UNAUDITED) Current: Federal.......................... $142,200 $441,600 $1,686,500 $403,600 $554,100 State............................ 24,400 70,200 294,700 74,000 94,900 -------- -------- ---------- -------- -------- 166,600 511,800 1,981,200 477,600 649,000 -------- -------- ---------- -------- -------- Deferred: Federal.......................... (3,600) (98,900) 112,400 29,500 (98,000) State............................ (600) (16,900) 18,600 5,800 (16,100) -------- -------- ---------- -------- -------- (4,200) (115,800) 131,000 35,300 (114,100) -------- -------- ---------- -------- -------- $162,400 $396,000 $2,112,200 $512,900 $534,900 ======== ======== ========== ======== ========
Reconciliation of the federal statutory income tax rate of 34% to the effective income tax rate is as follows:
THREE MONTHS YEAR ENDED DECEMBER 31, ENDED MARCH 31, -------------------------------- -------------------- 1995 1996 1997 1997 1998 -------- -------- ---------- -------- --------- (UNAUDITED) Federal income taxes, at statutory rates........................... $141,500 $344,400 $1,955,400 $457,600 $ 604,000 State taxes, net of federal benefit......................... 15,700 35,200 206,800 48,900 64,500 Equity in earnings of Geotrac, Inc............................. -- -- (68,300) -- (138,800) Other, net........................ 5,200 16,400 18,300 6,400 5,200 -------- -------- ---------- -------- --------- $162,400 $396,000 $2,112,200 $512,900 $ 534,900 ======== ======== ========== ======== =========
F-24 86 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 10. INCOME TAXES -- (CONTINUED) Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for income tax reporting purposes. Significant components of the Company's deferred tax assets and liabilities are as follows:
DECEMBER 31, ------------------- MARCH 31, 1996 1997 1998 -------- -------- ----------- (UNAUDITED) Deferred tax assets Non-deductible items, principally vacation pay...... $183,900 $172,400 $241,000 Deferred tax liability Depreciation and fixed asset bases differences...... (55,200) (174,700) (101,200) Other............................................... -- -- (28,000) -------- -------- -------- Net deferred tax asset (liability).................... $128,700 $ (2,300) $111,800 ======== ======== ========
NOTE 11. COMMITMENTS AND CONTINGENCIES Risks and Uncertainties The Company derives a substantial portion of its revenues from outsourcing services provided to its principal shareholder, BIG. The Company has entered into contracts with BIG pursuant to which it will continue to provide administrative services to BIG (See Note 12). Any loss of or material decrease in the business from BIG could have a material adverse effect on the business, financial condition and results of operations of the Company. The Company's future financial condition and results of operations will depend to a significant extent upon the commercial success of BIG and its continued willingness to utilize the Company's services. Any significant downturn in the business of BIG or its commitment in utilizing the Company's services could have a material adverse effect on the Company's business, financial condition and results of operations. The Company's business is dependent upon various factors, such as general economic conditions and weather patterns, that are beyond its control. For example, the demand for flood zone determinations by lenders and their customers is directly related to the affordability of mortgage financing and refinancing. Current interest rates are relatively low and therefore conducive to a higher volume of mortgage lending and flood zone determinations. An increase in interest rates would have a negative impact on mortgage lending and consequently also on the level of flood zone determinations requested. Fluctuations in interest rates will likely produce fluctuations in the Company's earnings and operating results. Likewise, natural disasters such as hurricanes, tornadoes and floods, all of which are unpredictable, directly impact the demand for both the Company's outsourcing and flood zone determination services. Legal Proceedings Bankers Insurance Company ("BIC"), the Company's principal customer and a wholly-owned subsidiary of BIG, is currently subject to an investigation by the Florida Department of Insurance (the "DOI") stemming from BIC's use of a private investigator to gather information on a DOI employee. In a separate action, certain officers and employees of BIC and the Company have been subpoenaed by the Federal Emergency Management Agency ("FEMA") to produce documentation in connection with FEMA's investigation of, among other things, certain cash management practices. The management of BIC and the Company do not believe the outcome of these investigations will have a material adverse effect on the business, financial condition or results of operations of BIC or the Company. Since the investigations are in the early stages, it is impossible at this time to predict the ultimate outcome of these investigations. F-25 87 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 11. COMMITMENTS AND CONTINGENCIES -- (CONTINUED) The Company is involved in various legal actions arising in the ordinary course of business. Management cannot predict the outcome of these matters. It is management's belief, after discussion with legal counsel, that the ultimate resolution of these actions will not have a material adverse effect on the Company's financial position, results of operations, or liquidity. Tax Examination The Company's ultimate parent, Bankers International Financial Corporation, is currently undergoing an income tax examination by the Internal Revenue Service related to the years 1995 and 1996; however, no assessment has been levied. While it is not possible to determine with certainty the outcome of these matters, in the opinion of management, the eventual resolution of the examination will not have a material adverse effect on the Company's financial position, results of operations, or liquidity. Employment Agreements The Company entered into employment agreements with certain members of its executive management team, which will be effective on completion of the contemplated initial public offering. The agreements provide for employment terms of three years and shall continue indefinitely until terminated by either party pursuant to the terms of the agreements. In the event an employment agreement is terminated by the Company without cause, the employee shall be entitled to earned, but unpaid benefits as well as a "Severance Payment" equal to the employee's base salary for a period of twelve months, subject to adjustment as defined. The agreements contain non-compete provisions, which prevent a terminated employee from soliciting customers, prospective customers or employees of the Company. In connection with the acquisition of Geotrac, Inc., the Company entered into an employment agreement with the President and Chief Executive Officer of Geotrac, Inc. This agreement provides for an initial term of four years and shall continue in effect thereafter until terminated by either party upon 90 days prior written notice. The agreement provides for an initial annual base salary of $150,000 subject to annual review by Geotrac, Inc.'s Board of Directors. In the event of Mr. White's death or disability, Geotrac, Inc.'s obligations under the agreement will automatically terminate, except that Mr. White shall be entitled to severance equal to his then current annual base salary. The agreement further provides that, in the event of termination by Geotrac, Inc. without cause (as defined therein) or by Mr. White for good reason (as defined therein), or in the event the agreement is not renewed for any reason other than death, disability or for cause, then Geotrac, Inc. shall pay Mr. White at the rate of his annual base salary then in effect for the longer of (i) the remainder of the term of the agreement and (ii) one year after such termination date, subject to a credit of up to 75% of the base salary paid to Mr. White by his new employer, if any. NOTE 12. RELATED PARTY TRANSACTIONS Service and Administrative Agreements During 1995, 1996 and 1997, the Company provided information technology services to affiliated entities based generally on actual cost incurred (including selling, general and administrative expenses), which amounted to $3,443,628, $4,787,772 and $3,236,255 of the outsourcing revenues for 1995, 1996 and 1997, respectively, and $863,375 for the three months ended March 31, 1997. For the three months ended March 31, 1998, these charges are included in the fee structure related to the affiliated service agreement discussed below. In 1997, the Company charged a monthly fee for its policy and claims administration services based on certain factors under the terms of the 1997 service agreements with BIG and other affiliated companies. For F-26 88 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 12. RELATED PARTY TRANSACTIONS -- (CONTINUED) policy and claims administration, the Company charged a fee based on a percentage of direct written premiums and a percentage of direct paid losses for certain lines of business, as defined, respectively. The fee ranged from 8.5% to 9% for services rendered in connection with policy administration and .5% to 15% for claims administration related to these policies. Also, in 1997 the Company processed claims for BIG and its other affiliates related to those lines of business not covered under the servicing agreement and provided other miscellaneous services on a cost reimbursement basis. Amounts charged related to this claims processing and other miscellaneous services amounted to $9,518,525 for 1997 and $2,379,632 for the three months ended March 31, 1997. Effective January 1, 1998, the Company and BIG, along with its affiliates, entered into a service agreement which replaced the previous arrangement. For policy administration, the Company charges a fee, ranging from 8% to 10% of direct written premiums for certain lines of business, as defined. In 1998, in addition to policy processing services previously provided under the 1997 service agreements, the Company also provides policy processing related to its affiliated companies' automobile lines of business. In addition, claims services that were previously provided on a cost reimbursement basis are included in its 1998 affiliated servicing agreements. For claims administration, the Company charges fees ranging from 7% to 12.50% of direct earned premiums, except for flood related programs which are based on 1% of earned premiums and 1.5% of incurred losses. Also, a service fee of 2% of direct earned premiums is charged related to information technology services. Under these service agreements, the Parent Company accounted for $16,359,821 of total outsourcing revenue in 1997, and $3,521,648 and $8,221,734 for the three months ended March 31, 1997 and 1998, respectively. The Company has historically been charged a monthly management fee under a management agreement with BIG for common costs that are incurred by its Parent and allocated to its affiliated companies. These common costs include human resources, legal, corporate planning and communications, cash management, certain executive management and rent. The basis of allocation for the management services is employee head counts and estimates of time incurred, which management believes to be a reasonable basis of allocation. Total management fees in 1995, 1996, 1997 and the three months ended March 31, 1997 were $724,904, $1,053,546, $2,343,866 and $585,966, respectively. Effective January 1, 1998, the Company is being charged for these services, exclusive of rent, generally based on agreed upon quarterly amounts totaling $426,266 for the three months ended March 31, 1998. Prior to December 31, 1997, the Company was also charged for rental expenses through the management services allocated from its Parent as discussed above. Subsequent to this time, the Company entered into specific lease agreements for its office space. The future minimum lease payments under these non-cancelable operating leases are $1,150,535 and $1,384,180 for the years ending December 31, 1998 and 1999, respectively. For financial statement purposes, rent expense of $252,306 for the three months ended March 31, 1998 is included in management services from Parent. The Company leases certain employees, from time to time, that have been trained in customer service and other areas of property and casualty insurance from its affiliated companies. The Company has agreed to pay all direct and indirect expenses in connection with these employees. These charges are included in cost of outsourcing services and selling, general and administrative expenses and amounted to $6,635,249 for 1997, and $374,947 and $1,242,823 for the three months ended March 31, 1997 and 1998, respectively. Effective January 1, 1998, the Company entered into a perpetual license agreement with BIG and BIC pursuant to which the Company licensed its primary operating systems from BIG and BIC in exchange for a F-27 89 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 12. RELATED PARTY TRANSACTIONS -- (CONTINUED) nominal fee. The license agreement provides that the Company shall be solely responsible for maintaining and upgrading the systems and shall have the authority to license such systems to third parties. Flood zone determination services performed for affiliated companies amounted to $239,980, $414,209 and $1,028,358 for 1995, 1996 and 1997, respectively, and $215,077 and $236,368 for the three months ended March 31, 1997 and 1998, respectively. Intercompany Accounts The Company's due from affiliates, including the note receivable -- affiliate, generally resulted from the zero balance account arrangement with BIG (See Note 2) whereby the Company's excess cash was swept into BIG's operating cash account. The Company's due to affiliates, including the note payable -- affiliate, generally resulted from the Company's affiliates advancing service fees and paying certain expenses on behalf of the Company. The Company's income tax payable to Parent represents the current income tax liability owed to the Parent under the intercompany tax sharing/allocation agreement. At the time of the Company's contemplated initial public offering, the Company will be owned approximately 20% by a Cayman Islands corporation. The Cayman Islands corporation acquired its interest in the Company directly from the Company's Parent. The Cayman Islands corporation is wholly owned by a discretionary charitable trust. The sole trustee of this trust is a Cayman Islands bank unaffiliated with BIG, the Company or their respective officers or directors. BIG is indirectly owned by a separate Cayman Islands corporation which is owned by a separate discretionary charitable trust. The sole trustee of this trust is a Cayman Islands corporation unaffiliated with BIG, the Company or their respective officers or directors. The declaration of each trust provides that the same not-for-profit Cayman Islands corporation possesses the discretionary power to (i) direct the trustee to appoint the trust fund to another trust for the benefit of one or more of the beneficiaries of the trust and (ii) remove the trustee and appoint one or more new trustees outside the Cayman Islands. The Board of Directors of this entity includes certain executive officers of BIG and the Company. The Cayman Islands corporation is selling a portion of its interest in the Company in the offering, and a subsidiary of the Cayman Island corporation has agreed to loan approximately $17.5 million to BIG in exchange for a subordinated note. A portion of the funds to be received by BIG will be used to satisfy the due from affiliates and note receivable -- affiliate balances recorded by the Company. With the funds, the Company will repay the entire due to affiliate, income taxes payable to Parent and note payable -- affiliate balances at that time. In the event that the Company's offering is not completed, the due to affiliates (including income taxes payable to Parent) and due from affiliates, which are without any specific terms and are non-interest bearing, will be satisfied during the ordinary course of business. This note should also be read in conjunction with the other notes to the financial statements for additional related party transactions. NOTE 13. EMPLOYEE BENEFIT PLANS The Company's employees participate in its Parent company's 401(k) plan. The Plan covers substantially all employees. Benefits vest based on the number of years of service. To participate in the plan, employees must be at least 21 years old and have completed twelve months of service. The Company, at its discretion, can make matching contributions based upon the participant's deferral depending on the participant's annual salary up to a maximum of 6% of compensation. The Company's expense related to this plan was approximately $70,191, $121,390 and $466,096 in 1995, 1996 and 1997, respectively, and $98,595 and $159,602 for the three months ended March 31, 1997 and 1998, respectively. F-28 90 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 13. EMPLOYEE BENEFIT PLANS (CONTINUED) In addition, the Company's employees participate in self-insured medical and dental plans provided by the Parent. The medical program provides for specific excess loss reinsurance for individual claims greater than $60,000 for any one claimant and aggregate claims greater than $1,000,000. The Company accrues the estimated liabilities for the ultimate costs of both reported claims and incurred but not reported claims. NOTE 14. SEGMENT INFORMATION The Company primarily operates in two business segments within the United States; providing policy and claims administration services and flood zone determinations. No unaffiliated customer accounted for more than 10% of the Company's total revenues for the periods presented. The following table provides information about these reportable segments as required by SFAS No. 131 "Disclosures About Segments of an Enterprise and Related Information":
INTERCOMPANY OUTSOURCING FLOOD ZONE ELIMINATIONS CONSOLIDATED SERVICES DETERMINATIONS AND OTHER TOTALS ----------- -------------- ------------ ------------ 1995 Operating revenues -- affiliated........... $ 3,516,704 $ 239,980 $ (73,076) $ 3,683,608 Operating revenues -- unaffiliated......... -- 4,886,946 -- 4,886,946 Operating income........................... (244,310) 732,073 -- 487,703 Interest expense........................... 17,527 53,966 -- 71,493 Depreciation and amortization.............. 92,597 91,558 -- 184,155 Identifiable assets........................ 613,022 2,036,315 -- 2,649,337 Equity in earnings of Geotrac, Inc......... -- -- -- -- 1996 Operating revenues -- affiliated........... $ 4,819,786 $ 417,949 $ (35,754) $ 5,201,981 Operating revenues -- unaffiliated......... 337,458 7,291,031 -- 7,628,489 Operating income........................... (78,801) 1,167,115 -- 1,088,314 Interest expense........................... 11,901 63,449 -- 75,350 Depreciation and amortization.............. 171,683 137,505 -- 309,188 Identifiable assets........................ 1,508,426 1,932,816 -- 3,441,242 Equity in earnings of Geotrac, Inc......... -- -- -- -- 1997 Operating revenues -- affiliated........... $30,374,066 $ 1,028,359 $(1,259,465) $30,142,960 Operating revenues -- unaffiliated......... 599,443 7,763,576 -- 8,363,019 Operating income........................... 3,290,830 2,408,676 -- 5,699,506 Interest expense........................... 69,781 79,564 -- 149,345 Depreciation and amortization.............. 404,830 278,842 -- 683,672 Identifiable assets........................ 8,178,483 11,353,222 -- 19,531,705 Equity in earnings of Geotrac, Inc......... -- 201,009 -- 201,009 MARCH 31, 1997 -- (UNAUDITED) Operating revenues -- affiliated........... $ 6,983,198 $ 215,077 $ (218,543) $ 6,979,732 Operating revenues -- unaffiliated......... 91,702 1,732,116 -- 1,823,818 Operating income........................... 913,610 669,956 -- 1,381,397 Interest expense........................... 17,445 18,021 -- 35,466 Depreciation and amortization.............. 75,600 40,533 -- 116,133 Identifiable assets........................ 6,526,340 2,289,471 (77,844) 8,737,967 Equity in earnings of Geotrac, Inc......... -- -- -- --
F-29 91 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 14. SEGMENT INFORMATION -- (CONTINUED)
INTERCOMPANY OUTSOURCING FLOOD ZONE ELIMINATIONS CONSOLIDATED SERVICES DETERMINATIONS AND OTHER TOTALS ----------- -------------- ------------ ------------ MARCH 31, 1998 -- (UNAUDITED) Operating revenues -- affiliated........... $8,802,652 $ 236,368 $ (308,864) $ 8,730,156 Operating revenues -- unaffiliated......... 161,231 2,054,552 -- 2,215,783 Operating income........................... 698,641 752,830 -- 1,451,471 Interest expense........................... 62,827 20,363 -- 83,190 Depreciation and amortization.............. 173,462 99,459 -- 272,921 Identifiable assets........................ 13,307,037 12,111,488 -- 25,418,525 Equity in earnings of Geotrac, Inc......... -- 408,138 -- 408,138
F-30 92 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Board of Directors Geotrac, Inc. We have audited the accompanying balance sheets of Geotrac, Inc. (formerly YoSystems, Inc.) as of December 31, 1996 and 1997, and the related statements of income, shareholders' equity and cash flows for each of the three years in the period ended December 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Geotrac, Inc. as of December 31, 1996 and 1997 and the results of its operations and its cash flows for each of the three years in the period ended December 31, 1997, in conformity with generally accepted accounting principles. GRANT THORNTON LLP Tampa, Florida May 29, 1998 F-31 93 GEOTRAC, INC. BALANCE SHEETS
DECEMBER 31, ---------------------- MARCH 31, 1996 1997 1998 -------- ----------- ----------- (UNAUDITED) ASSETS CURRENT ASSETS Cash and cash equivalents............................... $ 138 $ 1,897,262 $ 2,073,279 Accounts receivable, net................................ -- 2,227,236 2,844,241 Prepaid expenses........................................ -- 278,734 236,128 Deferred tax assets..................................... -- 290,000 312,000 -------- ----------- ----------- Total current assets............................ 138 4,693,232 5,465,648 PROPERTY AND EQUIPMENT, net............................... -- 3,419,916 3,312,670 OTHER ASSETS Goodwill, net........................................... -- 8,662,804 8,552,215 Customer contracts, net................................. -- 1,516,667 1,466,667 Deferred tax assets..................................... -- 25,000 8,000 Other................................................... -- 319,063 307,201 -------- ----------- ----------- Total assets.................................... $ 138 $18,636,682 $19,112,401 ======== =========== =========== LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES Current portion of long-term debt....................... $ -- $ 1,250,000 $ 1,250,000 Current portion of capital lease obligations............ -- 288,952 288,952 Accounts payable........................................ -- 120,754 224,183 Accounts payable -- related party....................... 25,139 -- -- Income taxes payable.................................... -- 297,000 562,000 Deferred compensation................................... -- 705,000 705,000 Other current liabilities............................... -- 629,318 607,737 -------- ----------- ----------- Total current liabilities....................... 25,139 3,291,024 3,637,872 LONG-TERM DEBT............................................ -- 7,187,500 6,562,500 CAPITAL LEASE OBLIGATIONS................................. -- 557,356 493,293 DEFERRED REVENUE.......................................... -- 475,000 460,000 COMMITMENTS AND CONTINGENCIES............................. -- -- -- SHAREHOLDERS' EQUITY (DEFICIT) Common Stock, $.01 par value, 1,000 shares authorized; 490, 1,000 and 1,000 shares issued and outstanding at December 31, 1996, 1997 and March 31, 1998, respectively......................................... 5 10 10 Additional paid-in capital.............................. 5,995 6,715,570 6,715,570 Retained earnings (deficit)............................. (31,001) 410,222 1,243,156 -------- ----------- ----------- Total shareholders' equity (deficit)............ (25,001) 7,125,802 7,958,736 -------- ----------- ----------- Total liabilities and shareholders' equity (deficit)..................................... $ 138 $18,636,682 $19,112,401 ======== =========== ===========
The accompanying notes are an integral part of these statements. F-32 94 GEOTRAC, INC. STATEMENTS OF OPERATIONS
THREE MONTHS ENDED YEAR ENDED DECEMBER 31, MARCH 31, -------------------------------- ------------ 1995 1996 1997 1998 -------- -------- ---------- ------------ (UNAUDITED) REVENUES Flood zone determination services............... $ -- $ -- $6,242,815 $4,463,616 Other revenues.................................. -- -- 93,210 109,250 -------- -------- ---------- ---------- Total revenues.......................... -- -- 6,336,025 4,572,866 -------- -------- ---------- ---------- EXPENSES Cost of revenues................................ -- -- 2,678,557 1,874,263 Selling, general and administrative expense..... 9,755 29,841 1,319,434 761,866 Deferred compensation (non-recurring item)...... -- -- 732,795 Depreciation and amortization................... -- -- 594,045 360,196 -------- -------- ---------- ---------- Total expenses.......................... 9,755 29,841 5,324,831 2,996,325 -------- -------- ---------- ---------- OPERATING INCOME (LOSS)........................... (9,755) (29,841) 1,011,194 1,576,541 OTHER INCOME (non-recurring item)................. 932,222 -- 1,700,000 -- INTEREST EXPENSE.................................. -- -- (338,391) (189,607) -------- -------- ---------- ---------- INCOME (LOSS) BEFORE PROVISION FOR INCOME TAXES... 922,467 (29,841) 2,372,803 1,386,934 PROVISION FOR INCOME TAXES........................ -- -- 272,000 554,000 -------- -------- ---------- ---------- NET INCOME (LOSS)................................. $922,467 $(29,841) $2,100,803 $ 832,934 ======== ======== ========== ==========
The accompanying notes are an integral part of these statements. F-33 95 GEOTRAC, INC. STATEMENT OF SHAREHOLDERS' EQUITY (DEFICIT)
ADDITIONAL RETAINED COMMON PAID-IN EARNINGS STOCK CAPITAL (DEFICIT) TOTAL ------ ---------- ----------- ----------- Balance at January 1, 1995....................... $ 5 $ 5,995 $ 78,744 $ 84,744 Dividend paid to shareholder................... -- -- (1,002,371) (1,002,371) Net income..................................... -- -- 922,467 922,467 --- ---------- ----------- ----------- Balance at December 31, 1995..................... 5 5,995 (1,160) 4,840 Net loss....................................... -- -- (29,841) (29,841) --- ---------- ----------- ----------- Balance at December 31, 1996..................... 5 5,995 (31,001) (25,001) Dividend paid to S Corporation shareholder..... -- -- (1,700,000) (1,700,000) Sale of Common Stock........................... 5 6,749,995 -- 6,750,000 Recapitalization of Company for change from S Corporation to C Corporation................ (40,420) 40,420 -- Net income..................................... -- -- 2,100,803 2,100,803 --- ---------- ----------- ----------- Balance at December 31, 1997..................... 10 6,715,570 410,222 7,125,802 Net income (unaudited)......................... -- -- 832,934 832,934 --- ---------- ----------- ----------- Balance at March 31, 1998 (unaudited)............ $10 $6,715,570 $ 1,243,156 $ 7,958,736 === ========== =========== ===========
The accompanying notes are an integral part of this statement. F-34 96 GEOTRAC, INC. STATEMENTS OF CASH FLOWS
THREE MONTHS YEAR ENDED DECEMBER 31, ENDED ------------------------------------ MARCH 31, 1995 1996 1997 1998 ----------- -------- ----------- ----------- (UNAUDITED) CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss)............................ $ 922,467 $(29,841) $ 2,100,803 $ 832,934 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization............. -- -- 594,045 360,196 Deferred federal income tax (credit) expense................................. -- -- (315,000) (5,000) Changes in assets and liabilities: Accounts receivable..................... 84,298 -- 8,284 (617,005) Prepaid expenses and other assets....... -- -- (73,945) 42,431 Accounts payable and other liabilities.......................... -- 25,139 768,058 81,848 Income taxes payable.................... -- -- 297,000 265,000 Deferred revenue........................ -- -- (25,000) (15,000) ----------- -------- ----------- ---------- Net cash provided by (used in) operating activities............... 1,006,765 (4,702) 3,354,245 945,404 ----------- -------- ----------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES Purchases of property and equipment.......... -- -- (153,371) (80,324) Acquisition of business, net of cash acquired.................................. -- -- (6,163,057) -- ----------- -------- ----------- ---------- Net cash used in investing activities......................... -- -- (6,316,428) (80,324) ----------- -------- ----------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES Payment of note payable from shareholder..... -- -- (200,000) -- Proceeds from note payable................... -- -- 447,800 -- Payments on note payable..................... -- -- (312,500) (625,000) Payments on capital lease obligations........ -- -- (125,993) (64,063) Dividend paid S corporation shareholder...... (1,002,371) -- (1,700,000) -- Sale of common stock......................... -- -- 6,750,000 -- ----------- -------- ----------- ---------- Net cash provided by (used in) financing activities............... (1,002,371) -- 4,859,307 (689,063) ----------- -------- ----------- ---------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS............................. 4,394 (4,702) 1,897,124 176,017 CASH AND CASH EQUIVALENTS, beginning of period....................................... 446 4,840 138 1,897,262 ----------- -------- ----------- ---------- CASH AND CASH EQUIVALENTS, end of period....... $ 4,840 $ 138 $ 1,897,262 $2,073,279 =========== ======== =========== ========== SUPPLEMENT DISCLOSURES OF CASH FLOW INFORMATION Cash paid for interest....................... $ -- $ -- $ 155,110 $ 372,888 =========== ======== =========== ========== Cash paid for income taxes................... $ -- $ -- $ 290,000 $ 294,000 =========== ======== =========== ==========
F-35 97 GEOTRAC, INC. STATEMENTS OF CASH FLOWS -- (CONTINUED) SUPPLEMENTAL DISCLOSURES OF NON-CASH INVESTING AND FINANCING ACTIVITIES: During the year ended December 31, 1997, the Company financed $8,302,200 of the acquisition of SMS Geotrac, Inc. ($8,250,000) and deferred financing costs ($52,200). During the year ended December 31, 1997, the Company acquired $25,398 in equipment under a capital lease. Acquisition of Business Net of Cash Acquired:
YEAR ENDED DECEMBER 31, 1997 ------------ Fair value of assets acquired............................... $17,308,778 Liabilities assumed......................................... (2,308,778) Debt issued................................................. (8,250,000) Cash acquired............................................... (586,943) ----------- $ 6,163,057 ===========
The accompanying notes are an integral part of these statements. F-36 98 GEOTRAC, INC. NOTES TO FINANCIAL STATEMENTS NOTE 1. DESCRIPTION OF BUSINESS AND ORGANIZATION Geotrac, Inc. (the "Company"), formerly YoSystems, Inc., is a provider of flood zone determination services for financial services companies and individuals located throughout the United States. On July 31, 1997, the Company acquired the outstanding stock of SMS Geotrac, Inc., a wholly-owned subsidiary of Strategic Mortgage Services, Inc. (SMS), an unrelated company, for $15,000,000. Prior to the acquisition, the Company had limited activity and was an S corporation for federal income tax purposes. The Company's principal activity prior to July 31, 1997 was to receive contingent earnout payments from the sale of its operating assets during 1994 and to distribute any payments received to its shareholder. Simultaneous with the acquisition of SMS Geotrac, Inc., the Company sold 49% of its outstanding shares to Bankers Hazard Determination Services, Inc. (BHDS), a subsidiary of Insurance Management Solutions Group, Inc. (IMSG), for $6,750,000. Such proceeds of the stock sale together with the proceeds of $8,250,000 from a bank borrowing were used to acquire SMS Geotrac, Inc. Subsequent to the acquisition, the Company changed its name from YoSystems, Inc. to Geotrac, Inc. As of July 31, 1997, the Company became a C corporation for federal income tax purposes. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates In preparing the financial statements in conformity with generally accepted accounting principles, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Concentration of Credit The Company provides flood zone determination services primarily to insurance companies and financial institutions throughout the United States. Credit is extended to customers (primarily financial services companies) based on management's assessment of their credit worthiness. Customer deposits are required in certain instances. Property and Equipment Property and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization is provided for using the straight line method over the estimated useful life of the assets. Capitalized costs include the cost of purchasing maps as well as the direct labor cost of converting the maps to digitized computer files. The Company capitalizes the costs of acquiring and computerizing maps that are used as a basis for making flood zone determinations. These capitalized costs are amortized on a straight-line basis over a period of five years. F-37 99 GEOTRAC, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) Impairment of Long-Lived Assets The Company evaluates the recoverability of its long-lived assets and intangibles (including goodwill) held whenever adverse events or changes in business climate indicate that the expected undiscounted future cash flows from the related asset may be less than previously anticipated. If the net book value of the related asset exceeds the undiscounted future cash flows of the asset, the carrying amount would be reduced to the present value of its expected future cash flows and an impairment loss would be recognized. As of December 31, 1997 and March 31, 1998 management does not believe that an impairment reserve is required. Goodwill Goodwill of $8,847,119 related to the acquisition of SMS Geotrac, Inc., is being amortized using the straight-line method over twenty years. Accumulated amortization at December 31, 1997 and March 31, 1998 was $184,315 and $294,904, respectively. Customer Contracts In connection with the acquisition of SMS Geotrac, Inc., the Company estimated the fair value of its customer contracts and allocated $1,600,000 of the purchase price to such contracts. Customer contracts are being amortized using the straight-line method over eight years. Accumulated amortization of December 31, 1997 and March 31, 1998 was $83,333 and $133,333, respectively. Revenues Revenue earned on flood zone determination services is recognized when the determination is performed. The Company provides life of loan monitoring of flood zone determinations whereby the Company notifies its customers of changes in previously issued flood zone determinations. The Company estimates the revenues associated with this future obligation to monitor changes and notify customers and defers and amortizes these amounts using the straight-line method over the life of the loan, approximately 8 years. Income Taxes For the year ended December 31, 1996 and through July 31, 1997 the Company was an S Corporation for federal income tax purposes. Accordingly, federal income taxes on net earnings of the Company were payable by the shareholder. Beginning August 1, 1997, the Company accounts for income taxes on the asset and liability method. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as measured by the enacted tax rates which will be in effect when these differences reverse. Deferred tax expense is the result of changes in deferred tax assets and liabilities. At the date of the termination of the S Corporation election, there were no deferred tax assets or liabilities created. Deferred Financing Costs The Company has deferred financing costs of approximately $337,000, as it relates to its bank borrowings which are being amortized using the straight line method (approximates the effective yield method) over the term of the loan (see Note 5). F-38 100 GEOTRAC, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) Fair Value of Financial Instruments The carrying amount of the Company's financial instruments at December 31, 1997, and March 31, 1998, which includes cash, accounts receivable, accounts payable and debt, approximates fair value due to the short maturity of those instruments. The Company considers the fixed rate and variable rate financial instruments to be representative of current market interest rates and, accordingly, the recorded amounts approximate their present fair market value. Unaudited Financial Statements The unaudited financial statements and the related notes thereto for March 31, 1998 include all normal and recurring adjustments, which in the opinion of management are necessary for a fair presentation and are prepared on the same basis as audited annual statements. The interim results are not necessarily indicative of the results that may be expected for the full year. Segments and Related Information The Company adopted SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information" ("SFAS 131"), which establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports issued to shareholders. This statement also establishes standards for related disclosures about products and services geographic areas, and major customers. This statement requires the reporting of financial and descriptive information about an enterprise's reportable operating segments. The Company only has one operating segment and one principal product or service (See Note 1). All the Company's operations are located within the United States and no individual customer represents more than 10% of total revenues for all periods presented herein. New Accounting Pronouncement Not Yet Adopted In June 1997, the FASB issued SFAS No. 130, "Reporting of Comprehensive Income' ("SFAS 130"), which establishes standards for reporting and display of comprehensive income and its components (revenues, expense, gains and losses) in a full set of financial statements as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. This statement is effective for fiscal years beginning after December 15, 1997. Earlier application is permitted. Reclassification of financial statements for earlier periods provided for comparative purposes is required. The Company believes that adoption of SFAS 130 will have no effect on the financial statements. NOTE 3. ACQUISITION OF SMS GEOTRAC, INC. On July 31, 1997 the Company acquired all of the outstanding common stock of SMS Geotrac, Inc. (Note 1) for a purchase cost of $15,000,000 which was funded as follows: Cash contributed by BHDS.................................... $ 6,750,000 Bank borrowing.............................................. 8,750,000 Excess cash not required for acquisition.................... (500,000) ----------- $15,000,000 ===========
F-39 101 GEOTRAC, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) NOTE 3. ACQUISITION OF SMS GEOTRAC, INC. -- (CONTINUED) The acquisition has been accounted for as a purchase, and accordingly the net assets acquired on July 31, 1997 were recorded at their estimated fair value as follows: Current assets.............................................. $ 3,026,152 Property and equipment...................................... 3,547,454 Excess of cost over assets acquired......................... 8,847,119 Customer contracts.......................................... 1,600,000 Other assets................................................ 288,053 Liabilities assumed......................................... (2,308,778) ----------- $15,000,000 ===========
In addition, BHDS and the Company entered into a cross licensing agreement; whereby, the Company is to receive a total of $900,000 for the use of its database of digitized maps, for the period from the date of acquisition through June 2000. Further, BHDS will reimburse the Company for fifty percent of its cost to maintain the database as of December 31, 1997, approximately $250,000 has been recorded under this agreement. The following unaudited proforma consolidated results of operations for the year ended December 31, 1997 is presented as if the acquisition of SMS Geotrac, Inc. has been made on January 1, 1996. The unaudited proforma information is not necessarily indicative of either the results of operations that would have occurred had the purchase been made at January 1, 1996 or the future results of the consolidated operations:
1996 1997 ----------- ----------- (UNAUDITED) Revenues.................................................... $13,374,610 $14,062,666 Net earnings................................................ $ 555,676 $ 2,489,623
The following table distinguishes the condensed historical results of operations for the year ended December 31, 1997 by the period before and after the acquisition of SMS Geotrac, Inc.
AUGUST 1, JANUARY 1, 1997 1997 THROUGH THROUGH DECEMBER 31, JULY 31, 1997 1997 TOTAL ------------- ------------ ---------- Revenues.......................................... $ -- $6,336,025 $6,336,025 Operating income (loss)........................... (9,419) 1,001,775 1,011,194 Other income (expense)............................ 1,700,000 (338,391) 1,361,069 ---------- ---------- ---------- Net income.............................. $1,690,581 $ 410,222 $2,100,803 ========== ========== ==========
F-40 102 GEOTRAC, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) NOTE 4. PROPERTY AND EQUIPMENT Property and equipment consists of the following:
LIFE DECEMBER 31, MARCH 31, YEARS 1997 1998 ------ ------------ ---------- Computer equipment..................................... 3-5 $1,343,736 $1,364,419 Furniture and fixtures................................. 7 498,002 500,567 Transportation equipment............................... 5 28,908 28,908 Maps and map database.................................. 5 1,855,554 1,912,930 ---------- ---------- 3,726,200 3,806,824 Less accumulated depreciation and amortization......... (306,284) (494,154) ---------- ---------- $3,419,916 $3,312,670 ========== ==========
Depreciation and amortization expense for the year ended December 31, 1997 and the three month period ended March 31, 1998 were $306,284 and $187,870, respectively. NOTE 5. LONG-TERM DEBT In connection with the purchase of SMS Geotrac, Inc., the Company borrowed $8,750,000 from a bank. The note is payable in quarterly installments of $312,500 plus interest. Interest is charged, at the Company's option, at 1) the current prime rate; 2) a seven year fixed rate; 3) a certain percentage over the LIBOR rate based upon a formula; or 4) a combination of the above rates. In addition to the quarterly payments, annual prepayments may be required in an amount equal to fifty percent of excess cash flow, as defined in the loan agreement. The agreement contains covenants that require the Company to maintain certain financial ratios (e.g., stockholders' equity of at least $6,250,000 through June 30, 1998 increasing by 50% of net income thereafter), limits the dollar value of capital expenditures and restricts the payment of dividends to 50% of excess cash flows (as defined). The note is collateralized by substantially all the assets of the Company. The outstanding balance (and prime interest rate) at December 31, 1997 and March 31, 1998 was $8,437,500 (8.5%) and $7,812,500 (8.5%), respectively. Scheduled maturities of the note payable to bank at December 31, 1997 are as follows: 1998........................................................ $1,250,000 1999........................................................ 1,250,000 2000........................................................ 1,250,000 2001........................................................ 1,250,000 2002........................................................ 1,250,000 Thereafter.................................................. 2,187,500 ---------- $8,437,500 ==========
NOTE 6. OTHER INCOME (NON-RECURRING ITEM) During 1996 and on July 30, 1997 the Company received contingent earn-out payments of $932,222 and $1,700,000 (final payment), respectively associated with the sale of its operating assets during 1994. These amounts are classified as other income and a non-recurring item. F-41 103 GEOTRAC, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) NOTE 7. COMMITMENTS AND CONTINGENCIES Operating Leases The Company leases office space and equipment under operating leases with unexpired terms ranging from a month-to-month basis to seven years. Rent expense under all operating leases was approximately $135,000 and $80,000 for the year ended December 31, 1997 and the three month period ended March 31, 1998, respectively. The Company is currently leasing one of its operating facilities from its 51 percent shareholder. This lease requires monthly rental payments of $8,717 through August 1998. The future minimum lease payments under these operating lease agreements are as follows:
YEAR ENDED DECEMBER 31, ----------------------- 1998........................................................ $416,161 1999........................................................ 371,274 2000........................................................ 255,766 2001........................................................ 216,672 2002........................................................ 198,616 ---------- $1,458,489 ==========
Capital Leases The Company has capital lease agreements for computer equipment and furniture and fixtures. At December 31, 1997 and March 31, 1998 property and equipment includes $695,623 of assets recorded under capital leases and accumulated depreciation of $57,543 and $92,326, respectively. The future minimum lease payments under these capital lease agreements are as follows:
YEAR ENDED DECEMBER 31, ----------------------- 1998........................................................ $343,762 1999........................................................ 323,763 2000........................................................ 241,835 2001........................................................ 38,099 -------- Total............................................. 947,459 Less amount representing interest........................... 101,151 -------- Present value of minimum lease payments..................... 846,308 Less amount representing current portion.................... 288,952 -------- Long-term portion......................................... $557,356 ========
Deferred Compensation On September 11, 1997 the Company's Board of Directors, recognizing SMS Geotrac, Inc's president's nonbinding commitment which originated prior to the acquisition of SMS Geotrac, approved and granted bonuses to certain current and former employees of SMS Geotrac. Such bonuses were principally related to prior services rendered by these employees and resulted in additional compensation of $732,795 which is separately disclosed in the statement of operations as deferred compensation (a non-recurring item) of which approximately $362,000 and 371,000 relates to cost of revenues and selling, general and administrative expenses, respectively. These amounts are to be paid to the individuals on or before December 31, 1998. Common Stock Awards Prior to and at the time of the acquisition of SMS Geotrac, the president of SMS Geotrac also had a nonbinding commitment to grant to certain former and current employees options to purchase shares of Geotrac, Inc. (formerly YoSystems) common stock held by the president and his wife, for prior employee F-42 104 GEOTRAC, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) NOTE 7. COMMITMENTS AND CONTINGENCIES -- (CONTINUED) services rendered. On May 12, 1998, the president awarded 46.45 shares of his and his wife's common stock to these individuals. In conjunction with the agreement and plan of merger with IMSG, which is expected to close by June 26, 1998, the Company is to acquire the common stock held by these individuals for approximately $728,069. On May 12, 1998, the Company recorded additional compensation expense (non-recurring item) of $728,069 and an increase to contributed capital of $728,069. Risks and Uncertainties The nature of the Company's business is such that it is dependent upon various factors such as general economic conditions and weather patterns that are beyond its control. The demand for flood zone determinations by lenders and their customers is directly related to the affordability of mortgage financing and refinancing. Current interest rates are relatively low and therefore conducive to a higher volume of mortgage lending and flood zone determinations. An increase in interest rates would have a negative impact on mortgage lending and consequently on the level of flood zone determinations performed. Fluctuations in interest rates will likely produce fluctuations in the Company's operating results. Likewise, natural disasters such as hurricanes, tornadoes, and floods, all or which are unpredictable, directly impact the demand for the Company's flood zone determination business. NOTE 8. INCOME TAXES The provision for income taxes consists of the following components:
THREE YEAR MONTHS ENDED ENDED DECEMBER 31, MARCH 31, 1997 1998 ------------- ---------- Federal: Current................................................... $ 461,000 $434,000 Deferred (benefit)........................................ (249,000) (5,000) --------- -------- 212,000 429,000 --------- -------- State: Current................................................... 126,000 125,000 Deferred (benefit)........................................ (66,000) -- --------- -------- 60,000 125,000 --------- -------- Total............................................. $ 272,000 $554,000 ========= ========
A reconciliation of the federal statutory income tax rate to the Company's effective income tax rate is as follows:
THREE YEAR MONTHS ENDED ENDED DECEMBER 31, MARCH 31, 1997 1998 ------------- ---------- Federal income taxes, at statutory rates.................... $ 807,000 $472,000 S corporation earnings not subject to tax................... (575,000) -- State taxes, net............................................ 40,000 82,000 --------- -------- $ 272,000 $554,000 ========= ========
F-43 105 GEOTRAC, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) NOTE 8. INCOME TAXES -- (CONTINUED) Deferred federal income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the corresponding amounts used for income tax purposes. Significant components of the Company's deferred tax assets are as follows:
DECEMBER 31, MARCH 31, 1997 1998 ------------ --------- Current deferred tax assets (liabilities): Vacation accrual.......................................... $(18,000) $ (9,000) Deferred compensation..................................... 303,000 303,000 Allowance for doubtful accounts........................... 5,000 18,000 -------- -------- Net current deferred tax asset............................ $290,000 $312,000 ======== ======== Long-term deferred tax asset: Depreciation and amortization............................. $ 25,000 $ 8,000 ======== ========
NOTE 9. EMPLOYEE BENEFIT PLAN From August 1, 1997 through December 31, 1997, the Company participated in a 401(k) plan established by the former Parent of SMS Geotrac, Inc. Eligible full-time employees of the Company made voluntary contributions to the plan. No Company contributions were made to the plan. Effective January 1, 1998 the Company established its own 401(k) plan. Any contributions to the new plan by the Company are discretionary. NOTE 10. SUBSEQUENT EVENT On May 12, 1998, the Company, its shareholders (including BHDS), IMSG and IMSG's parent, Bankers Insurance Group, Inc., executed a definitive agreement whereby all the shares of common stock held by the Company's president, his wife and by certain employees representing 51% of the outstanding shares, will be acquired by IMSG and BHDS for total consideration of $7,994,250 consisting of: Shares of IMSG Common Stock................................. $5,766,181 Promissory note............................................. 1,500,000 Cash........................................................ 728,069 ---------- $7,994,250 ==========
Upon the completion of the transaction, the Company will merge into BHDS, with BHDS being the surviving corporation. The cross-license agreement with BHDS (See Note 3) will be terminated, along with any amounts due to or from which are expected to be insignificant. F-44 106 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS The Board of Directors SMS Geotrac, Inc. We have audited the accompanying statements of income, shareholder's equity and cash flows of SMS Geotrac, Inc. for each of the two years in the period ended June 30, 1997 and the one month period ended July 31, 1997. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the results of its operations its and cash flows of SMS Geotrac, Inc. for each of the two years in the period ended June 30, 1997 and the one month period ended July 31, 1997, in conformity with generally accepted accounting principles. GRANT THORNTON LLP Tampa, Florida May 29, 1998 F-45 107 SMS GEOTRAC, INC. STATEMENTS OF INCOME
ONE MONTH YEAR ENDED JUNE 30, ENDED ------------------------- JULY 31, 1996 1997 1997 ----------- ----------- ---------- REVENUES Flood zone determination services...................... $12,286,525 $12,313,735 $1,197,314 Other revenues......................................... 203,301 207,772 12,365 ----------- ----------- ---------- Total revenues................................. 12,489,826 12,521,507 1,209,679 ----------- ----------- ---------- EXPENSES Cost of revenues....................................... 6,219,142 5,913,800 529,597 Selling, general and administrative expense............ 3,079,377 2,839,433 227,286 Depreciation and amortization.......................... 688,678 1,330,876 103,560 ----------- ----------- ---------- Total expenses................................. 9,987,197 10,084,109 860,443 ----------- ----------- ---------- OPERATING INCOME......................................... 2,502,629 2,437,398 349,236 INTEREST EXPENSE......................................... (81,495) (78,850) (8,215) ----------- ----------- ---------- INCOME BEFORE PROVISION FOR INCOME TAXES................. 2,421,134 2,358,548 341,021 PROVISION FOR INCOME TAXES............................... 1,046,900 1,079,100 148,000 ----------- ----------- ---------- NET INCOME............................................... $ 1,374,234 $ 1,279,448 $ 193,021 =========== =========== ==========
The accompanying notes are an integral part of these statements. F-46 108 SMS GEOTRAC, INC. STATEMENT OF SHAREHOLDER'S EQUITY
ADDITIONAL COMMON PAID-IN RETAINED STOCK CAPITAL EARNINGS TOTAL ------ ---------- ---------- ---------- Balance at July 1, 1996............................ $1 $1,464,047 $ 326,215 $1,790,263 Capital contribution from parent................. -- 932,222 -- 932,222 Net income....................................... -- -- 1,374,234 1,374,234 -- ---------- ---------- ---------- Balance at June 30, 1996........................... 1 2,396,269 1,700,449 4,096,719 Capital contributions from parent................ -- 2,111,140 -- 2,111,140 Net income....................................... -- -- 1,279,448 1,279,448 -- ---------- ---------- ---------- Balance at June 30, 1997........................... 1 4,507,409 2,979,897 7,487,307 Capital contribution from parent................. -- 1,700,000 -- 1,700,000 Net income....................................... -- -- 193,021 193,021 -- ---------- ---------- ---------- Balance at July 31, 1997........................... $1 $6,207,409 $3,172,918 $9,380,328 == ========== ========== ==========
The accompanying notes are an integral part of this statement. F-47 109 SMS GEOTRAC, INC. STATEMENTS OF CASH FLOWS
ONE MONTH YEAR ENDED JUNE 30, ENDED ------------------------- JULY 31, 1996 1997 1997 ----------- ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net income.......................................... $ 1,374,234 $ 1,279,448 $ 193,021 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization.................... 688,678 1,330,876 103,560 Deferred federal income tax (credit) expense..... (240,400) 53,100 8,000 Income taxes due to Parent....................... 1,304,440 1,106,539 139,988 Gain on sale of property and equipment........... (1,252) -- -- Provision for bad debts.......................... 385,908 -- -- Changes in assets and liabilities: Accounts receivable............................ (1,204,784) 517,209 49,514 Prepaid expenses and other assets.............. (99,933) (38,993) (38,223) Accounts payable and other liabilities......... 241,530 (459,510) (11,793) Deferred revenue............................... 231,261 157,880 (1,490) ----------- ----------- ----------- Net cash provided by operating activities... 2,679,682 3,946,549 442,577 ----------- ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Property and equipment deposit returned............. -- -- 130,670 Purchases of property and equipment................. (1,679,980) (1,457,719) (60,941) Proceeds from disposal of property and equipment.... 12,400 -- -- ----------- ----------- ----------- Net cash provided by (used in) investing activities................................ (1,667,580) (1,457,719) 69,729 ----------- ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Advance from officer................................ -- -- 200,000 Advance to related party............................ -- -- (796,597) Net repayments on revolving line of credit.......... (283,884) -- -- Repayment of capital lease obligations.............. (146,788) (291,219) (22,433) Advances to parent.................................. -- (905,780) (1,850,000) Capital contribution from parent.................... -- 500,000 -- ----------- ----------- ----------- Net cash used in financing activities....... (430,672) (696,999) (2,469,030) ----------- ----------- ----------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.................................... 581,430 1,791,831 (1,956,724) CASH AND CASH EQUIVALENTS, beginning of period........ 170,406 751,836 2,543,667 ----------- ----------- ----------- CASH AND CASH EQUIVALENTS, end of period.............. $ 751,836 $ 2,543,667 $ 586,943 =========== =========== =========== SUPPLEMENT DISCLOSURES OF CASH FLOW INFORMATION Cash paid for interest.............................. $ 81,495 $ 78,850 $ 8,215 =========== =========== ===========
Supplemental disclosures of non-cash investing and financing activities: During the year ended June 30, 1996 and on July 31, 1997, the Company's parent made a payment of $932,222 and $1,700,000 to the Company's former owner in conjunction with the August 1, 1994 purchase of the Company. The amounts were recorded as an increase to goodwill and an additional capital contribution to the Company. During the year ended June 30, 1997, the Company and its parent agreed to treat $1,611,140 of intercompany obligations as a capital contribution to the Company. During the year ended June 30, 1997, the Company entered into capital lease agreements relating to equipment with a cost of $427,453. The accompanying notes are an integral part of these statements. F-48 110 SMS GEOTRAC, INC. NOTES TO FINANCIAL STATEMENTS NOTE 1. DESCRIPTION OF BUSINESS AND ORGANIZATION SMS Geotrac, Inc. (the "Company"), headquartered in Norwalk, Ohio, is principally a provider of flood zone determination services for insurance companies and financial institutions located throughout the United States. The Company is a wholly-owned subsidiary of Strategic Mortgage Services, Inc. (Parent). NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Use of Estimates In preparing the financial statements in conformity with generally accepted accounting principles, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents. Concentration of Credit The Company provides professional flood zone determination services for financial services companies and individuals throughout the United States. Credit is extended to customers (primarily financed services companies) based on management's assessment of their credit worthiness. Customer deposits are required in certain instances. Depreciation and Amortization of Property and Equipment Depreciation and amortization is computed using accelerated methods for financial reporting and federal income tax purposes, over the estimated useful lives of the assets which range from 3-5 years for computer equipment and 5-7 years for furniture and fixtures, transportation equipment and maps. Depreciation and amortization for the years ended June 30, 1996 and 1997 were $594,797 and $1,226,820, respectively and $94,889 for the one month period ended July 31, 1997. Goodwill Goodwill is being amortized using the straight-line method over fifteen years. Amortization for the years ended June 30, 1996 and 1997 was $93,881 and $104,056, respectively; and $8,671 for the one month period ended July 31, 1997. Revenues Revenue earned on flood zone determination services is recognized when the determination is performed. For an additional fee, the Company provides life of loan monitoring of flood zone determinations whereby the Company notifies its customers of changes in previously issued flood zone determinations. The estimated revenues associated with this future obligation to monitor changes and notify customers are deferred and amortized using the straight-line method over the expected life of the loan, approximately 7 years. Income Taxes Income taxes are accounted for on the asset and liability method. Deferred tax assets and liabilities are determined based on the difference between the financial statement and tax bases of assets and liabilities as F-49 111 SMS GEOTRAC, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED) measured by the enacted tax rates which will be in effect when these differences reverse. Deferred tax expense is the result of changes in deferred tax assets and liabilities. New Pronouncements Not Yet Adopted In June 1997, the FASB issued SFAS No. 130, "Reporting of Comprehensive Income" ("SFAS 130"), which establishes standards for reporting and display of comprehensive income and its components (revenues, expense, gains and losses) in a full set of financial statements as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. This statement is effective for fiscal years beginning after December 15, 1997. Earlier application is permitted. Reclassification of financial statements for earlier periods provided for comparative purposes is required. The Company does not anticipate that adoption of SFAS 130 will have material effect on the financial statements. Segments and Related Information The Company adopted SFAS No. 131, "Disclosure about Segments of an Enterprise and Related Information" ("SFAS 131"), which establishes standards for the way that public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports issued to shareholders. This statement also establishes standards for related disclosures about products and services geographic areas, and major customers. This statement requires the reporting of financial and descriptive information about an enterprise's reportable operating segments. The Company only has one operating segment and one principal product or service (See Note 1). All the Company's operations are located within the United States and no individual customer represents more than 10% of total revenues for all periods presented herein. NOTE 3. COMMITMENTS AND CONTINGENCIES Operating Leases The Company leases office space and equipment under operating leases with unexpired terms ranging from a month to month basis to seven years. Rent expense under all operating leases was approximately $296,000 and $314,000 for the years ended June 30, 1996 and 1997, respectively and $27,000 for the one month period ended July 31, 1997. The Company leases one of its operating facilities from a Company controlled by the President of the Company. This lease requires monthly rental payments of $8,717 through August 1998. The future minimum lease payments under these operating lease agreements are as follows:
YEAR ENDED JUNE 30, - ------------------- 1998........................................................ $ 419,400 1999........................................................ 410,159 2000........................................................ 316,359 2001........................................................ 291,600 2002........................................................ 219,399 Thereafter.................................................. 90,280 ---------- $1,747,197 ==========
F-50 112 SMS GEOTRAC, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) NOTE 3. COMMITMENTS AND CONTINGENCIES -- (CONTINUED) Capital Leases The Company has capital lease agreements for computer equipment and furniture and fixtures. The future minimum lease payments under these capital lease agreements are as follows:
YEAR ENDED JUNE 30, - ------------------- 1998........................................................ $ 356,670 1999........................................................ 316,670 2000........................................................ 316,670 2001........................................................ 105,460 2002........................................................ 4,412 ---------- Total............................................. 1,099,882 Less amount representing interest........................... 130,546 ---------- Present value of minimum lease payments..................... 969,336 Less amount representing current portion.................... 304,950 ---------- Long-term portion........................................... $ 664,386 ==========
Risks and Uncertainties The nature of the Company's business is such that it is dependent upon various factors such as general economic conditions and weather patterns that are beyond its control. The demand for flood zone determinations by lenders and their customers is directly related to the affordability of mortgage financing and refinancing. Current interest rates are relatively low and therefore conducive to a higher volume of mortgage lending and flood zone determinations. An increase in interest rates would have a negative impact on mortgage lending and consequently on the level of flood zone determinations performed. Fluctuations in interest rates will likely produce fluctuations in the Company's operating results. Likewise, natural disasters such as hurricanes, tornadoes, and floods, all or which are unpredictable, directly impact the demand for the Company's flood zone determination business. NOTE 4. INCOME TAXES The Company's results of operations are included in the consolidated federal income tax return of its Parent. Income taxes are determined and recorded in the amount that would have been due and payable had the Company filed a separate income tax return on an accrual basis. Federal and state income taxes payable is included in the amount due to Parent. The provision for income taxes consists of the following components:
ONE MONTH YEAR ENDED JUNE 30, ENDED ----------------------- JULY 31, 1996 1997 1997 ---------- ---------- --------- Federal: Current.......................................... $1,016,500 $ 793,000 $111,000 Deferred......................................... (164,700) 37,100 6,000 ---------- ---------- -------- 851,800 830,100 117,000 ---------- ---------- -------- State: Current.......................................... 270,800 233,000 29,000 Deferred......................................... (75,700) 16,000 2,000 ---------- ---------- -------- 195,100 249,000 31,000 ---------- ---------- -------- Totals................................... $1,046,900 $1,079,100 $148,000 ========== ========== ========
F-51 113 SMS GEOTRAC, INC. NOTES TO FINANCIAL STATEMENTS -- (CONTINUED) NOTE 4. INCOME TAXES -- (CONTINUED) A reconciliation of the federal statutory income tax rate to the effective income tax rate is as follows:
ONE MONTH YEAR ENDED JUNE 30, ENDED ----------------------- JULY 31, 1996 1997 1997 ---------- ---------- --------- Federal income taxes, at statutory rates........... $ 823,000 $ 802,000 $116,000 State taxes........................................ 195,100 249,000 31,000 Other.............................................. 28,800 28,000 1,000 ---------- ---------- -------- $1,046,900 $1,079,000 $148,000 ========== ========== ========
NOTE 5. EMPLOYEE BENEFIT PLAN The Company participates in a 401(k) plan established by its Parent. Eligible full-time employees of the Company may make voluntary contributions to the plan. Matching Company contributions to the plan may be made at the discretion of the Board of Directors. No Company contributions were made during the years ended June 30, 1996 and 1997 or for the one month ended July 31, 1997. NOTE 6. RELATED PARTY TRANSACTIONS During the year ended June 30, 1996 and on July 30, 1997, the Company's parent made a payment of $932,222 and $1,700,000 to the Company's former owner (a company controlled by the President of the Company) in conjunction with the August 1, 1994 purchase of the Company. The amounts were recorded as an increase to goodwill and an additional capital contribution to the Company. During the year ended June 30, 1997, the Company and its Parent agreed to treat all outstanding amounts owed to the Parent, $1,611,140, as an additional capital contribution. In addition, the Parent contributed $500,000 to the Company. During the one month period ended July 31, 1997, the Company advanced $796,596 to YoSystems, Inc, a company owned by the Company's President. NOTE 7. SUBSEQUENT EVENT On July 31, 1997 all of the outstanding stock of the Company was acquired by YoSystems, Inc., which is owned by the Company's President, for $15 million. Concurrent with the acquisition of the Company, YoSystems, Inc. sold 49% of its common stock to Bankers Hazard Determination Services, Inc. F-52 114 ====================================================== NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLDER OR THE UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, ANY SECURITY OTHER THAN THE SHARES OF COMMON STOCK OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY THE SHARES OF COMMON STOCK BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF. ------------------------ TABLE OF CONTENTS
PAGE ---- Prospectus Summary.................... 1 Risk Factors.......................... 5 Geotrac Acquisition................... 11 Use of Proceeds....................... 11 Dividend Policy....................... 12 Capitalization........................ 13 Dilution.............................. 14 Selected Consolidated Financial Data of the Company...................... 15 Management's Discussion and Analysis of Financial Condition and Results of Operations of the Company........ 17 Selected Consolidated Financial Data of Geotrac.......................... 23 Management's Discussion and Analysis of Financial Condition and Results of Operations of Geotrac............ 24 Business.............................. 28 Management............................ 40 Principal and Selling Shareholders.... 46 Certain Transactions.................. 46 Description of Capital Stock.......... 50 Shares Eligible for Future Sale....... 52 Underwriting.......................... 54 Legal Matters......................... 55 Experts............................... 55 Available Information................. 56 Index to Financial Statements......... F-1
UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS. ====================================================== ====================================================== SHARES [IMSG LOGO] COMMON STOCK ------------------------ PROSPECTUS ------------------------ RAYMOND JAMES & ASSOCIATES, INC. LEHMAN BROTHERS FURMAN SELZ , 1998 ====================================================== 115 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. Securities and Exchange Commission filing fee............... $23,600 NASD filing fee............................................. 8,500 Nasdaq listing fee.......................................... Transfer agent expenses and fees............................ Printing and engraving...................................... Accountants' fees and expenses.............................. Consultants' fees and expenses.............................. Legal fees and expenses..................................... Miscellaneous............................................... ------- Total............................................. $ =======
- --------------- * All of the above fees, costs and expenses above will be paid by the Company. Other than the SEC filing fee and NASD filing fee, all fees and expenses are estimated. ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS. The Florida Business Corporation Act (the "Florida Act") permits a Florida corporation to indemnify a present or former director or officer of the corporation (and certain other persons serving at the request of the corporation in related capacities) for liabilities, including legal expenses, arising by reason of service in such capacity if such person shall have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and in any criminal proceeding if such person had no reasonable cause to believe his conduct was unlawful. However, in the case of actions brought by or in the right of the corporation, no indemnification may be made with respect to any matter as to which such director or officer shall have been adjudged liable, except in certain limited circumstances. The Company's Amended and Restated Articles of Incorporation and Amended and Restated Bylaws provide that the Company shall indemnify directors and executive officers to the fullest extent now or hereafter permitted by the Florida Act. In addition, the Company may enter into Indemnification Agreements with its directors and executive officers in which the Registrant has agreed to indemnify such persons to the fullest extent now or hereafter permitted by the Florida Act. The indemnification provided by the Florida Business Corporation Act and the Company's Amended and Restated Bylaws is not exclusive of any other rights to which a director or officer may be entitled. The general effect of the foregoing provisions may be to reduce the circumstances which an officer or director may be required to bear the economic burden of the foregoing liabilities and expense. The Company may obtain a liability insurance policy for its directors and officers as permitted by the Florida Act, which policy may extend to, among other things, liability arising under the Securities Act of 1933, as amended (the "Securities Act"). ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES. The Company is a holding company that was incorporated in the State of Florida on December 26, 1996 by its parent, Bankers Insurance Group, Inc. ("BIG"). On or about December 30, 1996, BIG contributed two of its wholly-owned operating subsidiaries, Insurance Management Solutions, Inc. and Bankers Hazard Determination Services, Inc., in exchange for 500 shares of the Company's Common Stock. The issuance of shares of the Company's Common Stock pursuant to this transaction is claimed to be exempt from registration under the Securities Act pursuant to Section 4(2) thereof. II-1 116 Effective May 8, 1998, the Company declared a stock dividend of 40,000 shares of Common Stock for each share of Common Stock then outstanding, resulting in an increase in the outstanding capital stock of the Company to 20,000,000 shares of Common Stock. On July 31, 1997, the Company acquired a 49% equity interest in Geotrac, Inc., an Ohio corporation ("Old Geotrac"), for $6.75 million in cash. On June , 1998, the Company acquired the remaining 51% equity interest in Old Geotrac in exchange for (i) shares of Common Stock (assuming an initial public offering price of $ per share), (ii) a promissory note in the principal amount of $1.5 million, and (iii) cash in the amount of $723,069. The transaction was effected pursuant to the merger of Old Geotrac into a wholly-owned subsidiary of the Company, with the surviving entity being known as "Geotrac, Inc." The issuance of shares of the Company's Common Stock pursuant to this merger is claimed to be exempt from registration under the Securities Act pursuant to Section 4(2) thereof. ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. (a) Exhibits.
EXHIBIT NUMBER EXHIBIT DESCRIPTION - ------- ------------------- 1.1 -- Proposed Form of Underwriting Agreement.* 3.1 -- Amended and Restated Articles of Incorporation of Insurance Management Solutions Group, Inc. 3.2 -- Amended and Restated Bylaws of Insurance Management Solutions Group, Inc. 4.1 -- Specimen certificate for the Common Stock of Insurance Management Solutions Group, Inc.* 5.1 -- Opinion of Foley & Lardner.* 10.1 -- Form of Employment Agreement between certain executive officers and Insurance Management Solutions Group, Inc. 10.2 -- Insurance Management Solutions Group, Inc. Long Term Incentive Plan. 10.3 -- Insurance Management Solutions Group, Inc. Non-Employee Directors' Stock Option Plan. 10.4 -- Snell Arcade Building Lease, dated May 15, 1996, between Snell Arcade Limited Company and Bankers Insurance Group, Inc., as revised and assigned to Insurance Management Solutions Group, Inc., effective January 1, 1998. 10.5 -- Bankers Building -- 5th Street North Lease Agreement, dated January 1, 1997, between Bankers Insurance Group, Inc. and Insurance Management Solutions Group, Inc. 10.6 -- Bankers Financial Center Lease Agreement, dated January 1, 1997, between Bankers Insurance Company and Insurance Management Solutions Group, Inc. 10.7 -- Lease, dated September 2, 1994, between DanYo LLC (as successor to Sandan) and SMS Geotrac, Inc. 10.8 -- Indenture of Lease, dated September 23, 1994, between Southview Business Center, Ltd., an Ohio limited partnership, and SMS Geotrac, Inc., including Addendum I, dated March 20, 1995, and Addendum II, dated December 8, 1995. 10.9 -- Master Equipment Lease Agreement, dated May 11, 1995, and executed on May 15, 1995, between National City Leasing Corporation and SMS Geotrac, Inc. 10.10 -- Term Lease Master Agreement, dated June 30, 1995, between IBM Credit Corporation and SMS Geotrac, Inc. 10.11 -- Employee Leasing Agreement, dated May 19, 1998, between Bankers Insurance Company and Insurance Management Solutions Group, Inc. 10.12 -- Administration Services Agreement, dated January 1, 1998, between Bankers Insurance Group, Inc. and Insurance Management Solutions Group, Inc.
II-2 117
EXHIBIT NUMBER EXHIBIT DESCRIPTION - ------- ------------------- 10.13 -- Service Agreement, dated January 1, 1998, between Insurance Management Solutions, Inc. and Bankers Insurance Company. 10.14 -- Service Agreement dated January 1, 1998 between Insurance Management Solutions, Inc. and Bankers Security Insurance Company. 10.15 -- Service Agreement dated January 1, 1998 between Insurance Management Solutions, Inc. and First Community Insurance Company. 10.16 -- Vendor Flood Insurance Agreement, dated January 1, 1996, between Insurance Management Solutions, Inc. (as successor to Insurance Management Information Services, Inc.) and Mobile USA Insurance Company, Inc. 10.17 -- Vendor Flood Insurance Agreement, dated November 10, 1995, between AAA Auto Club South Insurance Company and Insurance Management Information Services, Inc. 10.18 -- Flood Insurance Program Services Agreement by and among Insurance Management Information Services, Inc., American Alternative Insurance Corporation, and Corporate Insurance Agency Services. 10.19 -- Loan and Security Agreement, dated July 31, 1997, between Huntington National Bank, YoSystems, Inc. and SMS Geotrac, Inc. 10.20 -- Pledge and Security Agreement, dated May 8, 1998, by Insurance Management Solutions Group, Inc. in favor of SouthTrust Bank, N.A. 10.21 -- Agreement and Plan of Merger, dated May 12, 1998, by and among Geotrac, Inc., Insurance Management Solutions, Inc., Daniel J. and Sandra White, Bankers Insurance Group, Inc. and Bankers Hazard Determination Services, Inc. 10.22 -- Employment Agreement, dated , 1998, between Geotrac, Inc. and Daniel J. White. 10.23 -- Term Lease Master Agreement, dated August 6, 1996, between IBM Credit Corporation and Bankers Insurance Company, assigned by Bankers Insurance Company to Insurance Management Solutions, Inc., effective April 1, 1998, pursuant to Sales and Assignment Agreement, dated May 6, 1998. 10.24 -- Sales and Assignment Agreement, dated May 6, 1998, by and between Insurance Management Solutions Group, Inc., Insurance Management Solutions, Inc., Bankers Insurance Group, Inc., Bankers Insurance Services, Inc., Bankers Life Insurance Company, Southern Rental & Leasing Corporation, Bankers Insurance Company, and Bankers Security Insurance Company. 10.25 -- Software Maintenance and Enhancement Agreement, dated January 7, 1997 between Systems Integration and Imaging Technologies Incorporated and Insurance Management Information Services, Inc. 10.26 -- Corporate Governance Agreement, dated , 1998, between Geotrac, Inc., Daniel J. White and Insurance Management Solutions Group, Inc. 10.27 -- Tax Indemnity Agreement dated , 1998 between Bankers Insurance Group, Inc., Insurance Management Solutions Group, Inc. and Daniel J. and Sandra White. 10.28 -- Flood Insurance Agreement, dated January 6, 1998, between First Community Insurance Company and Keystone Insurance Company. 10.29 -- Marketing Agreement, dated November 14, 1997, between First Community Insurance Company and Nobel Insurance Company. 10.30 -- Flood Insurance Agreement, dated February 11, 1998, between First Community Insurance Company and Horace Mann Insurance Company. 10.31 -- Promissory Note dated April 1, 1998, from Insurance Management Solutions, Inc. to Bankers Insurance Company in the principal amount of $2,353,424.42.
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EXHIBIT NUMBER EXHIBIT DESCRIPTION - ------- ------------------- 10.32 -- Promissory Note dated April 1, 1998, from Insurance Management Solutions, Inc. to Southern Rental & Leasing Corporation in the principal amount of $448,749.95. 10.33 -- Promissory Note dated May 8, 1998, from Insurance Management Solutions Group, Inc. to Heritage Hotel Holding Company in the principal amount of $6,750,000, as amended. 10.34 -- Note dated December 30, 1994, from Insurance Management Solutions, Inc. (as successor to Bankers Data Center, Inc.) to First of America Bank -- Florida F.S.B. in the principal amount of $200,000. 10.35 -- Loan Agreement dated December 30, 1994, between First of America Bank -- Florida F.S.B., Geotrac, Inc. (as successor to National Flood Certification Services, Inc.), Southern Rental & Leasing Corporation, Insurance Management Solutions, Inc. (as successor to Bankers Data Center, Inc.) and Bankers Insurance Group, Inc. 10.36 -- Security Agreement dated December 30, 1994, by Insurance Management Solutions, Inc. (as successor to Bankers Data Center, Inc.) in favor of First of America Bank -- Florida F.S.B. 10.37 -- Note dated December 30, 1994, from Geotrac, Inc. (as successor to National Flood Certification Services, Inc.) to First of America Bank -- Florida F.S.B. in the principal amount of $60,000. 10.38 -- Security Agreement dated December 30, 1994, by Geotrac, Inc. (as successor to National Flood Certification Services, Inc.) in favor of First of America Bank -- Florida F.S.B. 10.39 -- Note dated December 30, 1996, from Geotrac, Inc. (as successor to Bankers Hazard Determination Services, Inc.) to First of America Bank -- Florida F.S.B. in the principal amount of $245,000. 10.40 -- Note dated December 30, 1996, from Insurance Management Solutions, Inc. (as successor to Insurance Management Information Services, Inc.) to First of American Bank -- Florida FSB in the principal amount of $809,000. 10.41 -- Loan Agreement dated December 30, 1996, between First of America Bank -- Florida F.S.B., Geotrac, Inc. (as successor to Bankers Hazard Determination Services, Inc.), Bankers Insurance Group, Inc., Bankers Risk Management Services, Inc., Bankers Underwriters, Inc., Insurance Management Solutions, Inc. (as successor to Insurance Management Information Services, Inc.), Southern Rental & Leasing Corporation, Bankers Financial Corporation and Bankers International Financial Corporation. 10.42 -- Security Agreement dated December 30, 1996, by Geotrac, Inc. (as successor to Bankers Hazard Determination Services Inc.), in favor of First of America Bank -- Florida F.S.B. securing $245,000 loan. 10.43 -- Security Agreement dated December 30, 1996, by Insurance Management Solutions, Inc. (as successor to Insurance Management Information Services, Inc.) in favor of First of America Bank -- Florida F.S.B. securing $809,000 loan. 10.44 -- Installment Note dated December 30, 1997, from Geotrac, Inc. (as successor to Bankers Hazard Determination Services, Inc.) to SouthTrust Bank, N.A. in the principal amount of $184,000. 10.45 -- Cross-Collateralization and Cross-Default Agreement dated December 30, 1997, in favor of SouthTrust Bank, N.A. by Bankers Financial Corporation, Bankers Insurance Group, Inc., Insurance Management Solutions, Inc. and Geotrac, Inc. (as successor to Bankers Hazard Determination Services, Inc.). 10.46 -- Security Agreement dated December 30, 1997, between Geotrac, Inc. (as successor to Bankers Hazard Determination Services, Inc.), and SouthTrust Bank, N.A. 10.47 -- Revolving Line of Credit Note dated December 27, 1993, from Geotrac, Inc. (as successor to National Flood Certification Services, Inc.) to Marine Bank, in the amount of $600,000. 10.48 -- Security Agreement dated December 27, 1993, between Geotrac, Inc. (as successor to National Flood Certification Services, Inc.) and Marine Bank.
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EXHIBIT NUMBER EXHIBIT DESCRIPTION - ------- ------------------- 10.49 -- Installment Note dated December, 1997, from Insurance Management Solutions, Inc. to SouthTrust Bank, N.A. in the principal amount of $2,131,000. 10.50 -- Promissory Note dated December 30, 1997, from Insurance Management Solutions, Inc. to SouthTrust Bank, N.A. in the principal amount of $500,000. 10.51 -- Security Agreement dated December 30, 1997, between Insurance Management Solutions Group, Inc. and SouthTrust Bank, N.A. 10.52 -- Flood Compliance Service Agreement dated November 1, 1996, between Geotrac, Inc. (as successor to SMS Geotrac) and Mortgage Corporation of America. 10.53 -- Flood Compliance Service Agreement dated March 1, 1997, between Geotrac, Inc. (as successor to SMS Geotrac) and CitFed Mortgage Corporation of America. 10.54 -- Flood Compliance Service Agreement dated March 1, 1998, between Geotrac, Inc. (as successor to SMS Geotrac), ABN AMRO North American and certain of its affiliates. 10.55 -- Flood Compliance Service Agreement dated April 12, 1997, between Geotrac, Inc. (as successor to SMS Geotrac) and Third Federal Savings. 10.56 -- Flood Compliance Service Agreement dated April 9, 1997, between Geotrac, Inc. (as successor to SMS Geotrac) and MidAm, Inc. 10.57 -- Flood Compliance Service Agreement dated December 28, 1995, between Geotrac, Inc. and Crestar Bank. 10.58 -- Flood Compliance Service Agreement dated April 1, 1996, between Geotrac, Inc. (as successor to SMS Geotrac) and ReliaStar Mortgage Corporation. 10.59 -- Flood Zone Determination Agreement dated March 25, 1993, between Geotrac, Inc. (as successor to National Flood Certification Services, Inc.) and AIG Consultants, Inc. 10.60 -- Flood Zone Determination Agreement dated December 28, 1995, between Geotrac, Inc. (as successor to Bankers Hazard Determination Services, Inc.) and SouthTrust Corporation, as amended on June 3, 1997. 10.61 -- Flood Zone Determination Agreement dated July 14, 1994, between Geotrac, Inc. (as successor to National Flood Certification Services, Inc.) and SunBank, N.A. 10.62 -- Flood Zone Determination Agreement dated November 8, 1993, between Geotrac, Inc. (as successor to National Flood Certification Services, Inc.) and Royal Indemnity Company. 10.63 -- Flood Insurance Agreement, dated February 17, 1995, between First Community Insurance Company and Armed Forces Insurance Exchange, as amended. 10.64 -- Flood Insurance Agreement, dated November 17, 1995, between First Community Insurance Company and Amica Mutual Insurance Company, as amended. 10.65 -- Non-Qualified Stock Option Plan. 10.66 -- Funding Agreement, dated June 19, 1998, by and between Bankers Insurance Group, Inc. and Insurance Management Solutions Group, Inc. 10.67 -- Assignment of Registered Service Mark ("Floodwriter"), dated May 7, 1998, from Bankers Insurance Company to Insurance Management Solutions, Inc. 10.68 -- Assignment of Registered Service Mark ("Undercurrents"), dated May 7, 1998, from Bankers Insurance Company to Insurance Management Solutions, Inc. 10.69 -- Registration Rights Agreement, dated , 1998, between Information Management Solutions Group, Inc. and Daniel J. and Sandra White 10.70 -- Software License Agreement, effective January 1, 1998, between Insurance Management Solutions, Inc., Bankers Insurance Group, Inc. and Bankers Insurance Company.* 21.1 -- List of subsidiaries of Insurance Management Solutions Group, Inc.
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EXHIBIT NUMBER EXHIBIT DESCRIPTION - ------- ------------------- 23.1 -- Consent of Foley & Lardner (included in Exhibit (5.1)). 23.2 -- Consent of Grant Thornton LLP. 23.3 -- Consent of Grant Thornton LLP. 23.4 -- Consent of Grant Thornton LLP. 24.1 -- Power of Attorney relating to subsequent amendments (included on the signature page of this Registration Statement). 27.1 -- Financial Data Schedule (filed for SEC purposes only). 27.2 -- Financial Data Schedule (filed for SEC purposes only). 27.3 -- Financial Data Schedule (filed for SEC purposes only). 27.4 -- Financial Data Schedule (filed for SEC purposes only). 27.5 -- Financial Data Schedule (filed for SEC purposes only). 27.6 -- Financial Data Schedule (filed for SEC purposes only).
- --------------- * To be filed by amendment. (b) Financial Statement Schedules. None. ITEM 17. UNDERTAKINGS. The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. The undersigned registrant hereby undertakes that: (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective. (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. II-6 121 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of St. Petersburg, and State of Florida, on this 25th day of June, 1998. INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. By: /s/ DAVID K. MEEHAN ------------------------------------ David K. Meehan Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. Each person whose signature appears below constitutes and appoints David K. Meehan, Jeffrey S. Bragg and Kelly K. King, and each of them individually, his true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this Registration Statement, (as well as any registration statement for the same offering covered by this Registration Statement that is to be effective upon filing pursuant to Rule 462(b) under the Securities Act of 1933) and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or either of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
SIGNATURE TITLE DATE --------- ----- ---- /s/ DAVID K. MEEHAN Chairman of the Board, Chief June 25, 1998 - ----------------------------------------------------- Executive Officer and Director David K. Meehan (Principal Executive Officer) /s/ KELLY K. KING Vice President, Chief Financial June 25, 1998 - ----------------------------------------------------- Officer and Treasurer Kelly K. King /s/ JEFFREY S. BRAGG Director June 25, 1998 - ----------------------------------------------------- Jeffrey S. Bragg /s/ ROBERT M. MENKE Director June 25, 1998 - ----------------------------------------------------- Robert M. Menke /s/ ROBERT G. MENKE Director June 25, 1998 - ----------------------------------------------------- Robert G. Menke /s/ JOHN A. GRANT, JR. Director June 25, 1998 - ----------------------------------------------------- John A. Grant, Jr.
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SIGNATURE TITLE DATE --------- ----- ---- /s/ WILLIAM D. HUSSEY Director June 25, 1998 - ----------------------------------------------------- William D. Hussey /s/ E. RAY SOLOMON Director June 25, 1998 - ----------------------------------------------------- E. Ray Solomon /s/ DANIEL J. WHITE Director June 25, 1998 - ----------------------------------------------------- Daniel J. White
II-8 123 EXHIBIT INDEX
EXHIBIT NUMBER EXHIBIT DESCRIPTION - ------- ------------------- 1.1 -- Proposed Form of Underwriting Agreement.* 3.1 -- Amended and Restated Articles of Incorporation of Insurance Management Solutions Group, Inc. 3.2 -- Amended and Restated Bylaws of Insurance Management Solutions Group, Inc. 4.1 -- Specimen certificate for the Common Stock of Insurance Management Solutions Group, Inc.* 5.1 -- Opinion of Foley & Lardner.* 10.1 -- Form of Employment Agreement between certain executive officers and Insurance Management Solutions Group, Inc. 10.2 -- Insurance Management Solutions Group, Inc. Long Term Incentive Plan. 10.3 -- Insurance Management Solutions Group, Inc. Non-Employee Directors' Stock Option Plan. 10.4 -- Snell Arcade Building Lease, dated May 15, 1996, between Snell Arcade Limited Company and Bankers Insurance Group, Inc., as revised and assigned to Insurance Management Solutions Group, Inc., effective January 1, 1998. 10.5 -- Bankers Building -- 5th Street North Lease Agreement, dated January 1, 1997, between Bankers Insurance Group, Inc. and Insurance Management Solutions Group, Inc. 10.6 -- Bankers Financial Center Lease Agreement, dated January 1, 1997, between Bankers Insurance Company and Insurance Management Solutions Group, Inc. 10.7 -- Lease, dated September 2, 1994, between DanYo LLC (as successor to Sandan) and SMS Geotrac, Inc. 10.8 -- Indenture of Lease, dated September 23, 1994, between Southview Business Center, Ltd., an Ohio limited partnership, and SMS Geotrac, Inc., including Addendum I, dated March 20, 1995, and Addendum II, dated December 8, 1995. 10.9 -- Master Equipment Lease Agreement, dated May 11, 1995 and executed on May 15, 1995, between National City Leasing Corporation and SMS Geotrac, Inc. 10.10 -- Term Lease Master Agreement, dated June 30, 1995, between IBM Credit Corporation and SMS Geotrac, Inc. 10.11 -- Employee Leasing Agreement, dated May 19, 1998, between Bankers Insurance Company and Insurance Management Solutions Group, Inc. 10.12 -- Administration Services Agreement, dated January 1, 1998, between Bankers Insurance Group, Inc. and Insurance Management Solutions Group, Inc. 10.13 -- Service Agreement, dated January 1, 1998, between Insurance Management Solutions, Inc. and Bankers Insurance Company. 10.14 -- Service Agreement dated January 1, 1998 between Insurance Management Solutions, Inc. and Bankers Security Insurance Company. 10.15 -- Service Agreement dated January 1, 1998 between Insurance Management Solutions, Inc. and First Community Insurance Company. 10.16 -- Vendor Flood Insurance Agreement, dated January 1, 1996, between Insurance Management Solutions, Inc. (as successor to Insurance Management Information Services, Inc.) and Mobile USA Insurance Company, Inc. 10.17 -- Vendor Flood Insurance Agreement, dated November 10, 1995, between AAA Auto Club South Insurance Company and Insurance Management Services, Inc. 10.18 -- Flood Insurance Program Services Agreement by and among Insurance Management Services, Inc., American Alternative Insurance Corporation, and Corporate Insurance Company Services. 10.19 -- Loan and Security Agreement, dated July 31, 1997, between Huntington National Bank, YoSystems, Inc. and SMS Geotrac, Inc.
124
EXHIBIT NUMBER EXHIBIT DESCRIPTION - ------- ------------------- 10.20 -- Pledge and Security Agreement, dated May 8, 1998, by Insurance Management Solutions Group, Inc. in favor of SouthTrust Bank, N.A. 10.21 -- Agreement and Plan of Merger, dated May 12, 1998, by and among Geotrac, Inc., Insurance Management Solutions, Inc., Daniel J. and Sandra White, Bankers Insurance Group, Inc. and Bankers Hazard Determination Services, Inc. 10.22 -- Employment Agreement, dated , 1998, between Geotrac, Inc. and Daniel J. White. 10.23 -- Term Lease Master Agreement, dated August 6, 1996, between IBM Credit Corporation and Bankers Insurance Company, assigned by Bankers Insurance Company to Insurance Management Solutions, Inc., effective April 1, 1998, pursuant to Sales and Assignment Agreement, dated May 6, 1998. 10.24 -- Sales and Assignment Agreement, dated May 6, 1998, by and between Insurance Management Solutions Group, Inc., Insurance Management Solutions, Inc., Bankers Insurance Group, Inc., Bankers Insurance Services, Inc., Bankers Life Insurance Company, Southern Rental & Leasing Corporation, Bankers Insurance Company, and Bankers Security Insurance Company. 10.25 -- Software Maintenance and Enhancement Agreement, dated January 7, 1997 between Systems Integration and Imaging Technologies Incorporated and Insurance Management Information Services, Inc. 10.26 -- Corporate Governance Agreement, dated , 1998, between Geotrac, Inc., Daniel J. White and Insurance Management Solutions Group, Inc. 10.27 -- Tax Indemnity Agreement dated , 1998 between Bankers Insurance Group, Inc., Insurance Management Solutions Group, Inc. and Daniel J. and Sandra White. 10.28 -- Flood Insurance Agreement, dated January 6, 1998, between First Community Insurance Company and Keystone Insurance Company. 10.29 -- Marketing Agreement, dated November 14, 1997, between First Community Insurance Company and Nobel Insurance Company. 10.30 -- Flood Insurance Agreement, dated February 11, 1998, between First Community Insurance Company and Horace Mann Insurance Company. 10.31 -- Promissory Note dated April 1, 1998, from Insurance Management Solutions, Inc. to Bankers Insurance Company in the principal amount of $2,353,424.42. 10.32 -- Promissory Note dated April 1, 1998, from Insurance Management Solutions, Inc. to Southern Rental & Leasing Corporation in the principal amount of $448,749.95. 10.33 -- Promissory Note dated May 8, 1998, from Insurance Management Solutions Group, Inc. to Heritage Hotel Holding Company in the principal amount of $6,750,000, as amended. 10.34 -- Note dated December 30, 1994, from Insurance Management Solutions, Inc. (as successor to Bankers Data Center, Inc.) to First of America Bank -- Florida F.S.B. in the principal amount of $200,000. 10.35 -- Loan Agreement dated December 30, 1994, between First of America Bank -- Florida F.S.B., Geotrac, Inc. (as successor to National Flood Certification Services, Inc.), Southern Rental & Leasing Corporation, Insurance Management Solutions, Inc. (as successor to Bankers Data Center, Inc.) and Banker Insurance Group, Inc. 10.36 -- Security Agreement dated December 30, 1994, by Insurance Management Solutions, Inc. (as successor to Bankers Data Center, Inc.) in favor of First of America Bank -- Florida F.S.B. 10.37 -- Note dated December 30, 1994, from Geotrac, Inc. (as successor to National Flood Certification Services, Inc.) to First of America Bank -- Florida F.S.B. in the principal amount of $60,000. 10.38 -- Security Agreement dated December 30, 1994, by Geotrac, Inc. (as successor to National Flood Certification Services, Inc.) in favor of First of America Bank -- Florida F.S.B.
125
EXHIBIT NUMBER EXHIBIT DESCRIPTION - ------- ------------------- 10.39 -- Note dated December 30, 1996, from Geotrac, Inc. (as successor to Bankers Hazard Determination Services, Inc.) to First of America Bank -- Florida F.S.B. in the principal amount of $245,000. 10.40 -- Note dated December 30, 1996, from Insurance Management Solutions, Inc. (as successor to Insurance Management Information Services, Inc.) to First of American Bank -- Florida FSB in the principal amount of $809,000. 10.41 -- Loan Agreement dated December 30, 1996, between First of America Bank -- Florida F.S.B., Geotrac, Inc. (as successor to Bankers Hazard Determination Services, Inc.), Bankers Insurance Group, Inc., Bankers Risk Management Services, Inc., Bankers Underwriters, Inc., Insurance Management Solutions, Inc. (as successor to Insurance Management Information Services, Inc.), Southern Rental & Leasing Corporation, Bankers Financial Corporation and Bankers International Financial Corporation. 10.42 -- Security Agreement dated December 30, 1996, by Geotrac, Inc. (as successor to Bankers Hazard Determination Services, Inc.) in favor of First of America Bank -- Florida F.S.B. securing $245,000 loan. 10.43 -- Security Agreement dated December 30, 1996, by Insurance Management Solutions, Inc. (as successor to Insurance Management Information Services, Inc.) in favor of First of America Bank -- Florida F.S.B. securing $809,000 loan. 10.44 -- Installment Note dated December 30, 1997, from Geotrac, Inc. (as successor to Bankers Hazard Determination Services, Inc.) to SouthTrust Bank, N.A. in the principal amount of $184,000. 10.45 -- Cross-Collateralization and Cross-Default Agreement dated December 30, 1997, in favor of SouthTrust Bank, N.A. by Bankers Financial Corporation, Bankers Insurance Group, Inc., Insurance Management Solutions, Inc. and Geotrac, Inc. (as successor to Bankers Hazard Determination Services, Inc.). 10.46 -- Security Agreement dated December 30, 1997, between Geotrac, Inc. (as successor to Bankers Hazard Determination Services, Inc.), and SouthTrust Bank, N.A. 10.47 -- Revolving Line of Credit Note dated December 27, 1993, from Geotrac, Inc. (as successor to National Flood Certification Services, Inc.) to Marine Bank, in the amount of $600,000. 10.48 -- Security Agreement dated December 27, 1993, between Geotrac, Inc. (as successor to National Flood Certification Services, Inc.) and Marine Bank. 10.49 -- Installment Note dated December, 1997, from Insurance Management Solutions, Inc. to SouthTrust Bank, N.A. in the principal amount of $2,131,000. 10.50 -- Promissory Note dated December 30, 1997, from Insurance Management Solutions, Inc. to SouthTrust Bank, N.A. in the principal amount of $500,000. 10.51 -- Security Agreement dated December 30, 1997, between Insurance Management Solutions Group, Inc. and SouthTrust Bank, N.A. 10.52 -- Flood Compliance Service Agreement dated November 1, 1996, between Geotrac, Inc. (as successor to SMS Geotrac) and Mortgage Corporation of America. 10.53 -- Flood Compliance Service Agreement dated March 1, 1997, between Geotrac, Inc. (as successor to SMS Geotrac) and CitFed Mortgage Corporation of America. 10.54 -- Flood Compliance Service Agreement dated March 1, 1998, between Geotrac, Inc. (as successor to SMS Geotrac), ABN AMRO North American and certain of its affiliates. 10.55 -- Flood Compliance Service Agreement dated April 12, 1997, between Geotrac, Inc. (as successor to SMS Geotrac) and Third Federal Savings. 10.56 -- Flood Compliance Service Agreement dated April 9, 1997, between Geotrac, Inc. (as successor to SMS Geotrac) and MidAm, Inc. 10.57 -- Flood Compliance Service Agreement dated December 28, 1995, between Geotrac, Inc. and Crestar Bank.
126
EXHIBIT NUMBER EXHIBIT DESCRIPTION - ------- ------------------- 10.58 -- Flood Compliance Service Agreement dated April 1, 1996, between Geotrac, Inc. (as successor to SMS Geotrac) and ReliaStar Mortgage Corporation. 10.59 -- Flood Zone Determination Agreement dated March 25, 1993, between Geotrac, Inc. (as successor to National Flood Certification Services, Inc.) and AIG Consultants, Inc. 10.60 -- Flood Zone Determination Agreement dated December 28, 1995, between Geotrac, Inc. (as successor to Bankers Hazard Determination Services, Inc.) and SouthTrust Corporation, as amended on June 3, 1997. 10.61 -- Flood Zone Determination Agreement dated July 14, 1994, between Geotrac, Inc. (as successor to National Flood Certification Services, Inc.) and SunBank, N.A. 10.62 -- Flood Zone Determination Agreement dated November 8, 1993, between Geotrac, Inc. (as successor to National Flood Certification Services, Inc.) and Royal Indemnity Company. 10.63 -- Flood Insurance Agreement, dated February 17, 1995, between First Community Insurance Company and Armed Forces Insurance Exchange, as amended. 10.64 -- Flood Insurance Agreement, dated November 17, 1995, between First Community Insurance Company and Amica Mutual Insurance Company. 10.65 -- Non-Qualified Stock Option Plan. 10.66 -- Funding Agreement, dated June 19, 1998, by and between Bankers Insurance Group, Inc. and Insurance Management Solutions Group, Inc. 10.67 -- Assignment of Registered Service Mark ("Floodwriter"), dated May 7, 1998, from Bankers Insurance Company to Insurance Management Solutions, Inc. 10.68 -- Assignment of Registered Service Mark ("Undercurrents"), dated May 7, 1998, from Bankers Insurance Company to Insurance Management Solutions, Inc. 10.69 -- Registration Rights Agreement, dated , 1998, between Information Management Solutions Group, Inc. and Daniel J. and Sandra White 10.70 -- Software License Agreement, effective January 1, 1998, between Insurance Management Solutions, Inc., Bankers Insurance Group, Inc. and Bankers Insurance Company.* 21.1 -- List of subsidiaries of Insurance Management Solutions Group, Inc. 23.1 -- Consent of Foley & Lardner (included in Exhibit (5.1)). 23.2 -- Consent of Grant Thornton LLP. 23.3 -- Consent of Grant Thornton LLP. 23.4 -- Consent of Grant Thornton LLP. 24.1 -- Power of Attorney relating to subsequent amendments (included on the signature page of this Registration Statement). 27.1 -- Financial Data Schedule (filed for SEC purposes only.) 27.2 -- Financial Data Schedule (filed for SEC purposes only). 27.3 -- Financial Data Schedule (filed for SEC purposes only). 27.4 -- Financial Data Schedule (filed for SEC purposes only). 27.5 -- Financial Data Schedule (filed for SEC purposes only). 27.6 -- Financial Data Schedule (filed for SEC purposes only).
- --------------- * To be filed by amendment. EX-3.1 2 AMENDED AND RESTATED ARTICLES OF INCORPORATION 1 EXHIBIT 3.1 [FLORIDA STATE SEAL] FLORIDA DEPARTMENT OF STATE Sandra B. Mortham Secretary of State January 28, 1998 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. 360 CENTRAL AVENUE ST PETERSBURG, FL 33701 Re: Document Number P96000103608 The Amended and Restated Articles of Incorporation for INSURANCE MANAGEMENT SOLUTIONS GROUP, INC., a Florida corporation, were filed on January 28, 1998. This document was electronically received and filed under FAX audit number B98000001847. Should you have any questions concerning this matter, please telephone (850) 487-6050, the Amendment Filing Section. Darlene Connell Corporate Specialist Division of Corporations Letter Number: 498A00004895 DIVISION OF CORPORATIONS - P.O. BOX 6327 - TALLAHASSEE, FLORIDA 32314 2 AMENDED AND RESTATED ARTICLES OF INCORPORATION OF INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. THE UNDERSIGNED, acting on behalf of INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. (hereinafter, the "Corporation") under the Florida Business Corporation Act, Chapter 607 of the Florida Statutes, as hereafter amended and modified (the "FBCA"), hereby adopts the following Amended and Restated Articles of Incorporation for the Corporation, pursuant to Section 607.1007 of the Florida Statutes: ARTICLE 1 Name The name of the Corporation is: Insurance Management Solutions Group, Inc. ARTICLE 2 Business and Activities The Corporation may, and is authorized to, engage in any activity or business now or hereafter permitted under the laws of the United States and of the State of Florida. ARTICLE 3 Capital Stock 3.1 Authorized Shares. The total number of shares of all classes of capital stock that the Corporation shall have the authority to issue shall be 100,000,000 shares of Common Stock having a par value of $.01 per share ("Common Stock") and 20,000,000 shares shall be Preferred Stock, $.01 par value per share ("Preferred Stock"). The Board of Directors is expressly authorized, pursuant to Section 607.0602 of the FBCA, to provide for the classification and reclassification of any unissued shares of Common Stock or Preferred Stock and the issuance thereof in one or more classes or series without the approval of the shareholders of the Corporation, all within the limitations set forth in Section 607.0601 of the FBCA. This instrument was prepared by and return to: G. Kristin Delano, Esq. Florida Bar Number 228850 P.O. Box 15707 St. Petersburg, FL 33733 (813) 823-4000 ext. 4416 3 3.2 Common Stock. (A) Relative Rights. Except as otherwise provided in these Articles of Incorporation, each share of Common Stock shall have the same rights as and be identical in all respects to all the other shares of Common Stock. (B) Voting Rights. The holders of Common Stock shall be entitled to vote for the election of directors of the Corporation and for all other corporate purposes. Upon any such vote, each holder of Common Stock shall, except as otherwise provided by the FBCA, be entitled to one vote for each share of Common Stock held by such holder. (C) Dividends. Whenever there shall have been paid, or declared and set aside for payment, the holders of record of the Common Stock and any class or series of stock entitled to participate therewith as to dividends, shall be entitled to receive dividends, when as, and if declared by the Board of Directors, out any assets legally available for the payment of dividends thereon. (D) Dissolution, Liquidation, Winding Up. In the event of any dissolution, liquidation, or winding up of the Corporation, whether voluntary or involuntary, the holders of record of the Common Stock then outstanding, and all holder of any class or series of stock entitled to participate therewith in whole or in part, as to the distribution of assets, shall become entitled to participate in the distribution of assets of the Corporation remaining after the Corporation shall have paid, or set aside for payment all debts and liabilities of the Corporation. 3.3 Preferred Stock. (A) Issuance, Designations, Powers, Etc. The Board of Directors is expressly authorized, subject to the limitations prescribed by the FBCA and the provisions of these Articles of Incorporation, to provide, by resolution and by filing Articles of Amendment to these Articles of Incorporation, which, pursuant to Section 607.0602(4) of the FBCA shall be effective without shareholder action, for the issuance from time to time of the number of shares to be included in each such class or series, and to fix the designations, powers, preferences and other rights of the shares of each such class or series and to fix the qualifications, limitations and restrictions thereon, including, but without limiting the generality of the foregoing, the following: (1) the number of shares constituting that class or series and the distinctive designation of that class or series; (2) the dividend rate on the shares of that class or series, whether dividends shall be cumulative, noncumulative or partially cumulative and, if so, from which date or dates, and the relative rights of priority, if any, of payments of dividends on shares of that class or series; 2 4 (3) whether that class or series shall have voting rights, in addition to the voting rights provided by the FBCA, and, if so, the terms of that class or series; (4) whether that class or series shall have conversion privileges, and, if so, the terms and conditions of such conversion, including provision for adjustment of the conversion rate in such events as the Board of Directors shall determine; (5) whether or not the shares of that class or series shall be redeemable, and, if so, the terms and conditions of such redemption, including the dates upon or after which they shall be redeemable, and the amount per share payable in case of redemption, which amount may vary under different conditions and at different redemption dates; (6) whether that class or series shall have a sinking fund for the redemption or purchase of shares of that class or series, and, if so, the terms and amount of such sinking fund; (7) the rights of the shares of that class or series in the event of voluntary or involuntary liquidation, dissolution, or winding up of the Corporation, and the relative rights of priority, if any, of payment of shares of that class or series; and (8) any other relative powers, preferences, and rights of that class or series, and qualifications, limitations or restrictions on that class or series. (B) Dissolution, Liquidation, Winding Up. In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, the holders of Preferred Stock of each class or series shall be entitled to receive only such amount or amounts as shall have been fixed by the Articles of Amendment to these Articles of Incorporation or by the resolution or resolutions of the Board of Directors providing for the issuance of such class or series. 3.4 No Preemptve Rights. Except as the Board of Directors may otherwise determine, no shareholder of the Corporation shall have any preferential or preemptive right to subscribe for or purchase from the Corporation any new or additional shares of capital stock, or securities convertible into shares of capital stock, of the Corporation, whether now or hereafter authorized. 3 5 ARTICLE 4 Board of Directors 4.1 Classification. The number of directors of the Corporation shall be as fixed from time to time by or pursuant to these Articles of incorporation or by bylaws of the Corporation (the "Bylaws"). The directors shall be classified, with respect to the time for which they severally hold office, into three classes, Class I, Class II and Class III, each of which shall be as nearly equal in number as possible, and shall be adjusted from time to time in the manner specified in the Bylaws to maintain such proportionality. Each initial director in Class I shall hold office for a term expiring at the 2000 annual meeting of the shareholders; each initial director in Class II shall hold office for a term expiring at the 1999 annual meeting of the shareholders; and each initial director in Class III shall hold office for a term expiring at the 1998 annual meeting of the shareholders. Notwithstanding the foregoing provisions of this Section 4.1 , each director shall serve until such director's successor is duly elected and qualified or until such director's earlier death, resignation or removal. At each annual meeting of the shareholders, the successors to the class of directors whose term expires at that meeting shall be elected to hold office for a term expiring at the annual meeting of the shareholders held in the third year following the year of their election and until their successors shall have been duly elected and qualified or until such director's earlier death, resignation or removal. 4.2 Removal. Any director or directors may be removed from office at any time with or without cause by the affirmative vote, at a special meeting of the shareholders called for such a purpose, of not less than sixty-six and two-thirds percent (66-2/3%) of the total number of votes of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, but only if notice of such proposed removal was contained in the notice of such meeting. At least thirty (30) days prior to such special meeting of shareholders, written notice shall be sent to the director or directors whose removal will be considered at such meeting. Any vacancy on the Board of Directors resulting from such removal or otherwise shall be filled only by vote of a majority of the directors then in office, although less than a quorum, and any director so chosen shall hold office until the next election of the class for which such director shall have been chosen and until his or her successor shall have been elected and qualified or until any such director's earlier death, resignation or removal. 4.3 Change of Number of Directors. In the event of any increase or decrease in the authorized number of directors, the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board of Directors among the three classes of directors so as to maintain such classes as nearly equal as possible. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. 4 6 4.4 Exercise of Business Judgment. In discharging his or her duties as a director of the Corporation, a director may consider such factors as the director considers relevant, including the long-term prospects and interests of the Corporation and its shareholders, the social, economic, legal, or other effects of any corporate action or inaction upon the employees, suppliers, customers of the Corporation or its subsidiaries, the communities and society in which the Corporation or its subsidiaries operate, and the economy of the State of Florida and the United States. 4.5 Initial Number of Directors. The number of directors constituting the initial Board of Directors of the Corporation is nine (9). The number of directors may be increased or decreased from time to time as provided in the Bylaws, but in no event shall the number of directors be less than three (3). ARTICLE 5 Action By Shareholders 5.1 Call For Special Meeting. Special meetings of the shareholders of the Corporation may be called at any time, but only by (a) the Chairman of the Board of the Corporation, (b) a majority of the directors in office, although less than a quorum, and (c) the holders of not less than thirty-five percent (35%) of the total number of votes of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. 5.2 Shareholder Action By Unanimous Written Consent. Any action required or permitted to be taken by the shareholders of the Corporation must be effected at a duly called annual or special meeting of the shareholders, and may not be effected by any consent in writing by such shareholders, unless such written consent is unanimous. ARTICLE 6 Indemnification 6.1 Provision of Indemnification. The Corporation shall, to the fullest extent permitted or required by the FBCA, including any amendments thereto (but in the case of any such amendment, only to the extent such amendment permits or requires the Corporation to provide broader indemnification rights than prior to such amendment), indemnify its Directors and Executive Officers against any and all Liabilities, and advance any and all reasonable Expenses, incurred thereby in any Proceeding to which any such Director or Executive Officer is a Party or in which such Director or Executive Officer is deposed or called to testify as a witness because he or she is or was a Director or Executive Officer of the Corporation. The rights to indemnification granted hereunder shall not be deemed exclusive of any other rights to indemnification against Liabilities or the 5 7 advancement of Expenses which a Director or Executive Officer may be entitled under any written agreement, Board of Directors' resolution, vote of shareholders, the Act, or otherwise. The Corporation may, but shall not be required to, supplement the foregoing rights to indemnification against Liabilities and advancement of Expenses by the purchase of insurance on behalf of any one or more of its Directors or Executive Officers whether or not the Corporation would be obligated to indemnify or advance Expenses to such Director or Executive Officer under this Article. For purposes of this Article, the term "Directors" includes former directors of the Corporation and any director who is or was serving at the request of the Corporation as a director, officer, employee, or agent of another Corporation, partnership, joint venture, trust, or other enterprise, including, without limitation, any employee benefit plan (other than in the capacity as an agent separately retained and compensated for the provision of goods or services to the enterprise, including, without limitation, attorneys-at-law, accountants, and financial consultants). The term "Executive Officers" includes those individuals who are or were at any time "executive officers" of the Corporation as defined in Securities and Exchange Commission Rule 3b-7 promulgated under the Securities Exchange Act of 1934, as amended. All other capitalized terms used in this Article 6 and not otherwise defined herein have the meaning set forth in Section 607.0850, Florida Statutes (1995). The provisions of this Article 6 are intended solely for the benefit of the indemnified parties described herein, their heirs and personal representatives and shall not create any rights in favor of third parties. No amendment to or repeal of this Article VI shall diminish the rights of indemnification provided for herein prior to such amendment or repeal. ARTICLE 7 Amendments 7.1 Articles of Incorporation. Notwithstanding any other provision of these Articles of Incorporation or the Bylaws of the Corporation (and notwithstanding that a lesser percentage may be specified by law) the affirmative vote of sixty-six and two-thirds percent (66-2/3%) of the total number of votes of the then outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required (unless separate voting by classes is required by the FBCA, in which event the affirmative vote of sixty-six and two-thirds percent (66-2/3%) of the number of shares of each class or series entitled to vote as a class shall be required), to amend or repeal, or to adopt any provision inconsistent with the purpose or intent of, Articles 4, 5, 6 or this Article 7 of these Articles of Incorporation. Notice of any such proposed amendment, repeal or adoption shall be contained in the notice of the meeting at which it is to be considered. Subject to the provisions set forth herein, the Corporation reserves the right to amend, alter, repeal or rescind any provision contained in these Articles of Incorporation in the manner now or hereafter prescribed by law. 6 8 7.2 Bylaws. The shareholders of the Corporation may adopt or amend a bylaw which fixes a greater quorum or voting requirement for shareholders (or voting groups of shareholders) than is required by the FBCA. The adoption or amendment of a bylaw that adds, changes or deletes a greater quorum or voting requirement for shareholders must meet the same quorum or voting requirement and be adopted by the same vote and voting groups required to take action under the quorum or voting requirement then in effect or proposed to be adopted, whichever is greater. ARTICLE 8 Initial Registered Office and Agent The address of the initial Registered Office of the Corporation is 360 Central Avenue, St. Petersburg, Florida 33701 and the initial Registered Agent at such address is G. Kristin Delano ARTICLE 9 Principal Office and Mailing Address The address of the Principal Office of the Corporation and its mailing address is 360 Central Avenue, St. Petersburg, Florida 33701. The location of the Principal Office and the mailing address shall be subject to change as may be provided in the Bylaws. THESE AMENDED AND RESTATED ARTICLES OF INCORPORATION were unanimously approved at a joint meeting of the Shareholders and the Board of Directors held on the 27th day of January, 1998, said adopted Amended and Restated Articles of Incorporation superseding the original Articles of incorporation and all amendments to them. BY: /s/ G. Kristin Delano --------------------------------- G. Kristin Delano, Secretary 7 9 ACCEPTANCE OF APPOINTMENT BY INITIAL REGISTERED AGENT THE UNDERSIGNED, having been named in Article 8 of the foregoing Articles of Incorporation as initial Registered Agent at the office designated therein, hereby accepts such appointment and agrees to act in such capacity. The undersigned hereby states that he is familiar with, and hereby accepts, the obligations set forth in Section 607.0505, Florida Statutes, and the undersigned will further comply with any other provisions of law made applicable to him as Registered Agent of the Corporation. DATED this 28th day of January, 1998. /s/ G. Kristin Delano ------------------------------------- G. Kristin Delano, Registered Agent 8 EX-3.2 3 AMENDED AND RESTATED BYLAWS 1 EXHIBIT 3.2 AMENDED AND RESTATED BYLAWS OF INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. 2 TABLE OF CONTENTS ARTICLE 1 DEFINITIONS SECTION 1.1 DEFINITIONS ..................................................................................1 ARTICLE 2 OFFICES SECTION 2.1 PRINCIPAL AND BUSINESS OFFICES ...............................................................1 SECTION 2.2 REGISTERED OFFICE.............................................................................1 ARTICLE 3 SHAREHOLDERS SECTION 3.1 ANNUAL MEETING............................................................................... SECTION 3.2 SPECIAL MEETINGS............................................................................. SECTION 3.3 PLACE OF MEETING............................................................................. SECTION 3.4 NOTICE OF MEETING............................................................................ SECTION 3.5 WAIVER OF NOTICE............................................................................. SECTION 3.6 FIXING OF RECORD DATE........................................................................ SECTION 3.7 SHAREHOLDERS' LIST FOR MEETINGS.............................................................. SECTION 3.8 QUORUM....................................................................................... SECTION 3.9 VOTING OF SHARES............................................................................. SECTION 3.10 VOTE REQUIRED................................................................................ SECTION 3.11 CONDUCT OF MEETINGS.......................................................................... SECTION 3.12 INSPECTORS OF ELECTION....................................................................... SECTION 3.13 PROXIES...................................................................................... SECTION 3.14 ACTION BY SHAREHOLDERS WITHOUT MEETING....................................................... SECTION 3.15 ACCEPTANCE OF INSTRUMENT SHOWING SHAREHOLDER ACTION ARTICLE 4 BOARD OF DIRECTORS SECTION 4.1 GENERAL POWERS AND NUMBER.................................................................... SECTION 4.2 QUALIFICATIONS............................................................................... SECTION 4.3 TERM OF OFFICE............................................................................... SECTION 4.4 NOMINATIONS OF DIRECTORS..................................................................... SECTION 4.5 REMOVAL ..................................................................................... SECTION 4.6 RESIGNATION.................................................................................. SECTION 4.7 VACANCIES.................................................................................... SECTION 4.8 COMPENSATION................................................................................. SECTION 4.9 REGULAR MEETINGS............................................................................. SECTION 4.10 SPECIAL MEETING.............................................................................. SECTION 4.11 NOTICE....................................................................................... SECTION 4.12 WAIVER OF NOTICE............................................................................. SECTION 4.13 QUORUM AND VOTING............................................................................ SECTION 4.14 CONDUCT OF MEETINGS.......................................................................... SECTION 4.15 COMMITTEES...................................................................................
2 3 SECTION 4.16 ACTION WITHOUT MEETING....................................................................... ARTICLE 5 OFFICERS SECTION 5.1 NUMBER....................................................................................... SECTION 5.2 ELECTION AND TERM OF OFFICE.................................................................. SECTION 5.3 REMOVAL...................................................................................... SECTION 5.4 RESIGNATION.................................................................................. SECTION 5.5 VACANCIES.................................................................................... SECTION 5.6 CHAIRMAN OF THE BOARD........................................................................ SECTION 5.7 PRESIDENT.................................................................................... SECTION 5.8 VICE PRESIDENTS.............................................................................. SECTION 5.9 SECRETARY.................................................................................... SECTION 5.10 TREASURER.................................................................................... SECTION 5.11 ASSISTANT SECRETARIES AND ASSISTANT TREASURERS............................................... SECTION 5.12 OTHER ASSISTANTS AND ACTING OFFICERS......................................................... SECTION 5.13 SALARIES..................................................................................... ARTICLES 6 CONTRACTS, CHECKS AND DEPOSITS; SPECIAL CORPORATE ACTS SECTION 6.1 CONTRACTS.................................................................................... SECTION 6.2 CHECKS, DRAFTS, ETC.......................................................................... SECTION 6.3 DEPOSITS..................................................................................... SECTION 6.4 VOTING OF SECURITIES OWNED BY CORPORATION.................................................... ARTICLE 7 CERTIFICATES FOR SHARES; TRANSFER OF SHARES SECTION 7.1 CONSIDERATION FOR SHARES...................................................................... SECTION 7.2 CERTIFICATES FOR SHARES....................................................................... SECTION 7.3 TRANSFER OF SHARES............................................................................ SECTION 7.4 RESTRICTION ON TRANSFER....................................................................... SECTION 7.5 LOST, DESTROYED OR STOLEN CERTIFICATES........................................................ SECTION 7.6 STOCK REGULATIONS............................................................................. ARTICLE 8 SEAL SECTION 8.1 SEAL.......................................................................................... ARTICLE 9 BOOKS AND RECORDS SECTION 9.1 BOOKS AND RECORDS............................................................................. SECTION 9.2 SHAREHOLDERS' INSPECTION RIGHTS............................................................... SECTION 9.3 DISTRIBUTION OF FINANCIAL INFORMATION......................................................... SECTION 9.4 OTHER REPORTS................................................................................. ARTICLE 10 INDEMNIFICATION SECTION 10.1 PROVISION OF INDEMNIFICATION.................................................................
3 4 ARTICLE 11 AMENDMENTS SECTION 11.1 POWER TO AMEND...............................................................................
4 5 ARTICLE 1 DEFINITIONS Section 1.1 Definitions. The following terms shall have the following meanings for purposes of these bylaws: "Act" means the Florida Business Corporation Act, as it may be amended from time to time, or any successor legislation thereto. "Corporation" means Insurance Management Solutions Group, Inc., a Florida corporation. "Deliver" or "delivery" includes delivery by hand; United States mail; facsimile, telegraph, teletype or other form of electronic transmission, with written confirmation or other acknowledgment of receipt; and private mail carriers handling nationwide mail services. "Principal office" means the office (within or without the State of Florida) where the Corporation's principal executive offices are located, as designated in the Articles of Incorporation until an annual report or an interim report has been filed with the Florida Department of State, and thereafter as designated in the annual report. ARTICLE 2 OFFICES Section 2.1 Principal and Business Offices. The Corporation may have such principal and other business offices, either within or without the State of Florida, as the Board of Directors may designate or as the business of the Corporation may require from time to time. Section 2.2 Registered Office. The registered office of the Corporation required BY the Act to be maintained in the State of Florida may but need not be identical with the principal office if located in the State of Florida, and the address of the registered office may be changed from time to time by the Board of Directors or by the registered agent. The business office of the registered agent of the Corporation shall be identical to such registered office. ARTICLE 3 SHAREHOLDERS Section 3.1 Annual Meeting. (a) Call by Directors. The annual meeting of shareholders shall be held within four months after the close of each fiscal year of the Corporation on a date and at a time and place designated by the Board of Directors, for the purpose of electing directors and for the transaction of such other business as may come before the meeting. If the election of directors shall not be held on the day fixed as herein provided for any annual meeting of shareholders, or at any adjournment thereof, the Board of Directors shall cause the election to be held at a special meeting of 5 6 shareholders as soon thereafter as is practicable. The failure to hold the annual meeting of the shareholders within the time stated in these bylaws shall not affect the terms of office of the officers or directors of the Corporation or the validity of any corporate action. (b) Business At Annual Meeting. At an annual meeting of the shareholders of the Corporation, only such business shall be conducted as shall have been properly brought before the meeting. To be properly brought before an annual meeting, business must be (1) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (2) otherwise properly brought before the meeting by or at the direction of the Board of Directors as determined by the Chairman, or (3) otherwise properly brought before the meeting by a shareholder. For business to be properly brought before an annual meeting by a shareholder, the shareholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a shareholder's notice shall be received at the principal business office of the Corporation no later than the date designated for receipt of shareholders' proposals in a prior public disclosure made by the Corporation. If there has been no such prior public disclosure, then to be timely, a shareholder's notice must be delivered to or mailed and received at the principal business office of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the annual meeting of shareholders; provided, however, that in the event that less than seventy (70) days' notice of the date of the meeting is given to shareholders by notice or prior public disclosure, notice by the shareholders, to be timely, must be received by the Corporation not later than the close of business on the tenth day following the day on which the Corporation gave notice or made a public disclosure of the date of the annual meeting of the shareholders. A shareholder's notice to the Secretary shall set forth as to each matter the shareholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (b) the name and address, as they appear on the Corporation's stock books, of the shareholders proposing such business, (c) the class and number of shares of the Corporation which are beneficially owned by the shareholder, (d) any material interest of the shareholder in such business, and (e) the same information required by clauses (b), (c) and (d) above with respect to any other shareholder that, to the knowledge of the shareholder proposing such business, supports such proposal. Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this Section 3.1 (b). The Chairman of an annual meeting shall, if the facts warrant, determine and declare to the annual meeting that a matter of business was not properly brought before the meeting in accordance with the provisions of this Section 3.1 (b), and if the Chairman shall so determine, the Chairman shall so declare at the meeting and any such business not properly brought before the meeting shall not be transacted. Section 3.2 Special Meetings. (a) Call by Directors or President. Special meetings of shareholders of the Corporation, for any purpose or purposes, may be called by the Board of Directors, the Chairman of the Board (if any) or the President. 6 7 (b) Call by Shareholders. The Corporation shall call a special meeting of shareholders in the event that the holders of at least thirty-five percent (35%) of all of the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting sign, date, and deliver to the Secretary one or more written demands for the meeting describing one or more purposes for which it is to be held. The Corporation shall give notice of such a special meeting within sixty days after the date that the demand is delivered to the Corporation. Section 3.3 Place of Meeting. The Board of Directors may designate any place, either within or without the State of Florida, as the place of meeting for any annual or special meeting of shareholders. If no designation is made, the place of meeting shall be the principal office of the Corporation. Section 3.4 Notice of Meeting. (a) Content and Delivery. Written notice stating the date, time, and place of any meeting of shareholders and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten days nor more than sixty days before the date of the meeting by or at the direction of the President or the Secretary, or the officer or persons duly calling the meeting, to each shareholder of record entitled to vote at such meeting and to such other persons as required by the Act. If mailed, notice of a meeting of shareholders shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at his or her address as it appears on the stock record books of the Corporation, with postage thereon prepaid. (b) Notice of Adjourned Meetings. If an annual or special meeting of shareholders is adjourned to a different date, time, or place, the Corporation shall not be required to give notice of the new date, time, or place if the new date, time, or place is announced at the meeting before adjournment; provided, however, that if a new record date for an adjourned meeting is or must be fixed, the Corporation shall give notice of the adjourned meeting to persons who are shareholders as of the new record date who are entitled to notice of the meeting. (c) No Notice Under Certain Circumstances. Notwithstanding the other provisions of this Section, no notice of a meeting of shareholders need be given to a shareholder if: (1) an annual report and proxy statement for two consecutive annual meetings of shareholders, or (2) all, and at least two, checks in payment of dividends or interest on securities during a twelve-month period have been sent by first-class, United States mail, addressed to the shareholder at his or her address as it appears on the share transfer books of the Corporation, and returned undeliverable. The obligation of the Corporation to give notice of a shareholders' meeting to any such shareholder shall be reinstated once the Corporation has received a new address for such shareholder for entry on its share transfer books. 7 8 Section 3.5 Waiver of Notice. (a) Written Waiver. A shareholder may waive any notice required by the Act or these bylaws before or after the date and time stated for the meeting in the notice. The waiver shall be in writing and signed by the shareholder entitled to the notice, and be delivered to the Corporation for inclusion in the minutes or filing with the corporate records. Neither the business to be transacted at nor the purpose of any regular or special meeting of shareholders need be specified in any written waiver of notice. (b) Waiver by Attendance. A shareholder's attendance at a meeting, in person or by proxy, waives objection to all of the following: (1) lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; and (2) consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented. Section 3.6 Fixing of Record Date. (a) General. The Board of Directors may fix in advance a date as the record date for the purpose of determining shareholders entitled to notice of a shareholders' meeting, entitled to vote, or take any other action. In no event may a record date fixed by the Board of Directors be a date preceding the date upon which the resolution fixing the record date is adopted or a date more than seventy days before the date of meeting or action requiring a determination of shareholders. (b) Special Meeting. The record date for determining shareholders entitled to demand a special meeting shall be the close of business on the date the first shareholder delivers his or her demand to the Corporation. (c) Shareholder Action by Unanimous Written Consent. If no prior action is required by the Board of Directors pursuant to the Act, the record date for determining shareholders entitled to take action without a meeting shall be the close of business on the date the first signed written consent with respect to the action in question is delivered to the Corporation, but if prior action is required by the Board of Directors pursuant to the Act, such record date shall be the close of business on the date on which the Board of Directors adopts the resolution taking such prior action unless the Board of Directors otherwise fixes a record date. Any action of the shareholders of the Corporation taken without a meeting shall be effected only upon the unanimous written consent of all shareholders entitled to take such action. (d) Absence of Board Determination for Shareholders' Meeting. If the Board of Directors does not determine the record date for determining shareholders entitled to notice of and to vote at an annual or special shareholders' meeting, such record date shall be the close of business on the day before the first notice with respect thereto is delivered to shareholders. (e) Adjourned Meeting. A record date for determining shareholders entitled to notice of or to vote at a shareholders' meeting is effective for any 8 9 adjournment of the meeting unless the Board of Directors fixes a new record date, which it must do if the meeting is adjourned to a date more than 120 days after the date fixed for the original meeting. Section 3.7 Shareholders' List for Meetings. (a) Preparation and Availability. After a record date for a meeting of shareholders has been fixed, the Corporation shall prepare an alphabetical list of the names of all of the shareholders entitled to notice of the meeting. The list shall be arranged by class or series of shares, if any, and show the address of and number of shares held by each shareholder. Such list shall be available for inspection by any shareholder for a period of ten days prior to the meeting or such shorter time as exists between the record date and the meeting date, and continuing through the meeting, at the Corporation's principal office, at a place identified in the meeting notice in the city where the meeting will be held, or at the office of the Corporation's transfer agent or registrar, if any. A shareholder or his or her agent may, on written demand, inspect the list, subject to the requirements of the Act, during regular business hours and at his or her expense, during the period that it is available for inspection pursuant to this Section. A shareholder's written demand to inspect the list shall describe with reasonable particularity the purpose for inspection of the list, and the Corporation may deny the demand to inspect the list if the Secretary determines that the demand was not made in good faith and for a proper purpose or if the list is not directly connected with the purpose stated in the shareholder's demand, all subject to the requirements of Section 607.1 602(3) of the Act. Notwithstanding anything herein to the contrary, the Corporation shall make the shareholders' list available at any annual meeting or special meeting of shareholders and any shareholder or his or her agent or attorney may inspect the list at any time during the meeting or any adjournment thereof. (b) Prima Facie Evidence. The shareholders' list is prima facie evidence of the identity of shareholders entitled to examine the shareholders' list or to vote at a meeting of shareholders. (c) Failure to Comply. If the requirements of this Section have not been substantially complied with, or if the Corporation refuses to allow a shareholder or his or her agent or attorney to inspect the shareholders' list before or at the meeting, on the demand of any shareholder, in person or by proxy, who failed to get such access, the meeting shall be adjourned until such requirements are complied with. (d) Validity of Action Not Affected. Refusal or failure to prepare or make available the shareholders' list shall not affect the validity of any action taken at a meeting of shareholders. Section 3.8 Quorum. (a) What Constitutes a Quorum. Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. If the Corporation has only one class of stock outstanding, such class shall constitute a separate voting group for purposes of this Section. Except as otherwise provided in the Act, a majority of the votes entitled to 9 10 be cast on the matter shall constitute a quorum of the voting group for action on that matter. (b) Presence of Shares. Once a share is represented for any purpose at a meeting, other than for the purpose of objecting to holding the meeting or transacting business at the meeting, it is considered present for purposes of determining whether a quorum exists for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for the adjourned meeting. (c) Adjournment in Absence of Quorum. Where a quorum is not present, the holders of a majority of the shares represented and who would be entitled to vote at the meeting if a quorum were present may adjourn such meeting from time to time. Section 3.9 Voting of Shares. Except as provided in the Articles of Incorporation or the Act, each outstanding share, regardless of class, is entitled to one vote on each matter voted on at a meeting of shareholders. Section 3.10 Vote Required. (a) Matters Other Than Election of Directors. If a quorum exists, except in the case of the election of directors, action on a matter shall be approved by a majority of the votes cast at such meeting, unless the Act or the Articles of Incorporation require a greater number of affirmative votes. (b) Election of Directors. Each director shall be elected by a plurality of the votes cast by the shares entitled to vote in the election of directors at a meeting at which a quorum is present. Each shareholder who is entitled to vote at an election of directors has the right to vote the number of shares owned by him or her for as many persons as there are directors to be elected. Shareholders do not have a right to cumulate their votes for directors. Section 3.11 Conduct of Meeting. The Chairman of the Board of Directors, and if there be none, or in his or her absence, the President, and in his or her absence, a Vice President in the order provided under the Section of these bylaws titled "Vice Presidents", and in their absence, any person chosen by the shareholders present shall call a shareholders' meeting to order and shall act as presiding officer of the meeting, and the Secretary of the Corporation shall act as secretary of all meetings of the shareholders, but, in the absence of the Secretary, the presiding officer may appoint any other person to act as secretary of the meeting. The presiding officer of the meeting shall have broad discretion in determining the order of business at a shareholders' meeting. The presiding officer's authority to conduct the meeting shall include, but in no way be limited to, recognizing shareholders entitled to speak, calling for the necessary reports, stating questions and putting them to a vote, calling for nominations, and announcing the results of voting. The presiding officer also shall take such actions as are necessary and appropriate to preserve order at the meeting. The rules of parliamentary procedure need not be observed in the conduct of shareholders' meetings. 10 11 Section 3.12 Inspectors of Election. Inspectors of election may be appointed by the Board of Directors to act at any meeting of shareholders at which any vote is taken. IF inspectors of election are not so appointed, the presiding officer of the meeting may, and on the request of any shareholder shall, make such appointment. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector at such meeting with strict impartiality and according to the best of his or her ability. The inspectors of election shall determine the number of shares outstanding, the voting rights with respect to each, the shares represented at the meeting, the existence of a quorum, and the authenticity, validity, and effect of proxies; receive votes, ballots, consents, and waivers; hear and determine all challenges and questions arising in connection with the vote; count and tabulate all votes, consents, and waivers; determine and announce the result; and do such acts as are proper to conduct the election or vote with fairness to all shareholders. No inspector, whether appointed by the Board of Directors or by the person acting as presiding officer of the meeting, need be a shareholder. The inspectors may appoint and retain other persons or entities to assist the inspectors in the performance of the duties of the inspectors. On request of the person presiding at the meeting, the inspectors shall make a report in writing of any challenge, question or matter determined by them and execute a certificate of any fact found by them. Section 3.13 Proxies. (a) Appointment. At all meetings of shareholders, a shareholder may vote his or her shares in person or by proxy. A shareholder may appoint a proxy to vote or otherwise act for the shareholder by signing an appointment form, either personally or by his or her attorney-in-fact. If an appointment form expressly provides, any proxy holder may appoint, in writing, a substitute to act in his or her place. A telegraph, telex, or a cablegram, a facsimile transmission of a signed appointment form, or a photographic, photostatic, or equivalent reproduction of a signed appointment form is a sufficient appointment form. (b) When Effective. An appointment of a proxy is effective when received by the Secretary or other officer or agent of the Corporation authorized to tabulate votes. An appointment is valid for up to eleven (11) months unless a longer period is expressly provided in the appointment form. An appointment of a proxy is revocable by the shareholder unless the appointment form conspicuously states that it is irrevocable and the appointment is coupled with an interest. 11 12 Section 3.14 Action by Shareholders Without Meeting. (a) Requirements for Unanimous Written Consent. Any action required or permitted by the Act to be taken at any annual or special meeting of shareholders may be taken without a meeting, without prior notice, and without a vote if one or more written consents describing the action taken shall be signed and dated by the holders of all (and not less than all) of the outstanding capital stock of the Corporation entitled to vote thereon. Such consents must be delivered to the principal office of the Corporation in Florida, the Corporation's principal place of business, the Secretary, or another officer or agent of the Corporation having custody of the books in which proceedings of meetings of shareholders are recorded. No written consent shall be effective to take the corporate action referred to therein unless, within sixty days of the date of the earliest dated consent delivered in the manner required herein, written consents signed by the number of holders required to take action are delivered to the Corporation by delivery as set forth in this Section. (b) Revocation of Written Consents. Any written consent may be revoked prior to the date that the Corporation receives the required number of consents to authorize the proposed action. No revocation is effective unless in writing and until received by the Corporation at its principal office in Florida or its principal place of business, or received by the Secretary or other officer or agent having custody of the books in which proceedings of meetings of shareholders are recorded. (c) Same Effect as Vote at Meeting. A consent signed under this Section has the effect of a meeting vote and may be described as such in any document. Whenever action is taken by written consent pursuant to this Section, the written consent of the shareholders consenting thereto or the written reports of inspectors appointed to tabulate such consents shall be filed with the minutes of proceedings of shareholders. Section 3.15 Acceptance of Instruments Showing Shareholder Action. If the name signed on a vote, consent, waiver, or proxy appointment corresponds to the name of a shareholder, the Corporation, if acting in good faith, may accept the vote, consent, waiver, or proxy appointment and give it effect as the act of a shareholder. If the name signed on a vote, consent, waiver, or proxy appointment does not correspond to the name of a shareholder, the Corporation, if acting in good faith, may accept the vote, consent, waiver, or proxy appointment and give it effect as the act of the shareholder if any of the following apply: (a) The shareholder is an entity and the name signed purports to be that of an officer or agent of the entity; (b) The name signed purports to be that of a administrator, executor, guardian, personal representative, or conservator representing the shareholder and, if the Corporation requests, evidence of fiduciary status acceptable to the Corporation is presented with respect to the vote, consent, waiver, or proxy appointment; (c) The name signed purports to be that of a receiver or trustee in bankruptcy, or assignee for the benefit of creditors of the shareholder and, if the Corporation requests, evidence of this status acceptable to the Corporation is 12 13 presented with respect to the vote, consent, waiver, or proxy appointment; (d) The name signed purports to be that of a pledgee, beneficial owner, or attorney-in-fact of the shareholder and, if the Corporation requests, evidence acceptable to the Corporation of the signatory's authority to sign for the shareholder is presented with respect to the vote, consent, waiver, or proxy appointment; or (e) Two or more persons are the shareholder as covenants or fiduciaries and the name signed purports to be the name of at least one of the co-owners and the person signing appears to be acting on behalf of all co-owners. The Corporation may reject a vote, consent, waiver, or proxy appointment if the Secretary or other officer or agent of the Corporation who is authorized to tabulate votes, acting in good faith, has reasonable basis for doubt about the validity of the signature on it or about the signatory's authority to sign for the shareholder. ARTICLE 4 BOARD OF DIRECTORS Section 4.1 General Powers and Number. All corporate powers shall be exercised BY or under the authority of, and the business and affairs of the Corporation managed under the direction of, the Board of Directors. The Corporation shall have nine (9) directors initially. The number of directors may be increased or decreased from time to time by vote of a majority of the Board of Directors, but shall never be less than three (3) nor more than twenty (20). Section 4.2 Qualifications. Directors must be natural persons who are eighteen years of age or older but need not be residents of the State of Florida or shareholders of the Corporation. Section 4.3 Term of Office. The directors shall be classified, with respect to the time for which they severally hold office, into three (3) classes, Class I, Class II and Class III, each of which shall be as nearly equal in number as possible. Class I shall be established for a term expiring at the annual meeting of shareholders to be held in 2000 and shall consist initially of three (3) directors. Class II shall be established for a term expiring at the annual meeting of shareholders to be held in 1999 and shall consist initially of three (3) directors. Class III shall be established for a term expiring at the annual meeting of shareholders to be held in 1998 and shall consist initially of three (3) directors. Each director shall hold office until his or her successors are elected and qualified, or until such director's earlier death, resignation or removal as hereinafter provided. At each annual meeting of the shareholders of the Corporation, the successors of the class of directors whose terms expire at that meeting shall be elected to hold office for a term expiring at the annual meeting of shareholders held in the third year following the year of their election. Unless otherwise provided in the Articles of Incorporation, when the number of directors of the Corporation is changed, the Board of Directors shall determine the class or classes to which the increased or decreased number of directors shall be apportioned; provided, however, that no decrease in the 13 14 number of directors shall affect the term of any director then in office. Section 4.4 Nominations of Directors. Except as otherwise provided pursuant to the provisions of the Articles of Incorporation or Articles of Amendment relating to the rights of the holders of any class or series of Preferred Stock, voting separately by class or series, to elect directors under specified circumstances, nominations of persons for election to the Board of Directors may be made by the Chairman of the Board on behalf of the Board of Directors or by any shareholder of the Corporation entitled to vote for the election of directors at the annual meeting of the shareholders who complies with the notice provisions set forth in this Section 4.4. To be timely, a shareholder's notice shall be received at the principal business office of the Corporation no later than the date designated for receipt of shareholders' proposals in a prior public disclosure made by the Corporation. If there has been no such prior public disclosure, then to be timely, a shareholder's nomination must be delivered to or mailed and received at the principal business office of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the annual meeting of shareholders; provided, however, that in the event that less than seventy (70) days' notice of the date of the meeting is given to the shareholders or prior public disclosure of the date of the meeting is made, notice by the shareholder to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure was made. A shareholder's notice to the Secretary shall set forth (a) as to each person the shareholder proposes to nominate for election or re-election as a director, (i) the name, age, business address and residence address of such proposed nominee, (ii) the principal occupation or employment of such person, (iii) the class and number of shares of capital stock of the Corporation which are beneficially owned by such person, and (iv) any other information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including without limitation such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); and (b) as to the shareholder giving notice: the name and address, as they appear on the Corporation's books, of the shareholder proposing such nomination, and (ii) the class and number of shares of stock of the Corporation which are beneficially owned by the shareholder. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth in this Section 4.4. The Chairman of the meeting shall, if the facts warrant, determine and declare to the annual meeting that a nomination was not made in accordance with the provisions of this Section 4.4, and if the Chairman shall so determine, the Chairman shall so declare at the meeting and the defective nomination shall be disregarded. 14 15 Section 4.5 Removal. Except as otherwise provided pursuant to the provisions of the Articles of Incorporation or Articles of Amendment relating to the rights of the holders of any class or series of Preferred Stock, voting separately by class or series, to elect directors under specified circumstances, any director or directors may be removed from office at any time with or without cause by the affirmative vote, at a special meeting of the shareholders called for such a purpose, of not less than sixty-six and two-thirds percent (66-2/3%) of the total number of votes of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, but only if notice of such proposed removal was contained in the notice of such meeting. At least thirty (30) days prior to such special meeting of shareholders, written notice shall be sent to the director or directors whose removal will be considered at such meeting. Any vacancy on the Board of Directors resulting from such removal or otherwise shall be filled only by vote of a majority of the directors then in office, although less than a quorum, and any director so chosen shall hold office until the next election of the class for which such directors shall have been chosen and until his or her successor shall have been elected and qualified or until any such director's earlier death, resignation or removal. Section 4.6 Resignation. A director may resign at any time by delivering written notice to the Board of Directors or its Chairman (if any) or to the Corporation. A director's resignation is effective when the notice is delivered unless the notice specifies a later effective date. Section 4.7 Vacancies. (a) Who May Fill Vacancies. Except as provided below, whenever any vacancy occurs on the board of Directors, including a vacancy resulting from an increase in the number directors, it may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the Board of Directors. Any director elected in accordance with the preceding sentence shall not hold office until his or her successor is duly elected and qualified, and such successor shall complete such director's remaining term. (b) Directors Electing by Voting Groups. Whenever the holders of shares of any voting group are entitled to elect a class of one or more directors by the provisions of the Articles of Incorporation, vacancies in such class may be filled by holders of shares of that voting group or by a majority of the directors then in office elected by such voting group or by a sole remaining directors so selected. If no director elected by such voting group remains in office, unless the Articles of Incorporation provide otherwise, directors not elected by such voting group may fill vacancies. (c) Prospective Vacancies. A vacancy that will occur at a specific later date, because of a resignation effective at a later date or otherwise, may be filled before the vacancy occurs, but the new director may not take office until the vacancy occurs. Section 4.8 Compensation. The Board of Directors, irrespective of any personal interest of any of its members, may establish reasonable compensation of all directors 15 16 for services to the Corporation as directors, officers, or otherwise, or may delegate such authority to an appropriate committee. The Board of Directors also shall have authority to provide for or delegate authority to an appropriate committee to proivde for reasonable pensions, disability or death benefits, and other benefits or payments, to directors, officers, and employees and to their families, dependents, estates, or beneficiaries on account of prior service rendered to the Corporation by such directors, officers and employees. Section 4.9 Regular Meetings. A regular meeting of the Board of Directors shall be held without other notice than this bylaw immediately after the annual meeting of shareholders and each adjourned session thereof. The place of such regular meeting shall be the same as the place of the meeting of shareholders which precedes it, or such other suitable place as may be announced at such meeting of shareholder. The Board of Directors may provide, by resolution, the date, time and place whether within or without the State of Florida, for the holding of additional regular meetings of the Board of Directors without notice other than such resolution. Section 4.10 Special Meetings. Special meetings of the Board of Directors may be called by the Chair of the Board (if any), the President or not less than one third (1/3) of the members of the Board of Directors. The person or persons calling the meeting may fix any place, whether within or without the State of Florida, as the place for holding any special meeting of the Board of Director, and if no other place is fixed the place of the meeting shall be the principal office of the Corporation in the State of Florida. Section 4.11 Notice. Special meetings of the Board of Directors must be preceded by at least two days' notice of the date, time, and place of the meeting. The notice need not describe the purpose of the special meeting. Section 4.12 Waiver of Notice. Notice of a meeting of the Board of Directors need not be given to any director who signs a waiver of notice either before or after the meeting. Attendance of a director at a meeting shall constitute a waiver of notice of such meeting and waiver of any and all objections to the place of the meeting, the time of the meeting, or the manner in which it has been called or convened, except when a director states, at the beginning of the meeting or promptly upon arrival at the meeting, any objection to the transaction of business because the meeting is not lawfully called or convened. Section 4.13 Quorum and Voting. A quorum of the Board of Directors consists of a majority of the number of directors prescribed by these bylaws (or if no number is prescribed, the number of directors in office immediately before the meeting begins). If a quorum is present when a vote is taken, the affirmative vote of a majority of directors present is the act of the Board of Directors. A director who is present at a meeting of the Board of Directors or a committee of the Board of Directors when corporate action is taken is deemed to have assented to the action taken unless: (a) he or she objects at the beginning of the meeting (or promptly upon his or her arrival) to holding it or transacting specified business at the meeting; or (b) he or she votes against or abstains from the action taken. 16 17 Section 4.14 Conduct of Meetings. (a) Presiding Officer. The Board of Directors may elect from among its members a Chairman of the Board of Directors, who shall preside at meetings of the Board of Directors. The Chairman, and if there be none, or in his or her absence, the President, and in his or her absence, a Vice President in the order provided under the Section of these bylaws titled "Vice Presidents," and in his or her absence, any director chosen by the directors present, shall call meetings of the Board of Directors to order and shall act as presiding officer of the meeting. (b) Minutes. The Secretary of the Corporation shall act as secretary of all meetings of the Board of Directors but in the absence of the Secretary, the presiding officer may appoint any other person present to act as secretary of the meeting. Minutes of any regular or special meeting of the Board of Directors shall be prepared and distributed to each director. (c) Adjournments. A majority of the directors present, whether or not a quorum exists, may adjourn any meeting of the Board of Directors to another time and place. Notice of any such adjourned meeting shall be given to the directors who are not present at the time of the adjournment and, unless the time and place of the adjourned meeting are announced at the time of the adjournment, to the other directors. (d) Participation by Conference Call or Similar Means. The Board of Directors may permit any or all directors to participate in a regular or a special meeting by, or conduct the meeting through the use of, any means of communication by which all directors participating may simultaneously hear or communicate with each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting. Section 4.15 Committees. The Board of Directors, by resolution adopted by a majority of the full Board of Directors, may designate from among its members an Executive Committee and one or more other committees, which may include, by way of example and not as a limitation, a Compensation Committee (for the purpose of establishing and implementing an executive compensation policy) and an Audit Committee (for the purpose of examining and considering matters relating to the financial affairs of the Corporation). Each committee shall have two or more members, who serve at the pleasure of the Board of Directors, provided that the Compensation Committee and the Audit Committee shall consist of at least two Independent Directors. For purposes of this section, "Independent Director" shall mean a person other than an officer or employee of the Corporation or any subsidiary of the Corporation or any other individual having a relationship which, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. To the extent provided in the resolution of the Board of Directors establishing and constituting such committees, such committees shall have and may exercise all the authority of the Board of Directors, except that no such committee shall have the authority to: (a) approve or recommend to shareholders actions or proposals required by the Act to be approved by shareholders; 17 18 (b) fill vacancies on the Board of Directors or any committee thereof; (c) adopt, amend, or repeal these bylaws; (d) authorize or approve the reacquisition of shares unless pursuant to a general formula or method specified by the Board of Directors; or (e) authorize or approve the issuance or sale or contract for the sale of shares, or determine the designation and relative rights, preferences, and limitations of a voting group except that the Board of Directors may authorize a committee (or a senior executive officer of the Corporation) to do so within limits specifically prescribed by the Board of Directors. The Board of Directors, by resolution adopted in accordance with this Section, may designate one or more directors as alternate members of any such committee, who may act in the place and stead of any absent member or members at any meeting of such committee. The provisions of these bylaws which govern meetings, notice and waiver of notice, and quorum and voting requirements of the Board of Directors apply to committees and their members as well. Section 4.16 Action Without Meeting. Any action required or permitted by the Act to be taken at a meeting of the Board of Directors or a committee thereof may be taken without a meeting if the action is taken by all members of the Board or of the committee. The action shall be evidenced by one or more written consents describing the action taken, signed by each director or committee member and retained by the Corporation. Such action shall be effective when the last director or committee member signs the consent, unless the consent specifies a different effective date. A consent signed under this Section has the effect of a vote at a meeting and may be described as such in any document. ARTICLE 5 OFFICERS Section 5.1 Number. The principal officers of the Corporation shall be a Chairman, a President, the number of Vice Presidents, if any, as authorized from time to time by the Board of Directors, a Secretary, and a Treasurer, each of whom shall be elected by the Board of Directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the Board of Directors. The Board of Directors may also authorize any duly appointed officer to appoint one or more officers or assistant officers. The same individual may simultaneously hold more than one office. Section 5.2 Election and Term of Office. The officers of the Corporation to be elected by the Board of Directors shall be elected annually by the Board of Directors at the first meeting of the Board of Directors held after each annual meeting of the shareholders. If the election of officers shall not be held at such meeting, such election shall be held as soon thereafter as is practicable. Each officer shall hold office until his or her successor shall have been duly elected or until his or her prior death, 18 19 resignation, or removal. Section 5.3 Removal. The Board of Directors may remove any officer and, unless restricted by the Board of Directors, an officer may remove any officer or assistant officer appointed by that officer, at any time, with or without cause and notwithstanding the contract rights, if any, of the officer removed. The appointment of an officer does not of itself create contract rights. Section 5.4 Resignation. An officer may resign at any time by delivering notice to the Corporation. The resignation shall be effective when the notice is delivered, unless the notice specifies a later effective date and the Corporation accepts the later effective date. IF a resignation is made effective at a later date and the Corporation accepts the future effective date, the pending vacancy may be filled before the effective date but the successor may not take office until the effective date. Section 5.5 Vacancies. A vacancy in any principal office because of death, resignation, removal, disqualification, or otherwise, shall be filled as soon thereafter as practicable by the Board of Directors for the unexpired portion of the term. Section 5.6 Chairman of the Board. The Chairman of the Board (the "Chairman") shall be a member of the Board of Directors of the Corporation and shall preside over all meetings of the Board of Directors and shareholders of the Corporation. The Chairman shall have authority, subject to such rules as may be prescribed by the Board of Directors, to appoint such agents and employees of the Corporation as he or she shall deem necessary, to prescribe their powers, duties and compensation, and to delegate authority to them. Such agents and employees shall hold office at the direction of the Chairman. The Chairman shall have authority to sign certificates for shares of the Corporation the issuance of which shall have been authorized by resolution of the Board of Directors, and to execute and acknowledge, on behalf of the Corporation, all deeds, mortgages, bonds, contracts, leases, reports, and all other documents or instruments necessary or proper to be executed in the course of the Corporation's regular business, or which shall be authorized by resolution of the Board of Directors; and, except as otherwise provided by law or the Board of Directors, the Chairman may authorize the President or any Vice President or other officer or agent of the Corporation to execute and acknowledge such documents or instruments in his or her place and stead. In general, he or she shall perform all duties as may be prescribed by the Board of Directors from time to time. Section 5.7 President. The President shall be the chief executive officer of the Corporation and, subject to the direction of the Board of Directors, shall in general supervise and control all of the business and affairs of the Corporation. If the Chairman of the Board is not present, the President shall preside at all meetings of the Board of Directors and shareholders. The President shall have authority, subject to such rules as may be prescribed by the Board of Directors, to appoint such agents and employees of the Corporation as he or she shall deem necessary, to prescribe their powers, duties and compensation, and to delegate authority to them. Such agents and employees shall hold office at the discretion of the President. The President shall have authority to sign certificates for shares of the Corporation the issuance of which shall have been authorized by resolution of the Board of Directors, and to execute and 19 20 acknowledge, on behalf of the Corporation, all deeds, mortgages, bonds, contracts, leases, reports, and all other documents or instruments necessary or proper to be executed in the course of the Corporation's regular business, or which shall be authorized by resolution of the Board of Directors; and, except as otherwise provided by law or the Board of Directors, the President may authorize any Vice President or other officer or agent of the Corporation to execute and acknowledge such documents or instruments in his or her place and stead. In general he or she shall perform all duties incident to the office of President and such other duties as may be prescribed by the Board of Directors from time to time. Section 5.8 Vice Presidents. In the absence of the President or in the event of the President's death, inability or refusal to act, or in the event for any reason it shall be impracticable for the President to act personally, the Vice President, if any (or in the event there be more than one Vice President, the Vice Presidents in the order designated by the Board of Directors, or in the absence of any designation, then in the order of their election), shall perform the duties of the President, and when so acting, shall have all the powers of and be subject to all the restrictions upon the President. Any Vice President may sign certificates for shares of the Corporation the issuance of which shall have been authorized by resolution of the Board of Directors; and shall perform such other duties and have such authority as from time to time may be delegated or assigned to him or her by the President or by the Board of Directors. The execution of any instrument of the Corporation by any Vice President or Assistant Vice President shall be conclusive evidence, as to third parties, of his or her authority to act in the stead of the President. The Corporation may have one or more Executive Vice Presidents and one or more Senior Vice Presidents, who shall be Vice Presidents for purposes hereof. Section 5.9 Secretary. The Secretary shall: (a) keep, or cause to be kept, minutes of the meetings of the shareholders and of the Board of Directors (and of committees thereof) in one or more books provided for that purpose (including records of actions taken by the shareholders or the Board of Directors (or committees thereof) without a meeting); (b) be custodian of the corporate records and of the seal of the Corporation, if any, and if the Corporation has a seal, see that it is affixed to all documents the execution of which on behalf of the Corporation under its seal is duly authorized; (c) authenticate the records of the Corporation; (d) maintain a record of the shareholders of the Corporation, in a form that permits preparation of a list of the names and addresses of all shareholders, by class or series of shares and showing the number and class or series of shares held by each shareholder; (e) have general charge of the stock transfer books of the Corporation; and (f) in general perform all duties incident to the office of Secretary and have such other duties and exercise such authority as from time to time may be delegated or assigned by the President or by the Board of Directors. Section 5.10 Treasurer. The Treasurer shall: (a) have charge and custody of and be responsible for all funds and securities of the Corporation; (b) maintain appropriate accounting records; (c) receive and give receipts for moneys due and payable to the Corporation from any source whatsoever, and deposit all such moneys in the name of the Corporation in such banks, trust companies, or other depositories as shall be selected in accordance with the provisions of these bylaws; and (d) in general perform all of the duties incident to the office of Treasurer and have such other duties 20 21 and exercise such other authority as from time to time may be delegated or assigned by the President or by the Board of Directors. If required by the Board of Directors, the Treasurer shall give a bond for the faithful discharge of his or her duties in such sum and with such surety or sureties as the Board of Directors shall determine. Section 5.11 Assistant Secretaries and Assistant Treasurers. There shall be such number of Assistant Secretaries and Assistant Treasurers as the Board of Directors may from time to time authorize. The Assistant Treasurers shall respectively, if required by the Board of Directors, give bonds for the faithful discharge of their duties in such sums and with such sureties as the Board of Directors shall determine. The Assistant Secretaries and Assistant Treasurers, in general, shall perform such duties and have such authority as shall from time to time be delegated or assigned to them by the Secretary or the Treasurer, respectively, or by the President or the Board of Directors. Section 5.12 Other Assistants and Acting Officers. The Board of Directors shall have the power to appoint, or to authorize any duly appointed officer of the Corporation to appoint, any person to act as assistant to any officer, or as agent for the Corporation in his or her stead, or to perform the duties of such officer whenever for any reason it is impracticable for such officer to act personally, and such assistant or acting officer or other agent so appointed by the Board of Directors or an authorized officer shall have the power to perform all the duties of the office to which he or she is so appointed to be an assistant, or as to which he or she is so appointed to act, except as such power may be otherwise defined or restricted by the Board of Directors or the appointing officer. Section 5.13 Salaries. The salaries of the principal officers shall be fixed from time to time by the Board of Directors or by a duly authorized committee thereof, and no officer shall be prevented from receiving such salary by reason of the fact that he or she is also a director of the Corporation. ARTICLE 6 CONTRACTS, CHECKS AND DEPOSITS; SPECIAL CORPORATE ACTS Section 6.1 Contracts. The Board of Directors may authorize any officer or officers, or any agent or agents to enter into any contract or execute or deliver any instrument in the name of and on behalf of the Corporation, and such authorization may be general or confined to specific instances. In the absence of other designation, all deeds, mortgages, and instruments of assignment or pledge made by the Corporation shall be executed in the name of the Corporation by the President or one of the Vice Presidents; the Secretary or an Assistant Secretary, when necessary or required, shall attest and affix the corporate seal, if any, thereto; and when so executed no other party to such instrument or any third party shall be required to make any inquiry into the authority of the signing officer or officers. Section 6.2 Checks, Drafts, etc. All checks, drafts or other orders for the payment of money, notes, or other evidences of indebtedness issued in the name of the Corporation, shall be signed by such officer or officers, agent or agents of the Corporation and in such manner as shall from time to time be determined by or under the authority of a resolution of the Board of Directors. 21 22 Section 6.3 Deposits. All funds of the Corporation not otherwise employed shall be deposited from time to time to the credit of the Corporation in such banks, trust companies, or other depositories as may be selected by or under the authority of a resolution of the Board of Directors. Section 6.4 Voting of Securities Owned by Corporation. Subject always to the specific directions of the Board of Directors, (a) any shares or other securities issued by any other corporation and owned or controlled by the Corporation may be voted at any meeting of security holders of such other corporation by the President of the Corporation if he or she be present, or in his or her absence by any Vice President of the Corporation who may be present, and (b) whenever, in the judgment of the President, or in his or her absence, of any Vice President, it is desirable for the Corporation to execute a proxy or written consent in respect of any such shares or other securities, such proxy or consent shall be executed in the name of the Corporation by the President or one of the Vice Presidents of the Corporation, without necessity of any authorization by the Board of Directors, affixation of corporate seal, if any, or countersignature or attestation by another officer. Any person or persons designated in the manner above stated as the proxy or proxies of the Corporation shall have full right, power, and authority to vote the shares or other securities issued by such other corporation and owned or controlled by the Corporation the same as such shares or other securities might be voted by the Corporation. ARTICLE 7 CERTIFICATES FOR SHARES; TRANSFER OF SHARES Section 7.1 Consideration for Shares. The Board of Directors may authorize shares to be issued for consideration consisting of any tangible or intangible property or benefit to the Corporation, including cash, promissory notes, services performed, promises to perform services evidenced by a written contract, or other securities of the Corporation. Before the Corporation issues shares, the Board of Directors shall determine that the consideration received or to be received for the shares to be issued is adequate. The determination of the Board of Directors is conclusive insofar as the adequacy of consideration for the issuance of shares relates to whether the shares are validly issued, fully paid, and nonassessable. The Corporation may place in escrow shares issued for future services or benefits or a promissory note, or make other arrangements to restrict the transfer of the shares, and may credit distributions in respect of the shares against their purchase price, until the services are performed, the note is paid, or the benefits are received. If the services are not performed, the note is not paid, or the benefits are not received, the Corporation may cancel, in whole or in part, the shares escrowed or restricted and the distributions credited. Section 7.2 Certificates for Shares. Every holder of shares in the Corporation shall be entitled to have a certificate representing all shares to which he or she is entitled unless the Board of Directors authorizes the issuance of some or all shares without certificates. Any such authorization shall not affect shares already represented by certificates until the certificates are surrendered to the Corporation. If the Board of Directors authorizes the issuance of any shares without certificates, within a reasonable time after the issue or transfer of any such shares, the Corporation shall send the 22 23 shareholder a written statement of the information required by the Act or the Articles of Incorporation to be set forth on certificates, including any restrictions on transfer. Certificates representing shares of the Corporation shall be in such form, consistent with the Act, as shall be determined by the Board of Directors. Such certificates shall be signed (either manually or in facsimile) by the President or any Vice President or any other persons designated by the Board of Directors and may be sealed with the seal of the Corporation or a facsimile thereof. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the person to whom the shares represented thereby are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Corporation. Unless the Board of Directors authorizes shares without certificates, all certificates surrendered to the Corporation for transfer shall be canceled and no new certificate shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except as provided in these bylaws with respect to lost, destroyed, or stolen certificates. The validity of a share certificate is not affected if a person who signed the certificate (either manually or in facsimile) no longer holds office when the certificate is issued. Section 7.3 Transfer of Shares. Prior to due presentment of a certificate for shares for registration of transfer, the Corporation may treat the registered owner of such shares as the person exclusively entitled to vote, to receive notifications, and otherwise to have and exercise all the rights and power of an owner. Where a certificate for shares is presented to the Corporation with a request to register a transfer, the Corporation shall not be liable to the owner or any other person suffering loss as a result of such registration of transfer if (a) there were on or with the certificate the necessary endorsements, and (b) the Corporation had no duty to inquire into adverse claims or has discharged any such duty. The Corporation may require reasonable assurance that such endorsements are genuine and effective and compliance with such other regulations as may be prescribed by or under the authority of the Board of Directors. ARTICLE 8 SEAL Section 8.1 Seal. The Board of Directors may provide for a corporate seal for the Corporation. ARTICLE BOOKS AND RECORDS Section 9.1 Books and Records. (a) The Corporation shall keep as permanent records minutes of all meetings of the shareholders and Board of Directors, a record of all actions taken by the shareholders or Board of Directors without a meeting, and a record of all actions taken by a committee of the Board of Directors on behalf of the Corporation. (b) The Corporation shall maintain accurate accounting records. 23 24 (c) The Corporation or its agent shall maintain a record of the shareholders in a form that permits preparation of a list of the names and addresses of all shareholders in alphabetical order by class of shares showing the number and series of shares held by each. (d) The Corporation shall keep a copy of all written communications within the preceding three years to all shareholders generally or to all shareholders of a class or series, including the financial statements required to be furnished by the Act, and a copy of its most recent annual report delivered to the Department of State. Section 9.2 Shareholder's Inspection Rights. Shareholders are entitled to inspect and copy records of the Corporation as permitted by the Act. Section 9.3 Distribution of Financial Information. The Corporation shall prepare and disseminate financial statements to shareholders as required by the Act. Section 9.4 Other Reports. The Corporation shall disseminate such other reports to shareholders as are required by the Act, including reports regarding indemnification in certain circumstances and reports regarding the issuance or authorization for issuance of shares in exchange for promises to render services in the future. ARTICLE 10 INDEMNIFICATION Section 10.1 Provision of Indemnification. The Corporation shall, to the fullest extent permitted or required by the Act, including any amendments thereto (but in the case of any such amendment, only to the extent such amendment permits or requires the Corporation to provide broader indemnification rights than prior to such amendment), indemnify its Directors and Executive Officers against any and all Liabilities, and advance any and all reasonable Expenses, incurred thereby in any Proceeding to which any such Director or Executive Officer is a Party or in which such Director or Executive Officer is deposed or called to testify as a witness because he or she is or was a Director or Executive Officer of the Corporation. The rights to indemnification granted hereunder shall not be deemed exclusive of any other rights to indemnification against Liabilities or the advancement of Expenses which a Director or Executive Officer may be entitled under any written agreement, Board of Directors' resolution, vote of shareholders, the Act, or otherwise. The Corporation may, but shall not be required to, supplement the foregoing rights to indemnification against Liabilities and advancement of Expenses by the purchase of insurance on behalf of any one or more of its Directors or Executive Officers whether or not the Corporation would be obligated to indemnify or advance Expenses to such Director or Executive Officer under this Article. For purposes of this Article, the term "Directors" includes former directors of the Corporation and any director who is or was serving at the request of the Corporation as a director, officer, employee, or agent of another Corporation, partnership, joint venture, trust, or other enterprise, including, without limitation, any employee benefit plan (other than in the capacity as an agent separately retained and compensated for the provision of goods or services to the enterprise, including, without limitation, attorneys-at-law, accountants, and financial consultants). The term 24 25 "Executive Officers" includes those individuals who are or were at any time "executive officers" of the Corporation as defined in Securities and Exchange Commission Rule 3b-7 promulgated under the Securities Exchange Act of 1934, as amended. All other capitalized terms used in this Article 10 and not otherwise defined herein have the meaning set forth in Section 607.0850, Florida Statutes (1995). The provisions of this Article 10 are intended solely for the benefit of the indemnified parties described herein, their heirs and personal representatives and shall not create any rights in favor of third parties. No amendment to or repeal of this Article 10 shall diminish the rights of indemnification provided for herein prior to such amendment or repeal. ARTICLE 11 AMENDMENTS Section 11.1 Power to Amend. These bylaws may be amended or repealed by either the Board of Directors or the shareholders, unless the Act reserves the power to amend these bylaws generally or any particular bylaw provision, as the case may be, exclusively to the shareholders or unless the shareholders, in amending or repealing these bylaws generally or any particular bylaw provision, provide expressly that the Board of Directors may not amend or repeal these bylaws or such bylaw provision, as the case may be. The shareholders of the Corporation may adopt or amend a bylaw provision which fixes a greater quorum or voting requirement for shareholders (or voting groups of shareholders) than is required by the Act. The adoption or amendment of a bylaw provision that adds, changes or deletes a greater quorum or voting requirement for shareholders must meet the same quorum or voting requirement and be adopted by the same vote and voting groups required to take action under the quorum or voting requirement then in effect or proposed to be adopted, whichever is greater. 25 EX-10.1 4 FORM OF EMPLOYMENT AGREEMENT 1 EXHIBIT 10.1 EMPLOYMENT AGREEMENT AGREEMENT made effective this ______ day of ______, 1998 between INSURANCE MANAGEMENT SOLUTIONS GROUP, INC., a Florida corporation, which corporation, together with its subsidiary companies, shall hereinafter be referred to as "Company" and ______, of ______, Florida, hereinafter referred to as "Employee". R E C I T A L S : 1. Company is engaged in the business of providing comprehensive outsourcing services to the property and casualty insurance industry with an emphasis on providing full third party administration outsourcing services for flood insurers and is also a provider of flood zone determination and ancillary services primarily to insurance companies and financial institutions throughout the State of Florida and such other states as the Company shall deem appropriate. 2. The Company's business requires secrecy in connection with the methods and systems employed, and, for the proper protection of the Company, it is absolutely necessary and essential (which necessity Employee expressly recognizes) that all matters connected with, arising out of, or pertaining to the business of the Company, its methods and systems and the names of its customers be kept secret and confidential as goodwill belonging to the Company. 3. The Company will sustain great loss and damage, if during the term of this Agreement, or for a period of two (2) years immediately following its termination for any reason whatsoever, the Employee should, for himself or herself, or on behalf of any other person, persons, company, partnership or corporation, call upon the customers or clientele of the Company for the purpose of soliciting, selling or servicing any of the programs or services of the Company as described in Section 1 hereof, or the solicitation of any Company employee for the purpose of hiring such employee, for which loss and damage, by reason of his or her financial circumstances, Employee could not be compelled by law to respond to damages in any action at law. NOW, THEREFORE, Company and Employee, in consideration of the covenants and agreements herein contained and in further consideration of the benefits and advantages flowing from each to the other, covenant and agree as follows: SECTION 1. EMPLOYMENT OF EMPLOYEE. Company hereby agrees to employ Employee as ______________________________. SECTION 2. EMPLOYEE'S BEST EFFORTS. Employee hereby accepts employment by Company, and agrees to devote his or her entire time and best efforts to this employment. Employee agrees to perform such other duties as are customarily performed by one holding such position in other, same or similar businesses as that engaged in by Company, and shall also render such other and unrelated services and duties as may be assigned to him or her from time to time by Company. 2 SECTION 3. TERMS OF EMPLOYMENT. (a) Company and Employee understand and agree that the term of employment of this Agreement shall be for a period of three years from the date hereof and thereafter shall continue indefinitely until terminated by either party pursuant to the terms herein. (b) Said employment may be terminated with cause, and no notice or severance is owed. Involuntary termination with cause is defined as a dismissal at any time based on failure to conform to the conditions of employment, material breach of this Agreement, gross misconduct or willful violation of Company policy or procedure as outlined in Section 2.12 on Involuntary Termination contained in the Company's Human Resources Policies and Procedures Manual, as amended from time to time. (c) In the event this Agreement is terminated without cause, then the Employee shall be entitled to any payments payable under Section 4 which have been earned but not yet paid,and in addition, Employee shall be entitled to severance pay equal to Employee's then current salary payable in accordance with the Company's usual payroll practices for a period equal to twelve (12) months (the "Severance Payment"). In the event that Employee is entitled to a Severance Payment pursuant to this Section 3(c) and Employee secures employment at any time during the twelve (12) months following termination (the "Severance Period"), then the Company shall be entitled to a credit against its obligations to make the Severance Payment in the amount up to seventy-five percent (75%) of Employee's base salary during the Severance Period paid to him by his new employer. (d) Notwithstanding anything contained herein to the contrary, in the event Company shall discontinue operating its business, then this Agreement shall terminate as of the last day of the month on which Company ceases operations with the same force and effect as if such last day of the month were originally set as the termination date hereof. SECTION 4. EMPLOYEE'S COMPENSATION AND EXPENSES. (a) As compensation for the service to be performed by Employee under this Agreement, Company shall pay Employee, and Employee shall accept from Company, a base salary of _____________ dollars ($________) per annum paid on a bi-weekly basis. (b) In addition to the base salary, some employees shall be entitled to earn additional compensation pursuant to a bonus plan, and an employee stock option plan. If Employee is eligible for either a bonus plan or the stock option plan, copies of the plan will be provided to Employee. (c) The Employee shall be provided the same benefits and on the same basis as other employees of the Company including, but not limited to, the 401(k) plan, life insurance, disability insurance and health insurance. (d) Employee's salary, bonuses and allowances may be modified, as agreed upon between Employee and Company, from time to time, and any such modifications made during the term of this Agreement shall be incorporated as part of the Agreement. 2 3 (e) Company shall reimburse Employee for all other reasonable, ordinary and necessary expenses incurred by Employee on Company's behalf pursuant to Company's directions and subject to Company's restrictions and requirements. SECTION 5. FUNDS COLLECTED BY EMPLOYEE. Employee does explicitly understand and agree that all funds received by him on behalf of Company, as may be authorized by Company from time to time, shall be held in trust by Employee and shall immediately be remitted to Company by Employee. Additionally, Employee shall be responsible for any and all technical data, books, equipment, or other property of Company which may come into his possession by reason of his or her employment. In the event this employment is terminated for any reason whatsoever, Employee shall immediately turn in to Company and account for all such funds, equipment and property which may be in the possession of Employee at such termination. SECTION 6. RESTRICTIVE COVENANTS. (a) Covenant not to Compete. The Employee hereby expressly covenants and agrees, which covenants and agreements are of the essence of this contract, that he or she will not, during the term of this Agreement and for a period of two (2) years immediately following the termination of this Agreement, for any reason whatsoever, directly or indirectly, for himself or herself, or on behalf of, or in conjunction with, any other person, persons, company, partnership or corporation: (1) call upon any customer or customers of Company solicited or contacted by Employee while at the Companyor whose account was serviced by Employee while at the Company, pursuant to his or her employment hereunder, for the purpose of soliciting, selling or servicing any programs or services of the type sold and serviced by Company during the term hereof within the state of Florida and such other states in which the Company shall conduct business; (2) nor will Employee divert, solicit or take away any customer or customers of Company or the business or patronage of any such customers of the Company for the purpose of selling or servicing any programs or services of the type sold and serviced by Company during the term hereof, (3) nor will Employee call upon any prospective customer or customers of the Company, solicited or contacted by Employee or Employee's staff pursuant to his or her employment hereunder, for the purpose of soliciting, selling or servicing programs or services of the type sold and serviced by Company during the term hereof within the State of Florida and such other states in which the Company shall conduct business. For purposes of this Agreement, it is agreed between the parties hereto that prospective customers are defined as those called upon by Employee or by Employee's staff two (2) times or more during any part of the six (6) month period next preceding the termination of this Agreement for any reasons whatsoever, or those prospective customers as listed by Employee or by Employee's staff as active potential prospects on Employee's weekly or monthly 3 4 sales call reports submitted to Company during any part of the six (6) month period next preceding the termination of this Agreement for any reasons whatsoever; (4) nor upon termination of Employee's employment from Company, whether by resignation, discharge, or otherwise, and for a period of two (2) years from the date of termination, shall Employee, directly or indirectly, for himself or herself or on behalf of, or in conjunction with, any other person, persons, company, partnership or corporation: solicit, approach, or call upon any Company employee for the purpose of retaining or hiring the Company employee in any capacity. In the event of a breach or threatened breach by Employee of the provisions of this paragraph, Company shall be entitled to an injunction restraining Employee from directly or indirectly soliciting, approaching, or calling upon any Company employee for the purpose of retaining or hiring the Company employee in any capacity and/or in fact hiring the Company employee in any capacity; and, in addition to obtaining an injunction, Company shall be entitled to recover damages from Employee. In the event any Court determines the specified time period to be unreasonable, arbitrary, or against public policy, a lesser time period which is determined to be reasonable, non-arbitrary and not against public policy may be enforced against Employee by injunction, as well as by all other legal remedies available to Company. In the event of any legal action in connection with this agreement, the prevailing party shall be entitled to recover all of its legal expenses, including reasonable attorney's fees and costs, whether the same are incurred in connection with trial or during an appeal and to have the same awarded as part of the judgment in the proceeding in which such legal expenses and attorney's fees were incurred. (b) Nondisclosure. Employee recognizes and acknowledges that the list of the Company's customers, trade secrets, data processing systems, computer software, computer programs, or other systems, data, methods, or procedures developed or used by the Company, as they may exist from time to time, are valuable, special and unique assets of the Company's business. The Employee will not, during or after the term of his or her employment without the prior written consent of the Company, which consent may be arbitrarily withheld, and except to the extent necessary to accomplish assignments on behalf of the Company in which the Employee is, at any given time during the term of Employee's tenure with the Company, currently and actively engaged, possess, transmit, copy, reproduce, or disclose the list of the Company's customers or any part thereof or any of the Company's present or future trade secrets, or any data processing systems, computer software, computer programs or other systems, data, methods, or procedures to any person, firm, corporation, association, or any other entity for any reason or purpose whatsoever, nor will the undersigned assist anyone else to do so. In the event of a breach or threatened breach by Employee of the provisions hereof, the Company shall be entitled to an injunction restraining Employee from disclosing, in whole or in part, the list of the Company's customers or the Company's trade secrets, or from rendering any services to any person, firm, corporation, association, or other entity to whom such list or such trade secrets, in whole or in part, has been disclosed or is threatened to be disclosed and requiring the return to the Company of all copies of customer lists, manuals, data, software, 4 5 computer programs, or written procedures in the possession of Employee. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of damages from the Employee. The existence of any claim or cause of action of Employee against the Company shall not constitute a defense to the enforcement by the Company of this covenant. No failure of the Company to exercise any right given hereunder shall be taken or construed as a waiver of its right to seek any remedies by reason of any past, present, or future breaches of the Agreement on the part of Employee. SECTION 7. SEVERABILITY OF RESTRICTIVE COVENANTS. Company and Employee agree that the restrictive covenants contained in Section 6, or any of its sub-paragraphs, are severable and separate and the unenforceability of any specific covenant therein shall not affect the validity of any other covenants set forth therein. These covenants on the part of the Employee shall be construed as an agreement independent of any other provision of this Agreement, and the existence of any claim or cause of action of the Employee against Company, whether predicated on this Agreement or otherwise, shall not constitute a defense to the enforcement by the Company of said covenants. Employee agrees and acknowledges that any violation by Employee of the covenants set forth in Section 6 hereof would cause irreparable damage to Company, and Employee further agrees that upon proof of the existence of such a violation of the covenants set forth in said Section 6 hereof Company will be entitled to injunctive relief against the Employee by any Court of competent jurisdiction. In the event any Court of competent jurisdiction should determine that the territorial restrictions set forth in Sections 6 hereof, and/or their durations, are unreasonable in their scope, then, and in that event, the territorial restrictions, and/or their duration, shall be limited to such territory and/or duration as may be determined reasonable by a Court of competent jurisdiction. SECTION 8. ATTORNEY'S FEES. The parties hereto agree that, in the event of any legal action in connection with this Agreement, the prevailing party shall be entitled to recover all of its legal expenses, including reasonable attorney's fees and costs, whether the same are incurred in connection with trial or appeal, and to have the same awarded as part of the judgment in the proceeding in which such legal expenses and attorney's fees were incurred. SECTION 9. CHOICE OF LAW AND VENUE. This agreement shall be construed according to the laws of the State of Florida, without regard to choice of law provisions. Venue to resolve any dispute under this Agreement shall be Pinellas County, Florida. SECTION 10. INVALIDITY OF PRIOR AGREEMENTS. This Agreement supersedes all prior agreements and understandings between Employee and Company and this Agreement expresses the whole and entire agreement between the parties with reference to Employee's employment and it cannot be modified or changed by any oral or verbal promise by whomsoever made, nor shall any written modification of it be binding on Company until such written modification shall have been approved in writing by the President of the Company. SECTION 11. SEVERABILITY. All agreements and covenants contained herein are severable and, in the event any of them shall be held to be invalid, illegal or unenforceable by any 5 6 competent Court, this contract shall be interpreted as if such invalid, illegal or unenforceable agreement or covenants were not contained herein. SECTION 12. NON-WAIVER OF RIGHTS. All of the rights of Company and Employee hereunder shall be cumulative and not alternative, but a waiver or indulgence on the part of Company or Employee of any rights or entitlement hereunder shall not be construed as a waiver of any other rights or entitlements hereunder by either Company or Employee. No notice shall be required by Company or Employee to enforce strict adherence to all the terms of this agreement. SECTION 13. MISCELLANEOUS PROVISIONS. The provisions of this Agreement shall extend to the successors, surviving corporations and assigns of Company. Singular and masculine pronouns shall include plural, feminine, and artificial persons and entities whenever the context permits. SECTION 14. EMPLOYEE'S ACKNOWLEDGMENT. Employee certifies that he is over twenty-one (21) years of age and hereby acknowledges having read the entire contents of this Agreement before signing his name below and that he has received a copy hereof for his own use. IN WITNESS WHEREOF, the Company and Employee have affixed their hands and seals on this, the day and year first above written, the Company acting through its duly authorized officers. Signed, Sealed and Delivered in the Presence of: WITNESSES: "COMPANY" Insurance Management Solutions Group, Inc. By: - ----------------------------------- --------------------------------------- As Its: - ----------------------------------- ----------------------------------- Date: ------------------------------------- WITNESSES: "EMPLOYEE" - ----------------------------------- ------------------------------------------ Date: - ----------------------------------- ------------------------------------- 6 EX-10.2 5 LONG TERM INCENTIVE PLAN 1 EXHIBIT 10.2 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. LONG TERM INCENTIVE PLAN ARTICLE 1: 1. ESTABLISHMENT; PURPOSE: 1.1. ESTABLISHMENT. Insurance Management Solutions Group, Inc., a Florida corporation, (the "Company") hereby establishes an incentive compensation plan to be known as the "Insurance Management Solutions Group, Inc. Long Term Incentive Plan" (the "Plan"). 1.2. PURPOSE. The purpose of the Plan is to (a) attract, retain and motivate participating employees of the Company and its subsidiaries through awards of shares of the Common Stock of the Company (the "Shares"), options to purchase Shares (the "Options") and Stock Appreciation Rights (the "SARs"), (b) encourage employee ownership of Shares and (c) encourage participating employees to think and act like owners of the Company. 1.3. MAXIMUM NUMBER OF SHARES. The maximum number of Shares that may be issued under the Plan is 875,000, subject to adjustment as provided in Section 9.1. Such Shares may be issued through the purchase of either authorized and unissued Shares, or issued Shares acquired by the Company. If an Option is surrendered or for any other reason ceases to be exercisable in whole or in part, the Shares that are subject to such Option, but as to which the Option has not been exercised, shall again become available for offering under the Plan. 1.4. STATUS. It is the intention of the Company that incentive stock options granted under the Plan qualify as "incentive stock options" under Section 422 of the Code, and the regulations promulgated thereunder. The provisions of the Plan with respect to ISOs, accordingly, shall be construed in a manner consistent with such requirements. Except with respect to ISOs, no Award under the Plan is intended to qualify for special treatment or status under the Code. ARTICLE 2: 2. DEFINITIONS: 2.1. DEFINITIONS. The following words and terms as used herein shall have that meaning set forth therefor in this Article 2 unless a different meaning is clearly required by the context. 2.1.1. "Award" shall mean any Option, Restricted Share, SAR or cash payment granted or awarded under the Plan. 2.1.2. "Award Agreement(s)" shall mean any document, agreement or certificate deemed by the Committee as necessary or advisable to be entered into with or delivered to a Participant in connection with the grant of an Award under the Plan. 2 2.1.3. "Board" or "Board of Directors" shall mean the Board of Directors of the Company. 2.1.4. "Committee" is defined in Article 3.1. 2.1.5. "Code" shall mean the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code shall include a reference to any successor provision. 2.1.6. "Company" shall mean Insurance Management Solutions Group, Inc., a Florida corporation, and its successors. 2.1.7. "Effective Date" is defined in Section 9.7. 2.1.8. "Eligible Employee" shall mean any individual employed by the Company, any Subsidiary who meets the eligibility requirements of Article 4, or any individual who is employed as a consultant or advisor by the Company that provides bona fide services not in connection with a capital transaction. 2.1.9. "Fair Market Value" of the Shares shall mean the closing price on the date in question (or, if no Shares are traded on such day, on the next preceding day on which Shares were traded) of the Shares on the principal securities exchange in the United States on which such stock is listed, or if such Shares are not listed on a securities exchange in the United States, the closing price on such day in the over-the-counter market as reported by the National Association of Security Dealers Automated Quotation System (NASDAQ), or NASDAQ's successor, or if not reported on NASDAQ, the fair market value of such Shares as determined by the Committee in good faith and based on all relevant factors. 2.1.10. "ISO" shall mean an incentive stock option granted in accordance with the provisions of Article 5 of the Plan. 2.1.11. "NSO" shall mean a nonqualified stock option granted in accordance with the provisions of Article 6 of the Plan. 2.1.12. "Option" shall mean an ISO or an NSO. 2.1.13. "Optionee" shall mean an Eligible Employee to whom an Option is granted under the Plan. 2.1.14. "Participant" shall mean an Eligible Employee, who in accordance with the terms of the Plan, is approved by the Committee for participation in the Plan as a recipient of an Award and who receives an Award. 2.1.15. "Plan" shall mean the Insurance Management Solutions Group, Inc. Long Term Incentive Plan, as set forth herein and as amended from time to time. 2.1.16. "Restricted Share(s)" shall mean any Shares granted or awarded to a Participant in accordance with the provisions of Article 8 of the Plan. 3 2.1.17. "SAR" shall mean a Stock Appreciation Right granted in accordance with the provisions of Article 7 of the Plan, which as to each SAR entitles the Participant to receive payment equal to the excess of (1) the Fair Market Value of a Share at the time of payment or exercise over (2) a specified price or value set or established at the time of grant of the SAR. 2.1.18. "Shares" shall mean shares of the common stock of the Company. 2.1.19. "Subsidiary" shall mean any corporation that at the time qualifies as a subsidiary of the Company under the definition of "subsidiary corporation" contained in Section 424(f) of the Code. 4 2.1.20. "10% Stockholder" shall mean an individual who owns more than 10% of the total combined voting power of all classes of stock of the Company or of a parent or subsidiary corporation. 2.2. USAGE. Whenever appropriate, words used in the singular shall be deemed to include the plural and vice versa, and the masculine gender shall be deemed to include the feminine gender. ARTICLE 3 3. ADMINISTRATION 3.1. COMMITTEE. This Plan shall be administered by a committee appointed by the Board of Directors (the "Committee"). The Committee shall consist of not less than two (2) nor more than five (5) persons, each of whom shall be a member of the Board and none of whom shall be eligible to participate under the Plan. The Board of Directors may from time to time remove members from, or add members to, the Committee. Vacancies on the Committee, howsoever caused, shall be filled by the Board of Directors. 3.2. ORGANIZATION. The Committee shall select one of its members as chairman, and shall hold meetings at such time and places as it may determine. The acts of a majority of the Committee at which a quorum is present, or acts reduced to or approved in writing by a majority of the members of the Committee, shall be valid acts of the Committee. 3.3. POWER AND AUTHORITY. Subject to the provisions of the Plan, the Committee shall have full authority, in its discretion: (a) to determine from among Eligible Employees those persons who shall become Participants; (b) to determine the nature, amount and terms and conditions of all Awards under the Plan, in accordance with and subject to the specific limitations and requirements set forth in the Plan; and (c) to interpret the Plan, the terms of all Awards and Award Agreements and any other agreement or instrument awarded, issued or entered into under the Plan, and to prescribe, amend and rescind rules and regulations with respect to the administration of the Plan. The interpretation and construction by the Committee of any provision of the Plan, any Award or any other agreement or instrument awarded, issued or entered into under the Plan, and all other determinations and decisions of the Committee pursuant to the provisions of the Plan, shall be final, conclusive and binding on all Participants and other affected persons. All actions and policies of the Committee, to the extent they deal with ISOs, shall be consistent with the qualification of ISOs as incentive stock options under Section 422 of the Code. 5 3.4. DISCRETIONARY AUTHORITY. The Committee's decision to authorize the grant of an Award to an Eligible Employee at any time shall not require the Committee to authorize the grant of an Award to that employee at any other time or to any other employee at any time; nor shall its determination with respect to the size, type or terms and conditions of the Award to be granted to an Eligible Employee at any time require it to authorize the grant of an Award of the same type or size or with the same terms and conditions to that employee at any other time or to any other employee at any time. The Committee shall not be precluded from authorizing the grant of an Award to any Eligible Employee solely because the employee previously may have been granted an Award of any kind under the Plan. 3.5. NO LIABILITY. No member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan. ARTICLE 4 4. EMPLOYEES ELIGIBLE TO PARTICIPATE 4.1. GENERALLY. Any person, including any officer but not a person who is solely a director, who is in the employ of the Company or any Subsidiary on the date of a grant of an Award shall be an Eligible Employee, able to participate in the Plan in accordance with the terms of the Plan. The Committee shall have the sole power to determine if the eligibility requirements have been satisfied. 4.2. PARTICIPANT STATUS. In accordance with the provisions of Section 3.3, the Committee, in its sole discretion, from time to time may select from among Eligible Employees persons to become Participants in the Plan. Any Eligible Employee so selected and who remains an Eligible Employee shall become a Participant upon the approval of such status by the Committee, which approval shall be conclusively evidenced by the award or grant of an Award to a Participant. 4.3. ISO ELIGIBILITY REQUIREMENT. Notwithstanding any provision of the Plan to the contrary, no person shall be eligible to receive any ISOs under the Plan if such person would not be able to qualify for the benefits of incentive stock options under Section 422 of the Code. ARTICLE 5 5. TERMS AND CONDITIONS OF INCENTIVE STOCK OPTIONS 5.1. GRANT. Any ISO granted pursuant to the Plan shall be authorized by the Committee and shall be evidenced by certificates or agreements in such form as the Committee from time to time shall approve, which certificates or agreements shall comply with and be subject to the terms and conditions hereinafter specified. Upon the granting of any ISO, the Committee shall promptly cause the Optionee to be notified of the fact that such Option has been granted. The date on which the Committee approves the grant of an ISO shall be considered to be the date on which such Option is granted. 5.2. NUMBER OF SHARES. Each ISO shall state the number of Shares to which it pertains. 6 5.3. OPTION PRICE. Each ISO shall state the option price, which option price shall be determined by the Committee in its discretion. Notwithstanding the foregoing, the option price in no event shall be less than 100% of the Fair Market Value of the Shares on the date of grant of the Option; or, in the case of an ISO being issued to an Eligible Employee who is a 10% Stockholder at the time an ISO is granted, 110% of the Fair Market Value of the Shares on the date of grant. 5.4. METHOD OF EXERCISE. An Optionee may exercise an ISO during such time as may be permitted by the Option and the Plan by providing written notice to the Committee, tendering the purchase price in accordance with the provisions of Section 5.5, and complying with any other exercise requirements contained in the Option or promulgated from time to time by the Committee. 5.5. METHOD OF PAYMENT. Payment of the option price upon the exercise of the ISO shall be in: (a) United States dollars in cash or by check, bank draft or money order payable to the order of the Company; (b) in the discretion of and in the manner determined by the Committee, by the delivery of Shares already owned by the Optionee; (c) by any other legally permissible means acceptable to the Committee at the time of grant of the Option (including cashless exercise as permitted under the Federal Reserve Board's Regulation T, subject to applicable legal restrictions); or in the discretion of the Committee, through a combination of (a), (b) and (c) of this Section. If the option price is paid in whole or in part through the delivery of Shares, the decision of the Committee with respect to the Fair Market Value of such Shares shall be final and conclusive. 5.6. TERM AND EXERCISE OF OPTIONS. 5.6.1. Unless otherwise specified in writing by the Committee at the time of grant or in the Award Agreement, each ISO shall be exercisable, in whole or in part, only in accordance with the "Vesting Schedule" which is attached to and hereby made a part of this Plan. To the extent not exercised, exercisable installments of ISOs shall be exercisable, in whole or in part, in any subsequent period, but not later than the expiration date of the Option. The Committee shall determine the expiration date of the Option at the time of the grant of the Option; provided, however, that no ISO shall be exercisable after the expiration of ten (10) years from the date it is granted; or, in the case of a 10% Stockholder, no ISO shall be exercisable after the expiration of five (5) years from the date it is granted. Not less than one hundred (100) Shares may be exercised at any one time unless the number exercised is the total number at the time exercisable under the Option. 5.6.2. Within the limits described above, the Committee may impose additional requirements on the exercise of ISOs. When it deems special circumstances to exist, the Committee in its discretion may accelerate the time at which an ISO may be exercised if, under previously established exercise terms, such Option was not immediately exercisable in full, even if the acceleration would permit the Option to be exercised more rapidly than the vesting set forth in the attached Vesting Schedule, or as otherwise specified by the Committee, would permit. 5.7. ADDITIONAL LIMITATIONS. The aggregate Fair Market Value (determined as of the time an ISO is granted) of the Shares with respect to which ISOs are exercisable for the first time by any Optionee in any calendar year under the Plan and under all other incentive stock option plans of 7 the Company and any parent and subsidiary corporations of the Company (as those terms are defined in Section 424 of the Code) shall not exceed $100,000. 5.8. DEATH OR OTHER TERMINATION OF EMPLOYMENT. 5.8.1. In the event that an Optionee shall cease to be employed by the Company or a Subsidiary for any reason other than his or her death, subject to the conditions that no ISO shall be exercisable after its expiration date, such Optionee shall have the right to exercise the ISO at any time within ninety (90) days after such termination of employment to the extent his or her right to exercise such Option had accrued pursuant to this Article 5 at the date of such termination and had not previously been exercised; such ninety (90) day period shall be increased to one (1) year for any Optionee who ceases to be employed by the Company or a Subsidiary because he is disabled (within the meaning of Section 22(e)( 3) of the Code) or who dies during the ninety (90) day period and the Option may be exercised within such extended time limit by the Optionee or, in the case of death, the personal representative of the Optionee or by any person or persons who shall have acquired the Option directly from the Optionee by bequest or inheritance. Whether an authorized leave of absence or absence for military or governmental service shall constitute termination of employment for purposes of the Plan shall be determined by the Committee, whose determination shall be final and conclusive. 5.8.2. In the event that an Optionee shall die while in the employ of the Company or a Subsidiary and shall not have fully exercised any ISO, the ISO may be exercised, subject to the conditions that no ISO shall be exercisable after its expiration date, to the extent that the Optionee's right to exercise such Option had accrued pursuant to this Article 5 at the time of his or her death and had not previously been exercised, at any time within one (1) year after the Optionee's death, by the personal representative of the Optionee or by any person or persons who shall have acquired the Option directly from the Optionee by bequest or inheritance. 5.8.3. No ISO shall be transferable by the Optionee otherwise than by will or the laws of descent and distribution. 5.8.4. During the lifetime of the Optionee, an ISO shall be exercisable only by him or her and shall not be assignable or transferable, and no other person shall acquire any rights therein. 5.9. DELIVERY OF CERTIFICATES REPRESENTING SHARES. 5.9.1. As soon as practicable after the exercise of an ISO, the Company shall deliver or cause to be delivered to the Optionee exercising the ISO a certificate or certificates representing the Shares purchased upon the exercise. 5.9.2. Certificates representing Shares to be delivered to an Optionee will be registered in the name of the participating employee, or if the Optionee so directs, by written notice to the Company, and to the extent permitted by applicable law, in the names of the Optionee and one such other person as may be designated by the participating Optionee, as joint tenants with rights of survivorship. 8 5.10. RIGHTS AS A STOCKHOLDER. An Optionee shall have no rights as a stockholder with respect to any Shares covered by his or her ISO until the date on which he or she becomes a record owner of the Shares purchased upon the exercise of the Option (the "record ownership date"). No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions, or other rights for which the record date is prior to the record ownership date, except as provided in Article 9. 5.11. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the terms and conditions and within the limitations of the Plan, the Committee may modify outstanding ISOs granted under the Plan, or accept the surrender of outstanding ISOs (to the extent not theretofore exercised) and authorize the granting of new Options in substitution therefor (to the extent not theretofore exercised). The Committee shall not, however, modify any outstanding ISO so as to specify a lower option price or accept the surrender of outstanding ISOs and authorize the granting of new Options in substitution therefor specifying a lower option price. Notwithstanding the foregoing, however, no modification of an ISO shall, without the consent of the Optionee, alter or impair any of the rights or obligations under any ISO theretofore granted under the Plan. 5.12. LISTING AND REGISTRATION OF SHARES. Each ISO shall be subject to the requirement that if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of the Shares covered thereby upon any securities exchange or under any state or federal laws, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such ISO or the issuance or purchase of Shares thereunder, such ISO may not be exercised unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. Notwithstanding anything in the Plan to the contrary, if the provisions of this Section become operative, and if, as a result thereof, the exercise of an ISO is delayed, then and in that event, the term of the ISO shall not be affected. 5.13. OTHER PROVISIONS. The ISO certificates or agreements authorized under the Plan shall contain such other provisions, including, without limitation, restrictions upon the exercise of the Option, as the Committee shall deem advisable. Any such certificate or agreement shall contain such limitations and restrictions upon the exercise of the ISO as shall be necessary in order that such Option will be an incentive stock option as defined in Section 422 of the Code, or to conform to any change in the law. 9 ARTICLE 6 6. TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS 6.1. GRANT. Any NSO granted pursuant to the Plan shall be authorized by the Committee and shall be evidenced by certificates or agreements in such form as the Committee from time to time shall approve, which certificates or agreements shall comply with and be subject to the terms and conditions hereinafter specified. Upon the granting of any NSO, the Committee shall promptly cause the Optionee to be notified of the fact that such Option has been granted. The date on which the Committee approves the grant of a NSO shall be considered to be the date on which such Option is granted. 6.2. NUMBER OF SHARES. Each NSO shall state the number of Shares to which it pertains. 6.3. OPTION PRICE. Each NSO shall state the option price, which option price shall be determined by the Committee in its discretion and may be equal to, less than or greater than 100% of the Fair Market Value of the Shares on the date of grant. 6.4. METHOD OF EXERCISE. An Optionee may exercise a NSO during such time as may be permitted by the Option and the Plan by providing written notice to the Committee, tendering the purchase price in accordance with the provisions of Section 6.5, and complying with any other exercise requirements contained in the Option or promulgated from time to time by the Committee. 6.5. METHOD OF PAYMENT. Payment of the option price upon the exercise of the NSO shall be: (a) in United States dollars in cash or by check, bank draft or money order payable to the order of the Company; (b) in the discretion of and in the manner determined by the Committee, by the delivery of Shares already owned by the Optionee; (c) by any other legally permissible means acceptable to the Committee at the time of grant of the Option (including cashless exercise as permitted under the Federal Reserve Board's Regulation T, subject to applicable legal restrictions); or in the discretion of the Committee, through a combination of (a), (b) and (c) of this Section. If the option price is paid in whole or in part through the delivery of Shares, the decision of the Committee with respect to the Fair Market Value of such Shares shall be final and conclusive. 6.6. TERM AND EXERCISE OF OPTIONS. 6.6.1. Unless otherwise specified in writing by the Committee at the time of grant or in the Award Agreement, each NSO shall be exercisable, in whole or in part, only in accordance with the attached Vesting Schedule.To the extent not exercised, exercisable installments of NSOs shall be exercisable, in whole or in part, in any subsequent period, but not later than the expiration date of the Option. The Committee shall determine the expiration date of the Option at the time of the grant of the Option; provided, however, that no NSO shall be exercisable after the expiration of ten (10) years from the date it is granted. Not less than one hundred (100) Shares may be exercised at any one time unless the number exercised is the total number at the time exercisable under the Option. 6.6.2. Within the limits described above, the Committee may impose additional requirements on the exercise of NSOs. When it deems special circumstances to exist, the Committee in its 10 discretion may accelerate the time at which a NSO may be exercised if, under previously established exercise terms, such Option was not immediately exercisable in full, even if the acceleration would permit the Option to be exercised more rapidly than the vesting set forth in the attached Vesting Schedule, or as otherwise specified by the Committee, would permit. 6.7. DEATH OR OTHER TERMINATION OF EMPLOYMENT. 6.7.1. In the event that an Optionee shall cease to be employed by the Company or a Subsidiary for any reason other than his or her death, subject to the conditions that no NSO shall be exercisable after its expiration date, such Optionee shall have the right to exercise the NSO at any time within ninety (90) days after such termination of employment to the extent his or her right to exercise such Option had accrued pursuant to this Article 6 at the date of such termination and had not previously been exercised; such ninety (90) day period shall be increased to one (1) year for any Optionee who ceases to be employed by the Company or a Subsidiary because he is disabled (within the meaning of Section 22(e)( 3) of the Code) or who dies during the ninety (90) day period, and the Option may be exercised within such extended time limit by the Optionee or in the case of death, the personal representative of the Optionee or by any person or persons who shall have acquired the Option directly from the Optionee by bequest or inheritance. Whether an authorized leave of absence or absence for military or governmental service shall constitute termination of employment for purposes of the Plan shall be determined by the Committee, whose determination shall be final and conclusive. 6.7.2. In the event that an Optionee shall die while in the employ of the Company or a Subsidiary and shall not have fully exercised any NSO, the NSO may be exercised, subject to the conditions that no NSO shall be exercisable after its expiration date, to the extent that the Optionee's right to exercise such Option had accrued pursuant to this Article 6 at the time of his or her death and had not previously been exercised, at any time within one (1) year after the Optionee's death, by the personal representative of the Optionee or by any person or persons who shall have acquired the Option directly from the Optionee by bequest or inheritance. 6.7.3. No NSO shall be transferable by the Optionee otherwise than by will or the laws of descent and distribution. 6.7.4. During the lifetime of the Optionee, an NSO shall be exercisable only by him or her and shall not be assignable or transferable, and no other person shall acquire any rights therein. 6.8. DELIVERY OF CERTIFICATES REPRESENTING SHARES. 6.8.1. As soon as practicable after the exercise of a NSO, the Company shall deliver or cause to be delivered to the Optionee exercising the NSO a certificate or certificates representing the Shares purchased upon the exercise. 6.8.2. Certificates representing Shares to be delivered to an Optionee under the Plan will be registered in the name of the Optionee, or if the Optionee so directs, by written notice to 11 the Company, and to the extent permitted by applicable law, in the names of the Optionee and one such other person as may be designated by the Optionee, as joint tenants with rights of survivorship. 6.9. RIGHTS AS A STOCKHOLDER. An Optionee shall have no rights as a stockholder with respect to any Shares covered by his or her NSO until the date on which he or she becomes a record owner of the Shares purchased upon the exercise of the Option (the "record ownership date"). No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions, or other rights for which the record date is prior to the record ownership date, except as provided in Article 9. 6.10. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the terms and conditions and within the limitations of the Plan, the Committee may modify outstanding NSOs granted under the Plan, or accept the surrender of outstanding NSOs (to the extent not theretofore exercised) and authorize the granting of new Options in substitution therefor (to the extent not theretofore exercised). The Committee shall not, however, modify any outstanding NSO so as to specify a lower option price or accept the surrender of outstanding NSOs and authorize the granting of new Options in substitution therefor specifying a lower option price. Notwithstanding the foregoing, however, no modification of an NSO shall, without the consent of the Optionee, alter or impair any of the rights or obligations under any NSO theretofore granted under the Plan. 6.11. LISTING AND REGISTRATION OF SHARES. Each NSO shall be subject to the requirement that if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of the Shares covered thereby upon any securities exchange or under any state or federal laws, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such NSO or the issuance or purchase of shares thereunder, such NSO may not be exercised unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. Notwithstanding anything in the Plan to the contrary, if the provisions of this Section become operative, and if, as a result thereof, the exercise of a NSO is delayed, then and in that event, the term of the NSO shall not be affected. 6.12. OTHER PROVISIONS. The NSO certificates or agreements authorized under the Plan shall contain such other provisions, including, without limitation, restrictions upon the exercise of the Option, as the Committee shall deem advisable. 12 ARTICLE 7 7. STOCK APPRECIATION RIGHTS 7.1. GRANT. The Committee, in its sole discretion, from time to time may authorize the grant of SARs to a Participant. An SAR may be granted in connection with all or any portion of a previously or contemporaneously granted Award (other than an SAR), or by itself and not in connection with any other Award. An SAR may be granted at the time of grant of the related Option and shall be subject to the same terms and conditions as the related Option, except as this Article 7 may otherwise provide. The grant of SAR shall be evidenced either by provisions in the Option to which it relates or by a separate written agreement between the Company and the Participant, which shall comply with and be subject to the terms and conditions of the Plan and shall be in such form as the Committee from time to time shall approve (an "SAR Agreement"). The SAR Agreement may contain such additional terms, conditions or limitations, not inconsistent with the specific provisions of the Plan, as may be approved by the Committee in it sole discretion. 7.2. TERMS AND CONDITIONS. Each SAR granted under the Plan shall be exercisable or payable at such time or times, or upon the occurrence of such event or events, and in such amounts or types of consideration (including cash or Shares) as the Committee shall specify in the SAR Agreement. Subsequent to the grant of an SAR, the Committee, at any time before complete termination of such SAR, may accelerate the time or times at which such SAR may be exercised or paid in whole or in part. 7.3. EXERCISE. 7.3.1. An SAR shall be exercised by surrendering the SAR Agreement or, if the SAR was granted in connection with an Option, the surrender of the related Option together with any SAR Agreement, or the portion(s) thereof pertaining to the Shares with respect to which the SAR is exercised, and providing the Company with a written notice in such form and containing such information (including the number of Shares with respect to which the SAR is being exercised) as the SAR Agreement or the Committee may specify. The date on which the Company receives such surrender and notice shall be the date on which the related Option, or portion thereof, shall be deemed surrendered and the SAR shall be deemed exercised. 7.3.2. An SAR granted in connection with an Option shall be exercisable only at such time or times, to such extent and by such persons as the Option to which it relates shall be exercisable, provided that an SAR granted in connection with an ISO shall not be exercisable on any date on which the Fair Market Value of a Share is less than or equal to the per share exercise price of the ISO. An SAR shall be canceled when, and to the extent that, any related Option is exercised, and an Option shall be canceled when, and to the extent that, the Option is surrendered to the Company upon the exercise of a related SAR. 7.4. PAYMENT. To effect payment or exercise of an SAR, the Company shall make payment to the Participant in cash or Shares (valued at their Fair Market Value on the date of payment or exercise) or in combination of cash and Shares as provided in the SAR Agreement. If payment is to be made in Shares, upon such exercise, the Participant shall be entitled to receive that number 13 of Shares which have an aggregate Fair Market Value on the exercise date equal to the amount by which the Fair Market Value of one Share on the exercise date exceeds the Option price per share of any related Option or the Fair Market Value on the date of grant of the SAR, as the case may be, multiplied by the number of Shares covered by the related Option or the SAR, as the case may be, or portion thereof, surrendered in connection with the exercise of the SAR. 7.5. EXPIRATION. An SAR granted in connection with or related to an Option, unless previously exercised or canceled, shall expire upon the expiration of the Option to which it relates. Any other SAR, unless previously exercised or canceled, shall expire upon the tenth anniversary of its grant. The exercise of an SAR granted in connection with an Option shall result in a pro rata surrender or cancellation of any related Option to the extent the SAR has been exercised. 7.6. DEATH OR OTHER TERMINATION OF EMPLOYMENT. 7.6.1. In the event that a Participant shall cease to be employed by the Company or a Subsidiary for any reason other than his or her death, subject to the conditions that no SAR shall be exercisable after its expiration date, such Participant shall have the right to exercise the SAR at any time within ninety (90) days after such termination of employment to the extent his or her right to exercise such SAR had accrued pursuant to this Article 7 at the date of such termination and had not previously been exercised; such ninety (90) day period shall be increased to one (1) year for any Participant who ceases to be employed by the Company or a Subsidiary because he is disabled (within the meaning of Section 22(e)(3) of the Code) or who dies during the ninety (90) day and the SAR may be exercised within such extended time limit by the Participant or, in the case of death, the personal representative of the Participant or by any person or persons who shall have acquired the SAR directly from the Participant by bequest or inheritance. Whether an authorized leave of absence or absence for military or governmental service shall constitute termination of employment for purposes of the Plan shall be determined by the Committee, whose determination shall be final and conclusive. 7.6.2. In the event that a Participant shall die while in the employ of the Company or a Subsidiary and shall not have fully exercised any SAR, the SAR may be exercised, subject to the conditions that no SAR shall be exercisable after its expiration date, to the extent that a Participant's right to exercise such SAR had accrued in accordance with the provisions of this Article 7 at the time of his or her death and had not previously been exercised, at any time within one (1) year after a Participant's death, by the personal representative of a Participant or by any person or persons who shall have acquired the SAR directly from a Participant by bequest or inheritance. 7.6.3. No SAR shall be transferable by a Participant otherwise than by will or the laws of descent and distribution. 7.6.4. During the lifetime of a Participant, an SAR shall be exercisable only by him or her and shall not be assignable or transferable, and no other person shall acquire any rights therein. 7.7. DELIVERY OF CERTIFICATES REPRESENTING SHARES. As soon as practicable after the exercise or payment of an SAR payable in whole or in part in Shares, the Company shall deliver or cause to 14 be delivered to the Participant exercising the SAR for Shares a certificate or certificates representing the Shares issuable upon such purchase or exercise. Certificates representing Shares to be delivered to a Participant will be registered in the name of the Participant or if the Participant so directs, by written notice to the Company, and to the extent permitted by applicable law, in the names of the Participant and one such other person as may be designated by the Participant, as joint tenants with rights of survivorship. 7.8. LISTING AND REGISTRATION OF SHARES. Each SAR shall be subject to the requirement that if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of any Shares covered thereby upon any securities exchange or under any state or federal laws, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the issuance or purchase of Shares, such SAR may not be paid or exercised unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. Notwithstanding anything in the Plan to the contrary, if the provisions of this Section become operative, and if, as a result thereof, the exercise of an SAR is delayed, then and in that event, the term of the SAR shall not be affected. 7.9. RIGHTS AS A STOCKHOLDER. In general, the holder of an SAR shall have no rights as a stockholder. The holder of an SAR under which Shares are issuable upon payment or exercise shall have no rights as a stockholder of the Company until the date on which he or she becomes a record owner of the Shares issued upon the payment or exercise of the SAR (the "record ownership date"). No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions, or other rights for which the record date is prior to the record ownership date, except as provided in Article 9. ARTICLE 8 8. RESTRICTED SHARES 8.1. GENERAL. The Committee, in its sole discretion, from time to time may authorize the grant of Restricted Shares to a Participant. In making any such grant of Restricted Shares, the Committee may grant Restricted Shares without the requirement of any cash payment or may require a cash payment from a Participant in an amount no greater than the aggregate Fair Market Value of the Restricted Shares as of the date of grant in exchange for, or as a condition precedent to, the completion of the grant and the issuance of the Restricted Shares. 8.2. RESTRICTION PERIOD. All Restricted Shares issued under Article 8 shall be subject to certain restrictions as set forth in Section 8.3, which restrictions shall continue in effect for such period of time as is specified in the Award Agreement (the "Restriction Period"). The Award Agreement may contain such additional terms, conditions or limitations, not inconsistent with the specific provisions of the Plan, as may be approved by the Committee in it sole discretion. 8.3. CERTAIN RESTRICTIONS. Until the expiration of the Restriction Period, Restricted Shares shall be subject to the following restrictions: (a) the Participant shall not be entitled to take possession of the certificate or certificates representing the Shares; (b) the Restricted Shares may not be sold, transferred, assigned, pledged, conveyed, hypothecated or otherwise disposed of (other than by 15 operation of law); and (c) the Shares may be forfeited immediately as provided in Section 8.4. In addition, the Committee, as specified in writing at the time of grant or in the Award Agreement, may condition the right to receive Restricted Shares upon the satisfaction of such additional terms, conditions or limitations, including but not limited to performance criteria, as may be approved by the Committee in its sole discretion. 8.4. TERMINATION OF EMPLOYMENT. Unless otherwise specified by the Committee in writing at the time of the Award or in the Award Agreement, if the employment of a Participant is terminated for any reason other the death or disability (within the meaning of Section 22(e)(3) of the Code) of the Participant before the expiration of the Restriction Period, the Restricted Shares shall be forfeited immediately and all rights of a Participant to such Shares shall terminate immediately without further obligation on the part of the Company. Unless otherwise specified by the Committee in writing at the time of the Award or in the Award Agreement, if a Participant's employment is terminated by reason of the death or disability (within the meaning of Section 22(e)(3) of the Code) of the Participant before the expiration of the Restriction Period, (a) the number of Restricted Shares held by the Company for a Participant's account pursuant to Section 8.6 shall be reduced by partial forfeiture in an amount of Restricted Shares in proportion equal to the percentage of the total Restriction Period remaining after a Participant's termination of employment, (b) the restrictions on the unforfeited balance of such Restricted Shares shall lapse on the date the Participant's employment terminated and (c) the certificate or certificates representing the Shares upon which the restrictions have lapsed shall be delivered to the Participant (or, in the event of the Participant's death, to his or her legal representative). 8.5. DISTRIBUTION OF RESTRICTED SHARES. If a Participant to whom Restricted Shares have been issued pursuant to Article 8 remains in the continuous employment of the Company or a Subsidiary until the expiration or waiver by the Board of the Restriction Period and the satisfaction of any other conditions imposed by the Award Agreement, with respect to the Restricted Shares in question, all restrictions applicable to such Restricted Shares shall lapse and the certificate or certificates representing the Shares that were granted to the Participant shall be delivered to the Participant. 8.6. DELIVERY OF CERTIFICATES REPRESENTING SHARES. 8.6.1. As soon as practicable after a grant of Restricted Shares, unless the Award Agreement provides for a different issuance procedure, the Company shall issue certificates representing the Restricted Shares registered in the name of the holder of Restricted Shares. 8.6.2. To administer the restrictions imposed on Restricted Shares under the Plan and the Award Agreement, certificates representing Restricted Shares (to the extent they are issued under the Award Agreement prior to satisfaction of such restrictions) shall not be delivered to Participants but shall be delivered to the Company to be held by the Company as safekeeping agent for the benefit of each Participant. A written safekeeping receipt evidencing the Shares so held in safekeeping, bearing the name of the Participant, indicating the number of the certificate or certificates and the number of Shares so represented shall be delivered promptly to each Participant. In its capacity as safekeeping agent for Participants, the Company shall act in accordance with instructions received from such Participants, which instructions are to be confirmed in writing if deemed 16 appropriate by the Company. The safekeeping agency shall not affect the rights of Participants as owners of Restricted Shares, nor shall such agency affect the restrictions imposed on Restricted Shares under the Plan or the Award Agreement. 8.6.3. Upon the lapse, satisfaction or waiver of the Restriction Period and any other restrictions imposed on Restricted Shares under the Plan or the Award Agreement, any safekeeping agency arrangement adopted pursuant to Section 8.6.2 shall terminate and the certificates representing the Shares owned by Participants, registered in the name(s) of the Participants, shall be delivered promptly to such Participants. 8.7. WAIVER OF RESTRICTIONS. The Committee, in its sole discretion, may at any time waive or accelerate the expiration of any or all restrictions with respect to Restricted Shares issued pursuant to this Article 8. 8.8. RIGHTS AS A STOCKHOLDER. A Participant receiving Restricted Shares shall have no rights as a stockholder with respect to any Restricted Shares grant to him or her under the Plan until the date on which he or she becomes a record owner of the Restricted Shares (the "record ownership date"). No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions, or other rights for which the record date is prior to the record ownership date, except as provided in Article 9. 17 ARTICLE 9 9. MISCELLANEOUS 9.1. STOCK ADJUSTMENTS. 9.1.1. In the event of any increase or decrease in the number of issued Shares resulting from a stock split or other division or consolidation of shares or the payment of a stock dividend (but only on Shares) or any other increase or decrease in the number of Shares effected without any receipt of consideration by the Company, then, in any such event, the number of Shares that remain available under the Plan, the number of Shares covered by each outstanding Option, the exercise price per Share covered by each outstanding Option, the number of Shares covered by each outstanding SAR and the price per Share and the number and any purchase price for any Restricted Shares granted but not yet issued, in each case, shall be proportionately and appropriately adjusted for any such increase or decrease. 9.1.2. Subject to any required action by the stockholders, if any change occurs in the Shares by reason of any recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or of any similar change affecting Shares, then, in any such event, the number and type of Shares then covered by each outstanding Option, the purchase price per Share covered by each outstanding Option, the number of Shares covered by each outstanding SAR and the exercise price per Share and the number and any purchase price for any Restricted Shares granted but not yet issued, in each case, shall be proportionately and appropriately adjusted for any such change. 9.1.3. In the event of a change in the Shares as presently constituted that is limited to a change of all of its authorized shares with par value into the same number of shares with a different par value or without par value, the shares resulting from any change shall be deemed to be Shares within the meaning of the Plan. 9.1.4. To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by, and in the discretion of, the Committee, whose determination in that respect shall be final, binding and conclusive; provided, however, that any Option granted pursuant to Article 5 shall not be adjusted in a manner that causes such Option to fail to continue to qualify as an incentive stock option within the meaning of Section 422 of the Code. 18 9.1.5. Except as hereinabove expressly provided in this Section, an Eligible Employee or a Participant shall have no rights by reason of any division or consolidation of shares of stock of any class or the payment of any stock dividend or any other increase or decrease the number of shares of stock of any class or by reason of any dissolution, liquidation, merger or consolidation, or spin-off of assets or stock of another corporation; and any issuance by the Company of shares of stock of any class, securities convertible into shares of stock of any class, or warrants or options for shares of stock of any class shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares, any Option, any SAR or any Restricted Shares granted but not yet issued. 9.1.6. The existence of the Plan, or the grant of an Option, SAR or Restricted Shares under the Plan, shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or to consolidate, or to dissolve, to liquidate, to sell, or to transfer all or any part of its business or assets. 9.2. TAX ABSORPTION PAYMENTS. The Company may, but is not required to, make a cash payment, either directly to any Participant or on a Participant's behalf, in an amount that the Committee estimates to be equal (after taking into account any federal and state taxes that the Committee estimates to be applicable to such cash payment) to any additional federal and state income taxes that are imposed upon a Participant as a result of the granting of any Award under the Plan (a "Tax Absorption Payment"). In determining the amount of any Tax Absorption Payment, the Committee may adopt such methods and assumptions as it considers appropriate, and it shall not be required to examine the individual tax liability of any Participant. The decision to make any Tax Absorption Payment shall be made by the Committee at the same time as the grant of the Award to which it relates. 9.3. AMENDMENT OF THE PLAN; TERMINATION. The Board shall have the right to revise, amend or terminate the Plan at any time without notice; provided, however, that without shareholder approval the Board may not (a) increase the aggregate number of Shares that may be issued pursuant to this Plan, (b) extend the period during which any Award may be granted, (c) extend the term of the Plan, or (d) modify the requirements as to eligibility for participation hereunder; provided, further, that no such action may be taken, without the consent of the Participant to whom any Award shall have been granted, that adversely affects the rights of such Participant concerning such Award, except as such termination or amendment of this Plan is required by statute, or rules or regulations promulgated thereunder, or as otherwise permitted hereunder. The foregoing prohibitions in this Section shall not be affected by adjustments in shares and purchase price made in accordance with the provisions of Section 9.1. 9.4. APPLICATION OF FUNDS. The proceeds received by the Company from the sale of Shares or the exercise of Awards pursuant to the Plan will be used for general corporate purposes. 9.5. NO IMPLIED RIGHTS TO EMPLOYEES. The existence of the Plan and the granting of Awards under the Plan shall in no way give any employee the right to continued employment or the right to receive any additional Awards or any additional compensation under the Plan, or otherwise provide any employee any rights not specifically set forth in the Plan or in any Option, SAR or Award Agreement. 19 9.6. WITHHOLDING. 9.6.1. The Company shall have the power to withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy any federal, state or local withholding or other tax due from the Company with respect to any amount payable and/or shares issuable under the Plan, and the Company may defer such payment or issuance unless indemnified to its satisfaction. Whenever under the Plan payments are to be made in cash, such payments shall be made net of an amount sufficient to satisfy any federal, state or local withholding tax liability. 9.6.2. Subject to the consent of the Committee, with respect to (i) the exercise of an NSO, (ii) the lapse of restrictions on Restricted Stock, or (iii) the issuance of any other stock Award under the Plan, a Participant may make an irrevocable election (an "Election") to (A) have shares of Common Stock otherwise issuable under (i) withheld, or (B) tender back to the Company shares of Common Stock received pursuant to (i), (ii), or (iii), or (C) deliver back to the Company pursuant to (i), (ii), or (iii) previously acquired shares of Common Stock having a Fair Market Value sufficient to satisfy all or part of the Participant's estimated tax obligations associated with the transaction. Such Election must be made by a Participant prior to the date on which the relevant tax obligation arises. The Committee may disapprove of any Election, may suspend or terminate the right to make Elections, or may provide with respect to any Award under this Plan that the right to make Elections shall not apply to such Awards. 9.6.3. CONDITIONS PRECEDENT TO EFFECTIVENESS. Subject to the approval of the Plan by the stockholders of the Company within 12 months after its adoption by the Board of Directors, the Plan shall become effective upon the satisfaction of all the following conditions, with the Effective Date of the Plan being the date that the last of the following conditions is satisfied: 9.6.3.1. the adoption of the Plan by the Board of Directors; and 9.6.3.2. the effectiveness of the Company's Registration Statement on Form S-1 relating to the Company's initial public offering, as filed with the SEC (File No.__________ ).] 20 VESTING SCHEDULE:
---------------------------------------------------------------------------- Number of Years from Percentage of Shares Date Option is Granted Exercisable ---------------------------------------------------------------------------- Less than 1 year 0% ---------------------------------------------------------------------------- 1 year but less than 2 years 20% ---------------------------------------------------------------------------- 2 years but less than 3 years 40% ---------------------------------------------------------------------------- 3 years but less than 4 years 60% ---------------------------------------------------------------------------- 4 years but less than 5 years 80% ---------------------------------------------------------------------------- 5 years or more 100% ----------------------------------------------------------------------------
EX-10.3 6 1998 NON-EMPLOYEE STOCK OPTION PLAN 1 EXHIBIT 10.3 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN ARTICLE 1: 1. GENERAL: 1.1. PURPOSE. The purpose of the Insurance Management Solutions Group, Inc. Non-Employee Directors' Stock Option Plan is to secure for Insurance Management Solutions Group, Inc. and its stockholders the benefits of the incentive inherent in increased common stock ownership by the members of the Board of Directors of the Company who are not employees of the Company or any of its Subsidiaries. 1.2. MAXIMUM NUMBER OF SHARES. The maximum number of shares of Common Stock that may be issued under the Plan is 200,000, subject to adjustment as provided in Section 3.1 below. The Common Stock to be issued may be either authorized and unissued shares or issued shares acquired by the Company. In the event that Options granted under the Plan shall terminate or expire without being exercised in whole or in part, new Options may be granted covering the shares not purchased under such lapsed Options. 1.3. DEFINITIONS. The following words and terms as used herein shall have that meaning set forth therefor in this Section 1.3 unless a different meaning is clearly required by the context. Whenever appropriate, words used in the singular shall be deemed to include the plural and vice versa, and the masculine gender shall be deemed to include the feminine gender. 1.3.1. "Board" or "Board of Directors" shall mean the Board of Directors of the Company. 1.3.2. "Committee" is defined in Section 1.4. 1.3.3. "Common Stock" shall mean the common stock of the Company. 1.3.4. "Company" shall mean Insurance Management Solutions Group, Inc., a Florida corporation, and any successor. 1.3.5. "Effective Date" is defined in Section 3.9. 1.3.6. "Fair Market Value" of the shares of Common Stock shall mean the closing price on the date in question (or, if no shares are traded on such day, on the next preceding day on which shares were traded) of the Common Stock on the principal securities exchange in the United States on which such stock is listed, or if such stock is not listed on a securities exchange in the United States, the closing price on such day in the over-the-counter market as reported by the National Association of Security Dealers Automated Quotation System (NASDAQ), or NASDAQ's successor, or if not reported on NASDAQ, the fair market value of such stock as determined by the Committee in good faith and based on all relevant factors. 1.3.7. "NSO" shall mean a nonqualified stock option granted in accordance with the provisions of Article 2 of this Plan. 1.3.8. "Non-Employee Director" shall mean a member of the Board of Directors of the Company who is not an employee of the Company or any Subsidiary. 2 2. 1.3.9. "Option" shall mean an NSO. 1.3.10. "Optionee" shall mean a Non-Employee Director to whom an Option is granted under the Plan. 1.3.11. "Plan" shall mean the Insurance Management Solutions Group, Inc. Non-Employee Directors' Stock Option Plan, as set forth herein and as amended from time to time. 1.3.12. "Subsidiary" shall mean any corporation that at the time qualifies as a subsidiary of the Company under the definition of "subsidiary corporation" contained in Section 424(f) of the Internal Revenue Code of 1986, as amended. 1.4. ADMINISTRATION. This Plan is intended to be administered pursuant to a formula and, accordingly, is intended to be self governing. To the extent that any questions of interpretation arise, these questions shall be resolved by the Board. 1.5. ELIGIBILITY REQUIREMENTS. Each Non-Employee Director shall be eligible to receive Options in accordance with Article 2 below. The adoption of this Plan shall not be deemed to give any director any right to be granted options to purchase Common Stock of the Company, except to the extent and upon such terms and conditions as set forth in this Plan. ARTICLE 2: 2. TERMS AND CONDITIONS OF OPTIONS: 2.1. GRANT. Options granted under the Plan shall be evidenced by an agreement in such form as the Committee shall prescribe from time to time in accordance with the Plan and shall comply with the terms and conditions set forth under this Article 2. The date of the Annual Meeting of Stockholders or the date of a regularly scheduled quarterly meeting Board meeting, whichever is applicable, shall be the date of grant of the Options. 2.2. NUMBER OF SHARES. As of the date of the Annual Meeting of Stockholders of the Company, each Non-Employee Director who is then elected, reelected or who is continuing as a member of the Board after the adjournment of the Annual Meeting shall be granted an Option for 800 shares of Common Stock. In 3 addition, as of the date of each regularly scheduled quarterly meeting of the Board of Directors, other than the Annual Meeting, each Non-Employee Director who is then elected, reelected or who is continuing as a member of the Board after the adjournment of the meeting shall be granted an Option for 400 shares of Common Stock. Notwithstanding the foregoing, if a Non-Employee Director is absent from a meeting, arrives late for a meeting or leaves a meeting early, then the Chairman of the Board, in his absolute discretion, may reduce by one-half the number of shares of Common Stock that such Non-Employee Director would have been granted under this Section 2.2 had he or she not been absent, arrived late or left early. 2.3. OPTION PRICE. The Option exercise price shall be the Fair Market Value of the Common Stock on the date of the grant of the Option. 2.4. METHOD OF EXERCISE. An Option may be exercised by a Non-Employee Director during such time as may be permitted by the Option and the Plan by providing written notice to the Committee and tendering the purchase price in accordance with the provisions of Section 2.5, and complying with any other exercise requirements contained in the Option or promulgated from time to time by the Committee. 2.5. METHOD OF PAYMENT. Each Option shall state the method of payment of the Option price upon the exercise of the Option. The method of payment stated in the Option shall include payment (a) in United States dollars in cash or by check, bank draft or money order payable to the order of the Company, (b) in the discretion of and in the manner determined by the Committee, by the delivery of shares of Common Stock already owned by the Optionee, (c) by any other legally permissible means acceptable to the Committee at the time of the grant of the Option (including cashless exercise as permitted under the Federal Reserve Board's Regulation T, subject to applicable legal restrictions), or (d) in the discretion of the Committee, through a combination of (a), (b) and (c) of this Section 2.5. If the option price is paid in whole or in part through the delivery of shares of Common Stock, the decision of the Committee with respect to the Fair Market Value of such shares shall be final and conclusive 2.6. TERM AND EXERCISE OF OPTIONS. 2.6.1.1. One hundred percent (100%) of the total number of shares of Common Stock covered by the Option shall become exercisable as of the date of the grant of the Option and, subject to the provisions of Section 2.7, shall be exercisable by the Non-Employee Director for a period of six (6) years from the date of grant. Not less than one hundred (100) shares may be exercised at any one time unless the number exercised is the total number at the time exercisable under the Option. 2.6.1.2. No Option or any part of an Option shall be exercisable unless written notice of the exercise is delivered to the Company specifying the number of shares to be purchased and payment in full is made for the shares of Common Stock being acquired thereunder at the time of exercise prior to the expiration of the Option. 2.7. DEATH OR OTHER TERMINATION OF POSITION AS A DIRECTOR. Notwithstanding the provisions of Section 2.6 above. 2.7.1.1. In the event that a Non-Employee Director (a) is removed as a director for dishonesty or violation of his or her fiduciary duty to the Company, (b) voluntarily resigns under or followed by such circumstances as would constitute a violation of his or her fiduciary duty to the Company, or (c) the Company discovers that he or she has committed an act of dishonesty not discovered by the Company prior to the cessation of his or her services as a Non-Employee Director that would have 4 resulted in his or her removal if discovered prior to such date, then forthwith from the happening of any such event, any Option then held by him or her shall terminate and become void to the extent that it then remains unexercised. 2.7.1.2. If a person shall cease to be a Non-Employee Director for any reason other than one or more of the reasons set forth in section 2.7.1, such person, or in the case of death, the executors, administrators or distributees, as the case may be, may, within six months after such person ceases to be a Non-Employee Director (unless the option expires under section 2.6.1 prior to the expiration of six months), exercise the Option with respect to any shares of Common Stock as to which such person has not exercised the Option on the date the person ceased to be such a Non-Employee Director. 2.7.1.3. In the event any Option is exercised by the executors, administrators, legatees or distributees of the estate of a deceased Optionee, the Company shall be under no obligation to issue Common Stock thereunder unless and until the Company is satisfied that the person or persons exercising the Option are the duly appointed legal representatives of the deceased Optionee's estate or the proper legatees or distributees thereof. 2.8. TRANSFERABILITY OF OPTIONS. The Option shall not be transferable by the Optionee otherwise than by will or the laws of descent and distribution, and shall be exercisable during his lifetime only by him. 2.9. DELIVERY OF CERTIFICATES REPRESENTING SHARES. As soon as practicable after the exercise of an Option, the Company shall deliver, or cause to be delivered, to the Non-Employee Director exercising the Option, a certificate or certificates representing the shares of Common Stock purchased upon the exercise. Certificates representing shares of Common Stock to be delivered to a Non-Employee Director shall be registered in the name of such director. 2.10. RIGHTS AS A STOCKHOLDER. A Non-Employee Director shall have no rights as a stockholder with respect to any shares of Common Stock covered by his or her Option until the date on which he or she becomes a record owner of the shares purchased upon the exercise of the Option (the "record ownership date"). No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions, or other rights for which the record date is prior to the record ownership date. ARTICLE 3: 3. MISCELLANEOUS 3.1. STOCK ADJUSTMENTS. 3.1.1. In the event of any increase or decrease in the number of issued shares of Common Stock resulting from a stock split or other division or consolidation of shares or the payment of a stock dividend (but only on Common Stock) or any other increase or decrease in the number of such shares effected without any receipt of consideration by the Company, then, in any such event, the number of shares of Common Stock that remain available under the Plan, the number of shares of Common Stock covered by each outstanding Option, and the purchase price per share of Common Stock covered by each outstanding Option shall be proportionately and appropriately adjusted for any such increase or decrease. 3.1.2. Subject to any required action by the stockholders, if any change occurs in the shares of Common Stock by reason of any recapitalization, reorganization, merger, consolidation, split-up, 5 combination or exchange of shares, or of any similar change affecting the shares of Common Stock, then, in any such event, the number and type of shares covered by each outstanding Option, and the purchase price per share of Common Stock covered by each outstanding Option, shall be proportionately and appropriately adjusted for any such change. A dissolution or liquidation of the Company shall cause each outstanding Option to terminate. 3.1.3. In the event of a change in the Common Stock as presently constituted that is limited to a change of all of its authorized shares with par value into the same number of shares with a different par value or without par value, the shares resulting from any change shall be deemed to be shares of Common Stock within the meaning of the Plan. 3.1.4. To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by, and in the discretion of, the Committee, whose determination in that respect shall be final, binding and conclusive. Except as hereinabove expressly provided in this Section 3.1, a Non-Employee Director shall have no rights by reason of any division or consolidation of shares of stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class or by reason of any dissolution, liquidation, merger or consolidation, or spin-off of assets or stock of another corporation; and any issuance by the Company of shares of stock of any class, securities convertible into shares of stock of any class, or warrants or options for shares of stock of any class shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to the Option. 3.1.5. The existence of the Plan and the grant of any Option pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or to consolidate, or to dissolve, to liquidate, to sell, or to transfer all or any part of its business or assets. 3.2. LISTING AND REGISTRATION OF COMMON STOCK. Each Option shall be subject to the requirement that if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of the shares of Common Stock covered thereby upon any securities exchange or under any state or federal laws, or the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such Option or the issuance or purchase of shares thereunder, such Option may not be exercised unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. Notwithstanding anything in the Plan to the contrary, if the provisions of this Section 3.2 become operative, and if, as a result thereof, the exercise of an Option is delayed, then and in that event, the term of the Option shall not be affected. Notwithstanding the foregoing, or any other provisions in the Plan, the Company shall have no obligation under the Plan to cause any share of Common Stock to be registered or qualified under any federal or state law, or listed on any stock exchange or admitted to any national market system. 3.3. TERM OF THE PLAN. The Plan shall terminate upon the earlier of (a) the adoption of a resolution of the Board terminating the Plan or (b) ten years from the Effective Date. 3.4. AMENDMENT OF THE PLAN; TERMINATION. The Board may, insofar as permitted by law, from time to time, with respect to any shares of Common Stock at the time not subject to Options, suspend, discontinue or terminate the Plan or revise or amend it in any respect whatsoever. 6 6. 3.5. APPLICATION OF FUNDS. The proceeds received by the Company from the sale of Common Stock pursuant to Options will be used for general corporate purposes. 3.6. NO OBLIGATION TO EXERCISE. The granting of any Option under the Plan shall impose no obligation upon any Optionee to exercise such Option. 3.7. NO IMPLIED RIGHTS TO DIRECTORS. Except as expressly provided for in the Plan, no Non-Employee Director or other person shall have any claim or right to be granted an Option under the Plan. Neither the Plan, nor any action taken hereunder, shall be construed as giving any Non-Employee Director any right to be retained as a Director or in any other capacity. 3.8. WITHHOLDING. 3.8.1. The Company shall have the power to withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy any federal, state or local withholding or other tax due from the Company with respect to any amount payable and/or shares issuable under the Plan, and the Company may defer such payment or issuance unless indemnified to its satisfaction. Whenever under the Plan payments are to be made in cash, such payments shall be made net of an amount sufficient to satisfy any federal, state or local withholding tax liability. 3.8.2. Subject to the consent of the Committee, with respect to the exercise of an Option, a Participant may make an irrevocable election (an "Election") to (A) have shares of Common Stock otherwise issuable withheld, or (B) tender back to the Company shares of Common Stock received, or (C) deliver back to the Company previously acquired shares of Common Stock having a Fair Market Value sufficient to satisfy all or part of the Participant's estimated tax obligations associated with the transaction. Such Election must be made by a Participant prior to the date on which the relevant tax obligation arises. The Committee may disapprove of any Election, may suspend or terminate the right to make Elections, or may provide with respect to any Award under this Plan that the right to make Elections shall not apply to such Awards. 3.9. CONDITIONS PRECEDENT TO EFFECTIVENESS. The Plan shall become effective upon the satisfaction of all the following conditions, with the Effective Date of the Plan being the date that the last such condition is satisfied: 3.9.1. the adoption of the Plan by the Board of Directors; and 3.9.2. the effectiveness of the Company's Registration Statement on Form S-1 relating to the Company's initial public offering, as filed with the SEC (File No.___________).] EX-10.4 7 SNELL ARCADE BUILDING LEASE, DATED MAY 15,1996 1 EXHIBIT 10.4 SNELL ARCADE BUILDING (RETAIL) LEASE THIS LEASE AGREEMENT made and entered into as of this 15th day of May, 1996, by and between: SNELL ARCADE LIMITED COMPANY ("LANDLORD"), AND BANKERS INSURANCE GROUP, INC., ("TENANT"). Landlord and Tenant, for keeping their respective obligations, and by the exchange of valuable consideration, agree to the following terms: Landlord has the authority to enter into this lease, and holds fee simple ownership of the land and building located at 405 Central Avenue, St. Petersburg, Pinellas County, Florida 33701, known as The Snell Arcade Building (the "Building"). 1. PREMISES. Landlord leases to Tenant and Tenant hereby leases from Landlord the real property, on the FIRST FLOOR AND LOWER LEVEL of the Building, as indicated on the attached plan of the space marked Exhibit "A" ("Premises"). Premises will encompass the area of approximately 6,644 gross square feet, approximately 3,450 square feet on the First Floor and 3,194 square feet on the Lower Level, each on a horizontal plane between demising walls including exterior glass surfaces, and vertically between the structural (concrete) floor and ceiling. 2. COMMENCEMENT DATE and TERM. The "Term" of this lease shall begin MAY 15, 1996 (the "Commencement Date") and end on MAY 31, 1998. The Tenant shall have the option of two (2) one (1) year renewals. Tenant shall notify the Landlord of its intent to exercise its option six (6) months prior to the expiration of each term. 3. LANDLORD'S WORK. To prepare the Premises for Tenant's occupancy, Landlord shall provide interior improvements as follows: SPACE WILL BE PROVIDED "AS IS" WITH NO IMPROVEMENTS WHATSOEVER. 4. TENANT'S WORK. Tenant may make non-structural modifications to the Premises for the installation of personal property or to construct additional interior improvements at Tenant's sole risk and expense, provided Tenant obtains Landlord's written permission prior to the installation. Landlord's permission shall not be unreasonably withheld or delayed. Tenant's work shall be completed in a workmanlike manner and in full compliance with governmental authorities regulations. Landlord assumes no responsibility for Tenant, Tenants agents, employees, personal property of contractors for injury sustained in or damage to the Premises. Tenant's work shall become the property of the Landlord, except that relocated partitions which Tenant might install will remain Tenant's property and that Tenant shall have the right to remove the partitions so long as Tenant repairs any damages caused by such removal. 5. RENT. Tenant shall pay Landlord monthly beginning on May 15, 1996 rent in the amount of $2,491.50 plus 7% sales tax in equal installments monthly for 36 months on the first of each month, without setoff or deduction and without demand. Beginning on June 1, 1999, if the Tenant exercises its option for an additional year, rent shall be $2,657.60 plus 7% sales tax per month for twelve (12) months. Beginning on June 1, 2000, if the Tenant exercises its second option for an additional year, rent shall be $2,768.33 plus 7% sales tax per month for twelve (12) months. Page 1 of 5 2 6. SECURITY DEPOSIT. $2,491.50 to be paid at lease signing. The security deposit is pledged by Tenant to secure the faithful performance of this lease. If there are no lease defaults by Tenant during the Term, the full deposit shall be credited to Tenant's last month rent, and any remainder returned immediately to Tenant after Lease termination and Premises are surrendered in satisfactory condition to Landlord. 7. UTILITIES and SERVICES PROVIDED BY LANDLORD. Services provided to Tenant shall be of a quantity and quality consistent with Class "A" downtown office buildings in St. Petersburg, Florida. (a) Landlord shall make available, 24 hours a day each day, seven days per week: (1) water for cooking, washing, drinking and ordinary lavatory purposes in the Building common areas or Premises; (2) elevator service; (3) electricity for power receptacles and lights in the common areas of the Building; (4) electricity in a reasonable amount to serve the Premises lighting fixtures and power outlets, but not including kitchen equipment. (b) Landlord shall provide air conditioning to the Premises and Building common areas during "Normal Operating Hours" defined as: Monday through Friday 7:00 AM until 8:30 PM and Saturday 7AM through Noon excepting holidays. Additional air conditioning shall be provided at times other than Normal Operating Hours" upon reasonable prior notice at a cost to Tenant of $25.00 per hour. (c) Landlord shall provide pest control services bimonthly and "as needed", unless requested otherwise by Tenant. (d) Landlord shall make available to Tenant the men's and women's bathrooms on the second floor. 8. INTERRUPTION OF SERVICES. Landlord cannot warrant that the utilities and services above will be free of interruption by reason of repairs, strikes, reason of law, or causes beyond the reasonable control of the Landlord. Interruptions shall not be deemed an eviction or render the Landlord liable for damages by abatement of Rent or otherwise. 9. TENANTS EXPENSES. Tenant will pay the following to others, not the Landlord, and not included in Rent: (a) janitorial services, telephone installation, repair and service. (b) charges for labor, services, materials and taxes used in connection with any improvements or repairs to the Premises which are undertaken by Tenant as Tenant's Work or otherwise. (c) ad valorem and excise taxes imposed by law on Tenant's business. 10. RESPONSIBILITIES OF LANDLORD. Landlord shall maintain the Building in good condition, order, and repair including: common areas, the foundation, roof, exterior walls, elevators, the plumbing system, air-conditioning, electrical, lighting, fire alarm and sprinkler systems; and in the Premises: electrical devices and lighting fixtures, systems and facilities located in or serving the Premises provided, however, Tenant shall reimburse Landlord upon demand for all maintenance or repairs necessitated by the negligent, intentional, or wrongful act of Tenant. Page 2 of 5 3 11. RESPONSIBILITIES OF TENANT. (a) Tenant shall comply with Building rules and regulations that may be issued by Landlord from time to time. (b) Tenant shall maintain its Premises in a clean and sanitary condition, and in good repair including doors, walls, ceilings, floors, carpeting, windows, interior and exterior glass, and draperies. If Tenant fails to perform any maintenance required, Landlord may perform same on Tenant's behalf and Tenant shall reimburse Landlord, upon demand, for all costs and expenses incurred together with interest thereon at the highest rate permitted by law until paid. Reasonable wear and tear are excepted from the provisions of this Paragraph. (c) Tenant shall not waste utilities or services supplied by Landlord. (d) Tenant shall be responsible for all storefront plate glass. 12. ASSIGNMENT AND SUBLETTING. Tenant shall not assign this lease, nor sublet the Premises, without the express written permission of the Landlord, which consent shall not be unreasonably withheld. The Premises may be occupied by any of Tenant's affiliates and subsidiaries. The Lease may be assigned to any of Tenant's affiliates or subsidiaries without the prior written permission of the Landlord; provided that no such assignment shall relieve Tenant from its obligations under the Lease. 13. PERSONAL PROPERTY. Personal property placed in the Building or Premises shall be at the sole risk of its owner and Tenant. Landlord shall not be liable for any damage to personal property, or to the Tenant arising from the bursting or leaking or water pipes, or from any act of negligence of any person. 14. SIGNS. Tenant may install signs (illuminated or otherwise) that are visible from the exterior of the Premises or the Building provided they are "to Code" and do not harm or deface any architectural portion or element of the building. Signs shall be of a type that conform to the decor of the Building and shall be subject to Landlord's approval. Tenant may use the 3 under canopy signs at Tenants Central Avenue street frontage if Tenant shall maintain the same. 15. USE AND COMPLIANCE WITH LAWS. Tenant agrees to use the Premises as office space, and to promptly comply with all laws, of federal, state, county and Underwriters Association for the prevention of fires. 16. CASUALTY. In the event the Premises shall be destroyed or significantly damaged by fire or other casualty during the Term of this lease where part or all of the Premises cannot used to perform Tenant's business in a normal manner, then: (a) if the damage can be substantially repaired within 14 days, Landlord shall restore the Premises (exclusive of Tenant's fixtures, equipment, signs, Tenant's Work, and personal property) by repairs or reconstruction and reasonably render the Premises in as good condition as existed prior to such damage. Tenant shall be relieved from paying Rent on the amount of the Premises which shall be unusable by Tenant until re-occupying the Premises. (b) if it is determined by the Landlord that the Premises cannot be substantially repaired within 14 days, Landlord and Tenant will negotiate a cancellation or continuance of this lease until the Premises is repaired and reasonably rendered in as good Page 3 of 5 4 condition as existed prior to the damage. Tenant shall be relieved from paying Rent until re-occupying the Premises. As used herein, the term "casualty" means fire, hurricane, flood, tornado, rain, wind, sinkhole, or other act of God, riot, civil commotion, or other acts of a public enemy; and theft, vandalism, or other criminal or tortuous acts of third parties; and other hazards necessitating significant repairs to the Premises, not occasioned in whole or in part by any act or omission of Tenant. 17. LIENS PROHIBITED. Tenant shall not permit any liens to attach to any interest in the Premises or the Building. 18. ADDITIONAL RENT. In the event that Landlord shall take legal action to recover any sum due and shall obtain a judgment in its favor, Landlord shall be entitled to recover all costs and expenses incurred, including reasonable attorneys' fees. (a) In addition to other remedies available to Landlord, if Rent due on the 1st of any month is not paid by the 10th fifth of that month, Tenant shall pay a late fee of 1% per month until the Rent is paid. (b) If Tenant causes extra Landlord services to be used, such as the extra power used by refrigeration, cooking, or extra lighting, the additional costs will be passed on to Tenant. 19. ENTRY. Tenant agrees to permit Landlord entry to the Premises during the Term of this lease, upon reasonable notice, for the purpose of inspecting or making repairs, and within ninety (90) days prior to lease termination for the purpose of showing the Premises to prospective tenants. Landlord shall have the right to deny Tenant entry into, and use of the Premises, if Tenants Rent is more than 1 month past due, until Rent and additional rent is paid. 20. LIABILITY. Landlord shall not be liable to Tenant for any damages or injuries to the property of Tenant or to the persons or property of Tenant's officers, agents, employees, or invitees occasioned by or due to Building or Premises defects, other than caused by a negligent act of the Landlord. Tenant agrees that it will procure and maintain for the Term, public liability insurance, in form and coverage satisfactory to Landlord, written by an insurance company authorized to engage in the business of general liability insurance in the State of Florida, protecting Landlord, Landlords mortgagee and Tenant against claims for injury to persons or property occurring in the Premises, with Landlord and Landlord's mortgagee as additional insureds, as their respective interests shall appear. The policy shall have a combined single limit for personal injury and property damage of not less than One Million Dollars ($1,000,000) with respect to injuries, death, or damages in any one occurrence, and shall require thirty (30) days written notice to Landlord prior to any cancellation or modification. If requested by Landlord, Tenant shall deliver a certificate of such insurance to Landlord. Should Tenant fail to furnish evidence of insurance, Landlord may, in addition to exercising any of its other rights, obtain insurance and the premiums shall be reimbursed to Landlord on demand. 21. NOTICES. Any notice required under this lease or by law shall be in writing and shall be deemed to have been delivered when mailed either by overnight courier delivery service or by registered or certified mail, return receipt requested, and addressed to Landlord/Agent Peter C. Fischbach at the Building and to Tenant at the address of the Premises. Such addresses may be changed by written notice to the other in the manner described in this paragraph. Page 4 of 5 5 22. SURRENDER. Upon the expiration or earlier termination of this lease, Tenant shall leave the Premises in good condition, ordinary wear and tear excepted. Tenant shall remove its personal property and then repair any damage caused. Property not removed shall become the property of Landlord. 23. RADON. Pursuant to Section 404.056, Florida Statutes (1990), notification is hereby given to Tenant as follows: "RADON GAS: Radon is a naturally occurring radioactive gas, that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county public health unit." 24. QUIET ENJOYMENT. So long as Tenant pays Rent and fulfills its lease obligations, Tenant may peaceably hold and quietly enjoy the Premises during the Term. 25. The rights of the Landlord and Tenant under this lease shall be cumulative, and failure on the part of either to exercise any rights promptly shall not forfeit other rights. If any provision of this lease shall be invalid, the remainder of this lease shall not be affected. 26. This lease shall be governed by and construed in accordance with the laws of the State of Florida. IN WITNESS WHEREOF, the Tenant and Landlord have executed this Agreement, the day above written. TENANT: BANKERS INSURANCE GROUP, INC. /s/ Steven Kurcan By: /s/ G. Kristin Delano - --------------------------------- --------------------------------------- Witness Title: Corporate Secretary ------------------------------------ Date: 5-15-96 ------------------------------------- LANDLORD: THE SNELL ARCADE LIMITED COMPANY By: /s/ Peter C. Fishbach - --------------------------------- --------------------------------------- Witness Title: Managing Member ------------------------------------ Date: May 15, 1996 ------------------------------------- SNELL ARCADE RULES AND REGULATIONS 1. Smoking shall not be permitted in any of the Building common areas, the 2nd floor office common areas (sort of OK inside your own closed office doors), and is strongly discouraged everywhere. Smoking in the open-air Arcade is also OK but not encouraged. 2. Tenants shall be responsible for conserving utilities by not wasting them, and turning off lights and air conditioning when leaving the Premises. Page 5 of 5 6 EXHIBIT A (PART 1 OF 2) 5/96 SNELL ARCADE 405 CENTRAL AVENUE ST. PETERSBURG, FLORIDA (FLOOR PLAN) 7 EXHIBIT A (PART 2 OF 2) 5/96 SNELL ARCADE 405 CENTRAL AVENUE ST. PETERSBURG, FLORIDA (FLOOR PLAN) 8 SNELL ARCADE 405 CENTRAL AVENUE ST. PETERSBURG, FLORIDA 33701 INSURANCE MANAGEMENT SOLUTIONS, INC. Floor Rentable Area (Square Feet) ----- --------------------------- 1 3,450 Basement 3,194 ----- Total RSF 6,644 * Annual Rent $29,898.00 7% Sales Tax 2,092.86 ----------- $31,990.86 (FLOOR PLAN) 9 SNELL ARCADE 405 CENTRAL AVENUE ST. PETERSBURG, FLORIDA (FLOOR PLAN) 10 EXHIBIT A (PART 1 OF 2) 5/96 SNELL ARCADE 405 CENTRAL AVENUE ST. PETERSBURG, FLORIDA (FLOOR PLAN) 11 EXHIBIT A (PART 2 OF 2) 5/96 SNELL ARCADE 405 CENTRAL AVENUE BSMT FLOOR (FLOOR PLAN) 12 SNELL ARCADE 405 CENTRAL AVENUE BSMT FLOOR (FLOOR PLAN) 13 REVISION OF LEASE This Revision of Lease ("Revision") is entered into between Snell Arcade Limited Company ("Landlord"), Bankers Insurance Group, Inc. ("Bankers") and Insurance Management Solutions Group, Inc. ("IMSG".) WHEREAS, on May 15, 1996, Bankers entered into a Lease of retail office space with Landlord, a copy of said Lease being attached as Exhibit "A" and WHEREAS, Bankers desires to assign all of its right, title and interest in the Lease to IMSG" and the Landlord desires to give its consent to such assignment; and WHEREAS, the parties desire to modify the terms of the Lease. NOW, THEREFORE, in consideration of the premises and other valuable consideration the receipt and value of which are hereby acknowledged, the parties hereto agree as follows: 1. All payments currently due Landlord under the Lease have been paid in full. 2. Bankers hereby assigns all of its right, title and interest in the Lease to IMSG". 3. IMSG" hereby accepts the assignment of said Lease and agrees to comply with the various terms and conditions of the Lease. 4. Landlord consents to the assignment of the Lease. However, Bankers shall continue to be liable under the Lease. 5. The second sentence of paragraph number 2 of the Lease shall be revised to state "The Tenant shall have the option of four (4) one (1) year renewals." 6. An additional two sentences shall be added to the end of paragraph 5 of the Lease to state Beginning on June 1, 2001, if the Tenant exercises its third option for an additional year, rent shall be $2,906.75 plus 7% sales tax per month for twelve (12) months. Beginning on June 1, 2002, if the Tenant exercises its fourth option for an additional year, rent shall be $3,052.09 plus 7% sales tax per month for twelve (12) months. 7. The within Revision shall be effective as of January 1, 1998. IN WITNESS WHEREOF, the parties hereto have executed this Agreement in St. Petersburg, Florida on the dates indicated below. WITNESSES: "LANDLORD" SNELL ARCADE LIMITED CO. /s/ Steven Kurcan - --------------------------- BY: /s/ Peter C. Fishbach - --------------------------- --------------------------- As Its: Managing Member ----------------------- Date: 4/7/98 ------------------------- 14 WITNESSES: "BANKERS" BANKERS INSURANCE GROUP, INC. /s/ Kyle C. Reynolds - ----------------------------- By: /s/ G. Kristin Delano /s/ Erica Rudin --------------------------- - ----------------------------- As Its: Secretary ----------------------- Date: 4-8-98 ------------------------- WITNESSES: "IMSG"" INSURANCE MANAGEMENT /s/ Kyle C. Reynolds SOLUTIONS GROUP, INC. - ----------------------------- By: /s/ Jeffrey S. Bragg /s/ Erica Rudin --------------------------- - ----------------------------- As Its: COO ----------------------- Date 4-8-98 -------------------------- EX-10.5 8 BANKERS BUILDING, 5TH STREET NORTH LEASE AGREEMENT 1 EXHIBIT 10.5 Bankers Building - 5th Street North Lease Agreement BANKERS INSURANCE GROUP, INC., LANDLORD INSURANCE MANAGEMENT SOLUTIONS GROUP, INC., TENANT 2 INDEX
Page No. 1 DEFINITIONS...................................................................................1 2. PREMISES......................................................................................2 3. TERM..........................................................................................3 4. RENT..........................................................................................3 5. TENANT'S SHARE OF OPERATING COSTS.............................................................4 6. SECURITY DEPOSIT..............................................................................4 7. ADDITIONS AND ALTERATIONS.....................................................................4 8. PERMITTED USE ................................................................................5 9. UTILITIES.....................................................................................5 10. INDEMNIFICATION; INSURANCE....................................................................6 11. ASSIGNMENT OR SUBLETTING......................................................................8 12. SIGNS; ADVERTISING............................................................................9 13. MAINTENANCE OF INTERIOR OF PREMISES ..........................................................9 14. DAMAGE OR DESTRUCTION .......................................................................10 15. DEFAULTS.................................................................................... 10 16. REMEDIES.....................................................................................12 17. LANDLORD'S RIGHT OF ENTRY....................................................................13 18 NOTICES......................................................................................13 19. TAXES ON TENANTS PERSONAL PROPERTY AND TAXES ASSESSED ON RENTALS.............................................................13 20 COSTS OF COLLECTION..........................................................................14 21. PRIOR AGREEMENTS.............................................................................14 22. FLOOR PLANS..................................................................................14 23. NO AUTOMATIC RENEWAL.........................................................................15 24. BUILDING STANDARDS MANUAL....................................................................15 25. TERMS AND HEADING............................................................................15 26. CONDEMNATION.................................................................................15 27. SUBORDINATION TO MORTGAGES...................................................................15 28. ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS...............................................16 29. QUIET ENJOYMENT..............................................................................16 30. PARKING SPACES...............................................................................16 31. SUBSTITUTION OF PREMISES.....................................................................17 32. LANDLORD'S RIGHT TO ALTER COMMON AREAS.......................................................17 33. EXCULPATION .................................................................................17 34. SUCCESSORS AND ASSIGNS.......................................................................17 35. SECURITY AGREEMENT ..........................................................................18 36. MECHANICS LIEN...............................................................................18 37. RECORDATION..................................................................................18 38. RADON GAS....................................................................................18 39. REAL ESTATE BROKER...........................................................................19 EXHIBIT "A" .........................................................................FLOOR PLAN EXHIBIT "B" .......................................................BUILDING RULES & REGULATIONS
3 BANKERS BUILDING 5TH STREET NORTH LEASE AGREEMENT THIS LEASE, made as of the 1st day of January, 1997, by and between BANKERS INSURANCE GROUP, INC., hereinafter called the "Landlord", and INSURANCE MANAGEMENT SOLUTIONS GROUP, INC., hereinafter referred to as the "Tenant"; WITNESSETH: For and in consideration of the rents, covenants, agreements and conditions hereinafter reserved, made and entered into on the part of the Tenant to be paid, performed, and observed, it is hereby stipulated, covenanted and agreed by and between the Landlord and the Tenant as follows: 1. DEFINITIONS As used in this Lease Agreement, the terms enumerated below as items 1.1 to 1.18 inclusive shall have only the meaning set forth in this section unless the same shall be expressly modified, limited or expanded elsewhere in the Lease Agreement, in which event, such modification, limitation and/or expansion shall supersede the applicable terms set forth below: 1.1 Exhibits: The following Exhibits attached to this lease are incorporated herein and made a part hereof: Exhibit A: Floor Plan of Premises Exhibit B Building Standards Manual 1.2 Building: Commercial Building located at 10051 5th Street North St. Petersburg, Florida 33702 Legal description: Lot 1, Block 1, Bankers White Way Replat as recorded in Plat Book 107, Page 72 of the Public Records of Pinellas County, Florida 1.3 Premises or Demised Premises: As outlined on Exhibit A 1.4 Term: 2 years 1.5 Commencement Date: January 1, 1997. 1.6 Termination Date: December 31, 1999. 1 4 1.7 Base Rent: $12.00 per square foot; $252,636.00 per annum; $21,053.00 per month. 1.8 Prepaid Rent: N/A 1.9 Rentable Area of Demised Premises: 21,053 square feet MOL 1.10 Tenant's Proportionate Share of Operating Costs ("Proportionate Share"): 47.77% 1.11 Tenant Improvement Allowance: N/A Number of Parking Spaces available for Tenant's use: Ten (10) covered parking spaces and approximately 138 surface parking spaces. 1.13 Monthly Rental for parking spaces: $10 per month per space plus taxes for ten (10) covered parking spaces and $0 per month per space plus taxes for approximately 138 surface parking spaces. (Rates subject to change to reflect rates generally charged by the Landlord). 1.14 Security Deposit: N/A. 1.15 Permitted Use: Office use. 1.16 Tenant's Address: Insurance Management Solutions Group, Inc. 360 Central Avenue St. Petersburg, FL 33701 1.17 Landlord's Address: Bankers Insurance Group, Inc. 360 Central Avenue, Suite 100 St. Petersburg, FL 33701 1.18 Guarantor: N/A -------------------- 1.19 Expense Stop: N/A 2. PREMISES 2.1 The Landlord does hereby let, demise and lease the Premises to the Tenant, and the Tenant does hereby hire and take the Premises from the Landlord for the Term of this Lease. 2.2 Tenant acknowledges that this Lease is made subject to all existing liens, encumbrances, deeds of trust, reservations, restrictions and other matters of record and to zoning, building and fire ordinances and all governmental statutes, rules and 2 5 regulations relating to the use or occupancy of the Premises, as same may hereafter be amended from time to time. 3. TERM 3.1 The Term of this Lease shall commence on the Commencement Date and shall terminate on the Termination Date, unless terminated sooner in accordance with the terms of this Lease. The Tenant has an option to renew this Lease for one additional two (2) year period by providing the Landlord with notice to do so six (6) months prior to the termination date of this Lease. Tenant's right to exercise this option is based upon agreeing to pay rent at the time of the renewal equal to 90% of the then market rent for like space or at a rate as provided by paragraph 4.5 herein. 3.2 Notwithstanding the Commencement Date, the Term shall commence earlier than the Commencement Date if Tenant occupies the Premises prior to the stated Commencement Date. "Occupancy", "occupy" or "occupies" as used in this Lease shall mean use of the Premises for any reason by Tenant or Tenant's agents, licensees, employees, directors, officers, partners, trustees, and invitees (collectively, "Tenant's Employee"). 3.3 If Landlord, through no fault of Tenant, cannot deliver possession of the Premises to Tenant on the Commencement Date, such delay shall not affect the validity of this Lease nor shall Landlord be liable to Tenant for any loss or damage resulting therefrom, but there shall be a proportionate reduction of rent covering the period between the Commencement Date and the time when Landlord delivers possession of the Premises to Tenant. No such delay shall operate to extend the Term. 4. RENT 4.1 Tenant agrees to pay to Landlord each year during the Term (as the Term may be adjusted pursuant to Section 3.2 or 3.3) the Annual Rent for the Premises. Said Annual Rent shall be paid in monthly installments equal to the Monthly Rent. The Monthly Rent shall be due and payable in advance, on or before the first day of each calendar month during the entire Term, commencing with the first full calendar month of the Term; provided that Tenant shall pay to the Landlord on the Commencement Date the prorated Monthly Rent attributable to the month in which the Commencement Date occurs if the Commencement Date is other than the first day of a month. Concurrently with the execution of this Lease, Tenant shall pay to Landlord the Prepaid Rent plus Florida State Sales Tax thereon and any other tax applicable to said Rent. 4.2 Tenant agrees to pay to Landlord as additional rent upon demand (but not more frequently than monthly) all charges for any services, goods or materials furnished by Landlord at Tenant 's request which are not required to be furnished by Landlord under this Lease without separate charge or reimbursement. 4.3 Any rent for any fractional month shall be prorated based on a thirty (30) day month, and for any fractional year shall be prorated based on a three hundred sixty- 3 6 five (365) day year. All rent payable by Tenant to Landlord under this Lease shall be paid to Landlord in lawful money of the United States of America at Landlord's office located in the Building, or to such other person or at such other place as Landlord may from time to time designate in writing. All rent shall be paid without prior demand, deduction, setoff or counterclaim. 4.4 A late payment penalty shall be added to any rent not received by Landlord within ten (10) days of the due date. Such penalty shall be equal to the interest that accrues on said amount from the date the payment was due until the date on which Landlord receives said payment, computed at the rate of eighteen percent (18%) per annum. 4.5 The Monthly Rent shall be adjusted, upward only, beginning on the first anniversary of the Commencement Date by the greater of $0.25 per square foot or by the same percentage that the "Index" (as hereinafter defined) most recently published prior to such anniversary date has increased over the Index on the date of this Lease. For purposes of this Paragraph 4.5, the "Index" means the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W); U.S. City Average (1967=100) as published by the United States Department of Labor, Bureau of Labor Statistics; provided that, in the event the Index shall not be published or shall be discontinued, the most nearly comparable index shall be substituted therefor by Landlord; however, such increase shall not exceed a total of $13.00 per square foot annually over the term of this Lease and the option period exercised by the Tenant. 4.6 Tenant shall pay to Landlord concurrently with the payment of the Monthly Rent and other sums all Florida State Sales Tax and any other tax which is applicable to such payment. 5. TENANT'S SHARE OF OPERATING COSTS: N/A 6. SECURITY DEPOSIT: N/A 7. ADDITIONS AND ALTERATIONS No changes, alterations, improvements, or additions to the Premises shall be made to or upon said Premises or any part thereof without the written consent of the Landlord being first had and obtained. All changes, alterations, additions and improvements made or placed in or upon the Premises by the Landlord or the Tenant, and which by operation of law would become a part of the real estate, shall immediately upon being made or placed thereon become the property of the Landlord and shall remain upon and be surrendered with the Premises as a part thereof, at the termination, by lapse of time or otherwise, of the Term herein granted. Any such changes, alterations, improvements, or additions shall be done in conformity with the "Building Standards Manual" furnished herewith as Exhibit "B", as well as with such other reasonable requirements as Landlord may impose upon the granting of its written consent. At Landlord's request at or prior to termination of the Term, Tenant shall remove all or any part of any improvements made to the Premises. 4 7 8. PERMITTED USE 8.1 The Premises shall be used only for the Permitted Use and for no other purpose. The Tenant, shall, at its own cost and expense, obtain any and all licenses and permits necessary for such use. The Tenant shall comply with all governmental laws, ordinances and regulations applicable from time to time to its use of the Premises, and shall promptly comply with all governmental orders and directives for the correction, prevention and abatement of nuisances in or upon, or connected with the Premises, all at the Tenant's sole expense. 8.2 The Tenant shall not do, suffer or permit anything to be done in, on or about the Premises or the Property, nor bring, nor keep anything therein which will in any way affect fire or other insurance upon the Building or any of its contents or which will in any way conflict with any law, ordinance, rule or regulation now or hereafter in force or effect relating to the occupancy and use of the Premises and said Property, or in any way obstruct or interfere with the rights of other lessees or users of the Property, or injure or annoy them, nor use, nor allow the Premises or the Building to be used for any improper, immoral, unlawful or objectionable purpose, cooking therein, and nothing shall be prepared, manufactured, or used in the Premises which might emit an odor into the corridors of the building. 8.3 The Tenant will not, without the written consent of the Landlord, use any apparatus, machinery, or equipment or device in, on or about the Premises which may cause any excessive noise or may set up any excessive vibration or excessive floor loads or which in any way would increase the normal amount of electricity agreed to be furnished or supplied under this Lease, or as specified in the Building Standards Manual, and further, the Tenant shall not connect with water any apparatus, machinery, equipment or device without the prior written consent of the Landlord. The Tenant shall, at the Tenant's sole cost and expense, comply with all of the requirements of all municipal, state and federal authorities now or hereafter in force, pertaining to said Premises, and shall faithfully observe in the use of said Premises and Property all municipal ordinances and regulations and state and federal statutes and regulations now or hereafter in force and effect. 8.4 Any change in law or otherwise which may make Tenant's use of the Premises impracticable or impossible shall not affect Tenant's obligations under this Lease. 9. UTILITIES; JANITORIAL SERVICES Subject to Tenant's obligation to pay rent under this Lease and perform Tenant's other obligations, the Landlord agrees to furnish in connection with the Premises, the following: electricity (commensurate with the Landlords electrical system and wiring in the building of which the Premises are a part, supplying approximately 110 volts) for lights and other usual and ordinary office purposes; replacement of ceiling light bulbs and tubes in the fixtures provided by the Landlord; heat and air conditioning, subject to government 5 8 authority regulations from time to time in effect, during normal business hours (8 a.m. to 6 p.m., Monday through Friday, except holidays and from 8 a.m. to 1 p.m. on Saturdays); janitorial services as specified in the Building Standards Manual; and provide for use in common of the elevators, restrooms, and other like facilities of the Building. All said costs shall be included in Building Operating Costs. Landlord reserves the right to establish special charges to be paid by Tenant for additional non-standard services provided. The Landlord shall not be liable for the failure to furnish any of the items or services herein mentioned when such failure is caused by or results from accidents or conditions or matters beyond the reasonable ability of the Landlord to control, or caused by or resulting from lack of utility services, breakdown of mechanical equipment, repairs, labor disturbances, or labor disputes of any character, whether resulting from or caused by acts of the Landlord or otherwise; nor shall the Landlord be liable under any circumstances for loss of or injury to property or persons, however occurring, through or in connection with or incidental to the furnishing of any of such items or services, nor shall any such failure relieve the Tenant from the duty to pay the full amount of rent and other sums of money herein provided to be paid by the Tenant, or constitute or be construed as a constructive or other eviction of the Tenant. 10. INDEMNIFICATION; INSURANCE 10.1 INDEMNITY. Tenant agrees to indemnify, defend and save harmless Landlord, Bankers Insurance Company any property manager(s) engaged by Landlord or Bankers Insurance Company and each of their affiliated companies, partners, shareholders, agents, directors, officers, and employees (collectively, "Indemnitees") from and against any and all liabilities, damages, claims, suits, injuries, costs (including court costs, attorneys fees and costs of investigation, and actions of any kind arising or alleged to arise by reason of injury to or death of any person or damage to or loss of property occurring on, in, or about the Leased Premises or by reason of any other claim whatsoever of any person or party occasioned or alleged to be occasioned in whole or in part by any act or omission on the part of Tenant or any invitee, licensee, agent, employee, director, officer, contractor, subcontractor, or tenant of Tenant, or by any breach, violation, or nonperformance of any covenant of Tenant under this Lease (collectively "Liabilities") even if such Liabilities arise from or are attributed to the concurrent negligence of any Indemnitee. The only Liabilities with respect to which Tenant's obligation to indemnify the Indemnitees does not apply is with respect to Liabilities resulting from the sole negligence or willful misconduct of an Indemnitee. If any action or proceeding is brought by or against any Indemnitee in connection with any such Liabilities, Tenant shall defend such action or proceeding, at Tenant's expense, by or through attorneys reasonable satisfactory to Landlord. The provisions of this paragraph apply to all activities of Tenant with respect to the Leased Premises or Building, whether occurring before or after the Commencement Date of the Term and before or after the expiration or termination of this Lease. Tenant's obligations under this paragraph are not limited to the limits or coverage of insurance maintained or required to be maintained by Tenant under this Lease. 10.2 TENANT'S INSURANCE. Tenant shall, at its sole expense, maintain in effect at all times during the Term, insurance coverage with limits not less than those set 6 9 forth below with insurers reasonably acceptable to Landlord and which are licensed to do business in the State in which the Building is located.
Insurance Minimum Limits --------------------- -------------- A. Workers' Compensation Workers' Compensation Statutory Employer's Liability $500,000
This policy shall include a Waiver of Subrogation in favor of the Indemnitees. B. Commercial General Liability Bodily Injury/ $1,000,000 each occurrence, Property Damage or equivalent, subject to (Occurrence Basis) a $1,000,000 aggregate
This policy shall be on a form acceptable to Landlord, endorsed to include the Indemnitees as additional insured, contain cross-liability and severability of interest endorsements, state that this insurance is primary insurance as regards any other insurance carried by any Indemnitee, and shall include the following coverages: (1) Premises/Operations; (2) Independent Contractors; (3) Broad Form Contractual Liability specifically in support of, but not limited to, the Indemnity sections of this Lease; and (4) Personal Injury Liability with employee and contractual exclusions removed. C. Comprehensive Automobile Liability Combined single limit for $500,000 of equivalent bodily injuries/property damage This policy shall be on a standard form written to cover all owned, hired and non-owned automobiles. This policy shall be endorsed to include the Indemnitees as additional insured, contain cross-liability and severability of interest endorsements, and state that this insurance is primary insurance as regards any other insurance carried by any Indemnitee Evidence of these coverages represented by Certificates of Insurance issued by the insurance carrier must be furnished to the Landlord prior to Tenant moving in. Certificates of Insurance shall specify the additional insured status mentioned above as well as the Waivers of Subrogation. Such Certificate of Insurance shall state that Landlord will be notified in writing thirty (30) days prior to cancellation, material change, or non-renewal of insurance. If Tenant does not procure insurance as required hereunder, Landlord may, upon advance written notice to Tenant, cause such insurance to be issued, and Tenant 7 10 shall pay to Landlord the premium of such insurance within ten (10) days of Landlord's demand, plus interest at the highest lawful rate for a loan of like amount from the date of payment by Landlord until repaid by Tenant. Upon the request of Landlord, Tenant shall provide Landlord with certified copies of any and all applicable insurance policies. 10.3 WAIVER OF LIABILITY. No Indemnitee will be liable in any manner to Tenant or any other party claiming by through or under Tenant for any injury to or death of persons unless caused by the sole negligence or willful misconduct of an Indemnitee. In no event will any Indemnitee be liable in any manner to Tenant or any other party as the result of the acts or omissions of Tenant, its invitees, licensees, agents, employees, directors, officers, contractors, subcontractors, or tenants of Tenant, or any other tenant of the Building. All personal property upon the Leased Premises is at the risk of Tenant only and no Indemnitees will be liable for any damage thereto or theft thereof, regardless of whether such property is entrusted to employees of the Building, or such loss or damage is occasioned by casualty, theft, or any other cause of whatsoever nature, even if due in whole or in part to the negligence of any Indemnitee. 10.4 WAIVER OF SUBROGATION. Notwithstanding anything herein to the contrary, no party will have any right or claim against any Indemnitee for any property damage (whether caused, in whole or in part, by negligence or the condition of the Leased Premises or the Building or any part thereof by way of subrogation or assignment, Tenant hereby waiving and relinquishing any such right. To the extent Tenant chooses to insure its property, Tenant shall request its insurance carrier to endorse all applicable policies waiving the carrier's right of recovery under subrogation or otherwise in favor of any Indemnitee and provide Landlord with a certificate of insurance verifying this waiver. Landlord hereby waives and relinquishes any right or claim against Tenant for damage to the Leased Premises or the Building by way of subrogation or assignment, to the extent covered by insurance proceeds. Landlord shall request its insurance carrier to endorse all applicable policies waiving the carrier's right of recovery under subrogation or otherwise in favor of Tenant and a certificate of insurance will be made available at the request of the Tenant. 11. ASSIGNMENT OR SUBLETTING 11.1 The Tenant shall not sell, assign, transfer, mortgage, hypothecate or otherwise encumber this Lease or the leasehold interest granted hereby, or any interest therein, or permit the use of the Premises or any part thereof by any person or persons other than the Tenant and Tenant's employees and business invitees, or sublet the Premises, or any part thereof, without the written consent of the Landlord in Landlord's sole discretion in each such case being first had and obtained; and notwithstanding any such assignment, mortgage, hypothecation, encumbrance or subletting, the Tenant shall at all times remain fully responsible and liable for the payment of the rent and other sums of money herein specified and for compliance with all of the obligations of the Tenant under the terms, provisions and covenants of the Lease. If Tenant is a corporation, unincorporated association, trust or general or limited partnership, the sale, assignment, 8 11 transfer or hypothecation of any stock or other ownership interest of such entity which from time to time in the aggregate exceeds twenty-five percent (25%) of such interest shall be deemed an assignment subject to the provisions of this Paragraph 11.1. 11.2 If Tenant subleases or assigns any portion of the Premises and whether or not such sublease or assignment was consented to, and the rental exceeds the amount of rent due hereunder, Tenant shall pay to Landlord all such excess rent as additional rent. In no event shall Tenant be permitted to sublease or assign any portion of the Premises at a rental amount less than the amount due under the terms of this Lease. 11.3 Any act described in Section 11.1 which is done without the consent of the Landlord shall be null and void and shall be an Event of Default. 11.4 Landlord shall have the right to sell, transfer or assign any of its rights and obligations under this Lease. 12. SIGNS; ADVERTISING The Tenant shall not place or maintain or permit to be placed or maintained any signs or advertising of any kind whatsoever on the exterior of the Building, or on any exterior windows in said Building, or elsewhere within the Premises so as to be visible from the exterior of said Building, or on the interior walls or partitions, including doorways, of the Premises, visible from the public hallways or other public areas of the Building except such numerals and lettering on doorways as may be approved and permitted by the Landlord (and the Landlord shall have the right to specify the size, design, content, materials to be used and locations upon the door of any such materials and letter); and the Tenant shall not place or maintain, nor permit the placing or maintaining, and shall promptly remove any that may be placed by Tenant, of any awnings or other structure or material or machinery or equipment of any kind whatsoever on the exterior or extending to the exterior of the Building, or on the outside (that is to say, the side not facing inward toward the interior of the Premises) of any interior wall or partition separating the Premises from other portions or areas of said Building. 13. MAINTENANCE OF INTERIOR OF PREMISES The Tenant shall take good care of the Premises and shall, at the Tenant's own cost and expenses, keep in good sanitary condition and repair and shall promptly make all repairs to the same to the satisfaction of the Landlord, except for usual and ordinary wear and tear by reasonable use and occupancy or fire or other casualty; and at the end or other expiration of the Term, shall deliver up the Premises in the same condition as received, ordinary wear and tear by ordinary use thereof, fire and other casualty only excepted. Landlord may, but shall not be obligated to, make any repairs which are not promptly made by Tenant and charge Tenant for the cost thereof as rent. Tenant waives all rights (whether statutory or otherwise) to make repairs at the expense of Landlord, to cure any alleged defaults by Landlord at the expense of Landlord, or to deduct the cost thereof from rent or other sums due Landlord hereunder. 9 12 14. DAMAGE OR DESTRUCTION If the Building is, without fault of the Tenant, damaged by fire or other peril to the extent that the entire Demised Premises are rendered untenantable and cannot be reasonably rendered in as good a condition as existed prior to the damage within one hundred eighty (180) days from the date of such damage, the Term of this lease may be terminated by the Landlord or the Tenant by giving written notice to the other party; but if such damage is not such as to permit a termination of the Term of this Lease as above provided, then if such damage is not caused by Tenant or Tenant's agents, employees, guests or invitees, a proportionate reduction shall be made in the rent herein reserved corresponding to the time during which and to the portions of the Premises of which the Tenant shall hereby be deprived of possession. The Tenant agrees that Landlord shall not be responsible or liable for any loss due to business interruption occasioned by such fire, casualty or other cause which renders the Premises untenantable nor shall Landlord be liable for any damage to Tenant's property or persons. Tenant may not terminate this Lease on account of any damage caused by Tenant or Tenant's agents, employees, guests or invitees. 15. DEFAULTS 15.1 Each and any of the following shall be deemed an "Event of Default" by Tenant and a material breach of the Lease: (a) Tenant's failure to pay the Monthly Rent or any other sum payable by Tenant hereunder as and when such payment is due and such failure shall continue for ten (10) days after written notice by Landlord to Tenant of such failure; (b) Tenant's failure to observe, keep or perform any of the other terms, covenants, agreements or conditions under this Lease, including, without limitation, the Building Standards Manual, that Tenant is obligated to observe or perform and said failure continues for a period of ten (10) days after written notice by Landlord; provided that if the nature of Tenant's default is such that it cannot be cured solely by the payment of money and that more than ten (10) days are reasonably required for its cure, then Tenant shall not be in default hereunder if it shall commence the correction of such default within said ten (10) day period and shall diligently prosecute the same to completion; (c) Tenant's vacation or abandonment of the Premises; (d) (i) Tenant's (or general partner of Tenant, if Tenant is a partnership) making an assignment for the benefit of creditors; or (ii) A custodian, trustee, receiver or agent being appointed or taking possession of all or substantially all of property of Tenant (or a general partner of Tenant); or 10 13 (iii) Tenant's failure to pay Tenant's debts as such debts become due; or (iv) Tenant's (or a general partner of Tenant) becoming "insolvent" as that term is defined in Section 101(26) of the "Revised Bankruptcy Act" (Title II of the United States Code; II U.S.C. &101 et seq.); or (v) Tenant's (or a general partner of Tenant (a) filing of a petition with the bankruptcy court under the Revised Bankruptcy Act, or (b) otherwise filing any petition or applying to any tribunal for appointment of a custodian, trustee or receiver of Tenant (or of a general partner of Tenant) or commencing any proceeding relating to Tenant (or a general partner of Tenant) under any bankruptcy or reorganization statute or under any arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect; or (vi) Any petition being filed against Tenant (or a general partner of Tenant) under the Revised Bankruptcy Act and either (a) the bankruptcy court orders relief against Tenant (or a general partner of Tenant) under the chapter of the Revised Bankruptcy Act under which the petition was filed, or (b) such petition is not dismissed by the bankruptcy court within sixty (60) days of the date of filing; or (vii) Any petition or application of the type described in subparagraph (v)(b), above, filed against Tenant (or a general partner of Tenant), or any proceeding of the type described in subparagraph (v)(b), above, is commenced, and either (a) Tenant (or a general partner of Tenant) by any act indicates its approval thereof, consent thereto, or acquiescence therein, or (b) an order is entered appointing any such custodian, trustee, receiver or agent, adjudicating Tenant (or a general partner of Tenant) bankrupt or insolvent, or approving such petition or application in any such proceeding, and any such order remains in effect for more than sixty (60) days; or (e) Any guarantor of this Lease defaulting under any guaranty of this Lease, or attempting to repudiate or revoke any such guaranty or any obligation under such guaranty; or the occurrence of any event described in Paragraph 1 5(d), above, with respect to any guarantor of this Lease (as if Paragraph 1 5(d) referred to such guarantor in place of "Tenant"); or (f) The liquidation, dissolution, failure to exist or disqualification of Tenant. 15.2 Landlord shall have the right, but not the obligation, to cure any of Tenant's defaults under this Lease, in which event Tenant shall forthwith reimburse Landlord all costs thereof, including any attorneys' fees, together with interest from the date expended until the date repaid at the rate of eighteen percent (18%) per annum. No exercise of this right shall be deemed to be an acceptance of such default or a waiver thereof. 11 14 16. REMEDIES 16.1 Upon the occurrence of an Event of Default hereunder, Landlord may at any time thereafter, without notice or demand except as stated hereafter and without limiting Landlord in the exercise of any other right or remedy which Landlord may have by reason of such default or breach: (a) Enter upon and take possession of the Premises. In such event, Landlord shall have the right to remove all persons and property from the Premises and store such property in a public warehouse or elsewhere at the cost and risk of and for the account of Tenant, and all such persons shall quit and surrender possession of the Premises to Landlord. Tenant hereby waives all claims for damages which may be caused by the entry of Landlord and taking possession of the Premises or removing and storing the furniture and property and hereby agrees to indemnify and save Landlord harmless from any loss, costs, damages or liability occasioned thereby, and no such entry shall be considered or construed to be forcible entry or construed to be a termination of the Lease unless Landlord expressly elects to terminate this Lease. Should Landlord elect to enter, as hereby provided, or should Landlord take possession pursuant to legal proceedings or pursuant to any notice provided by law, Landlord may then or at any time thereafter terminate this Lease pursuant to Paragraph 16.1 (c), below: (b) Tenant and each and every subtenant and assignee of Tenant shall remain and continue liable for the equivalent of the rent and other charges herein reserved and required by the Tenant to be paid and met until the expiration of this Lease and for any and all loss or damage, including all fees and expenses and attorneys' fees which the Landlord may sustain or incur by reason of any such event, and the Landlord may relet all or any part of the Premises at such price and upon such terms and for such duration of time as the Landlord may determine in the name of the Landlord or as agent of the Tenant, or otherwise, and receive the rent therefor and apply the same first to the payment of such expenses and fees as the Landlord may have incurred in entering, dispossessing and in letting, including among others all expenses of the Landlord reasonably incurred in putting the Premises in proper condition (including tenant improvements) and then to the payment of the rent and other charges reserved hereunder and the fulfillment of the Tenant's covenants hereunder, the Tenant and any subtenant of the Tenant and assignee of the Tenant shall remain liable for any deficiency. Acts of maintenance, efforts to relet the Premises, or the appointment of a receiver on Landlord's initiative to protect Landlord's interest under this Lease shall not constitute a termination of this Lease, unless and until Landlord expressly elects in writing to terminate this Lease; (c) Terminate this Lease and all rights of Tenant therein and recover from Tenant in an action of all of the damages suffered or to be suffered by Landlord, including the damages and costs described in subparagraph (b) above; and (d) Pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the State of Florida. 12 15 16.2 Acceptance by the Landlord of any rent after the same has become due and payable shall not constitute a waiver by the Landlord of any rights which the Landlord may have under the terms of this Lease in the event of a default with respect to any other payment of rent. 16.3 The Landlord's rights and remedies under this Lease shall be cumulative, and shall not be exhausted by one exercise thereof, and shall not exclude any other rights and remedies authorized, provided or permitted by law. No failure or omission on the part of the Landlord promptly to exercise or insist upon any of its rights hereunder shall operate as a waiver of any such rights; and no waiver on the part of the Landlord of any breach or default or lack of prompt or full and complete performance or compliance by the Tenant hereunder shall operate as a waiver of any subsequent breach or default or lack of prompt and full performance or compliance. 17. LANDLORD'S RIGHT OF ENTRY The Tenant agrees that the Landlord, or its officers, agents, servants, and employees, may enter said Premises at any hour to protect the same against the elements, or accidents, or to effect repairs or replacements, and at any reasonable hour for the purpose of examining the same, showing the same to prospective purchasers or tenants, or for any other reasonable purpose. 18. NOTICES Any bill, statement, notice or communication which the Landlord may desire or be required to give to the Tenant shall be deemed sufficiently given and rendered if, in writing, delivered to the Tenant personally, or sent by registered or certified mail addressed to the Tenant at the Building or left at the Premises addressed to the Tenant, and the time of the rendition of such bill, statement, or notice shall be deemed to be the time when the same is mailed to the Tenant, or delivered, or left at the Premises as herein provided. Any notice to Landlord shall be in writing, addressed to Landlord at Landlord's Address (or such different address as Landlord may notify Tenant) and shall be sent first class U.S. mail, postage prepaid, certified return receipt requested. 19. TAXES ON TENANT'S PERSONAL PROPERTY AND TAXES ASSESSED ON RENTALS 19.1 The Tenant shall pay promptly when due any and all taxes and assessments that may be levied or assessed against Tenant's personal property located in, on or about the Premises and will cause such personal property to be assessed directly to the Tenant. If for any reason said personal property cannot, or is not assessed separately and is included with the Landlord's real or personal property tax assessments, the Tenant will upon demand pay to the Landlord the amount of taxes levied or assessed against the personal property, using for such purpose the valuation and rate of tax placed thereon by the taxing authority, if the same can be determined and if not, using a reasonable valuation. 13 16 19.2 In addition to the rent hereinabove provided for, the Tenant shall pay to the Landlord, promptly as and when due, all sales, use or excise taxes, levied, assessed or payable on or on account of the Leasing or renting provided for hereunder, or on account for the rent payable hereunder. 20. COSTS OF COLLECTION The Tenant shall promptly pay to the Landlord all costs and expenses of enforcement of this Lease and of collection, including a reasonable attorney's fee, including on appeal, with respect to any part of said rent and other charges and sums of money herein reserved or required by the Tenant to be paid and met, which may be sustained or incurred by the Landlord after the date the same, or any thereof, becomes due; and the Tenant further agrees to pay all reasonable costs and expenses, including a reasonable attorney's fee including on appeal, which may be sustained or incurred by the Landlord in or about the enforcement or declaration of any of the rights or remedies of the Landlord or obligations of the Tenant, whether arising under this Lease or granted, permitted or imposed by law or otherwise. 21. PRIOR AGREEMENTS: This agreement supersedes and revokes any and all prior written agreements between the parties relating to the Premises, and all oral agreements between the parties relating to the Premises are hereby merged into this Lease; and no amendment, modification or variation of the Lease or any terms or provisions of the Lease, shall be effectual, binding or valid unless and until the same is reduced to writing and signed by the party to be charged thereby. No notice, request or demand in this Lease provided for may be waived except by written waiver thereof signed by the party waiving the same. Submission of the Lease to or by Tenant shall not create any rights in favor of Tenant until this Lease has been executed by both Landlord and Tenant. 22. FLOOR PLANS Any floor plan or other plan, drawing or sketch which is attached to or made part of this Lease, such as Exhibit "A", is used solely for the purpose of a reasonable approximate identification and location of the demised Premises, and any markings, measurements, dimensions or notes of any kind contained therein shall be subordinate to any specific terms contained in this Lease. Attached to the construction plans for the tenant improvements shall be a specification sheet stating in detail the finishes to be used in the demised premises. Both Landlord and Tenant shall initial the construction plans and specifications indicating this approval of the terms contained therein. Construction of the tenant improvements by contract shall be the responsibility of the Landlord and any cost in excess of the Tenant Improvement Allowance shall be the Tenant's responsibility. If Tenant requests any Change Orders that create cost over and above the original scope of work then Tenant shall be responsible for that additional cost. Tenant has inspected the Premises and the Building and has verified the dimensions thereof to the satisfaction of the Tenant; and the Tenant has inspected and is familiar with the condition of the 14 17 elevators, stairways, halls, air conditioning system and facilities; and sanitary facilities of the Building and the Tenant agrees to accept the Premises. 23. NO AUTOMATIC RENEWAL There shall be no extension or automatic renewal of the terms of this Lease unless otherwise agreed in writing by the parties hereto. Tenant shall have no right to hold over and, if Tenant does so with Landlord's consent, same shall be a tenancy from month-to-month terminable at will by either Landlord or Tenant. 24. BUILDING STANDARDS MANUAL By the execution of this Lease, the Tenant accepts and agrees to abide by, and to instruct the Tenant's employees to abide by all provisions of the "Building Standards Manual" and any modifications or additions made thereto from time to time during the term of this Lease. The initial set of these regulations is attached as the "Building Standards Manual" (Exhibit "B"). 25. TERMS AND HEADING As used herein the singular shall include the plural, the plural shall include the singular, and each gender shall include the other where the context shall so require. The headings in this Lease are not a part of this Lease and shall nave no effect upon the construction of interpretation of any part hereof. This Lease shall be governed by the laws of the state of Florida. 26. CONDEMNATION In the event the whole or any part of the Building of which the Premises are a part, other than a part not interfering with the maintenance or operation thereof shall be taken or condemned for any public or quasi-public use or purpose, the Landlord may, at its option, terminate this Lease from the time title to or right to possession shall vest in or be taken for such public or quasi-public use or purpose and the Landlord shall be entitled to any and all income, rent, awards or any interest therein whatsoever which may be paid or made in connection therewith. 27. SUBORDINATION TO MORTGAGES This Lease is hereby made expressly subject and subordinate at all times to any and all mortgages, deeds of trust, ground or underlying leases affecting the Premises which have been executed and delivered or which will hereafter be executed and delivered and any and all extensions and renewals thereof and substitutions therefore and to any and all advances made or to be made under or upon said mortgages, deeds of trust, ground or underlying leases. Tenant agrees to execute any instrument or instruments which the Landlord may deem necessary or desirable to effect the subordination of this Lease to any or such mortgages, deeds of trust, ground or underlying leases and in the event that the Tenant shall refuse, after reasonable notice, to 15 18 execute such instrument or instruments which the Landlord may deem necessary or desirable to effect the subordination of the Lease to any or all such mortgages, deeds of trust, ground or underlying leases and in the event that the Tenant shall refuse, after reasonable notice, to execute such instrument or instruments, the Landlord may, in addition to any right or remedy accruing hereunder, terminate this Lease without incurring any liability whatsoever and the estate hereby granted is expressly limited accordingly. The Tenant hereby agrees to attorn to any future owner of the Lessor's interest in the Premises under this Lease, whether such occurs by reason of the dispossession of the Landlord or otherwise, and such shall not constitute a default by Tenant hereunder. 28. ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS 28.1 Within fifteen (15) days after request of Landlord, Tenant shall deliver to Landlord a duly executed certificate stating the Termination Date, the Monthly Rent, the amount of any prepaid rent and security deposits, the fact that this Lease is in full force and effect, the fact that this Lease is unmodified (or if modified, the date of the modification), and the fact that Landlord is not in default (or if a default exists, the nature thereof). Failure to timely deliver same shall be conclusive evidence that the Termination Date and Monthly Rent are as set forth herein, no rent has been paid in advance, there is no security deposit, and that there are no modifications or Landlord's defaults. Such certificate will be relied on by Landlord, prospective lenders or prospective purchasers. 28.2 During the term of Lease and any extensions thereto, Tenant (and Tenant's Guarantor) shall produce current financial statements as requested by Landlord, any prospective purchaser or lender or any lender of record within thirty (30) days of written notification from Landlord. If Tenant (or Tenant's Guarantor) is a company which is required to make periodic reports to the Securities and Exchange Commission, a copy of Tenant's (or Tenant's Guarantor) most recent publicly disclosed financial statements shall be sufficient for purposes of this Lease. 29. QUIET ENJOYMENT Landlord agrees that Tenant, upon paying the Monthly Rent, all additional rent and all other sums and charges then due and upon performing the covenants and conditions of this Lease to be performed by the Tenant, may enjoy peaceful and quiet possession of the Premises during the term of this Lease. 30. PARKING SPACES Tenant hereby agrees to lease from Landlord the number of parking spaces indicated in Paragraph 1 hereinabove in the attached parking garage for the Term of the Lease and any renewals thereof. The monthly rental shall commence at the per space rate therefore indicated in Paragraph 1 hereinabove and shall thereafter be adjusted to the rate generally charged by Landlord. 16 19 31. SUBSTITUTION OF PREMISES At any time hereafter, Landlord may substitute for the Premises other Premises (herein referred to as "the new premises") provided: (a) The new premises shall be substantially similar to the Premises in area and use for Tenant's purposes and shall be located in the Building; (b) The rental for the new premises shall be adjusted in accordance with Landlord's scheduled lease rates but shall not exceed the rental paid for the Premises; (c) If Tenant is already in occupancy of the Premises, then in addition: (i) Landlord shall pay the expense of Tenant for moving from the Premises to the new premises and for improving the new premises so that they are substantially similar to the Premises; and (ii) Landlord shall first give Tenant at least thirty (30) days notice before making such change. If Landlord shall exercise its right hereunder, the new premises shall thereafter be deemed for the purposes of this Lease as the Premises. 32. LANDLORD'S RIGHT TO ALTER COMMON AREAS Without abatement or diminution in rent, Landlord reserves and shall have the right to change the street address and/or location of entrances, passageways, doors, doorways, corridors, elevators, stairs, toilets, or other common areas of the Building or the complex without liability to Tenant. 33. EXCULPATION Notwithstanding anything to the contrary set forth in this Lease, it is specifically understood and agreed by Tenant that there shall be absolutely no personal liability on the part of Landlord or on the part of the partners of Landlord with respect to any of the terms, covenants and conditions of this Lease, and Tenant shall look solely to the equity of Landlord in the Property for the satisfaction of each and every remedy of Tenant in the event of any breach by Landlord of any of the terms, covenants and conditions of this Lease to be performed by Landlord. This exculpation of personal liability is absolute and without any exception whatsoever. 34. SUCCESSORS AND ASSIGNS Except as otherwise provided in this Lease, all of the covenants, conditions and provisions of this Lease shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns. 17 20 35. SECURITY AGREEMENT Tenant hereby grants to the Landlord a security interest under the Uniform Commercial Code as adopted by the State of Florida in all the furniture and fixtures, goods and chattels of the said Tenant now owned or hereafter required, which may be brought or put on said premises, as security for the payment of rent herein reserved, and agrees that said security interest as well as the Florida Statutory Landlord's lien for the payment of said rent may be enforced by distress, foreclosure or otherwise, at the option of the said Landlord, and Tenant agrees that such lien is granted to the Landlord and vested in said Landlord, and the Tenant further agrees that in case of the failure of said Tenant to pay the rent herein reserved when the same shall become due, and it becomes necessary for the Landlord to collect said rent by suit or through an attorney, or should Landlord employ an attorney because of the breach of any of the terms, covenants or agreements contained in this lease, the Tenant will pay the Landlord a reasonable attorney's fee together with all costs and charges incurred by, through or in connection with such collection or in any other suit or action or appeal which may be brought in any Court because of a breach of any terms, covenants or agreements contained in this Lease. 36. MECHANICS LIEN The Tenant shall have no authority to incur, create or permit, and shall not incur, create, permit or suffer, any lien for labor or materials or services to attach to the interest or estate of either the Landlord or the Tenant in the Demised Premises or in the building or other real estate of which the Demised Premises form a part; and neither the Tenant nor anyone claiming by, through or under the Tenant, shall have any right to file or place any labor or material lien of any kind or character whatsoever or any mechanics lien or other lien of any kind, upon the Demised Premises or the building or other real estate of which the Demised Premises form a part, so as to encumber or affect the title of the Landlord, and all persons contracting with the Tenant directly or indirectly, or with any person who in turn is contracting with the Tenant, for the erection, construction, installation, alteration or repair of the demised premises or any improvements therein or thereon, including fixtures and equipment, and all material-men, contractors, mechanics, laborers, architects, from the date of this instrument, they and each of them must look to the Tenant only to secure the payment of any bills or charges or claims for work done, or materials furnished, or services rendered or performed during the term hereby demised. 37. RECORDATION This Lease shall not be recorded. 38. RADON GAS Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risk to persons who are exposed to it over time. Levels or radon that exceed Federal and State Guidelines have been found in 18 21 buildings in Florida. Additional information may be obtained from your county public health unit. 39. REAL ESTATE BROKER Tenant represents and warrants to Landlord that no broker, agent, commission salesman or other person has represented Tenant in the negotiations for or procurement of this Lease and of the Premises and Tenant does and shall agree to indemnify and hold Landlord harmless from and against any and all loss, cost, damage, claim and demand, meritorious or otherwise, for or from any fees, commissions, payments or expenses due or alleged to be due to any broker, agent, commission salesman or other person purporting to represent Tenant in connection with this Lease, the premises, or the negotiations therefore. IN WITNESS WHEREOF, the Landlord and Tenant have executed this Lease as of the day and year first above written. WITNESS: LANDLORD: BANKERS INSURANCE GROUP, INC. Erica Rudin - ------------------------------- By: /s/ G. Kristin Delano ----------------------------- Susan M. Dill - ------------------------------- Date: 1-1-98 -------------------------- WITNESS: TENANT: INSURANCE MANAGEMENT SOLUTIONS GROUP INC. Diane Helland - ------------------------------- By: /s/ Jeffrey S. Bragg ----------------------------- Erica Rudin - ------------------------------- Date: 1-1-98 -------------------------- 19 22 BANKERS BUILDING 10051 5TH STREET NORTH ST. PETERSBURG, FLORIDA 33702 INSURANCE MANAGEMENT SOLUTIONS, INC.
FLOOR RENTABLE AREA (SQUARE FEET) - --------- -------------------------- 2 7,360
EX-10.6 9 BANKERS FINANCIAL CENTER LEASE AGREEMENT 1 EXHIBIT 10.6 Bankers Financial Center Lease Agreement BANKERS INSURANCE COMPANY, LANDLORD INSURANCE MANAGEMENT SOLUTIONS GROUP, INC., TENANT 2 INDEX
Page No. 1. DEFINITIONS................................................................1 2. PREMISES...................................................................3 3. TERM.......................................................................3 4. RENT.......................................................................3 5. TENANT'S SHARE OF OPERATING COSTS..........................................4 6. SECURITY DEPOSIT...........................................................4 7. ADDITIONS AND ALTERATIONS..................................................5 8. PERMITTED USE..............................................................5 9. UTILITIES..................................................................6 10. INDEMNIFICATION; INSURANCE.................................................6 11. ASSIGNMENT OR SUBLETTING...................................................9 12. SIGNS; ADVERTISING.........................................................9 13. MAINTENANCE OF INTERIOR OF PREMISES........................................10 14. DAMAGE OR DESTRUCTION......................................................10 15. DEFAULTS...................................................................11 16. REMEDIES...................................................................12 17. LANDLORD'S RIGHT OF ENTRY..................................................14 18. NOTICES....................................................................14 19. TAXES ON TENANT'S PERSONAL PROPERTY AND TAXES ASSESSED ON RENTALS.........................................14 20. COSTS OF COLLECTION........................................................14 21. PRIOR AGREEMENTS...........................................................15 22. FLOOR PLANS................................................................15 23. NO AUTOMATIC RENEWAL.......................................................15 24. BUILDING STANDARDS MANUAL..................................................16 25. TERMS AND HEADING..........................................................16 26. CONDEMNATION...............................................................16 27. SUBORDINATION TO MORTGAGES.................................................16 28. ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS.............................17 29. QUIET ENJOYMENT............................................................17 30. PARKING SPACES.............................................................17 31. SUBSTITUTION OF PREMISES...................................................18 32. LANDLORD'S RIGHT TO ALTER COMMON AREAS.....................................18 33. EXCULPATION................................................................18 34. SUCCESSORS AND ASSIGNS.....................................................18 35. SECURITY AGREEMENT.........................................................19 36. MECHANICS LIEN.............................................................19 37. RECORDATION................................................................19 38. RADON GAS..................................................................19 39. REAL ESTATE BROKER.........................................................20 EXHIBIT "A".........................................................FLOOR PLAN EXHIBIT "B".......................................BUILDING RULES & REGULATIONS
3 BANKERS FINANCIAL CENTER LEASE AGREEMENT THIS LEASE, made as of the 1st day of January, 1997, by and between BANKERS INSURANCE COMPANY hereinafter called the "Landlord", and INSURANCE MANAGEMENT SOLUTIONS GROUP, INC., hereinafter referred to as the "Tenant"; WITNESSETH: For and in consideration of the rents, covenants, agreements and conditions hereinafter reserved, made and entered into on the part of the Tenant to be paid, performed, and observed, it is hereby stipulated, covenanted and agreed by and between the Landlord and the Tenant as follows: 1. DEFINITIONS As used in this Lease Agreement, the terms enumerated below as items 1.1 to 1.18 inclusive shall have only the meaning set forth in this section unless the same shall be expressly modified, limited or expanded elsewhere in the Lease Agreement, in which event, such modification, limitation and/or expansion shall supersede the applicable terms set forth below: 1.1 Exhibits: The following Exhibits attached to this lease are incorporated herein and made a part hereof: Exhibit A: Floor Plan of Premises Exhibit B: Building Standards Manual 1.2 Building: Bankers Financial Center 360 Central Avenue St. Petersburg, Florida 33701 Legal description: Lot 1, Block 1, Revised Map of St. Petersburg Block 31 Partial Replat, according to Plat Book 85, Page 15 of the Public Records of Pinellas County, Florida. 1.3 Premises or Demised Premises: As outlined on Exhibit A 1.4 Term: 2 years 1.5 Commencement Date: January 1, 1997. 1 4 1.6 Termination Date: December 31, 1999. 1.7 Base Rent: $12.00 per square foot. $990,792 per annum. $82,566 per month. 1.8 Prepaid Rent: N/A 1.9 Rentable Area of Demised Premises ("Net Rentable Area"): 82,566 square feet, MOL 1.10 Tenant's Proportionate Share of Operating Costs ("Proportionate Share"): 34.08% 1.11 Tenant Improvement Allowance: N/A 1.12 Number of Parking Spaces which Tenant shall rent: 137 in adjacent parking garage, 84 to be covered spaces and 35 uncovered. In addition, the Tenant shall lease approximately 235 parking spaces in the surface lot located at 3rd Avenue South and 3rd Street South, depending upon availability. 1.13 Monthly Rental for parking spaces: $40.00 per month for each covered space, $30.00 per month for each uncovered space plus taxes for each parking space in the adjacent parking garage, and $20.00 per month per space plus taxes for each space in the surface parking lot (rates subject to change to reflect the rates generally charged by the Landlord). 1.14 Security Deposit: N/A 1.15 Permitted Use: Office use 1.16 Tenant's Address: Insurance Management Solutions Group, Inc. 360 Central Avenue St. Petersburg, FL 33701 1.17 Landlord's Address: Bankers Insurance Company 360 Central Avenue, Suite 100 St. Petersburg, FL 33701 1.18 Guarantor: N/A 1.19 Expense Stop: Building operating costs for calendar year ending December 31, 1997. 2 5 2. PREMISES 2.1 The Landlord does hereby let, demise and lease the Premises to the Tenant, and the Tenant does hereby hire and take the Premises from the Landlord for the Term of this Lease. 2.2 Tenant acknowledges that this Lease is made subject to all existing liens, encumbrances, deeds of trust, reservations, restrictions and other matters of record and to zoning, building and fire ordinances and all governmental statutes, rules and regulations relating to the use or occupancy of the Premises, as same may hereafter be amended from time to time. 3. TERM 3.1 The Term of this Lease shall commence on the Commencement Date and shall terminate on the Termination Date, unless terminated sooner in accordance with the terms of this Lease. The Tenant has an option to renew this Lease for one additional two (2) year period by providing the Landlord with notice to do so six (6) months prior to the termination date of this Lease. Tenant's right to exercise this option is based upon agreeing to pay rent at the time of the renewal equal to 90% of the then market rent for like space or at a rate as provided by paragraph 4.5 herein. 3.2 Notwithstanding the Commencement Date, the Term shall commence earlier than the Commencement Date if Tenant occupies the Premises prior to the stated Commencement Date. "Occupancy", "occupy" or"occupies" as used in this Lease shall mean use of the Premises for any reason by Tenant or Tenant's agents, licensees, employees, directors, officers, partners, trustees, and invitees (collectively, "Tenant's Employee"). 3.3 If Landlord, through no fault of Tenant, cannot deliver possession of the Premises to Tenant on the Commencement Date, such delay shall not affect the validity of this Lease nor shall Landlord be liable to Tenant for any loss or damage resulting therefrom, but there shall be a proportionate reduction of rent covering the period between the Commencement Date and the time when Landlord delivers possession of the Premises to Tenant. No such delay shall operate to extend the Term. 4. RENT 4.1 Tenant agrees to pay to Landlord each year during the Term (as the Term may be adjusted pursuant to Section 3.2 or 3.3) the Annual Rent for the Premises. Said Annual Rent shall be paid in monthly installments equal to the Monthly Rent. The Monthly Rent shall be due and payable in advance, on or before the first day of each calendar month during the entire Term, commencing with the first full calendar month of the Term; provided that Tenant shall pay to the Landlord on the Commencement Date the prorated 3 6 Monthly Rent attributable to the month in which the Commencement Date occurs if the Commencement Date is other than the first day of a month. Concurrently with the execution of this Lease, Tenant shall pay to Landlord the Prepaid Rent plus Florida State Sales Tax thereon and any other tax applicable to said Rent. 4.2 Tenant agrees to pay to Landlord as additional rent upon demand (but not more frequently than monthly) all charges for any services, goods or materials furnished by Landlord at Tenant's request which are not required to be furnished by Landlord under this Lease without separate charge or reimbursement. 4.3 Any rent for any fractional month shall be prorated based on a thirty (30) day month, and for any fractional year shall be prorated based on a three hundred sixty-five (365) day year. All rent payable by Tenant to Landlord under this Lease shall be paid to Landlord in lawful money of the United States of America at Landlord's office located in the Building, or to such other person or at such other place as Landlord may from time to time designate in writing. All rent shall be paid without prior demand, deduction, setoff or counterclaim. 4.4 A late payment penalty shall be added to any rent not received by Landlord within ten (10) days of the due date. Such penalty shall be equal to the interest that accrues on said amount from the date the payment was due until the date on which Landlord receives said payment, computed at the rate of eighteen percent (18%) per annum. 4.5 The Monthly Rent shall be adjusted, upward only, beginning on the first anniversary of the Commencement Date by the greater of $0.25 per square foot or by the same percentage that the "Index" (as hereinafter defined) most recently published prior to such anniversary date has increased over the Index on the date of this Lease. For purposes of this Paragraph 4.5, the "Index" means the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W); U.S. City Average (1967=100) as published by the United States Department of Labor, Bureau of Labor Statistics; provided that, in the event the Index shall not be published or shall be discontinued, the most nearly comparable index shall be substituted therefor by Landlord; however, such increase shall not exceed a total of $13.00 per square foot annually over the term of this Lease and the renewal option period exercised by the Tenant. 4.6 Tenant shall pay to Landlord concurrently with the payment of the Monthly Rent and other sums all Florida State Sales Tax and any other tax which is applicable to such payment. 5. TENANT'S SHARE OF OPERATING COSTS: N/A 6. SECURITY DEPOSIT: N/A 4 7 7. ADDITIONS AND ALTERATIONS No changes, alterations, improvements, or additions to the Premises shall be made to or upon said Premises or any part thereof without the written consent of the Landlord being first had and obtained. All changes, alterations, additions and improvements made or placed in or upon the Premises by the Landlord or the Tenant, and which by operation of law would become a part of the real estate, shall immediately upon being made or placed thereon become the property of the Landlord and shall remain upon and be surrendered with the Premises as a part thereof, at the termination, by lapse of time or otherwise, of the Term herein granted. Any such changes, alterations, improvements, or additions shall be done in conformity with the "Building Standards Manual" furnished herewith as Exhibit "B", as well as with such other reasonable requirements as Landlord may impose upon the granting of its written consent. At Landlord's request at or prior to termination of the Term, Tenant shall remove all or any part of any improvements made to the Premises. 8. PERMITTED USE 8.1 The Premises shall be used only for the Permitted Use and for no other purpose. The Tenant, shall, at its own cost and expense, obtain any and all licenses and permits necessary for such use. The Tenant shall comply with all governmental laws, ordinances and regulations applicable from time to time to its use of the Premises, and shall promptly comply with all governmental orders and directives for the correction, prevention and abatement of nuisances in or upon, or connected with the Premises, all at the Tenant's sole expense. 8.2 The Tenant shall not do, suffer or permit anything to be done in, on or about the Premises or the Property, nor bring, nor keep anything therein which will in any way affect fire or other insurance upon the Building or any of its contents or which will in any way conflict with any law, ordinance, rule or regulation now or hereafter in force or effect relating to the occupancy and use of the Premises and said Property, or in any way obstruct or interfere with the rights of other lessees or users of the Property, or injure or annoy them, nor use, nor allow the Premises or the Building to be used for any improper, immoral, unlawful or objectionable purpose, cooking therein, and nothing shall be prepared, manufactured, or used in the Premises which might emit an odor into the corridors of the building. 8.3 The Tenant will not, without the written consent of the Landlord, use any apparatus, machinery, or equipment or device in, on or about the Premises which may cause any excessive noise or may set up any excessive vibration or excessive floor loads or which in any way would increase the normal amount of electricity agreed to be furnished or supplied under this Lease, or as specified in the Building Standards Manual, and, further, the Tenant shall not connect with water any apparatus, machinery, equipment or device without the prior written consent of the Landlord. The Tenant shall, at the Tenant's sole cost and expense, comply with all of the requirements of all 5 8 municipal, state and federal authorities now or hereafter in force, pertaining to said Premises, and shall faithfully observe in the use of said Premises and Property all municipal ordinances and regulations and state and federal statutes and regulations now or hereafter in force and effect. 8.4 Any change in law or otherwise which may make Tenant's use of the Premises impracticable or impossible shall not affect Tenant's obligations under this Lease. 9. UTILITIES; JANITORIAL SERVICES Subject to Tenant's obligation to pay rent under this Lease and perform Tenant's other obligations, the Landlord agrees to furnish in connection with the Premises, the following: electricity (commensurate with the Landlord's electrical system and wiring in the building of which the Premises are a part, supplying approximately 110 volts) for lights and other usual and ordinary office purposes; replacement of ceiling light bulbs and tubes in the fixtures provided by the Landlord; heat and air conditioning, subject to government authority regulations from time to time in effect, during normal business hours (8 a.m. to 6 p.m., Monday through Friday, except holidays and from 8 a.m. to 1 p.m. on Saturdays); janitorial services as specified in the Building Standards Manual; and provide for use in common of the elevators, restrooms, and other like facilities of the Building. All said costs shall be included in Building Operating Costs. Landlord reserves the right to establish special charges to be paid by Tenant for additional non-standard services provided. The Landlord shall not be liable for the failure to furnish any of the items or services herein mentioned when such failure is caused by or results from accidents or conditions or matters beyond the reasonable ability of the Landlord to control, or caused by or resulting from lack of utility services, breakdown of mechanical equipment, repairs, labor disturbances, or labor disputes of any character, whether resulting from or caused by acts of the Landlord or otherwise; nor shall the Landlord be liable under any circumstances for loss of or injury to property or persons, however occurring, through or in connection with or incidental to the furnishing of any of such items or services, nor shall any such failure relieve the Tenant from the duty to pay the full amount of rent and other sums of money herein provided to be paid by the Tenant, or constitute or be construed as a constructive or other eviction of the Tenant. 10. INDEMNIFICATION; INSURANCE 10.1 INDEMNITY. Tenant agrees to indemnify, defend and save harmless Landlord, Bankers Insurance Company any property manager(s) engaged by Landlord or Bankers Insurance Company and each of their affiliated companies, partners, shareholders, agents, directors, officers, and employees (collectively, "Indemnitees") from and against any and all liabilities, damages, claims, suits, injuries, costs (including court costs, attorneys' fees and costs of investigation, and actions of any kind arising or alleged to arise by reason of injury to or death of any person or damage to or loss of property occurring on, in, or about the Leased Premises or by reason of any other claim 6 9 whatsoever of any person or party occasioned or alleged to be occasioned in whole or in part by any act or omission on the part of Tenant or any invites, licensee, agent, employee, director, officer, contractor, subcontractor, or tenant of Tenant, or by any breach, violation, or nonperformance of any covenant of Tenant under this Lease (collectively "Liabilities") even if such Liabilities arise from or are attributed to the concurrent negligence of any Indemnitee. The only Liabilities with respect to which Tenant's obligation to indemnify the Indemnitees does not apply is with respect to Liabilities resulting from the sole negligence or willful misconduct of an Indemnitee. If any action or proceeding is brought by or against any Indemnitee in connection with any such Liabilities, Tenant shall defend such action or proceeding, at Tenant's expense, by or through attorneys reasonable satisfactory to Landlord. The provisions of this paragraph apply to all activities of Tenant with respect to the Leased Premises or Building, whether occurring before or after the Commencement Date of the Term and before or after the expiration or termination of this Lease. Tenant's obligations under this paragraph are not limited to the limits or coverage of insurance maintained or required to be maintained by Tenant under this Lease. 10.2 TENANT'S INSURANCE. Tenant shall, at its sole expense, maintain in effect at all times during the Term, insurance coverage with limits not less than those set forth below with insurers reasonably acceptable to Landlord and which are licensed to do business in the state in which the Building is located. Insurance Minimum Limits A. Workers' Compensation Workers' Compensation Statutory Employer's Liability $500,000 This policy shall include a Waiver of Subrogation in favor of the Indemnitees. B. Commercial General Liability Bodily Injury/ $1,000,000 each occurrence, Property Damage or equivalent, subject to (Occurrence Basis) a $1,000,000 aggregate This policy shall be on a form acceptable to Landlord, endorsed to include the Indemnitees as additional insured, contain cross-liability and severability of interest endorsements, state that this insurance is primary insurance as regards any other insurance carried by any Indemnitee, and shall include the following coverages: (1) Premises/Operations; (2) Independent Contractors; 7 10 (3) Broad Form Contractual Liability specifically in support of, but not limited to, the Indemnity sections of this Lease; and (4) Personal Injury Liability with employee and contractual exclusions removed. C. Comprehensive Automobile Liability Combined single limit for $500,000 of equivalent bodily injuries/property damage This policy shall be on a standard form written to cover all owned, hired and non-owned automobiles. This policy shall be endorsed to include the Indemnitees as additional insured, contain cross-liability and severability of interest endorsements, and state that this insurance is primary insurance as regards any other insurance carried by any Indemnitee. Evidence of these coverages represented by Certificates of Insurance issued by the insurance carrier must be furnished to the Landlord prior to Tenant moving in. Certificates of Insurance shall specify the additional insured status mentioned above as well as the Waivers of Subrogation. Such Certificate of Insurance shall state that Landlord will be notified in writing thirty (30) days prior to cancellation, material change, or non-renewal of insurance. If Tenant does not procure insurance as required hereunder, Landlord may, upon advance written notice to Tenant, cause such insurance to be issued, and Tenant shall pay to Landlord the premium of such insurance within ten (10) days of Landlord's demand, plus interest at the highest lawful rate for a loan of like amount from the date of payment by Landlord until repaid by Tenant. Upon the request of Landlord, Tenant shall provide Landlord with certified copies of any and all applicable insurance policies. 10.3 WAIVER OF LIABILITY. No Indemnitee will be liable in any manner to Tenant or any other party claiming by through or under Tenant for any injury to or death of persons unless caused by the sole negligence or willful misconduct of an Indemnitee. In no event will any Indemnitee be liable in any manner to Tenant or any other party as the result of the acts or omissions of Tenant, its invitees, licensees, agents, employees, directors, officers, contractors, subcontractors, or tenants of Tenant, or any other tenant of the Building. All personal property upon the Leased Premises is at the risk of Tenant only and no Indemnitees will be liable for any damage thereto or theft thereof, regardless of whether such property is entrusted to employees of the Building, or such loss or damage is occasioned by casualty, theft, or any other cause of whatsoever nature, even if due in whole or in part to the negligence of any Indemnitee. 10.4 WAIVER OF SUBROGATION. Notwithstanding anything herein to the contrary, no party will have any right or claim against any Indemnitee for any property damage (whether caused, in whole or in part, by negligence or the condition of the Leased Premises or the Building or any part thereof) by way of subrogation or assignment, Tenant hereby waiving and relinquishing any such right. To the extent Tenant chooses to insure its property, Tenant shall request its insurance carrier to 8 11 endorse all applicable policies waiving the carrier's right of recovery under subrogation or otherwise in favor of any Indemnitee and provide Landlord with a certificate of insurance verifying this waiver. Landlord hereby waives and relinquishes any right or claim against Tenant for damage to the Leased Premises or the Building by way of subrogation or assignment, to the extent covered by insurance proceeds. Landlord shall request its insurance carrier to endorse all applicable policies waiving the carrier's right of recovery under subrogation or otherwise in favor of Tenant and a certificate of insurance will be made available at the request of the Tenant. 11. ASSIGNMENT OR SUBLETTING 11.1 The Tenant shall not sell, assign, transfer, mortgage, hypothecate or otherwise encumber this Lease or the leasehold interest granted hereby, or any interest therein, or permit the use of the Premises or any part thereof by any person or persons other than the Tenant and Tenant's employees and business invitees, or sublet the Premises, or any part thereof, without the written consent of the Landlord in Landlord's sole discretion in each such case being first had and obtained; and notwithstanding any such assignment, mortgage, hypothecation, encumbrance or subletting, the Tenant shall at all times remain fully responsible and liable for the payment of the rent and other sums of money herein specified and for compliance with all of the obligations of the Tenant under the terms, provisions and covenants of the Lease. If Tenant is a corporation, unincorporated association, trust or general or limited partnership, the sale, assignment, transfer or hypothecation of any stock or other ownership interest of such entity which from time to time in the aggregate exceeds twenty-five percent (25%) of such interest shall be deemed an assignment subject to the provisions of this Paragraph 11.1. 11.2 If Tenant subleases or assigns any portion of the Premises and whether or not such sublease or assignment was consented to, and the rental exceeds the amount of rent due hereunder, Tenant shall pay to Landlord all such excess rent as additional rent. In no event shall Tenant be permitted to sublease or assign any portion of the Premises at a rental amount less than the amount due under the terms of this Lease. 11.3 Any act described in Section 11.1 which is done without the consent of the Landlord shall be null and void and shall be an Event of Default. 11.4 Landlord shall have the right to sell, transfer or assign any of its rights and obligations under this Lease. 12. SIGNS; ADVERTISING The Tenant shall not place or maintain or permit to be placed or maintained any signs or advertising of any kind whatsoever on the exterior of the Building, or on any exterior windows in said Building, or elsewhere within the Premises so as to be visible 9 12 from the exterior of said Building, or on the interior walls or partitions, including doorways, of the Premises, visible from the public hallways or other public areas of the Building except such numerals and lettering on doorways as may be approved and permitted by the Landlord (and the Landlord shall have the right to specify the size, design, content, materials to be used and locations upon the door of any such materials and letter); and the Tenant shall not place or maintain, nor permit the placing or maintaining, and shall promptly remove any that may be placed by Tenant, of any awnings or other structure or material or machinery or equipment of any kind whatsoever on the exterior or extending to the exterior of the Building, or on the outside (that is to say, the side not facing inward toward the interior of the Premises) of any interior wall or partition separating the Premises from other portions or areas of said Building. 13. MAINTENANCE OF INTERIOR OF PREMISES The Tenant shall take good care of the Premises and shall, at the Tenant's own cost and expenses, keep in good sanitary condition and repair and shall promptly make all repairs to the same to the satisfaction of the Landlord, except for usual and ordinary wear and tear by reasonable use and occupancy or fire or other casualty; and at the end or other expiration of the Term, shall deliver up the Premises in the same condition as received, ordinary wear and tear by ordinary use thereof, fire and other casualty only excepted. Landlord may, but shall not be obligated to, make any repairs which are not promptly made by Tenant and charge Tenant for the cost thereof as rent. Tenant waives all rights (whether statutory or otherwise) to make repairs at the expense of Landlord, to cure any alleged defaults by Landlord at the expense of Landlord, or to deduct the cost thereof from rent or other sums due Landlord hereunder. 14. DAMAGE OR DESTRUCTION If the Building is, without fault of the Tenant, damaged by fire or other peril to the extent that the entire Demised Premises are rendered untenantable and cannot be reasonably rendered in as good a condition as existed prior to the damage within one hundred eighty (180) days from the date of such damage, the Term of this lease may be terminated by the Landlord or the Tenant by giving written notice to the other party, but if such damage is not such as to permit a termination of the Term of this Lease as above provided, then if such damage is not caused by Tenant or Tenant's agents, employees, guests or invitees, a proportionate reduction shall be made in the rent herein reserved corresponding to the time during which and to the portions of the Premises of which the Tenant shall hereby be deprived of possession. The Tenant agrees that Landlord shall not be responsible or liable for any loss due to business interruption occasioned by such fire, casualty or other cause which renders the Premises untenantable nor shall Landlord be liable for any damage to Tenants property or persons. Tenant may not terminate this Lease on account of any damage caused by Tenant or Tenant's agents, employees, guests or invitees. 10 13 15. DEFAULTS 15.1 Each and any of the following shall be deemed an "Event of Default" by Tenant and a material breach of the Lease: (a) Tenant's failure to pay the Monthly Rent or any other sum payable by Tenant hereunder as and when such payment is due and such failure shall continue for ten (10) days after written notice by Landlord to Tenant of such failure; (b) Tenant's failure to observe, keep or perform any of the other terms, covenants, agreements or conditions under this Lease, including, without limitation, the Building Standards Manual, that Tenant is obligated to observe or perform and said failure continues for a period of ten (10) days after written notice by Landlord; provided that if the nature of Tenant's default is such that it cannot be cured solely by the payment of money and that more than ten (10) days are reasonably required for its cure, then Tenant shall not be in default hereunder if it shall commence the correction of such default within said ten (10) day period and shall diligently prosecute the same to completion; (c) Tenant's vacation or abandonment of the Premises; (d) (i) Tenant's (or general partner of Tenant, if Tenant is a partnership) making an assignment for the benefit of creditors; or (ii) A custodian, trustee, receiver or agent being appointed or taking possession of all or substantially all of property of Tenant (or a general partner of Tenant); or (iii) Tenant's failure to pay Tenant's debts as such debts become due; or (iv) Tenant's (or a general partner of Tenant) becoming "insolvent" as that term is defined in Section 101(26) of the "Revised Bankruptcy Act" (Title II of the United States Code; II U.S.C. & 101 et seq.); or (v) Tenant's (or a general partner of Tenant (a) filing of a petition with the bankruptcy court under the Revised Bankruptcy Act, or (b) otherwise filing any petition or applying to any tribunal for appointment of a custodian, trustee or receiver of Tenant (or of a general partner of Tenant) or commencing any proceeding relating to Tenant (or a general partner of Tenant) under any bankruptcy or reorganization statute or under any arrangement, insolvency, readjustment of debt, dissolution or liquidation law of any jurisdiction, whether now or hereafter in effect; or (vi) Any petition being filed against Tenant (or a general partner of Tenant) under the Revised Bankruptcy Act and either (a) the bankruptcy court orders 11 14 relief against Tenant (or a general partner of Tenant) under the chapter of the Revised Bankruptcy Act under which the petition was filed, or (b) such petition is not dismissed by the bankruptcy court within sixty (60) days of the date of filing; or (vii) Any petition or application of the type described in subparagraph (v)(b), above, filed against Tenant (or a general partner of Tenant), or any proceeding of the type described in subparagraph (v)(b), above, is commenced, and either (a) Tenant (or a general partner of Tenant) by any act indicates its approval thereof, consent thereto, or acquiescence therein, or (b) an order is entered appointing any such custodian, trustee, receiver or agent, adjudicating Tenant (or a general partner of Tenant) bankrupt or insolvent, or approving such petition or application in any such proceeding, and any such order remains in effect for more than sixty (60) days; or (e) Any guarantor of this Lease defaulting under any guaranty of this Lease, or attempting to repudiate or revoke any such guaranty or any obligation under such guaranty; or the occurrence of any event described in Paragraph 15(d), above, with respect to any guarantor of this Lease (as if Paragraph 15(d) referred to such guarantor in place of "Tenant"); or (f) The liquidation, dissolution, failure to exist or disqualification of Tenant. 15.2 Landlord shall have the right, but not the obligation, to cure any of Tenant's defaults under this Lease, in which event Tenant shall forthwith reimburse Landlord all costs thereof, including any attorneys' fees, together with interest from the date expended until the date repaid at the rate of eighteen percent (18%) per annum. No exercise of this right shall be deemed to be an acceptance of such default or a waiver thereof. 16. REMEDIES 16.1 Upon the occurrence of an Event of Default hereunder, Landlord may at any time thereafter, without notice or demand except as stated hereafter and without limiting Landlord in the exercise of any other right or remedy which Landlord may have by reason of such default or breach: (a) Enter upon and take possession of the Premises. In such event, Landlord shall have the right to remove all persons and property from the Premises and store such property in a public warehouse or elsewhere at the cost and risk of and for the account of Tenant, and all such persons shall quit and surrender possession of the Premises to Landlord. Tenant hereby waives all claims for damages which may be caused by the entry of Landlord and taking possession of the Premises or removing and storing the furniture and property and hereby agrees to indemnify and save Landlord harmless from any loss, costs, damages or liability occasioned thereby, and no such entry shall be considered or construed to be forcible entry or construed to be a termination of the Lease unless Landlord expressly elects to terminate this Lease. Should Landlord 12 15 elect to enter, as hereby provided, or should Landlord take possession pursuant to legal proceedings or pursuant to any notice provided by law, Landlord may then or at any time thereafter terminate this Lease pursuant to Paragraph 16.1(c), below: (b) Tenant and each and every subtenant and assignee of Tenant shall remain and continue liable for the equivalent of the rent and other charges herein reserved and required by the Tenant to be paid and met until the expiration of this Lease and for any and all loss or damage, including all fees and expenses and attorneys' fees which the Landlord may sustain or incur by reason of any such event, and the Landlord may relet all or any part of the Premises at such price and upon such terms and for such duration of time as the Landlord may determine in the name of the Landlord or as agent of the Tenant, or otherwise, and receive the rent therefor and apply the same first to the payment of such expenses and fees as the Landlord may have incurred in entering, dispossessing and in letting, including among others all expenses of the Landlord reasonably incurred in putting the Premises in proper condition (including tenant improvements) and then to the payment of the rent and other charges reserved hereunder and the fulfillment of the Tenant's covenants hereunder, the Tenant and any subtenant of the Tenant and assignee of the Tenant shall remain liable for any deficiency. Acts of maintenance, efforts to relet the Premises, or the appointment of a receiver on Landlord's initiative to protect Landlord's interest under this Lease shall not constitute a termination of this Lease, unless and until Landlord expressly elects in writing to terminate this Lease; (c) Terminate this Lease and all rights of Tenant therein and recover from Tenant in an action of all of the damages suffered or to be suffered by Landlord, including the damages and costs described in subparagraph (b) above; and (d) Pursue any other remedy now or hereafter available to Landlord under the laws or judicial decisions of the State of Florida. 16.2 Acceptance by the Landlord of any rent after the same has become due and payable shall not constitute a waiver by the Landlord of any rights which the Landlord may have under the terms of this Lease in the event of a default with respect to any other payment of rent. 16.3 The Landlord's rights and remedies under this Lease shall be cumulative, and shall not be exhausted by one exercise thereof, and shall not exclude any other rights and remedies authorized, provided or permitted by law. No failure or omission on the part of the Landlord promptly to exercise or insist upon any of its rights hereunder shall operate as a waiver of any such rights; and no waiver on the part of the Landlord of any breach or default or lack of prompt or full and complete performance or compliance by the Tenant hereunder shall operate as a waiver of any subsequent breach or default or lack of prompt and full performance or compliance. 13 16 17. LANDLORD'S RIGHT OF ENTRY The Tenant agrees that the Landlord, or its officers, agents, servants, and employees, may enter said Premises at any hour to protect the same against the elements, or accidents, or to effect repairs or replacements, and at any reasonable hour for the purpose of examining the same, showing the same to prospective purchasers or tenants, or for any other reasonable purpose. 18. NOTICES Any bill, statement, notice or communication which the Landlord may desire or be required to give to the Tenant shall be deemed sufficiently given and rendered if, in writing, delivered to the Tenant personally, or sent by registered or certified mail addressed to the Tenant at the Building or left at the Premises addressed to the Tenant, and the time of the rendition of such bill, statement, or notice shall be deemed to be the time when the same is mailed to the Tenant, or delivered, or left at the Premises as herein provided. Any notice to Landlord shall be in writing, addressed to Landlord at Landlord's Address (or such different address as Landlord may notify Tenant) and shall be sent first class U.S. mail, postage prepaid, certified return receipt requested. 19. TAXES ON TENANT'S PERSONAL PROPERTY AND TAXES ASSESSED ON RENTALS 19.1 The Tenant shall pay promptly when due any and all taxes and assessments that may be levied or assessed against Tenant's personal property located in, on or about the Premises and will cause such personal property to be assessed directly to the Tenant. If for any reason said personal property cannot, or is not assessed separately and is included with the Landlord's real or personal property tax assessments, the Tenant will upon demand pay to the Landlord the amount of taxes levied or assessed against the personal property, using for such purpose the valuation and rate of tax placed thereon by the taxing authority, if the same can be determined and if not, using a reasonable valuation. 19.2 In addition to the rent hereinabove provided for, the Tenant shall pay to the Landlord, promptly as and when due, all sales, use or excise taxes, levied, assessed or payable on or on account of the Leasing or renting provided for hereunder, or on account for the rent payable hereunder. 20. COSTS OF COLLECTION The Tenant shall promptly pay to the Landlord all costs and expenses of enforcement of this Lease and of collection, including a reasonable attorney's fee, including on appeal, with respect to any part of said rent and other charges and sums of money herein reserved or required by the Tenant to be paid and met, which may be sustained or incurred by the Landlord after the date the same, or any thereof, becomes 14 17 due; and the Tenant further agrees to pay all reasonable costs and expenses, including a reasonable attorney's fee including on appeal, which may be sustained or incurred by the Landlord in or about the enforcement or declaration of any of the rights or remedies of the Landlord or obligations of the Tenant, whether arising under this Lease or granted, permitted or imposed by law or otherwise. 21. PRIOR AGREEMENTS This agreement supersedes and revokes any and all prior written agreements between the parties relating to the Premises, and all oral agreements between the parties relating to the Premises are hereby merged into this Lease; and no amendment, modification or variation of the Lease or any terms or provisions of the Lease, shall be effectual, binding or valid unless and until the same is reduced to writing and signed by the party to be charged thereby. No notice, request or demand in this Lease provided for may be waived except by written waiver thereof signed by the party waiving the same. Submission of the Lease to or by Tenant shall not create any rights in favor of Tenant until this Lease has been executed by both Landlord and Tenant. 22. FLOOR PLANS Any floor plan or other plan, drawing or sketch which is attached to or made part of this Lease, such as Exhibit "A", is used solely for the purpose of a reasonable approximate identification and location of the demised Premises, and any markings, measurements, dimensions or notes of any kind contained therein shall be subordinate to any specific terms contained in this Lease. Attached to the construction plans for the tenant improvements shall be a specification sheet stating in detail the finishes to be used in the demised premises. Both Landlord and Tenant shall initial the construction plans and specifications indicating this approval of the terms contained therein. Construction of the tenant improvements by contract shall be the responsibility of the Landlord and any cost in excess of the Tenant Improvement Allowance shall be the Tenant's responsibility. If Tenant requests any Change Orders that create cost over and above the original scope of work then Tenant shall be responsible for that additional cost. Tenant has inspected the Premises and the Building and has verified the dimensions thereof to the satisfaction of the Tenant; and the Tenant has inspected and is familiar with the condition of the elevators, stairways, halls, air conditioning system and facilities; and sanitary facilities of the Building and the Tenant agrees to accept the Premises. 23. NO AUTOMATIC RENEWAL There shall be no extension or automatic renewal of the terms of this Lease unless otherwise agreed in writing by the parties hereto. Tenant shall have no right to hold over and, if Tenant does so with Landlords consent, same shall be a tenancy from month-to-month terminable at will by either Landlord or Tenant. 15 18 24. BUILDING STANDARDS MANUAL By the execution of this Lease, the Tenant accepts and agrees to abide by, and to instruct the Tenant's employees to abide by all provisions of the "Building Standards Manual" and any modifications or additions made thereto from time to time during the term of this Lease. The initial set of these regulations is attached as the "Building Standards Manual" (Exhibit"B"). 25. TERMS AND HEADING As used herein the singular shall include the plural, the plural shall include the singular, and each gender shall include the other where the context shall so require. The headings in this Lease are not a part of this Lease and shall nave no effect upon the construction of interpretation of any part hereof. This Lease shall be governed by the laws of the State of Florida. 26. CONDEMNATION In the event the whole or any part of the Building of which the Premises are a part, other than a part not interfering with the maintenance or operation thereof shall be taken or condemned for any public or quasi-public use or purpose, the Landlord may, at its option, terminate this Lease from the time title to or right to possession shall vest in or be taken for such public or quasi-public use or purpose and the Landlord shall be entitled to any and all income, rent, awards or any interest therein whatsoever which may be paid or made in connection therewith. 27. SUBORDINATION TO MORTGAGES This Lease is hereby made expressly subject and subordinate at all times to any and all mortgages, deeds of trust, ground or underlying leases affecting the Premises which have been executed and delivered or which will hereafter be executed and delivered and any and all extensions and renewals thereof and substitutions therefore and to any and all advances made or to be made under or upon said mortgages, deeds of trust, ground or underlying leases. Tenant agrees to execute any instrument or instruments which the Landlord may deem necessary or desirable to effect the subordination of this Lease to any or such mortgages, deeds of trust, ground or underlying leases and in the event that the Tenant shall refuse, after reasonable notice, to execute such instrument or instruments which the Landlord may deem necessary or desirable to effect the subordination of the Lease to any or all such mortgages, deeds of trust, ground or underlying leases and in the event that the Tenant shall refuse, after reasonable notice, to execute such instrument or instruments, the Landlord may, in addition to any right or remedy accruing hereunder, terminate this Lease without incurring any liability whatsoever and the estate hereby granted is expressly limited accordingly. The Tenant hereby agrees to attorn to any future owner of the Lessor's interest in the 16 19 Premises under this Lease, whether such occurs by reason of the dispossession of the Landlord or otherwise, and such shall not constitute a default by Tenant hereunder. 28. ESTOPPEL CERTIFICATES AND FINANCIAL STATEMENTS 28.1 Within fifteen (15) days after request of Landlord, Tenant shall deliver to Landlord a duly executed certificate stating the Termination Date, the Monthly Rent, the amount of any prepaid rent and security deposits, the fact that this Lease is in full force and effect, the fact that this Lease is unmodified (or if modified, the date of the modification), and the fact that Landlord is not in default (or if a default exists, the nature thereon. Failure to timely deliver same shall be conclusive evidence that the Termination Date and Monthly Rent are as set forth herein, no rent has been paid in advance, there is no security deposit, and that there are no modifications or Landlord's defaults. Such certificate will be relied on by Landlord, prospective lenders or prospective purchasers. 28.2 During the term of Lease and any extensions thereto, Tenant (and Tenant's Guarantor) shall produce current financial statements as requested by Landlord, any prospective purchaser or lender or any lender of record within thirty (30) days of written notification from Landlord. If Tenant (or Tenants Guarantor) is a company which is required to make periodic reports to the Securities and Exchange Commission, a copy of Tenant's (or Tenant's Guarantor) most recent publicly disclosed financial statements shall be sufficient for purposes of this Lease. 29. QUIET ENJOYMENT Landlord agrees that Tenant, upon paying the Monthly Rent, all additional rent and all other sums and charges then due and upon performing the covenants and conditions of this Lease to be performed by the Tenant, may enjoy peaceful and quiet possession of the Premises during the term of this Lease. 30. PARKING SPACES Tenant hereby agrees to lease from Landlord the number of parking spaces indicated in Paragraph 1 hereinabove in the attached parking garage and in the surface lot at 3rd Avenue South and 3rd Street South for the Term of the Lease and any renewals thereof. The monthly rental shall commence at the per space rate therefore indicated in Paragraph 1 hereinabove and shall thereafter be adjusted to the rate generally charged by Landlord. 17 20 31. SUBSTITUTION OF PREMISES At any time hereafter, Landlord may substitute for the Premises other Premises (herein referred to as "the new premises") provided: (a) The new premises shall be substantially similar to the Premises in area and use for Tenant's purposes and shall be located in the Building; (b) The rental for the new premises shall be adjusted in accordance with Landlord's scheduled lease rates but shall not exceed the rental paid for the Premises; (c) If Tenant is already in occupancy of the Premises, then in addition: (i) Landlord shall pay the expense of Tenant for moving from the Premises to the new premises and for improving the new premises so that they are substantially similar to the Premises; and (ii) Landlord shall first give Tenant at least thirty (30) days notice before making such change. If Landlord shall exercise its right hereunder, the new premises shall thereafter be deemed for the purposes of this Lease as the Premises. 32. LANDLORD'S RIGHT TO ALTER COMMON AREAS Without abatement or diminution in rent, Landlord reserves and shall have the right to change the street address and/or location of entrances, passageways, doors, doorways, corridors, elevators, stairs, toilets, or other common areas of the Building or the complex without liability to Tenant. 33. EXCULPATION Notwithstanding anything to the contrary set forth in this Lease, it is specifically understood and agreed by Tenant that there shall be absolutely no personal liability on the part of Landlord or on the part of the partners of Landlord with respect to any of the terms, covenants and conditions of this Lease, and Tenant shall look solely to the equity of Landlord in the Property for the satisfaction of each and every remedy of Tenant in the event of any breach by Landlord of any of the terms, covenants and conditions of this Lease to be performed by Landlord. This exculpation of personal liability is absolute and without any exception whatsoever. 34. SUCCESSORS AND ASSIGNS Except as otherwise provided in this Lease, all of the covenants, conditions and provisions of this Lease shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns. 18 21 35. SECURITY AGREEMENT Tenant hereby grants to the Landlord a security interest under the Uniform Commercial Code as adopted by the State of Florida in all the furniture and fixtures, goods and chattels of the said Tenant now owned or hereafter required, which may be brought or put on said premises, as security for the payment of rent herein reserved, and agrees that said security interest as well as the Florida Statutory Landlord's lien for the payment of said rent may be enforced by distress, foreclosure or otherwise, at the option of the said Landlord, and Tenant agrees that such lien is granted to the Landlord and vested in said Landlord, and the Tenant further agrees that in case of the failure of said Tenant to pay the rent herein reserved when the same shall become due, and it becomes necessary for the Landlord to collect said rent by suit or through an attorney, or should Landlord employ an attorney because of the breach of any of the terms, covenants or agreements contained in this lease, the Tenant will pay the Landlord a reasonable attorney's fee together with all costs and charges incurred by, through or in connection with such collection or in any other suit or action or appeal which may be brought in any Court because of a breach of any terms, covenants or agreements contained in this Lease. 36. MECHANICS LIEN The Tenant shall have no authority to incur, create or permit, and shall not incur, create, permit or suffer, any lien for labor or materials or services to attach to the interest or estate of either the Landlord or the Tenant in the Demised Premises or in the building or other real estate of which the Demised Premises form a part; and neither the Tenant nor anyone claiming by, through or under the Tenant, shall have any right to file or place any labor or material lien of any kind or character whatsoever or any mechanics lien or other lien of any kind, upon the Demised Premises or the building or other real estate of which the Demised Premises form a part, so as to encumber or affect the title of the Landlord, and all persons contracting with the Tenant directly or indirectly, or with any person who in turn is contracting with the Tenant, for the erection, construction, installation, alteration or repair of the demised premises or any improvements therein or thereon, including fixtures and equipment, and all material-men, contractors, mechanics, laborers, architects, from the date of this instrument, they and each of them must look to the Tenant only to secure the payment of any bills or charges or claims for work done, or materials furnished, or services rendered or performed during the term hereby demised. 37. RECORDATION This Lease shall not be recorded. 38. RADON GAS Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risk to persons who are exposed to it 19 22 over time. Levels or radon that exceed Federal and State Guidelines have been found in buildings in Florida. Additional information may be obtained from your county public health unit. 39. REAL ESTATE BROKER Tenant represents and warrants to Landlord that no broker, agent, commission salesman or other person has represented Tenant in the negotiations for or procurement of this Lease and of the Premises and Tenant does and shall agree to indemnify and hold Landlord harmless from and against any and all loss, cost, damage, claim and demand, meritorious or otherwise, for or from any fees, commissions, payments or expenses due or alleged to be due to any broker, agent, commission salesman or other person purporting to represent Tenant in connection with this Lease, the premises, or the negotiations therefore. IN WITNESS WHEREOF, the Landlord and Tenant have executed this Lease as of the day and year first above written. WITNESS: LANDLORD: BANKERS INSURANCE COMPANY /s/ Erica Rudin - --------------------------------- /s/ Susan M. Dill By: /s/ G. Kristin Delano - --------------------------------- ------------------------------------- Date: 1-1-98 ----------------------------------- WITNESS: TENANT: INSURANCE MANAGEMENT /s/ Diane Hellard SOLUTIONS GROUP, INC. - --------------------------------- /s/ Erica Ruden By: /s/ Jeffrey S. Bragg - --------------------------------- ------------------------------------- Date: 1-1-98 ----------------------------------- 20 23 BANKERS FINANCIAL CENTER 360 CENTRAL AVENUE ST. PETERSBURG, FLORIDA 33701 INSURANCE MANAGEMENT SOLUTIONS, INC.
FLOOR RENTABLE AREA (SQUARE FEET) - ----- --------------------------- 2 9,768 3 14,198 4 10,771 5 125 6 13,923 7 7,865 8 7,914 9 2,027 10 7,478 16 885 17 1,788 ------ Total RSF 76,742
24 (FLOOR PLAN) 25 (FLOOR PLAN) 26 (FLOOR PLAN) 27 (FLOOR PLAN) 28 (FLOOR PLAN) 29 (FLOOR PLAN) 30 (FLOOR PLAN) 31 (FLOOR PLAN) 32 (FLOOR PLAN) 33 (FLOOR PLAN) EX-10.7 10 LEASE BETWEEN DANYO LLC AND SMS GEOTRAC, INC. 1 EXHIBIT 10.7 LEASE THIS LEASE made and entered into this 2nd day of September, 1994, by and between SANDAN, an Ohio partnership (the "Landlord"), and SMS GEOTRAC, INC., a Delaware corporation (the "Tenant"). 1. LEASED PROPERTY. 1.1 The Landlord, for and in consideration of the rents to be paid and of the covenants and agreements hereinafter contained to be kept and performed by the Tenant, hereby leases and lets to the Tenant, and the Tenant hereby takes and hires from the Landlord, the real property commonly known as 3900 LAYLIN ROAD NORWALK, OHIO 44857 Together with all buildings, structures and improvements thereon, and all appurtenances thereto (hereinafter collectively referred to as the "Leased Premises"), except 631 square feet of the Leased Premises which shall be used by Sandra White for her tailoring business. 2. TERM. 2.1 The term of this Lease shall be a period of five (5) years, commencing as of September 1, 1994 and terminating on August 31, 1999. 2 3. RENT. 3.1 The Tenant hereby covenants and agrees to pay to the Landlord as rent for the Leased Premises, during said term, the sum of Five Hundred Twenty-Three Thousand Dollars ($523,000.00), payable in equal consecutive monthly installments of Eight Thousand Seven Hundred Sixteen and 67/l00th Dollars ($8,716.67), each in advance upon the first day of each and every calendar month during said term. Rent for any period during the term of this Lease which is less than one month shall be a pro-rata portion of the monthly installment. 4. ADDITIONAL RENT. 4.1 The Tenant shall further pay, as additional rent, all utility charges as required by Section 7 hereof, all premiums on insurance policies as required by Section 8 hereof, all real estate taxes and assessments as required by Section 9 hereof, all necessary repairs and replacements as required by Section 6.2 hereof, and all other expenses and charges, which, during the term hereof, shall arise, be levied, assessed, charged or imposed upon or with respect to the Leased Premises. It is the purpose and intent of the Landlord and the Tenant that the rent described in Section 3 above shall be absolutely net to the Landlord, so that this Lease shall yield, net, to the Landlord the rent specified in Section 3 above during the term hereof. 4.2 The Landlord covenants and agrees that if there shall be any refunds or rebates of any utility charges, insurance premiums, real estate taxes and assessments, and/or any other 2 3 expenses and charges paid by the Tenant with respect to the Leased Premises hereunder, such refunds or rebates shall belong to the Tenant. Any refund or rebate received by Landlord shall be deemed trust funds received as the Tenant's agent and on its behalf. Landlord will promptly notify Tenant of the existence of such refunds and rebates and shall take all reasonable actions which may be required to obtain such refunds or rebates. The Landlord will, upon the request of the Tenant, sign any receipts which may be necessary to secure the payment of any such refunds or rebates, and will immediately (and without charge) pay over to the Tenant any such refunds or rebates as are received by the Landlord. 4.3 In the event that the Tenant fails to pay by their respective due dates all expenses and charges to be paid by it pursuant to the terms hereof, or fails to maintain and make any required repairs to the Leased Premises as provided herein, or fails to carry insurance as provided herein, or fails to fulfill any other obligation under this Lease, and if any of the foregoing failures continue for a period of ten (10) days after Tenant receives written notice from Landlord, then the Landlord, at its option, may do so and the amount of such expenditure shall immediately become due and payable to the Landlord and be considered additional rent hereunder, but no such payment or compliance by Landlord shall constitute a waiver of any such failure by Tenant or affect any right or remedy of Landlord with respect thereto. 3 4 5. USE OF PREMISES. 5.1 The Tenant shall use and occupy the Leased Premises for general business purposes including, without limiting the generality of the foregoing, sales activities, general office and data processing. 5.2 The use by the Tenant of the Leased Premises shall be in a careful, safe and proper manner, and the Tenant shall not permit the same to be used for any unlawful purpose, nor commit nor suffer any waste; and the Tenant will carefully preserve, protect, control and guard the same from damage. 6. MAINTENANCE AND REPAIR OF PREMISES. 6.1 Except as expressly provided herein, the Tenant agrees that it is taking the Leased Premises in an "as is" condition and that the Landlord has made no representations or warranties concerning the Leased Premises. 6.2 Throughout the term of this Lease, the Tenant shall, at its sole cost and expense, take good care of and make all necessary repairs and replacements to the Leased Premises and appurtenances thereto, except those repairs and replacements which are specifically set forth in Subsection 6.3 hereof as being obligations of Landlord, and at the expiration of the term of this Lease, return the Leased Premises to the Landlord in the same condition as the Leased Premises were in as of the date hereof, except for (i) those repairs and replacements which are Landlord's obligations as set forth in Subsection 6.3 hereof, (ii) normal wear and tear and (iii) damage to the Leased Premises attributable to 4 5 any fire or other casualty covered under Section 12, below. Notwithstanding part (iii) above, however, subject to Section 8.4, below, the Tenant shall be required to make any repairs to the Leased Premises to the extent that (a) the fire or other casualty is attributable to the willful misconduct of the Tenant or (b) insurance proceeds to make such repairs would have been available but for the Tenant's failure to maintain the types) of insurance which the Tenant is required to maintain pursuant to Section 8.2, below. The Tenant shall, at its own cost and expense, keep the Leased Premises, abutting sidewalks and parking areas, if any, free and clear from all rubbish, dirt, ice, snow, goods or other obstacles; further, the Tenant shall be responsible for all costs associated with landscaping, both indoor and outdoor, including the replacement and replanting of flowers, grass and bushes, and the maintenance (other than any repairs and/or replacements which Landlord is required to make under Section 6.3, below) thereof, janitorial, painting, window cleaning, removal of rubbish and general cleaning services, security services and all other services related to the operation and maintenance (other than any repairs and/or replacements which Landlord is required to make under Section 6.3, below) of the buildings on the Leased Premises, both interior and exterior, including materials, supplies and the rental costs of equipment and tools related to any of the foregoing, or contracts with independent third parties to provide such services or supplies. 5 6 6.3 Except for repairs and replacements necessitated as a result of the negligence of Tenant or the failure of Tenant to perform its obligations under Section 6.2, above of Tenant, its employees, agents, licensees or invitees, the Landlord shall, throughout the term of this Lease, at the Landlord's sole cost and expense, keep in good condition and repair the foundations, exterior walls, structural condition of all load bearing walls and the roof of the building (the "Building") in which the Leased Premises are located. In addition, Landlord shall, at Landlord's sole cost and expense, make any major repairs to all of the Building's systems (including, without limitation, the plumbing, electrical, lighting, heating, ventilation and air conditioning and fire detection (including sprinkler) systems) which may be required during the term of this Lease and/or replace such systems; provided that Landlord shall not be required to make any repairs to any of the Building's which are necessitated by the Tenant's failure to make repairs under Section 6.2, above. In the event that the Landlord fails to so take good care of and make all necessary repairs and replacements to said components of the building(s) on the Leased Premises, then the Tenant, at its option, may do so upon ten (10) days written notice to the Landlord; provided, however, that in the event that the Leased Premises are rendered unusable as a result of such a failure by Landlord, Tenant may make such repairs upon twenty-four (24) hours' prior written notice delivered to the Landlord by facsimile. The Landlord shall either pay or reimburse the Tenant for the cost and expense of so taking good 6 7 care of and repairing or replacing said components of the building(s) on the Leased Premises within five (5) days of receipt by the Landlord of the bill for such cost and expense. 6.4 CONDITION OF THE LEASED PREMISES. The Landlord hereby represents and warrants that as of the date of this Lease: (a) all of the Building's systems (including, without limitation, the plumbing, electrical, lighting, heating, ventilation and air conditioning and fire detection (including sprinkler) systems) shall be in good operating condition and repair; (b) the foundations, exterior walls, structural condition of all load bearing walls and the roof of the Building shall be in good operating condition and repair; and (c) the Building is in compliance with all building, life/safety, disability and other laws, codes and regulations of any governmental or quasi-governmental authority, including, without limitation, the Americans With Disabilities Act of 1990 and all restrictions of record, which may apply to the Building. 7. UTILITIES. 7.1 Throughout the term of this Lease, the Tenant shall, at its sole cost and expense, and on its own account, furnish all utilities of every type and nature required by it in the use of the Building and any portions of the Leased Premises located outside of the Building, and shall pay or cause to be paid, when due, all bills for water, sewage, heat, gas and electricity used on, in connection with, or chargeable against the Building and any portions of the Leased Premises located outside of the Building. 7 8 8. INSURANCE. 8.1 Public Liability Insurance. Tenant agrees to carry at its own expense, throughout the term of this Lease, public liability insurance covering the Premises and Tenant's use thereof, with minimums of One Million Dollars ($1,000,000.00) on account of bodily injuries to or death of one person and One Million Dollars ($1,000,000.00) on account of bodily injuries to or death of more than one person as a result of any occurrence. Said policy or policies of insurance shall name Landlord and Tenant as insureds. 8.2 Fire and Extended Coverage Insurance. Tenant hereby agrees to obtain and carry during the term of this Lease and any renewal thereof a policy or policies of insurance insuring the building and any improvements made thereto by Tenant during the term of this Lease and any renewal thereof against loss or damage by fire and such other risks as are from time to time included in standard extended coverage endorsements, in an amount equal to the replacement cost of such building and such improvements. Landlord and Tenant shall be the named insureds under such policy or policies. (1) Any and all proceeds of such policy or policies shall be applied to Tenant's and/or Landlord's obligations under Paragraphs 6 and 12 hereof, to the extent of said obligations. (2) Any and all excess proceeds paid pursuant to said policy or policies shall be and become the property of Tenant. 8 9 8.3 Personal Property Insurance. Tenant agrees to carry, at its expense, insurance against fire and such other risks as are from time to time included in standard extended coverage endorsements insuring Tenant's items of personal property located on or within the Premises, in an amount deemed sufficient by Tenant. 8.4 Waiver of Subrogation. Landlord and Tenant hereby waive all causes of action and rights of recovery each may have against the other and on behalf of any person or entity claiming through or under either Landlord or Tenant by way of subrogation or otherwise for all loss or damage to property to person by reason of fire or any peril insured against any standard or extended coverage insurance regardless of the cause or origin of such damage including any act of negligence by either party hereto or any party acting for and on behalf of either party thereto but, the within waiver, contained herein shall be limited only to the recovery made by either party hereto under any policy of insurance then in effect and only if such waiver shall not invalidate or impair the coverage afforded by the policy of insurance then in effect. Landlord and Tenant agree that any policies of insurance providing for insurance against the perils described herein shall provide for the waiver contained in this Paragraph of the Lease so long as such waiver is available without the payment of additional premium or charge. If any additional premium or charge is required to obtain such waiver, then the cost thereof shall be paid by the party benefitted thereby. 9 10 8.5 The Tenant shall use its best efforts to have inserted in each policy of insurance obtained pursuant to the provisions hereof an agreement by the insurer that Landlord will be promptly notified of any overdue premium payment, and a provision that such policy shall not be canceled without prior written notice to the Landlord and its mortgagee(s) to whom a loss thereunder may be payable. The Tenant shall cause certificates of insurance required hereunder to be provided to the Landlord, and, at the Landlord's request, proof of premium payments. 9. TAXES. 9.1 Tenant shall pay all real estate taxes and assessments, both general and special, water rents and sewer charges, heretofore or hereafter levied, assessed or charged by any governmental taxing authority against the Premises and all buildings and other improvements which are a part thereof which became due and payable during the term of this Lease or any renewal thereof. Tenant shall pay all taxes heretofore or hereafter levied or assessed by any governmental authority against any leasehold interest or any fixtures, furnishings, equipment or other personal property of any kind owned, installed or used by Tenant in or on the Premises, which become due and payable during the term of this Lease or any renewal thereof. 9.2 The Tenant shall, upon notice to the Landlord, have the right to contest, at the Tenant's sole cost and expense, any real estate taxes and assessments in the name and on behalf of the Landlord, and the Landlord shall, at the request of Tenant, 10 11 cooperate in such contest by the Tenant, providing the Landlord does not have to pay for any expenses or costs incurred thereby. 10. CHANGES AND ALTERATIONS. 10.1 The Tenant shall have the right to make at any time and from time to time during the term of this Lease, at its sole cost and expense, changes and alterations to the Leased Premises (but not structural alterations), subject, however, in all cases, to the following provisions of this Section. 10.2 No change or alteration shall be made to the Leased Premises without the prior written consent of the Landlord, which consent shall not be unreasonably withheld or delayed; provided, however, that the Tenant shall be entitled, without the Landlord's prior written consent, to make any non-structural alterations to the Leased Premises which cost less than Twenty Thousand Dollars ($20,000.00), individually, or Sixty Thousand Dollars ($60,000.00) in the aggregate throughout the Term of this Lease. 10.3 No change or alteration shall be undertaken until the Tenant shall have procured and paid for all required permits and authorizations of all municipal departments and governmental subdivisions having jurisdiction. The Landlord shall join in application for such permits or authorizations whenever such action is necessary. Before any alteration, addition or improvement or any other change is commenced or any materials are delivered to the Leased Premises, Tenant shall provide Landlord with plans, specifications, names of contractors, copies of contracts and necessary permits. 11 12 10.4 Any change or alteration shall be made promptly (unavoidable delays excepted) in a good and workmanlike manner and free and clear of all mechanic's liens and in compliance with all applicable permits and authorizations and building and zoning laws and all other laws, ordinances, orders, rules, regulations and requirements of all federal, state, county and municipal governments, and all departments, commissions, boards and officers thereof. 11. TENANT'S CHANGES. FIXTURES AND EQUIPMENT. 11.1 Except as otherwise provided herein all equipment, furnishings, signs and other items of personal property installed in the Premises by Tenant and paid for by Tenant shall remain the property of Tenant and may be removed by Tenant upon the expiration of the term of this Lease or any renewal thereof or its earlier termination, provided that any of such items as are affixed to the Premises and require severance may be removed only if Tenant shall repair any damage caused by such removal and provided further that Tenant shall have fully performed all of the covenants and agreements to be performed by it under the provisions of this Lease. If Tenant fails to remove such items from the Premises within thirty (30) days after the termination of this Lease or the expiration of the term of this Lease, or any renewal thereof, all such equipment, furnishings, signs and items of personal property shall become the property of Landlord. 12 13 12. DESTRUCTION OF PREMISES AND CONDEMNATION. 12.1 If the Premises shall be destroyed or so injured by any cause as to be unfit, in whole or in part, for use and such destruction or injury could reasonably be repaired within ninety (90) days from the happening of such destruction or injury, then Tenant shall not be entitled to surrender possession of the Premises. In the case of any such destruction or injury, Landlord shall repair the same with all reasonable speed and shall complete such repairs within ninety (90) days from the happening of such injury, provided that the cost of such repairs is fully covered by the proceeds of the fire and extended coverage insurance policy or policies provided in Section 8 hereof. If the Premises shall be destroyed or so injured by any cause as to be unfit, in whole or in part, for use and such destruction or injury could not be reasonably repaired within ninety (90) days from the happening of such destruction or injury, and if the cost of such repairs is not fully covered by said insurance proceeds, Landlord may elect to terminate this Lease provided Landlord shall notify Tenant of such intention within thirty (30) days after the happening of such destruction or injury, and in the event of such termination all unearned rent and other charges paid in advance by Tenant shall be refunded. If after any damage or destruction of the Leased Premises, Tenant shall be unable to use all or any portion of the Premises, rent shall abate during the period of repair or reconstruction in the same proportion to the total rent as the portion of the Leased Premises rendered unusable bears to the 13 14 entire Leased Premises. If the Landlord undertakes the repair, restoration and/or reconstruction of the Building under this Section 12.1 and fails to complete such repair, restoration and/or reconstruction within one hundred twenty (120) days after the date of the occurrence of the casualty or if Landlord fails to give notice to Tenant of Landlord's election to repair the Building within thirty (30) days after the occurrence of such casualty, then the Tenant may immediately cancel this Lease by giving written notice of its election to cancel to the Landlord. 12.2 If such destruction or injury cannot reasonably be repaired within ninety (90) days after the happening thereof, then either party may, by written notice to the other party within thirty (30) days after the occurrence of such casualty, terminate this Lease. If neither party so terminates this Lease, Landlord shall restore the Premises to their former condition with due diligence, and rent shall abate during the period of repair or reconstruction in the same proportion to the total rent as the portion of the Leased Premises rendered unusable bears to the entire Leased Premises. If the Landlord undertakes the repair, restoration and/or reconstruction of the Building under this Section 12.2 and fails to complete such repair, restoration and/or reconstruction within one hundred eighty (180) days after the date of the occurrence of the casualty, then the Tenant may immediately cancel this Lease by giving written notice of its election to cancel to the Landlord. 14 15 12.3 For purposes of Sections 12.1 and 12.2, above, any determination regarding whether the Building can be repaired within a specific period of time shall be made by a reputable architect or contractor selected by Landlord and reasonably acceptable to Tenant. 12.4 Eminent Domain. In the event the Premises or any part thereof shall be taken or condemned either permanently or temporarily for any public or quasi-public use or purpose by any competent authority in appropriation proceedings or by any right of eminent domain, the entire compensation award therefor, including, but not limited to, all damages as compensation for diminution in value of the leasehold, reversion and fee, shall belong to the Landlord without any deduction therefrom for any present or future estate of Tenant, and Tenant hereby assigns to Landlord all its right, title and interest to any such award. Although all damages in the event of any condemnation are to belong to the Landlord, whether such damages are awarded as compensation for diminution in value of the leasehold, reversion or to the fee of the Premises, Tenant shall have the right to claim and recover from the condemning authority, but not from Landlord, such compensation as may be separately awarded or recoverable by Tenant in Tenant's own right on account of any and all damage to Tenant's business by reason of the condemnation and for or on account of any cost or loss which Tenant might incur in removing Tenant's furnishings, fixtures, leasehold improvements and equipment. 15 16 If the whole of the Premises shall be taken by any public authority under the power of eminent domain or any portion of the Leased Premises are taken by eminent domain which renders the remaining portions of the Leased Premises unusable for Tenant's intended purposes, this Lease shall terminate as of the day possession shall be taken by such public authority, and Tenant shall pay rent up to that date with an appropriate refund by Landlord of such rent as shall have been paid in advance for a period subsequent to the date of the taking. If less than ten percent (10%) of the gross leasable area of the Premises shall be so taken, said Lease shall terminate only with respect to the parts so taken as of the day possession shall be taken by such public authority, and Tenant shall pay rent up to that day for the parts so taken with an appropriate refund by Landlord of such rent as may have been paid in advance for a period subsequent to the date of the taking and, thereafter, the rent shall be equitably adjusted, and Landlord shall at its expense make all necessary repairs or alterations to the basic building and exterior work so as to constitute the remainder of the Premises a complete, finished architectural unit. If ten percent (10%) or more of the gross leasable area of the Premises shall be so taken, then this Lease shall terminate with respect to the part so taken from the date possession shall be taken by such public authority, and Tenant shall pay rent up to that date with an appropriate refund by Landlord of such rent as may have been paid in advance for a period subsequent to the date of the taking, and either party shall have 16 17 the right to terminate this Lease upon notice in writing within thirty (30) days after such taking of possession; in the event that Tenant remains in possession, and if Landlord does not so terminate, all of the terms herein provided shall continue in effect except that the rent shall be equitably abated, and Landlord shall make all necessary repairs or alterations to the basic building and exterior work so as to constitute the remaining premises a complete, finished architectural unit. If more than fifty percent (50%) of the gross leasable area of the building in which the Premises are located shall be taken under the power of eminent domain, either party may, by written notice to the other party, delivered on or before the day of surrendering possession to the public authority, terminate this Lease, and rent shall be paid or refunded as of the date of termination. 13. ASSIGNMENT AND SUBLETTING. 13.1 The Tenant may not assign this Lease and/or sublet or underlet the Leased Premises or any part thereof without the Landlord's prior written consent. 13.2 Notwithstanding Section 13.1, the Tenant shall not require the Landlord's consent in order to assign this Lease, or to sublease all or any portion of the Leased Premises, (a) to any entity which, directly or indirectly, controls, is controlled by, or is under common control with the Tenant, (b) any entity resulting from the merger or consolidation of control of the Tenant, or (c) any person or entity which acquires the Tenant or 17 18 substantially all of the assets of the Tenant's business that is then being conducted on the Leased Premises. 14. ENTRY BY LANDLORD. 14.1 The Landlord and its duly authorized representatives shall have the right to enter the Leased Premises at all reasonable times for the purposes of (a) inspecting the condition of same and making such repairs, alterations, additions or improvements thereto as may be necessary or desirable, and (b) exhibiting the same to persons who may wish to purchase or lease the same, and, during the last six (6) months of the term of this Lease, placing a notice of reasonable size on the Leased Premises offering the same or any part thereof for sale or rent. 15. COVENANTS AGAINST LIENS. 15.1 Liens of Tenant. If because of any act or omission of Tenant, any mechanic's lien or other lien, charge or order for the payment of money shall be filed against any portion of the Leased Premises, Tenant shall, at its own cost and expense, cause the same to be discharged of record or bonded within ninety (90) days after written notice from Landlord to Tenant of the filing thereof unless Tenant shall contest the validity of such liens by appropriate proceedings in good faith and with due diligence. 15.2 Removal of Liens. If Tenant shall fail to cause such liens to be discharged of record or bonded within the aforesaid ninety (90) day period (unless Tenant shall contest the validity of such lien as aforesaid, or satisfy such liens within sixty (60) days after judgment in favor of any such lien holders 18 19 from which no further appeal might be taken) Landlord shall have the right to cause the same to be discharged. All amounts paid by Landlord to cause such liens to be discharged shall constitute additional rent payable by Tenant to Landlord. 16. ENJOYMENT WITHOUT MOLESTATION. 16.1 If the Tenant pays the rent it is obligated hereunder to pay, and observes all other terms, covenants and conditions hereof, it shall occupy and enjoy the use of the property hereby leased during the term of this Lease without any hindrance, molestation or ejection by the Landlord, its successors or assigns. 17. OPTION TO RENEW. 17.1 Tenant is hereby granted an option to renew this Lease for an additional five (5) year term upon the same terms and conditions as are provided herein except that the rent during such renewal term shall be adjusted as set forth in this Paragraph. Said option to renew shall be exercised by the Tenant giving notice by certified mail to the Landlord, return receipt requested, at least six (6) months prior to the expiration of the initial term. It shall be a condition of the exercise of the foregoing option that at the time of the exercise of said option the Tenant shall not be in default beyond any grace period herein provided in the performance of any of the terms or provisions contained in this Lease. 17.2 In the event the Tenant exercises its option to renew this Lease for an additional five (5) year period, the annual 19 20 rent during said renewal term shall be adjusted as follows: (i) The Consumer Price Index for All Urban Consumers (1987=100) "All Items" for the City nearest the location of the Building issued by the Bureau of Labor of the Department of Labor for the month of June in the calendar year during which the initial term of this Lease expires (hereinafter referred to as "Comparison Index") shall be compared to the Consumer Price Index for the month of June in the calendar year during which this Lease commences (hereinafter referred to as the "Base Index"). If said Comparison Index exceeds the Base Index, the annual rent for the renewal term shall be adjusted by multiplying the annual rent being paid prior to the expiration of the initial term, by a fraction, the numerator of which is the Comparison Index and the denominator of which is the Base Index. (ii) The comparisons and adjustments, if any provided for herein shall be made as soon as the Comparison Index has been made available by the Department of Labor. The Landlord shall, after making the necessary computation, notify the Tenant, in writing, of the adjusted annual rent to be charged during the renewal term if the option to renew is exercised. 20 21 (iii) If during the term of this Lease the Bureau of Labor shall substitute a new base for the 1987=100 base hereinbefore stipulated as of the Index base, Landlord and Tenant agree that such substituted base, adjusted and equated to the 1987=100 base in the manner recommended by said Bureau of Labor, shall then become and be the Index for all purposes of this Paragraph. In the event the Index shall cease to be published, then, for the purposes of this Paragraph, there shall be substituted for the Index such other index as Landlord and Tenant shall agree upon. 18. INDEMNITY. 18.1 The Tenant shall, at all times, indemnify the Landlord for, defend the Landlord against, and save the Landlord harmless from any liability, loss, cost, injury, damage or other expense, including mechanic's liens or other liens, that may occur or be claimed by or with respect to any person or property on or about the Leased Premises to the extent that such matters result from the use of the Leased Premises by the Tenant or from the Tenant's failure to observe or perform its obligations under this Lease, other than any such liability, loss, cost, injury, damage or other expense resulting from the Landlord's failure to observe and perform any provision, covenant or condition required under this Lease to be observed and performed by the Landlord. 21 22 18.2 The Landlord shall, at all times, indemnify the Tenant for, defend the Tenant against, and save the Tenant harmless from any liability, loss, cost, injury, damage or other expense that may occur or be claimed by or with respect to any person or property on or about the Building to the extent that such matters result from the use of the Building by the Landlord or from the Landlord's failure to observe or perform its obligations under this Lease, other than any such liability, loss, cost, injury, damage or other expense resulting from the Tenant's failure to observe and perform any provision, covenant or condition required under this Lease to be performed by the Tenant. 19. DEFAULT. 19.1 The occurrence of any one or more of the following events shall constitute an event of default (an "Event of Default"): (a) The Tenant shall fail to pay any installment of rent or make any payment of additional rent within ten (10) days after the Tenant receives written notice that such amount is overdue; (b) The Tenant fails to deliver to Landlord a certificate of insurance as required under Section 8.5, above and such failure continues for a period of ten (10) days after Tenant receives written notice of such failure from Landlord or the Tenant fails to obtain replacement insurance for any type of insurance required hereunder for which a notice of cancellation has been received and such failure continues for a period of ten (10) days after Tenant receives written notice of such failure from Landlord; (c) The Tenant shall fail to observe and perform any other provision, covenant or condition of this Lease required under this Lease to be observed and performed by the Tenant within thirty 22 23 (30) days after the Landlord shall have given written notice to the Tenant of the failure of the Tenant to observe and perform the same, or if such default shall be of such a nature that it cannot be cured completely within said thirty (30) day period, if Tenant shall not have promptly commenced curing such default within such thirty (30) day period, or shall not thereafter proceed with diligence and in good faith to remedy such default; (d) The Tenant shall make an assignment for the benefit of its creditors; (e) Proceedings in bankruptcy or for reorganization of the Tenant or for adjustments of debts under the Federal Bankruptcy Code, as amended, or any parts thereof, or under any other act or law, whether parts thereof, or under any other act or law, whether state or federal, for the relief of debtors, shall be commenced by or against the Tenant and shall not be discharged within sixty (60) days of their commencement; (f) A receiver or trustee shall be appointed for the tenant or for any substantial part of its assets and such receiver or trustee shall not be discharged within sixty (60) days of his appointment; and (g) Any proceedings shall be instituted for the involuntary dissolution or the full or partial liquidation of the Tenant and such proceedings shall not be dismissed or discharged within sixty (60) days of their commencement. 19.2 Upon the occurrence of an Event of Default, the Landlord shall mail or otherwise deliver to the Tenant written notice of the Event of Default and its intention to invoke the remedies set forth herein. After a ten (10) day period beginning on the date such notice is mailed or otherwise delivered, the Landlord may, at its election, terminate the Lease and re-enter and take possession of the Leased Premises, or re-enter and take possession of the Leased Premises without thereby terminating this 23 24 Lease. In either event, Landlord shall have the right (a) to declare the remaining unpaid amount of rent due during the term of this Lease to be immediately due and payable (in such event, if the Landlord relets the Leased Premises or any part thereof during what would have been the balance of the term of this Lease, then the Landlord shall promptly pay to the Tenant (up to the amount received by the Landlord from such acceleration) the amounts as they are received from such reletting, less the Landlord's Expenses (as hereafter defined); or (b) to relet the Leased Premises, or any part thereof, for such term or terms and on such conditions as the Landlord determines for and on behalf of the Tenant for the highest rental reasonably obtainable in the judgment of the Landlord, and recover from the Tenant any deficiency between the amount of rent, in fact, received through such reletting and the amount of rent, additional rent and all other charges payable under this Lease, plus any expenses incurred by the Landlord in connection with such reletting, including, without limitation, the expense of any repairs or alterations the Landlord reasonably deems necessary or appropriate to make in connection with such reletting and sums expended for brokerage commissions (herein referred to as the "Landlord's Expenses"). 20. NON-WAIVER. 20.1 Neither a failure by the Landlord to exercise any of its options hereunder, nor failure to enforce its rights or seek its remedies upon any default, nor the acceptance by the Landlord of any rent accruing before or after any default, shall effect or 24 25 constitute a waiver of the Landlord's right to exercise such option, to enforce such right, or to seek such remedy with respect to that default or to any prior or subsequent default. The remedies provided in this Lease shall be cumulative and shall not in any way abridge, modify or preclude any other rights or remedies to which the Landlord is entitled either at law or in equity. 21. SURRENDER OF PREMISES. 21.1 Upon termination of this Lease, whether by lapse of time or otherwise, or upon the exercise by the Landlord of the power to re-enter and repossess the Leased Premises without terminating this Lease, as hereinbefore provided, the Tenant shall at once surrender the possession of the same to the Landlord in as good order and repair as they were in as of the date hereof, except for (i) those repairs and replacements which are Landlord's obligations as set forth in Subsection 6.3 hereof, (ii) normal wear and tear, and at once remove all of the Tenant's property therefrom and (iii) damage to the Leased Premises attributable to any fire or other casualty covered under Section 12, above. Notwithstanding part (iii) above, however, subject to Section 8.4, above, the Tenant shall be required to make any repairs to the Leased Premises to the extent that (a) the fire or other casualty is attributable to the willful misconduct of the Tenant or (b) insurance proceeds to make such repairs would have been available but for the Tenant's failure to maintain the type(s) of insurance which the Tenant is required to maintain pursuant to Section 8.2, above. If, upon such an event, the Tenant does not at once surrender possession of the 25 26 same and remove all its property therefrom, the Landlord may forthwith re-enter and repossess the same and remove all of the Tenant's property therefrom and store the same without being guilty of trespass or of forcible entry or detainer and thereafter the Landlord may recover from the Tenant all costs and expenses incurred by the Landlord in removing the Tenant's property and storing the same, together with interest as aforesaid. 22. HOLDING OVER BY TENANT. 22.1 If the Tenant remains in possession of all or any part of the Leased Premises after the expiration of the term hereof, then the Tenant shall be deemed a Tenant of the Leased Premises from month-to-month with the rental for each month of the holding-over period being ten percent (10%) greater than the rental due hereunder for the immediately preceding month, and subject to all of the other terms and provisions hereof, except only as to the term of this Lease. 23. SECURITY DEPOSIT. 23.1 Within forty-five (45) days from the date hereof, the Tenant shall deposit with the Landlord as a security deposit an amount equal to one month's rent hereunder. The Landlord shall repay to the Tenant in cash the principal amount of the security deposit immediately upon termination of this Lease, provided that the Tenant has fully complied with its obligations hereunder. Notwithstanding the previous sentence, the Landlord shall have the right to apply any part of the security deposit to cure any failure of the Tenant to fulfill its obligations hereunder. 26 27 24. NOTICES. 24.1 Any notice, election, communication, request or other document or demand required or desired to be given to the Landlord or the Tenant shall be in writing and shall be deemed given if either served personally or sent by registered or certified mail, postage prepaid: If to Landlord: Sandan c/o Dan White Two Central Boulevard Norwalk, OH 44857 With a copy to: Mark Volsky, Esq. Hermann, Cahn & Schneider 100 Erieview Plaza 1301 E. 9th, Suite 500 Cleveland, OH 44114 If to Tenant: SMS Geotrac, Inc. 3160 Airway Avenue Costa Mesa, CA 92626 With a copy to: Strategic Mortgage Services, Inc. 4340 Von Karman, Suite 400 Newport Beach, California 92660 Attn: Mr. David Howard, Real Estate Department 24.2 Either party may, from time to time, change the address at which such written notices, exercises of elections, communications, requests or other documents or demands are to be mailed, by giving the other party written notice of such changed address. 27 28 25. SHORT FORM OF LEASE. 25.1 The parties hereto agree to execute a short form of this Lease for recording upon request of either party hereto. 26. BROKERS. 26.1 The Landlord and the Tenant represent and warrant to each other that no real estate broker or intermediary offered the Leased Premises to the Tenant on behalf of the Landlord for lease. The Tenant and the Landlord agree to defend, indemnify and hold each other harmless against any claims for brokerage commission arising out of any conversations or negotiations had by the Tenant or the Landlord, as the case may be, with any real estate broker or intermediary regarding the lease of the Leased Premises from the Landlord to the Tenant. 27. ENTIRE AGREEMENT. 27.1 All understandings and agreements heretofore had between the parties hereto are merged into this Lease, which alone fully and completely expresses their understanding, and the same is being entered into after full investigation, neither party relying upon any statement or representation made by the other which is not embodied in this Lease. 28. MODIFICATIONS. 28.1 This Lease shall not be modified or amended except by a written instrument duly executed by the parties hereto. 29. PARTIAL INVALIDITY. 29.1 If any provision of this Lease or the application thereof to any part or circumstances shall, to any extent, be 28 29 invalid or unenforceable, the remainder of this Lease shall be valid and enforceable to the fullest extent permitted by law. 30. SUCCESSORS AND ASSIGNS. 30.1 This Lease shall be binding upon and shall inure to the benefit of the parties hereto, their successors and assigns. 31. SECTION HEADINGS. 31.1 The section headings contained in this Lease are for reference purposes only and shall not affect in any way the meaning or interpretation of this Lease. 32. GOVERNING LAW. 32.1 The laws of the State of Ohio shall govern the validity, construction, interpretation and enforcement of this Lease. IN WITNESS WHEREOF, the Landlord and Tenant have duly executed this instrument as of the day and year first above written. WITNESSES: SANDAN (LANDLORD) By: /s/ Daniel J. White - -------------------------------- ----------------------------------------- Its Partner - -------------------------------- ----------------------------------------- SMS GEOTRAC, INC. (TENANT) By: /s/ Gerald M. Boylan - -------------------------------- ----------------------------------------- Gerald M. Boylan Its Secretary - -------------------------------- ----------------------------------------- 29 30 CERTIFICATE OF ACKNOWLEDGEMENT State of California On Sept. 9, 1994 before me, Margaret L. -------------- -------------------------- SS. (date) (name and title of Officer) County of Orange Kramp, a notary public personally appeared ------------ ---------------------------------, Gerald M. Boylan ----------------------------------------------------- personally known to me (or proved to me on the basis of satisfactory evidence) to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument. WITNESS my hand and official seal. /s/ Margaret L. Kramp --------------------------------------------- Notary's Signature
FLORIDA Margaret L. Kramp STATE Comm. #999651 SEAL NOTARY PUBLIC CALIFORNIA ORANGE COUNTY Comm. Express July 14, 1997 31 STATE OF OHIO ) ) SS: COUNTY OF CUYAHOGA ) BEFORE ME, a Notary Public in and for the State and County aforesaid, personally appeared SANDAN, and Ohio partnership, by Dan White, its partner, who acknowledged before me that he/she did execute the foregoing instrument and that the same is the free act and deed of said partnership and is his/her free act and deed personally and as such officer. IN WITNESS WHEREOF, I have hereunto set my hand and seal at Cleveland, Ohio, this 2nd day of September, 1994. /s/ Karen S. Truax ----------------------------------- Notary Public KAREN S. TRUAX NOTARY PUBLIC, STATE OF OHIO Recorded In Cuyahoga County My Comm. Expires May 5, 1999 STATE OF ) --------------) COUNTY OF ) SS: -------------) BEFORE ME, a Notary Public in and for the State of County aforesaid, personally appeared____________. a Delaware corporation, by____________________, its ___________________, who acknowledged before me that he/she did execute the foregoing instrument and that the same is the free act and deed of said corporation and is his/her free act and deed personally and as such officer. IN WITNESS WHEREOF, I have hereunto set my hand and seal at __________________, ________________, this ______ day of ________________, 1994. --------------------------------- Notary Public 30 EX-10.8 11 INDENTURE OF LEASE, DATED SEPTEMBER 23, 1994 1 EXHIBIT 10.8 INDENTURE OF LEASE This indenture of lease made and entered into at Norwalk, Ohio, this 23rd day of September, 1994, by and between SOUTHVIEW BUSINESS CENTER, LTD., A LIMITED PARTNERSHIP OF 156 S. NORWALK RD., NORWALK, OH 44857, hereinafter referred to as LESSOR and SMS GEOTRAC, INC., A DELAWARE CORPORATION WITH PRINCIPAL OFFICES AT 3900 LAYLIN RD., NORWALK, OH 44857, hereinafter referred to as LESSEE, WITNESSETH: 1. That for the term, at the rent and otherwise upon the terms, conditions and provisions hereinafter contained, Lessor does hereby let and lease unto Lessee the following described premises, to wit: KNOWN GENERALLY AS THE NORTHERN ONE-HALF (1/2) OF THE BUILDING KNOWN AS SOUTHVIEW BUSINESS CENTER INCLUDING APPROXIMATELY 16000 SQ. FT. OF WAREHOUSE AND OFFICE SPACE AT 156 S. NORWALK RD., NORWALK, OH, NORWALK TOWNSHIP. to have and to hold for a term of seven (7) years, commencing on the first day of occupancy or no later than the completion date of new office construction within the said premises, and ending exactly seven (7) years thereafter; provided Lessee shall have the right to renew this Lease upon the same terms and conditions, including the rent hereinafter specified, for a like period of five (5) years. To exercise this option to renew, Lessee shall notify Lessor of its intention to renew no later than Ninety (90) days prior to lease end. 2. Said Lessee hereby agrees to pay the sum of Eighty-Four Thousand Eight Hundred Forty and 00/100 ($84,840.00) Dollars rent per year during the continuance of this lease, which rent is to be paid by the Lessee in monthly installments of Seven Thousand Seventy and 00/100 ($7,070.00) Dollars each, payable on the first day of each month, in advance, from the commencement of the term of this lease. 3. Lessee shall have the right to make such additions, alterations and improvements, in and to the building on the demised premises as he deems necessary or desirable provided; however, that in constructing such additions, alterations or improvements, Lessee does not unreasonably interfere with the operation of the Lessor's business. 4. Lessee agrees to make no structural changes or alterations in the premises or the improvements thereof without first obtaining Lessor's written consent, 2 which consent shall not be unreasonably withheld. Any permission given by the Lessor to make structural changes or alterations, shall be on the condition that the work shall be at Lessee's expense, unless otherwise agreed in writing, and shall be in accordance with the applicable building and safety codes, and shall be such as not to weaken any structure or building. 5. All additions, fixtures, improvements and repairs including utility upgrades made upon the premises by Lessee shall thereafter be the property of the Lessor, except and/or unless it is mutually agreed in writing that any such items are the sole property of Lessee and may be removed by it upon the termination of this lease. 6. In the event that Lessee makes any alterations, improvements or additions to the premises as hereinabove provided, Lessee shall promptly pay all expenses therefor and hereby agrees to and does indemnify Lessor for labor and/or materials furnished, and in the event any mechanic's lien is filed as a result of work contracted for by Lessee, Lessee will immediately pay the same and cause any such lien to be satisfied and discharged of record. Lessee further agrees to reimburse Lessor for any expenses incurred by Lessor as a result of any liens attaching to the property as a result of any alterations, improvements or additions made by Lessee, including but not limited to attorney's fees incurred by Lessor. 7. Lessor shall, during the term of this lease, pay all real estate taxes and assessments of every nature levied and assessed against the demised premises including all buildings and improvements presently thereon. Lessee shall pay all taxes and assessments upon any equipment belonging to Lessee at the demised premises. 8. Lessee shall, during the term of this lease, pay all charges for gas, electricity, heat, air-conditioning and water used or supplied to the demised premises such as would apply to ordinary office equipment and facilities. 9. In the event that any part of the office space herein rented is appropriated or otherwise taken under the power of eminent domain, then Lessee shall have the right and option to terminate this lease by giving ninety (90) days written notice of such intention to Lessor; such option to be exercised within six (6) months of the date upon which title vests in the condemning authority. In the event that any part of the building or improvements on said premises are appropriated or taken as hereinabove described, and Lessee does not elect to terminate this lease, the rental shall be reasonably reduced in the proportion that the value of the building or improvements so appropriated bears to the total value of the premises herein demised. In the event this lease is terminated in accordance herewith, the rental shall be adjusted to the date of termination and Lessee shall not have further duty or obligation hereunder. 3 10. Lessor shall make at its own expense all repairs, alterations and improvements to the building located on the demised premises which may be necessary to maintain the same in good condition and repair, or which may be necessary in order that the demised premises and improvements thereon shall conform to all lawful requirements, laws, and ordinances, the direction of proper public authority and the requirements of all policies of insurance then in force; except that Lessee agrees to keep the demised premises in a clean and orderly condition at all times. Lessee shall retain responsibility for replacement of light bulbs within the leased space and such janitorial services as may be necessary from time to time. Lessor will be responsible for all exterior maintenance and snow and ice removal. 11. Lessee shall not commit or suffer any waste or damage to any building or improvements on the demised premises. 12. Lessee agrees that Lessor or its representatives, with the consent of Lessee, which consent shall not be unreasonably withheld, shall have the right at all reasonable times to enter upon and to inspect the demised premises to ascertain that Lessee is carrying out the terms, conditions and provisions hereof, and to make the necessary repairs, improvements and alterations as hereinabove provided. Lessor shall take all reasonable steps not to interfere with the business activity of Lessee during any inspection or construction of the demised premises. 13. Lessee shall, upon termination of this lease by lapse of time or otherwise, surrender up and deliver the premises together with all improvements made thereon by Lessee in as good order and repair as when first received or constructed, reasonable wear and use thereof excepted. 14. In the event Lessee remains in possession of the demised premises after the term of this lease including any renewal thereof, it shall be deemed a tenant from month to month only, at the monthly rental payment provided for in this lease, and governed in all other things except as to the duration of the term by provisions of this lease. 15. Lessee agrees to indemnify and save Lessor harmless from all loss, cost and expense by reason of injury to any person or property in, on or about the demised premises, which injury results from the Lessee's use of the demised premises. Lessee further agrees to carry public liability insurance covering its use of said premises in the following amounts: $300,000. PER PERSON; $500,000. PER OCCURRENCE Lessee shall deposit with Lessor a copy of such policy or policies, as well as proof of payment of all premiums. Lessor will carry insurance coverage equal to or higher than that required of Lessee. 4 16. This lease shall not be assigned, transferred, or the premises, or any part thereof, sublet without the previous written consent of Lessor and subject to such conditions as Lessor may impose, but such consent shall not be unreasonably withheld. Any attempted assignment or transfer hereof or subletting or under-renting without such written consent shall be wholly null and void; providing, however, that this paragraph shall not prohibit assignment to any corporation pursuant to an agreement of merger or consolidation between Lessee and such corporation, nor shall this paragraph prohibit subletting to any partly or wholly owned subsidiary of Lessee. In the event of such an assignment to a corporation, Lessee shall remain liable for the faithful performance of all the provisions of this lease, including the payment of rent. Lessee may request of Lessor an early termination of this lease. Such request shall be made in writing. Lessor may agree to early termination if a suitable tenant(s) is found to complete the current lease term of Lessee. 17. Lessee shall have the right at his sole cost and expense during the term hereof or any renewal terms, to erect, maintain and operate any signs, electrical or otherwise, in front of said building or attached to the exterior walls thereof; provided, Lessee shall first obtain the consent and approval of Lessor, which shall not be unreasonably withheld, in writing as to the location and design, and further provided any such signs are erected and maintained in accordance with all regulations, laws and ordinances applicable thereto. 18. In the event of a fire or other casualty destroys a portion of the area leased by Lessee hereunder, Lessor shall immediately begin all repairs necessary to restore said premises as nearly as possible to their original condition and shall complete such repairs in a diligent and workmanlike manner and in as little time as possible having due regard for the nature and extent of the damage. In such a case, the rent will be reduced in the ratio the damaged area bears to approximately 16,000 square feet. It is understood and agreed that, if the leased premises or any part thereof shall be destroyed or rendered unfit by fire or other casualty for use or occupancy as in the sole judgment of Lessee would make it impossible or impractical to conduct its operations and Lessor shall not restore the same as aforesaid, then Lessee shall have the option of terminating this lease. 19. It is distinctly understood between the parties hereto that all agreements and understandings of any character heretofore had between them are embodied in this instrument, and no changes shall be made herein unless the same shall be in writing and duly signed by the parties hereto in the same manner and form as this lease has been executed. 5 20. All notices, demands and requests which may or are required to be given by either party to the other shall be in writing. All such notices, demands and requests by Lessor to Lessee shall be sent to Lessee at the demised premises or at such other place that Lessee may from time to time designate in writing. 21. Lessor hereby covenants and agrees with Lessee that if Lessee shall perform all of the covenants and agreements herein agreed to be performed on his part, the said Lessee shall, at all times during the term hereof or of any renewal term, have the peaceable and quiet enjoyment and possession of the leased premises without any manner of let or hindrance from Lessor or any person or persons lawfully claiming said premises. 22. The terms, conditions and provisions of this lease shall inure to and be binding upon Lessor and Lessee and their respective heirs, executors, administrators, successors, and assigns. IN WITNESS thereof, Lessor and Lessee have executed this lease as of the day and year first above written. WITNESSES: LESSOR: SOUTHVIEW BUSINESS CENTER, LTD. /s/ Cynthia S. Tallman By: /s/ John E. Gelvin, Jr. - ---------------------------------- -------------------------------- GENERAL PARTNER /s/ Janet Roble - ---------------------------------- LESSEE: SMS GEOTRAC, INC. /s/ D.P. Casper By: /s/ Daniel J. White - ---------------------------------- -------------------------------- PRESIDENT /s/ B.R. Churchwell - ---------------------------------- 6 ADDENDUM I TO LEASE AGREEMENT THIS ADDENDUM reflects a change in the rent and term of LEASE made and entered into the 23RD day of SEPTEMBER, 1994, by and between SOUTHVIEW BUSINESS CENTER, LTD., A LIMITED PARTNERSHIP, the LESSOR, and SMS GEOTRAC, INC., the LESSEE. The change in rent payment and term of lease is based upon structural changes to the space occupied by the Lessee. Areas designated "Computer" and "Administration" have been completed as finished office space. First Floor infrastructure (rough-in plumbing, reinforced footers for Second Floor, etc.) has been completed. These changes are based in general on the Phase II First Floor Plan drawings, (Attachment A) dated November, 1994, by Charles M. Effinger, Architect. Lessor does hereby let and lease unto Lessee the following described premises, to wit: KNOWN GENERALLY AS THE NORTHERN ONE-HALF (1/2) OF THE BUILDING KNOWN AS SOUTHVIEW BUSINESS CENTER INCLUDING PHASE II IMPROVEMENTS TO WAREHOUSE AND OFFICE SPACE AT 156 S. NORWALK RD., NORWALK, OH, NORWALK TOWNSHIP. to have and to hold for a term of seven (7) years, commencing on the first day of occupancy or no later than the completion date of new construction within the said premises, and ending exactly seven (7) years thereafter, provided Lessee shall have the right to renew this lease upon the same terms and conditions, including the rent hereinafter specified, for a like period of five (5) years. Lessee hereby agrees to pay an additional sum of Twenty-eight Thousand Eight Hundred and 00/100 ($28,800.00) Dollars rent per year during the term of this lease, which rent is to be paid by the Lessee in monthly installments. Said monthly installments of Two Thousand Four Hundred and 00/100 ($2,400.00) Dollars when added to current monthly installments of Seven Thousand Seventy and 00/100 ($7,070.00) Dollars should total Nine Thousand Four Hundred Seventy ($9,470.00) Dollars each, payable on the first day of occupancy as specified herein prorated as necessary to the first day of the month, thence monthly on the first day of the month thereafter for the term of the lease. All the terms found in the original Indenture of Lease shall apply to this space. IN THE PRESENCE OF: LESSOR: SOUTHVIEW BUSINESS CENTER, LTD. /s/ Cynthia S. Tallman By: /s/ John E. Gelvin, Jr. - ---------------------------------- -------------------------------- GENERAL PARTNER 7 LESSEE: SMS GEOTRAC, INC. /s/ D.P. Casper By: /s/ Daniel J. White - ---------------------------------- -------------------------------- PRESIDENT /s/ Signature Not Legible - ---------------------------------- STATE OF OHIO } }: ss: COUNTY OF HURON } Before me, a Notary Public in and for said State, personally came JOHN E. GELVIN, JR., A GENERAL PARTNER OF THE SOUTHVIEW BUSINESS CENTER, LTD. who acknowledged that he did execute the foregoing Indenture of Lease for the purposes therein contained by signing his name as Lessor. IN WITNESS WHEREOF, I have hereunto set me hand and official seal at Norwalk, Ohio, this 1st day of March, 1995. /s/ Leisha D. Rospert ---------------------------------------- LEISHA D. ROSPERT, NOTARY PUBLIC MY COMMISSION EXPIRES: 3-7-96 ------------------ STATE OF OHIO } } ss: COUNTY OF HURON } Before me, a Notary Public in and for said State, personally came DANIEL WHITE, PRESIDENT OF SMS GEOTRAC, INC., who acknowledged that he executed the foregoing Indenture of Lease for the purposes therein contained by signing his name as Lessee. IN WITNESS WHEREOF, I have hereunto set my hand and official seal at Norwalk, Ohio, this 20th day of March, 1995. /s/ Elizabeth A. Adams, Notary, State of Ohio --------------------------------------------- NOTARY PUBLIC MY COMMISSION EXPIRES: 12/7/95 ----------------------- 8 ADDENDUM II TO LEASE AGREEMENT THIS ADDENDUM reflects a change in the rent payments and term of LEASE made and entered into on the 23RD day of SEPTEMBER, 1994, as well as ADDENDUM I, dated the 1ST day of MARCH, 1995, by and between SOUTHVIEW BUSINESS CENTER, LTD., A LIMITED PARTNERSHIP, the LESSOR, and SMS GEOTRAC, INC., the LESSEE. The change in rent payment and term of lease is based upon structural changes to the space occupied by the Lessee. All remaining open warehouse space has been completed as finished office space including upgrades to utilities, parking and other exterior areas. Lessor does hereby let and lease unto Lessee the following described premises, to wit: KNOWN GENERALLY AS THE NORTHERN ONE-HALF (1/2) OF THE BUILDING KNOWN AS SOUTHVIEW BUSINESS CENTER INCLUDING ALL IMPROVEMENTS TO APPROXIMATELY 21000 SQUARE FEET OF OFFICE SPACE AT 156 S. NORWALK RD., IN THE TOWNSHIP OF NORWALK, STATE OF OHIO. to have and to hold for a term of seven (7) years, commencing on the 1ST day of DECEMBER, 1995, and ending exactly seven (7) years thereafter; provided Lessee shall have the right to renew this lease upon the same terms and conditions, including the rent hereinafter specified, for a like period of five (5) years. Lessee agrees to pay the monthly water bill as pertaining to the above described premises for the term of this lease. Lessee hereby agrees to pay an additional sum of One Hundred Three Thousand, Thirty-Two and 00/100 ($103,032.00) Dollars rent per year during the term of this lease, which rent is to be paid by the Lessee in monthly installments. Said monthly installments of Eight Thousand Five Hundred Eighty-Six and 00/100 ($8,586.00) Dollars when added to current monthly installments of Nine Thousand Four Hundred Seventy and 00/100 ($9,470.00) Dollars should total Eighteen Thousand Fifty-Six and 00/100 ($18,056.00) Dollars each, payable on the first day of occupancy as specified, thence monthly on the first day of the month thereafter for the term of the lease. All the terms found in the original Indenture of Lease shall apply to this space. 9 IN THE PRESENCE OF: LESSOR: SOUTHVIEW BUSINESS CENTER, LTD. /s/ Charles E. Steffanni By: /s/ John E. Gelvin, Jr. - ---------------------------------- -------------------------------- GENERAL PARTNER /s/ Michael T. [Illegible] - ---------------------------------- LESSEE: SMS GEOTRAC, INC. /s/ Joan N. Johnson By: /s/ Daniel White - ---------------------------------- -------------------------------- PRESIDENT /s/ Shirley M. Stang - ---------------------------------- STATE OF OHIO } }: ss: COUNTY OF HURON } Before me, a Notary Public in and for said State, personally came JOHN E. GELVIN, JR., A GENERAL PARTNER OF THE SOUTHVIEW BUSINESS CENTER, LTD. who acknowledged that he did execute the foregoing Addendum II to the Indenture of Lease for the purposes therein contained by signing his name as Lessor. IN WITNESS WHEREOF, I have hereunto set me hand and official seal at Norwalk, Ohio, this 8th day of December, 1995. /s/ Leisha D. Rospert ---------------------------------------- LEISHA D. ROSPERT, NOTARY PUBLIC MY COMMISSION EXPIRES: 3-7-96 ------------------ STATE OF OHIO } }: ss: COUNTY OF HURON } Before me, a Notary Public in and for said State, personally came DANIEL WHITE, PRESIDENT OF SMS GEOTRAC, INC., who acknowledged that he executed the foregoing Addendum II to the Indenture of Lease for the purposes therein contained by signing his name as Lessee. IN WITNESS WHEREOF, I have hereunto set my hand and official seal at Norwalk, Ohio, this 8th day of December, 1995. /s/ Elizabeth A. Adams --------------------------------------------- NOTARY PUBLIC ELIZABETH A. ADAMS MY COMMISSION EXPIRES: 12/7/99 ----------------------- 10 ADDENDUM II TO LEASE AGREEMENT THIS ADDENDUM reflects a change in the rent payments and term of LEASE made and entered into on the 23RD day of SEPTEMBER, 1994, as well as ADDENDUM I, dated the 1ST day of MARCH, 1995, by and between SOUTHVIEW BUSINESS CENTER, LTD., A LIMITED PARTNERSHIP, the LESSOR, and SMS GEOTRAC, INC., the LESSEE. The change in rent payment and term of lease is based upon structural changes to the space occupied by the Lessee. All remaining open warehouse space has been completed as finished office space including upgrades to utilities, parking and other exterior areas. Lessor does hereby let and lease unto Lessee the following described premises, to wit: KNOWN GENERALLY AS THE NORTHERN ONE-HALF (1/2) OF THE BUILDING KNOWN AS SOUTHVIEW BUSINESS CENTER INCLUDING ALL IMPROVEMENTS TO APPROXIMATELY 21000 SQUARE FEET OF OFFICE SPACE AT 156 S. NORWALK RD. IN THE TOWNSHIP OF NORWALK, STATE OF OHIO. to have and to hold for a term of seven (7) years, commencing on the 1ST day of DECEMBER, 1995, and ending exactly seven (7) years thereafter; provided Lessee shall have the right to renew this lease upon the same terms and conditions, including the rent hereinafter specified, for a like period of five (5) years. Lessee agrees to pay the monthly water bill as pertaining to the above described premises for the term of this lease. Lessee hereby agrees to pay an additional sum of One Hundred Three Thousand, Thirty-Two and 00/100 ($103,032.00) Dollars rent per year during the term of this lease, which rent is to be paid by the Lessee in monthly installments. Said monthly installments of Eight Thousand Five Hundred Eighty-Six and 00/100 ($8,586.00) Dollars when added to current monthly installments of Nine Thousand Four Hundred Seventy and 00/100 ($9,470.00) Dollars should total Eighteen Thousand Fifty-Six and 00/100 ($18,056.00) Dollars each, payable on the first day of occupancy as specified, thence monthly on the first day of the month thereafter for the term of the lease. All the terms found in the original Indenture of Lease shall apply to this space. 11 IN THE PRESENCE OF: LESSOR: SOUTHVIEW BUSINESS CENTER, LTD. /s/ By: /s/ John E. Gelvin, Jr. - ---------------------------------- -------------------------------- GENERAL PARTNER /s/ - ---------------------------------- LESSEE: SMS GEOTRAC, INC. /s/ Joan N. Johnson By: /s/ Daniel White - ---------------------------------- -------------------------------- PRESIDENT /s/ Shirley M. Stang - ---------------------------------- STATE OF OHIO } }: ss: COUNTY OF HURON } Before me, a Notary Public in and for said State, personally came JOHN E. GELVIN, JR., A GENERAL PARTNER OF THE SOUTHVIEW BUSINESS CENTER, LTD. who acknowledged that he did execute the foregoing Addendum II to the Indenture of Lease for the purposes therein contained by signing his name as Lessor. IN WITNESS WHEREOF, I have hereunto set me hand and official seal at Norwalk, Ohio, this 8th day of December, 1995. /s/ Leisha D. Rospert ---------------------------------------- LEISHA D. ROSPERT, NOTARY PUBLIC MY COMMISSION EXPIRES: 3-7-96 ------------------ STATE OF OHIO } }: ss: COUNTY OF HURON } Before me, a Notary Public in and for said State, personally came DANIEL WHITE, PRESIDENT OF SMS GEOTRAC, INC., who acknowledged that he executed the foregoing Addendum II to the Indenture of Lease for the purposes therein contained by signing his name as Lessee. IN WITNESS WHEREOF, I have hereunto set my hand and official seal at Norwalk, Ohio, this 8th day of December, 1995. /s/ Elizabeth A. Adams --------------------------------------------- NOTARY PUBLIC ELIZABETH A. ADAMS MY COMMISSION EXPIRES: 12/7/99 ----------------------- EX-10.9 12 MASTER EQUIPMENT LEASE AGREEMENT 1 EXHIBIT 10.9 MASTER EQUIPMENT LEASE AGREEMENT No --------- This is a Master Equipment Lease Agreement between NATIONAL CITY LEASING CORPORATION, a Kentucky corporation, whose principal office is located at 101 South Fifth Street, Louisville, Kentucky 40202 ("Lessor") and SMS GEOTRAC, INC. a Delaware corporation, partnership, proprietorship [cross out inapplicable clause] whose principal office is located at 3900 Laylin Road, Norwalk, OH 44857 ("Lessee"). 1. LEASE. Lessor agrees to lease to Lessee and Lessee agrees to lease from Lessor, subject to the terms and conditions set forth herein, the items of personal property (the "Equipment") described in each Equipment Supplement (a "Supplement") executed and delivered by the parties hereto and incorporating the terms of this Master Equipment Lease Agreement by reference therein (the "Lease"). The terms "Agreement", "hereof", "herein", and "hereunder", when used in this Lease, shall mean this Lease, each Supplement and any schedule thereto. This Agreement constitutes an agreement of lease and nothing herein contained shall be construed as conveying to Lessee any right, title, or interest in the Equipment except as lessee only. The parties agree that this Lease is a "Finance Lease" as defined in Section; 2A-103(q) of the Uniform Commercial Code ("UCC"). Lessee acknowledged either (a) that Lessee has reviewed and approved any written Supply Contract (as defined in UCC Section 2A-103 (y) covering the Equipment purchased from the Supplier (as defined in UCC Section 2A-103(x)) thereof for lease to Lessee or (b) that Lessor has informed or advised Lessee, in writing, either previously or by this Lease of the following: (i) the identity of the Supplier: (ii) that the Lessee may have rights under the Supply Contract; and (iii) that the Lessee may contact the Supplier for a description of any such rights Lessee may have under the Supply Contract. 2. TERM; ACCEPTANCE; RENT; RETURN. The term of lease of each item of Equipment shall commence on the date the Lessee accepts the Equipment (the "Commencement Date") as evidenced by the Certificate of Delivery and Acceptance pertaining to such Equipment and, unless earlier terminated pursuant to the provisions hereof, shall continue for the term specified in each Supplement Lessee's execution and delivery of a Certificate of Delivery and Acceptance shall constitute Lessee's irrevocable acceptance of the Equipment covered thereby for all purposes of this Agreement. Lessee shall pay to Lessor (at Lessor's office specified above, or as Lessor may otherwise designate), rent as specified in each Supplement. Each date on which an installment of rent is payable is hereinafter called a "Rent Payment Date". As to each Supplement, the first Rent Payment Date shall be the Rent Payment Date set forth therein, with the succeeding Rent Payment Dates on the corresponding day of each month thereafter. In addition, if applicable, Lessee shall pay interim rent for the period between the Commencement Date and the first Rent Payment Date, based on a 30-day month and the number of days between the Commencement Date and the first Rent Payment Date. Lessee shall also pay to Lessor, on demand, a late payment charge of 5% of each installment of rent and any other amount owing hereunder which is not paid when due. Upon the expiration or earlier termination of the term of lease of each item of Equipment leased hereunder, Lessee shall at its expense return such item to Lessor at such location as Lessor may designate, in the condition required to be maintained by Section 7 hereof. 3. NO WARRANTIES. Lessee acknowledges that Lessor is not the manufacturer of the Equipment nor the manufacturer's agent nor a dealer therein, and LESSOR HAS NOT MADE AND DOES NOT MAKE ANY REPRESENTATION OR WARRANTY WHATSOEVER, EITHER EXPRESS OR IMPLIED, AS TO THE MERCHANTABILITY, FITNESS, CONDITION, DESIGN OR OPERATION OF THE EQUIPMENT, ITS FITNESS FOR A PARTICULAR PURPOSE, THE QUALITY OR CAPACITY OF THE MATERIALS IN THE EQUIPMENT OR WORKMANSHIP IN THE EQUIPMENT, LESSOR'S TITLE TO THE EQUIPMENT NOR ANY OTHER REPRESENTATION OR WARRANTY OF ANY KIND WHATSOEVER. Lessee confirms that it has made (or will make) the selection of each item of Equipment on the basis of its own judgment and expressly disclaims reliance upon any statements, representations or warranties made by Lessor. Lessor shall not be liable to Lessee for any matter relating to the ordering, manufacture, purchase, delivery, assembly, installation, testing, operation or expense of any kind caused by the Equipment. Lessor shall not be liable for any consequential damages as that term is used in UCC 2-719(3). Lessor hereby assigns to Lessee all rights which Lessor has or may acquire against any manufacturer, supplier, or contractor with respect to any warranty and representation relating to the Equipment leased hereunder. Lessee acknowledges that Lessee has reviewed and approved the Purchase Order, Supply Contract or Purchase Agreement covering the Equipment purchase from the vendor or Supplier thereof for lease to Lessee. 4. EQUIPMENT TO REMAIN PERSONAL PROPERTY; LOCATION; IDENTIFICATION; INSPECTION. Lessee represents that the Equipment shall be and at all times remain separately identifiable personal property Lessee shall, at its expense, take such action as may be necessary to prevent any third party from acquiring any right to or interest in the Equipment by virtue of the Equipment being deemed to be real property or a part of other personal property and shall indemnify Lessor against any loss which it may sustain by reason of Lessee's failure to do so. The Equipment may not be removed from the location specified in the Supplement pertaining thereto without Lessor's prior written consent and Lessee's provision of reasonable documentation as requested by Lessor. If requested by Lessor, Lessee shall attach to and maintain on the Equipment a conspicuous plate or marking disclosing ownership therein. Lessor or its representatives may, at reasonable times, inspect the Equipment. 5. TAXES; INDEMNITY. Lessee agrees to pay, and to indemnify and hold Lessor harmless from, all license fees, assessments, and sales, use property, excise and other taxes and charges(other than federal income taxes and taxes imposed by any other jurisdiction which are based on, or measured by, the net income of Lessor for reasons other than the owner ship or leasing of the Equipment in that jurisdiction imposed upon or with respect to (a) the Equipment or any part thereof arising out of or in connection with the shipment of Equipment or the possession, ownership, use or operation thereof, or (b) this Agreement or the consummation of the transaction herein contemplated. Lessor shall prepare and file any and all returns required in connection with the obligations which Lessee has assumed under this section except such filings as Lessor may, at its option, direct Lessee to make. Each party shall upon request furnish the other a copy of any such filing made or governmental invoice received covering such obligations. Lessee further agrees to assume liability for, and to indemnify and hold Lessor harmless against, all claims, costs, expenses, damages and liabilities arising from or pertaining to the manufacture, assembly, installation, ownership, use, possession and operation of the Equipment, including without limitation, latent and other defects, whether or not discoverable by Lessee or any other person, any expense, liability or loss directly or indirectly related to or arising out of any injury to any person or tangible or intangible property, whether arising from negligence or under any theory of strict or absolute liability or any other cause, or any claim for patent or copyright infringement, together with all legal fees and expenses reasonably incurred by Lessor in connection with any liability asserted against it, whether groundless or otherwise. The agreements and indemnities contained in this section shall survive the expiration or earlier termination of the Agreement. 6. ASSIGNMENTS; SUBLETTING; ENCUMBRANCES. (a) LESSEE WILL NOT WITHOUT LESSOR'S PRIOR WRITTEN CONSENT ASSIGN OR TRANSFER THIS LEASE OR ANY INTEREST HEREIN, OR SUBLEASE OR RELINQUISH POSSESSION OF, OR CREATE OR SUFFER TO EXIST ANY LIEN MORTGAGE, SECURITY INTEREST OR ENCUMBRANCE UPON THE EQUIPMENT. (b) Lessor may assign or transfer this Lease or Lessor's interest in the Equipment without notice to Lessee. Any assignee of Lessor shall have all the rights, but none of the obligations, of Lessor under this Lease and Lessee agrees that it will not assert against any assignee of Lessor any defense, counterclaim, or offset that Lessee may have against Lessor. Lessee acknowledges that any assignment or transfer by Lessor shall not materially charge Lessee's duties or obligations under this Lease nor materially increase the burdens or risks imposed on Lessee. 7. USE; REPAIRS; ETC. Lessee will cause the Equipment to be operated in accordance with the manufacturer's or supplier's instructions or manuals by competent and duly qualified personnel only and in compliance with all laws and regulations and the insurance policies required to be maintained hereunder. Lessee shall, at its own cost and expense, enter into and keep in force during the term hereon a maintenance agreement with the manufacturer of the Equipment or such other maintenance vendor as may be approved in writing, by Lessor, to maintain, service an repair the Equipment so as to keep it in as good operating condition as it was when it first became subject to this Lease, ordinary wear and tear expected. Lessor shall have the right to approve such maintenance agreement (which approval shall not be unreasonably withheld) and shall be furnished with an executed copy thereof. Lessee shall, at its own cost and expense, to the extent not covered by the aforesaid maintenance agreement, maintain the Equipment in operating condition. Replacement parts shall be free and clear of any mortgage, lien, charge, or encumbrance (and title thereto shall best in Lessor immediately upon installation, attachment of incorporation of the same in, on or into such Unit). Upon termination of this Lease, at the expiration of the Lease Term or otherwise, the Equipment shall be returned to the Lessor in as good operating condition as when it became subject to this Lease, ordinary wear and tear excepted, and in such condition as to be acceptable to the manufacturer for regular maintenance without any remedial maintenance. Lessee will not alter or add to the Equipment without Lessor's prior written consent. Lessee will remove any attachments, alterations or accessories and return the Equipment in its original condition, normal wear and tear excepted, at the termination of the Lease if Lessor shall so demand in the absence of such demand, all attachments, alterations or accessories shall become part of the Equipment at the time of the attachment thereto. 8. LOSS; DAMAGE. If any Equipment shall be lost, stolen, destroyed, damaged beyond repair or rendered permanently unfit for normal use for any reason or in the event of any condemnation, confiscation, seizure, or requisition of title to or use of any Equipment (each of the foregoing being hereinafter called a "Loss"). Lessee shall immediately pay to Lessor an amount equal to the sum of (i) all rent and other amounts due and owning hereunder for such Equipment to and including the date of Loss, plus (ii) all remaining unpaid rentals for such Equipment of the term of the 2 related Supplement plus (iii) Lessor's anticipated residual interest in said Equipment, plus (iv) interest at 18% per annum from the date of Loss to the date of payment but in no event more than the maximum permitted by law, whereupon Lessor will transfer to Lessee, without recourse or warranty, all of Lessor's right, title and interest in such Equipment. Lessee agrees that Lessor's residual interest is equal to an amount represented by the Fair Market Sales Value of the Equipment immediately prior to the Loss, but in no event less than 20% of the Equipment's original cost to Lessor. For purposes of this section, the "Fair Market Sales Value" shall be determined on the basis of and be equal in amount to the value that would be obtained in a transaction between an informed and willing buyer and seller. If any Equipment is damaged as the result of an event not constituting a Loss. Lessee shall, if requested by Lessor, promptly cause such item to be repaired or replaced in accordance with the provisions of Section 7 hereof. 9. INSURANCE. Lessee shall maintain at all times on the Equipment, at Lessee's expense, property damage, direct damage and public liability insurance in such amounts, against such risks and in such form and with such insurers as shall be satisfactory to Lessor. The required insurance shall be specified in the applicable Supplement; provided, that the amount of direct damage insurance shall not on any date be less than the full replacement value of the Equipment as of such date. Each public liability insurance policy will name Lessor as additional named insured as its interests may appear and each damage insurance policy will name Lessor as loss payee, and each insurance policy shall contain a clause requiring the insurer to give to Lessor at least 30-days prior written notice of any alteration of the terms or cancellation of such policy. Lessee shall furnish to Lessor a certificate or other evidence satisfactory to Lessor that such insurance coverage is in effect, provided, however, that Lessor shall be under no duty to ascertain as to the existence or adequacy of such insurance. Lessor makes no representation that the minimum insurance coverage requirements in a Supplement will be adequate at all times to satisfy Lessee's obligations hereunder. Lessee has the responsibility to provide additional insurance coverage to maintain coverage hereunder in an amount adequate to fulfill its obligation hereunder and is consistent with insurance coverage for similar risks in Lessee's industry or line of business. 10. NONCANCELLABLE AGREEMENT; LESSEE'S OBLIGATIONS UNCONDITIONAL. This Agreement cannot be cancelled or terminated except as expressly provided herein. Lessee agrees that its obligation to pay all rent and other amounts payable hereunder and to perform its duties with respect hereto shall be absolute and unconditional under any and all circumstances, including, without limitation, the following: (a) any setoff, counterclaim, recoupment, defense or other right which Lessee may have against Lessor, the manufacturer, or supplier of any Equipment or anyone else for any reason whatsoever; (b) any defect in the condition, design, title, operation or fitness for use, or any to or loss of any Equipment; (c) any insolvency, reorganization or similar proceedings by or against Lessee, or (d) any other event or circumstances whatsoever, whether or not similar to the foregoing. Each rent or other payment made by Lessee hereunder shall be final and Lessee will not seek to recover all of any part of such payment from Lessor for any reason whatsoever. 11. EVENTS OF DEFAULT AND REMEDIES. An Event of Default shall occur hereunder if Lessee: (a) shall fail to make any payment or rent or other amount owing hereunder when due; (b) shall fail to perform or observe any other covenant, agreement or condition hereunder; (c) shall make any representation or warranty to Lessor herein or in any document or certificate furnished Lessor in connection herewith which shall prove to be incorrect at any time. (d) shall become insolvent or make an assignment for the benefit of creditors or consent to the appointment of a trustee or receiver, or a trustee or receiver shall be appointed for Lessee or for a substantial part of its property or for the Equipment, or reorganization, arrangement, insolvency, dissolution or liquidation proceedings shall be instituted by or against Lessee; (e) shall suffer an adverse material change in its financial condition from the date hereof, and as a result thereof Lessor deems itself or any of its Equipment to be insecure, or (f) shall be in default under any other agreement at any time executed with Lessor or any affiliate or subsidiary of National City Corporation then Lessor may declare this Agreement to be in default and may do one or more of the following with respect to any or all of the Equipment as Lessor in its sole discretion may elect, to the extent permitted by, and subject to compliance with any mandatory requirements of applicable law then in effect (a) demand that Lessee, and Lessee shall at its expense upon such demand, return the Equipment promptly to Lessor in the manner and condition required by and otherwise in accordance with the provisions of Section 2 hereof, as if the Equipment were being returned at the expiration of its term of lease hereunder, or Lessor, at its option, may enter upon the premises where the Equipment is located and take possession of and remove the same by summary proceedings or otherwise, all without liability to Lessee for damage to property or otherwise. (b) re-lease or sell any or all of the Equipment at public or private sale, with or without notice to Lessee or advertisement, or otherwise dispose of any or all of the Equipment as Lessor may determine, and recover from Lessee damages, for loss of a bargain and not as a penalty, in an amount equal to the sum of (i) any accrued and unpaid rent as the later of (A) the date of default or (B) the date that Lessor has obtained possession of the Equipment or such other date as Lessee has made an effect tender of possession of the Equipment back to Lessor ("Default Date"), plus rent (at the rate provided for in this Agreement) for the additional period (but in no event longer than ninety (90) days) that it takes Lessor to resell or re-let the Equipment, plus interest at the rate of 18% per annum, or the highest rate permitted by law, whichever is less; (ii) the present value of all future rentals reserved in the Lease and contracted to be paid over the unexpired terms of the Lease discounted at a rate equal to the discount rate of the Federal Reserve Bank of Cleveland as of the Default Date, (iii) all commercially reasonable costs and expenses incurred by Lessor in any repossession, recovery, storage, repair, sale, re-lease or other disposition of the Equipment including reasonable attorney's fees and costs incurred in connection with or otherwise resulting from the Lessee's default; (iv) estimated residual value of the Equipment (which is defined as the Fair Market Sales Value of the Equipment immediately prior to the Event of Default, but in no event an amount less than 20% of the Equipment's original cost to Lessor), and (v) any indemnity, if then determinable, plus interest at 18% per annum or the highest rate permitted by law, whichever is less; LESS the amount received by Lessor upon such public or private sale or re-lease of such items of Equipment, if any; (c) declare immediately due and payable all sums due and to become due hereunder for the full term of the Lease (including any renewal or purchase options which Lessee has contracted to pay); (d) with or without terminating this Lease, recover from Lessee damages, as liquidated damages for loss or a bargain and not as a penalty, in an amount equal to the sum of (i) any accrued and unpaid rent as of the date of entry of judgment in favor of Lessor plus interest at the rate of 18% per annum or at the highest rate permitted by law, whichever is less, (ii) the present value of all future rentals reserved in the lease and contracted to be paid over the unexpired term of the Lease discounted at a rate equal to the discount rate of the Federal Reserve Bank of Cleveland; (iii) all commercially reasonable costs and expenses incurred by Lessor in any repossession, recovery, storage, repair, sale, re-lease or other disposition of the Equipment, including reasonable attorney's fees and costs incurred in connection therewith or otherwise resulting from Lessee's default; (iv) estimated residual value of the Equipment (which is defined as the Fair Market Sales Value of the Equipment immediately prior to the Event of Default, but in no event an amount less than 20% of the Equipment's original cost to Lessor); and (v) any indemnity, if then determinable, plus interest at 18% per annum or the highest rate permitted by law, whichever is less; (e) if (i) Lessor elects not to sell, re-lease or otherwise dispose of all or part of the Equipment or (ii) does so by re-lease which is not made in a manner substantially similar to the applicable Supplement or (iii) the measure of damages under clauses (b) and (d) above are not allowable under any applicable law, Lessor may recover the market value, if any, as of the Default Date of the rent reasonably estimated by Lessor to be obtainable for the Equipment during the remaining Lease term or any renewal thereof then in effect, plus any accrued and unpaid rent as of the Default Date, and (f) Lessor may exercise any other right or remedy which may be available to it under applicable law or proceed by appropriate court action to enforce the terms hereof or to recover damages for the breach hereof or to rescind this Agreement. For the purpose of this section, the "Fair Market Sales Value" of any Equipment shall mean such value to Lessor net of all expenses and costs whatsoever which would be incidental to the reclamation of the Equipment and the sale thereof as determined (at Lessee's expense) by an independent appraiser selected by Lessor; provided, however, that (i) the "Fair Market Sales Value" of any Equipment shall be zero if Lessor is unable to recover possession thereof in accordance with the terms of clause (a) above, and (ii) if Lessor shall have sold any Equipment prior to any notice given pursuant to clause (b) above, the "Fair Market Sales Value" thereof shall be the net proceeds of such sale after deducting all costs and expenses incurred by Lessor in connection therewith. Except as expressly provided above, no remedy referred to in this section is exclusive, but each shall be cumulative and in addition to any other remedy referred to herein or otherwise available to Lessor at law or equity; and the exercise or beginning of exercise by Lessor of any one or more of such remedies shall not preclude the simultaneous or later exercise by Lessor of any other remedies. No express or implied waiver by Lessor of an Event of Default shall constitute a waiver of any other or subsequent Event of Default. To the extent permitted by law, Lessee waives any rights now or hereafter conferred by statute or otherwise which may require Lessor to sell, re-lease or otherwise use the Equipment in mitigation of Lessor's damages or which may otherwise limit or modify any of Lessor's rights or remedies. 3 12. INDEMNIFICATION FOR TAX BENEFITS. (a) Lessor, as the owner of the Equipment, shall be entitled to such deductions, credits and other benefits as are provided by the Internal Revenue Code of 1986, as amended, (hereinafter called the "Code") to an owner of property. (b) Lessee agrees that neither it nor any corporation controlled by it, in control of it, or under common control with it, directly or indirectly, will at any time take any action or file any returns or other documents inconsistent with the foregoing and that each of such corporations will file such returns, take such action and execute such documents as may be reasonable and necessary to facilitate accomplishment of the intent thereof. Lessee agrees to copy or make available for inspection and copying by Lessor such records as will enable Lessor to determine whether it is entitled to the benefit of any amortization or depreciation deduction which may be available from time to time with respect to the Equipment. (c) If Lessor, under any circumstances or for any reason whatsoever, except for acts of the Lessor or future changes in the Code, shall lose, shall not have or shall lose the right to claim or there shall be disallowed or recaptured all or any portion of the federal tax depreciation deductions with respect to any item of Equipment based on depreciation or the Lessor's full cost of such item of Equipment and computed on the basis of a method of depreciation provided by the Code as Lessor in its complete discretion may select, then Lessee agrees to pay Lessor upon demand an amount which, after deduction of all taxes required to be paid by Lessor in respect to the receipt thereof under the laws of any federal, state or local government or taxing authority of the United States or of any taxing authority or governmental authority of any foreign country, shall be equal to the sum of (i) an amount equal to the additional income taxes paid or payable by Lessor in consequence of the failure to obtain the benefit of a depreciation deduction, and (ii) any interest and/or penalty which may be assessed in connection with any of the foregoing. (d) The provisions of this Section 12 shall survive the expiration or earlier termination of this Agreement. 13. LESSOR'S RIGHTS TO PERFORM. If Lessee fails to make any payment required to be made hereunder or fails to comply with any other agreements contained herein, Lessor may make such payment or comply with such agreements, and the amount of such payment and the reasonable expenses of Lessor incurred in connection with such payment or compliance, shall be payable by Lessee on demand. 14. FURTHER ASSURANCES. Lessee will, at its expense, promptly and duly execute and deliver to Lessor such further documents and assurances and take such further action as Lessor may from time to time request in order to more effectively carry out the intent and purpose of this Agreement so as to establish and protect the rights, interest and remedies intended to be created in favor of Lessor hereunder, including, without limitation, the execution and filing of financing statements and continuation statements with respect to the Equipment and this Agreement. Lessee authorizes Lessor to effect any such filing (including the filing of any financing statements without the signature of Lessee) and Lessor's expenses with respect thereto shall be payable by Lessee on demand. 15. NOTICES. All notices and other communications required to be given to any party hereunder shall be in writing and delivered or mailed by regular mail to such party at the address set forth above or at such other address as it may designate to other parties. 16. MISCELLANEOUS. Any provision of this Agreement which is unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such unenforceability without invalidating the remaining provisions hereof, and any such unenforceability in any jurisdiction shall not render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable law, Lessee waives (a) any provision of law which renders any provision hereof unenforceable in any respect; (b) any and all rights conferred upon a Lessee by Article 2A of the UCC, including but not limited to Lessee's rights to (i) cancel this Agreement; (ii) repudiate this Agreement; (iii) revoke acceptance of the Equipment; (iv) recover damages from Lessor for any breaches of warranty or for any other reason; (v) claim a security interest in the Equipment in Lessee's possession or control for any reason; (vi) deduct all or any part of any claimed damages resulting from Lessor's default, if any, under this Lease; (vii) accept partial delivery of this Equipment; (viii) recover any general, special, incidental or consequential damages, for any reason whatsoever; (ix) specific performance, replevin, detinue, sequestration, claim and delivery of the like for any Equipment identified to the Lease, or any substitutions or replacements thereof; and (c) any rights now or hereafter conferred by statute or otherwise which may require Lessor to sell, lease or otherwise use any Equipment in mitigation of Lessee's damages. Provided the Lessee is not in default under any provision of this Lease, the Lessor shall not interfere with Lessee's quiet enjoyment of the use of the Equipment pursuant to the terms of this Agreement. This Agreement and the provisions hereof shall inure to the benefit of Lessor and its successors and assigns, and shall be binding on and inure to the benefit of Lessee and its successors and assigns. 17. CONDITIONS PRECEDENT. The obligation of Lessor contained in Section 1 hereof shall be subject to the following conditions precedent (a) there shall have occurred no material adverse change in the business or the financial condition of Lessee from the date hereof until the Commencement Date of any Supplement; (b) Lessee shall have furnished Lessor with a certificate or other evidence satisfactory to Lessor that insurance coverage as required by Section 9 hereof is in effect as to the item of Equipment desired to be leased; (c) unless specifically waived by Lessor, Lessee shall have furnished Lessor opinions of counsel as this Agreement, in form and substance acceptable to Lessor; (d) unless specifically waived by Lessor, Lessee shall have furnished Lessor waivers, in form and substance acceptable to Lessor, of all rights in or to Equipment of any landlord or mortgagee of any real property upon which the Equipment is or is to be situated, and (e) all other instruments and legal and corporate proceedings in connection with the transactions contemplated herein shall be satisfactory in form and substance to Lessor, and counsel to Lessor shall have received copies of all documents which it may have requested in connection therewith. If any of the above conditions is not satisfied at the time Lessee submits any Supplement, Lessor shall have no obligation under this Agreement to lease the items of personal property covered thereby to Lessee. 18. FINANCIALS. Lessee agrees that for so long as any item of Equipment shall be leased under this Agreement, Lessee will deliver or cause to be delivered to Lessor (a) as soon as practicable, and in any event within sixty (60) days after the end of each quarterly period (other than the fourth quarterly period) for each fiscal year of Lessee, the balance sheet of Lessee as of the end of such quarterly period together with the related statements of income and expenses for such quarterly period all in reasonable detail prepared in accordance with generally accepted accounting principles consistently applied throughout the period involved and certified by Lessee's chief financial officer; and (b) as soon as practicable, and in any event within one hundred twenty (120) days after the close of each fiscal year of Lessee, the audited balance sheet of Lessee as of the end of such fiscal year together with related statements of income and surplus for such fiscal year all in reasonable detail prepared in accordance with generally accepted accounting principles consistently applied throughout the period involved and certified by an independent public accountant acceptable to Lessor. 19. REPRESENTATION, WARRANTIES AND COVENANTS. Lessee represents, warrants and covenants that (a) if Lessee is a corporation, Lessee is duly organized and validly existing in good standing under the laws of the state of its incorporation and is duly qualified and licensed to do business as a foreign corporation in good standing in those jurisdictions where such qualifications are necessary to authorize Lessee to carry on its present business and operations and to own its properties or to perform its obligations hereunder; (b) if Lessee is a partnership, Lessee is duly organized and validly existing under the partnership laws of its state of domicile and is duly authorized in any foreign jurisdiction where such qualification is necessary to authorize Lessee to carry on its present business and operations and to own its properties and to perform its obligations hereunder; (c) Lessee has full power, authority and legal right to execute, deliver and carry out as Lessee the terms and provisions of this Agreement and any other documents in connection with this lease transaction; (d) if Lessee is a corporation, Lessee's execution, delivery and performance of this Agreement and the other documents and agreements referred to herein, and the performance of its obligations under this Agreement have all been authorized by all necessary corporate action, do not require the approval or consent of stockholders, or of any trustee or holders of any indebtedness or obligation of Lessee and will not violate any law, governmental rule, regulation or order binding upon Lessee or any provision of any indenture, mortgage, contract or other agreement to which Lessee is a party or by which it is bound or to which it is subject, and will not violate any provision of the Certificate of Incorporation, By-laws or any preferred stock agreement of Lessee; (e) if Lessee is a partnership, Lessee's execution, delivery and performance of this Agreement and the other documents and agreements referred to herein, and the performance of its obligations under this Agreement have all been authorized by all necessary partnership actions; (f) there are no pending or threatened investigations, actions or proceedings before any court or administrative agency or other tribunal body, which seek to question or set aside any of the transactions contemplated by this Agreement, or which, if adversely determined, would materially affect the condition, business or operation of Lessee; (g) Lessee is not in default in any material manner in the payment or performance of any of its obligations or in the performance of any contract, agreement or other instrument to which it is a party or by which it or any of its assets may be bound; (h) the balance sheet of Lessee as of the end of its most recent fiscal year and the related profit and loss statement of the Lessee for the fiscal year ended on said date, including the related schedules and notes, together with the report of an independent certified public accountant, heretofore delivered to Lessor, are all true and correct and present fairly (x) the financial position of Lessee as at the date of said balance sheet and (y) the results of the operations of Lessee for said fiscal year; (i) all proceedings required to be taken to authorize the lease of the Equipment from Lessor and to protect Lessor's interest in such Equipment, free and clear of all liens and encumbrances whatsoever, have been taken; (j) Lessee has no significant liabilities (contingent or otherwise) which are not disclosed by or reserved against the financial statements referred to in (h) above; (k) all the financial statements referred to in (h) above have been prepared in accordance with generally accepted accounting principles and practices applied on a basis consistently maintained throughout the period involved; (l) there has been no change which would have a material adverse effect on the business or financial condition of Lessee from that set forth in the balance sheet referred to in (h) above; (m) no authorization, consent, approval, license, exemption of or filing or registration with court, governmental unit or department, commission, board, bureau, agency, instrumentality or the like is required or necessary for the valid execution and delivery of the Agreement, any bill of sale and the other documents and agreements referred to herein; (n) this Master Lease Agreement, the Supplements and any accompanying documents, having been duly authorized, executed and delivered to Lessor, constitute legal, valid and binding obligations of Lessee, enforceable against Lessee in accordance with the terms thereof except as such terms may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally; (o) the Equipment is personal property and neither real property nor a fixture; (p) as of the Commencement Date of each item of Equipment, a reasonable estimate of the estimated fair market value of such item of Equipment at the end of the lease term thereof will be at least 20% of the Lessor's cost thereof (without including in such value any increase or decrease for inflation or deflation, and after subtracting from such value any cost for removal and delivery of possession of Equipment to Lessor at the end of the lease term thereof); and (q) as of the 4 Commencement Date of each item of Equipment, a reasonable estimate of the estimated useful life of such item of Equipment at the end of the original lease term will be at least two years beyond the lease term thereof. 20. PURCHASE OPTION. Lessor and Lessee hereby agree that so long as no Event of Default shall have occurred and be continuing, Lessee shall have the option to purchase the Equipment at the expiration of the lease term for the purchase price set forth in the Supplement. In order to exercise its option with respect to any given item of Equipment, Lessee must give Lessor written notice at least ninety (90) days prior to the expiration of the lease term with respect thereto, and remit the purchase price in cash to Lessor or its assigns on or before said expiration date. After receipt of the purchase price in accordance with this section, Lessor will transfer to Lessee all of its right, title and interest in the Equipment purchased as-is, where-is, without recourse, representation or warranty of any kind, express or implied. Fair Market Sales Value for the purpose of this section only shall be determined on the basis of and be equal in the amount of the value that would be obtained in a transaction between an informed and willing buyer and an informed and willing seller, and the cost of moving the Equipment from the location of current use shall not be a deduction from such value. 21. CHOICE OF LAW. The rights and liabilities of the parties to this Agreement and each Supplement shall be interpreted, enforced and ???? respects by the laws of the Commonwealth of Kentucky. Lessee ??? and subjects itself to the jurisdiction of every local, state and federal court in the Commonwealth of Kentucky, agrees that except as otherwise required Lessee shall never file or maintain any action or proceeding in connection with this Agreement or any Supplement in any court outside the Commonwealth of Kentucky waives personal service, any and all process in connection therewith and consents to the service ??? upon Lessee in the manner provided in the Agreement for giving notice. 22. ATTORNEY. If Lessor commences any action to enforce or define any right or obligation under this Agreement or any Supplement, the Lessee shall pay to Lessor all reasonable attorney's fees and all other legal expenses (including ??? other witnesses) for preparation, negotiation, filing, maintenance, de??? and appeal of litigation paid or incurred by the Lessor. 23. HEADINGS. The headings in various sections of this Agreement are intended solely for convenience and are not intended nor shall they be used to construe, explain, modify meaning upon any provision hereof. 24. MODIFICATION. Neither ??? nor any Supplement can be modified or amended except by ???? signed and currently dated by both signatories hereto. Lessee's initials. /s/ DJW --------------------------------- 25. COUNTERPARTS: ORIGINALS. The parties may execute this Agreement and any Supplement in any number of counterparts. All such counterparts of the Agreement shall constitute one Agreement. One copy of the Agreement and each Supplement shall be designated as the "Original" and all other copies shall be "Duplicates". Only the "Original" shall constitute chattel paper. 26. LESSEE'S ACKNOWLEDGEMENT OF NO EXTRINSIC PROMISES LESSEE AGREES THAT THERE HAVE BEEN NO REPRESENTATIONS, AGREEMENTS, STATEMENTS, PROMISE, UNDERSTANDINGS OR INDUCEMENTS (COLLECTIVELY IN THIS SECTION "PROMISES") MADE TO LESSEE BY OR ON BEHALF OF LESSOR OR ANY THIRD PERSON IN CONNECTION WITH THIS AGREEMENT ANY SUPPLEMENT, ANY EQUIPMENT LEASED HEREUNDER, OR ANY PRESENT OR FUTURE TRANSACTION OF WHICH THIS AGREEMENT AND/OR ANY SUPPLEMENT IS OR BECOMES A PART OTHER THAN THOSE PROMISES. IF ANY EXPRESSLY IN WORDS MADE IN THIS AGREEMENT AND EACH SUPPLEMENT 27. ENTIRE AGREEMENT. THIS AGREEMENT IS AN INTEGRATION AND EACH SUPPLEMENT IS AN INTEGRATION AND RESPECTIVELY THE ENTIRE AGREEMENT BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER OF EACH TRANSACTION EMBRACED THEREBY. ALL AGREEMENTS, REPRESENTATIONS, PROMISES, INDUCEMENTS, STATEMENTS AND UNDERSTANDINGS, PRIOR TO AN CONTEMPORANEOUS WITH THIS AGREEMENT AND PRIOR TO AND CONTEMPORANEOUS WITH EACH SUPPLEMENT, WRITTEN OR ORAL, BETWEEN THE PARTIES WITH RESPECT TO THE SUBJECT MATTER OF EACH SUCH TRANSACTION, IF ANY, ARE AND EACH IS SUPERSEDED BY THIS AGREEMENT AND BP? EACH SUPPLEMENT AS IT IS EXECUTED. Executed as of the 15th day of May, 1995 ?? hereof, the signor hereby certifies that he has read this Agreement and ??? duly authorized to execute this Master Equipment Lease Agreement to ??? Lessee SMS Geotrac, Inc. -------------------------------------------- By: /s/ Daniel J. White ----------------------------------------- Title: President ------------------------------------- LESSOR: NATIONAL CITY LEASING CORPORATION By: [Illegible Signature] ----------------------------------------- Title: V.P. -------------------------------------- EX-10.10 13 TERM LEASE MASTER AGREEMENT 1 EXHIBIT 10.10 IBM CREDIT CORPORATION Stamford, CT 06904 TERM LEASE MASTER AGREEMENT Name and Address of Lessee: Agreement No.: IBM Branch Office No.: IBM Branch Office Address: IBM Customer No.: The Lessor pursuant to this Term Lease Master Agreement (Agreement) will be (a) IBM Credit Corporation, or a subsidiary or affiliate thereof, (b) a partnership in which IBM Credit Corporation is a partner, or (c) a related business enterprise for whom IBM Credit Corporation is the agent (Lessor). The subject matter of the lease shall be machines, field installable upgrades, feature additions or accessories marketed by International Business Machines Corporation (IBM) and shall be referred to as Equipment. Any lease transaction requested by Lessee and accepted by Lessor shall be specified in a Term Lease Supplement (Supplement). A Supplement shall refer to and incorporate by reference this Agreement and, when signed by the parties, shall constitute the lease (Lease) for the Equipment specified therein. Additional details pertaining to a Lease shall be specified in a Supplement. A Supplement may also specify additional terms and conditions as well as other amounts to be financed (Financing). Financing may include licensed program material charges (LPM Charges) for licensed programs marketed by IBM under the referenced IBM license agreement (License Agreement). 1. OPTIONS. The Supplement shall designate various lease and financing options. Option A is a Lease available only for Modifications (Paragraph 23) to Equipment under Option A prior to enactment of the Tax Reform Act of 1986. Option B is a Lease with a fair market purchase option at the end of the Lease. For Equipment under Option B Prime (B*), Lessor assumes for tax purposes that Lessee is the owner. For financing LPM Charges, Option S will apply. 2. CREDIT REVIEW. For each Lease, Lessee consents to any reasonable credit investigation and review by Lessor. 3. AGREEMENT TERM. This Agreement shall be effective when signed by both parties and may be terminated by either party upon one month's notice. However, each Lease then in effect shall survive any termination of this Agreement. 4. CHANGES. Lessor may, upon prior written notice, change the terms and conditions of this Agreement. Any change will apply on the effective date specified in the notice to Leases which have an Estimated Shipment Date, or Effective Date for Additional License, one month or more after the date of the notice. By notice to Lessor in writing prior to delivery, or Effective Date for Additional License, and within 15 days after receipt of such notice. Lessee may terminate the Lease for an affected item. Otherwise, the change shall apply. 5. ADVANCE RENT. Lessee shall pay to Lessor, prior to Lessor's acceptance of a Lease, Advance Rent, if specified. Advance Rent shall be refunded if Lessor for any reason does not accept the Lease or Lessee terminates the Lease in accordance with Paragraph 4, 12 or 15. 6. SELECTION AND USE OF EQUIPMENT, PROGRAMMING AND LICENSED PROGRAM MATERIALS. Lessee agrees that it shall be responsible for the selection, use of, and results obtained from, the Equipment, any programming supplied by IBM without additional charge for use on the Equipment (Programming), licensed program materials, and any other associated equipment, programs or services. 7. ASSIGNMENT TO LESSOR. Lessee hereby assigns, exclusively to Lessor, Lessee's right to purchase the Equipment from IBM. This assignment is effective when Lessor accepts the applicable Supplement and Lessor shall then be obligated to purchase and pay for the Equipment. Other than the obligation to pay the purchase price, all responsibilities and limitations applicable to Customer as defined in the referenced IBM purchase agreement in effect at the time the Lease is accepted by Lessor (Purchase Agreement) shall apply to Lessee. If the Equipment is subject to a volume procurement amendment to the Purchase Agreement or to another discount offering, (a) Lessor will pay the same amount for the Equipment that would have been payable by Lessee, and (b) Lessee will remain responsible to IBM for any late order change charges, settlement charges, adjustment charges or any other charges incurred under the volume procurement amendment or other discount offering. 8. LEASE NOT CANCELLABLE; LESSEE'S OBLIGATIONS ABSOLUTE. Lessee's obligation to pay shall be absolute and unconditional and shall not be subject to any delay, reduction, set-off, defense, counterclaim or recoupment for any reason whatsoever, including any failure of the Equipment, Programming or licensed program materials or any representations by IBM. If the Equipment, Programming or licensed program materials are unsatisfactory for any reason, Lessee shall make any claim solely against IBM and shall, nevertheless, pay Lessor all amounts payable under the Lease. 9. WARRANTIES. Lessor grants to Lessee the benefit of any and all warranties made available by IBM in the Purchase Agreement. Lessor warrants that neither Lessor nor anyone acting or claiming through Lessor, by assignment or otherwise, will interfere with Lessee's quiet enjoyment of the use of the Equipment so long as no event of default shall have occurred and be continuing. EXCEPT FOR LESSOR'S WARRANTY OF QUIET ENJOYMENT, LESSOR MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. AS TO LESSOR, LESSEE LEASES THE EQUIPMENT AND TAKES THE ADDITIONAL TERMS AND CONDITIONS ON PAGES 2 THROUGH 4 ARE PART OF THIS AGREEMENT. LESSEE ACKNOWLEDGES THAT LESSEE HAS READ THIS AGREEMENT AND ITS SUPPLEMENT, UNDERSTANDS THEM, AND AGREES TO BE BOUND BY THEIR TERMS AND CONDITIONS. FURTHER, LESSEE AGREES THAT THIS AGREEMENT AND ITS SUPPLEMENT ARE THE COMPLETE AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES, SUPERSEDING ALL PROPOSALS OR PRIOR AGREEMENTS, ORAL OR WRITTEN, AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER HEREOF. Accepted by: /s/ SMS GEOTRAC IBM CREDIT CORPORATION ---------------------------------------- Lessee By /s/ Eileen Torres By /s/ Daniel J. White, President - ------------------------------------- ------------------------------------- Authorized Signature Authorized Signature Eileen Torres 7/11/95 DANIEL J. WHITE 6/30/95 - ------------------------------------- ------------------------------------- Name (Type or Print) Date Name (Type or Print) Date 2 ANY PROGRAMMING "AS IS" IN NO EVENT SHALL LESSOR HAVE ANY LIABILITY FOR, NOR SHALL LESSEE HAVE ANY REMEDY AGAINST LESSOR FOR, CONSEQUENTIAL DAMAGES, ANY LOSS OF PROFITS OR SAVINGS, LOSS OF USE, OR ANY OTHER COMMERCIAL LOSS. 10. LESSEE AUTHORIZATION. So long as Lessee is not in default under the Lease (a) Lessee is authorized to act on Lessor's behalf concerning delivery and installation of the Equipment, any IBM warranty service for the Equipment, and any programming services for the Programming, and (b) Lessee shall have, solely for these purposes, all rights Lessor may have against IBM under the Purchase Agreement. The foregoing authorization shall not constitute any surrender of Lessor's interest in the Equipment. 11. DELIVERY AND INSTALLATION. Lessee shall arrange with IBM for the delivery of the Equipment at the Equipment Location. Lessee shall pay any delivery and installation charges. Lessor shall not be liable to Lessee for any delay in, or failure of, delivery of the Equipment and Programming. Lessee shall examine the Equipment and Programming immediately upon delivery. If the Equipment is not in good condition or the Equipment or Programming does not correspond to IBM's specifications, Lessee shall promptly give IBM written notice and shall provide IBM reasonable assistance to cure the defect or discrepancy. 12. LATE DELIVERY. If the Equipment or licensed program materials are not delivered to the Equipment Location on or before the 15th day after the Estimated Shipment Date, Lessor may, upon written notice to Lessee, increase the Lease Rate. Lessee may terminate the Lease for the affected item by giving Lessor written notice prior to delivery. Otherwise, the Rent shall be adjusted to reflect such increase. 13. RENT COMMENCEMENT DATE. The Rent Commencement Date, unless otherwise specified in the Supplement, shall be the date payment is due IBM under the applicable referenced agreement. Lessee shall be notified of the Rent Commencement Date and the serial numbers of the Equipment. 14. LEASE TERM. The Lease shall be effective when signed by both parties. The initial Term of the Lease shall expire at the end of the number of Payment Periods, specified as "Term" in the Supplement, after the Rent Commencement Date. However, obligations under the Lease shall continue until they have been performed in full. 15. RATE PROTECTION. Unless modified pursuant to Paragraph 12, the Rent shall be based on the Lease Rate specified in the Supplement or such greater Lease Rate as may be specified by written notice to Lessee more than one month before the Estimated Shipment Date or Effective Date for Additional License. By notice to Lessor in writing prior to delivery, or Effective Date for Additional License, and within 15 days after receipt of such notice. Lessee may terminate the Lease for the affected item. Otherwise, the Rent shall be adjusted to reflect the increase. The Unit Purchase Price and IBM Charges are subject to change in accordance with the referenced agreements. 16. RENT. During the initial Term, Lessee shall pay Lessor, for each Payment Period. Rent as determined in Paragraph 15. Lessee's obligation to pay shall begin on the Rent Commencement Date. Rent will be invoiced in advance as of the first day of each Payment Period and will be due on the day following the last day of the Payment Period. When the Rent Commencement Date is not on the first day of a calendar month and/or when the initial Term does not expire on the last day of a calendar month, the applicable Rent will be prorated on the basis of 30-day months. Advance Rent, if any, will be applied to the initial invoice(s). 17. RENEWAL. If Lessee is not then in default under the Lease, Lessee may renew the Lease one or more times but not beyond six years from the expiration of the initial Term. Lessor shall offer renewal Terms of one year and may offer longer Terms if then generally available. For a renewal Term, upon request by Lessee, at least five months prior to Lease expiration, Lessor shall notify Lessee, at least four months prior to expiration, of the Rent, any changes to the Payment Period and due dates, and of any required Purchase Option or Renewal Option Percents not specified in the Supplement. The Rent shall be objectively determined by Lessor by using the projected fair market rental value of the Equipment as of the commencement of such renewal Term. However, for Option B', the Rent shall be as specified in the Supplement. Lessee may renew for any renewal Term only by so notifying Lessor in writing at least three months before expiration. 18. PURCHASE OF EQUIPMENT. If Lessee is not then in default under the Lease, Lessee may, upon three months prior written notice to Lessor, purchase Equipment upon expiration of the Lease. Under Option A or B, the purchase price shall be objectively determined by Lessor by using the projected fair market sale value of the Equipment as of such expiration date plus, for Equipment under Option A, any recapture of investment tax credit and any tax due thereon. Under Option B Prime (B') the purchase price shall be an amount determined by multiplying the Unit Purchase Price by the Purchase Option Percent for such Equipment. If Lessee purchases any Equipment, Lessee shall, on or before the date of purchase, pay to Lessor the purchase price, any applicable taxes, all Rent due through the day preceding the date of purchase, any other amounts due, and the prepayment of Financing (Paragraph 35). Lessor shall, on the date of purchase, transfer to Lessee by bill of sale, without recourse or warranty of any kind, express or implied, all of Lessor's right, title and interest in and such Equipment on an "As Is, Where Is" basis except that Lessor shall warrant title free and clear of all encumbrances. 19. OPTIONAL EXTENSION. If Lessee has not elected to renew or purchase, and as long as Lessee is not in default under the Lease, the Lease will be extended unless Lessee notifies Lessor in writing, not less than three months prior to Lease expiration, that Lessee does not want the extension. The extension will be under the same terms and conditions then in effect, including Rent (but, for Options A or B, not less than fair market rental value) and will continue until the earlier of termination by either party, up to three months' prior written notice or six years after expiration of the initial Term. 20. INSPECTION; MARKING; FINANCING STATEMENTS. Upon request, Lessee shall make the Equipment and its maintenance records available for inspection by Lessor during Lessee's normal business hours. Lessee shall affix to the Equipment any labels indicating ownership supplied by Lessor. Lessee shall execute and deliver to Lessor for filing any Uniform Commercial Code financing statements or similar documents Lessor may reasonably request. 21. EQUIPMENT USE. Lessee agrees that Equipment will be operated by competent, qualified personnel, in accordance with applicable operating instructions, laws and government regulations and that Equipment under Option A will be used only for business purposes. 22. MAINTENANCE. Lessee, at its expense, shall keep the Equipment in a suitable environment as specified by IBM and in good condition and working order, ordinary wear and tear excepted. 23. ALTERATIONS; MODIFICATIONS; PARTS. Lessee may alter or modify the Equipment only upon written notice to Lessor. Any non-IBM alteration is to be removed and the Equipment restored to its normal, unaltered condition at Lessee's expense prior to its return to Lessor. At Lessee's option, any IBM field installation, upgrade, feature addition or accessory added to any item of Equipment (Modification) may be removed. If removed, the Equipment is to be restored at Lessee's expense to its normal, unmodified condition. If not removed, such Modification shall, upon return of the Equipment, become, without charge, the property of Lessor free of all encumbrances. Restoration will include replacement of any parts removed in connection with the installation of an alteration or Modification. Any part installed in connection with warranty or maintenance service shall be the property of Lessor. 24. LEASES FOR MODIFICATIONS AND ADDITIONS. Lessor will arrange for leasing of Modifications and Additions under terms and conditions then generally in effect, subject to satisfactory credit review. Additions shall be machines, or IBM Charges for licensed program materials, which are associated with the Equipment. These Modifications and Additions must be ordered by Lessee from IBM. Any lease for Modifications shall, and any lease for Additions may, expire at the same time as the Lease for the Equipment. The rent shall be determined by Lessor as specified in a Supplement. If Lessee purchases Equipment prior to Lease expiration, Lessee shall simultaneously purchase any Modifications under the Lease. 25. RETURN OF EQUIPMENT. Upon expiration or termination of the Lease for any item of Equipment, or upon demand by Lessor pursuant to Paragraph 38, Lessee shall promptly return the Equipment, freight prepaid, to a location in the continental United States specified by Lessor. Except for Casualty Loss, Lessee shall pay any costs and expenses incurred by Lessor to inspect 3 qualify the Equipment for IBM's maintenance agreement service. Any parts removed in connection therewith shall become Lessor's property. 26. CASUALTY INSURANCE; LOSS OR DAMAGE. Lessor will maintain, at its own expense, insurance covering loss of or damage to the Equipment (but excluding any Modifications not subject to a Lease and any non-IBM alterations) with a $5,000 deductible per incident. If any item of Equipment shall be lost, stolen, destroyed or irreparably damaged for any cause whatsoever (Casualty Loss) before the Date of Installation as defined in the Purchase Agreement, the Lease for that item shall terminate. If any item of Equipment suffers Casualty Loss, or shall be otherwise damaged, on or after the Date of Installation, Lessee shall promptly inform Lessor. If Lessor determines that the item can be economically repaired, Lessee shall place the item in good condition and working order and Lessor will reimburse Lessee the reasonable cost of such repair, less the deductible. If not so repairable, Lessee shall pay Lessor the lesser of $5,000 or the fair market value of the Equipment immediately prior to the Casualty Loss. Upon Lessor's receipt of payment the Lease for that item shall terminate. 27. TAXES. Lessee shall promptly reimburse Lessor for, or shall pay directly if so requested by Lessor, as additional Rent, all taxes, charges, and fees imposed or levied by any governmental body or agency upon or in connection with the purchase, ownership, leasing, possession, use or relocation of the Equipment or Programming or in connection with the financing of LPM Charges or otherwise in connection with the transactions contemplated by the Lease, excluding, however, all taxes on or measured by the net income of Lessor. Upon request, Lessee will provide proof of payment. Any other taxes, charges and fees relating to the licensing, possession or use of licensed program materials will be governed by the License Agreement. 28. LESSOR'S PAYMENT. If Lessee fails to perform its obligations under Paragraph 27 or 31 or to discharge any encumbrances created by Lessee, Lessor shall have the right to substitute performance, in which case, Lessee shall pay Lessor the cost thereof. 29. TAX INDEMNIFICATION (APPLIES ONLY FOR EQUIPMENT UNDER OPTIONS A OR B). The Lease is entered into on the basis that under the Internal Revenue Code of 1986, as amended (Code), Lessor shall be entitled to (1) maximum Accelerated Cost Recovery System (ACRS) deductions for 5-year property, and (2) deductions for interest expense incurred to finance purchase of the Equipment. The Bulletin "Lessor's Tax Assumptions" will be given to Lessee on request. Lessee represents, warrants and covenants that at all times during the Lease: (a) no item of Equipment will constitute "public utility property" as defined in the Code; (b) Lessee will not make any election under the Code or take any action, or fail to take any action, if such election, action or failure to act would cause any item of Equipment to cease to be eligible for any ACRS deductions or interest deductions; (c) Lessee will keep and make available to Lessor the records required to establish the matters referred to in this Paragraph 29; and (d) for Equipment located in a United States possession, Lessee represents that Lessee is a tax exempt entity as defined in the Code. Furthermore, if Lessee is a tax exempt entity, Lessee covenants that it will not renew or extend the Lease if such action shall cause Lessor a Tax Loss as described below. If, as a result of any act, failure to act, misrepresentation, inaccuracy, or breach of any warranty or covenant, or default under the Lease, by Lessee, an affiliate of Lessee, or any person who shall obtain the use of possession of any item of Equipment through Lessee. Lessor shall lose the right to claim or shall suffer any disallowance or recapture of all or any portion of any ACRS deductions or interest deductions (Tax Loss) with respect to any item of Equipment, then, promptly upon written notice to Lessee that a Tax Loss has occurred, Lessee shall reimburse Lessor the amount determined below. The reimbursement shall be an amount that, in the reasonable opinion of Lessor, shall make Lessor's after-tax rate of return and cash flows (Financial Returns), over the term of the Lease for such item of Equipment, equal to the expected Financial Returns that would have been otherwise available. The reimbursement shall take into account the effects of any interest, penalties and additions to tax required to be paid by Lessor as a result of such Tax Loss and all taxes required to be paid by Lessor as a result of any payments pursuant to this paragraph. Financial Returns shall be based on economic and tax assumptions used by Lessor in entering into the Lease. All the rights and privileges of Lessor arising from this Paragraph 29 shall survive the expiration or termination of the Lease. For purposes of determining tax effects under Paragraphs 18, 27, 29 and 30, the term "Lessor" shall include, to the extent of interests, any partner in Lessor and any affiliated group of corporations, and each member thereof, of which Lessor or any such partner is or shall become a member and with which Lessor or any such partner joins in the filing of consolidated or combined returns. 30. GENERAL INDEMNITY. This Lease is a net lease. Therefore, Lessee shall indemnify Lessor against, and hold Lessee harmless from, any and all claims, actions, damages, obligations, liabilities and liens; and all costs and expenses, including legal fees, incurred by Lessor in connection therewith; arising out of the Lease including, without limitation, the purchase, ownership, lease, licensing, possession, maintenance, condition, use or return of the Equipment, Programming or licensed program materials; or arising by operation of law, excluding, however, any of the foregoing which result from the sole negligence or willful misconduct of Lessor. Lessee agrees that upon written notice by Lessor of the assertion of any claim, action, damage, obligation, liability or lien, Lessee shall assume full responsibility for the defense thereof. Any payment pursuant to this paragraph shall be of such amount as shall be necessary so that, after payment of any taxes required to be paid thereon by Lessor, including taxes on or measured by the net income of Lessor, the balance will equal the amount due hereunder. Lessee's obligations under this paragraph shall not constitute a guarantee of the residual value or useful life of any item of Equipment or a guarantee of any debt of Lessor. The provisions of this paragraph with regard to matters arising during the Lease shall survive the expiration or termination of the Lease. 31. LIABILITY INSURANCE. Lessee shall obtain and maintain comprehensive general liability insurance, in an amount of $1,000,000 or more for each occurrence, with an insurer having a "Best's Policyholders" rating of B+ or better. The policy shall name Lessor as an additional insured as Lessor's interest may appear and shall contain a clause requiring the insurer to give Lessor at least one month's prior written notice of the cancellation, or any alteration in the terms, of the policy. Lessee shall furnish to Lessor, upon request, evidence that such insurance coverage is in effect. 32. SUBLEASE AND RELOCATION OF EQUIPMENT: ASSIGNMENT BY LESSEE. Upon Lessor's prior written consent, which will not be unreasonably withheld, Lessee may sublet the Equipment or relocate it from the Equipment Location. No sublease or relocation shall relieve Lessee of its obligations under the Lease. In no event shall Lessee remove the Equipment from the United States. Lessee shall not assign, transfer or otherwise dispose of the Lease or Equipment, or any interest therein, or create or suffer any levy, lien or encumbrance thereof except those created by Lessor. 33. ASSIGNMENT BY LESSOR. Lessee acknowledges and understands that the terms and conditions of the Lease have been fixed to enable Lessor to sell and assign its interest or grant a security interest or interests in the Lease and the Equipment individually or together, in whole or in part, for the purpose of securing loans to Lessor or otherwise. If Lessee is given written notice of any assignment, it shall promptly acknowledge receipt thereof in writing. Each such assignee shall have all of the rights of Lessor under the Lease. Lessee shall not assert against any such assignee any set-off, defense or counterclaim that Lessee may have against Lessor or any other person. Lessor shall not be relieved of its obligations hereunder as a result of any such assignment unless Lessee expressly consents thereto. 34. FINANCING. If the Lease provides for financing of LPM Charges, Lessor will pay such Charges directly to IBM. Any other charges due IBM under the License Agreement shall be paid directly to IBM by Lessee. Lessee's obligation to pay Rent shall not be affected by any discontinuance, return or destruction of any license or licensed program materials under the License Agreement on or after the date LPM Charges are due. If Lessee discontinues any of the licensed program materials in accordance with the terms of the License Agreement prior to the date LPM Charges are due, the financing of affected LPM Charges shall be cancelled. 4 35. FINANCING PREPAYMENT (Does Not Apply For Items of Equipment). Lessee may terminate an item of Financing (but not an item of Equipment) by prepaying its remaining Rent. Lessee shall provide Lessor with notice of the intended prepayment date which shall be at least one month after the date of the notice. Lessor may, depending on market conditions at the time, make an adjustment in the remaining Rent to reflect such prepayment and shall advise Lessee of the balance to be paid. If, prior to Lease expiration, Lessee purchases the Equipment or if the Lease is terminated, Lessee shall at the same time prepay any related Financing including that for programs licensed to the Equipment. 36. DELINQUENT PAYMENTS. If any amount to be paid to Lessor is not paid on or before its due date, Lessee shall pay Lessor on demand 2% of such late payment for each month or part thereof from the due date until the date paid or, if less, the maximum allowed by law. 37. DEFAULT; NO WAIVER. Lessee shall be in default under the Lease upon the occurrence of any of the following events: (a) Lessee fails to pay when due any amount required to be paid by Lessee under the Lease and such failure shall continue for a period of seven days after the due date; (b) Lessee fails to perform any other provisions under the Lease or violates any of the covenants or representations made by Lessee in the Lease, or Lessee fails to perform any of its obligations under any other Lease entered into pursuant to this Agreement, and such failure or breach shall continue unremedied for a period of 15 days after written notice is received by Lessee from Lessor; (c) Lessee violates any of the covenants or representations made by Lessee in any application for credit or in any agreement with IBM with respect to the Equipment or licensed program materials or fails to perform any provision in any such agreement (except the obligation to pay the purchase price or LPM Charges); (d) Lessee makes an assignment for the benefit of creditors, whether voluntary or involuntary, or consents to the appointment of a trustee or receiver, or if either shall be appointed for Lessee or for a substantial part of its property without its consent; (e) any petition or proceeding if filed by or against Lessee under any Federal or State bankruptcy or insolvency code or similar law, or (f) if applicable, Lessee makes a bulk transfer subject to the provisions of the Uniform Commercial Code. Any failure of Lessor to require strict performance by Lessee or any waiver by Lessor of any provision in the Lease shall not be construed as a consent or waiver of any other breach of the same or of any other provision. 38. REMEDIES. If Lessee is in default under the Lease, Lessor shall have the right, in its sole discretion, to exercise any one or more of the following remedies in order to protect its interests, reasonably expected profits and economic benefits. Lessor may (a) declare any Lease entered into pursuant to this Agreement to be in default; (b) terminate in whole or in part any Lease; (c) recover from Lessee any and all amounts then due and to become due; (d) take possession of any or all items of Equipment, wherever located, without demand or notice, without any court order or other process of law; and (e) demand that Lessee return any or all such items of Equipment to Lessor in accordance with Paragraph 25 and, for each day that Lessee shall fail to return any item of Equipment, Lessor may demand an amount equal to the Rent, prorated on the basis of a 30-day month, in effect immediately prior to such default. Upon repossession or return of such item or items of Equipment, Lessor shall sell, lease or otherwise dispose of such item or items in a commercially reasonable matter, with or without notice and on public or private bid, and apply the net proceeds thereof towards the amounts due under the Lease but only after deducting (i) in the case of sale, the estimated fair market value of such item or items as of the scheduled expiration of the Lease; or (ii) in the case of any replacement lease, the rent due for any period beyond the scheduled expiration of the Lease for such item or items (iii) in either case, all expenses, including legal fees, incurred in connection therewith; and (iv) where appropriate, any amount in accordance with Paragraph 29. Any excess net proceeds are to be retained by Lessor. Lessor may pursue any other remedy available at law or in equity, including, but not limited to, seeking damages, specific performance and an injunction. No right or remedy is exclusive of any other provided herein permitted by law or equity. All such rights and remedies shall be cumulative and may be enforced concurrently or individually from time to time. 39. LESSOR'S EXPENSE. Lessee shall pay Lessor on demand all costs and expense, including legal and collection fees incurred by Lessor in enforcing the terms, conditions or provisions of the Lease or in protecting Lessor's rights and interests in the Lease and the Equipment. 40. OWNERSHIP; PERSONAL PROPERTY; LICENSE PROGRAM MATERIALS. The Equipment under Lease is and shall be the property of Lessor. Lessee shall have no right, title or interest therein except as set forth in the Lease. The Equipment is and shall at all times be and remain, personal property and shall not become a fixture or realty. Licensed program materials are licensed and provided by IBM directly to Lessee under the terms and conditions of the License Agreement. 41. NOTICES; ADMINISTRATION. Service of all notices under the Lease shall be sufficient if delivered personally or mailed to Lessee at its address specified in the Supplement or to IBM Credit Corporation as Lessor in care of the IBM Branch Office specified in the Supplement. Notice by mail shall be effective when deposited in the United States mail, duly addressed and with postage prepaid. Notices, consents and approvals from or by Lessor shall be given by Lessor or on its behalf by IBM and all payments shall be made to IBM until Lessor shall notify Lessee otherwise. 42. LESSEE REPRESENTATION. If the Lease includes financing, Lessee represents that it is (a) a corporation if any item of Equipment is located in Ohio, Mississippi, Virginia or West Virginia, and/or (b) a business corporation if any item of Equipment is located in Pennsylvania. 43. REVISIONS FOR PREVIOUSLY INSTALLED EQUIPMENT. Equipment installed with Lessee under an IBM lease or rental agreement may be purchased by Lessor, on the Effective Date of Purchase (as defined in the Purchase Agreement), for lease to Lessee under Option B or B*. For such Equipment, the Lease shall be revised as follows: Paragraphs 4 and 26 -- replace "Estimated Shipment Date" by "Intended Effective Date of Purchase"; replace "delivery" and "Date of Installation" by "Effective Date of Purchase"; Paragraph 7 -- add at the end of the first paragraph, "Assignment of the option to purchase installed Equipment at the net purchase option price under an IBM lease or rental agreement will be permitted only when Lessee submits the Supplement in sufficient time to achieve the Intended Effective Date of Purchase. The Effective Date of Purchase under this assignment shall be the later of the first day of the Quotation Month or the day on which the applicable Supplement is accepted by Lessor. If the Quotation Month expires and the purchase of Equipment is not concluded, this assignment and Lease will be null and void regarding any such Equipment and all rights, duties and obligations of Lessee and IBM will remain in accordance with the provisions of the IBM agreement under which the Equipment is currently installed"; Paragraphs 11 and 12 -- delete both paragraphs, and Paragraph 15 -- replace the entire paragraph with the following: "The Rent shall be based on the Lease Rate specified in the Supplement or such greater Lease Rate as may be specified by written notice to Lessee more than one month before the Effective Date of Purchase. The Unit Purchase Price is subject to change in accordance with the referenced Purchase Agreement. Lessee may terminate the Lease for an item subject to an increase by giving Lessor written notice on or before the Effective Date of Purchase. 44. APPLICABLE LAW; SEVERABILITY. The Lease shall be governed by the laws of the State of Connecticut. If any provision shall be held to be invalid or unenforceable, the validity and enforceability of the remaining provisions shall not in any way be affected or impaired. EX-10.11 14 EMPLOYEE LEASE AGREEMENT, DATED MAY 19, 1998 1 EXHIBIT 10.11 EMPLOYEE LEASING AGREEMENT This is an Employee Leasing Agreement ("Agreement") by and between Bankers Insurance Company, a Florida corporation located at 360 Central Avenue, St. Petersburg, Florida 33701 ("BIC"), and Insurance Management Solutions Group, Inc., a Florida corporation located at 360 Central Avenue, St. Petersburg, Florida 33701 ("IMSG"). WHEREAS, BIC employs certain individuals who have been trained in customer services and other areas in the property and casualty insurance business, and WHEREAS, BIC desires to continue employing these individuals as a result of the favorable tax rate BIC receives under Florida's premium tax structure for insurance companies, and WHEREAS, IMSG desires to lease these employees because of their skills and expertise, and WHEREAS, BIC is willing to lease these individuals to IMSG. NOW THEREFORE, in consideration of the premises and other valuable consideration the receipt of which is hereby acknowledged, the parties hereto agree as follows: 1. Terms a) BIC shall lease to IMSG and IMSG shall lease from BIC certain employees, as agreed to between the parties from time to time. b) The number of employees to be leased will vary depending on the employment needs of IMSG and the availability of employees from BIC. c) In consideration of BIC making these employees available to IMSG, IMSG agrees to pay all expenses in connection with said employees including, but not limited to, salaries, bonuses, holiday and sick pay, benefits, applicable employer taxes, Workers' Compensation coverage, and any other direct or indirect expenses associated with the employment of these individuals. Such expenses will either be paid directly by IMSG or reimbursed on a dollar-for-dollar basis to BIC by IMSG. d) IMSG shall indemnify and hold harmless BIC from any liabilities incurred by or on behalf of the leased employees within the scope of their employment by IMSG including, but not limited to, the obligations set forth in paragraph 1(c) above and any applicable federal, state, or local law, rule or regulation. 1 2 e) IMSG agrees to make available to the leased employees the same benefits which were available to the employees from BIC, including but not limited to, 401K plan, bonuses, dental insurance, flexible spending accounts, life insurance, and medical insurance. f) The leased employees will also have the same company holidays as was provided by BIC. 2. Length of Agreement. This Agreement shall remain in effect until the parties mutually agree to its termination or one party gives the other party at least 60 days prior notice of intent to terminate. 3. Compensation. IMSG shall determine the compensation of each leased employee. 4. Duties. Leased employee shall have such duties as may from time to time be reasonably assigned to him or her by IMSG. 5. Extent of Services. Leased employees shall devote their entire time, energy and attention to their duties in connection with IMSG, and shall not engage in or carry on or be employed by, directly or indirectly, any other business of profession without the consent of IMSG; provided, however, that nothing herein contained shall prohibit leased employees from investing or trading in stock, bonds, commodities or other securities or forms of investments, including real property. 6. Termination of Employment. IMSG may terminate leased employee's employment hereunder upon leased employee's disloyalty, misconduct or other similar cause. 7. Notice. Any notice required or permitted to be given under this Agreement shall be sufficient if in writing and if sent by certified or registered mail, return receipt requested, to the parties at the following addresses: To BIC at: 360 Central Avenue St. Petersburg, FL 33701 Tel: (813) 823-4000 ext. 4416 Fax: (813) 823-6518 Attention: G. Kristin Delano To IMSG at: 360 Central Avenue St. Petersburg, FL 33701 Tel: (813) 823-4000 ext. 4427 Fax: (813) 823-6518 Attention: Jeffrey S. Bragg 8. Waiver of Breach. The waiver by either party of a breach of any condition of this Agreement shall not be construed as a waiver of any subsequent breach. 2 3 9. Assignment. The rights and obligations of either party under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of both parties. 10. Attorney's Fees. In the event either party is required to bring suit to enforce the provisions of this Agreement, the losing party agrees to be responsible for the payment to the prevailing party of reasonable attorney's fees and court costs, whether the same are incurred in connection with trial or appeal. 11. Entire Agreement. This Agreement contains the entire agreement of the parties. It may not be changed orally, but only by an agreement in writing signed by both parties. 12. Governing Law. This Agreement shall be construed under and be governed by the laws of the State of Florida. 13. Prior Agreements. This Agreement amends and supplants any and all prior Employment Agreements between the parties hereto. 14. Scope. (a) IMSG shall retain sufficient direction and control over the workplace and the employee's to supervise all day-to-day work activities of the employees necessary to conduct IMSG's business. As the supervising employer, IMSG shall assume all liability for any actions or inactions by the employees for such business related services and activities. In addition, IMSG shall ensure that the employees adhere to employment and safety policies designated and provided by BIC and/or as may be required by law. (b) IMSG shall make any and all strategic, operational or other business-related decisions regarding IMSG's business. Such decisions and related outcomes shall exclusively be the responsibility of IMSG and BIC shall bear no responsibility nor liability for any actions or inactions by IMSG. 15. COBRA. Should IMSG not accept BIC's group health insurance coverage, IMSG retains all obligations for the continuation of coverage for any current COBRA participants as well as for any and all eligible employees at the time of termination of the Agreement. If IMSG does not accept BIC's group health insurance coverage, upon termination of this Agreement, for any reason, IMSG shall obtain group health insurance coverage for all former employees, and shall assume from BIC all responsibility and obligation for the continuation of coverage for any COBRA participants as well as for any and all eligible employees at the time of termination of the Agreement for the remainder of their COBRA eligibility period. 16. Human Resources / Employee Relations. (a) Adding and Removing Employees: Each and every employee must complete the BIC employment application process and must be accepted by BIC prior to becoming an employee of BIC. BIC agrees that should IMSG request the 3 4 removal of an employee, BIC shall promptly comply, provided such removal is permissible by the employment policies, procedures and practices of BIC. Such action shall not in any way abrogate BIC's rights as an employer to terminate employment of any employee. IMSG shall notify BIC in writing of any addition or removal of employees within TWENTY-FOUR (24) hours of such event by way of forwarding the application process documents or separation notices (with all supporting write-ups). (b) Duty to Inform: IMSG shall inform BIC of employment related complaints, charges, and/or allegations raised by or related to the employees within FORTY-EIGHT (48) hours of receiving notice of such issues, and shall provide complete and accurate disclosure of all circumstances surrounding such matters. All harassment issues shall be given special priority and immediately communicated to BIC. (c) ADA: IMSG shall provide, at its own expense, reasonable access and accommodations as required by the Americans' with Disabilities Act, and any regulations related thereto. In addition, IMSG shall comply with the guidelines and provisions of the Americans' with Disabilities Act in its determinations of individuals it may request BIC to hire, promote, or fire. (d) FMLA: IMSG shall at all times comply with the Family and Medical Leave Act ("FMLA") and it is IMSG's responsibility to reinstate eligible employees, and in all other manner to comply with the FMLA. This provision shall survive termination of this Agreement. (e) EEOC: IMSG shall abide by and comply with all other applicable employment related laws and regulations (State and Federal), including, but not limited to, those related to discrimination based on race, sex, color, age, national origin, religion and marital status; as well as those laws governing sexual harassment, and/or discrimination. (f) AAP: Any and all Affirmative Action Plan program development, administration, tracking, and the like, shall be the exclusive responsibility of IMSG unless otherwise specifically stated herein. IN WITNESS WHEREOF, the parties have executed this Agreement the day and year first above written. WITNESSES: BANKERS INSURANCE COMPANY "BIC" /s/ C. Anthony Sexton By: /s/G. Kristin Delano - ------------------------------------- -------------------------------------- As Its: Corporate Secretary - ------------------------------------- ---------------------------------- Date: 5-19-98 ------------------------------------ 4 5 WITNESSES: INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. "IMSG" /s/ Diane Holland By: /s/ Jeffrey S. Bragg - ------------------------------------- -------------------------------------- /s/ C. Anthony Sexton As Its: Executive Vice President/COO - ------------------------------------- ---------------------------------- Date: 5/19/98 ------------------------------------ 5 EX-10.12 15 ADMINISTRATION SERVICES AGREEMENT 1 EXHIBIT 10.12 ADMINISTRATION SERVICES AGREEMENT ADMINISTRATION SERVICES AGREEMENT ("Agreement") made effective as of the 1st day of January, 1998, by and between Bankers Insurance Group, Inc., a Florida corporation (herein, "Bankers") and Insurance Management Solutions Group, Inc., a Florida corporation (herein, "IMSG"). WHEREAS, Bankers has extensive experience in the management of property/casualty insurance business; and WHEREAS, IMSG is a subsidiary of Bankers and desires Bankers to perform certain administrative and special services (collectively "services") for IMSG in its operations and as IMSG may request; and WHEREAS, Bankers and IMSG contemplate that such an arrangement will achieve certain operating economies, and improve services to the mutual benefit of both Bankers and IMSG; and WHEREAS, Bankers and IMSG wish to assure that all charges for services and the use of Facilities incurred hereunder are reasonable and to the extent practicable reflect actual costs and are arrived at in a fair and equitable manner, and that estimated costs, whenever used, are adjusted periodically, to bring them into alignment with actual costs; NOW, THEREFORE, in consideration of the promises and of the mutual covenants herein contained, and intending to be legally bound hereby, Bankers and IMSG agree as follows: 1. PERFORMANCE OF SERVICES AND USE OF FACILITIES. Bankers agrees to the extent requested by IMSG to perform such services for IMSG as IMSG determines to be reasonably necessary in the conduct of its operations. Bankers agrees to the extent requested by IMSG to make available its Facilities to IMSG as IMSG may determine to be reasonably necessary in the conduct of its operations, including but not limited to: human resource services, such as recruiting, hiring, benefits administration and training, legal services, certain corporate accounting functions, buildings and services, cash management, agency accounting and corporate communications. Bankers agrees at all times to use its best efforts to maintain sufficient personnel and Facilities of the kind necessary to perform this Agreement. (a) Capacity of Personnel: Status of Facilities. Whenever Bankers utilizes its personnel to perform services for IMSG pursuant to the this Agreement, such personnel shall at all times remain employees of Bankers or its affiliates and Bankers shall alone retain full liability to such employees for their welfare, salaries, fringe benefits, legally required employer contributions and tax obligations. No Facility of Bankers used in performing services for or subject to use by IMSG shall be deemed to be transferred, assigned, conveyed or leased by performance or use pursuant to this Agreement. (b) Exercise of Judgment in Rendering Services. In providing any services hereunder which require the exercise of judgment by Bankers, Bankers shall perform any such service in accordance with any standards and guidelines IMSG develops and communicates to Bankers. In performing any services hereunder, Bankers shall at all times act in a manner reasonably calculated to be in, or not opposed to, the best interests of IMSG, and in any event in accordance with the written standards and guidelines of IMSG. (c) Control. The performance of services by Bankers for IMSG pursuant to this Agreement shall in no way impair the absolute control of the business and operations of Bankers or IMSG by their respective Boards of Directors. Bankers shall act hereunder so as to assure the separate operating identity of IMSG. 1 2 2. SERVICES A. Custodial Services. Subject to the direction and control of the Board of Directors of IMSG, IMSG does hereby appoint Bankers and Bankers does accept such appointment to act as a custodian of cash and similar assets, with full power and authority to act for, on behalf of, and in the name of IMSG in the maintenance and management of monies, or other sums as IMSG may entrust to Bankers under this Agreement; provided that: (1) Bankers shall keep and maintain proper books and records wherein shall be recorded the business transacted by it on behalf of, in the name of, or on account of IMSG. Bankers shall monthly submit to an officer of IMSG designated by IMSG for that purpose a transaction report for the preceding month. (2) Subject to the direction and control of the Board of Directors of IMSG, and subject to compliance with investment guidelines established by IMSG, Bankers shall make, manage, and dispose of all investments of IMSG in accordance with the terms and conditions of a separate agreement to be entered into between the parties hereto. (3) Whenever Bankers receives and collects monies for the account of IMSG, Bankers will not commingle such monies with its own, but will deposit such monies in an appropriate separate account in the name of IMSG. B. Functional Support Services. Subject to the ultimate control and direction of the IMSG Board of Directors, Bankers shall provide legal services, including the negotiation and preparation of contracts, agreements and agency documents, governmental relations and advising on regulatory compliance and rendering opinions on various legal matters, assisting IMSG with the selection and performance management of third party legal counsel associated for purposes of the prosecution or defense of actions. Other services to be provided include Human Resources, payroll and employee relations services. Also provided is Agency Accounting and Accounts Payable, Cash Management, Property Accounting, Audit Services and Agency Licensing. C. Location. Except as is herein specifically set forth to the contrary, it is understood Bankers shall be providing all of the services for which provision is herein set forth from its principal place of business located in St. Petersburg, FL.; provided that such facility may be relocated from time to time to such reasonable location as IMSG may determine upon 60 days' advance notice to IMSG. 3. CHARGES. (a) IMSG agrees to reimburse Bankers for services and Facilities provided by Bankers to IMSG pursuant to this Agreement. The charge to IMSG for such services and Facilities shall include all direct and directly allocable expenses, reasonably and equitably determined to be attributable to IMSG by Bankers, plus a reasonable charge for direct overhead, the amount of such charge for overhead to be agreed upon by the parties from time to time. Quarterly charges for Calendar Year 1998 are identified in Exhibit A. (b) Bankers' determination of charges hereunder shall be presented to IMSG, and if IMSG objects to any such determination, it shall so advise Bankers within thirty (30) days of receipt of notice of said determination. Unless the parties can reconcile any such objection, they shall agree to the selection of a firm of independent certified public accountants which shall determine the charges properly allocable to IMSG and shall, within a reasonable time, submit such determination, together with the basis therefore, in writing to Bankers and IMSG whereupon such determination shall be binding. The expenses of such a determination by a firm of independent certified public accountants shall be borne equally by Bankers and IMSG. 2 3 4. PAYMENT. (a) IMSG shall advance such funds to Bankers as the parties may mutually agree are reasonably necessary to cover the charges (provision for which is set forth in paragraph 3 hereof) of IMSG for the ensuing calendar quarter. (b) Within thirty (30) days after the end of each month, Bankers will submit to IMSG a detailed written statement and accounting of the charges due from IMSG to Bankers for services and the use of Facilities pursuant to this Agreement in the preceding calendar quarter, including charges not included in any previous statements. Any amount advanced by IMSG to Bankers under Section 4(a) hereof in excess of (i) the actual charges for services and Facilities rendered and received plus (ii) such amount as is reasonably required for such charges for the subsequent calendar quarter shall be refunded to IMSG by Bankers along with the detailed written statement and accounting. 5. RECORDS AND DOCUMENTS RELATING TO CHARGES. Bankers shall be responsible for maintaining full and accurate accounting records of all services rendered and Facilities used pursuant to this Agreement and such additional information as IMSG may reasonable request for purposes of its internal bookkeeping and accounting operations. Bankers shall make such accounting records insofar as they pertain to the computation of charges hereunder available at its principal offices for audit, inspection and copying by IMSG or any governmental agency having jurisdiction over IMSG during all reasonable business hours. 6. OTHER RECORDS AND DOCUMENTS. (a) All books, records, and files established and maintained by Bankers by reason of its performance under this Agreement which, absent this Agreement, would have been held by IMSG, shall be the property of IMSG and shall be subject to examination by IMSG and persons authorized by it at all times. IMSG may at any time require Bankers to surrender possession of such books, records and files, whereupon Bankers shall deliver them to IMSG. (b) Without limiting the generality of the foregoing and notwithstanding anything in this Agreement appearing to the contrary, it is mutually understood and agreed that IMSG shall maintain the originals of its books of account at its home office in Florida. For the purposes of this Agreement, the term "books of account" means: the Charter and By-laws; the record containing the names and addresses of shareholders, the number and class of shares held by each and the dates when they respectively became the owners of record thereof; the minutes of any meetings of shareholders and of the board of directors and any committees thereof; the general ledger; the investment ledger; journals; the cash book; subsidiary ledgers; annual and quarterly statements; and all minutes supporting annual, quarterly and other statements and reports filed with or submitted to supervisory and regulatory authorities. 7. TERMINATION AND MODIFICATION. This Agreement or any part thereof shall commence and be effective as of the day and year first above set forth and shall remain in effect for a period of one year. Upon termination, Bankers shall promptly deliver to IMSG all books and records that are, or are deemed by this Agreement to be, the property of IMSG. This Agreement may be amended only by mutual consent in writing signed by the parties. 8. SETTLEMENT ON TERMINATION. No later than ninety (90) days after the effective date of termination of this Agreement, Bankers shall deliver to IMSG a detailed written statement for all charges incurred and not included in any previous statement to the effective date of termination. The amount owed by either party hereunder shall be due and payable within thirty (30) days of receipt of such statement. 3 4 9. ASSIGNMENT. This Agreement and any rights pursuant hereto shall not be assignable by either party hereto, except by operation of law. Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto, or their respective legal successors, any rights, remedies, obligations or liabilities, or to relieve any person other that the parties hereto, or their respective legal successors, from any obligations or liabilities that would otherwise be applicable. 10. GOVERNING LAW. This Agreement is made pursuant to and shall be governed by, interpreted under, and the right of the parties determined in accordance with, the laws of the State of Florida. 11. NOTICE. All notices, statements or requests provided for hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand to an officer of the other party, or when deposited with the U.S. Postal Service, as certified or registered mail, postage prepaid, addressed (a) If to Bankers to: 360 Central Avenue P.O. Box 15707 St. Petersburg, FL 33733 Attn: G. Kristin Delano (813) 803-4016 FAX (813) 823-6518 (b) If to IMSG to: 360 Central Avenue P.O. Box 15707 St. Petersburg, FL 33733 Attn: David K. Meehan, Chairman (813) 823-4000 x 4201 FAX (813) 823-6518 or to such other person or place as each party may from time to time designate by written notice sent as aforesaid. 12. HEADINGS. The headings of the various paragraphs of this Agreement are for convenience only, and shall be accorded no weight in the construction of this Agreement. 13. ENTIRE AGREEMENT. This Agreement, together with such Amendment as may from time to time be executed in writing by the parties, constitutes the entire Agreement between the parties with respect to the subject matter hereof. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in duplicate by their respective officers duly authorized so to do, and their respective corporate seals to be attached hereto as of the date and year first above written. WITNESSES: INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. /s/ C. Anthony Sexton BY: /s/ Jeffrey S. Bragg - -------------------------------------- --------------------------------- AS ITS: COO - -------------------------------------- ----------------------------- DATE: 5/15/98 ------------------------------- 4 5 WITNESSES: BANKERS INSURANCE GROUP, INC. /s/ Erica Rudin BY: /s/ G. Kristin Delano - --------------------------------------- --------------------------------- AS ITS: Corporate Secretary - --------------------------------------- ----------------------------- DATE: 5/18/98 ------------------------------- Exhibit A Fee Schedule 5 6 Exhibit A Management Agreement Bankers Insurance Group, Inc. Services to Insurance Management Solutions Group Functions performed by Bankers Insurance Group, Inc. for the benefit of Insurance Management Solutions Group, Inc. for the Calendar year 1998 by quarter: Human Resources: Quarter 1 $ 175,000 Quarter 2 $ 175,000 Quarter 3 $ 175,000 Quarter 4 $ 175,000 Accounts Payable: Quarter 1 $ 11,250 Quarter 2 $ 11,250 Quarter 3 $ 11,250 Quarter 4 $ 11,250 Agency Accounting: Quarter 1 $ 137,500 Quarter 2 $ 137,500 Quarter 3 $ 137,500 Quarter 4 $ 137,500 Cash Management: Quarter 1 $ 21,250 Quarter 2 $ 21,250 Quarter 3 $ 21,250 Quarter 4 $ 21,250 Property Accounting: Quarter 1 $ 5,000 Quarter 2 $ 5,000 Quarter 3 $ 5,000 Quarter 4 $ 5,000 Audit Services: Quarter 1 $ 37,500 Quarter 2 $ 37,500 Quarter 3 $ 37,500 Quarter 4 $ 37,500 Agency Licensing: Quarter 1 $ 5,000 Quarter 2 $ 5,000 Quarter 3 $ 5,000 Quarter 4 $ 5,000 Affiliated Senior Management: Quarter 1 $ 3,750 Quarter 2 $ 3,750 Quarter 3 $ 3,750 Quarter 4 $ 3,750 Total Contract Based on 1998 Budgets and Projections: $1,570,000
IMS may, from time to time as needed, require Corporate Legal Services and Corporate Communications Services. Such services will be provided on an Hourly Basis as follows: Legal Services: $150.00 per Hour Corporate Communications: $40.00 per Hour 7 It is understood by both IMS and Bankers Insurance Group, Inc. that should material fluctuations in either a positive or negative direction impact IMS, either party has the right to re-negotiate those contemplated services and corresponding fees in light of material changes in demand for said services. EX-10.13 16 SERVICE AGREEMENT, DATED JANURARY 1, 1998 1 EXHIBIT 10.13 SERVICE AGREEMENT SERVICE AGREEMENT ("Agreement") made effective as of the 1st day of January, 1998, by and between Insurance Management Solutions, a Florida corporation (herein, "IMS") and Bankers Insurance Company, a Florida insurance corporation (herein, "BIC"). WHEREAS, IMS has extensive experience in the operation of property/casualty insurance business; and WHEREAS, BIC is an affiliate of IMS and desires IMS to perform certain administrative and special services (collectively "services") for BIC in its operations and desires further to make use in its day to day operations of certain property, equipment, and facilities (herein collectively called, "Facilities") of IMS in Florida and as BIC may request; and WHEREAS, IMS and BIC contemplate that such an arrangement will achieve certain operating economies, and improve services to the mutual benefit of both IMS and BIC; and WHEREAS, IMS and BIC wish to assure that all charges for services and the use of Facilities incurred hereunder are reasonable and are arrived at in a fair and equitable manner, and that estimated charges, whenever used, are adjusted periodically; NOW, THEREFORE, in consideration of the promises and of the mutual covenants herein contained, and intending to be legally bound hereby, IMS and BIC agree as follows: 1. PERFORMANCE OF SERVICES AND USE OF FACILITIES. IMS agrees to make available its Facilities to BIC and perform the services hereinafter required for the conduct of its operations, including but not limited to: data processing equipment; business property, whether owned or leased; and communications equipment. IMS agrees at all times to use its best efforts to maintain sufficient personnel and Facilities of the kind necessary to perform this Agreement. A.) Capacity of Personnel: Status of Facilities. Whenever IMS utilizes its personnel to perform services for BIC pursuant to the this Agreement, such personnel shall at all times remain employees of IMS or its affiliates and IMS shall alone retain full liability to such employees for their welfare, salaries, fringe benefits, legally required employer contributions and tax obligations. No Facility of IMS used in performing services for or subject to use by BIC shall be deemed to be transferred, assigned, conveyed or leased by performance or use pursuant to this Agreement. B.) Exercise of Judgment in Rendering Services. In providing any services hereunder which require the exercise of judgment by IMS, IMS shall perform any such service in accordance with any standards and guidelines BIC develops and communicates to IMS. In performing any services hereunder, IMS shall at all times act in a manner reasonably calculated to be in, or not opposed to, the best interests of BIC, and in any event in accordance with the written standards and guidelines of BIC. C.) Control. The performance of services by IMS for BIC pursuant to this Agreement shall in no way impair the absolute control of the business and operations of IMS or BIC by their respective Boards of Directors. IMS shall act hereunder so as to assure the separate operating identity of BIC. 1 2 A.) Accounting, Tax and Auditing. Under the general supervision of the Board of Directors and responsible officers of BIC, IMS shall provide accounting services as may be required, including preparation and maintenance of the financial statements and reports including preparation and processing of the financial records and transactions of BIC as well as the preparation and distribution of producer (agent) statements and payments and any subsequent billing and collection activities. IMS shall also provide such assistance as may be required with respect to tax and auditing services. B.) Claims. Subject to procedures established by BIC and communicated to IMS and managing general agents, IMS shall provide claims services as may be required, including review of claims services rendered by agents and/or managing general agents of BIC. BIC shall at all times have the ultimate and final authority in determining whether to pay or reject payment on claims. Claims services contemplated as "pass through" costs to BIC include: 1) Defense, litigation and medical cost containment expenses, whether internal or external: (a) Fees or salaries for appraisers, private investigators, hearing representatives, reinspectors and fraud investigators, if working in defense of a claim, and fees or salaries for rehabilitation nurses, if such salaries for rehabilitation nurses, if such cost is not included in the losses. (b) Attorney fees incurred owing to a duty to defend, even when other coverage does not exist. (c) Loss adjustment expenses for participation in voluntary and involuntary market pools if reported by accident year. (d) Litigation Management expenses. (e) Fixed amounts for medical cost containment expenses. (f) Surveillance expenses. 2) Defense expenses are defined as all expenses to defend claims, excluding adjuster expenses. 3) IMS shall report all claims to BIC in accordance with established criteria including, but not limited to, all claims that present a risk of a finding of bad faith. Such reports shall be made on such basis and with such frequency as BIC may from time to time require. Whenever bad faith claim handling results in a claim payment greater than the applicable policy limits (herein, "Bad Faith Occurrence"), the total amount paid on such claim will be a pass through to BIC as long as BIC gave prior approval to the claim handling management decisions that lead to the Bad Faith Occurrence. If BIC was not give prior approval of the management decisions that lead to the Bad Faith Occurrence, then the amount paid on such claim will only be a pass through to BIC if (i) the Bad Faith Occurrence is based on a common law theory of bad faith, and (ii) the claim handling decisions that lead to the Bad Faith Occurrence were decisions that were fairly debatable. While a court or jury may find that the insurer failed to deal with its insured fairly and honestly, the matter will be deemed to be fairly debatable if the 2 3 fact finder, given the same set of circumstances could reasonably find to the contrary. C) Functional Support Services. Subject to the ultimate control and direction of the BIC Board of Directors, IMS shall provide telecommunications services and electronic data processing services, Facilities and integration, including software programming and documentation and hardware utilization. D) Customer Service. Subject to procedures established by BIC and communicated to IMS, IMS shall provide customer service support as may be required, including responding to telephonic and written inquiries for policy information and modification, receipt of, and accounting for and paying over premium to BIC, policy issuance, policy assembly and policy mailings. E) Except as is herein specifically set forth to the contrary, it is understood IMS shall be providing all of the services for which provision is herein set forth from its principal place of business located in St. Petersburg, FL.; provided that such facility may be relocated from time to time to such reasonable location as IMS may determine upon 60 days' advance notice to BIC. 2. CHARGES. (a) BIC agrees to pay for services and Facilities provided by IMS to BIC pursuant to this Agreement and to reimburse IMS for expenses, all as set forth in Exhibit A which is attached hereto and by reference made a part hereof. (b) IMS's determination of charges hereunder shall be presented to BIC, and if BIC objects to any such determination, it shall so advise IMS within thirty (30) days of receipt of notice of said determination. Unless the parties can reconcile any such objection, they shall agree to the selection of a firm of independent certified puBIC accountants which shall determine the charges properly allocable to BIC and shall, within a reasonable time, submit such determination, together with the basis therefore, in writing to IMS and BIC whereupon such determination shall be binding. The expenses of such a determination by a firm of independent certified puBIC accountants shall be borne equally by IMS and BIC. 3. PAYMENT. (a) BIC shall advance such funds to IMS as the parties may mutually agree are reasonably necessary to cover the charges (provision for which is set forth in Exhibit A hereof) of BIC for the ensuing calendar quarter. (b) Within thirty (30) days after the end of each month, IMS will submit to BIC a detailed written statement and accounting of the fees and charges due from BIC to IMS for services and the use of Facilities pursuant to this Agreement in the preceding calendar quarter, including charges not included in any previous statements. Any amount advanced by BIC to IMS under Section hereof in excess of (i) the actual charges for services and Facilities rendered and received plus (ii) such amount as is reasonably required for such charges for the subsequent calendar quarter shall be refunded to BIC by IMS along with the detailed written statement and accounting. 4. RECORDS AND DOCUMENTS RELATING TO CHARGES. IMS shall be responsible for maintaining full and accurate accounting records of all services rendered and Facilities used pursuant to this Agreement and such additional information as BIC may 3 4 reasonably request for purposes of its internal bookkeeping and accounting operations. IMS shall make such accounting records insofar as they pertain to the computation of charges hereunder available at its principal offices for audit, inspection and copying by BIC or any governmental agency having jurisdiction over BIC during all reasonable business hours. 5. OTHER RECORDS AND DOCUMENTS. (a) All books, records, and files established and maintained by IMS by reason of its performance under this Agreement which, absent this Agreement, would have been held by BIC, shall be the property of BIC and shall be subject to examination by BIC and persons authorized by it at all times. BIC may at any time require IMS to surrender possession of such books, records and files, whereupon IMS shall deliver them to BIC. (b) Without limiting the generality of the foregoing and notwithstanding anything in this Agreement appearing to the contrary, it is mutually understood and agreed that BIC shall maintain the originals of its books of account at its home office in Florida. For the purposes of this Agreement, the term "books of account" means: the Charter and By-laws; the record containing the names and addresses of shareholders, the number and class of shares held by each and the dates when they respectively became the owners of record thereof; the minutes of any meetings of shareholders and of the board of directors and any committees thereof; the general ledger; the investment ledger; journals; the cash book; subsidiary ledgers; annual and quarterly statements; reports on examination; and all minutes supporting annual, quarterly and other statements and reports filed with or submitted to supervisory and regulatory authorities. 6. TERMINATION AND MODIFICATION. This Agreement or any part thereof shall commence and be effective as of January 1, 1998 and shall remain in effect until June 1, 2001; provided that this agreement shall continue thereafter until termination in whole or in part by mutual consent or by either IMS or BIC upon giving ninety (90) days or more advance written notice. Upon termination, IMS shall promptly deliver to BIC all books and records that are, or are deemed by this Agreement to be, the property of BIC. This Agreement may be amended only by mutual consent in writing signed by the parties. 7. SETTLEMENT ON TERMINATION. No later than ninety (90) days after the effective date of termination of this Agreement, IMS shall deliver to BIC a detailed written statement for all charges incurred and not included in any previous statement to the effective date of termination. The amount owed by either party hereunder shall be due and payable within thirty (30) days of receipt of such statement. 8. ASSIGNMENT. This Agreement and any rights pursuant hereto shall not be assignable by either party hereto, except by operation of law. Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto, or their respective legal successors, any rights, remedies, obligations or liabilities, or to relieve any person other that the parties hereto, or their respective legal successors, from any obligations or liabilities that would otherwise be applicable. 9. GOVERNING LAW. This Agreement is made pursuant to and shall be governed by, interpreted under, and the right of the parties determined in accordance with, the laws of the State of 10. NOTICE. All notices, statements or requests provided for hereunder shall 4 5 be in writing and shall be deemed to have been duly given when delivered by hand to an officer of the other party, or when deposited with the U.S. Postal Service, as certified or registered mail, postage prepaid, addressed (a) If to IMS to: 360 Central Avenue P.O. Box 15707 St. Petersburg, FL 33733 Attn: David K. Meehan, President (813) 823-4000 x 4201 FAX (813) 823-6518 (b) If to BIC to: 360 Central Avenue P.O. Box 15707 St. Petersburg, FL 33733 Attn: G. Kristin Delano (813) 803-4016 FAX (813) 823-6518 or to such other person or place as each party may from time to time designate by written notice sent as aforesaid. 11. HEADINGS. The headings of the various paragraphs of this Agreement are for convenience only, and shall be accorded no weight in the construction of this Agreement. 12. ENTIRE AGREEMENT. This Agreement, together with such Amendment as may from time to time be executed in writing by the parties, constitutes the entire Agreement between the parties with respect to the subject matter hereof. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in duplicate by their respective officers duly authorized so to do, and their respective corporate seals to be attached hereto as of the date and year first above written. WITNESSES: BANKERS INSURANCE COMPANY /s/ Erica Rudin BY: /s/G. Kristin Delano - ------------------------------------- ------------------------------------ AS ITS: Corporate Secretary - ------------------------------------- -------------------------------- INSURANCE MANAGEMENT SOLUTIONS, INC. /s/C. Anthony Sexton BY: /s/Jeffrey S. Bragg - ------------------------------------- ------------------------------------ AS ITS: COO - ------------------------------------- -------------------------------- Exhibit A Fee Schedule 5 6 EXHIBIT A INSURANCE MANAGEMENT SOLUTIONS, INC. SERVICE FEES
Performance Period: January 1, 1998-June 1, 2001 Customer Service Fees: Homeowners/Dwelling Fire: 8.50% of Direct Premiums Written(1) Flood: 8.00% of Direct Premiums Written(1) Automobile: 10.00% of Direct Premiums Written(1) Claims Service Fees: Homeowners/Dwelling Fire: Property: 7.00% of Direct Earned Premiums(2) IMSG will be reimbursed for costs associated with independent adjusters and appraisers when indemnity losses from a single event exceed $2,000,000 subject to a cap of 5.00% of direct incurred losses from that storm. Casualty: 10.25% of Direct Earned Premiums(2) Flood: 1.00% of Direct Earned Premiums and 1.50% of Direct Incurred Losses(3) Automobile: Auto Property: 9.00% of Direct Earned Premiums(2) Auto Casualty: 12.50% of Direct Earned Premiums(2) Data Processing Fees: Homeowners/Dwelling Fire: 2.00% of Direct Earned Premiums(2) Flood: 2.00% of Direct Earned Premiums(2) Automobile: 2.00% of Direct Earned Premiums(2) Bail: .20% of Direct Earned Premiums(2) All Other Lines of Business processed by BIC, BSIC & FCIC: 2.00% of Direct Earned Premiums(2) Mailroom, Policy Assembly & Cash Office Service Fees: All Other Lines of Business (not incl.-HO, Flood, Auto, Bail) 1.00% of Direct Earned Premiums(2) Bail: .10% of Direct Earned Premiums(2) Special Contracts entered into by BIC, FCIC or BSIC will be negotiated on an individual basis. The existing General Agents' Program calls for Claims Only Service. 8.00% of Direct Earned Premiums(2)
- --------------- (1) Direct Written Premiums includes gross written premiums net of cancellations. The affiliates pay on the basis of 80% Written and 20% Earned. (2) Direct Earned Premiums are determined by earning direct written premiums ratably over the life of the policies written. (3) Direct Incurred Losses are defined as calendar period paid losses plus ending loss reserves minus beginning loss reserves. 7 ADDENDUM B ADDENDUM TO SERVICE CONTRACT As respects claims arising from policies issued by Bankers Insurance Company on behalf of the Florida Residential Property Casualty Joint Underwriting Association and the Florida Auto Joint Underwriting Association, Insurance Management Solutions, Inc. has agreed to assume, for a fee, the servicing of all existing indemnity loss claims as well as claims which have occurred but have not yet been reported. Terms of this arrangement are as follows: FLORIDA RESIDENTIAL PROPERTY CASUALTY JOINT UNDERWRITING ASSOCIATION
Effective Date: January 1, 1998 until all such Claims are Settled Fees: $38.75 per Open Claim per Month; this includes Claims Open and closed in Same Accounting Month. Definition of LAE: The same definition of both ULAE and ALAE as applies to all other Claims Service Agreements between the parties applies to this Addendum. FLORIDA AUTO JOINT UNDERWRITING ASSOCIATION Effective Data: January 1, 1998 until all such Claims are Settled Fees: $175 per Closed Claim File Definition of LAE: The same definition of both ULAE and ALAE as applies to all other Claims Service Agreements between the parties applies to this Addendum.
EX-10.14 17 SERVICE AGREEMENT DATED JANURARY 1, 1998 1 EXHIBIT 10.14 SERVICE AGREEMENT SERVICE AGREEMENT ("Agreement") made effective as of the 1st day of January, 1998, by and between Insurance Management Solutions, a Florida corporation (herein, "IMS") and Bankers Security Insurance Company, a Florida insurance corporation (herein, "BSIC"). WHEREAS, IMS has extensive experience in the operation of property/casualty insurance business; and WHEREAS, BSIC is an affiliate of IMS and desires IMS to perform certain administrative and special services (collectively "services") for BSIC in its operations and desires further to make use in its day to day operations of certain property, equipment, and facilities (herein collectively called, "Facilities") of IMS in Florida and as BSIC may request; and WHEREAS, IMS and BSIC contemplate that such an arrangement will achieve certain operating economies, and improve services to the mutual benefit of both IMS and BSIC; and WHEREAS, IMS and BSIC wish to assure that all charges for services and the use of Facilities incurred hereunder are reasonable and are arrived at in a fair and equitable manner, and that estimated charges, whenever used, are adjusted periodically; NOW, THEREFORE, in consideration of the promises and of the mutual covenants herein contained, and intending to be legally bound hereby, IMS and BSIC agree as follows: 1. PERFORMANCE OF SERVICES AND USE OF FACILITIES. IMS agrees to make available its Facilities to BSIC and perform the services hereinafter required for the conduct of its operations, including but not limited to: data processing equipment; business property, whether owned or leased; and communications equipment. IMS agrees at all times to use its best efforts to maintain sufficient personnel and Facilities of the kind necessary to perform this Agreement. A.) Capacity of Personnel: Status of Facilities. Whenever IMS utilizes its personnel to perform services for BSIC pursuant to the this Agreement, such personnel shall at all times remain employees of IMS or its affiliates and IMS shall alone retain full liability to such employees for their welfare, salaries, fringe benefits, legally required employer contributions and tax obligations. No Facility of IMS used in performing services for or subject to use by BSIC shall be deemed to be transferred, assigned, conveyed or leased by performance or use pursuant to this Agreement. B.) Exercise of Judgment in Rendering Services. In providing any services hereunder which require the exercise of judgment by IMS, IMS shall perform any such service in accordance with any standards and guidelines BSIC develops and communicates to IMS. In performing any services hereunder, IMS shall at all times act in a manner reasonably calculated to be in, or not opposed to, the best interests of BSIC, and in any event in accordance with the written standards and guidelines of BSIC. C.) Control. The performance of services by IMS for BSIC pursuant to this Agreement shall in no way impair the absolute control of the business and operations of IMS or BSIC by their respective Boards of Directors. IMS shall act hereunder so as to assure the separate operating identity of BSIC 1 2 D.) Accounting, Tax and Auditing. Under the general supervision of the Board of Directors and responsible officers of BSIC, IMS shall provide accounting services as may be required, including preparation and maintenance of the financial statements and reports including preparation and processing of the financial records and transactions of BSIC as well as the preparation and distribution of producer (agent) statements and payments and any subsequent billing and collection activities. IMS shall also provide such assistance as may be required with respect to tax and auditing services. E.) Claims. Subject to procedures established by BSIC and communicated to IMS and managing general agents, IMS shall provide claims services as may be required, including review of claims services rendered by agents and/or managing general agents of BSIC. BSIC shall at all times have the ultimate and final authority in determining whether to pay or reject payment on claims. Claims services contemplated as "pass through" costs to BSIC include: 1) Defense, litigation and medical cost containment expenses, whether internal or external: (a) Fees or salaries for appraisers, private investigators, hearing representatives, reinspectors and fraud investigators, if working in defense of a claim, and fees or salaries for rehabilitation nurses, if such salaries for rehabilitation nurses, if such cost is not included in the losses. (b) Attorney fees incurred owing to a duty to defend, even when other coverage does not exist. (c) Loss adjustment expenses for participation in voluntary and involuntary market pools if reported by accident year. (d) Litigation Management expenses. (e) Fixed amounts for medical cost containment expenses. (f) Surveillance expenses. 2) Defense expenses are defined as all expenses to defend claims, excluding adjuster expenses. 3) IMS shall report all claims to BSIC in accordance with established criteria including, but not limited to, all claims that present a risk of a finding of bad faith. Such reports shall be made on such basis and with such frequency as BSIC may from time to time require. Whenever bad faith claim handling results in a claim payment greater than the applicable policy limits (herein, "Bad Faith Occurrence"), the total amount paid on such claim will be a pass through to BSIC as long as BSIC gave prior approval to the claim handling management decisions that lead to the Bad Faith Occurrence. If BSIC was not give prior approval of the management decisions that lead to the Bad Faith Occurrence, then the amount paid on such claim will only be a pass through to BSIC if (i) the Bad Faith Occurrence is based on a common law theory of bad faith, and (ii) the claim handling decisions that lead to the Bad Faith Occurrence were decisions that were fairly debatable. While a court or jury may find that the insurer failed to deal with its insured fairly and honestly, the matter will be deemed to be fairly debatable if 2 3 the fact finder, given the same set of circumstances could reasonably find to the contrary. C) Functional Support Services. Subject to the ultimate control and direction of the BSIC Board of Directors, IMS shall provide telecommunications services and electronic data processing services, Facilities and integration, including software programming and documentation and hardware utilization. D) Customer Service. Subject to procedures established by BSIC and communicated to IMS, IMS shall provide customer service support as may be required, including responding to telephonic and written inquiries for policy information and modification, receipt of, and accounting for and paying over premium to BSIC, policy issuance, policy assembly and policy mailings. E) Except as is herein specifically set forth to the contrary, it is understood IMS shall be providing all of the services for which provision is herein set forth from its principal place of business located in St. Petersburg, FL.; provided that such facility may be relocated from time to time to such reasonable location as IMS may determine upon 60 days' advance notice to BSIC. 2. CHARGES. (a) BSIC agrees to pay for services and Facilities provided by IMS to BSIC pursuant to this Agreement and to reimburse IMS for expenses, all as set forth in Exhibit A which is attached hereto and by reference made a part hereof. (b) IMS's determination of charges hereunder shall be presented to BSIC, and if BSIC objects to any such determination, it shall so advise IMS within thirty (30) days of receipt of notice of said determination. Unless the parties can reconcile any such objection, they shall agree to the selection of a firm of independent certified puBSIC accountants which shall determine the charges properly allocable to BSIC and shall, within a reasonable time, submit such determination, together with the basis therefore, in writing to IMS and BSIC whereupon such determination shall be binding. The expenses of such a determination by a firm of independent certified puBSIC accountants shall be borne equally by IMS and BSIC. 3. PAYMENT. (a) BSIC shall advance such funds to IMS as the parties may mutually agree are reasonably necessary to cover the charges (provision for which is set forth in Exhibit A hereof) of BSIC for the ensuing calendar quarter. (b) Within thirty (30) days after the end of each month, IMS will submit to BSIC a detailed written statement and accounting of the fees and charges due from BSIC to IMS for services and the use of Facilities pursuant to this Agreement in the preceding calendar quarter, including charges not included in any previous statements. Any amount advanced by BSIC to IMS under Section hereof in excess of (i) the actual charges for services and Facilities rendered and received plus (ii) such amount as is reasonably required for such charges for the subsequent calendar quarter shall be refunded to BSIC by IMS along with the detailed written statement and accounting. 4. RECORDS AND DOCUMENTS RELATING TO CHARGES. IMS shall be 3 4 responsible for maintaining full and accurate accounting records of all services rendered and Facilities used pursuant to this Agreement and such additional information as BSIC may reasonably request for purposes of its internal bookkeeping and accounting operations. IMS shall make such accounting records insofar as they pertain to the computation of charges hereunder available at its principal offices for audit, inspection and copying by BSIC or any governmental agency having jurisdiction over BSIC during all reasonable business hours. 5. OTHER RECORDS AND DOCUMENTS. (a) All books, records, and files established and maintained by IMS by reason of its performance under this Agreement which, absent this Agreement, would have been held by BSIC, shall be the property of BSIC and shall be subject to examination by BSIC and persons authorized by it at all times. BSIC may at any time require IMS to surrender possession of such books, records and files, whereupon IMS shall deliver them to BSIC. (b) Without limiting the generality of the foregoing and notwithstanding anything in this Agreement appearing to the contrary, it is mutually understood and agreed that BSIC shall maintain the originals of its books of account at its home office in Florida. For the purposes of this Agreement, the term "books of account" means: the Charter and By-laws; the record containing the names and addresses of shareholders, the number and class of shares held by each and the dates when they respectively became the owners of record thereof; the minutes of any meetings of shareholders and of the board of directors and any committees thereof; the general ledger; the investment ledger; journals; the cash book; subsidiary ledgers; annual and quarterly statements; reports on examination; and all minutes supporting annual, quarterly and other statements and reports filed with or submitted to supervisory and regulatory authorities. 6. TERMINATION AND MODIFICATION. This Agreement or any part thereof shall commence and be effective as of January 1, 1998 and shall remain in effect until June 1, 2001; provided that this agreement shall continue thereafter until termination in whole or in part by mutual consent or by either IMS or BSIC upon giving ninety (90) days or more advance written notice. Upon termination, IMS shall promptly deliver to BSIC all books and records that are, or are deemed by this Agreement to be, the property of BSIC. This Agreement may be amended only by mutual consent in writing signed by the parties. 7. SETTLEMENT ON TERMINATION. No later than ninety (90) days after the effective date of termination of this Agreement, IMS shall deliver to BSIC a detailed written statement for all charges incurred and not included in any previous statement to the effective date of termination. The amount owed by either party hereunder shall be due and payable within thirty (30) days of receipt of such statement. 8. ASSIGNMENT. This Agreement and any rights pursuant hereto shall not be assignable by either party hereto, except by operation of law. Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto, or their respective legal successors, any rights, remedies, obligations or liabilities, or to relieve any person other that the parties hereto, or their respective legal successors, from any obligations or liabilities that would otherwise be applicable. 9. GOVERNING LAW. This Agreement is made pursuant to and shall be governed by, interpreted under, and the right of the parties determined in accordance with, the laws of the State of 4 5 10. NOTICE. All notices, statements or requests provided for hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand to an officer of the other party, or when deposited with the U.S. Postal Service, as certified or registered mail, postage prepaid, addressed (a) If to IMS to: 360 Central Avenue P.O. Box 15707 St. Petersburg, FL 33733 Attn: David K. Meehan, President (813) 823-4000 x 4201 FAX (813) 823-6518 (b) If to BSIC to: 360 Central Avenue P.O. Box 15707 St. Petersburg, FL 33733 Attn: G. Kristin Delano (813) 803-4016 FAX (813) 823-6518 or to such other person or place as each party may from time to time designate by written notice sent as aforesaid. 11. HEADINGS. The headings of the various paragraphs of this Agreement are for convenience only, and shall be accorded no weight in the construction of this Agreement. 12. ENTIRE AGREEMENT. This Agreement, together with such Amendment as may from time to time be executed in writing by the parties, constitutes the entire Agreement between the parties with respect to the subject matter hereof. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in duplicate by their respective officers duly authorized so to do, and their respective corporate seals to be attached hereto as of the date and year first above written. WITNESSES: BANKERS SECURITY INSURANCE COMPANY /s/ Erica Rudin BY: /s/G. Kristin Delano - ------------------------------------- ------------------------------------ AS ITS: Corporate Secretary - ------------------------------------- -------------------------------- INSURANCE MANAGEMENT SOLUTIONS, INC. /s/ C. Anthony Sexton BY: /s/Jeffrey S. Bragg - ------------------------------------- ------------------------------------ AS ITS: COO - ------------------------------------- -------------------------------- Exhibit A Fee Schedule 5 6 EXHIBIT A INSURANCE MANAGEMENT SOLUTIONS, INC. SERVICE FEES
Performance Period: January 1, 1998-June 1, 2001 Customer Service Fees: Homeowners/Dwelling Fire: 8.50% of Direct Premiums Written(1) Flood: 8.00% of Direct Premiums Written(1) Automobile: 10.00% of Direct Premiums Written(1) Claims Service Fees: Homeowners/Dwelling Fire: Property: 7.00% of Direct Earned Premiums(2) IMSG will be reimbursed for costs associated with independent adjusters and appraisers when indemnity losses from a single event exceed $2,000,000 subject to a cap of 5.00% of direct incurred losses from that storm. Casualty: 10.25% of Direct Earned Premiums(2) Flood: 1.00% of Direct Earned Premiums and 1.50% of Direct Incurred Losses(3) Automobile: Auto Property: 9.00% of Direct Earned Premiums(2) Auto Casualty: 12.50% of Direct Earned Premiums(2) Data Processing Fees: Homeowners/Dwelling Fire: 2.00% of Direct Earned Premiums(2) Flood: 2.00% of Direct Earned Premiums(2) Automobile: 2.00% of Direct Earned Premiums(2) Bail: .20% of Direct Earned Premiums(2) All Other Lines of Business processed by BIC, BSIC & FCIC: 2.00% of Direct Earned Premiums(2) Mailroom, Policy Assembly & Cash Office Service Fees: All Other Lines of Business (not incl.-HO, Flood, Auto, Bail) 1.00% of Direct Earned Premiums(2) Bail: .10% of Direct Earned Premiums(2) Special Contracts entered into by BIC, FCIC or BSIC will be negotiated on an individual basis. The existing General Agents' Program calls for Claims Only Service. 8.00% of Direct Earned Premiums(2)
- --------------- (1) Direct Written Premiums includes gross written premiums net of cancellations. The affiliates pay on the basis of 80% Written and 20% Earned. (2) Direct Earned Premiums are determined by earning direct written premiums ratably over the life of the policies written. (3) Direct Incurred Losses are defined as calendar period paid losses plus ending loss reserves minus beginning loss reserves. 7 ADDENDUM B ADDENDUM TO SERVICE CONTRACT As respects claims arising from policies issued by Bankers Insurance Company on behalf of the Florida Residential Property Casualty Joint Underwriting Association and the Florida Auto Joint Underwriting Association, Insurance Management Solutions, Inc. has agreed to assume, for a fee, the servicing of all existing indemnity loss claims as well as claims which have occurred but have not yet been reported. Terms of this arrangement are as follows: FLORIDA RESIDENTIAL PROPERTY CASUALTY JOINT UNDERWRITING ASSOCIATION
Effective Date: January 1, 1998 until all such Claims are Settled Fees: $38.75 per Open Claim per Month; this includes Claims Open and closed in Same Accounting Month. Definition of LAE: The same definition of both ULAE and ALAE as applies to all other Claims Service Agreements between the parties applies to this Addendum. FLORIDA AUTO JOINT UNDERWRITING ASSOCIATION Effective Data: January 1, 1998 until all such Claims are Settled Fees: $175 per Closed Claim File Definition of LAE: The same definition of both ULAE and ALAE as applies to all other Claims Service Agreements between the parties applies to this Addendum.
EX-10.15 18 SERVICE AGREEMENT DATED JANUARY 1, 1998 1 EXHIBIT 10.15 SERVICE AGREEMENT SERVICE AGREEMENT ("Agreement") made effective as of the 1st day of January, 1998, by and between Insurance Management Solutions, a Florida corporation (herein, "IMS") and First Community Insurance Company, a New York insurance corporation (herein, "FCIC"). WHEREAS, IMS has extensive experience in the operation of property/casualty insurance business; and WHEREAS, FCIC is an affiliate of IMS and desires IMS to perform certain administrative and special services (collectively "services") for FCIC in its operations and desires further to make use in its day to day operations of certain property, equipment, and facilities (herein collectively called, "Facilities") of IMS in Florida and as FCIC may request; and WHEREAS, IMS and FCIC contemplate that such an arrangement will achieve certain operating economies, and improve services to the mutual benefit of both IMS and FCIC; and WHEREAS, IMS and FCIC wish to assure that all charges for services and the use of Facilities incurred hereunder are reasonable and are arrived at in a fair and equitable manner, and that estimated charges, whenever used, are adjusted periodically; NOW, THEREFORE, in consideration of the promises and of the mutual covenants herein contained, and intending to be legally bound hereby, IMS and FCIC agree as follows: 1. PERFORMANCE OF SERVICES AND USE OF FACILITIES. IMS agrees to make available its Facilities to FCIC and perform the services hereinafter required for the conduct of its operations, including but not limited to: data processing equipment; business property, whether owned or leased; and communications equipment. IMS agrees at all times to use its best efforts to maintain sufficient personnel and Facilities of the kind necessary to perform this Agreement. A.) Capacity of Personnel: Status of Facilities. Whenever IMS utilizes its personnel to perform services for FCIC pursuant to the this Agreement, such personnel shall at all times remain employees of IMS or its affiliates and IMS shall alone retain full liability to such employees for their welfare, salaries, fringe benefits, legally required employer contributions and tax obligations. No Facility of IMS used in performing services for or subject to use by FCIC shall be deemed to be transferred, assigned, conveyed or leased by performance or use pursuant to this Agreement. B.) Exercise of Judgment in Rendering Services. In providing any services hereunder which require the exercise of judgment by IMS, IMS shall perform any such service in accordance with any standards and guidelines FCIC develops and communicates to IMS. In performing any services hereunder, IMS shall at all times act in a manner reasonably calculated to be in, or not opposed to, the best interests of FCIC, and in any event in accordance with the written standards and guidelines of FCIC. C.) Control. The performance of services by IMS for FCIC pursuant to this Agreement shall in no way impair the absolute control of the business and operations of IMS or FCIC by their respective Boards of Directors. IMS shall act hereunder so as to 2 assure the separate operating identity of FCIC D.) Accounting, Tax and Auditing. Under the general supervision of the Board of Directors and responsible officers of FCIC, IMS shall provide accounting services as may be required, including preparation and maintenance of the financial statements and reports including preparation and processing of the financial records and transactions of FCIC as well as the preparation and distribution of producer (agent) statements and payments and any subsequent billing and collection activities. IMS shall also provide such assistance as may be required with respect to tax and auditing services. E.) Claims. Subject to procedures established by FCIC and communicated to IMS and managing general agents, IMS shall provide claims services as may be required, including review of claims services rendered by agents and/or managing general agents of FCIC. FCIC shall at all times have the ultimate and final authority in determining whether to pay or reject payment on claims. Claims services contemplated as "pass through" costs to FCIC include: 1) Defense, litigation and medical cost containment expenses, whether internal or external: (a) Fees or salaries for appraisers, private investigators, hearing representatives, reinspectors and fraud investigators, if working in defense of a claim, and fees or salaries for rehabilitation nurses, if such salaries for rehabilitation nurses, if such cost is not included in the losses. (b) Attorney fees incurred owing to a duty to defend, even when other coverage does not exist. (c) Loss adjustment expenses for participation in voluntary and involuntary market pools if reported by accident year. (d) Litigation Management expenses. (e) Fixed amounts for medical cost containment expenses. (f) Surveillance expenses. 2) Defense expenses are defined as all expenses to defend claims, excluding adjuster expenses. 3) IMS shall report all claims to FCIC in accordance with established criteria including, but not limited to, all claims that present a risk of a finding of bad faith. Such reports shall be made on such basis and with such frequency as FCIC may from time to time require. Whenever bad faith claim handling results in a claim payment greater than the applicable policy limits (herein, "Bad Faith Occurrence"), the total amount paid on such claim will be a pass through to FCIC as long as FCIC gave prior approval to the claim handling management decisions that lead to the Bad Faith Occurrence. If FCIC was not give prior approval of the management decisions that lead to the Bad Faith Occurrence, then the amount paid on such claim will only be a pass through to FCIC if (i) the Bad Faith Occurrence is based on a common law theory of bad faith, and (ii) the claim handling decisions that lead to the Bad Faith Occurrence were decisions that were fairly debatable. While a court or jury may find that the insurer failed to deal with its insured fairly and honestly, the matter will be deemed to be fairly debatable if the fact finder, given the same set of circumstances could reasonably find to the contrary. 3 C) Functional Support Services. Subject to the ultimate control and direction of the FCIC Board of Directors, IMS shall provide telecommunications services and electronic data processing services, Facilities and integration, including software programming and documentation and hardware utilization. D) Customer Service. Subject to procedures established by FCIC and communicated to IMS, IMS shall provide customer service support as may be required, including responding to telephonic and written inquiries for policy information and modification, receipt of, and accounting for and paying over premium to FCIC, policy issuance, policy assembly and policy mailings. E) Except as is herein specifically set forth to the contrary, it is understood IMS shall be providing all of the services for which provision is herein set forth from its principal place of business located in St. Petersburg, FL.; provided that such facility may be relocated from time to time to such reasonable location as IMS may determine upon 60 days' advance notice to FCIC. 2. CHARGES. (a) FCIC agrees to pay for services and Facilities provided by IMS to FCIC pursuant to this Agreement and to reimburse IMS for expenses, all as set forth in Exhibit A which is attached hereto and by reference made a part hereof. (b) IMS's determination of charges hereunder shall be presented to FCIC, and if FCIC objects to any such determination, it shall so advise IMS within thirty (30) days of receipt of notice of said determination. Unless the parties can reconcile any such objection, they shall agree to the selection of a firm of independent certified public accountants which shall determine the charges properly allocable to FCIC and shall, within a reasonable time, submit such determination, together with the basis therefore, in writing to IMS and FCIC whereupon such determination shall be binding. The expenses of such a determination by a firm of independent certified public accountants shall be borne equally by IMS and FCIC. 3. PAYMENT. (a) FCIC shall advance such funds to IMS as the parties may mutually agree are reasonably necessary to cover the charges (provision for which is set forth in Exhibit A hereof) of FCIC for the ensuing calendar quarter. (b) Within thirty (30) days after the end of each month, IMS will submit to FCIC a detailed written statement and accounting of the fees and charges due from FCIC to IMS for services and the use of Facilities pursuant to this Agreement in the preceding calendar quarter, including charges not included in any previous statements. Any amount advanced by FCIC to IMS under Section hereof in excess of (i) the actual charges for services and Facilities rendered and received plus (ii) such amount as is reasonably required for such charges for the subsequent calendar quarter shall be refunded to FCIC by IMS along with the detailed written statement and accounting. 4. RECORDS AND DOCUMENTS RELATING TO CHARGES. IMS shall be responsible for maintaining full and accurate accounting records of all services rendered and Facilities used pursuant to this Agreement and such additional information as FCIC may reasonably request for purposes of its internal bookkeeping and accounting 4 operations. IMS shall make such accounting records insofar as they pertain to the computation of charges hereunder available at its principal offices for audit, inspection and copying by FCIC or any governmental agency having jurisdiction over FCIC during all reasonable business hours. 5. OTHER RECORDS AND DOCUMENTS. (a) All books, records, and files established and maintained by IMS by reason of its performance under this Agreement which, absent this Agreement, would have been held by FCIC, shall be the property of FCIC and shall be subject to examination by FCIC and persons authorized by it at all times. FCIC may at any time require IMS to surrender possession of such books, records and files, whereupon IMS shall deliver them to FCIC. (b) Without limiting the generality of the foregoing and notwithstanding anything in this Agreement appearing to the contrary, it is mutually understood and agreed that FCIC shall maintain the originals of its books of account at its home office in New York. For the purposes of this Agreement, the term "books of account" means: the Charter and By-laws; the record containing the names and addresses of shareholders, the number and class of shares held by each and the dates when they respectively became the owners of record thereof; the minutes of any meetings of shareholders and of the board of directors and any committees thereof; the general ledger; the investment ledger; journals; the cash book; subsidiary ledgers; annual and quarterly statements; reports on examination; and all minutes supporting annual, quarterly and other statements and reports filed with or submitted to supervisory and regulatory authorities. 6. TERMINATION AND MODIFICATION. This Agreement or any part thereof shall commence and be effective as of January 1, 1998 and shall remain in effect until June 1, 2001; provided that this agreement shall continue thereafter until termination in whole or in part by mutual consent or by either IMS or FCIC upon giving ninety (90) days or more advance written notice. Upon termination, IMS shall promptly deliver to FCIC all books and records that are, or are deemed by this Agreement to be, the property of FCIC. This Agreement may be amended only by mutual consent in writing signed by the parties. 7. SETTLEMENT ON TERMINATION. No later than ninety (90) days after the effective date of termination of this Agreement, IMS shall deliver to FCIC a detailed written statement for all charges incurred and not included in any previous statement to the effective date of termination. The amount owed by either party hereunder shall be due and payable within thirty (30) days of receipt of such statement. 8. ASSIGNMENT. This Agreement and any rights pursuant hereto shall not be assignable by either party hereto, except by operation of law. Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto, or their respective legal successors, any rights, remedies, obligations or liabilities, or to relieve any person other that the parties hereto, or their respective legal successors, from any obligations or liabilities that would otherwise be applicable. 9. GOVERNING LAW. This Agreement is made pursuant to and shall be governed by, interpreted under, and the right of the parties determined in accordance with, the laws of the State of New York. 10. NOTICE. All notices, statements or requests provided for hereunder shall 5 be in writing and shall be deemed to have been duly given when delivered by hand to an officer of the other party, or when deposited with the U.S. Postal Service, as certified or registered mail, postage prepaid, addressed (a) If to IMS to: 360 Central Avenue P.O. Box 15707 St. Petersburg, FL 33733 Attn: David K. Meehan, President (813) 823-4000 x 4201 FAX (813) 823-6518 (b) If to FCIC to: 360 Central Avenue P.O. Box 15707 St. Petersburg, FL 33733 Attn: G. Kristin Delano (813) 803-4016 FAX (813) 823-6518 or to such other person or place as each party may from time to time designate by written notice sent as aforesaid. 11. HEADINGS. The headings of the various paragraphs of this Agreement are for convenience only, and shall be accorded no weight in the construction of this Agreement. 12. ENTIRE AGREEMENT. This Agreement, together with such Amendment as may from time to time be executed in writing by the parties, constitutes the entire Agreement between the parties with respect to the subject matter hereof. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in duplicate by their respective officers duly authorized so to do, and their respective corporate seals to be attached hereto as of the date and year first above written. WITNESSES: FIRST COMMUNITY INSURANCE COMPANY BY: - ------------------------------------- ------------------------------------ AS ITS: - ------------------------------------- -------------------------------- INSURANCE MANAGEMENT SOLUTIONS, INC. BY: - ------------------------------------- ------------------------------------ AS ITS: - ------------------------------------- -------------------------------- Exhibit A Fee Schedule 6 EXHIBIT A INSURANCE MANAGEMENT SOLUTIONS, INC. SERVICE FEES
Performance Period: January 1, 1998-June 1, 2001 Customer Service Fees: Homeowners/Dwelling Fire: 8.50% of Direct Premiums Written(1) Flood: 8.00% of Direct Premiums Written(1) Automobile: 10.00% of Direct Premiums Written(1) Claims Service Fees: Homeowners/Dwelling Fire: Property: 7.00% of Direct Earned Premiums(2) IMSG will be reimbursed for costs associated with independent adjusters and appraisers when indemnity losses from a single event exceed $2,000,000 subject to a cap of 5.00% of direct incurred losses from that storm. Casualty: 10.25% of Direct Earned Premiums(2) Flood: 1.00% of Direct Earned Premiums and 1.50% of Direct Incurred Losses(3) Automobile: Auto Property: 9.00% of Direct Earned Premiums(2) Auto Casualty: 12.50% of Direct Earned Premiums(2) Data Processing Fees: Homeowners/Dwelling Fire: 2.00% of Direct Earned Premiums(2) Flood: 2.00% of Direct Earned Premiums(2) Automobile: 2.00% of Direct Earned Premiums(2) Bail: .20% of Direct Earned Premiums(2) All Other Lines of Business processed by BIC, BSIC & FCIC: 2.00% of Direct Earned Premiums(2) Mailroom, Policy Assembly & Cash Office Service Fees: All Other Lines of Business (not incl.-HO, Flood, Auto, Bail) 1.00% of Direct Earned Premiums(2) Bail: .10% of Direct Earned Premiums(2) Special Contracts entered into by BIC, FCIC or BSIC will be negotiated on an individual basis. The existing General Agents' Program calls for Claims Only Service. 8.00% of Direct Earned Premiums(2)
- --------------- (1) Direct Written Premiums includes gross written premiums net of cancellations. The affiliates pay on the basis of 80% Written and 20% Earned. (2) Direct Earned Premiums are determined by earning direct written premiums ratably over the life of the policies written. (3) Direct Incurred Losses are defined as calendar period paid losses plus ending loss reserves minus beginning loss reserves. 7 ADDENDUM B ADDENDUM TO SERVICE CONTRACT As respects claims arising from policies issued by Bankers Insurance Company on behalf of the Florida Residential Property Casualty Joint Underwriting Association and the Florida Auto Joint Underwriting Association, Insurance Management Solutions, Inc. has agreed to assume, for a fee, the servicing of all existing indemnity loss claims as well as claims which have occurred but have not yet been reported. Terms of this arrangement are as follows: FLORIDA RESIDENTIAL PROPERTY CASUALTY JOINT UNDERWRITING ASSOCIATION
Effective Date: January 1, 1998 until all such Claims are Settled Fees: $38.75 per Open Claim per Month; this includes Claims Open and closed in Same Accounting Month. Definition of LAE: The same definition of both ULAE and ALAE as applies to all other Claims Service Agreements between the parties applies to this Addendum. FLORIDA AUTO JOINT UNDERWRITING ASSOCIATION Effective Data: January 1, 1998 until all such Claims are Settled Fees: $175 per Closed Claim File Definition of LAE: The same definition of both ULAE and ALAE as applies to all other Claims Service Agreements between the parties applies to this Addendum.
EX-10.16 19 VENDOR FLOOD INSURANCE AGREEMENT 1 EXHIBIT 10.16 VENDOR FLOOD INSURANCE AGREEMENT ("Agreement") entered into by and between MOBILE USA INSURANCE COMPANY, INC., a Florida insurance company ("Company") and INSURANCE MANAGEMENT INFORMATION SERVICES, INC., a Florida corporation ("Vendor") ARTICLE I - AUTHORITY OF VENDOR A. Company hereby appoints Vendor to supervise and administer its Write Your Own (WYO) flood insurance program in the State of Florida, the State of Arizona and such other states as may be mutually agreed upon in writing between Company and Vendor. B. Company hereby grants Vendor the authority to act for and on behalf of Company in matters required including the authority to collect and remit premiums, process applications and other forms, issue policies, and process claims, all in a manner consistent with, pursuant to and as authorized by the provisions of the National Flood Insurance Act of 1968, as amended, the Flood Disaster Protection Act of 1973, as amended, the regulations of the National Flood Insurance Program (NFIP/Write Your Own Program administered by the Federal Emergency Management Agency (FEMA),) (herein, collectively called the "WYO Program"), and the terms of this Agreement. C. Vendor hereby accepts such appointment, and the grant of authority, and agrees to carry out the resulting duties and responsibilities to the best of its ability, knowledge, skill, and judgment and in accordance with the highest reasonably attainable standards of quality generally utilized in the insurance and data processing industries. ARTICLE II - SPECIFIC RESPONSIBILITIES OF VENDOR A. Vendor shall be responsible for the following: 1. Policy Administration in accordance with the WYO Program, including: a. Community Eligibility/Rating Criteria; b. Policyholder Eligibility Determination; c. Policy Issuance; d. Policy Endorsements; e. Policy Cancellations; f. Policy Correspondence; g. Payment of Agents' Commissions (on Company's behalf); and h. The receipt recording control, timely deposit, and disbursements of funds in connection with the foregoing (a through g), in accordance with the WYO Financial Control Plan requirements established by the FCP ("Financial Control Plan"). i. Respond to written and telephone inquiries from Policyholder and/or Producer. 2. Claims Processing, in accordance with general Company standards and the WYO Financial Control Plan. Vendor may also rely on information contained in the WYO Claims Manual, the FEMA Adjuster Manual, the FIA/NFIP Policy Issuance Handbook, the WYO Operational Overview, or other WYO Program instructional material. a. A catastrophe team providing claims support will be engaged at the descretion of the Vendor. 3. Preparing and submitting to the FIA monthly financial and statistical reports, reconciliations, certifications and statistical reports on Company's behalf, in accordance with the WYO Program Accounting Procedures. Vendor shall submit copies of all monthly reports to the Company. B. Vendor shall provide assistance, at no additional cost, to Company agents in writing flood business to which this Agreement relates by: (1) procuring for each appointed agent a limited license to use the 2 FloodWriter(c)(TM) rating program, and (2) providing current flood zone determinations for each such policy application requested. C. Vendor shall coordinate activities and shall provide information to the FIA or its designee whenever a Flood Insurance Catastrophe Office is established. D. Claims administration use of Company's staff adjusters or Company's outside adjusters will be first course of action. If these are not available. Vendor will select independent adjusters. E. Vendor shall keep appropriate records in accordance with Internal Revenue Service regulations in order to prepare 1099 reporting for agents' commissions and adjusters' fees paid by Vendor on behalf of Company. F. Vendor shall use for best effects to adhere to the following time standards for performance when processing documents, claims, requests or inquiries: 1. Application Processing - 15 days (Note: If the policy cannot be mailed due to insufficient or erroneous information or insufficient funds, a request for correction or additional moneys shall be mailed within 10 days); 2. Renewal Processing - 7 days; 3. Endorsement Processing - 7 days; 4. Cancellation Processing - 15 days; 5. Simple Correspondence and Status Inquiries - 7 days; 6. Complex Correspondence and Inquiries - 20 days; 7. Requests for Supplies, Materials, and Manuals - 7 days; and 8. Claims Draft Processing - 7 days from completion of file examination. The elapsed time shown is from day of receipt through and including day of mail-out, and shall not include any Saturday, Sunday, or state or national legal holiday. G. Vendor shall, on a timely basis, accurately convert and migrate from current Vendor all policy data for in-force business. This will be at no expense to the Company. ARTICLE III - PREMIUM COLLECTION AND ARRANGEMENT A. Vendor and Company shall establish banking arrangements which comply with the FEMA/FIA Financial Assistance/Subsidy Arrangement ("Arrangement") and other WYO Program requirements, and which will provide for the establishment of an NFIP restricted account with Company as custodian, and/or a FEMA Letter of Credit, with additional accounts as needed to facilitate operations, all in conformity with FEMA guidelines. Company shall grant specific Vendor employees check-signing authority on accounts and the authority to initiate appropriate (drawdowns against Company's Letter of Credit, in order for Vendor to act on Company's behalf in making disbursements for Company liabilities established by the Arrangement, the WYO Program, and this Agreement. All such authorizations shall be in writing and may be revoked amended or modified at any time by Company upon 30 days advance written notice to Vendor. Vendor shall be liable to the FIA for any and all premiums Vendor has received on business written under this Agreement. Vendor shall establish procedures for the timely deposit and remittance of funds to the U.S. Treasury via the authorized automatic clearinghouse mechanism. B. Vendor shall maintain supporting documentation for all bank accounts over which it has authority. Monthly, Vendor shall prepare financial data, by state, reflecting all debits and credits with respect to flood insurance business written, including agents' commissions and Vendor's servicing fees paid, during the preceding month. Vendor shall submit such data and reports no later than the 20th of each month. ARTICLE IV - COMPANY ACCESS TO RECORDS Company, by its duty appointed representatives, shall have the right at any reasonable time to examine papers in the possession of Vendor covering flood insurance business written hereunder. ARTICLE V - EXPENSES AND FEES 3 A. Company shall pay Vendor a monthly servicing fee per schedule below. Vendor shall pay the general expenses of processing flood insurance business pursuant to this Agreement, including those of policy administration, claims processing, and financial and transactional reporting.
Calendar Year Net Written Premium IMIS Fee (As a % of Net Written Premium) --------------------------------- ---------------------------------------- $ 0 - $ 4,999,999 8% $ 5,000,000 - $ 9,999,999 7.5% $10,000,000 - $19,999,999 6.0% $20,000,000 and above Renegotiate
B. Company shall pay all taxes, including state premium taxes and fees, municipal taxes and fees, agents' commissions, or any board, exchange or bureau assessment. C. WYO Program Reimbursements made pursuant to the Arrangement, including, but not limited to, those for the unallocated loss adjustment, the allocated loss adjustment, and for approved special allocated loss expenses, shall be payable to Vendor. D. Claims Administration (Full Service): Vendor shall retain 3.3% of the net claim after application of the deductible. Salvage: 5% of recovery (after expenses) if Company's adjuster handles the salvage. If Vendor assigns the adjuster and handles the salvage, Vendor will receive 10% of recovery after expenses. Subrogation: 10% of recovery (after expenses). If Vendor assigns the adjuster and handles the subrogation, Vendor will receive 25% of recovery after expenses. ARTICLE VI - ADDITIONAL SERVICES AND FEES A. Full Book Flood Zone Determinations - A zone determination on each of (or a portion of) Company's homeowners policies is available at a cost of $10.00 per policy. B. Agent or Company Training - Upon request, Vendor will provide one training session per quarter, or four training sessions per year, to Company or Company's agents. Company shall provide the training facility and shall reimburse Vendor for travel expenses incurred. C. Marketing Materials - Company may use Vendor's previously developed marketing or promotional materials, which Vendor shall customize and produce for Company, at Company's expense. D. Any fees and services not defined in this agreement will be mutually agreed upon between the Company and Vendor as required. ARTICLE VII - CONFIDENTIALITY OF DATA AND INFORMATION A. Vendor and Company acknowledge that any and all information concerning the other's business is "Confidential and Proprietary Information" and neither party shall permit the duplication, use, or disclosure of any such "Confidential and Proprietary Information" to any person (other than its own employees, agents or representatives who must have such information for the performance of obligations hereunder), unless such duplication, use, or disclosure is specifically authorized in writing by the other party. "Confidential and Proprietary Information" is not meant to include any information which, at the time of disclosure, is generally known to the general public and/or the insurance industry. B. Neither party shall use or duplicate the name(s), trademarks(s), servicemark(s), or trade name(s) (whether registered or not) of the other party in public releases or advertising or in any other manner unless such use or duplication is specifically authorized in writing by the other party, except that Vendor may include Company's name in a list of clients/customers without such authorization. C. Company shall not disclose the terms of this contract especially the pricing structure, under this Agreement without prior written consent of the Vendor. D. Vendor shall maintain systems integrity and data security necessary to protect Company's records and data from loss and damage and to protect against unauthorized disclosure of Company's confidential and proprietary data as described in this Article. E. The disclosure restrictions provided in this Article shall be extinguished at the time and to the extent that the confidential information becomes generally available to the public domain without the fault of Vendor. 4 ARTICLE VIII - COMMENCEMENT AND TERMINATION A. This Agreement shall become effective on the date that this document is executed by Company and by Vendor, and shall remain in force for one (1) year. It may be terminated at any time after the one (1) year by either party sending written notice of termination to the other, not less than ninety (90) days prior to the termination date. B. This Agreement may, at the option of the Company, be terminated in the event that Vendor fails to perform any of the terms and conditions of this Agreement and such failure continues for a period of ninety days after written notice given by Company to Vendor specifying the nature of the default(s). C. Upon termination of this Agreement, Vendor shall fully account to Company for all of its responsibilities and activities pursuant to this Agreement, and cooperate with Company or designated representative to transfer all policy and status data on a timely and accurate basis. ARTICLE IX - LIABILITY A. In no event shall Vendor's liability for breach of this Agreement or any of its provisions exceed the Company's liability to FEMA in connection with the Write Your Own Flood Insurance Program. Vendor shall not be liable for any loss of profits, business goodwill, or other consequential, special or incidental damages. If either party should bring a Court action alleging breach of this Agreement or seeking to enforce, rescind, renounce, declare void or terminate this Agreement or any provisions thereof, the prevailing party shall be entitled to recover all of its legal expenses, including reasonable attorney's fees and costs (including legal expenses for any appeals taken), and to have the same awarded as part of the judgment in the proceeding which such legal expenses and attorney's fees were incurred. B. Company shall be held harmless for any and all adverse acts or omissions of Vendor arising out of, and in conjunction with, this Agreement. Company shall be indemnified for all costs and expenses incurred as a result of the adverse actions or omissions of Vendor. C. Vendor shall be held harmless for any and all adverse acts or omissions of Company arising out of, and in conjunction with, this Agreement. Vendor shall be indemnified for all costs and expenses incurred as a result of the adverse actions or omissions of Company. ARTICLE X - MISCELLANEOUS A. Applicable Law: This Agreement and all matters arising thereunder shall be governed and determined in accordance with the Federal laws applicable to the National Flood Insurance Program. Where such law does not provide the rule for decision, any matters in controversy or dispute shall be governed and determined in accordance with the laws of Florida. B. This Agreement contains all of the prior oral and/or previously written agreements, representations, and arrangements between the parties hereto. There are no representations or warranties other than those set forth herein. C. Company Warranties: Company warrants that it has entered into an Agreement with FEMA pursuant to which it is authorized to issue flood insurance policies or coverage, and that it is licensed to engage in the insurance business in all jurisdictions in which it authorized Vendor to issue any flood insurance policy or coverage in Company's name. D. Vendor Warranties: Vendor warrants to Company that it is duly incorporated and authorized to transact the business of servicing insurance companies. Invalidation. Should any part of this for any reason be declared invalid, such decision shall not effect the validity of any remaining portion, which remaining portion shall remain in full force and effect as if the had been executed with the invalid portion thereof eliminated. It is, therefore, declared the intention of the parties hereto that each of them will have executed the remaining portion of this without including therein any such part, parts or portion which may, for any reason, be hereafter declared void. Modification. No change or modification of this shall be valid unless the same shall be in writing and signed by all of the parties hereto. 5 Notices. Any and all notices, designations, consents, offers, acceptances, or any other communication provided for herein shall be given in writing by hand delivery, by overnight carrier, by registered or certified mail or by facsimile transmission and shall be addressed as follows: As to: Insurance Management Information Services, Inc. P.O. Box 15707 St. Petersburg, Florida 33733 Attn: Anne M. Sullivan Fax# (813) 822-0484 As to: Mobile USA Insurance Company, Inc. 7785 66th Street North Pinellas Park, Florida 34665 Attn: Frank J. Lake Fax# (813) 541-1608 Notices sent by hand delivery shall be deemed effective on the date of hand delivery. Notices sent by overnight carrier shall be deemed effective on the next business day after being placed into the hands of the overnight carrier. Notices sent by registered or certified mail shall be deemed effective on the third business day after being deposited into the post office. Notices sent by facsimile transmission shall be deemed to be effective on the day when sent if sent prior to 4:30 p.m. (the time being determined by the time zone of the recipient) otherwise they shall be deemed effective on the next business day. IN WITNESS WHEREOF, the parties hereto by their respective duly authorized representatives have executed this Agreement to be effective as of 1st day of January, 1996. "Vendor" "Company" INSURANCE MANAGEMENT MOBILE USA INSURANCE INFORMATION SERVICES, INC. COMPANY, INC. by: /s/ Robert G. Menke by: /s/ Frank J. Lake -------------------------------------- ------------------------------ Robert G. Menke, Senior Vice President FRANK J. LAKE ---------------------------- as its: PRESIDENT ------------------------ EX-10.17 20 VENDOR FLOOD INSURANCE AGREEMENT 1 EXHIBIT 10.17 VENDOR FLOOD INSURANCE AGREEMENT ("Agreement") entered into by and between AUTO CLUB SOUTH INSURANCE COMPANY, a Florida insurance company ("Company") and INSURANCE MANAGEMENT INFORMATION SERVICES, INC., a Florida Corporation ("Vendor") ARTICLE I - AUTHORITY OF VENDOR A. Company hereby appoints Vendor to supervise and administer its Write Your Own (WYO) flood insurance program in the State of Florida and such other states as may be mutually agreed upon in writing between Company and Vendor. B. Company hereby grants Vendor the authority to act for and on behalf of Company in matters required for Vendor to properly supervise and conduct the handling of the aforesaid flood insurance business, including the authority to collect and remit premiums, process applications and other form, issue policies, and process claims, all in a manner consistent with, pursuant to and as authorized by the provisions of the National Flood Insurance Act of 1968, as amended, the Flood Disaster Protection Act of 1973, as amended, the regulations of the National Flood Insurance Program (NFIP/Write Your Own Program administered by the Federal Insurance Administration (FIA) and the Federal Emergency Management Agency (FEMA), ) (herein, collectively called the "WYO Program"). and the terms of this Agreement. C. Vendor hereby accepts such appointment, and the grant of authority, and agrees to carry out the resulting duties and responsibilities to the best of its ability, knowledge, skill, and judgment, and in accordance with the highest reasonably attainable standards of quality generally utilized in the insurance and data processing industries. ARTICLE II - SPECIFIC RESPONSIBILITIES OF VENDOR A. Vendor shall be responsible for the following: l. Full Policy Administration, in accordance with the WYO Program, including: a. Community Eligibility/Rating Criteria, b. Policyholder Eligibility Determination; c. Policy Issuance; d. Policy Endorsements; e. Policy Cancellations; f. Policy Correspondence; g. Policy Renewal h. Payment of Agents' Commissions (on Company's behalf); and, i. The receipt, recording, control, timely deposit, and disbursements of funds in connection with the foregoing (a through g), in accordance with the WYO Financial Control Plan requirements established by the FIA ("Financial Control Plan"). 2. Claims Processing, in accordance with general Company standards and the WYO Financial Control Plan. Vendor may also rely on information and will perform to the standards contained in the WYO Claims Manual, the FEMA Adjuster Manual, the FIA/NFIP Policy Issuance Handbook the WYO Operational Overview, or other WYO Program instructional material. 3. Preparing and submitting to the FIA monthly financial and statistical reports, reconciliations, certifications, and statistical tapes on Company's behalf, in accordance with the WYO Program Accounting Procedures. B. Vendor shall provide assistance to Company agents in writing flood business to which this Agreement relates, by: (l) procuring for each appointed agent a limited license to use the FloodWriter(C)(TM) rating program, and (2) providing current flood zone determinations for each such policy application requested. 1 2 C. Vendor shall establish a program of self-audit acceptable to the FIA or shall comply with the self-audit program contained in the WYO Financial Control Plan. Vendor shall report the results of this self-audit to Company and FIA annually. D. Vendor shall coordinate activities and shall provide information to the FIA or its designee whenever a Flood Insurance Catastrophe Office is established. E. Vendor shall keep appropriate records in accordance with Internal Revenue Service regulations in order to handle 1099 reporting, for Company, when applicable. F. With respect to processing documents, claims, requests or inquiries. Vendor shall perform its services hereunder in accordance with the National Flood Insurance Act, as amended, and all implementing regulations as well as Company's Write-Your-Own Arrangement with FEMA. The same standards by Company is bound to FEMA shall be which Vendor is bound to Company. ARTICLE III- PREMIUM COLLECTION AND ARRANGEMENT A. Vendor and Company shall establish a banking arrangement which complies with the FEMA/FIA Financial Assistance/Subsidy Arrangement ("Arrangement,") and other WYO Program requirements, and which will provide for the establishment of an NF1P restricted account with Company as custodian and a FEMA Letter of Credit, with additional accounts as needed to facilitate operations, all in conformity with FEMA guidelines. Company shall grant specific Vendor employees check-signing authority on accounts and authority to initiate appropriate drawdowns against Company's Letter of Credit, in order for Vendor to act on Company's behalf in making disbursements for Company liabilities established by the Arrangement, the WYO Program, and this Agreement. All such authorizations shall be in writing and may be revoked, amended or modified at any time by Company, upon 5 days of advance notice to Vendor. Vendor shall be liable to the FIA for any and all premiums Vendor has received on business written under this Agreement. Vendor shall establish procedures for the timely deposit and remittance of funds to the U.S. Treasury via the authorized automatic clearinghouse mechanism. B. Vendor shall maintain supporting documentation for all bank accounts over which it has authority. At least quarterly, Vendor shall prepare financial data, by state, reflecting all debits and credits with respect to flood insurance business written, including agents' commissions and Vendor's servicing fees paid, during the preceding quarter. ARTICLE IV- COMPANY ACCESS TO RECORDS Company, by its duly appointed representatives, shall have the right at any reasonable time to examine papers in the possession of Vendor covering flood insurance business written hereunder. ARTICLE V - EXPENSES AND FEES A. Vendor shall at no cost to Company accomplish the following: 1. Develop and input Company data into Vendor's policy, claims, and general ledger systems; 2. Establish agent master files; 3. Assist with obtaining the Letter of Credit, restricted bank account, and funds transfer arrangement; 4. Design and order forms; 5. Develop any necessary customized procedures; and, 6. Conduct initial training (excluding travel expenses). B. Company shall pay Vendor a monthly servicing fee equal to 8 percent of monthly gross premiums written hereunder. Once calendar year gross written premium exceeds two million dollars, the monthly processing fee will be 7% of monthly gross premium for the balance of the calendar year. Vendor shall pay the general expenses of processing flood insurance business pursuant to this Agreement, including those of policy administration, claims processing, and financial and transactional reporting. C. Company shall pay all taxes, including state premium taxes and fees, municipal taxes and fees, dividends, agents' commissions, or any board, exchange or bureau assessment. 2 3 D. Allocate Loss Adjustment expenses reimbursed to the Company pursuant to the "Fee Schedule" in the WYO) Arrangement shall be paid to Vendor for handling Company claims. E. The WYO Program Unallocated Loss Adjustment expenses reimbursement paid by FEMA of 3.3% of net claim amount after deductible shall be shared with Vendor receiving 3% and the Company receiving 3/10 of a percent. F. Company shall receive 5% of any salvage recovery, after expenses. G. Company shall receive 15% of any subrogation recovery, after expenses. H. Company shall pay for any audit expenses as required by the rules and regulations of the Federal Insurance Administration/National Flood Insurance Program. ARTICLE VI - ADDITIONAL SERVICES AND FEES A. Full Book Flood Zone Determinations - A zone determination on each of (or a portion of) Company's homeowners policies is available at a cost of $10.00 per policy. B. A zip code analysis sorting designated blocks of homeowners policies into two categories. Preferred Risk or Special Flood Hazard is available at no charge. C. Agent or Company Training - Upon request, Vendor will provide one training session per quarter, or four training sessions per year, to Company or Company's agents. Company shall provide the training facility and shall reimburse Vendor for travel expenses incurred. D. Marketing Material - Company may use Vendor's previously developed marketing or promotional materials, which Vendor shall customize and produce for Company, at Company's expense. ARTICLE VII - CONFIDENTIALITY OF DATA AND INFORMATION A. Vendor and Company acknowledge that any and all information concerning the other's business is "Confidential and Proprietary Information", and neither party shall permit the duplication, use, or disclosure of any such "Confidential and Proprietary Information" to any person (other than its own employees, agents or representatives who must have such information for the performance of obligations hereunder), unless such duplication, use, or disclosure is specifically authorized in writing by the other party. "Confidential and Proprietary Information" is not meant to include any information which, at the time of disclosure, is generally known to the general public and/or the insurance industry. B. Neither party shall use or duplicate the name(s), trademark(s), servicemark(s), or trade name(s) (whether registered or not) of the other party in public releases or advertising or in any other manner unless such use or duplication is specifically authorized in writing by the other party, except that Vendor may include Company's name in a list of clients/customers without such authorization. C. Neither party shall disclose information as to specific work performed or services fees under this Agreement without prior written consent of the other party. D. Vendor shall maintain system integrity and data security necessary to protect Company's records and data from loss and damage and to protect against unauthorized disclosure of Company's confidential and proprietary data as described in this Article. E. The disclosure restrictions provided in this Article shall be extinguished at the time and to the extent that the confidential information becomes generally available to the public domain without the fault of Vendor. ARTICLE VIII - COMMENCEMENT AND TERMINATION A. This Agreement shall become effective on the date that this document is executed by Company and by Vendor, and shall remain in force for three (3) years. It may be terminated at any time after the three (3) years by either party sending written notice of termination to the other not less than thirty days prior to the termination date. B. This Agreement may, at the option of Company, be terminated in the event that Vendor fails to perform any of the terms and conditions of this Agreement and such failure continues for a period of ninety days after written notice given by Company to Vendor specifying the nature of the default(s). 3 4 C. Upon termination of this Agreement, Vendor shall fully account to Company for all of its responsibilities and activities pursuant to this Agreement. D. Company shall be held harmless for any and all adverse acts or omissions of Vendor arising out of, and in conjunction with, this Agreement; Company shall be indemnified for all costs and expenses incurred as a result of the adverse actions or omissions of Vendor. E. Vendor shall be held harmless for any and all adverse acts or omissions of Company arising out of, and in conjunction with, this Agreement; Vendor shall be indemnified for all costs and expenses incurred as a result of the adverse actions or omissions of Company. ARTICLE: IX - LIABILITY Vendor's liability to Company shall be limited to the same extent that the Company's liability is limited to FEMA in connection with the WYO Flood Insurance Program. Neither, party shall be liable to the other for incidental consequential or punitive damages. ARTICLE X - MISCELLANEOUS A. The law of the State of Florida shall govern this Agreement or any dispute arising therefrom. B. This Agreement contains all of the prior oral and/or previously written agreements, representations, and arrangements between the parties hereto. There are no representations or warranties other than those set forth herein. C. If either party should bring a Court action alleging breach of this Agreement or Seeking to enforce, rescind, renounce, declare void or terminate this Agreement or any provisions thereof, the prevailing party shall be entitled to recover all of its legal expenses, including reasonable attorney's fees and costs (including legal expenses for any appeals taken), and to have the same awarded as part of the judgment in the proceeding which such legal expenses and attorney's fees were incurred. D. Should any part of this Agreement for any reason be declared invalid, such decision shall not affect the validity of any remaining portion, which remaining portion shall remain in full force and effect as if it had been executed with the invalid portion thereof eliminated It is, therefore, declared the intention of the parties hereto that each of them will have executed the remaining portion of this Agreement without including therein any such part, parts or portion which may, for any reason, be hereafter declared void. E. No change or modification of this Agreement shall be valid unless the same shall be in writing and signed by all of the parties hereto. F. Any and all notices, designations, consents, offers, acceptances, or any other communication provided for herein shall be given in writing by and hand delivery, by overnight carrier, by registered or certified mail, or by facsimile transmission and shall be addressed as follows: As to Vendor Insurance Management Information Services, Inc. P. O. Box 15707 St. Petersburg, Florida 33733 Attn: Anne Sullivan Fax #(813) 822-0484 As to Company: Auto Club South Insurance Company 1515 N. Westshore Blvd. Tampa, Florida 33607 Attn: Larry Patrick Fax #(813) 289-1498 Notices sent by hand delivery shall be deemed effective on the date of hand delivery. Notices sent by overnight carrier shall be deemed effective on the next business day after being placed into the hands of the overnight carrier. Notices sent by registered or certified mail shall be deemed effective on the third business day after being deposited into the post office. Notices sent by facsimile transmission shall be 4 5 deemed to be effective on day when sent if sent prior to 4:30 p.m. (the time being determined by the time zone of the recipient) otherwise they shall be deemed effective on the next business day. IN WITNESS WHEREOF, the parties hereto by their respective duly authorized representatives have executed this Agreement to be effective as of 10 day of November, 1995. "Vendor" "Company" INSURANCE MANAGEMENT AUTO CLUB SOUTH INFORMATION SERVICES, INC. INSURANCE COMPANY by: /s/Robert G. Menke by: /s/Larry D. Patrick ------------------------------ -------------------------------- Larry D. Patrick R.G. Menke, Senior Vice President as its: Managing Director - --------------------------------- ---------------------------- 5 EX-10.18 21 FLOOD INSURANCE PROGRAM SERVICES AGREEMENT 1 EXHIBIT 10.18 FLOOD INSURANCE PROGRAM SERVICES AGREEMENT AMONG INSURANCE MANAGEMENT INFORMATION SERVICES, INC., AMERICAN ALTERNATIVE INSURANCE CORPORATION, AND CORPORATE INSURANCE AGENCY SERVICES FOR THE NATIONAL FLOOD INSURANCE PROGRAM THIS FLOOD INSURANCE PROGRAM SERVICES AGREEMENT (Agreement) is entered into by and among Insurance Management Information Services, Inc. (IMIS), a corporation organized and existing under the laws of Florida; American Alternative Insurance Corporation (AAIC), an insurer organized and existing under the laws of New York; and Corporate Insurance Agency Services (CIS), a licensed producer in the State of Pennsylvania. WHEREAS, the Federal Emergency Management Agency (FEMA) and the Federal Insurance Administration (FIA) administer the National Flood Insurance Program (NFIP). AAIC is an insurance company duly licensed to write flood insurance in all states of the United States and the District of Columbia, and has been approved by FIA to act as a Write Your Own Flood Carrier (WYO Carrier) under the Write Your Own Flood Insurance Program (WYO Flood Program), a program offered under the National Flood Insurance Program (NFIP); and WHEREAS, IMIS has been designated by FIA as a Qualified Performer for the provision of services to WYO Carriers under the NFIP; and WHEREAS, AAIC wishes to engage the services of IMIS to administer certain of AAIC's obligations as a WYO Carrier as set forth herein; and WHEREAS, IMIS is a subsidiary of Bankers Insurance Group, a national multi-line insurance group and guarantor of this Agreement, which Guaranty is attached hereto as Exhibit A; and WHEREAS, CIS has developed a plan for the marketing of WYO Flood Insurance Coverage, and intends to contract with financial institutions to provide flood zone determinations to these institutions, residential mortgage customers and on these institutions; residential mortgage portfolios. AAIC has appointed or intends to appoint CIS as its agent for the solicitation, determination of eligibility and premiums, binding of coverage, collection of premiums, and delivery of WYO Flood Insurance Policies as set forth in the Agency Agreement entered into between AAIC and CIS attached hereto as Exhibit B (Agency Agreement). AAIC now desires to engage the services of CIS to manage and supervise the activities of IMIS hereunder. NOW, THEREFORE, in consideration of the mutual promises, agreements, covenants and conditions hereinafter set forth, and intending to be legally bound hereby, the parties hereto agree as follows: 2 ARTICLE I - AUTHORITY OF IMIS 1.1 AAIC hereby engages IMIS to administer certain of AAIC's obligations as a WYO Carrier for the FNIP in the state(s) agreed upon between AAIC and CIS in the Agency Agreement attached as Exhibit B. 1.2 AAIC hereby grants IMIS the authority to act for and on behalf of AAIC in matters required for IMIS to conduct the aforesaid flood insurance business, as more particularly set forth in Article II below, including the authority to receive, distribute, and remit premiums as more particularly set forth herein, process applications and other forms, issue policies, and process claims, all in a manner consistent with and pursuant to and as authorized by the provisions of the National Flood Insurance Act of 1968, as amended; the Flood Disaster Protection Act of 1973, as amended; the regulations of the National Flood Insurance Program (NFIP) Write Your Own Program (WYO) administered by the Federal Insurance Administration (FIA) and the Federal Emergency Management Agency (FEMA) (collectively called the "WYO Flood Program"); and the terms of this Agreement. 1.3 IMIS hereby accepts such grant of authority, and agrees to carry out such duties and responsibilities to the best of its ability, knowledge, skill and judgment, and in accordance with the highest reasonably attainable standards of quality generally utilized in the insurance and data processing industries. ARTICLE II - RESPONSIBILITIES AND COMMITMENTS OF IMIS 2.1 IMIS shall perform the following WYO Program responsibilities on AAIC's behalf; a. Policy Administration, including: i. Community Eligibility/Rating Criteria; ii. Policyholder Eligibility Determination; iii. Policy Issuance; iv. Policy Endorsements; v. Policy Cancellations; provided however, that CIS shall also have authority to make policy cancellations, subject to the same laws, regulations, and Program Requirements; vi. Policy Correspondence; and vii. The receipt of funds collected by CIS, recording, control, and timely disbursement of WYO Program funds in accordance with the WYO ("Financial Control Plan") requirements established by FIA and the Agreements of the parties. - 2 - 3 Gross premiums deposited by CIS in the custodial account are remitted weekly to FIA by IMIS, net of the established NFIP Allowable Expenses equal to 32.6% of premiums written. "Allowable Expenses" means a WYO Flood Insurance carrier's operating and administrative expenses, including agent commissions management fees, service provider fees, fees payable to Participating Financial Institutions, production of policy documents taxes, dividends, and board or bureau assessments. viii. IMIS shall distribute the Allowable Expenses as follows: a. CIS will receive a flat commission of 13.6% of written premiums for all services rendered pursuant to this Agreement, unless otherwise adjusted pursuant to Section 2.3(a) above or Section 9.1(b)(ii) below. b. AAIC will receive 9.0% of written premiums calculated as follows: i. 5% WYO Carrier profit; ii. 3% for premium taxes and board or bureau assessments, subject to reconciliation annually based on actual payments made in the Arrangement Year. If the actual payments made during an Arrangement Year are less than 3%, then AAIC shall remit the difference to CIS as additional commission. If the amount paid exceeds 3%, then CIS shall forward the difference to AAIC; and iii. 1% AAIC's other overhead. c. AAIC Service" Provider, as identified in Section 2.2, will receive a flat service fee of 8%. b. Claims Processing, in accordance with general AAIC standards and the WYO Financial Control Plan. IMIS may also rely on information contained in the WYO Claims Manual, the FEMA Adjuster Manual, the FIA/NFIP Policy Issuance Handbook, the WYO Operations Overview, or other WYO Program instructional material. c. Preparing and submitting to FIA monthly financial and statistical reports, reconciliations, certifications, and statistical tapes on AAIC'S behalf, in accordance with the WYO Program Accounting Procedures. IMIS shall also supply AAIC and CIS with such financial and statistical information as reasonably needed for AAIC's and CIS' business purposes. - 3 - 4 2.2 IMIS shall cooperate with FIA and shall comply with all audit requirements of the WYO Program 2.3 Whenever a Flood Insurance Catastrophe Office is established by FIA, IMIS shall coordinate activities and shall provide information to FIA or its designee. 2.4 IMIS shall keep appropriate records in accordance with Internal Revenue Service regulations and shall handle Form 1099 reporting on behalf of AAIC, when applicable. 2.5 IMIS shall use its best efforts to adhere to the following WYO Program time standards for performance when processing documents, claims, requests or inquiries (consistent with WYO Proven guidelines, elapsed time shown is from day of receipt through and including day of mail-out, and shall not include any Saturday, Sunday, or state or national legal holiday): a. Application Processing - 15 days provided, however, that if the policy cannot be mailed due to insufficient or erroneous information or insufficient funds, a request for correction or additional moneys shall be mailed within 10 days; b. Renewal Processing - 7 days; c. Endorsement Processing - 7 days; d. Cancellation Processing - 15 days; e. Simple Correspondence and Status Inquiries - 7 days; f. Complex Correspondence and Inquiries - 20 days; g. Requests for Supplies, Materials, and Manuals - 7 days; h. Claims Draft Processing - 7 days from completion of file examination, and i. Claims Adjustment - 45 days average from receipt of Notice of Loss (or equivalent) through completion of examination. 2.6 IMIS commits that it shall promptly comply with the instructions and directions of CIS in its role as agent for AAIC with authority to manage and supervise IMIS' activities on AAIC's behalf under the terms of this Agreement and pursuant to the Program Requirements. Further, IMIS shall immediately notify CIS and AAIC of any objections has to any instruction or direction issued by CIS; provided however, that IMIS shall still comply with those portions of the directions or instructions to which it does not object. 2.7 IMIS warrants that it and any personnel engaged by it have adequate licenses to properly perform under this Agreement and further that it agrees to provide AAIC, upon request why copies of all licenses required of IMIS. In the event (a) that IMIS, license in its resident state expires or is revoked or suspended, for any - 4 - 5 reason, IMIS shall immediately notify AAIC and this Agreement shall automatically terminate as of the date of such license's expiration, revocation or suspension unless within one week from the date AAIC receives such notice from IMIS, AAIC agreed in writing, to modify the provisions set forth in this Paragraph; or (b) that IMIS' license expires or is revoked or suspended, for any reason, in any other state, IMIS shall notify AA1C and IMIS' authority to transact business in that state shall be automatically suspended as to that state. ARTICLE III - PREMIUM COLLECTION AND ARRANGEMENT 3.1 The parties shall establish a banking arrangement which complies with the FEMA/FIA Financial Assistance/Subsidy Arrangement entered into between AAIC and FIA ("Arrangement") and other applicable WYO Flood Program requirements, which provide for the establishment of a custodial account by AAIC as custodian for the NFIP, for (1) the collection, retention and disbursement of premiums pursuant to this Agreement and the Agency Agreement, less WYO Program allowable expenses; and (2) the operation of the Letter of Credit, established on behalf of AAIC under the WYO Program. Additional accounts, as needed to facilitate operations, may be established in conformity with WYO Program guidelines. 3.2 AAIC shall grant specific IMIS employees check-signing authority on accounts and the authority to initiate appropriate drawdowns against AAIC's Letter of Credit, in order for IMIS to act on AAIC's behalf in making disbursements for AAIC's liabilities arising under the Arrangement, the WYO Program, and this Agreement. All such authorizations shall be in writing and may be revoked, amended or modified at any time by AAIC, upon ninety (90) days advance written notice to IMIS, and further, shall be granted only to the number and type of employees who need such authority to perform on behalf of IMIS under this Agreement. 3.3 IMIS shall be liable to FIA for any and all premiums IMIS has received on business written under this Agreement. IMIS shall establish procedures for the timely deposit and remittance of funds to the U.S. Treasury via the authorized automatic clearinghouse mechanism. 3.4 IMIS shall maintain supporting documentation for any bank account over which it has authority pursuant to this Agreement. On a monthly basis, IMIS shall prepare and forward to AAIC and CIS financial data, by state, reflecting all debits and credits with respect to flood insurance business written, including agents' commissions and IMIS' servicing fees paid, during the preceding quarter. - 5 - 6 ARTICLE IV - EXPENSES AND FEES 4.1 AAIC and CIS shall pay to IMIS to be shared equally between them, a set-up fee often thousand dollars ($10,000), which includes the following: a. Developing and inputting AAIC Data into IMIS' policy, claims, and general ledger systems; b. Establishing agent master files; c. Assisting with obtaining the Letter of Credit, restricted bank account, and funds transfer arrangement; d. Designing and ordering forms; e. Developing any necessary customized procedures; f. Initial training (excluding travel expenses); g. Coordination and installation of the necessary equipment for a telecommunication link with IMIS' data center, h. Assisting with a compatible configuration to work with AAIC's environment; i. Coordinating the purchase and installation of the necessary hardware (all costs incurred for hardware will be reimbursed to IMIS by AAIC); and j. Consulting with AAIC's personnel to develop a work plan. 4.2 AAIC shell pay IMIS a monthly services fee equal to 8% of monthly written premiums hereunder. IMIS shall pay the general expenses of processing flood insurance business pursuant to this Agreement, including those of policy administration, claims processing, and financial and transactional reporting from this monthly servicing fee. 4.3 AAIC shall be responsible for the payment of all taxes, including state premiums taxes and fees, municipal taxes and fees, dividends, agents' commissions, or any board, exchange or bureau assessment. 4.4 WYO Program Reimbursements made pursuant to the Arrangement, including, but not limited to, those for unallocated loss adjustment expenses, allocated loss adjustment expenses, and for approved special allocated loss expenses, shall be payable to IMIS. ARTICLE V - AUTHORITY AND COMMITMENTS OF CIS CIS is engaged to manage and supervise the activities of IMIS in IMIS' performance of the duties set forth herein. To the extent any of these activities involve standards, rules or - 6 - 7 other guidelines ("Program Requirements") established by FIA for the WYO Program, CIS shall be responsible for knowledge of these Program Requirements and shall be obligated to review IMIS' compliance with these Program Requirements. Further, CIS shall have the authority to direct and instruct IMIS on any aspect of these activities which CIS reasonably believes is not in compliance with the Program Requirements and this Agreement, and CIS shall report such noncompliance to AAIC. Any disagreement between CIS and IMIS over compliance with Program Requirements shall be referred to AAIC for resolution. ARTICLE VI - ADDITIONAL SERVICES AND FEES 6.1 Agent or AAIC Training. Upon request, IMIS will provide one training session per quarter, or four training sessions per year, to AAIC or AAIC's agents who have been appointed hereunder, including CIS. AAIC shall provide the training facility and shall reimburse IMIS for travel expenses incurred. 6.2 Marketing Material. With IMIS' written approval, AAIC may use IMIS previously developed marketing or promotional materials, which IMIS shall customize and produce for AAIC, at AAIC's expense. 6.3 Any fees and services not defined in this Agreement may be mutually agreed upon between AAIC and IMIS as required, and documented by an addendum attached hereto. ARTICLE VII - CONFIDENTIALITY OF DATA AND INFORMATION 7.1 The parties acknowledge that during the term or this Agreement, they will have access to and become acquainted with Confidential Information of the others. Accordingly, no party shall permit the duplication, use, or disclosure of any such Confidential Information to any person other than its own employees, agents or representatives who must have such information for the performance of obligations hereunder, unless such duplication, use, or disclosure is specifically authorized in writing by the other party. "Confidential Information" is not meant to include any information which, at the time of disclosure, is generally known to the general public and/or the insurance industry. 7.2 No party shall use or duplicate the name(s), trademark(s), servicemark(s), or trade name(s) (whether registered or not) of any other party in public releases or advertising or in any other manner unless such use or duplication is specifically authorized in writing by the other party, except that IMIS and CIS may include AAIC's name in a list of clients/customers without such authorization. 7.3 No party shall disclose information as to specific work performed or services fees under this Agreement without prior written consent of the other party. - 7 - 8 7.4 IMIS shall take all reasonable precautions available to maintain system integrity and data security necessary to protect AAIC's and CIS' records and data from loss and damage and to protect against unauthorized disclosure of AAIC's and CIS' confidential and proprietary data as described in this Article. 7.5 The disclosure restrictions provided in this Article shall be extinguished at the time and to the extent that the confidential information becomes generally available to the public domain without the fault of IMIS. ARTICLE VIII - COMMENCEMENT AND TERMINATION 8.1 Term of Agreement. This Agreement shad become exclusive on the date that this document is executed by all parties. The initial term of this Agreement shall expire on the last day of the Arrangement Year, and thereafter, is automatically renewable for additional one-year terms beginning on October 1 of each year, subject to the termination provisions set forth below. The Arrangement Year refers to the annual policy issuing period established under the Arrangement commencing on October 1 of one year and concluding on September 30 the following year. 8.2 Termination Based on Non-Continued Participation in Program: In the event AAIC intends not to resubscribe to be a WYO Carrier, and consequently does not intend to notify FIA by July 1 of such year of its intent to resubscribe, as required to resubscribe, AAIC shall notify the other parties by April 1 of such year that the contract with FIA will not be renewed. This Agreement will then expire on the last day of the Arrangement Year as specified in Section 8.1; provided, however, that the requirements of Section 9.1 shall apply. 8.3 Termination by Any Party Without Cause. Notwithstanding any other provisions of this Article, any party may terminate this Agreement to be effective on the last day of any Arrangement Year as specified in Section 8.1, without cause, upon written notice to the other parties by April 1 or the Arrangement Year. Provided, however, that the requirements of Section 9.1 shall still apply. 8.4 Termination Based on Actions By FIA. This Agreement shall terminate concurrently with termination by FIA as hereunder described: a. With thirty (30) days written notice from FIA to AAIC on the basis of fraud or misrepresentation by AAIC, its agent(s) or service provider(s) subsequent to the inception of a policy; b. With thirty (30) days written notice from FIA to AAIC on the basis of nonpayment to FIA of any amount due FIA by AAIC, its agent(s) or service provider(s); c. On a date established by FIA due to the loss of funding for the NFIP; or - 8 - 9 d. With 180 days written notice from AAIC to CIS and IMIS based on a material change in the terms under which FIA will act as guarantor of WYO Flood Insurance Policies under the NFIP. 8.5 Termination by Any Party. Any party may immediately terminate this Agreement upon written notice to the other parties in the event of a. Upon the expiration, revocation or suspension of any license required of IMIS, pursuant to the terms of Section 2.7 above; b. A significant change in the ownership, control or management, or in the event of the execution of an Agreement of sale, transfer or merger of any party or guarantor hereof; c. Any misappropriation or use in violation of this Agreement, of funds or property of any party by any other party, d. Bankruptcy, receivership, common law composition of creditors of any card or guarantors hereof, regardless of whether any of these occur voluntarily or involuntarily, or e. Failure by any party to fulfill a material obligation under this Agreement, provided that such party has been notified in writing by the terminating party of such failure and has not cured such failure after having a reasonable opportunity to cure after receipt of such written notice. 8.6 Upon termination of this Agreement, IMIS shall fully account to AAIC for all of its responsibilities and activities pursuant to this Agreement. ARTICLE IX - CONTINUING RIGHTS & DUTIES OF IMIS AFTER TERMINATION 9.1 Subject to requirements imposed by FIA under the WYO Program and subsequent to termination pursuant to Article VIII, IMIS will perform all of the duties necessary for the proper servicing of policies bound or written under this Agreement and any successor policies required to be issued by law until those policies shall have expired or been terminated. Such services shall include all those set forth in Article II. The compensation of IMIS shall remain as stated herein for the performance of such services after termination. 9.2 IMIS specifically understands and agrees that the duties of Section 9.1 will apply in the event AAIC does not resubscribe to be a WYO Flood Insurance Carrier, as set forth in Article VIII, but AAIC is required by FIA at FlA's option, to act as such for one (1) additional year. - 9 - 10 ARTICLE X - ERRORS AND OMISSIONS AND FIDELITY COVERAGES 10.1 IMIS agree to maintain Errors and Omissions coverage throughout the term of this Agreement and thereafter upon termination or cancellation until all claims and payments have been resolved and paid and all annual adjustments finalized and paid. The limits of the Errors and Omissions coverage will be in an amount as follows: a. Not less than $1 million per occurrence and in a form and from an insurer acceptable to AAIC, which acceptance shall not be unreasonably withheld, when gross written premiums for WYO Flood Insurance are equal to or less than $3,000,000; b. When gross written premiums for WYO Flood Insurance Coverage are greater than $3,000,000, the amount equal to one-third of such gross written premiums on the date the liability occurs up to a maximum of $5,000,000 of liability for $15,000,000 in gross written premiums; c. If gross written premiums $15,000,000, the parties shall negotiate in good faith to set an amount for the amount of maximum liability, and shall document the amount by attaching an addendum to this Agreement; provided, however, that at no time when gross written premiums exceed $15,000,000 shall the maximum liability be less than $5,000,000; d. The amount of liability coverage shall be reviewed on an annual basis prior to expiration of the current Arrangement Year, and IMIS agrees to obtain and have in force any required additional limits of liability under its Errors and Omissions policy by the start of the next Arrangement year, and e. IMIS agrees to make AAIC an additional insured under such policy, which may be limited to the activities arising under this Agreement. Upon request, evidence of such insurance coverage will be provided to AAIC. At least thirty (30) days prior to the expiration, cancellation, or modification or such insurance, IMIS or its insurer shall provide notice of AAIC. 10.2 IMIS agrees to maintain a fidelity bond throughout the term of this Agreement and thereafter upon termination until all claims and payments have been resolved and paid and all annual adjustments finalized and paid. The limits of the fidelity bond shall be in an amount not less that $1,500,000 per occurrence and in a form and from a surety acceptable to AAIC. At least (30) days prior to the expiration, cancellation or modification of such insurance, each party or its insurer shall provide notice to AAIC. - 10 - 11 ARTICLE XI - INDEMNIFICATION 11.1 CIS will indemnify, defend and hold harmless IMIS, its directors, officers, and employees from any Liability, cost, loss, file, penalty, claim, demand, damage or expense, including attorneys' fees, resulting from any act, error or omission, or failure to properly supervise CIS's employees, its agents, sub-agents, or other representatives, or resulting from any breach of CIS' obligations under this Agreement. 11.2 IRIS will indemnify, defend and hold harmless AAIC and CIS, their directors, officers and employees from any liability, cost, loss, fine, penalty, claim, demand, damage or expense, including attorneys' fees, resulting from any act, error or omission of IMIS, its employees, or other representatives, or resulting from any breach of AAIC's obligations under this Agreement. 11.3 AAIC will indemnify, defend and hold harmless IMIS, its directors, officers and employees from any liability, cost, loss, fine, penalty, claim, demand, damage or expense, including attorneys' fees, resulting from any act, error or omission of AAIC or its employees, or resulting from any breach of AAIC's obligations under this Agreement. 11.4 All parties agree to immediately give the others notice upon being notified of a claim which could give rise to a claim under this Article. 11.5 This Article shall survive termination or cancellation of this Agreement. ARTICLE XII - MISCELLANEOUS 12.1 If any party should bring a Court action alleging breach of this Agreement or seeking to enforce, rescind, renounce, declare void or terminate this Agreement or any provisions thereof, then the prevailing party shall be entitled to recover all or its legal expenses, including reasonable attorney's fees and costs (including legal expenses for any appeals taken) and to have the same awarded as part of the judgment in the proceeding in which such legal expenses and attorney's fees were incurred. Further, it is understood and agreed that should AAIC or IMIS institute any Court action against CIS, that the Court action shall be brought in Pennsylvania and this Agreement shall be construed in accordance with the laws of the State of Pennsylvania. Likewise, it is understood and agreed that should IMIS or CIS institute any Court action against AAIC, this action shall be brought in New Jersey and the Agreement shall be construed in accordance with the laws of the State of New Jersey. In like manner, it is understood and agreed that should AAIC or CIS institute any Court action against IMIS, such action shall be brought in Florida and the Agreement shall be construed in accordance with the laws of the State of Florida. - 11 - 12 12.2 IMIS agrees to permit FIA, AAIC or its representatives, during the term of this Agreement and as long thereafter as AAIC or FIA considers necessary, to visit, inspect, examine, copy and verify, at IMIS' offices or elsewhere, during reasonable hours and upon prior notice to IMIS, and at the expense of the examining party, any of the properties, accounts, files, documents, books, reports and other records in possession or control of IMIS relating to business covered by this Agreement. Any insurance department commissioner so entitled shall also have access to these records. 12.3 This Agreement, and any exhibits, schedules or addenda attached hereto contains all of the prior oral and/or previously written agreements, representations, and arrangements among the parties hereto. There are no representations or warranties other than those set forth herein. 12.4 AAIC agrees to comply with applicable laws of the state or states covered by this Agreement and with the rules and regulations of any regulatory authority having jurisdiction over AAIC's activities, and shall, whenever necessary, maintain at its own expense all required licenses to transact business in such states. 12.5 Should any part of this Agreement for any reason be declared invalid, such decision shall not effect the validity or any remaining portion, which remaining portion shall remain in full force and effect as if the Agreement had been executed with the invalid portion thereof eliminated. It is, therefore, declared the intention of the parties hereto that each of them will have executed the remaining portion of this Agreement without including therein any such part, parts or portion which may, for any reason be hereafter declared void. 12.6 No change or modification of this shall be valid unless the same shall be in writing and signed by all of the parries hereto 12.7 Any and all notices, designations, consents, offers, acceptances, or any other communication provided for herein shall be given in writing by hand delivery, by overnight carrier, by registered or certified mail or by facsimile transmission and shall be addressed as follows: AAIC: American Alternative Insurance Corporation American Re - Plaza I 555 College Road East Princeton, New Jersey 08543 Attn: General Counsel and Senior Vice President CIS: Corporate Insurance Agency Services 1098 Washington Crossing Road, Suite 5 Washington Crossing, PA 18977 Attn: Mark Blasch, President - 12 - 13 IMIS: Insurance Management Information Services, Inc. 360 Central Avenue St. Petersburg, FL 33701 Attn: Kathleen M. Batson, Senor Vice President Notices sent by hand delivery shall be deemed effective on the date of hand delivery. Notices sent by overnight carrier shall be deemed effective on the next business day after being placed into the hands of the overnight carrier. Notices sent by registered or certified mail shall be deemed effective on the third business day after being deposited into the post office. Notices sent by facsimile transmission shall be deemed to be effective on day when sent if sent prior to 4:30 p.m. (the time being determined by the time zone of the recipient) otherwise they shall be deemed effective on the next business day. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed effective as of the date and year first above written. CORPORATE INSURANCE AGENCY SERVICES By: /s/ Mark E. Blasch ------------------------------------- Name Printed: Mark E. Blasch Title: President AMERICAN ALTERNATIVE INSURANCE CORPORATION By: /s/ Ralph M. Serio ------------------------------------- Name Printed: Ralph M. Serio Title: Senior Vice President INSURANCE MANAGEMENT INFORMATION SERVICES, INC. By: /s/ Kathleen M. Batson ------------------------------------- Name Printed: Kathleen M. Batson Title: President -13- 14 EXHIBIT A CORPORATE GUARANTY OF BANKERS INSURANCE GROUP - 14 - 15 EXHIBIT B AGENCY AGREEMENT BETWEEN AMERICAN ALTERNATIVE INSURANCE CORPORATION AND CORPORATE INSURANCE AGENCY SERVICES FOR THE NATIONAL FLOOD INSURANCE PROGRAM - 15 - 16 EXHIBIT A CORPORATE GUARANTY OF CAU - 16 - 17 GUARANTEE Guarantee, made this _____day of 19__, by Bankers Insurance Group, Inc., a corporation organized and existing under the laws of the State of Florida, with its principal place of business in St. Petersburg, Florida, hereinafter referred to "Guarantor", to American Alternative Insurance Corporation, a corporation organized and existing under the laws of the State of New York with its principal place of business in Princeton, New Jersey, hereinafter referred to as "Obligee". RECITALS WHEREAS, Obligee is prepared to execute a Flood Insurance Program Services Agreement with Insurance Management Information Services, Inc., a corporation organized and existing under the laws of the State of Florida, with its principal place of business in St. Petersburg, Florida, hereinafter referred to as "Obligor", for the purpose of having Obligor administer certain of Obligee's obligations as a WYO Carrier under the NFIP Program. A copy of the Proposed Contract is attached hereto as Exhibit "A". WHEREAS, Obligee will execute the contract only if performance thereof will be guaranteed by the Guarantor. Guarantor is willing to guarantee a performance of the contract under the terms and conditions set forth below. NOW, THEREFORE, based on the agreements contained herein and other good and valuable consideration, Guarantor agrees as follows: Section 1 - Statement of Guarantor. Guarantor guarantees prompt and satisfactory performance of the attached Contract, in accordance with all of its terms, conditions, and obligations, should Obligor default in the performance of its obligations under the Contract. Notwithstanding, Guarantor's liability shall be secondary to Obligor's liability and shall only accrue after Obligee exhausts any and all remedies it may reasonably pursue against Obligor and its E & O Insurance. Further, Guarantor's liability for Obligor's default shall be limited to and shall not exceed One Million Dollars ($1,000,000.00). However, if gross written premium exceeds Fifteen Million Dollars ($15,000,000.00). the parties shall negotiate in good faith to amend the amount of maximum liability and shall document that amount by attaching an addendum to this Guarantee. Any payment made pursuant to Guarantor's Error and Omissions insurance policy shall be credited to and proportionately reduce Guarantor's limit of liability under this Guarantee. Section 2 - Duration. This Guarantee shall continue in force until all obligations of Obligor under the attached Contract have been satisfied or until Obligor's liability to Obligee under the Contract has Contract has 18 been completely discharged. whichever first occurs. Guarantor shall not be discharged from liability hereunder as long as any claim by Obliges against Obligor remains Funding, unless the limit of Guarantor's liability has been reached. Section 3 - Modification of Guarantee Contract. Written consent of Guarantor shall be required prior to any modification of the attached Contract, in particular where the modification would increase the obligations of the Guarantor in any way, or render prompt and satisfactory performance by Obligor more difficult. Section 4 - Notices. Notice to the Guarantor of default on the part of Obligor is not waived. All notices shall be in writing and shall be delivered personally or mailed, certified or registered mail, or faxed, to the Guarantor or Obligee at the address set forth below. A. If to AAIC: Mr. Kenneth I. LeStrange Executive Vice-President and Chief Operating Officer Two World Financial Center 225 Liberty Street New York, NY 10281 B. IF TO BANKERS INSURANCE GROUP, INC.: Ms. Kathleen Batson Senior Vice-President 360 Central Avenue St Petersburg, FL 3701 Section 5 - Entire Agreement. This instrument embodies the entire agreement between the parties. There are no promises, terms, conditions, or obligations other than those contained herein, and this Guarantee shall supersede all previous communications, representations, or agreements. either verbal or written, between the Guarantor and Obligee. Section 6 - Parties Bound. This Guarantee shall be binding upon the Guarantor and its successors and assigns. Section 7 - Guarantor Warrants Full Capacity. The Guarantor warrants that the Guarantor has full power, capacity and legal right under all applicable laws to enter into this Guarantee. The Guarantor further warrants that the execution and delivery of this Guarantee: 19 1. Will not contravene any provision of any law or any contractual agreement or arrangement binding upon the Guarantor; and 2. Has been properly and validly authorized and when executed and delivered, will be valid and binding and enforceable against the Guarantor in accordance with its terms. Section 8 - Miscellaneous. If any party should bring a Court action alleging breach of this Guarantee or seeking to enforce, resend, renounce, declare void or terminate this Agreement or any provisions thereof, then the prevailing party shall be entitled to recover all of its legal expenses, including reasonable attorney's fees and costs (including legal expenses for any appeals taken) and to have the same awarded as part of the Judgment in the proceeding in which such legal expenses and attorneys fees were incurred. Further, It is understood and agreed that should Guarantor institute any court action against Obligee, that the Court action shall be brought in New Jersey and the Agreement shall be construed in accordance with the laws of the State of New Jersey. In like manner, it is understood and agreed that should Obligee institute any Court action against Guarantor, such action shall be brought in Florida and the Agreement shall be construed in accordance with The laws of the State of Florida. IN WITNESS WHEREOF, Guarantor has executed this Guarantee at St Petersburg, Florida, on the day and year first above written. Bankers Insurance Group, Inc. BY: /s/ Kathleen M. Batson -------------------------------- As Its: /s/ Senior Vice President ---------------------------- Attest: /s/ Demont F. Hastings ---------------------------- EX-10.19 22 LOAN AND SECURITY AGREEMENT 1 EXHIBIT 10.19 LOAN AND SECURITY AGREEMENT DATED AS OF JULY 31, 1997 BETWEEN YOSYSTEMS, INC., an Ohio corporation, AND SMS GEOTRAC, INC., a Delaware corporation AND THE HUNTINGTON NATIONAL BANK, a national banking association 2 TABLE OF CONTENTS
SECTION HEADING PAGE NO. - ------- ------- -------- 1. DEFINITIONS............................................................... 1 1.1 Definitions of Terms....................................... 1 (a) "Accounts"........................................ 1 (b) "Account Debtor".................................. 1 (c) "Agreement"....................................... 1 (d) "Bank"............................................ 1 (e) "Cash Flow Coverage Ratio"........................ 1 (f) "Cash Outflow".................................... 1 (g) "Code"............................................ 1 (h) "Collateral"...................................... 1 (i) "Company"......................................... 1 (j) "Cross License Agreement"......................... 1 (k) "Deposits"........................................ 1 (l) "EBITDA".......................................... 2 (m) "Environmental Laws".............................. 2 (n) "Equipment"....................................... 2 (o) "ERISA"........................................... 2 (p) "Event of Default"................................ 2 (q) "Excess Cash Flow"................................ 2 (r) "Funded Indebtedness"............................. 2 (s) "Geotrac"......................................... 2 (t) "Georgia Residential Office"...................... 2 (u) "Hazardous Substances"............................ 2 (v) "Intellectual Property"........................... 3 (w) "Inventory"....................................... 3 (y) "Loan"............................................ 3 (z) "Net Worth"....................................... 3 (aa) "Obligations"..................................... 3 (bb) "Premises"........................................ 3 (cc) "Prime Commercial Rate"........................... 3 (dd) "YoSystems"....................................... 3 1.2 Uniform Commercial Code and Generally Accepted Accounting Principles................................................. 3 2. TERM LOAN........................................................... 4 3. INTEREST, TERMS AND USES OF LOAN.................................... 4 3.1 Interest................................................... 4 (a) Interest Payments................................. 4 (b) Interest Rate Options............................. 5 (i) Prime Interest Rate...................... 5 (ii) LIBOR Interest Rate...................... 5 (iii) "As Quoted" Seven (7) Year Fixed Interest Rate............................ 5
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SECTION HEADING PAGE NO. - ------- ------- -------- (c) Notice of Election................................ 7 (d) Interest Calculation and Interest Payment Date.... 7 (e) Limitations on Requests and Elections............. 8 (f) Illegality and Impossiblity....................... 8 (g) Indemnification................................... 8 3.2 Interest Rate After Default................................ 9 3.3 Prepayment................................................. 9 3.4 Fees; Expenses; Costs...................................... 10 3.5 Payments................................................... 10 3.6 Use of Proceeds............................................ 10 3.7 Maturity................................................... 11 3.8 Additional Costs........................................... 11 4. SECURITY AGREEMENT.................................................. 11 4.1 Grant of Security Interest................................. 11 4.2 Representations and Covenants Regarding the Collateral..... 12 4.3 Collateral Insurance....................................... 12 4.4 Books and Records; Account Verification.................... 13 4.5 Preservation and Disposition of Collateral................. 13 4.6 Extensions and Compromises................................. 14 4.7 Financing Statements....................................... 14 4.8 Bank's Appointment as Attorney-in-Fact..................... 14 4.9 Remedies on Default........................................ 15 5. WARRANTIES AND REPRESENTATIONS...................................... 16 5.1 Corporate Organization and Authority....................... 16 5.2 Borrowing is Legal and Authorized.......................... 16 5.3 Taxes...................................................... 17 5.4 Compliance with Law........................................ 17 5.5 Financial Statements; Full Disclosure...................... 17 5.6 No Insolvency.............................................. 17 5.7 Government Consent......................................... 17 5.8 Title to Properties........................................ 18 5.9 No Defaults................................................ 18 5.10 Environmental Protection................................... 18 5.11 Pending Litigation......................................... 18 5.12 Warranties and Representations............................. 18 6. COMPANY BUSINESS COVENANTS.......................................... 18 6.1 Payment of Taxes and Claims................................ 19 6.2 Maintenance of Properties and Corporate Existence.......... 19 6.3 Sale of Assets; Merger; Subsidiaries; Tradenames........... 19 6.4 Negative Pledge............................................ 20 6.5 Other Borrowings and Contingent Liabilities................ 20 6.6 Sale of Accounts; No Consignment........................... 20 6.7 Ownership and Management................................... 20 6.8 Acquisition of Capital Stock............................... 20
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SECTION HEADING PAGE NO. - ------- ------- -------- 6.9 Trade Accounts Payable..................................... 20 6.10 Operating Lease Rentals.................................... 20 6.11 Cash Dividends and Other Distributions..................... 21 6.12 Investments................................................ 21 6.13 Net Worth.................................................. 21 6.14 Leverage Ratio............................................. 21 6.15 Cash Flow Coverage Ratio................................... 22 6.16 Capital Expenditures....................................... 22 6.17 Loans and Advances......................................... 22 6.18 Environmental Compliance in Indemnification................ 22 6.19 Evidence of Cash Equity in YoSystems, Inc.................. 22 7. FINANCIAL INFORMATION AND REPORTING................................. 23 8. DEFAULT............................................................. 23 8.1 Events of Default.......................................... 23 8.2 Default Remedies........................................... 24 9. MISCELLANEOUS....................................................... 24 9.1 Notices.................................................... 24 9.2 Reproduction of Documents.................................. 25 9.3 Survival; Successors and Assigns........................... 26 9.4 Amendment and Waiver; Duplicate Originals.................. 26 9.5 Enforceability and Governing Law........................... 26 9.6 Waiver of Right to Trial by Jury........................... 26 9.7 Advertising................................................ 27 9.8 Term of Agreement.......................................... 27
EXHIBITS EXHIBIT A Note EXHIBIT B Schedule of Permitted Liens EXHIBIT C Schedule of Business Locations EXHIBIT D Disclosure Schedule Relating to Representations and Warranties iii 5 LOAN AND SECURITY AGREEMENT This Agreement is entered into at Cleveland, Ohio, between the Bank and the Company as of July __, 1997. 1. DEFINITIONS. 1.1 DEFINITIONS OF TERMS. As used in this Agreement, the following terms shall have the following meanings. (a) "Accounts" means accounts, accounts receivable, contract rights, chattel paper, general intangibles, income tax refunds, instruments, negotiable documents, notes, drafts, acceptances, and other forms of obligations, books, records, ledger cards, computer programs, and other documents or property at any time evidencing or relating to the Company's business, including, but not limited to, those arising from or in connection with the sale, lease, or other disposition of Inventory. (b) "Account Debtor" means the party who is obligated on an Account. (c) "Agreement" means this Loan and Security Agreement between the Company and the Bank and includes any partial or total amendment, modification, renewal, restatement, extension, or substitution of or for this Agreement. (d) "Bank" means THE HUNTINGTON NATIONAL BANK, a national banking association. (e) "Cash Flow Coverage Ratio" means the consolidated ratio of EBITDA to Cash Outflow, to be calculated quarterly based on a rolling four-quarter cash flow. (f) "Cash Outflow" means the consolidated aggregate of (i) scheduled principal payments on long-term debt (including capital leases), (ii) interest expense, (iii) taxes paid, and (iv) unfunded capital expenditures. (g) "Code" means the Internal Revenue Code of 1986, as amended from time to time. (h) "Collateral" means all of the assets of the Company, including, without limitation, all Accounts, Deposits, Equipment, Intellectual Property, and Inventory of the Company; excluding, however, the issued and outstanding common stock of Geotrac. (i) "Company" means collectively, YOSYSTEMS, INC., an Ohio corporation, and SMS GEOTRAC, INC., a Delaware corporation. (j) "Cross License Agreement" means that certain agreement between YoSystems, Inc. and Bankers Hazard Determination Services, Inc. of even date herewith. (k) "Deposits" means any and all deposits or other sums at any time credited by or due from the Bank to the Company, any and all policies, certificates of insurance, securities, 6 goods, choses in action, cash and property owned by the Company or in which the Company has an interest, which now or hereafter are at any time in the possession or control of the Bank or in transit by mail or carrier to or from the Bank, or in the possession of any third party acting in the Bank's behalf, without regard to whether the Bank received the same in pledge for safekeeping, as agent for collection or transmission, or otherwise, or whether the Bank has conditionally released the same. (l) "EBITDA" means the consolidated aggregate of (i) net income, (ii) interest expense, (iii) income tax expense, (iv) depreciation and amortization expense, and (v) non-cash charges to income (net of non-cash credits). (m) "Environmental Laws" means the Comprehensive Environmental Response, Compensation and Liability Act, as amended, 42 U.S.C. ss. 9601, et seq., the Toxic Substances Control Act, 15 U.S.C. ss. 2601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. ss. 6901, et seq., the Water Quality Act of 1987, 33 U.S.C. ss. 1251, et seq., and the Clean Air Act, 42 U.S.C. ss. 7401, et seq., and any state or local statute, ordinance, law, code, rule, regulation, or order regulating or imposing liability (including strict liability) or standards of conduct regarding Hazardous Substances. (n) "Equipment" means all of the Company's machinery, equipment, tools, furniture, furnishings, and fixtures including, but not limited to, all manufacturing, fabricating, processing, transporting, and packaging equipment, power systems, heating, cooling, and ventilating systems, lighting and communication systems, electric, gas, and water distribution systems, food service systems, fire prevention, alarm, and security systems, laundry systems, and computing and data processing systems. (o) "ERISA" means the Employee Retirement Income Security Act of 1974, as amended from time to time. (p) "Event of Default" means any of the events specified in Section 8.1 of this Agreement. (q) "Excess Cash Flow" means EBITDA less a 1.1x multiple of Cash Outflow, to be calculated on an annual basis. (r) "Funded Indebtedness" means the consolidated aggregate of (i) each Company's obligations for borrowed money as evidenced by bonds, debentures, notes or similar instruments, and (ii) each Company's obligations under capital leases. (s) "Geotrac" means SMS Geotrac, Inc., a Delaware corporation. (t) "Georgia Residential Office" means the home office more fully described in Section 1(bb) hereof. (u) "Hazardous Substances" means all hazardous and toxic substances, wastes, materials, compounds, pollutants, and contaminants, including, without limitation, asbestos, polycholorinated biphenyls, and petroleum products, which are included under or regulated by 2 7 the Environmental Laws, but does not include such substances as are permanently incorporated into a structure or any part thereof in such a way as to preclude their subsequent release into the environment, or the permanent or temporary storage or disposal of household hazardous substances by tenants, and which are thereby exempt from or do not rise to any violation of the Environmental Laws. (v) "Intellectual Property" means all of the Company's trade names, trademarks, trade secrets, service marks, data bases, software and software systems, information systems, discs, tapes, goodwill, patents, patent applications, copyrights, licenses, and franchises. (w) "Inventory" means all of the Company's inventory including, but not limited to, all goods, merchandise, and other personal property furnished under any contract of service or intended for sale or lease, all parts, supplies, raw materials, work in process, finished goods, materials used or consumed in the Company's business, and repossessed and returned goods. (x) "Leverage" means the ratio of Funded Indebtedness to EBITDA, to be calculated quarterly based on a rolling four-quarter cash flow. (y) "Loan" means the loans and advances made by the Bank to the Company, subject to the terms and conditions of the Agreement, on a term basis up to the principal sum of $8,750,000.00 (z) "Net Worth" means, on a consolidated basis, total shareholders' equity plus subordinated debt, to be calculated on a quarterly basis. (aa) "Obligations" is used in its most comprehensive sense and means and includes, without limitation, all indebtedness, debts, and liabilities (including principal, interest, late charges, collection costs, attorneys' fees, and the like) of the Company to the Bank, whether now existing or hereafter arising, either created by the Company alone or together with another or others, primary or secondary, secured or unsecured, absolute or contingent, liquidated or unliquidated, direct or indirect, whether evidenced by note, draft, application for letter of credit, or otherwise, and any or all renewals of or substitutes therefor, including all indebtedness owed by the Company to the Bank in connection with the Loan. (bb) "Premises" means all real property owned, leased, or used by the Company, excluding the personal residence of Edward Prevost, Jr., a sales employee residing in the State of Georgia and working out of such personal residence (the "Georgia Residential Office"). (cc) "Prime Commercial Rate" means the rate established from time to time by the Bank as the Bank's Prime Rate, whether or not such rate is publicly announced. The Prime Rate may not be the lowest interest rate charged by the Bank for commercial or other extensions of credit. (dd) "YoSystems" means YoSystems, Inc., an Ohio corporation. 1.2 Uniform Commercial Code and Generally Accepted Accounting Principles. Unless the context otherwise requires, all terms used herein which are defined in the Uniform 3 8 Commercial Code as enacted in Ohio shall have the meaning stated therein, and all accounting terms shall be determined in accordance with generally accepted accounting principles, consistently applied. 2. TERM LOAN. (a) The Bank will make a term loan (the "Term Loan") to the Company in the principal amount of Eight Million Seven Hundred Fifty Thousand and No/100 Dollars ($8,750,000.00). The Term Loan will be evidenced by a promissory note of even date herewith to be executed in the form of Exhibit A attached hereto (the "Term Note"), or by one or more notes executed in substitution therefore. Repayment of the Loan shall be made in accordance with the terms of the notes then outstanding pursuant to the terms and conditions of this Agreement. (b) The Company shall repay the aggregate amount of principal of the Loan to the Bank in twenty-eight (28) consecutive and equal quarterly principal installments of Three Hundred Twelve Thousand Five Hundred and No/100 Dollars ($312,500.00) each, plus accrued interest, commencing September 30, 1997, and continuing on the last day of each calendar quarter thereafter. On June 30, 2004 (the "Maturity Date"), any and all remaining principal balance, plus accrued interest, shall be due and payable in full. (c) The Company shall be permitted to make optional prepayments of principal ("Optional Prepayments"), subject to the terms and conditions of Section 3.3 of this Agreement. Any Optional Prepayments shall be applied to the outstanding principal balance of the Loan in the inverse order of installments due hereunder and under the Term Note without relieving the Company from continuing to make regular payments of principal and interest as required under this Agreement. (d) The addition to the quarterly principal payments required in Section 2(b) above, the Company shall make mandatory annual prepayments of principal ("Mandatory Prepayments"), in an amount equal to fifty percent (50%) of Excess Cash Flow, for each fiscal commencing with fiscal year 1998. Such payment shall be due on the earlier of thirty (30) days following delivery of the Company's fiscal year end financial statements pursuant to Section 7 of this Agreement, or October 31 of the fiscal year immediately following the fiscal year end for which the Excess Cash Flow calculation is made. All Mandatory Prepayments shall be applied to the outstanding principal balance of the Loan in the inverse order of installments due hereunder and under the Term Note without relieving the Company from continuing to make regular payments of principal and interests as required under this Agreement. 3. INTEREST. TERMS AND USES OF LOAN. 3.1 Interest. (a) Interest Payments. The Company agrees to pay the Bank interest on the outstanding principal balance of the Loan on the earlier of a quarterly basis on the last day of each calendar quarter, or the maturity date for a contract for a LIBOR Rate Advance (as hereinafter defined); provided, however, that if the Company elects a six(6) month LIBOR 4 9 contract, interest shall be payable quarterly and upon the maturity date for such contract. The first interest payment shall be due September 30, 1997. (b) Interest Rate Options. Interest on the Loan shall be payable pursuant to the Company's option as follows: (i) Prime Interest Rate: Interest shall accrue on the Loan at the Prime Commercial Rate of the Bank ("Prime Interest Rate") at all times prior to the Maturity Date unless the Company elects the LIBOR Interest Rate (as hereinafter defined) pursuant to Section 3.1(b)(ii) of this Agreement, or a Fixed Interest Rate (as hereinafter defined) pursuant to Section 3.1(b)(iii) of this Agreement. At all times when the Loan, or any portion of the outstanding principal thereof, is subject to the Prime Interest Rate, the Company agrees to pay to the Bank quarterly interest as set forth in Section 3.1(a) hereof, plus principal installments as set forth in the Term Note and in Section 2 above, on the unpaid balance of the Loan and the Prime Interest Rate from time to time in effect. Each change in the Prime Interest Rate shall automatically and immediately change the interest rate on the Loan without notice to the Company. "Prime Commercial Rate" as used herein shall have the same meaning as set forth in Section 1 of this Agreement. The Prime Interest Rate shall be applicable at all times prior to the Maturity Date of the Loan to all unpaid principal balance of the Loan that is not subject to the alternative interest rate options elected in the manner hereinafter provided. "Prime Interest Rate Advance" shall mean any amount borrowed as part of the Loan that bears interest at the Prime Interest Rate. (ii) LIBOR Interest Rate: During the term of the Loan, the Company may from time to time prior to the Maturity Date elect to have interest accrue on all or part of the outstanding principal balance of the Loan at a rate of interest equal to the LIBOR Rate (as defined below) plus the LIBOR Rate Margin pursuant to the following incentive pricing matrix: LIBOR Rate Incentive Pricing Matrix
If the Company's Leverage then the LIBOR (as defined in Rate Margin shall be: Section 1 hereof) is: < 1.5:1.0 175 basis points - < 2.0:1.0 200 basis points - < 2.5:1.0 225 basis points - > 2.5:1.0 250 basis points
The LIBOR Rate Margin shall be adjusted on a quarterly basis with any such change effective on the first (1st) day of the month following the month in which consolidating and consolidated Company prepared financial statements of the 5 10 Company are received for the immediately preceding fiscal quarter. From the Closing Date until the first quarterly adjustment (based on June 30, 1997 financial statements), the initial LIBOR Rate Margin shall be 250 basis points. Provided, further, that the amount of principal balance accruing interest at the LIBOR Rate may not exceed the outstanding principal balance remaining due under the Loan as of the maturity date of the related LIBOR contract. In the event the Company for any reason causes a LIBOR contract to be broken, the Company shall pay any resulting penalty incurred by the Bank thereof. "LIBOR Rate" shall mean, with respect to any LIBOR Rate Advance and the related Interest Period (as hereinafter defined), the rate of interest the Bank may quote from time to time and subject to change without notice, determined on the basis of the offered per annum rate, estimated per annum rate, or the arithmetic mean of the per annum rates determined by the Bank in its reasonable discretion for deposits in U.S. Dollars in an amount comparable to the partial advance of the principal balance of the Loan for a period equal to the applicable time period of said partial advance, which shall appear on page 3750, captioned British Bankers Association Interest Settlement Rates, of Telerate, a service of Telerate Systems Incorporated (or such other page that may replace such page on that service for the purpose of displaying LIBOR; or if such service ceases to be available, such other reasonably comparable money rate service as the Bank may select) or upon information obtained from any other reasonable source reporting "London Interbank Offered Rate" of major banks on the date that is two (2) banking days of the Bank preceding the day on which the Company makes a request for a LIBOR Advance. Rates quoted by the Bank for LIBOR Rate Advances shall mean the per annum rate that is equal to the sum of LIBOR plus the rate representing the cost, if any, of maintaining reserves against "Eurocurrency Liabilities" under Regulation D of the Board of Governors of the Federal Reserve System. This provision is for the benefit of the Bank and is not intended to increase the expected yield to the Bank above the rate of interest provided for herein. If a LIBOR rate quoted by the Bank requires adjustment for a reserve requirement the reserve adjusted rate is computed by dividing the LIBOR by an amount equal to (1 - Reserve Requirement expressed as a decimal). "LIBOR Rate Advance" shall mean any amount borrowed as part of the Loan that bears interest at a rate calculated with reference to the LIBOR Rate. All LIBOR Rate Advances shall be for a minimum principal amount $500,000 and even increments of $100,000 for all amounts above such minimum. "LIBOR business day" shall mean, with respect to any LIBOR Rate Advance, a day which is both a day on which the Bank is open for business and a day on which dealings in U.S. dollar deposits are carried out in the London interbank market. (iii) "As Quoted" Seven (7) Year Fixed Interest Rate. The Company may elect to fix the interest applicable to the Loan for a period of seven (7) years (a "Fixed Interest Rate"). The Bank will quote the Company a Fixed Interest Rate upon request not less than three (3) business days prior to the Closing Date (as hereinafter defined). Such Fixed Interest Rate shall be quoted to the Company 6 11 based on money market, business, economic and competitive factors, and shall be determined in the Bank's sole and absolute discretion. "Fixed Interest Rate Advance" shall mean any amount borrowed as part of the Loan that bears interest at a Fixed Interest Rate. All Fixed Rate Advances shall be for a minimum principal amount of $500,000.00 and even increments of $100,000.00 for all amounts above such minimum. (c) Notice of Election. The Company may initially elect to request an advance of any type (an "Advance"), continue an Advance of one type as an Advance of the then existing type or convert an Advance of one type to an Advance of another type, by giving notice thereof to the Bank in writing in the form prescribed by the Bank not later than 10:00 a.m. New York time, two (2) LIBOR business days prior to the date any such continuation of or conversion to a LIBOR Rate Advance is to be effective, and not later than 10:00 a.m. New York time on the date such continuation or conversion is to be effective in all other cases, provided, that an outstanding Advance may only be converted on the last day of the then current Interest Period (if applicable) with respect to such Advance, and provided, further, that upon the continuation or conversion of an Advance such notice shall also specify the Interest Period (if applicable) to be applicable thereto upon such continuation or conversion. If the Company shall fail to timely deliver such a notice with respect to any outstanding Advance, the Company shall be deemed to have elected to convert such Advance to a Prime Interest Rate Advance on the last day of the then current Interest Period with respect to such Advance. The Company may elect to have a combination of LIBOR Rate Advances and Prime Rate Advances outstanding at any one time, subject to the limitations of Section 3.1(b)(ii) above and a limit of no more than four (4) LIBOR Rate Advances outstanding at any one time. (d) Interest Calculation and Interest Payment Date. "Interest Period" shall mean: (1) With respect to any LIBOR Rate Advance under the Loan, an initial period commencing, as the case may be, on the day such an Advance shall be made by the Bank, or on the day of conversion of any then outstanding Advance to an Advance of such type, ending on the date one (1), two (2), three (3) or six (6) months thereafter, all as the Company may elect pursuant to this Agreement; provided, that (a) any Interest Period with respect to a LIBOR Rate Advance that shall commence on the last LIBOR business day of the calendar month (or on any day for which there is no numerically corresponding day in the appropriate subsequent calendar month) shall end on the last LIBOR business day of the appropriate subsequent calendar month; and (b) each Interest Period with respect to a LIBOR Rate Advance that would otherwise end on a day which is not a LIBOR business day shall end on the next succeeding LIBOR business day or, if such next succeeding LIBOR business day falls in the next succeeding calendar month, on the next preceding LIBOR business day. (2) With respect to a Prime Interest Rate Advance under the Loan, an initial period commencing, as the case may be, on the day such an Advance shall be made by the Bank, or on the day of conversion of any then outstanding Advance to an Advance of such type, and ending on the day of conversion to an Advance of a different type or the Maturity Date. 12 Notwithstanding the provisions of (1) and (2) above, no Interest Period shall be permitted which would end after the Maturity Date of the Loan. Interest shall be due and payable on each Interest Payment Date. "Interest Payment Date" shall mean those times specified in Section 3.1(a) above. (e) Limitations on Requests and Elections. Notwithstanding any other provision of this Agreement to the contrary, if, upon receiving a request for an Advance or a request for a continuation of an Advance as an Advance of the then existing type or conversion of an Advance to an Advance of another type (i) in the case of any LIBOR Rate Advance, deposits in dollars for periods comparable to the Interest Period elected by the Company are not available to the Bank in the London interbank or secondary market, or (ii) by reason of national or international financial, political or economic conditions or by reason of any applicable law, treaty, rule or regulation (whether domestic or foreign) now or hereafter in effect, or the interpretation or administration thereof by any governmental authority charged with the interpretation or administration thereof, or compliance by the Bank with any request or directive of such authority (whether or not having the force of law), including without limitation exchange controls, it is impracticable, unlawful or impossible for the Bank (x) to make the relevant LIBOR Rate Advance or (y) to continue such Advance as a LIBOR Rate Advance or (z) to convert an Advance to a LIBOR Rate Advance, then the Company shall not be entitled, so long as such circumstances continue, to request a LIBOR Rate Advance or a continuation of or conversion to such Advances from the Bank. In the event that such circumstances no longer exist, the Bank shall again accept elections for LIBOR Rate Advances of the affected type and requests for continuations of and conversions to such Advances of the affected type. (f) Illegality and Impossibility. In the event that any applicable law, treaty, rule or regulation (whether domestic or foreign) now or hereafter in effect, or any interpretation or administration thereof by any governmental authority charged with the interpretation or administration thereof, or compliance by the Bank with any request or directive of such authority (whether or not having the force of law), including without limitation exchange controls, shall make it unlawful or impossible for the Bank to maintain a LIBOR Advance under this Agreement, the Company shall upon receipt of notice thereof from the Bank, repay in full the then outstanding principal amount of all such LIBOR Advances made by the Bank together with all accrued interest thereon to the date of payment and all amounts due to the Bank this Section 1.3, (i) on the last day of the then current Interest Period, if any, applicable to such LIBOR Advance, if the Bank may lawfully continue to maintain such LIBOR Advance to such day, or (ii) immediately if the Bank may not continue to maintain such LIBOR Advance to such day. This provision is for the benefit of the Bank and is not intended to increase the yield to the Bank above the rates of interest provided for in this Agreement. This section shall apply only as long as such illegality exists. The Bank shall use reasonable, lawful effects to avoid the impact of such law, treaty, rule or regulation. (g) Indemnification. If the Company makes any payment of principal with respect to any Advance on any other date than the last day of an Interest Period applicable thereto or if the Company fails to borrow any Advance after notice has been given to the Bank in accordance herewith, or fails to make any payment of principal or interest in respect of an 13 Advance when due or upon the Maturity Date of the Loan, the Company shall reimburse the Bank on demand for any resulting loss or expense incurred by the Bank, determined in the Bank's reasonable opinion, including without limitation any loss incurred in obtaining, liquidating or employing deposits from third parties. A detailed statement as to the amount of such loss or expense, prepared in good faith and submitted by the Bank to the Company shall be conclusive and binding for all purposes absent manifest error in computation. The Bank shall promptly notify the Company of any event occurring after the date of this Agreement that entitles the Bank to reimbursement pursuant to this Paragraph. The provisions of this Paragraph (g) shall survive the termination of this Agreement and the payment in full of all promissory notes outstanding pursuant hereto. Notwithstanding anything to the contrary set forth in this Agreement, the parties hereto agree that this Section 3.1(g), Section 3.3 and 3.8 shall not be interpreted so as to charge the Company more than once for any loss or expense incurred by the Bank in connection with this Agreement and reimbursable by the Company to the Bank pursuant to this Section 3.1(g), or Sections 3.3 or 3.8. 3.2 Interest Rate After Default. Interest shall accrue on the outstanding principal balance of all Advances made pursuant to this Agreement at a rate equal to the Prime Interest Rate plus five percent (5%) per annum upon the occurrence and during the continuance of any Event of Default and the expiration of any applicable cure period, unless otherwise waived in writing. 3.3 Prepayment. The Company may, at any time, upon payment of all accrued interest, fees and other amounts then due and payable to the Bank, and upon at least five (5) business days written notice to the Bank if such prepayment involves a LIBOR Rate Advance or a Fixed Interest Rate Advance, elect to prepay all or part of the principal outstanding balance of the Loan, provided, however, that if such prepayment occurs during an Interest Period subject to a LIBOR Rate Advance or a Fixed Interest Rate Advance, any such prepayment shall be in an amount equal to the sum of (i) the amount of the prepayment; (ii) all accrued interest to the date of such prepayment; (iii) any late charges or charge then due and owing; and (iv) an amount sufficient to compensate the Bank for any costs, charges, penalties and other sums incurred or suffered by Bank because of any match funding of all or any part of the principal amount of the loan. The amount sufficient shall be determined in accordance with the prepayment formula as follows: Prepayment Premium = RD x Y x (AP - AD) x PVF where: (1) RD is the Rate Differential and means (a) the Bank's cost of funding for the original term of the obligation evidenced by the Note through the last scheduled payment of the principal sum of the Loan, expressed as a per annum rate of interest, as determined by the Bank minus (b) the rate at which the Bank re-employs or could re-employ the funds prepaid for the remaining term of the obligation evidenced by the Note through the last scheduled payment of the principal sum of the Loan, expressed as a per annum rate of interest, as determined by the Bank; (2) Y is the Years and means the number of years an fractions of years beginning on the date of the prepayment and ending on the last day prior to the next 9 14 adjustment date for a LIBOR Advance or the Maturity Date for a Fixed Rate Advance; (3) AP is the Amount Paid and means the actual amount of the principal sum of the loan paid on the date of the prepayment; (4) AD is the Amount Due and means the principal portion of the installment payment due and payable on the date of the prepayment in accordance with the payment schedule above, if any; and (5) PVF is the Present Value Factor and means the value of $1.00 for Y number of years discounted at the per annum rate of interest at which the Bank re-employs or could re-employ the funds prepaid for the remaining term of the obligation evidenced by the Term Note through the last scheduled payment of the principal sum of the Loan, expressed as a per annum rate of interest, as determined by the Bank. Provided, further, that if RD is a negative number, no prepayment premium shall be incurred. Prepayment premiums shall be calculated against the principal portion of the Loan that is (i) subject to a LIBOR Interest Rate or a Fixed Interest Rate; and (ii) is actually prepaid by the Company. 3.4 Fees: Expenses: Costs. The Company agrees to pay to the Bank no later than the execution date of this Agreement (the "Closing Date"), a facility fee of Forty-Three Thousand Seven Hundred Fifty and No/100 Dollars ($43,750.00). The Company shall also pay all costs and expenses incidental to the Loan or the enforcement of the Bank's rights in connection therewith. Such costs shall include, but not be limited to, fees and out-of-pocket expenses of the Bank's counsel, audit fees, recording fees, inspection fees, revenue stamps, and note and mortgage taxes, if any. The Bank acknowledges payment by the Company of $5,000 as a deposit prior to the Closing Date, such deposit to be applied to the fees, costs and expenses to be paid by the Company at Closing pursuant to this Section 3.4. 3.5 Payments. All payments by the Company to the Bank hereunder shall be made in lawful currency of the United States of America and in immediately available funds before 2:00 p.m. Ohio time on the date when such payment is due at the office of the Bank at 917 Euclid Avenue, Cleveland, Ohio 44115, Attention: Corporate Banking, or at such other location as the Bank shall designate to the Company from time to time in writing. Any payment received and accepted by the Bank after such time shall be considered for all purposes (including the calculation of interest, to the extent permitted by law) as having been made on the Bank's next following Business Day. If the date for any payment hereunder falls on a day that is not a Business Day, then for all purposes of this Agreement the same shall be deemed to have fallen on the next following Business Day, and such extension of time shall in such case be included in the computation of payments of interest. 3.6 Use of Proceeds. The net proceeds of the Loan will be used for the purpose of financing YoSystems, Inc.'s purchase of one hundred percent (100%) of the issued and outstanding common and preferred stock of SMS Geotrac, Inc. 10 15 3.7 Maturity. The Loan shall be available until the Maturity Date, unless extended in the sole and absolute discretion of the Bank. In addition, the Loan, at the option of the Bank, shall become immediately due and payable without notice or demand upon the occurrence of any Event of Default under this Agreement. 3.8 Additional Costs. In the event that any applicable law, treaty, rule or regulation, whether domestic or foreign, now or hereafter in effect, or any interpretation or administration thereof by any governmental authority charged with the interpretation or administration thereof, or compliance by the Bank with any request or directive of any such authority, whether or not having the force of law, shall (a) affect the basis of taxation of payments to the Bank of any amounts payable by the Company for LIBOR Rate Advances under this Agreement (other than taxes imposed on the overall net income of the Bank by jurisdiction or by any political subdivision or taxing authority of any such jurisdiction, in which the Bank has its principal office), (b) impose, modify, or deem applicable any reserve, special deposit, or similar requirement against assets of, deposits with or for the account of, or credit extended by the Bank, or (c) impose any other condition, requirement, or charge with respect to this Agreement or the Loan, including without limitation any capital adequacy requirement, any requirement which affects the manner in which the Bank allocates capital resources to its commitments, or any similar requirement, and the result of any of the foregoing is to increase the cost to the Bank of making or maintaining the Loan or any advance under it, to reduce the amount of any sum receivable by the Bank thereon, or to reduce the rate of return on the Bank's capital, then the Company shall pay to the Bank from time to time, upon request of the Bank, an additional amount sufficient to compensate the Bank for such increased cost, reduced sum receivable, or reduced rate of return to the extent the Bank is not compensated therefor in the computation of the interest rates applicable to the Loan. A detailed statement as to the amount of such increased cost, reduced sum receivable, or reduced rate of return, prepared in good faith and submitted by the Bank to the Company, shall be conclusive and binding for all purposes relative to the Bank, absent manifest error in computation. The Bank shall promptly notify the Company of any event occurring after the date of this Agreement which entitles the Bank to additional compensation pursuant to this Section 3.8. 4. SECURITY AGREEMENT. 4.1 Grant of Security Interest. The Company hereby grants, pledges, and assigns to the Bank a security interest in the Collateral, whether the Company's interest therein is as owner, co-owner, lessee, consignee, secured party, or otherwise, be now owned or existing or hereafter arising or acquired, and wherever located, together with all substitutions, replacements, additions, and accessions therefor or thereto, all documents, negotiable documents, documents of title, warehouse receipts, storage receipts, dock warrants, express bills, freight bills, airbills, bills of lading, and other documents relating thereto, all products thereof and all cash and noncash proceeds thereof including, but not limited to, notes, drafts, checks, instruments, instruments, insurance proceeds, indemnity proceeds. The security interest hereby granted is to secure the prompt and full payment and complete performance of all Obligations of the Company to the Bank. It is the Company's express intention that the continuing security interest granted hereby shall extend to all present and future Obligations of the Company to the Bank, whether or not such Obligations are 11 16 reduced or extinquished and thereafter increased or reincurred, whether or not such Obligations are related to the indebtedness identified above by class, type, or kind, and whether or not such Obligations are specifically contemplated as of the date hereof. The absence of any reference to this Agreement in any documents, instruments, or agreements evidencing or relating to any Obligation secured hereby shall not limit or be construed to limit the scope or applicability of this Agreement. 4.2 Representations and Covenants Regarding the Collateral. The Company represents, warrants, and covenants as follows: (a) Except for (i) the security interest granted hereby, (ii) any liens set forth in Exhibit B (the "Permitted Liens"), the Company is, or as to Collateral arising or to be acquired after the date hereof, shall be, the sole and exclusive owner of the Collateral, and the Collateral is and shall remain free from any and all liens, security interests, encumbrances, claims, and interests, (other than pursuant to the Cross License Agreement) and no security agreement, financing statement, equivalent security or lien instrument or continuation statement covering any of the Collateral is on file or of record in any public office; (b) the Company shall not create, permit, or suffer to exist, and shall take such action as is necessary to remove, any claim to or interest in or lien or encumbrance upon the Collateral except the Permitted Liens, and shall defend the right, title, and interest of the Bank in and to the Collateral against all claims and demands of all persons and entities at any time claiming the same or any interest therein; (c) the Company's principal place of business and chief executive office is located at the address set forth in paragraph 9.1 of this Agreement; the Collateral and the records concerning the Collateral shall be kept at that address unless the Bank shall give its prior written consent otherwise; and the Company has no other places of business except as shown in Exhibit C attached hereto; (d) at lease thirty (30) days prior to the occurrence of any of the following events, the Company shall deliver to the loan office who is handling the Company's Obligations on behalf of the Bank written notice of such impending events: (i) a change in the Company's principal place of business or chief executive office; (ii) the opening or closing of any Premises; or (iii) a change in the Company's name, identity, or corporate structure; (e) each of the Accounts is based on an actual and bona fide sale and delivery of goods or service in the ordinary course of the Company's business, and the Company's Account Debtors have accepted the goods or services, and owe and are obligated to pay the full amounts reflected in the invoices according to the terms thereof; and (f) any and all taxes and fees relating to the Company's business shall be the Company's sole responsibility, the Company will pay the same when due, and none of said taxes and fees represent a lien on or claim against the Accounts. 4.3 Collateral Insurance. The Company shall have and maintain insurance at all times with respect to all Inventory and Equipment (a) insuring against risks of fire (including so-called extended coverage), explosion, theft, sprinkler leakage, and such other casualties as the Bank may reasonably designate, and (b) insuring against liability for personal injury and property damage, containing such terms, in such form, for such periods and written by such companies as may be reasonably satisfactory to the Bank, such insurance to be payable to the Bank and the Company as loss payee as their interests may appear. All policies of insurance, other than as described below with respect to errors and omissions insurance, shall provide for twenty (20) days' written minimum cancellation notice to the Bank and, at request of the Bank, shall be delivered to and held by it. During the continuance of an Event of Default, the Bank may act as attorney for the Company in obtaining, adjusting, settling, and cancelling such 12 17 insurance and indorsing any drafts. In the event of failure to provide insurance as herein provided, the Bank may, at its option, provide such insurance, and the Company shall pay to the Bank, upon demand, the cost thereof. Should the Company fail to pay said sum to the Bank upon demand, interest shall accrue thereon from the date of demand until paid in full at the highest rate set forth in any document or instrument evidencing any of the Obligations. The Company shall obtain satisfactory errors and omissions insurance coverage within ninety (90) days of the Closing Date, and shall upon request, deliver such policy to the Bank. Upon issuance, such policy shall also include twenty (20) days' minimum written cancellation notice to the Bank. 4.4 Books and Records: Account Verification. The Company shall at all times keep accurate and complete records of the Collateral, and at all times and from time to time, shall allow the Bank, by or through any of its officers, agents, attorneys, or accountants, to examine, inspect, and make extracts from the Company's books and records, and to arrange for verification of the Collateral directly with Account Debtors or by other methods and to examine and inspect the Collateral wherever located. In addition, upon request of the Bank, the Company shall provide the Bank with copies of agreements with, purchase orders from, and invoices to, the Company's customers, and copies of all shipping documents, delivery receipts, and such other documentation and information relating to the Collateral as the Bank may require. 4.5 Preservation and Disposition of Collateral. (a) Other than as specified in the sentence immediately following this sentence, prior to the placement of any Collateral in or upon any real property which the Company has leased or mortgaged, the Company shall have obtained a waiver from the lessor and/or the mortgagee, as the case may be, with respect to the rights (whether present or future) of the lessor or mortgagee with respect to that Collateral. The Bank agrees that the Company shall use its best efforts to obtain a waiver from Southwest Business Center, Ltd., as lessor, with respect to the Premises located at 156 S. Norwalk Road, Norwalk, Ohio, within twenty (20) days of the Closing Date. The Company shall advise the Bank promptly, in writing and in reasonable detail, (i) of any material encumbrance or claim asserted against any of the Collateral; (ii) of any material change in the composition of the Collateral; and (iii) of the occurrence of any other event that would have a material adverse effect upon the aggregate value of the Collateral or upon the security interest of the Bank; (b) the Company shall not sell or otherwise dispose of the Collateral, except that the Company may sell or otherwise dispose of Inventory in the ordinary course of its business, other non-Inventory assets reasonably determined by the Company not to be useful to the Company's business because of obsolescence, and pursuant to the Cross License Agreement; (c) the Company shall keep the Collateral in good condition and shall not misuse, abuse, secrete, waste, or destroy any of the same; (d) the Company shall not use the Collateral in violation of any statute, ordinance, regulation, rule, decree, or order; (e) the Company shall pay promptly when due all taxes, assessments, charges, or levies upon the Collateral or in respect to the income or profits therefrom (except those taxes contested by the Company in good faith in appropriate proceedings); (f) the Company will not accept any drafts or trade acceptances against the Collateral; and (g) at its option, the Bank may discharge taxes, liens, security interests, or other encumbrances at any time levied or placed on the Collateral and may pay for the maintenance and preservation of the Collateral. The Company agrees to reimburse the Bank upon demand for any payment made or any expense incurred (including reasonable 13 18 attorneys' fees) by the bank pursuant to the foregoing authorization. Should the Company fail to pay said sum to the Bank upon demand, interest shall accrue thereon, from the date of demand until paid in full, at the highest rate set forth in any document or instrument evidencing any of the Obligations. 4.6 Extensions and Compromises. With respect to any Collateral, the Company assents to all extensions or postponements of the time of payment thereof or any other indulgence in connection therewith, to each substitution, exchange, or release of Collateral, to the addition or release of any party primarily or secondarily liable, to the acceptance of partial payments thereon and to the settlement, compromise, or adjustment thereof, all in such manner and at such time or times as the Bank may deem advisable. The Bank shall have no duty as to the collection or protection of Collateral or any income therefrom, nor as to the preservation of rights against prior parties, nor as to the preservation of any right pertaining thereto, beyond the safe custody of Collateral in the possession of the Bank. 4.7 Financing Statements. At the request of the Bank, the Company shall join with the Bank in executing, delivering, and filing one or more financing statements in a form satisfactory to the Bank and shall pay the cost of filing the same in all public offices wherever filing is deemed by the Bank to be necessary or desirable. A carbon, photographic, or other reproduction of this Agreement or of a financing statement shall be sufficient as a financing statement. 4.8 Bank's Appointment as Attorney-in-fact. Effective upon and during the continuance of an Event of Default, the Company hereby irrevocably constitutes and appoints the Bank and any officer or agent thereof, with full power of substitution, as the Company's true and lawful attorney-in-fact with full irrevocable power and authority in its place and stead and in its name or in the Bank's own name, from time to time in the Bank's discretion, for the purpose of carrying out the terms of this Agreement and, without limiting the generality of the foregoing, hereby grants to the Bank the power and right, on behalf of the Company, without notice to or assent: (a) to execute, file, and record all such financing statements, certificates of title, and other certificates of registration and operation, and similar documents and instruments as the Bank may deem necessary or desirable to protect, perfect, and validate the Bank's security interest in the Collateral; (b) to receive, collect, take, indorse, sign, compromise, assign, and deliver in the Company's or the Bank's name, any and all checks, notes, drafts, or other documents or instruments relating to the Collateral; and (c) upon the occurrence of an Event of Default, (i) to notify postal authorities to change the address for delivery of the Company's mail to an address designated by the Bank, (ii) to open such mail delivered to the designated address, (iii) to sign and indorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, drafts against debtors, assignments, verifications, and notices in connection with accounts and other documents relating to the Collateral; (iv) to commence and prosecute any suits, actions, or proceedings at law or in equity in any court of competent jurisdiction to collect the Collateral or any part thereof and to enforce any other right in respect of any Collateral; (v) to defend any suit, action, or proceeding brought with respect to any Collateral; (vi) to negotiate, settle, compromise, or adjust any account, suit, action, or proceeding described above and, in connection therewith, to give such discharges or releases as the Bank 14 19 may deem appropriate; and (vii) generally, to sell, transfer, pledge, make any agreement with respect to or otherwise deal with any of the Collateral as fully and completely as though the Bank were the absolute owner thereof for all purposes, and to do, at the Bank's option and the Company's expense, at any time or from time to time, all acts and things which the Bank deems necessary to protect, preserve, or realize upon the Collateral and the Bank's security interest therein, in order to effect the intent of this Agreement. The Company hereby ratifies all that said attorneys shall lawfully do or cause to be done by virtue hereof. This power of attorney is a power coupled with an interest and shall be irrevocable. The powers conferred upon the Bank hereunder are solely to protect its interests in the Collateral and shall not impose any duty upon the Bank to exercise any such powers. The Bank shall be accountable only for amounts that the Bank actually receives as a result of the exercise of such powers and neither the Bank nor any of its officers, directors, employees, or agents shall be responsible to the Company for any act or failure to act, except for the Bank's own gross negligence or willful misconduct. 4.9 Remedies on Default. Upon the occurrence and continuance of an Event of Default, the Bank shall have the rights and remedies of a secured party under this Agreement, under any other instrument or agreement securing, evidencing, or relating to the Obligations, and under the law of the State of Ohio or any other applicable state law. Without limiting the generality of the foregoing, upon the occurrence and continuance of an Event of Default, the Bank shall have the right to take possession of the Collateral and all books and records relating to the Collateral and for that purpose the Bank may enter upon any premises on which the Collateral or books and records relating to the Collateral or any part thereof may be situated and remove the same therefrom. the Company expressly agrees that the Bank, upon the occurrence and continuance of an Event of Default, without demand of performance or other demand, advertisement, or notice of any kind (except the notices specified below of time and place of public sale or disposition or time after which a private sale or disposition is to occur) to or upon the Company or any other person or entity (all and each of which demands, advertisements, and/or notices are hereby expressly waived), may forthwith collect, receive, appropriate, and realize upon the Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give option or options to purchase or sell, or otherwise dispose of and deliver the Collateral (or contract to do so), or any part thereof, in one or more parcels at public or private sale or sales, at any of the Bank's offices or elsewhere at such prices as the Bank may deem best, for cash or on credit or for future delivery without assumption of any credit risk. The Bank shall have the right upon any such public sales or sales, and, to the extent permitted by law, upon any such private sale or sales, to purchase the whole or any part of the Collateral so sold, free of any right or equity of redemption. The Company further agrees, upon the occurrence and continuance of an Event of Default and at the Bank's request, to assemble the Collateral and to make it available to the Bank at such places as the Bank may reasonably select. The Company further agrees upon the occurrence and continuance of an Event of Default to allow the Bank to use or occupy the Company's premises, subject to the terms and conditions of those certain Landlord Estoppel Certificate, Waiver and Consent Agreements executed by the lessors of the Company's business locations in favor of the Bank of even date herewith, for the purpose of effecting the Bank's remedies in respect of the Collateral. the Bank shall apply the net proceeds of any such collection, recovery, receipt, appropriation, realization, or sale, after deducting all reasonable costs and expenses of every kind incurred 15 20 in connection therewith or incidental to the care or safekeeping of any or all of the Collateral or in any way relating to the rights of the Bank hereunder, including reasonable attorneys' fees and legal expenses, to the payment in whole or in part of the Obligations, in such order as the Bank may elect, and only after so paying over such net proceeds and after the payment by the Bank of any other amount required by any provision of law, need the Bank account for the surplus, if any. To the extent permitted by applicable law, the Company waives all claims, damages, and demands against the Bank arising out of the repossession, retention, sale, or disposition of the Collateral. The Company agrees that the Bank need not give more than seven days' notice (which notification shall be deemed given when mailed, postage prepaid, addressed to the Company at its address set forth in this Agreement, or when telecopied or telegraphed to that address or when telephoned or otherwise communicated orally to the Company or any of its agents at that address) of the time and place of any public sale or of the time after which a private sale may take place and that such notice is reasonable notification of such matters. The Company shall remain liable for any deficiency if the proceeds of any sale or disposition of the Collateral are insufficient to pay all amounts to which the Bank is entitled. The Company shall also be liable for the costs of collecting any of the Obligations or otherwise enforcing the terms thereof or of this Agreement, including reasonable attorneys' fees. 5. WARRANTIES AND REPRESENTATIONS. Each Company warrants and represents to the Bank as follows: 5.1 Corporate Organization and Authority. (a) YoSystems is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio; (b) Geotrac is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware; (c) each Company has all requisite corporate power and authority and all necessary licenses and permits to own and operate their properties and to carry on their business as now conducted and as presently proposed to be conducted; (d) other than the State of Georgia in connection with the Georgia Residential Office, neither Company is doing business or conducting any activity in any jurisdiction in which it has not duly qualified and become authorized to do business; and (e) other than Geotrac being a subsidiary of YoSystems, neither Company has subsidiaries and neither Company will create or acquire any subsidiaries without the prior written consent of the Bank. 5.2 Borrowing is Legal and Authorized. (a) The Board of Directors of each Company has duly authorized the execution and delivery of this Agreement and of the notes, and documents contemplated herein; this Agreement, the notes and other documents executed in connection with this Agreement will constitute valid and binding obligations of each Company enforceable in accordance with their respective terms; (b) the execution of this Agreement and related notes and documents and the compliance by each Company with all the provisions of this Agreement (i) are within the corporate powers of each Company, and (ii) are legal and will not conflict with, result in any breach in any of the provisions of, constitute a default under, or result in the creation of any lien or encumbrance upon any property of either Company under the provisions of, any agreement, charter instrument, bylaw, or other instrument to which either Company is a party or by which either Company may be bound; (c) there are no limitations in any indenture, contract, agreement, mortgage, deed of trust, or other agreement or instrument to which either Company is now a party or by which either Company may be 16 21 bound with respect to the payment of principal or interest on any indebtedness, or either Company's ability to incur indebtedness including the notes to be executed in connection with this Agreement. 5.3 Taxes. All tax returns required to be filed by each Company in any jurisdiction have in fact been filed, and all taxes, assessments, fees, and other governmental charges upon either Company, or upon any of either Company's properties, which are due and payable have been paid. Neither Company knows of any proposed additional tax assessment against it. The provisions for taxes on the books of each Company for its current fiscal period are adequate. 5.4 Compliance with Law. Each Company (a) is not in violation of any laws, ordinances, governmental rules or regulations to which it is subject, including without limitation any laws, rulings or regulations relating to ERISA or Section 4975 of the Code; (b) has not failed to obtain any licenses, permits, franchises, or other governmental or environmental authorizations necessary to the ownership of its properties or to the conduct of its business, which violation or failure might materially and adversely affect the business, prospects, profits, properties, or condition (financial or otherwise) of either Company; and (c) has not acquired, incurred or assumed directly or indirectly, any material contingent liability in connection with the release of any toxic or hazardous waste or substance into the environment. 5.5 Financial Statements: Full Disclosure. The historical financial statements for the fiscal year ending June 30, 1996, and the historical financial statements for any periods between that date and the date of this Agreement, which have been supplied by each Company to the Bank have been prepared in accordance with generally accepted accounting principles consistently applied and fairly represent each Company's financial condition as of such date. No material adverse change in either Company's financial condition has occurred since that date. The historical financial statements referred to in this paragraph do not, nor does this Agreement or any written statement furnished by either Company to the Bank in connection with obtaining the Loan, contain any untrue statement of a material fact or omit a material fact necessary to make the statements contained therein or herein not misleading. Each Company has disclosed to the Bank in writing all facts which materially affect the properties, business, prospects, profits, or condition (financial or otherwise) of each Company or the ability of each Company to perform this Agreement. 5.6 No Insolvency. On the date of each Company's entering into the Loan and after giving effect to all indebtedness of each Company (including the Loan), (a) each Company will be able to pay its obligations as they become due and payable; (b) the present fair saleable value of each Company's assets exceeds the amount that will be required to pay its probable liability on its obligations as the same become absolute and matured; (c) the sum of each Company's property at a fair valuation exceeds each Company's indebtedness; and (d) each Company will have sufficient capital to engage in its business. Each Company's grant of collateral for the Loan constitutes fair consideration and reasonably equivalent value because of the receipt of the proceeds of the Loan. 5.7 Government Consent. Neither the nature of each Company or of its business or properties, nor any relationship between either Company and any other entity or person, nor any circumstances in connection with the execution of this Agreement, is such as to require a 17 22 consent, approval or authorization of, or filing, registration, or qualification with, any governmental authority on the part of either Company as a condition to the execution and delivery of this Agreement and the notes and documents contemplated herein. 5.8 Title to Properties. Each Company has good and marketable title to all the property in which it has a property interest, free from any liens and encumbrances, except for the Permitted Liens and except as provided in the Cross License Agreement. Neither Company has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property whether now owned or hereafter acquired to be subject to a lien or encumbrance except as provided in this paragraph. 5.9 No Defaults. No event has occurred and no condition exists which would constitute an Event of Default pursuant to this Agreement. Neither Company is in violation in any material respect of any term of any agreement, charter instrument, bylaw, or other instrument to which it is a party or by which it may be bound. 5.10 Environmental Protection. Each Company (a) has no knowledge of the permanent placement, burial, or disposal of any Hazardous Substances on any of the Premises, of any spills, releases, discharges, leaks, or disposal of Hazardous Substances that have occurred or are presently occurring, under, or onto the Premises, or of any spills, releases, discharges, leaks or disposal of Hazardous Substances that have occurred or are occurring off the Premises as a result of the Company's improvement, operation, or use of the Premises which would result in noncompliance with any of the Environmental Laws; (b) is and has been in compliance with all applicable Environmental Laws; (c) knows of no pending or threatened environmental civil, criminal, or administrative proceedings against either Company relating to Hazardous Substances; (d) knows of no facts or circumstances that would give rise to any future civil, criminal, or administrative proceeding against either Company relating to Hazardous Substances; and (e) will not permit any of its employees, agents, contractors, subcontractors, or any other person occupying or present on its business premises to generate, manufacture, store, dispose, or release on, about, or under the Premises any Hazardous Substances which would result in the Premises not complying with the Environmental Laws. 5.11 Pending Litigation. Except as set forth on Exhibit D attached hereto and incorporated herein by reference, there are no proceedings pending, or to the knowledge of either Company threatened, against or affecting the properties, business prospects, profits or condition (financial or otherwise) of either Company or the ability of either Company to perform under this Agreement. 5.12 Warranties and Representations. On the date of each advance pursuant to the Loan, the warranties and representations set forth in Section 5 hereof shall be true and correct on and as of such date with the same effect as though such warranties and representations had been made on and as of such date, except to the extent that such warranties and representations expressly relate to an earlier date. 6. COMPANY BUSINESS COVENANTS. Each Company covenants that on and after the date of this Agreement until terminated pursuant to the terms of this Agreement, or so long as any of the indebtedness provided for herein remains unpaid: 18 23 6.1 Payment of Taxes and Claims. Each Company will pay before they become delinquent (except as contested in good faith by the Company in appropriate proceedings) (a) all taxes, assessments, and governmental charges or levies imposed upon it or its property; and (b) all claims or demands of materialmen, mechanics, carriers, warehousemen, landlords, bailees, and other like persons which, if unpaid, might result in the creation of a lien or encumbrance upon its property. 6.2 Maintenance or Properties and Corporate Existence. Each Company shall (a) maintain its property in good condition and make all renewals, replacements, additions, betterments, and improvements thereto which are deemed necessary by the Company; (b) maintain, with financially sound and reputable insurers, insurance with respect to its properties and business against such casualties and contingencies, or such types (including but not limited to fire and casualty, public liability, products liability, larceny, embezzlement, or other criminal misappropriation insurance) in such amounts as is customary in the case of corporations of established reputations engaged in the same or a similar business and similarly situated; (c) keep true books of records and accounts in which full and correct entries will be made of all its business transactions, and reflect in its financial statements adequate accruals and appropriations to reserves; (d) subject to the terms of the Merger (as defined in Section 6.3), do or cause to be done all things necessary (i) to preserve and keep in full force and effect its existence, rights and franchises, and (ii) to maintain its status as a corporation duly organized and existing and in good standing under the laws of the state of its incorporation; and (e) not be in violation of any laws, ordinances, or governmental rules and regulations or fail to obtain any licenses, permits, franchises, or other governmental authorizations necessary to the ownership of its properties or to the conduct of its business, which violation or failure to obtain might materially and adversely affect the business, prospects, profits, properties, or condition (financial or otherwise) of either company. 6.3 Sale of Assets: Merger; Subsidiaries: Tradenames. Neither Company will, except in the ordinary course of business, sell, lease, transfer, or otherwise dispose of, any of its assets. Neither Company will without the prior written consent of the Bank consolidate with or merger into any other entity, or permit any other entity to consolidate or merge into it. Neither Company shall acquire all or substantially all of the assets or business of any other company, person, or entity without the prior written consent of the Bank. Other than Geotrac being a subsidiary of YoSystems, each Company has no subsidiaries and conducts business only under the names of each Company identified in Section 1. The Company will not create or acquire any subsidiaries or conduct business under any other tradenames without the prior written consent of the Bank. Notwithstanding anything to the contrary set forth in this Section 6.3, the Bank consents to the merger of YoSystems and Geotrac (the "Merger") following the Closing Date provided the Company delivers to the Bank satisfactory evidence of the following: (a) Certificate of Merger filed with the Secretary of Ohio and the Secretary of State of Delaware; (b) identification of the name and domicile State of the surviving entity; and (c) any and all documents relating to such corporate merger and any supporting information reasonably requested by the Bank in connection therewith. In addition, each Company will execute such other documents and instruments as reasonably requested by the Bank in connection with the foregoing merger in order to protect the Bank's interests as a secured lender pursuant to this Agreement. 19 24 6.4 Negative Pledge. Neither Company will cause or permit or agree or consent to cause or permit in the future (upon the happening of a contingency or otherwise), any of its property, whether now owned or hereafter acquired, to become subject to a lien or encumbrance, except: (i) liens in connection with deposits required by workers' compensation, unemployment insurance, social security, and other like laws; (ii) taxes, assessments, reservations, exceptions, encroachments, easements, rights of way, covenants, conditions, restrictions, leases, and other similar title exceptions or encumbrances affecting real property, provided they do not in the aggregate materially detract from the value of said property or materially interfere with its use in the ordinary conduct of either Company's business; (iii) inchoate liens arising under ERISA to secure the contingent liability of either Company's business; (iii) inchoate liens arising under ERISA to secure the contingent liability of either Company; and (iv) the Permitted Liens. Neither Company shall grant or agree in favor of any other creditor or third-party to provide it with a "negative pledge" or provision similar to this Section 6.4. 6.5 Other Borrowings and Contingent Liabilities. Except for the Loan, neither Company will (a) create or incur any indebtedness for borrowed money or advances, or (b) guarantee, indorse, or otherwise become surety for or upon the obligations or others, except by indorsement of negotiable instruments for deposit or collection in the ordinary course of business. The limitations set forth in this Section 6.5 shall not included indebtedness for borrowed money or advances incurred through the execution of capitalized lease agreements ("Capitalized Leases"). Capitalized Leases entered into by the Company shall be subject to the limitations set forth in Section 6.16 of this Agreement. 6.6 Sale of Accounts: No Consignment. Neither Company shall sell, assign, or encumber, except to the Bank, any of its Accounts or notes receivable, with or without recourse. Neither Company shall permit any of its Inventory to be sold or transferred on consignment or acquire or possess any of its Inventory on consignment. 6.7 Ownership and Management. Neither Company shall permit any change in its ownership or any change among its principal executive officers or its principal members of management, other than in connection with the granting of options for the common stock of either Company, not to exceed ten percent (10%) of the issued and outstanding shares of either Company, to certain key employees pursuant to a stock option plan or agreement which shall include related rights to repurchase such shares. The Company, and each of them, shall upon request provide the Bank with copies of all documents and agreements relating to the granting of such stock options. 6.8 Acquisition of Capital Stock. Neither Company shall redeem or acquire any of its own capital stock except through the use of the net proceeds from the simultaneous sale of an equivalent amount of its capital stock, except in connection with the stock options referred to in Section 6.7 above. 6.9 Trade Accounts Payable. The Company shall not permit more than fifteen percent (15%) of its trade accounts payable to be past due for more than thirty (30) days. 6.10 Operating Lease Rentals. Exclusive of real property leases of each Company's business locations, neither Company will, without prior written approval of the Bank, enter into 20 25 operating leases providing for in the aggregate consolidated annual rentals in excess of $50,000. 6.11 Cash Dividends and Other Distributions. Neither Company shall (i) declare or pay any cash dividends or distributions which total in excess of a consolidated aggregate fifty percent (50%) of Excess Cash Flow in any one fiscal year; (ii) or make any other distributions of any kind to its shareholders, other than prior to the merger of Geotrac and YoSystems, dividends made by Geotrac to YoSystems in an amount not to exceed regular payments of principal and interest due under this Agreement. Dividends paid to shareholders other than YoSystems pursuant to Section 6.11(ii)(b) shall be subject to the limitations of Section 6.11(i). Provided, further, that no dividends shall be paid if an Event of Default has occurred and is continuing under this Agreement. Notwithstanding anything to the contrary set forth in this Section 6.11, the Bank consents to a one time cash distribution to Daniel J. White to occur on the Closing Date provided (i) such distribution does not exceed $1,700,000; and (ii) the payment of such distribution does not result in the Company, on a consolidated basis, having less than $1,000,000 in cash on its consolidated balance sheet immediately following the Closing Date. 6.12 Investments. Neither Company shall purchase for investment securities of any kind except for bonds or other obligations of the United States, certificates of deposit issued by commercial banks, commercial paper rated at least A-1 or P-1 and having a maturity of no more than one (1) year, and automated funds investment accounts (AIF Accounts). 6.13 Net Worth. The Company shall maintain a consolidated Net Worth as follows: (a) from the date hereof through and including June 29, 1998, a consolidated Net Worth of not less than $6,250,000; (b) from June 30, 1998 and thereafter, a consolidated Net Worth of not less than $6,250,000 plus fifty percent (50%) of consolidated net income for each successive fiscal year commencing with fiscal year 1998 (twelve months ending June 30, 1998). 6.14 Leverage Ratio. The Company shall maintain a Leverage Ratio as follows: (a) from September 30, 1997 through and including June 29, 1998, a Leverage Ratio of not greater than 3.0 to 1.0; (b) from June 30, 1998 through and including June 29, 1999, a Leverage Ratio of not greater than 2.5 to 1.0; and (c) from June 30, 1999 and thereafter, a Leverage Ratio of not greater than 2.0 to 1.0. 21 26 6.15 Cash Flow Coverage Ratio. The Company shall maintain a Cash Flow Coverage Ratio as follows: (a) from September 30, 1997 through and including June 29, 1998, a Cash Flow Coverage Ratio of not less than 1.10 to 1.0; (b) from June 30, 1998 through and including June 29, 1999, a Cash Flow Coverage Ratio of not less than 1.15 to 1.0; and (c) from June 30, 1999 and thereafter, a Cash Flow Coverage Ratio not less than 1.20 to 1.0. 6.16 Capital Expenditures. The Company will not make any expenditure for fixed or capital assets, including by way of the incurrence of obligations under Capital Leases, expenditures for maintenance and repairs which should be capitalized in accordance with generally accepted accounting principles or otherwise in excess of (i) $750,000.00 for fiscal years ending 1998 and 1999; (ii) $875,000.00 for fiscal years ending 2000 and 2001; and (iii) $1,000,000.00 for fiscal years ending 2002 and thereafter. 6.17 Loans and Advances. The Company will not make any loans or advances to any person, corporation or entity if such loans will exceed an aggregate total outstanding at any one time of $25,000.00. 6.18 Environmental Compliance and Indemnification. The Company hereby indemnifies the Bank and holds the Bank harmless from and against any loss, damage, cost, expense or liability (including strict liability) directly or indirectly arising from or attributable to the generation, storage, release, threatened release, discharge, disposal, or presence (whether prior to or during the term of the Loan) of Hazardous Substances on, under, or about the Premises (whether by the Company or any employees, agents, contractor, or subcontractors of the Company or any predecessor in title or any third persons occupying or present on the Premises), or the breach of any of the representations and warranties regarding the Premises, including, without limitation: (a) those damages or expenses arising under the Environmental Laws; (b) the costs of any repair, cleanup, or detoxification of the Premises, including the soil and ground water thereof, and the preparation and implementation of any closure, remedial, or other required plans; (c) damage to any natural resources; and (d) all reasonable costs and expenses incurred by the Bank in connection with clauses (a), (b) and (c) including, but not limited to reasonable attorneys' fees. The indemnification provided for herein shall not apply to any losses, liabilities, damages, injuries, expenses, or costs which: (i) arise from the gross negligence or willful misconduct of the Bank, or (ii) relate to Hazardous Substances placed or disposed of on the Premises after the Bank acquires title to the Premises through foreclosure or otherwise. 6.19 Evidence of Cash Equity in YoSystems, Inc. On or before the Closing Date, the Company, and each of them, shall provide the Bank satisfactory evidence that YoSystems has or shall contemporaneously with Closing receive a cash payment of not less than $6,750,000.00 in consideration of the sale of not more than forty-nine percent (49%) of its common stock to 22 27 Bankers Hazard Determination Services, Inc. ("Bankers"), a subsidiary of Bankers Insurance Group, Inc. Such sale of the stock of YoSystems shall be consummated pursuant to the terms and conditions of that certain Stock Purchase Agreement of even date herewith among YoSystems, Inc., Daniel J. and Sandra White, and Bankers. 7. FINANCIAL INFORMATION AND REPORTING. The Company shall deliver the following on a consolidating and consolidated basis to the Bank: (a) within thirty (30) days after the end of each fiscal quarter, financial statements, including a balance sheet and statements of income and surplus, and statements of cash flows and reconciliation of capital accounts certified by the president or chief financial officer of the Company as fairly representing the Company's financial condition as of as of the end of such period; (b) within thirty (30) days after the end of each fiscal quarter, statements signed by the president or chief financial officer of the Company calculating each of the financial covenants as set forth in Sections 6.9 through 6.17 of the Agreement (the "Financial Covenants") as of the end of such fiscal quarter and otherwise certifying the compliance of the Company with the terms of this Agreement, such statements to be provided every fiscal quarter, including fiscal year end; (c) within ninety (90) days of the end of each fiscal year consolidating and consolidated audited financial statements prepared in accordance with generally accepted accounting principles consistently applied and certified by independent public accountants satisfactory to the Bank, containing a balance sheet, statements of income and surplus, statements of cash flows and reconciliation of capital accounts, along with any management letters written by such accountants; (d) within ninety (90) days of the end of each fiscal year, a statement signed by the Company's independent public accountants certifying that the Company was in compliance with the Financial Covenants as of the end of such fiscal year; (e) immediately upon becoming aware of the existence on any set of facts or circumstances which, by themselves, upon the giving of notice, the lapse of time, or any one or more of the foregoing, would constitute a breach of any of the terms or conditions of this Agreement or an Event of Default under this Agreement, a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto; and (f) at the request of the Bank, such other information as the Bank may from time to time reasonably require. 8. DEFAULT. 8.1 Events of Default. An Event of Default shall exist if any of the following occurs and is continuing: (a) the Company, and either of them, fails to make any payment of principal or interest on any note executed in connection with this Agreement on or before the date such payment is due and such failure remains uncured for more than five (5) days; (b) the Company, and either of them, fails to perform or observe any covenant contained in Sections 3, 4, 6, or 7 of this Agreement, except those Sections specifically identified in subparagraph 8.1(c) which shall be subject to a cure period; (c) the Company, and either of them, fails to comply with any covenant contained in Sections 4.2, 4.3, 4.5(a), (c), (d) and (e), 6.1, 6.2 and 6.4 of this Agreement, or any other provision of this Agreement, and such failure continues for more than 30 days after such failure shall first become known to any officer of either Company; (d) any warranty, representation, or other statement by or on behalf of either Company contained in this Agreement or in any instrument furnished in compliance with or in reference to this Agreement is false or misleading in any material respect, or either Company fails to perform or observe any covenant contained in any mortgage, security agreement, or other agreement 23 28 in favor of the Bank; (e) either Company becomes insolvent or makes an assignment for the benefit of creditors, or consents to the appointment of a trustee, receiver, or liquidator; (f) bankruptcy, reorganization, arrangement, insolvency, or liquidation proceedings are instituted against either Company and such proceedings are not dismissed within sixty (60) days of the commencement thereof; (g) bankruptcy, reorganization, arrangement, insolvency, or liquidation proceedings are instituted by either Company; (h) a final judgment or judgements for the payment of money aggregating in excess of $100,000 is or are outstanding against the Company, or either of them, and any such judgement or judgements have not been promptly discharged in full or stayed; (i) the occurrence of any event which allows the acceleration of the maturity of any indebtedness of either Company to the Bank, any of the Bank's affiliates, or any other person, corporation, or entity under any indenture, agreement, or undertaking; or (j) the default by or death of any guarantor, insurer, or other surety for either Company with respect to any obligation or liability to the Bank; (k) any uninsured loss, damages, theft, destruction, levy, seizure, or attachment to, of, or upon any Collateral, including any attempt to accomplish the foregoing, which exceeds $100,000; or (l) default shall have occurred and be continuing under any agreement or other instrument under which any indebtedness of either Company may be issued or under any mortgage or other document, which default permits the acceleration of the indebtedness of either Company outstanding thereunder. 8.2 Default Remedies. If an Event of Default exists, the Bank may immediately exercise any right, power, or remedy permitted to the Bank by law or any provision of this Agreement, and shall have, in particular, without limiting the generality of the foregoing, the right to declare the entire principal and all interest accrued on all notes then outstanding pursuant to this Agreement to be forthwith due and payable, without any presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived by the Company. No course of dealing on the part of the Bank to exercise any right shall operate as a waiver of such right or otherwise prejudice the Bank's rights, powers and remedies. When the notes outstanding pursuant to this Agreement become due and payable, whether by acceleration or otherwise, the Bank shall have the remedies of a secured party under the laws of the State of Ohio with respect to all property securing the Obligations evidenced hereunder, and the Bank may, at its option, demand, sue for, collect, or make any compromise or settlement it deems desirable with reference to the Collateral held as security herefor. The Bank shall not be bound to take any steps necessary to preserve any rights in the Collateral against prior parties which the Company hereby assumes to do. The provisions of this Agreement shall apply and be controlling as to all property which may from time to time be Collateral securing the Obligations. 9. MISCELLANEOUS. 9.1 Notices. (a) All Communications under this Agreement or under the notes executed pursuant hereto shall be in writing and shall be mailed by first class mail, postage prepaid, (1) 24 29 if to the Bank, at the following address, or at such other address as may have been furnished in writing to the Company by the Bank: The Huntington National Bank Corporate Banking Group 917 Euclid Avenue Cleveland, Ohio 44115 Attn: Mr. Timothy M. Ward with copy to: McDonald, Hopkins, Burke & Haber Co., L.P.A. 2100 Bank One Center 600 Superior Avenue Cleveland, Ohio 441142653 Attn: Anne T. Corrigan, Esq. (2) if to the Company, at the following address, or at such other address as may have been furnished in writing to the Bank by the Company: YoSystems, Inc./SMS Geotrac, Inc. 3900 Laylin Road Norwalk, Ohio 44057 Attn: Mr. Daniel J. White with copy to: Benesch, Friedlander, Coplan & Aronoff, L.L.P. 200 Public Square 2300 BP America Building Cleveland, Ohio 44114 Attn: Ira C. Kaplan, Esq. (b) any notice so addressed and mailed by registered or certified mail shall be deemed to be given when so mailed. 9.2 Reproduction of Documents. This Agreement and all documents relating hereto, including, without limitation, (a) consents, waivers, and modifications which may hereafter be executed, (b) documents received by the Bank at the closing or otherwise, and (c) financial statements, certificates, and other information previously or hereafter furnished to the Bank, may be reproduced by the Bank by any photographic, photostatic, microfilm, micro-card, miniature photographic, or other similar process and the Bank may destroy any original document so reproduced. The Company agrees and stipulates that any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by the Bank in the regular course of business) and that any enlargement, facsimile, or further reproduction of such reproduction shall likewise be admissible in evidence. 25 30 9.3 Survival: Successors and Assigns. All warranties, representations, and covenants made by each Company herein or on any certificate or other instrument delivered by it or on its behalf under this Agreement shall be considered to have been relied upon by the Bank and shall survive the closing of the Loan regardless of any investigation made by the Bank on its behalf. All statements in any such certificate or other instrument shall constitute warranties and representations by each Company. This Agreement shall inure to the benefit of and be binding upon the heirs, successors, and assigns of each of the parties. The Bank hereby agrees to allow Citizens Bank, Norwalk, Ohio to participate in the Loan in the principal amount of up to $1,000,000, provided, however, that such participation shall be made upon terms and conditions acceptable to the Bank in the exercise of its sole and absolute discretion. 9.4 Amendment and Waiver: Duplicate Originals. This Agreement may be amended, and the observance of any term of this Agreement may be waived, with (and only with) the written consent of the Company and the Bank; provided however that nothing herein shall change the Bank's sole discretion (as set forth elsewhere in this Agreement) to make advances, determinations, decisions or to take or refrain from taking other actions. No delay or failure or other course of conduct by the Bank in the exercise of any power or right shall operate as a waiver thereof; nor shall any single or partial exercise of the same preclude any other or further exercise thereof, or the exercise of any other power or right. Two or more duplicate originals of this Agreement may be signed by the parties, each of which shall be an original but all which together shall constitute one and the same instrument. 9.5 Enforceability and Governing Law. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction, as to such jurisdiction, shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. No delay or omission on the part of the Bank in exercising any right shall operate as a waiver of such right or any other right. All of the Bank's rights and remedies, whether evidenced hereby or by any other agreement or instrument, shall be cumulative and may be exercised singularly or concurrently. This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio. The Company agrees that any legal suit, action, or proceeding arising out of or relating to this Agreement may be instituted in a state or federal court of appropriate subject matter jurisdiction in the State of Ohio; waives any objection which it may have now or hereafter to the venue of any suit, action or proceeding; and irrevocably submits to the jurisdiction of any such court in any such suit, action, or proceeding. 9.6 Waiver of Right to Trial by Jury. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION (1) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (2) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT, OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, 26 31 AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY. 9.7 Advertising. The Company agrees that the Bank may advertise or otherwise disclose for marketing purposes the extent and nature of the credit extended or to be extended and other services provided to the Company by the Bank in connection with or relating in any way to the Loan. 9.8 Term of Agreement. The term of this Agreement shall commence with the date hereof and end on the date when, after written notice from either party to the other that no further loans are to be made hereunder, the Company pays in full the Loan and all other obligations of Company to Bank which are secured hereby, and the Bank has no further obligations of any type to the Company. THE PARTIES have caused this Agreement to be signed by their duly authorized representatives as of the date first written above. YOSYSTEMS, INC., an Ohio corporation By: /s/ Daniel J. White ---------------------------------------------- Daniel J. White, President SMS GEOTRAC, INC., a Delaware corporation By: /s/ Daniel J. White ------------------------------------------- Daniel J. White, President THE HUNTINGTON NATIONAL BANK, a national banking association By: /s/ Timothy M. Ward ------------------------------------------ Timothy M. Ward, Assistant Vice President 32 EXHIBIT A THE HUNTINGTON NATIONAL BANK TERM NOTE $8,750,000.00 Dated as of July 31, 1997 Cleveland, Ohio FOR VALUE RECEIVED, the undersigned, jointly and severally if more than one, promise to pay to the order of THE HUNTINGTON NATIONAL BANK (hereinafter called the "Bank", which term shall include any holder hereof), at such place as the Bank may designate or, in the absence of such designation, at any of the Bank's offices, the sum of Eight Million Seven Hundred Fifty Thousand and No/100 Dollars ($8,750,000.00) (hereinafter called the "Principal Sum"), together with interest as hereinafter provided. The undersigned promise to pay the Principal Sum and the interest thereon at the time(s) and in the manner(s) hereinafter provided in this note (this "Note"). This Note is executed and the advances contemplated hereunder are to be made pursuant to a Loan and Security Agreement by and between the undersigned and the Bank (hereinafter call the "Loan Agreement") dated as of July 31, 1997, and all the covenants, representations, agreements, terms and conditions contained therein, including but not limited to additional conditions of default, are incorporated herein as if fully rewritten. INTEREST Interest will accrue on the unpaid balance of the Principal Sum at the applicable interest rate set forth in the Loan Agreement. Interest shall be payable quarterly and at such other times as specified in the Loan Agreement. Upon the occurrence and during the continuance of an "Event of Default" pursuant to the Loan Agreement, interest will accrue on the unpaid balance of the Principal Sum and unpaid interest, if any, until paid, at a variable rate of interest per annum, which shall change in the manner set forth below, equal to five percentage points (5%) in excess of the Prime Commercial Rate. All interest shall be calculated on the basis of a 360 day year for the actual number of days the Principal Sum or any part thereof remains unpaid. As used herein, Prime Commercial Rate shall mean the rate established by the Bank from time to time based on its consideration of economic, money market, business and competitive factors, and it is not necessarily the Bank's most favored rate. Subject to any maximum or minimum interest rate limitation specified herein or by applicable law, any variable rate of interest on the obligation evidenced hereby shall change automatically without notice to the undersigned immediately with each change in the Prime Commercial Rate. 33 MANNER OF PAYMENT The Principal Sum shall be due and payable in twenty-eight (28) consecutive quarterly installments, beginning on September 30, 1997, and continuing on the last day of each calendar quarter thereafter, and at maturity whether by demand, acceleration, or otherwise. Each installment of the Principal Sum shall be in the amount of Three Hundred Twelve Thousand Five Hundred and No/100 Dollars ($312,500.00), plus a final installment of the remaining Principal Sum which shall be due and payable on June 30, 2004. The undersigned shall also pay annual Mandatory Prepayments pursuant to Section 2 of the Loan Agreement. Regular payments made by the undersigned with respect to the indebtedness evidenced hereby shall be applied first to accrued interest then due and then to the Principal Sum. Optional and Mandatory Prepayments made by the undersigned with respect to the indebtedness evidenced hereby shall be applied first to accrued interest then due and then to the Principal Sum in the inverse order of installments due hereunder without relieving the undersigned from continuing to make regular payments as set forth herein and in the Loan Agreement. PREPAYMENT Prepayment of all or any portion of the Principal Sum may be subject to a prepayment premium as set forth in the Loan Agreement. LATE CHARGE Any installment or other payment not made within 10 days of the date such payment or installment is due shall be subject to a late charge equal to the lesser of 5% of the amount of the installment or payment, or $250.00. SECURITY This Note is secured by the security interest in the Collateral (as defined in the Loan Agreement) granted by the undersigned pursuant to the terms and conditions of the Loan Agreement. The rights of the Bank under this Note shall be cumulative and in addition to any and all rights of the Bank under the Loan Agreement or otherwise. DEFAULT Upon the occurrence and continuance of an "Event of Default" under the Loan Agreement, the Bank may, at its option, without notice or demand, accelerate the maturity of the obligations evidenced hereby, which obligations shall become immediately due and payable. In the event the Bank shall institute any action for the enforcement or collection of the obligations evidenced hereby, the undersigned agree to pay all costs and expenses of such action, including reasonable attorneys' fees, to the extent permitted by law. 34 GENERAL PROVISIONS All of the parties hereto, including the undersigned, and any endorser, surety, or guarantor, hereby severally waive presentment, notice of dishonor, protest, notice of protest, and diligence in bringing suit against any party hereto, and consent that, without discharging any of them, the time of payment may be extended an unlimited number of times before or after maturity without notice. The Bank shall not be required to pursue any party hereto, including any guarantor, or to exercise any rights against any collateral herefor before exercising any other such rights. The obligations evidenced hereby may from time to time be evidenced by another Note or Notes given in substitution, renewal or extension hereof. Any security interest or mortgage which secures the obligations evidenced hereby shall remain in full force and effect notwithstanding any such substitution, renewal, or extension. The captions used herein are for reference only and shall not be deemed a part of this Note. If any of the terms or provisions of this Note shall be deemed unenforceable, the enforceability of the remaining terms and provisions shall not be affected. This Note shall be governed by and construed in accordance with the law of the State of Ohio. WAIVER OF RIGHT TO TRIAL BY JURY THE UNDERSIGNED ACKNOWLEDGE THAT, AS TO ANY AND ALL DISPUTES THAT MAY ARISE BETWEEN THE UNDERSIGNED AND THE BANK, THE COMMERCIAL NATURE OF THE TRANSACTION OUT OF WHICH THIS NOTE ARISES WOULD MAKE ANY SUCH DISPUTE UNSUITABLE FOR TRIAL BY JURY. ACCORDINGLY, THE UNDERSIGNED HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY AS TO ANY AND ALL DISPUTES THAT MAY ARISE RELATING TO THIS NOTE OR TO ANY OF THE OTHER INSTRUMENTS OR DOCUMENTS EXECUTED IN CONNECTION HEREWITH. WARRANT OF ATTORNEY Each of the undersigned authorize any attorney at law to appear in any Court of Record in the State of Ohio or in any other state or territory of the United States after the above indebtedness becomes due, whether by acceleration or otherwise, to waive the issuing and service of process, and to confess judgment against any one or more of the undersigned in favor of the Bank for the amount then appearing due together with costs of suit, and thereupon to waive all errors and all rights of appeal and stays of execution. No such judgment or judgments against less than all of the undersigned shall be a bar to a subsequent judgment or 35 judgments against any one or more of the undersigned against whom judgment has not been obtained hereon; this being a joint and several warrant of attorney to confess judgment. WARNING--BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT, OR ANY OTHER CAUSE. YOSYSTEMS, INC., an Ohio corporation By: ------------------------------- Daniel J. White, President SMS GEOTRAC, INC., a Delaware corporation By: ------------------------------- Daniel J. White, President 36 EXHIBIT B PERMITTED LIENS Permitted Liens shall mean: (i) Liens for taxes, assessments, or similar charges, incurred in the ordinary course of business and which are not yet due and payable (or which are being contested in good faith by appropriate and lawful proceedings diligently conducted); (ii) Pledges or deposits made in the ordinary course of business to secure payment of workmen's compensation, or to participate in any fund in connection with workmen's compensation, unemployment insurance, old-age pensions or other social security programs; (iii) Liens of mechanics, materialmen, warehousemen, carriers, or other like liens, securing obligations incurred in the ordinary course of business that are not yet due and payable (or which are being contested in good faith by appropriate and lawful proceedings diligently conducted or otherwise released by surety bond within 90 days of attachment) and liens of landlords securing obligations to pay lease payments that are not yet due and payable or in default (or which are being contested in good faith by appropriate and lawful proceedings diligently conducted); (iv) Good-faith pledges or deposits made in the ordinary course of business to secure performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, not in excess of the aggregate amount due thereunder, or to secure statutory obligations, or surety, appeal, indemnity, performance or other similar bonds required in the ordinary course of business; (v) Encumbrances consisting of zoning restrictions, easements or other restrictions on the use of real property, none of which materially impairs the use of such property; (vi) Liens on property leased by Borrower or other interest or title of the lessor under leases not otherwise prohibited by the Loan Agreement securing obligations of Borrower to the lessor under such leases; (vii) Purchase money security interests to the extent that (X) such purchase money security interests attach to inventory purchased in the ordinary course of business pursuant to customary payment terms; (viii) Liens resulting from the Cross License Agreement; and (ix) Liens relating to any sublease of real property leased by Borrower, which sublease does not materially impair Borrower's use of such property. 37 EXHIBIT C BUSINESS LOCATIONS 1. 3900 Laylin Road, Norwalk, Ohio 44857 2. 156 S. Norwalk Road, Norwalk, Ohio 44857 3. 5050 Welwyn Ct., Suwanee, Georgia 30024 (private residence of one salesman) 38 EXHIBIT D DISCLOSURE SCHEDULE RELATING TO REPRESENTATIONS AND WARRANTIES Geotrac has been named as a defendant in an action (Christopher C. Canedy, John F. Farrell, Jeanne Flynn Martin and Susan M. Fritts v. SMS Geotrac, Inc., SMS, Inc., DSV Partners, Welsh, Carson, Anderson & Stowe, Joe Reppert and Does 1 through 100, Superior Court of the State of California, County of Orange-Central District, Case No. 780061) brought by four individuals seeking compensation for certain "stay in place bonuses" allegedly promised to them by an affiliate of Strategic Holdings USA, Inc., a Delaware corporation ("Seller"). Seller has agreed to indemnify and hold Geotrac harmless from any liability arising in connection with this claim. EX-10.20 23 PLEDGE SECURITY AGREEMENT 1 EXHIBIT 10.20 PLEDGE AND SECURITY AGREEMENT THIS PLEDGE AND SECURITY AGREEMENT (this "Agreement") is made and entered into as of the 8 day of May, 1998, by INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. (the "Pledgor"), in favor of SOUTHTRUST BANK, NATIONAL ASSOCIATION ("Lender"). WHEREAS, there is that certain Credit Agreement ("Credit Agreement") dated July 29th, 1997 by and between Heritage Hotel Holding Company ("HHHC") as borrower and Lender relating to the term loan made by the Lender to HHHC in the amount of $6,750,000.00; and WHEREAS, there is that certain Pledge and Security Agreement dated July 29th, 1997 by and between HHHC as pledgor and Lender relating to a term loan made by the Lender to HHHC in the amount of $6,750,000.00; whereby HHHC as owner of 675,000 shares of preferred stock of Bankers Hazard Determination Services, Inc. ("BHDS") has pledged to Lender all of its preferred stock in BHDS as additional security for the Loan pursuant to the Credit Agreement; and WHEREAS, there is that certain Pledge and Security Agreement dated July 29th, 1997 by and between BHDS as pledgor and Lender relating to a term loan made by the Lender to HHHC in the amount of $6,750,000.00; whereby BHDS as owner of 490 shares of common capital stock of Geotrac, Inc. f/k/a Yosystems, Inc. ("Geotrac") has pledged to Lender all of its common capital stock in Geotrac to Lender as additional security for the Loan pursuant to the Credit Agreement. For convenience, the Credit Agreement, and the two Pledge and Security Agreements hereinbefore described together with all related documents that were executed and delivered to document the loan including but not limited to the Term Note (herein, "Note") shall be share collectively called the "Loan Documents"; and WHEREAS, Geotrac wishes to merge into BHDS, canceling the 490 shares of common stock in Geotrac issued and outstanding to BHDS. WHEREAS, Insurance Management Solutions Group, Inc. wishes to purchase from HHHC the 675,000 shares of Class "A" Preferred Stock in BHDS which has been pledged to Lender; and IMSG proposes to give HHHC a Note in the principal amount of $6,750,000.00, and providing that all unpaid principal and interest shall be due and payable on December 31, 1998. WHEREAS, IMSG proposes to exchange its newly acquired Class "A" Preferred Stock in BHDS for 675,000 shares of Class "B" Preferred Stock in BHDS; and WHEREAS, IMSG will pledge to Lender all of its Class "B" Preferred Stock in BHDS as additional security for the Loan pursuant to the Credit Agreement; and WHEREAS, IMS declared a dividend to Insurance Management Solutions Group, Inc. as the sole shareholder of this Corporation, such dividend to be to due and payable at the close of business on April 30, 1998, and which dividend shall be as follows: 2 500 Shares of the Common Capital Stock of Bankers Hazard Determination Services, Inc. NOW, THEREFORE, in consideration of the premises, and of the mutual covenants and agreements herein set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows: 1. Representations of Pledgor. Pledgor represents and warrants as follows: (a) Pledgor is the legal and beneficial owner, free and clear of any liens, charges or encumbrances, of stock certificate No. 1 relating to 675,000 shares of Class "B" Preferred Stock of BHDS registered in the name of Pledgor (the "Collateral"). (b) The Collateral represents 100% of the issued and outstanding Class "B" Preferred Stock of BHDS; the shares have been duly and validly issued, are fully paid and non-assessable, and there are no restrictions on the transfer of any of the Collateral or on Pledgor's right to pledge the Collateral. (c) This Agreement has been duly authorized, executed and delivered by Pledgor and constitutes a legal, valid and binding obligation of Pledgor, enforceable in accordance with its terms; (d) The making and performance of this Agreement by Pledgor (i) is not and will not be in violation of any law or any regulation promulgated pursuant to law, by any governmental agency or body; (ii) does not require the approval or consent of any governmental agency or body; (iii) will not conflict with, or result in a breach of, any term, condition or provision of, or constitute a default under, any instrument to which Pledgor is a party or may be bound or affected, or constitute (with or without the giving of notice or the passage of time or both) a default under any such instrument, or result in the acceleration of any indebtedness, or result in the breach of any regulation, order, writ, injunction or decree of any court or any commission, board or other administrative agency entered in any proceeding to which Pledgor is a party or by which it may be bound or affected; and (iv) does not require the approval of any other secured or unsecured creditor. (e) Upon consummation of the pledge and assignment of the Collateral to Lender pursuant to this Agreement, such pledge and assignment will create a valid lien on and, upon delivery of the Collateral to the Lender, together with a stock transfer executed in blank, a perfected, first priority security interest in the Collateral. (f) No Collateral has been heretofore pledged to any person or entity and all Collateral is free of all liens of any kind whatsoever. 2. Pledge of Collateral. Pledgor hereby assigns, hypothecates, transfers and pledges to Lender all of the Pledgor's right, title and interest in and to all of the Collateral and hereby grants to Lender a first lien on and a security interest in such Collateral, all as collateral security for (a) the prompt and complete payment when due of the indebtedness of Borrower evidenced by the Loan Documents including, without limitation, the Credit 2 3 Agreement and the Note; (b) the prompt and complete performance of the obligations of Pledgor under, or pursuant to the terms of this Pledge and Security Agreement; and (c) all costs and expenses incurred by Lender in connection with the enforcement, maintenance and preservations of its rights under any of the Loan Documents and this Pledge and Security Agreement, including all attorneys' fees and including all of such costs herein. Anything to the contrary in this Agreement notwithstanding, so long as there is no default in existence under the Loan Documents, the Pledgor shall be entitled to receive or to direct payment and distribution of dividends paid or interest earned on the Collateral which right shall terminate upon the occurrence of a default under any of such Loan Documents. 3. Redelivery of Collateral. Upon performance and satisfaction in full of the Borrower's obligations under the Loan Documents, this Pledge and Security Agreement shall immediately cease and terminate as herein provided, and any Collateral then held by Lender shall be deemed immediately transferred to Pledgor, and this Agreement shall thereupon have no further force or effect. Upon the happening of the events specified in the immediately preceding sentence, the Lender shall be deemed to be holding such Collateral in trust for Pledgor until such Collateral, together with appropriate instruments of reassignment and release as requested by Pledgor, are delivered to Pledgor or to Pledgor's designee. Upon such delivery of Collateral or any part thereof to Pledgor or to Pledgor's designee hereunder or otherwise, the receipt thereof by Pledgor shall be a complete and full acquittance for the Collateral so delivered, and Lender shall thereafter be discharged from any liability or responsibility therefor. 4. Default. Upon default under the Loan Documents, the Lender without demand of performance or other demand, advertisement, or notice of any kind (except the notice specified below of time and place of public or private sale) to or upon Pledgor or any other person (all and each of which demands, advertisements and/or notices are hereby expressly waived to the extent permitted by law), may collect, receive, appropriate and realize upon the Collateral, or any portion thereof, and/or may forthwith sell, assign, grant options to purchase, contract to sell or otherwise dispose of and deliver the Collateral, or any part thereof, in one or more units, at public or private sale or sales, at any exchange, broker's board or at any of Lender's offices or elsewhere, upon such terms and conditions as the Lender may deem advisable and at such prices as Lender may deem reasonable, for cash or on credit or for future delivery without assumption of any credit risk, with the right to Lender upon any such sale or sales, public or private, to purchase the whole or any portion of the Collateral so sold, free of any right or equity of redemption in Pledgor, which right or equity is hereby expressly waived and released to the extent permitted by law. Unless Collateral threatens to decline speedily in value or is of a type customarily sold on a recognized market (in which event no notification is required), the Lender shall give at least five days' notice of the time and place of any public sale or of the time after which a private sale or other intended disposition is to take place and that such notice is reasonable notification of such matters. Such notice shall be given in the manner prescribed in the Florida Uniform Commercial Code for giving notice of notice by secured parties to debtors. Such reasonable notification shall be given to Pledgor unless it has signed after default a statement renouncing or modifying any right to notification of sale or other indended disposition In addition to the rights and remedies granted to it in this Agreement and in any other instrument or agreement securing, evidencing or relating to the Loan, Lender shall have all the rights and remedies of a secured party under the Uniform Commercial Code of the State of Florida. 3 4 IN WITNESS WHEREOF, the parties have duly executed this Agreement on the day and year first written above. Signed, sealed and delivered in the presence of: Insurance Management Solutions Group, Inc., a Florida corporation /s/ Nancy C. Haire By: /s/ G. Kristin Delano - ------------------------------ ---------------------------- SIGNATURE SIGNATURE NANCY C. HAIRE As Its: Corp. Secretary - ------------------------------ ----------------------- NAME LEGIBLY PRINTED TYPEWRITTEN OR STAMPED /s/ Erica Rudin - ------------------------------ SIGNATURE ERICA RUDIN - ------------------------------ NAME LEGIBLY PRINTED TYPEWRITTEN OR STAMPED (CORPORATE SEAL) 7 EX-10.21 24 AGREEMENT AND PLAN OF MERGER 1 EXHIBIT 10.21 AGREEMENT AND PLAN OF MERGER By and Among GEOTRAC, INC. INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. DANIEL J. AND SANDRA WHITE BANKERS INSURANCE GROUP, INC. AND BANKERS HAZARD DETERMINATION SERVICES, INC. Dated as of May 12, 1998 2 TABLE OF CONTENTS
Page ---- I. THE MERGER ..........................................................................................2 Section 1.01. The Merger ............................................................................2 Section 1.02. Effective Time ........................................................................2 Section 1.03. Tax-Free Reorganization................................................................2 Section 1.04. Closing ...............................................................................2 Section 1.05. Board of Directors; Officers II. CONVERSION OF SHARES ................................................................................3 Section 2.01. Conversion of Shares ..................................................................3 Section 2.02. Issuance of IMSG Common Stock .........................................................4 Section 2.03. Assistance in Consummation of the Merger ..............................................4 Section 2.04. Financing .............................................................................5 Section 2.05. Option and Exchange Agreement .........................................................5 Section 2.06. Cross-License Agreement ...............................................................7 III. REPRESENTATIONS AND WARRANTIES OF GEOTRAC AND THE WHITES ............................................7 Section 3.01. Corporate Organization and Power ......................................................7 Section 3.02. Authorization of Agreement ............................................................7 Section 3.03. Validity ..............................................................................8 Section 3.04. Consents and Approvals ................................................................8 Section 3.05. Title to Shares .......................................................................8 Section 3.06. Capitalization of Geotrac..............................................................8 Section 3.07. Litigation Relating to Transaction ....................................................8 Section 3.08. Broker's or Finders' Fees .............................................................8 Section 3.09. Taxes and Liabilities .................................................................8 Section 3.10. Financial Statements ..................................................................9 Section 3.11. No Undisclosed Liabilities ............................................................9 Section 3.12. No Default ...........................................................................10 Section 3.13. Environmental Matters ................................................................10 Section 3.14. Insurance ............................................................................10 Section 3.15. Compliance With Law ..................................................................11 Section 3.16. Intellectual Property ................................................................11 Section 3.17. Disclosure ...........................................................................11
3 IV. REPRESENTATIONS AND WARRANTIES OF BANKERS, IMSG AND BIG ...........................................11 Section 4.01. Corporate Organization and Power ....................................................11 Section 4.02. Authorization of Agreement ..........................................................11 Section 4.03. Validity ............................................................................12 Section 4.04. Consents and Approvals ..............................................................12 Section 4.05. Title to Shares .....................................................................12 Section 4.06. Capitalization of Bankers ...........................................................12 Section 4.07. Capitalization of IMSG ..............................................................12 Section 4.08. Taxes and Liabilities ...............................................................13 Section 4.09. Litigation Relating to Transaction ..................................................13 Section 4.10. Broker's or Finders' Fees ...........................................................13 Section 4.11. Financial Statements ................................................................13 Section 4.12. No Undisclosed Liabilities ..........................................................14 Section 4.13. No Default ..........................................................................14 Section 4.14. Environmental Matters ...............................................................14 Section 4.15. Insurance ...........................................................................15 Section 4.16. Compliance With Law .................................................................15 Section 4.17. Intellectual Property ...............................................................15 Section 4.18. Disclosure ..........................................................................16 V. CONDITIONS PRECEDENT ..............................................................................16 Section 5.01. Conditions Precedent to Obligations of Bankers, IMSG and BIG ........................16 Section 5.02. Conditions Precedent to Obligations of Geotrac and the Whites .......................17 VI. TERMINATION AND ABANDONMENT .......................................................................20 Section 6.01. Termination..........................................................................20 Section 6.02. Procedure and Effect of Termination .................................................20 VII. INDEMNIFICATION; REMEDIES..........................................................................20 Section 7.01. Survival of Representations and Warranties ..........................................20 Section 7.02. Indemnification by Geotrac and the Whites ...........................................20 Section 7.03. Indemnification by Bankers, IMSG and BIG ............................................21 Section 7.04. Third Party Claims ..................................................................21 Section 7.05. Further Limitations. ................................................................24 Section 7.06. Limitations on Amount of Whites .....................................................24 Section 7.07. Limitations on Indemnification Of BIG, IMSG and Bankers .............................25
4 VIII. MISCELLANEOUS .......................................................................................25 Section 8.01. Expenses, Etc .........................................................................25 Section 8.02. Publicity .............................................................................25 Section 8.03. Execution in Counterparts .............................................................25 Section 8.04. Notices ...............................................................................26 Section 8.05. Amendments, Supplements, Etc ..........................................................26 Section 8.06. Entire Agreement ......................................................................27 Section 8.07. Applicable Law ........................................................................27 Section 8.08. Attorney's Fees .......................................................................27 Section 8.09. Representation Acknowledged ...........................................................27 Section 8.10. Binding Effect Benefits ...............................................................27 Section 8.11. Assignability .........................................................................28 Section 8.12. Bankers' Employees ....................................................................28 Section 8.13. Guarantee .............................................................................28
5 INDEX TO SCHEDULES, EXHIBITS AND ANNEXES
Exhibit or Schedule Description SS. Ref. ------------------- ----------- -------- 2.01(a) Subordinated Promissory Note 2.01(a) 2.01(d) Schedule of Other Stockholders 2.01(d) 2.04(c) Terms of Preferred Stock of the Company 2.04(c) 2.05 Option and Exchange Agreement 2.05 3.09(a) Taxes and Liabilities 3.09(a) 3.09(d)(1) Financial Statements of Geotrac 3.09(d) 3.09(d)(2) Schedule of Permitted Payments 3.09(d) 4.08(e)(1) IMSG and Bankers Financial Statements 4.08(e) 5.01(d) Opinion of Geotrac's Counsel 5.01(d) 5.01(g) Employment Agreement 5.01(g) 5.02(d) Opinion of counsel to Bankers, IMSG and BIG 5.02(d) 5.02(m)(2) Corporate Governance Agreement 5.02(m)(2) 5.02(m)(3) Tax Indemnity Agreement 5.02(m)(3) 5.02(m)(4) Registration Rights Agreement 5.02(m)(4) 7.02(d) Tax Indemnity Exclusion 7.02(d)
6 AGREEMENT AND PLAN OF MERGER This Agreement and Plan of Merger ("Agreement"), dated as of May 12, 1998, by and among the following parties: a) Geotrac, Inc., an Ohio corporation located at 3900 Laylin Road, Norwalk, Ohio 44857 ("Geotrac"); and b) Daniel J. White ("White"); and c) White and his wife Sandra (the "Whites"); and d) Bankers Hazard Determination Services, Inc., a Florida corporation located at 360 Central Avenue, St. Petersburg, Florida 33701, ("Bankers") or assigns; and e) Insurance Management Solutions Group, Inc., a Florida corporation located at 360 Central Avenue, St. Petersburg, Florida 33701 ("IMSG"); and f) Bankers Insurance Group, Inc., a Florida corporation located at 360 Central Avenue, St. Petersburg, Florida 33701 ("BIG"). WITNESSETH Whereas, on July 31, 1997 Geotrac acquired from Strategic Holdings USA, Inc. ("Strategic") all of the issued and outstanding shares of capital stock of SMS Geotrac, Inc. ("SMS Geotrac"), a Delaware corporation, and Bankers simultaneously acquired forty-nine percent (49%) of the issued and outstanding shares of capital stock of Geotrac (all of which will be referred to as the "Geotrac Acquisition"); Whereas, Bankers and Geotrac desire to merge Geotrac with and into Bankers, with Bankers being the surviving corporation (the "Company") and changing its name to Geotrac, Inc. (the "Merger"); Whereas, as a result of the Merger the Company would be one hundred percent owned by IMSG; and Whereas, for federal income tax purposes, it is intended that the Merger shall qualify as a tax-free reorganization within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the "Code"). Now, Therefore, in consideration of the foregoing premises and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 7 I. THE MERGER Section 1.01. The Merger. Subject to the terms and conditions of this Agreement and in accordance with the Florida Statute 607.1101 et seq. ("Florida Statute") at the Effective Time (as defined in Section 1.2 below), Geotrac and Bankers shall consummate the Merger pursuant to which (i) Geotrac shall be merged with and into Bankers and the separate corporate existence of Geotrac shall thereupon cease, and (ii) bankers shall be the successor or surviving corporation in the Merger (the "surviving corporation" or the "Company") and shall continue to be governed by the laws of the State of Florida. Pursuant to the Merger, (x) the Articles of Incorporation of Bankers, as in effect immediately prior to the Effective Time, shall be the Articles of Incorporation of the Surviving Corporation until thereafter amended as provided by law and such Articles of Incorporation, and (y) the By-laws of Bankers, as in effect immediately prior to the Effective Time, shall be the By-laws of the Surviving Corporation until thereafter amended as provided by law, the Articles of Incorporation of the Surviving Corporation and such By-laws. Section 1.02. Effective Time. Bankers and Geotrac will cause a Certificate of Merger (the "Certificate of Merger") with respect to the Merger to be executed and filed on the date of the Closing (as defined in Section 1.04) (or on such other date as Bankers and Geotrac may agree) with the Secretary of State of the State of Florida and with the Secretary of State of the State of Ohio. The Merger shall become effective on the date on which the Certificate of Merger has been duly filed with the Secretary of State or such time as is agreed upon by the parties and specified in the Certificate of Merger, and such time is hereinafter referred to as the "Effective Time." Section 1.03. Tax-Free Reorganization. The parties intend to adopt this Agreement as a tax-free plan of reorganization and to consummate the Merger in accordance with the provisions of Section 368(a)(1)(A) and 368(a)(2)(D) of the Code. In this regard, IMSG and Bankers (i) represent that they presently intend, and that at the Effective Time will continue to intend, to cause the Surviving Company to continue Geotrac's historic business or use a significant portion of Geotrac's assets in a business within the meaning of Section 368 of the Code and (ii) covenant and agree that IMSG and the Surviving Corporation will conduct their businesses in a manner which will not jeopardize the characterization of the Merger as a reorganization within the meaning of Section 368 of the Code. Section 1.04. Closing. The closing of the Merger (the "Closing") will take place at 10:00 a.m., local time, on a date to be specified by the parties, which shall be no later than May 28, 1998 (the "Closing Date"), at the offices of Benesch, Friedlander, Coplan & Aronoff LLP, 2300 BP America Building, 200 Public Square, Cleveland, Ohio 44114, unless another time, date or place is agreed to in writing by the parties hereto. 2 8 Section 1.05. Board of Directors; Officers. The directors and officers of Geotrac immediately prior to the Effective Time shall be the directors and officers of the Surviving Corporation, in each case until their respective successors are duly elected and qualified. II. CONVERSION OF SHARES Section 2.01. Conversion of Shares. a) Except for those shares identified in, and as set forth in Sections 2.04(c) and (d), each share of Geotrac common stock, without par value ("Geotrac Common Stock"), issued and outstanding immediately prior to the Effective Time (other than shares to be canceled pursuant to Section 2.0l (c) and (d) hereof) shall, at the Effective Time, by virtue of the Merger and without any action on the part of the holder thereof, be converted into (i) the right to receive a number of duly authorized, validly issued, fully paid and nonassessable shares of common stock, par value $.01, of IMSG ("IMSG Common Stock") equal to the Exchange Rate (as defined below) and (ii) One Million Five Hundred Thousand Dollars ($1,500,000) in the form of a subordinated promissory note (the "Note") issued by the Company and guaranteed by IMSG and BIG. The Note will be subordinate to the Huntington Loan (as defined below) or any refinancing of such loan on terms reasonably acceptable to the Whites. Such Note will be due and payable on January 6, 2000, with interest payable quarterly at the Prime Rate (as defined). Prime Rate shall mean the rate published in the Wall Street Journal as the base rate on corporate loans posted by at least 75% of the nation's 30 largest banks. A copy of the Note is attached hereto as Exhibit 2.01(a). b) For purposes hereof, the "Exchange Rate" shall mean: (i) The quotient of (A) Five Million Seven Hundred and Sixty-Six Thousand and One Hundred and Eighty-One Dollars ($5,766,181), subject to adjustment as provided below, (the "Aggregate Price") and (B) the fair market value of one share of Common Stock of IMSG, which shall be the initial public offering price of IMSG's Common Stock to be issued in the proposed underwritten public offering (the "IPO"). (ii) In the event the IPO is not consummated prior to the Effective Time the Exchange Rate shall be the quotient of (A) the Aggregate Price and (B) $12.00, subject to adjustment if an IPO is consummated within three (3) years of the Effective Time and the initial public offering price is less than or exceeds $12.00 per share. 3 9 c) All shares of Geotrac Common Stock that are owned by Bankers shall, at the Effective Time, be canceled and retired and shall cease to exist and no IMSG Common Stock shall be delivered in exchange therefor. d) All of the shares of Geotrac Common Stock that are owned by the stockholders identified on Exhibit 2.01(d) hereof (the "Other Stockholders") shall at the election of the Other Stockholder (i) at the Effective Time, be canceled and retired and shall cease to exist and no IMSG Common Stock shall be delivered in exchange thereof and the Other Stockholders shall receive cash in the aggregate amount of $728,069 for their shares of Geotrac Common Stock and shall be entitled to the amount set forth opposite their name on Exhibit 2.01(d) with payment for their shares of Geotrac Common Stock being made on or before December 1, 1998, or (ii) at the Effective Time be converted into IMSG Common Stock at a conversion ratio equal to the Exchange Ratio. e) On and after the Effective Time, holders of certificates which immediately prior to the Effective Time represented outstanding shares of Geotrac Common Stock (the "Certificates") shall cease to have any rights as stockholders of Geotrac, except the right to receive the consideration set forth in this Article II (the "Merger Consideration") for each share of Geotrac Common Stock held by them. f) After the Effective Time, all of the issued and outstanding shares of capital stock of the Company will be owned by IMSG. Section 2.02. Issuance of IMSG Common Stock. a) The manner in which each share of Geotrac Common Stock (other than shares to be canceled as set forth in Section 2.01(c) and (d)) will be converted into IMSG Common Stock shall be as set forth in this Section 2.02. b) No certificates or scrip representing fractional shares of IMSG Common Stock shall be issued upon the surrender for exchange of Certificates representing shares of Geotrac Common Stock, no dividend or distribution with respect to shares shall be payable on or with respect to any fractional share and such fractional share interests shall not entitle the owner thereof to vote or to exercise any other rights of a stockholder of IMSG. In lieu of any such fractional shares, each holder of Geotrac Common Stock who otherwise would be entitled to receive a fractional share of IMSG Common Stock pursuant to the Merger will be paid an amount in cash equal to such fractional interest multiplied by the quotient of the Aggregate Price divided by the Exchange Rate. Section 2.03. Assistance in Consummation of the Merger. Each of IMSG, Bankers, BIG, Geotrac and the Whites shall provide all reasonable assistance to, and shall cooperate 4 10 with, each other to bring about the consummation of the Merger as soon as practicable in accordance with the terms and conditions of this Agreement. Section 2.04. Financing. a) The parties hereto acknowledge that Geotrac currently has an outstanding loan from The Huntington National Bank of Cleveland, Ohio ("Huntington") (the "Huntington Loan") in the principal amount of Eight Million Seven Hundred and Fifty Thousand Dollars ($8,750,000). The parties hereto agree that the Company will assume the Huntington Loan in connection with the Merger, on terms and conditions acceptable to the Company, the Whites, IMSG and Huntington. In the event Huntington is unwilling to continue to loan money to the Company, IMSG shall be responsible for obtaining replacement financing on terms acceptable to the Whites. The parties hereto acknowledge that the terms and conditions set forth in the existing Huntington loan are acceptable. IMSG agrees to advance such funds to the Company as are necessary, and not otherwise available in the Company, to carry the cost of servicing the Huntington Loan (or any refinancings thereof) and the Note issued to the Whites pursuant to Article II hereof. Any funds advanced by IMSG to the Company shall be treated as a loan to the Company. b) Upon consummation of the Merger, White shall have the authority, subject to the approval of the Board of Directors of the Company, such approval not to be unreasonably withheld, to sell that portion of the business of Bankers that White shall deem appropriate, together with making available for employment by purchaser, personnel who choose to accompany the part of the business sold. The proceeds of such sale or sales shall be used to reduce the debt of the Company to Huntington. Any proceeds of such sale or sales in excess of the amount required to satisfy the Huntington Loan shall be used to redeem the preferred stock of the Company held by IMSG. c) The parties hereto acknowledge that Bankers obtained Six Million Seven Hundred and Fifty Thousand Dollars ($6,750,000) from the sale of its preferred stock and a loan from South Trust (the "South Trust Loan"). The proceeds from the sale of Bankers preferred stock and the South Trust Loan were invested in Geotrac. Bankers, IMSG and BIG hereby agree that prior to the Effective Time, IMSG will assume the South Trust Loan in exchange for the Bankers preferred stock. The preferred stock will be exchanged for cumulative 8 1/2% preferred stock of the Company the terms of which are set forth on Exhibit 2.04(c) hereto. In the event IMSG closes an underwritten public offering ("IPO"), the parties hereto agree that a portion of the proceeds from such IPO will be contributed to the capital of the Company and used to redeem the outstanding preferred stock of the Company. 5 11 d) At the time the Company is required to make the payments to the Other Stockholders as required by Section 2.01(d) hereof, IMSG has agreed to loan the Company up to Seven Hundred and Twenty-Eight Thousand and Sixty-nine Dollars ($729,069). The proceeds of the loan may be used by the Company to pay the amounts owed to the Other Stockholders identified on Exhibit 2.01(d) hereof as consideration for their Shares of Geotrac Common Stock. Such advance will be treated as a debt of the Company and will accrue interest annually at the Prime Rate, with principal and interest payable at any time on or after December 31, 1999. Section 2.05. Option and Exchange Agreement. a) The parties will enter into an Option and Exchange Agreement that provides, in the event the Effective Time occurs before the consummation of the IPO, and if the IPO does not close prior to April 1, 2001, the Whites will be entitled to elect to: (i) exchange (the "Exchange") the IMSG Common Stock received as part of the Merger consideration pursuant to Section 2.01 hereof for twenty percent (20%) of the shares of Common Stock of the Company on a fully diluted basis plus cash equal to: (A) The amount of any federal, state and local income tax owed by the Whites as a result of the exchange of shares and the receipt of any tax gross-up payment made to the Whites such that the Whites will receive an after tax amount equal to the amount of the federal, state and local income tax due as a result of the exchange, plus (B) Twenty percent (20%) of any dividends that are paid with respect to the Company Common Stock between the date of the Merger and the date of the exercise of the option, less (C) Dividends paid to the Whites with respect to the IMSG Common Stock issued to them in connection with the Merger, or (ii) elect to have their shares of IMSG redeemed by IMSG for a promissory note of IMSG in the principal amount of Five Million Dollars ($5,000,000) (which principal amount will increase at a compounded rate equal to the Prime Rate on the date of the Merger, from the date of the Merger to the date of issuance). The note shall provide for monthly payments, shall amortize over a five year period, shall bear interest at a rate equal to the Prime Rate on the date of issuance and shall balloon after one year and shall be guaranteed by BIG. From and after April 1, 2001 6 12 the election under this Section 2.05 must be made within 30 days of written demand by IMSG to the Whites. The terms and conditions of the foregoing option are as set forth in the Option and Exchange Agreement as set forth on Exhibit 2.05 hereto. b) The Option and Exchange Agreement will further provide, from and after the third anniversary of the Effective Time of the Merger and provided the IPO has not been consummated, the Whites will have an option to require BIG to purchase the shares of Common Stock of IMSG or the Company, as the case may be, owned by them in return for twenty percent (20%) of the fair market value of the common stock of the Company. The fair market value is to be determined based on an independent appraisal of the Company without any discounts for minority interests or otherwise determined by an independent appraiser selected by the Whites and BIG. The terms and conditions of the Option and Exchange Agreement are set forth on Exhibit 2.05 hereto. Section 2.06. Cross-License Agreement. Upon consummation of the Merger the Cross-License Agreement dated July 31, 1997, between Geotrac and Bankers (the "Cross License Agreement") will be terminated and any obligations to make payments thereunder will be terminated. III. REPRESENTATIONS AND WARRANTIES OF GEOTRAC AND THE WHITES Geotrac and the Whites represent and warrant to Bankers, IMSG and BIG as follows: Section 3.01. Corporate Organization and Power. Geotrac is a corporation duly organized, validly existing and in good standing under the laws of the State of Ohio. Geotrac has the corporate power and authority to execute, deliver and perform its obligations under this Agreement. Section 3.02. Authorization of Agreement. The execution, delivery and consummation of this Agreement by Geotrac has been duly authorized by the Board of Directors and the shareholders of Geotrac in accordance with all applicable laws and the Articles of Incorporation and Code of Resolutions of Geotrac, and at the Closing no further corporate action will be necessary on the part of Geotrac or its shareholders to make this Agreement valid and binding on Geotrac and enforceable against Geotrac in accordance with its terms. The execution, delivery and consummation of this Agreement by Geotrac (i) is not contrary to the Articles of Incorporation or Code of Regulations of Geotrac, (ii) does not now and will not, with the passage of time, the giving of notice or otherwise, result in a violation or breach of, or constitute a default under, any term or provision of any indenture, mortgage, deed of trust, lease, instrument, order, judgment, decree, rule, regulation, law, contract, agreement or any other restriction to which Geotrac is a party or to which Geotrac or any of its assets is subject or bound, and (iii) will not result in the 7 13 creation of any lien or other charge upon the shares of Common Stock of Geotrac or the assets of Geotrac. Section 3.03. Validity. This Agreement has been duly executed and delivered by Geotrac and constitutes the legal, valid and binding obligation of Geotrac, enforceable against Geotrac in accordance with its terms. Section 3.04. Consents and Approvals. No order, authorization, approval or consent from, or filing with, any person or entity or any federal or state governmental or public body or other authority having jurisdiction over Geotrac is required for the execution, delivery and performance of this Agreement. Section 3.05. Title to Shares. The Stockholders have full right, power and authority to sell, issue, convey and deliver to Bankers, in accordance with the terms of this Agreement, good and valid title, beneficially and of record, to all 510 shares of Common Stock of Geotrac owned by them in the amounts set forth on Schedule 2.01(d) hereto, free and clear of all restrictions, claims, liens, charges, encumbrances and rights of others. Section 3.06. Capitalization of Geotrac. The total authorized capital stock of Geotrac is 1,000 shares of Common Stock, without par value, all of which shares have been validly issued and are presently outstanding. Geotrac does not hold any shares of capital stock as treasury shares. There are no outstanding subscriptions, options, agreements, contracts, calls, commitments or demands of any character to which Geotrac or the Whites or the Other Stockholders are a party which restrict the transfer of the Geotrac Common Stock owned by the Whites or the Other Stockholders or otherwise related to the Geotrac Common Stock owned by the Whites. Section 3.07. Litigation Relating to Transaction. There are no actions, suits, proceedings or claims pending before any court, arbitrator or government agency against or affecting Geotrac which might enjoin or prevent the consummation of the transactions contemplated by this Agreement. Section 3.08. Broker's or Finders' Fees. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by Geotrac directly with Bankers without the intervention of any person on behalf of Geotrac in such manner as to give rise to any claim by any person against Bankers for a finder's fee, brokerage commission or similar payment. Section 3.09. Taxes and Liabilities. a) Except as set forth on Schedule 3.09 (a), Geotrac (i) has filed, and will file, on a timely basis (including all extensions), all federal income tax returns and all state and local income or franchise tax returns (collectively, "Tax Returns") required to 8 14 be filed by Geotrac for all years or periods ending on or before the Closing Date accurately reflecting in all respects income or franchise taxes owing to the United States or any state or local government, and (ii) has paid in full, or set up an adequate reserve for the payment of, all taxes (including interest, penalties and additions to tax) shown to be due on such Tax Returns. Except as set forth on Schedule 3.09 (a), all such Tax Returns are, or will be, true, correct and complete in all material respects. b) To the knowledge of Geotrac, there are no outstanding agreements or waivers extending the statutory period of limitations applicable to any Geotrac federal income tax return for any period ending on or before the Closing. c) Geotrac has made or will make available to Bankers for inspection, complete and correct copies of all federal income tax returns of Geotrac. d) Except for the transactions set forth in the Geotrac financial statements attached hereto as Exhibit 3.09(d)(1) and as contemplated by this Agreement and permitted on Schedule 3.09(d)(2), Geotrac shall not commit to additional financial obligations including, but not limited to, declaration or payment of dividends, issuance of stock options, or incurrence of additional debt. Section 3.10. Financial Statements. The financial statements of Geotrac attached hereto as Exhibit 3.09 (d)(1) do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Such financial statements fairly present in all material respects the financial position and the results of operations and cash flows of Geotrac as at the dates thereof or for the periods presented therein. At Closing, the Company shall deliver financial statements for the year ended December 31, 1997 and the quarter ended March 31, l998 that have been prepared from, and are in accordance with, the books and records of Geotrac, have been prepared in accordance with United States generally accepted accounting principles ("GAAP") applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position and the consolidated results of operations and cash flows (and changes in financial position, if any) of Geotrac as at the dates thereof or for the periods presented therein. Section 3.11. No Undisclosed Liabilities. Except (a) to the extent disclosed in the Geotrac financial statements delivered herewith, (b) for liabilities and obligations incurred in the ordinary course of business consistent with past practice, during the period from March 31, 1998 through the date of this Agreement and (c) otherwise known to Bankers, Geotrac has not incurred any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, that have, or would be reasonably likely to have, a 9 15 material adverse effect on Geotrac or would be required to be reflected or reserved against on a balance sheet of Geotrac (including the notes thereto) prepared in accordance with GAAP. Section 3.12. No Default. The business of Geotrac is not being conducted in default or violation of any term, condition or provision of (a) its Certificate of Incorporation or By-laws or similar organizational documents, (b) any agreement pursuant to which Geotrac is bound or (c) any federal, state, local or foreign law, statute, regulation, rule, ordinance, judgment, decree, order, writ, injunction, concession, grant, franchise, permit or license or other governmental authorization or approval applicable to Geotrac excluding from the foregoing clauses (b) and (c), defaults or violations that, individually or in the aggregate, would not have a material adverse effect on Geotrac or would not, or would not be reasonably likely to, materially impair the ability of Geotrac to consummate the Merger or the other transactions contemplated hereby. No investigation or review by any governmental entity with respect to Geotrac is pending or, to the best knowledge of Geotrac and the Whites, threatened, nor to the best knowledge of Geotrac and the Whites, has any governmental entity indicated an intention to conduct the same. Section 3.13. Environmental Matters. As of the date of this Agreement, Geotrac is in compliance with all applicable Environmental Laws and there are no Environmental Liabilities and Costs of Geotrac that would have or are reasonably likely to have an adverse effect on Geotrac. For purposes of this Section 3.13, the following definitions shall apply: "Environmental Laws" means all applicable foreign, federal, state and local laws, common law, regulations, rules and ordinances relating to pollution or protection of health, safety or the environment. "Environmental Liabilities and Costs" means all liabilities, obligations, responsibilities, obligations to conduct cleanup, losses, damages, deficiencies, punitive damages, consequential damages, treble damages, costs and expenses (including, without limitation, all reasonable fees, disbursements and expenses of counsel, expert and consulting fees and costs of investigations and feasibility studies and responding to government requests for information or documents), fines, penalties, restitution and monetary sanctions, interest, direct or indirect, known or unknown, absolute or contingent, past, present or future, resulting from any claim or demand, by any person or entity, whether based in contract, tort, implied or express warranty, strict liability, joint and several liability, criminal or civil statute, under any Environmental Law, or arising from environmental, health or safety conditions, as a result of past or present ownership, leasing or operation of any properties, owned, leased or operated by Geotrac. 10 16 Section 3.14. Insurance. As of the date hereof, Geotrac is insured by insurers against such losses and risks and in such amounts as are customary in the businesses in which they are engaged. All policies of insurance and fidelity or surety bonds are in full force and effect. Descriptions of these plans and related liability coverage have been previously provided to Bankers. Section 3.15. Compliance With Law. Geotrac has complied in all material respects with all laws, statutes, regulations, rules, ordinances, and judgments, decrees, orders, writs and injunctions, of any court or governmental entity relating to any of the property owned, leased or used by them, or applicable to their business, including, but not limited to, equal employment opportunity, discrimination, occupational safety and health, environmental, interstate commerce, antitrust laws, ERISA and laws relating to taxes. Section 3.16. Intellectual Property. Geotrac owns or has adequate rights to use all patents, trademarks, service marks, trade names, service names, copyrights, technology, know-how, processes, trade secrets, customer lists and other intellectual property, intangible property and proprietary rights (collectively, the "Intellectual Property") used in or necessary for the conduct of their respective businesses as now conducted without, to the best knowledge of Geotrac and the Whites, any infringement or alleged infringement of the rights of others. Geotrac is not in default in the payment of any royalties, license fees or other consideration to any owner or licensor of any Intellectual Property used in or necessary for the conduct of their respective businesses as now conducted, nor otherwise is in default in any material respect in the performance of any of their respective obligations to any such owner or licensor, and no such owner or licensor, nor any such agent or representative, has notified Geotrac in writing of any claim of any such infringement, violation or default. Section 3.17. Disclosure. The representations, warranties or disclosures of information made by Geotrac and the Whites in this Agreement, the Schedules and Exhibits hereto or any certification delivered or to be delivered pursuant to this Agreement, taken as a whole, do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. IV. REPRESENTATIONS AND WARRANTIES OF BANKERS, IMSG AND BIG Bankers, IMSG and BIG represent and warrant to Geotrac and the Whites as follows: Section 4.01. Corporate Organization and Power. Bankers, IMSG and BIG are corporations duly organized, validly existing and in good standing under the laws of the State of Florida. Bankers, IMSG and BIG each have the corporate power and authority to 11 17 execute, deliver and perform their respective obligations under this Agreement and to consummate the transactions contemplated hereby and thereby. Section 4.02. Authorization of Agreement. The execution, delivery and consummation of this Agreement by Bankers, IMSG and BIG has been duly authorized by their respective boards of directors and shareholders in accordance with all applicable laws and their respective Certificate of Incorporation and By-Laws or other charter documents, and at the closing no further corporate action will be necessary on the part of Bankers, IMSG and BIG or any of their shareholders to make this Agreement valid and binding on Bankers, IMSG and BIG and enforceable against Bankers, IMSG and BIG in accordance with its terms. The execution, delivery and consummation of this Agreement by each of Bankers, IMSG and BIG (i) is not contrary to its Certificate of Incorporation or By-Laws or other charter documents of any of Bankers, IMSG or BIG, and (ii) does not now and will not, with the passage of time, the giving of notice or otherwise, result in a violation or breach of, or constitute a default under, any term or provision of any indenture, mortgage, deed of trust, lease, instrument, order, judgment, decree, rule, regulation, law, contract, agreement or any other restriction to which any of Bankers, IMSG or BIG is a party or to which any of their assets is subject or bound and (iii) will not result in the creation of any lien or other charge upon the capital stock of the Company or IMSG. Section 4.03. Validity. This Agreement has been duly executed and delivered by Bankers, IMSG and BIG and constitutes the legal, valid and binding obligation of Bankers, IMSG and BIG, enforceable against Bankers, IMSG and BIG in accordance with its terms. Section 4.04. Consents and Approvals. No order, authorization, approval or consent from, or filing with, any person, entity or federal or state governmental or public body or other authority having jurisdiction over Bankers, IMSG or BIG is required for the execution, delivery and performance by any of them of this Agreement. Section 4.05. Title to Shares. IMSG has full right, power and authority to sell, issue, convey and deliver to the Whites, in accordance with the terms of this Agreement, good and valid title, beneficially and of record, to all of the shares of IMSG Common Stock to be issued in accordance with Section 2.01 hereof, free and clear of all restrictions, claims, liens, charges, encumbrances and rights of others. Section 4.06. Capitalization of Bankers. The authorized capital stock of Bankers is 500 shares of Common Stock, $1.00 par value per share, of which 500 shares have been validly issued to IMSG, 1,000,000 shares of Class A Preferred Stock of which none of the shares are issued and outstanding and 1,000,000 shares of Class B Preferred Stock of which 675,000 shares have been validly issued to IMSG. Bankers does not hold any shares of capital stock as treasury shares. Except as contemplated by this Agreement, there are no outstanding subscriptions, options, agreements, contracts, calls, 12 18 commitments or demands of any character to which Bankers is a party which restrict the transfer of the capital stock of Bankers. Section 4.07. Capitalization of IMSG. The total authorized capital stock of IMSG consists of 100,000,000 shares of Common Stock, $.01 par value per share, of which 20,000,000 have been validly issued to BIG. Except as set forth on Schedule 4.07, IMSG does not hold any shares of capital stock as treasury shares. Except as contemplated by this Agreement and the IPO, there are no outstanding subscriptions, options, agreements, contracts, calls, commitments or demands of any character to which IMSG is a party which restrict the transfer of the capital stock of IMSG. Section 4.08. Taxes and Liabilities. a) IMSG and Bankers (i) have filed on a consolidated basis, and will file, on a timely basis (including all extensions), all federal income tax returns and all combined or unitary state and local income or franchise tax returns (collectively, "Tax Returns") required to be filed by IMSG and Bankers for all years or periods ending on or before the Effective Time accurately reflecting in all respects income or franchise taxes owing to the United States or any state or local government, and (ii) has paid in full, or if not paid in full prior to the Effective Time will pay in full when due, all taxes (including interest, penalties and additions to tax) shown to be due on such Tax Returns. All such Tax Returns are, or will be, true, correct and complete in all material respects. b) There are no outstanding agreements or waivers extending the statutory period of limitations applicable to any IMSG or Bankers federal income tax return for any period ending on or before the Closing. c) IMSG and Bankers have made or will make available to Geotrac for inspection, complete and correct copies of all federal income tax returns of IMSG and Bankers. Section 4.09. Litigation Relating to Transaction. There are no actions, suits, proceedings or claims pending before any court, arbitrator or government agency against or affecting Bankers, IMSG or BIG which might enjoin or prevent the consummation of the transactions contemplated by this Agreement. Section 4.10. Broker's or Finders' Fees. All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by Bankers, IMSG or BIG directly with Geotrac and White, without the intervention of any person on behalf of Bankers, IMSG or BIG in such manner as to give rise to any claim by any person against Geotrac and White for a finder's fee, brokerage commission or similar payment. 13 19 Section 4.11. Financial Statements. The financial statements of IMSG and Bankers attached hereto as Exhibit 4.08 (e)(1) do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Such financial statements fairly present in all material respects the consolidated financial position and the consolidated results of operations and cash flows of IMSG and its consolidated subsidiaries as at the dates thereof or for the periods presented therein. On or before the Closing, IMSG shall deliver consolidated financial statements for the three period ended December 31, 1997 and the quarter ended that have been prepared from, and are in accordance with, the books and records of IMSG and/or its consolidated subsidiaries, have been prepared in accordance with United States generally accepted accounting principles ("GAAP") applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position and the consolidated results of operations and cash flows (and changes in financial position, if any) of IMSG and its consolidated subsidiaries as at the dates thereof or for the periods presented therein. Section 4.12. No Undisclosed Liabilities. Except (a) to the extent disclosed in the IMSG financial statements delivered herewith and (b) for liabilities and obligations incurred in the ordinary course of business consistent with past practice, during the period from March 31, 1998 through the date of this Agreement, neither IMSG nor any of its subsidiaries have incurred any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, that have, or would be reasonably likely to have, a material adverse effect on IMSG and its subsidiaries or would be required to be reflected or reserved against on a consolidated balance sheet of IMSG and its subsidiaries (including the notes thereto) prepared in accordance with GAAP. Section 4.13. No Default. The business of IMSG and each of its subsidiaries is not being conducted in default or violation of any term, condition or provision of (a) its respective Certificate of Incorporation or By-laws or similar organizational documents, (b) any agreement pursuant to which IMSG or its subsidiaries is bound or (c) any federal, state, local or foreign law, statute, regulation, rule, ordinance, judgment, decree, order, writ, injunction, concession, grant, franchise, permit or license or other governmental authorization or approval applicable to IMSG or any of its subsidiaries excluding from the foregoing clauses (b) and (c), defaults or violations that, individually or in the aggregate, would not have a material adverse effect on IMSG and its subsidiaries or would not, or would not be reasonably likely to, materially impair the ability of IMSG to consummate the Merger or the other transactions contemplated hereby. No investigation or review by any governmental entity with respect to IMSG or any of its subsidiaries is pending or, to the best knowledge of IMSG, threatened, nor to the best knowledge of IMSG, has any governmental entity indicated an intention to conduct the same. 14 20 Section 4.14. Environmental Matters. As of the date of this Agreement, IMSG is in compliance with all applicable Environmental Laws and there are no Environmental Liabilities and Costs of IMSG and its subsidiaries that would have or are reasonably likely to have an adverse effect on IMSG and its subsidiaries. For purposes of this Section 4.14, the following definitions shall apply: "Environmental Laws" means all applicable foreign, federal, state and local laws, common law, regulations, rules and ordinances relating to pollution or protection of health, safety or the environment. "Environmental Liabilities and Costs" means all liabilities, obligations, responsibilities, obligations to conduct cleanup, losses, damages, deficiencies, punitive damages, consequential damages, treble damages, costs and expenses (including, without limitation, all reasonable fees, disbursements and expenses of counsel, expert and consulting fees and costs of investigations and feasibility studies and responding to government requests for information or documents), fines, penalties, restitution and monetary sanctions, interest, direct or indirect, known or unknown, absolute or contingent, past, present or future, resulting from any claim or demand, by any person or entity, whether based in contract, tort, implied or express warranty, strict liability, joint and several liability, criminal or civil statute, under any Environmental Law, or arising from environmental, health or safety conditions, as a result of past or present ownership, leasing or operation of any properties, owned, leased or operated by the Company or any of its Subsidiaries. Section 4.15. Insurance. As of the date hereof, IMSG and each of its subsidiaries are insured by insurers against such losses and risks and in such amounts as are customary in the businesses in which they are engaged. All policies of insurance and fidelity or surety bonds are in full force and effect. Descriptions of these plans and related liability coverage have been previously provided to Geotrac and the Whites. Section 4.16. Compliance With Law. IMSG and its subsidiaries have complied in all material respects with all laws, statutes, regulations, rules, ordinances, and judgments, decrees, orders, writs and injunctions, of any court or governmental entity relating to any of the property owned, leased or used by them, or applicable to their business, including, but not limited to, equal employment opportunity, discrimination, occupational safety and health, environmental, interstate commerce, antitrust laws, ERISA and laws relating to taxes. Section 4.17. Intellectual Property. IMSG and Bankers owns or has adequate rights to use all patents, trademarks, service marks, trade names, service names, copyrights, technology, know-how, processes, trade secrets, customer lists and other intellectual property, intangible property and proprietary rights (collectively, the "Intellectual 15 21 Property") used in or necessary for the conduct of their respective businesses as now conducted without, to the best knowledge of IMSG and/or Bankers, any infringement or alleged infringement of the rights of others. Neither IMSG nor Bankers is in default in the payment of any royalties, license fees or other consideration to any owner or licensor any Intellectual Property used in or necessary for the conduct of their respective businesses as now conducted, nor otherwise is in default in any material respect in the performance of any of their respective obligations to any such owner or licensor and no such owner or licensor nor any such agent or representative, has notified IMSG or Bankers in writing of any claim of any such infringement, violation or default. Section 4.18. Disclosure. The representations, warranties or disclosures of information made by IMSG, Bankers or BIG in this Agreement, the Schedules and Exhibits hereto or any certification delivered or to be delivered pursuant to this Agreement, taken as a whole, do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. V. CONDITIONS PRECEDENT Section 5.01. Conditions Precedent to Obligations of Bankers, IMSG and BIG. The obligations of Bankers, IMSG and BIG to consummate the transactions contemplated by this Agreement are subject, at the option of Bankers, IMSG and BIG, to the satisfaction at or prior to the Effective Time of each of the following conditions: a) Accuracy of Representations and Warranties. The representations and warranties of Geotrac and the Whites contained in this Agreement or in any certificate or document delivered to Bankers, IMSG or BIG pursuant hereto shall be true and correct in all material respects on and as of the Effective Time as though made at and as of that date, and Geotrac and the Whites shall have delivered to Bankers, IMSG or BIG a certificate to that effect. b) Compliance with Covenants. Geotrac shall have performed and complied with all terms, agreements, covenants and conditions of this Agreement to be performed or complied with by them at or prior to the Effective Time, and Geotrac and the Whites shall have delivered to Bankers, IMSG or BIG a certificate to that effect. c) Legal Actions or Proceedings. No legal action or proceeding shall have been instituted or threatened seeking to restrain, prohibit, invalidate or otherwise affect the consummation of the transactions contemplated hereby. d) Opinion of Counsel for Geotrac. Bankers, IMSG and BIG shall have received the opinion of Benesch, Friedlander, Coplan & Aronoff, LLP, counsel for Geotrac, 16 22 dated the Closing Date, satisfactory in form and substance to Bankers, IMSG and BIG and its counsel, to the effect set forth in Exhibit "5.01 (d)" hereto. e) Material Adverse Change. There shall not have occurred a material adverse change to the business or assets of Geotrac since the date of this Agreement. f) Shareholders Agreement. Bankers, IMSG, Geotrac and the Whites shall have terminated the Shareholders' Agreement dated July 31, 1997. g) Employment Agreement. Geotrac and Daniel J. White shall have entered into an Employment Agreement in the form of Exhibit "5.01 (g)" attached hereto. h) Good Standing. Bankers, IMSG and BIG shall have received certified copies of certificates of good standing for Geotrac from the Secretary of State of the State of Ohio. i) Resolution. Bankers, IMSG and BIG shall have received an executed Resolution of the Board of Directors and Shareholders of Geotrac authorizing the transactions contemplated by this Agreement and Exhibits and Schedules attached hereto and authorizing the termination of the 401(K) Plan of Geotrac at or prior to the Effective Time. j) Cross License Agreement. The Cross License Agreement shall be terminated. k) Huntington Loan. Huntington shall have consented to the transactions contemplated hereby. 1) Releases. Releases from each of the Other Stockholders shall have been delivered to Geotrac in a form satisfactory to BIG, IMSG and Bankers. m) Representation Letter. Grant Thornton shall have received a representation letter from Daniel White in a form acceptable to it. n) Financial Statements. Geotrac shall have delivered the financial statements specified in Section 3.10 and such financial statements must be reasonably acceptable to BIG, IMSG and Bankers. Section 5.02. Conditions Precedent to Obligations of Geotrac and the Whites. The obligations of Geotrac and the Whites under this Agreement are subject, at the option of Geotrac and the Whites, to the satisfaction at or prior to the Effective Time of each of the following conditions: 17 23 a) Accuracy of Representations and Warranties. The representations and warranties of Bankers, IMSG or BIG contained in this Agreement or in any certificate or document delivered to Geotrac pursuant hereto shall be true and correct in all material respects on and as of the Effective Time as though made at and as of that dates and Bankers, IMSG or BIG shall have delivered to Geotrac and the Whites a certificate to such effect. b) Compliance with Covenants. Bankers, IMSG and BIG shall have performed and complied with all terms, agreements, covenants and conditions of this Agreement to be performed or complied with by them at or prior to the Closing, and Bankers, IMSG and BIG shall have delivered to Geotrac and the Whites a certificate to that effect. c) Legal Actions or Proceedings. No legal action or proceeding shall have been instituted or threatened seeking to restrain, prohibit, invalidate or otherwise affect the consummation of the transactions contemplated hereby. d) Opinion of Counsel to Bankers, IMSG and BIG. Geotrac shall have received the opinion of C. Anthony Sexton, counsel for Bankers, IMSG or BIG, dated the Closing Date, satisfactory in form and substance to Geotrac and their counsel, to the effect set forth in Exhibit "5.02(d)" hereto. e) Material Adverse Change. There shall not have occurred a material adverse change in the business or assets of Bankers, IMSG or BIG since the date of this Agreement. f) Shareholders Agreement. Bankers, IMSG, Geotrac and the Whites shall have terminated the Shareholders' Agreement dated July 31, 1997. g) Employment Agreement. The Company and Daniel J. White shall have entered into an Employment Agreement in the form of Exhibit 5.01 (g) attached hereto. h) Good Standing and Charter Documents. Geotrac shall have received certified copies of certificates of good standing for Bankers, IMSG and BIG in the states of incorporation and received certified copies of the Articles of Organization and By-laws or other organizational documents of each of Bankers, IMSG and BIG. i) Resolutions. Geotrac shall have received certified copies of the resolutions of the Board of Directors and Shareholders, where necessary, of each of Bankers, IMSG and BIG authorizing the transactions contemplated by this Agreement and the Exhibits and Schedules attached hereto. 18 24 j) Cross License Agreement. The Cross License Agreement shall be terminated. k) Huntington Loan. Huntington shall have consented to the transaction contemplated hereby or IMSG shall have secured replacement financing on terms acceptable to Geotrac and the Whites. l) South Trust Loan. IMSG shall have purchased the preferred stock of the Company originally issued to Heritage Hotel Holding Company in connection with the South Trust Loan. m) Additional Documents. The following additional documents shall be executed and delivered: 1. The Option and Exchange Agreement. 2. The Corporate Governance Agreement attached hereto as Exhibit 5.02(m)(2) 3. The Tax Indemnity Agreement attached hereto as Exhibit 5.02(m)(3) hereto relating to the indemnity provided by IMSG and BIG to the Whites for any costs, expenses, losses, damages or liabilities they may incur as a result of the Merger not qualifying as a tax-free reorganization within the meaning of Sections 368(a)(1)(A) or 368(a)(2)(D) of the Code, or the exchange rights or put rights provided to the Whites pursuant to the Option and Exchange Agreement constituting "boot." 4. The Registration Rights Agreement attached hereto as Exhibit 5.02(m)(4). 5. An opinion from Grant Thornton, a tax advisor to BIG, to the effect that the Merger will qualify as a tax-free reorganization within the meaning of Sections 368 (a)(l)(A) and 368 (a)(2)(D) of the Code, the cost of which shall be borne by Bankers in a form acceptable to the Whites. 6. A certificate of IMSG and Bankers providing Geotrac and White with certain factual representations of IMSG and Bankers reasonably requested by Geotrac and the Whites as necessary to confirm that neither IMSG nor the Surviving Corporation will take any action on or after the Effective Time that would jeopardize the tax-free nature of the transaction. 7. Grant Thornton shall have received a representation letter from BIG, IMSG and Bankers in a form acceptable to it. 19 25 8. IMSG shall have delivered the consolidated financial statements identified in Section 4.11 and such consolidated financial statements must be reasonably acceptable to Geotrac and the Whites. 9. Geotrac and the Whites shall have received Releases from each of the Other Stockholders in a form reasonably acceptable to Geotrac and the Whites. VI. TERMINATION AND ABANDONMENT Section 6.01. Termination. This Agreement may be terminated at any time prior to the Closing: a) by the mutual consent of Bankers, IMSG or BIG and Geotrac and the Whites; or b) by either Bankers, IMSG or BIG or Geotrac if the Closing contemplated in Section 1.04 above shall not have occurred on or before May 28, 1998 or such later date as may be agreed upon by the parties hereto or any of the Conditions Precedent of that party are not met. Section 6.02. Procedure and Effect of Termination. In the event of termination of this Agreement and abandonment of the transactions contemplated hereby by any or all of the parties pursuant to Section 6.01, written notice thereof shall forthwith be given to the other party to this Agreement and this Agreement shall terminate and the transactions contemplated hereby shall be abandoned, without further action by any of the parties hereto. If this Agreement is terminated as provided herein, no party shall have any liability or further obligation to any other party to this Agreement pursuant to this Agreement, except that the parties preserve and shall retain their rights if another party breaches any representations or warranties or covenants contained herein. VII. INDEMNIFICATION; REMEDIES Section 7.01. Survival of Representations and Warranties. The representations and warranties of Geotrac and the Whites in Article II and of Bankers, IMSG or BIG in Article III shall survive the Closing for one year. Section 7.02. Indemnification by Geotrac and the Whites. Geotrac and the Whites shall indemnify Bankers, IMSG or BIG and the stockholders, directors, employees and agents of Bankers, IMSG or BIG in their capacity as such (collectively, the "Bankers, IMSG or BIG Indemnified Parties') from and against and shall hold the Bankers, IMSG or BIG Indemnified Parties harmless from: a) any proceeding, claim, liability loss, damage or deficiency, including any and all reasonable costs and expenses (including, but not limited to, reasonable legal and 20 26 accounting fees) related to any of the foregoing (collectively, "Loss"), resulting from or arising out of any material inaccuracy in or material breach of any representation or warranty by Geotrac contained in this Agreement. b) any Loss resulting from or arising out of a breach or nonperformance of any covenant or obligation of Geotrac under this Agreement; c) any Loss resulting from or arising out of the claims of any broker, finder or other person acting in a similar capacity on behalf of Geotrac or the Whites in connection with the transactions contemplated herein; and d) any Loss relating or pertaining to any Geotrac tax or other liability of any nature whatsoever (including interest, penalties and additions to tax) payable with respect to any period ending on or prior to Closing except for liabilities disclosed on the attached Exhibit "7.02(d)." Section 7.03. Indemnification by Bankers, IMSG and BIG. Bankers, IMSG and BIG shall indemnify Geotrac and the stockholders, directors, employees and agents of Geotrac in their capacity as such and the Whites (collectively, the "Geotrac Indemnified Parties") from and against, and shall hold the Geotrac Indemnified Parties harmless from: a) any Loss resulting from or arising out of any material inaccuracy in or material breach of any representation or warranty by Bankers, IMSG or BIG in this Agreement; b) any Loss resulting from or arising out of any breach or nonperformance of any covenant or obligation of Bankers, IMSG or BIG under this Agreement; c) any Loss resulting from or arising out of the claims or any broker, finder or other person acting in similar capacity on behalf of Bankers, IMSG or BIG in connection with the transactions contemplated herein; and d) any Loss relating or pertaining to any Bankers, IMSG or BIG tax or other liability of any nature whatsoever (including interest, penalties and additions to tax) payable with respect to any period ending on or prior to the Closing. Section 7.04. Third Party Claims. a) Notice of Claim. If any legal proceeding is instituted or any claim is asserted by any third party in respect of which the Geotrac Indemnified Parties on the one hand, or Bankers, IMSG or BIG Indemnified Parties on the other hand may be 21 27 entitled to indemnity hereunder, the party asserting such right to indemnity (the "Indemnified Party") shall give the party from whom indemnity is sought (the "Indemnifying Party") written notice thereof A delay in giving notice shall only relieve the Indemnifying Party of liability to the extent the Indemnifying Party Suffers actual prejudice because of the delay. The Indemnifying Party shall have 30 days after receipt of such notice to decide whether it will agree to be responsible for the claim and provide indemnity hereunder. b) Indemnifying Party Accepts Responsibility. If the Indemnifying Party decides to accept responsibility and liability for such claim and proceeding and provides written notice (the "Response Notice") to such effect to the Indemnified Party within-such 30-day period, the Indemnifying Party shall be fully responsible for undertaking and conducting, through counsel of its own choosing and its own expense, the settlement or defense of such claim or proceeding. If a court of competent jurisdiction determines that the Indemnifying Party was not required to provide indemnity for such claim, the Indemnified Party shall reimburse the Indemnifying Party for all of the Losses incurred by it in providing indemnity for the third-party claim and pursuing its claim against the Indemnified Party. If a court of competent jurisdiction determines that the Indemnifying Party was required to provide indemnity for such claim, the Indemnifying Party shall reimburse the Indemnified Party for all of the Losses, costs or expenses, incurred by the Indemnified Party in defense of the Indemnifying Party's claim. If a court of competent jurisdiction determines that the Indemnifying Party was required to provide indemnity for part, but not all of such third-party claim, the Indemnified Party shall reimburse the Indemnifying Party far the Losses, costs and expenses incident to the defense of the third-party claim in proportion to the responsibility allocated by such court, and each party shall bear its own costs and expenses with respect to the Indemnifying Party's claim against the Indemnified Party. The indemnified Party shall have the rights with counsel of its own choice and at its own expense, to participate in, but not control the defense and settlement of any claim or proceeding for which the Indemnifying Party accepts responsibility hereunder. In addition, if, at any time the Indemnified Party believes that a claim is not, (in fact) the proper subject for indemnification by the Indemnifying Party, the Indemnified Party may assume from the Indemnifying Party responsibility for and control of such claim or proceeding; provided that the Indemnified Party reimburses the Indemnifying Party for all of the losses, costs and expenses incurred by it to such date in defense of such claims. If the Indemnified Party assumes control of a claim pursuant to this paragraph, it thereby becomes fully responsible and liable for the defense and settlement thereof, and waives any right 22 28 to assert any further indemnification obligation with respect to such claim against the Indemnifying Party. Notwithstanding anything to the contrary herein, if, in the reasonable opinion of the Indemnified Party any Third Party Claim or the litigation or resolution thereof involves an issue or matter which could have a material adverse effect on the business operations assets, properties or prospects of the Indemnified Party (including, without limitation, the administration of the tax returns and responsibilities under the tax laws of the Indemnified Party), the Indemnified Party shall have the right to control the defense compromise and settlement of such Third Party Claim undertaken by the Indemnifying Party, and the costs and expenses of the Indemnified Party in connection therewith shall be included as part of the indemnification obligations of the Indemnifying Party hereunder. If the Indemnified Party shall elect to exercise such right, the Indemnifying Party shall have the right to participate in, but not control, the defense/compromise and settlement of such Third Party Claim at its sole cost and expense. Any compromise or settlement of such Third Party Claim shall be subject to the approval of the Indemnifying Party, which approval shall not be unreasonably withheld, conditioned or delayed. c) Indemnifying Party Declines Responsibility. If the Indemnifying Party fails to deliver a Response Notice timely, or delivers a Response Notice and declines responsibility and liability for such claim or proceeding, the Indemnified Party shall undertake, conduct and control through counsel of its own choosing and at its expense, the settlement or defense of such claim. Notwithstanding the foregoing, the Indemnified Party shall retain the right, after the completion or resolution of such claim or proceeding, to assert a claim against the Indemnifying Party alleging that it should have provided indemnity hereunder. If a court of competent jurisdiction determines that the Indemnifying Party was required to provide indemnity for such claim, the Indemnifying Party shall reimburse the Indemnified Party for all of the Losses costs and expenses incurred by the Indemnified Party in defending such claim and pursuing its claim against the Indemnifying Party. If a court of competent jurisdiction determines that the Indemnifying Party was not required to provide indemnity for such claim, the Indemnified Party shall reimburse the Indemnifying Party for all of the Losses, costs and expenses incurred by the Indemnifying Party in defense of the Indemnified Party's claim. If a court of competent jurisdiction determines that the Indemnifying Party was required to provide indemnity for part, but not all of such third-party claim the Indemnifying Party shall reimburse the Indemnified Party for the Losses, costs and expenses incident to the defense of the third-party claim in proportion to the responsibility allocated by such court, and each party shall bear its own costs and expenses with respect to the Indemnified Party's claim against the Indemnifying Party. 23 29 The Indemnifying Party shall have the right with counsel of its own choice at its own expense, to participate in but not control the defense and settlement of any claim or proceeding for which it initially declines responsibility. In addition, if at any time, the Indemnifying Party believes that the claim is, in fact, the proper subject for indemnity by it, the Indemnifying Party may, subject to the last paragraph of Section 7.04(b) hereof, assume from the Indemnified Party responsibility for and control of such claim or proceeding; provided that the Indemnifying Party reimburses the Indemnified Party for all of the Losses, costs and expenses incurred by it to such date in defense of such claim. If the Indemnifying Party assumes control of a claim pursuant to this paragraph, it thereby becomes fully responsible and liable for the defense and settlement thereof, and waives any right to claim back against the Indemnified Party or otherwise object to its indemnification obligations with respect thereto. d) Cooperation. Notwithstanding anything to the contrary herein, the Indemnifying Party and Indemnified Party Shall at all times cooperate with each other in the defense of any third-party claim or proceeding and the party controlling such defense shall, upon request by the other party provide reasonable updates and summaries of such matter. Each party agrees that it shall not, without the written consent of the other, settle or compromise any action or claim in any manner that would materially and adversely affect the other party, other than as a result of money damages or money payments. Section 7.05. Further Limitations. a) Exclusive Remedy. The indemnification provisions of this Article VII shall be the exclusive remedy following the Closing Date for any breaches or alleged breaches of any representations, warranties or covenants under this Agreement. Each of the parties hereto, on behalf of itself and its officers, directors, employees, security holders, partners, affiliates, agents or representatives (collectively, such party's "Representatives"), agrees not to bring any actions or proceedings, at law, equity or otherwise against any other party or its Representatives, in respect of any breaches of any representation or warranty of this Agreement, except pursuant to the express provisions of this Article VI, unless there has been an instance of fraud. The parties hereby agree that no party has made any representations or warranties, express or implied, with respect to this Agreement or the matters contemplated hereby except as explicitly set forth in this Agreement. b) No Indemnification For Known Breaches of Representations and Warranties. Notwithstanding any provision to the contrary contained herein, in the event that any party to this Agreement had actual knowledge, on or before the Effective Time, of the specific facts upon which a claim for indemnification for breach of 24 30 representations and warranties by any other party is based, then the harmed party shall have no liability for any Loss resulting from or arising out of such claim. Section 7.06. Limitations on Amount of Whites. a) The Whites will have no liability (for indemnification or otherwise) with respect to the matters set forth in Section 7.02(a) hereof until the total of all damages with respect to Section 7.02(a) exceeds $ 10,000, and then only for the amount by which such damages exceed $10,000. b) Subject to the provisions of Section 7.06, in addition, the Whites will have no liability (for indemnification or otherwise) with respect to the matters set forth in Section 7.02 relating to breaches of Sections 3.01 through 3.04, 3.07 and 3.09 through 3.17 for the amount of damages exceeding 51% of the total amount. c) Additionally, in no event shall the amount of damages paid by the Whites with respect to the matters set forth in Section 7.02(a) (for indemnification or otherwise) exceed $1,500,000. Section 7.07 Limitation on Indemnification of BIG, IMSG, and Bankers. a) BIG, IMSG and Bankers will have no liability (for indemnification or otherwise) with respect to the matters set forth in Section 7.03(a) hereof until the total of all damages with respect to Section 7.03(a) exceeds $10,000 and then only with respect to the damages exceed $10,000. b) In no event shall the damages paid by BIG, IMSG and Bankers in the aggregate with respect to the matters set forth in Section 7.03(a) (for indemnification or otherwise) exceed $3,000,000. c) Upon the consummation of an IPO by IMSG, the obligations of BIG with respect to the matters set forth in Section 7.03 shall cease as of the date of the Closing of such IPO. VIII. MISCELLANEOUS Section 8.01. Expenses. Etc. Whether or not the transactions contemplated by this Agreement are consummated, none of the parties hereto shall have any obligation to pay any of the fees and expenses of the other party incident to the negotiation, preparation and execution of this Agreement, including the fees and expenses of counsel, accountants, investment bankers and other experts. 25 31 Section 8.02. Publicity. The parties hereto agree to cooperate in issuing any press release or other public announcement concerning this Agreement or the transactions contemplated hereby Nothing contained herein shall prevent any party from at any time furnishing any information required by any government authority. Section 8.03. Execution in Counterparts. For the convenience of the parties, this Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the Same instrument. Section 8.04. Notices. All notices which are required or may be given pursuant to the terms of this Agreement shall be in writing and shall be sufficient in all respects if (i) delivered personally, (ii) mailed by registered or certified mail, return receipt requested and postage prepaid, or (iii) sent via a nationally recognized overnight courier service or (iv) sent via facsimile confirmed in writing to the recipient in each case as follows: If to Geotrac, White or the Whites: Geotrac, Inc. 3900 Laylin Road Norwalk, Ohio 44057 Attention: Daniel J. White Telephone (419) 668-8899 Telecopy: (419) 668-9266 with a copy to: Benesch, Friedlander, Coplan & Aronoff LLP 2300 BP America Building 200 Public Square Cleveland, Ohio 44114 Attention: Ira Kaplan, Esq. Telephone (216) 363-4567 Telecopy: (216) 363-4588 If to Bankers, the Company, IMSG or BIG, to: Bankers Hazard Determination Services, Inc. 360 Central Avenue St. Petersburg, Florida 33701 Attention: C. Anthony Sexton, Esq. Telephone: (813) 823-4000 extension 4894 Telecopy: (813) 823-6518 26 32 or such other address or addresses as either party hereto shall have designated by notice in writing to the other party hereto. Section 8.05. Amendments, Supplements, Etc. At any time this Agreement may be amended or supplemented by such additional agreements, articles or certificates, as may be determined by the parties hereto to be necessary, desirable or expedient to further the purposes of this Agreement, or to clarify the intention of the parties hereto, or to add to or modify the covenants, terms or conditions hereof or to effect or facilitate any governmental approval or acceptance of this Agreement or to effect or facilitate the filing or recording of this Agreement or the consummation of any of the transactions contemplated hereby. Any such agreement, article or certificate must be in writing and signed by both parties. No oral or unexecuted agreement, promise or undertaking shall be effective to modify, amend or alter the terms of this Agreement in any manner whatsoever. Section 8.06. Entire Agreement. This Agreement, its Exhibits, Schedules and Annexes and the documents executed on the Closing Date in connection herewith, constitute the entire agreement between the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings, oral and written, between the parties hereto with respect to the subject matter hereof. No representation, warranty promise, inducement or statement of intention has been made by either party which as not embodied in this Agreement or such other documents; and neither party shall be bound by, or be liable for, any alleged representation, warranty, promise, inducement or statement or intention not embodied herein or therein. Section 8.07. Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Florida, without regard to conflicts of law principles. However, jurisdiction and venue for any action brought to enforce the terms or conditions of this Agreement or any of its Exhibits or Schedules shall be the domicile of the defendant or respondent in any such action. Section 8.08. Attorney's Fees. If any party to this Agreement should bring a Court action alleging breach of this Agreement or seeking to enforce, rescind, renounce, declare void or terminate this Agreement or any provisions thereof, the prevailing party shall be entitled to recover all of its legal expenses, including reasonable attorney's fees and costs (including legal expenses for any appeals taken), and to have the same awarded as part of the judgment in the proceeding in which such legal expenses and attorney's fees were incurred. Section 8.09. Representation Acknowledged. The parties acknowledge that each party and its counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party 27 33 shall not be employed in the interpretation of this Agreement or any amendments or exhibits hereto. Section 8. 10. Binding Effect, Benefits. This Agreement shall inure to the benefit of and be binding upon the parties hereto and their respective successors, heirs and permitted assigns. Notwithstanding anything contained in this Agreement to the contrary, nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto or their respective successors and assigns, any rights, remedied obligations or liabilities under or by reason of this Agreement. Section 8.11. Assignability. Neither this Agreement nor any of the parties rights hereunder shall be assignable by any of the parties hereto without the prior written consent of the other parties hereto; provided, however, that the parties may assign a security interest in their rights to receive indemnification hereunder as part of a grant of collateral security to secure any indebtedness for money borrowed by the Company or Geotrac from a bank or other financial institution. Section 8.12. Bankers' Employees. It is contemplated that subsequent to the Merger, the Company will offer for sale certain assets related to the business of Bankers including the opportunity to hire current personnel managing the assets related to such business. In addition, certain current employees of Bankers will be offered positions with the Company and certain employees will choose to accompany the sale of the business to a third party. As to those current employees of Bankers who do not become employees of the Company or a third party, IMSG shall assume responsibility for their employment under the same terms and conditions as they are currently employed. IMSG and BIG agree not to solicit for employment those individuals who choose to be employed by the Company or take a position with a third party. Section 8.13. Guarantee. BIG hereby unconditionally guarantees the performance of the duties, obligations and covenants of Bankers and IMSG under this Agreement, the Exhibits and Schedules hereto and any other agreements executed and delivered herewith or contemplated hereby, which guarantee shall terminate and cease to exist upon the consummation of an IPO involving the capital stock of IMSG. 28 34 IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the day and year indicated below. WITNESSES Bankers Hazard Determination Services, Inc. /s/ Leslie A. BY: /s/ - ------------------------- --------------------------------------- /s/ C. Anthony Sexton AS ITS: Corp Sec'y DATE: 5-12-98 - ------------------------- -------------------- --------- WITNESSES Insurance Management Solutions Group, Inc. /s/ Leslie A. BY: /s/ - ------------------------- --------------------------------------- /s/ C. Anthony Sexton AS ITS: Corp Sec'y DATE: 5-12-98 - ------------------------- -------------------- --------- WITNESSES Bankers Insurance Group, Inc. /s/ Leslie A. BY: /s/ - ------------------------- --------------------------------------- /s/ C. Anthony Sexton AS ITS: Corp Sec'y DATE: 5-12-98 - ------------------------- -------------------- --------- WITNESSES Geotrac, Inc. /s/ Leslie A. BY: /s/ David J. White - ------------------------- --------------------------------------- /s/ C. Anthony Sexton AS ITS: President DATE: 5-12-98 - ------------------------- -------------------- --------- WITNESSES Insurance Management Solutions Group, Inc. /s/ Leslie A. /s/ Daniel J. White DATE: 5-12-98 - ------------------------- ---------------------------- --------- Daniel J. White /s/ C. Anthony Sexton - ------------------------- 29 35 WITNESSES /s/ Leslie A. Drorbton /s/ Sandra White DATE: 5-12-98 - -------------------------- ----------------- -------- /s/ - -------------------------- 30 EX-10.22 25 EMPLOYMENT AGREEMENT 1 EXHIBIT 10.22 EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into as of this ___ day of May, 1998, by and between Geotrac, Inc., a Florida corporation (the "Company")and Daniel J. White ("Executive"). RECITALS A. The Company and Executive desire to enter into an employment arrangement. B. The Company has determined that it is in the best interests of the Company to enter into this Agreement setting forth the rights, duties and obligations of both the Company and Executive. C. The Company's business requires secrecy in connection with the methods and systems employed, and, for the proper protection of the Company, it is absolutely necessary and essential (which necessity Executive expressly recognizes) that all matters connected with, arising out of, or pertaining to the business of the Company, its methods and systems and the names of its customers be kept secret and confidential as goodwill belonging to the Company. D. The Company will sustain great loss and damage, if during the term of this Agreement, or for the period described in Section 10.2 below immediately following its termination for any reason whatsoever, Executive should, for himself or on behalf of any other person, persons, company, partnership or corporation, call upon the trade, customers or clientele of the Company for the purpose of soliciting, selling or servicing any programs of the type sold or serviced by the Company, for which loss and damage, by reason of his financial circumstances, Executive could not be compelled by law to respond to damages in any action at law. E. The Company wishes to assure itself of the services of Executive and Executive is willing to be employed by the Company upon the terms and conditions provided in this Agreement. In consideration of the foregoing Recitals and the mutual covenants and conditions contained herein, the parties agree as follows: 1. Employment. The Company hereby employs Executive, and Executive hereby accepts employment with the Company, subject to the terms and conditions of this Agreement. 2. Duties and Job Description. Executive shall serve as President and Chief Executive Officer of the Company and shall do and perform all services, acts and other things necessary to perform the tasks assigned to him by the Board of Directors of the Company, which tasks shall be consistent with those normally assigned to Presidents and Chief Executive Officers of similar businesses. Executive shall devote his reasonable full-time efforts and attention to the business of the Company during the Term (as defined in Section 3, below). 2 3. Term. The term of employment under this Agreement shall become effective and shall commence as of the date hereof and shall continue for a term of four (4) years (the "Term"), unless earlier terminated in accordance with the provisions of Sections 7 or 8 of this Agreement. If this Agreement has not been previously terminated as provided herein, at the expiration of the Term, this Agreement shall continue until terminated by either party on ninety (90) days' prior written notice to the other. 4. Compensation. As compensation for the services to be performed under this Agreement, Executive shall receive a base salary (the "Salary") at the rate of $150,000.00 per year, payable in equal, biweekly installments or at such other time or times as the Company and Executive shall agree. At the end of the first year of this Agreement and each year thereafter, there shall be a review of Executive's performance and compensation by the Board of Directors of the Company. The annual review will include the possibility of a raise in salary. The Executive shall be entitled to participate in any bonus program established by the Company and shall be granted bonuses from time to time as determined by the Board of Directors. 5. Duty of Loyalty. Executive shall discharge his duties in good faith and shall not knowingly engage in any business or perform any services in any capacity whatsoever that are in conflict with the best interests of the Company. 6. Benefits: Automobile Allowance. 6.1 Benefits. Executive shall be offered comparable benefits to those offered to any other of the Company's executive officers, for the purpose of Executive's entitlement to employee benefit programs, including, without limitation, option plans, bonus programs, vacation, sick pay, expense reimbursement, retirement plans, health, life and disability insurance. 6.2 Automobile Allowance. The Company shall provide Executive with a suitable automobile in connection with the performance of his services under this Agreement in accordance with the Company's policies. 6.3 Reimbursement of Expenses. The Company shall reimburse Executive for any and all necessary, customary and usual expenses, properly receipted in accordance with corporate policies, incurred by Executive on behalf of the Company. 7. Death or Disability. 7.1 Termination of Employment. If during the term of this Agreement Executive should die or become physically or mentally disabled and as a result thereof becomes unable to continue the proper performance of his duties under Section 2 of this Agreement, Executive's employment under this Agreement shall thereupon automatically cease and terminate. The Company's obligation to pay Executive the Salary shall cease as of the date of such death or disability, except that severance shall be paid equal to one times Executive's 2 3 then current annual salary and shall be paid first from any insurance proceeds paid to the Company and the Company will pay the difference between the severance amount and the amount provided by the insurance proceeds in a lump sum within thirty (30) days of such termination. 7.2 Definition of Disabled. For purposes of this Section 7, Executive shall be "disabled" if, due to illness or injury, either physical or mental, Executive has been substantially unable to perform his customary duties for the Company for a period of one hundred eighty (180) consecutive days or an aggregate of one hundred eighty (180) days within a period of 365 consecutive days, provided the Company has given Executive thirty (30) days written notice of potential termination, and within said thirty (30) day period after written notice of termination had been given, Executive has not returned to the reasonable full-time performance of his duties. 8. Termination. 8.1 Termination by the Company for Cause. The Company may terminate this Agreement at any time for "Cause". "Cause" as used herein shall be defined as: (a) Drunkenness by Executive or illegal use of narcotics when, in the opinion of a physician selected by the Company's Board of Directors (the "Board") and reasonably acceptable to Executive, such drunkenness or use of narcotics materially impairs the ability of Executive to perform his duties under this Agreement. Prior to termination for drunkenness or illegal use of narcotics, Executive must have been offered treatment and (i) rejected the offer for treatment or (ii) failed to complete the treatment; (b) Conviction of a felony having a demonstrably material adverse effect on the financial condition of the Company; (c) Fraudulent conduct of a material nature of Executive in connection with the business affairs of the Company; (d) Any other conduct of Executive which is in material violation of this Agreement for a period of thirty (30) business days after written notice thereof is received by Executive from the Company. Executive's employment shall in no event be considered to have been terminated by the Company for Cause if such termination took place as the result of (i) any act or omission believed in good faith to have been in or not opposed to the interest of the Company, or (ii) any act or omission in respect of which a determination is made that Executive met the applicable standard of conduct prescribed for indemnification or reimbursement or payment of expenses under the by-laws of the Company or the laws of the State of Ohio, in each case as in effect at the time of such act or omission. 3 4 The vote of four (4) out of the five (5) members of the Board shall be required in order for Executive's employment to be terminated for cause pursuant to this Section 8.1. However, with respect to drunkenness under Section 8.1.a., and Section 8.1.d., such termination shall not occur unless a member of the Board, in a counseling session with Executive, has first described to Executive the reason for the termination and Executive shall then have thirty (30) days to discontinue the conduct so described or otherwise remedy the reason for the cause of termination. A written record of such counseling session shall be prepared and both the member of the Board and Executive shall sign such written record to indicate that it accurately reflects the matters discussed at the counseling session. If Executive's employment is terminated for Cause pursuant to this Section 8.1 in accordance with the provisions of this paragraph, Executive's employment may be terminated immediately without any further advance written notice and the Company shall have no obligation to make any payments to Executive under this Agreement other than the Company's obligation to pay Executive the Salary, any benefits and reimbursement of expenses accrued through the date of such termination. 8.2 Termination by the Company Without Cause or for Good Reason. In the event of termination by the Company without Cause or by the Executive for Good Reason (as defined), the Company shall pay Executive his base salary at the rate in effect as of such determination date for the longer of (a) the remainder of the term of this Agreement or (b) one year after such termination date. For purposes of this Agreement, "Good Reason" shall mean (i) a reduction in the Salary, (ii) a relocation of the Executive's headquarters outside of the Norwalk, Ohio, area, (iii) a material demunition in the Executive's duties or responsibilities, (iv) an adverse change in Executive's title, (v) assignment to Executive of duties and responsibilities inconsistent with his position in any material respect, (vi) breach by the Company or Insurance Management Solutions Group, Inc. ("IMSG") of their respective duties and obligations under this Agreement and the Corporate Governance Agreement, dated the date hereof between Executive, the Company and IMSG relating to certain corporate governance issues, (vii) breach by the Company, IMSG or Bankers Insurance Group, Inc. ("BIG") of their respective duties and obligations under the Merger Agreement, dated May 12, 1998, by and among Executive, his spouse, the Company, IMSG and BIG, (viii) breach by the Company, IMSG or BIG of their respective duties and obligations under the Option and Exchange Agreement dated of even date herewith between Executive, the Company and IMSG or the Indemnity Agreement between Executive, his spouse, the Company, IMSG and BIG, (ix) a default under the terms of that certain Subordinated Promissory Note in the principal amount of One Million Five Hundred Thousand Dollars ($1,500,000) issued by the Company to Executive, or (x) the sale, directly or indirectly, of the capital stock or substantially all of the assets of the Company to a competitor of the Company without the consent of Executive. 8.3 Termination by Executive. Executive shall have the right to terminate his employment with the Company under this Agreement at any time. Executive agrees to provide the Company with ninety (90) days' prior written notice of any such termination. The Company's obligation to pay Executive the Salary pursuant to Section 4.1, above, shall 4 5 cease as of his last day of work if Executive terminates his employment with the Company for any reason other than Good Reason. 8.4 Effect of Termination. Upon termination of this Agreement by the Company for any reason whatsoever, or upon the termination of this Agreement by Executive, this Agreement shall thereupon be and become void and of no further force or effect, except that the confidentiality and noncompetition provisions of Section 10, below, shall survive any such termination and shall continue to bind Executive. Any payments due pursuant to the provisions of this Agreement for services rendered prior to termination shall be made as provided in this Agreement. Notwithstanding the foregoing, if Executive is terminated other than for Cause, if Executive terminates his employment with the Company for Good Reason or this Agreement is not renewed for any reason other than death, disability or for Cause, Sections 10.2 and 10.4 below shall not apply and Executive shall be entitled to severance pay equal to Executive's then current salary payable in accordance with the Company's usual payroll practices for a period equal to the greater of (i) the unexpired term of this Agreement or (ii) one year (the "Severance Payment"). In the event that Executive is entitled to a Severance Payment pursuant to this Section 8.4 and Executive secures employment at any time during the greater of (i) the unexpired term of this Agreement or (ii) one year (the "Severance Period"), then the Company shall be entitled to a credit against its obligations to make the Severance Payment in an amount up to seventy-five percent (75%) of Executive's base salary during the Severance Period paid to him by his new employer. 9. Company's Performance. Executive shall prepare and deliver to the Board at least ninety (90) days prior to fiscal year-end a calendarized budget which includes a sales plan on a monthly basis for the next fiscal year indicating how the Company expects to reach the target for that fiscal year (the "Budget"). Executive shall use his best efforts to cause the Company to operate within, in all material respects, the Budget and failure to exercise his best efforts and to not achieve such goals, in all material respects, shall be reason for termination. Failure of the Company to achieve the results reflected in the Budget will not, in and of itself, be deemed a violation by Executive of this Agreement and not constitute an event giving rise to a "for cause" termination. 10. Confidentiality and Noncompetition. 10.1 Disclosure of Information. Executive acknowledges that in connection and as a result of his engagement hereunder, he will be making use of, acquiring, and/or adding to confidential information of a special and unique nature and value relating to such matters as the Company's trade secrets, systems, procedures, manuals, confidential reports, marketing or promotional methods, lists of customers, business plans and referral sources. As a material inducement to the Company's entering into this Agreement, and to pay the Salary, as well as any other additional benefits provided for herein, Executive covenants and agrees that he shall not, at any time during the duration of this Agreement, including any renewals hereof, and continuing thereafter, directly or indirectly, divulge or disclose, for any purpose whatsoever (other than the performance of his obligations hereunder), any confidential information that has been obtained by, or disclosed to, him as a result of his 5 6 duties hereunder and his prior employment with SMS Geotrac, Inc., a Delaware corporation, except to the extent that such confidential information is (a) in the public domain, (b) generally known in the flood zone mapping service industry, or (c) rightfully disclosed to Executive by a third party. 10.2 Covenant Not to Compete. In consideration of the Salary and other benefits provided herein, Executive agrees that for a period of two (2) years following Executive's termination of employment with the Company as provided for herein other than Executive's termination of employment for Good Reason and the Company's termination of Executive's employment for any reason other than for Cause, Executive shall not, directly or indirectly, engage in the flood zone compliance business nor in any other business engaged in or planned to be engaged in by the Company within any state of the United States of America or any other country in which the Company are doing or plan to do business, nor shall Executive have any interest, directly or indirectly, whether as proprietor, partner, employee, shareholder, principal, agent, creditor, consultant, director, officer or in any other capacity or manner whatsoever, in any such enterprise. For purposes of this Section 10.2, the phrase "planned to be engaged in" or "plans to do business" shall mean that as of the date Executive's employment terminates, the Company has determined, and is pursuing active steps, as evidenced by written documentation, to become involved in a new product, service or geographic area and such determination has been communicated to Executive. It is the intention of the parties that if any court shall determine that the scope, duration or geographical limit of any restriction contained in this Section 10.2 is unenforceable, the restrictive covenant set forth herein shall not thereby be terminated but shall be deemed amended to the extent required to render it valid and enforceable. Executive acknowledges that the scope, duration and geographical limitation of the restrictions contained in this Section 10 constitute a reasonable and necessary protection of the legitimate interests of the Company and that any violation of these restrictions would cause substantial injury to the Company, who would not have entered into this Agreement without receiving the additional consideration offered by Executive in binding himself to these restrictions. 10.3 Books and Records. Executive acknowledges that all files, books, records and other materials owned by the Company and their subsidiaries, as the case may be, shall at all times remain the property of the Company or their subsidiaries, as the case may be, and that upon termination of this Agreement, irrespective of the time, manner or cause of such termination, Executive shall surrender to the Company all such files, books, records and other materials. 10.4 Other Employees. Executive will not, during the term of this Agreement and for two (2) years thereafter, directly or indirectly, employ or attempt to employ or solicit for any employment any of the Company's employees. 10.5 Survival of Obligations Beyond Termination. The obligations of Executive under this Section 10 shall not terminate upon the termination of this Agreement, but, rather, 6 7 shall continue in effect thereafter. With respect to improvements, discoveries and inventions for which Executive has had any involvement, directly or indirectly, Executive shall provide the assistance deemed necessary by the Company with respect to acquiring and protecting the rights of the Company thereto, and, with respect to confidential information or other business information, until such time as the information shall be in the public domain. 10.6 Injunctive Relief. In the event of a breach or threatened breach by Executive of any of the provisions of this Section 10, the Company, in addition to, and not in limitation of, any other rights, remedies or damages available at law or in equity, shall be entitled to preliminary and permanent injunctive relief in order to prevent or restrain any such breach or threatened breach by Executive or Executive's agents, representatives or any and all persons directly or indirectly acting for or with Executive. 11. Key Man Insurance. The Company may purchase key man term life insurance on the life of Executive in an amount of up to $2,000,000 for the benefit of the Company (the "Life Insurance Policy"). Executive agrees to submit to any reasonable physical examination required in connection with the Life Insurance Policy and to otherwise cooperate with the Company in connection with its obtaining the Life Insurance Policy. Executive confirms to Company that to the best of his knowledge, he is insurable at normal rates. 12. General Provisions. 12.1. Notices. All notices which are required or may be given pursuant to the terms of this Agreement shall be in writing and shall be sufficient in all respects if (a) delivered personally, (b) mailed by registered or certified mail, return receipt requested and postage prepaid, or (c) sent via a nationally recognized overnight courier service or (d) sent via facsimile confirmed in writing to the recipient in each case as follows: If to Company or Executive: Geotrac, Inc. 3900 Laylin Road Norwalk, Ohio 44057 Attention: Daniel J. White Telephone (419) 668-8899 Telecopy: (419) 668-9266 7 8 with a copy to: Benesch, Friedlander, Coplan & Aronoff LLP 2300 BP America Building 200 Public Square Cleveland, Ohio 44114 Attention: Ira Kaplan, Esq. Telephone (216) 363-4567 Telecopy: (216) 363-4588 and copy to: Insurance Management Solutions Group, Inc. 360 Central Avenue St. Petersburg, Florida 33701 Attention: C. Anthony Sexton, Esq. Telephone: (813) 823-4000 extension 4894 Telecopy: (813) 823-6518 or such other address or addresses as either party hereto shall have designated by notice in writing to the other party hereto. 12.2 Waiver and Amendment. This Agreement may be amended, supplemented, modified and/or rescinded only through an express written instrument signed by the parties or their respective legal representatives, successors and assigns. Any party may specifically and expressly waive in writing any portion of this Agreement or any breach hereof, but no such waiver shall constitute a further or continuing waiver of any preceding or succeeding breach of the same or any other provision. The consent by one party to any act for which such consent was required shall not be deemed to imply consent or waiver of the necessity of obtaining such consent for the same or similar acts in the future. 12.3 Severability. Each provision of this Agreement is intended to be severable. If any covenant, condition or other provision contained in this Agreement is held to be invalid, void or illegal by any court of competent jurisdiction, such provision shall be deemed severable from the remainder of this Agreement and shall in no way affect, impair or invalidate any other covenant, condition or other provisions contained in this Agreement. If such condition, covenant or other provision shall be deemed invalid due to its scope or breadth, such covenant, condition or other provision shall be deemed valid to the extent of the scope or breadth permitted by law. 12.4 Successors and Assigns. Each of the terms, provisions and obligations of this Agreement shall be binding upon, shall inure to the benefit of, and shall be enforceable by the parties and their respective legal representatives, successors and assigns. 8 9 12.5 Interpretation. The language in all parts of this Agreement shall be in all cases construed simply according to its fair meaning and not strictly for or against any party. Whenever the context requires, all words used in the singular will be construed to have been used in the plural, and vice versa, and each gender will include any other gender. The captions of the Sections and Subsections of this Agreement are for convenience only and shall not affect the construction or interpretation of any of the provisions of this Agreement. 12.6 Integration. This Agreement sets forth the entire agreement between the parties with regard to the subject matter of this Agreement. All agreements, covenants, representations and warranties, express or implied, oral and written, of the parties with regard to the subject matter of this Agreement are contained in this Agreement, in the exhibits, schedules or annexes to this Agreement, and the documents referred to or implementing any provision of this Agreement. No other agreements, covenants, representations or warranties, express or implied, oral or written, have been made by either party to the other with respect to the subject matter of this Agreement. All prior and contemporaneous conversations, negotiations, covenants and warranties with respect to the subject matter of this Agreement are waived, merged in this Agreement and superseded by this Agreement. This is an integrated agreement. 12.7 Entire Agreement. This Agreement, and any exhibits, schedules or annexes and any documents executed concurrently herewith, constitute the entire agreement between the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings, oral and written, between the parties with respect to the subject matter hereof. No representation, warranty promise, inducement or statement of intention has been made by either party which as not embodied in this Agreement or such other documents; and neither party shall be bound by, or be liable for, any alleged representation, warranty, promise, inducement or statement or intention not embodied herein or therein. 12.8 Applicable Law. This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio, without regard to conflicts of law principles. However, jurisdiction and venue for any action brought to enforce the terms or conditions of this Agreement shall be the domicile of the defendant or respondent in any such action. 12.9 Attorneys' Fees. If any party to this Agreement should bring an arbitration or court action alleging breach of this Agreement or seeking to enforce, rescind, renounce, declare void or terminate this Agreement or any provisions thereof, the prevailing party shall be entitled to recover all of its legal expenses, including reasonable attorneys' fees and costs (including legal expenses for any appeals taken), and to have the same awarded as part of the judgment in the proceeding in which such legal expenses and attorneys' fees were incurred. 12.10 Representation Acknowledged. The parties acknowledge that each party and its counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party 9 10 shall not be employed in the interpretation of this Agreement or any amendments, exhibits, schedules or annexes hereto. IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the day and year indicated above. WITNESSES COMPANY Geotrac, Inc. By: - ------------------------------ ------------------------------ Its: - ------------------------------ ----------------------------- WITNESSES EXECUTIVE - ------------------------------ ---------------------------------- Daniel J. White - ------------------------------ 10 EX-10.23 26 TERM LEASE MASTER AGREEMENT 1 EXHIBIT 10.23 IBM CREDIT CORPORATION STAMFORD, CT 06904 TERM LEASE MASTER AGREEMENT Name and Address of Lessee: BANKERS INSURANCE CO Agreement No.: 577LBO5 350 CENTRAL AVE. ST. PETERSBURG, FL 33701-3857 Branch Office No.: BKA Branch Office Address: IBM CREDIT CORPORATION Customer No.: 0777056 290 HARBOR DRIVE STAMFORD, CT 06904 ATTN: RCF DEPT. 577
The Lessor pursuant to this Term Lease Master Agreement (Agreement) will be (a) IBM Credit Corporation, or a subsidiary or affiliate thereof, (b) a partnership in which IBM Credit Corporation is a partner, or (c) a related business enterprise for whom IBM Credit Corporation is the agent (Lessor). The subject matter of the lease shall be machines, field installable upgrades, feature additions or accessories marketed by International Business Machines Corporation (IBM) and shall be referred to as Equipment. Any lease transaction requested by Lessee and accepted by Lessor shall be specified in a Term Lease Supplement (Supplement). A Supplement shall refer to and incorporate by reference this Agreement and, when signed by the parties, shall constitute the lease (Lease) for the Equipment specified therein. Additional details pertaining to a Lease shall be specified in a Supplement. A Supplement may also specify additional terms and conditions as well as other amounts to be financed (Financing). Financing may include licensed program material charges (LPM Charges) for licensed programs marketed by IBM under the referenced IBM license agreement (License Agreement). 1. OPTIONS. The Supplement shall designate various lease and financing options. Option A is a Lease available only for Modifications (Paragraph 23) to Equipment under Option A prior to enactment of the Tax Reform Act of 1966. Option B is a Lease with a fair market purchase option at the end of the Lease. For Equipment under Option B Prime (B+), Lessor assumes for tax purposes that Lessee is the owner. For financing LPM Charges, Option S will apply. 2. CREDIT REVIEW. For each Lease, Lessee consents to any reasonable credit investigation and review by Lessor. 3. AGREEMENT TERM. This Agreement shall be effective when signed by both parties and may be terminated by either party upon one month's written notice. However, each Lease then in effect shall survive any termination of this Agreement. 4. CHANGES. Lessor may, upon prior written notice, change the terms and conditions of this Agreement. Any change will apply on the effective date specified in the notice to Leases which have an Estimated Shipment Date, or Effective Date for Additional License, one month after the date of notice. By notice to Lessor in writing prior to delivery, or Effective Date for Additional License, and within 15 days after receipt of such notice, Lessee may terminate the Lease for an affected item. Otherwise, the change shall apply. 5. ADVANCE RENT. Lessee shall pay to Lessor, prior to Lessor's acceptance of a Lease, Advance Rent, if specified. Advance Rent shall be refunded if Lessor for any reason does not accept the Lease or Lessee terminates the Lease in accordance with Paragraph 4, 12 or 15. 6. SELECTION AND USE OF EQUIPMENT, PROGRAMMING AND LICENSED PROGRAM MATERIALS. Lessee agrees that it shall be responsible for the selection, use of, and results obtained from, the Equipment, and programming supplied by IBM without additional charge for use on the Equipment (Programming) licensed program materials, and any other associated equipment, programs or services. 7. ASSIGNMENT TO LESSOR. Lessee hereby assigns, exclusively to Lessor, Lessee's right to purchase the Equipment from IBM. This assignment is effective when Lessor accepts the applicable Supplement and Lessor shall then be obligated to purchase and pay for the Equipment. Other than the obligation to pay the purchase price, all responsibilities and limitations applicable to Customer as defined in the referenced IBM purchase agreement in effect at the time the Lease is accepted by Lessor (Purchase Agreement) shall apply to Lessee. If the Equipment is subject to a volume procurement amendment to the Purchase Agreement or to another discount offering, (a) Lessor will pay the same amount for the Equipment that would have been payable by Lessee, and (b) Lessee will remain responsible to IBM for any late order change charges, settlement charges, adjustment charges or any other charges incurred under the volume procurement amendment or other discount offering. 8. LEASE NOT CANCELLABLE, LESSEE'S OBLIGATION ABSOLUTE. Lessee's obligation to pay shall be absolute and unconditional and shall not be subject to any delay, reduction, set-off, defense, counterclaim or recoupment for any reason whatsoever, including any failure of the Equipment, Programming or licensed program materials or any representations by IBM. If the Equipment, Programming or licensed program materials are unsatisfactory for any reason, Lessee shall make any claim solely against IBM and shall, nevertheless, pay Lessor all amounts payable under the Lease. 9. WARRANTIES. Lessor grants to Lessee the benefit of any and all warranties made available by IBM in the Purchase Agreement. Lessor warrants that neither Lessor nor anyone acting or claiming through Lessor, by assignment or otherwise, will interfere with Lessee's quiet enjoyment of the use of the Equipment so long as no event of default shall have occurred and be continuing. EXCEPT FOR LESSOR'S WARRANTY OF QUIET ENJOYMENT. LESSOR MAKES NO WARRANTY, EXPRESS OR IMPLIED, AS TO ANY MATTER WHATSOEVER. INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AS TO LESSOR. LESSEE LEASES THE EQUIPMENT AND TAKES Page 1 of 5 2 ANY PROGRAMMING "AS IS". IN NO EVENT SHALL LESSOR HAVE ANY LIABILITY FOR, NOR SHALL LESSEE HAVE ANY REMEDY AGAINST LESSOR FOR, CONSEQUENTIAL DAMAGES, ANY LOSS OF PROFITS OR SAVINGS, LOSS OF USE, OR ANY OTHER COMMERCIAL LOSS. 10. LESSEE AUTHORIZATION. So long as Lessee is not in default under the Lease (a) Lessee is authorized to act on Lessor's behalf concerning delivery and installation of the Equipment, any IBM warranty service for the Equipment, and any programming services for the Programming, and (b) Lessee shall have, solely for these purposes, all rights Lessor may have against IBM under the Purchase Agreement. The foregoing authorization shall not constitute any surrender of Lessor's interest in the Equipment. 11. DELIVERY AND INSTALLATION. Lessee shall arrange with IBM for the delivery of the Equipment and Programming and for installation of the Equipment at the Equipment Location. Lessee shall pay any delivery and installation charges. Lessor shall not be liable to Lessee for any delay in, or tallure of, delivery of the Equipment and Programming. Lessee shall examine the Equipment and Programming immediately upon delivery. If the Equipment is not in good condition or the Equipment or Programming does not correspond to IBM's specifications, Lessee shall promptly give IBM written notice and shall provide IBM reasonable assistance to cure the defect or discrepancy. 12. LATE DELIVERY. If the Equipment or licensed program materials are not delivered to the Equipment Location on or before the 15th day after the Estimated Shipment Date, Lessor may, upon written notice to Lessee, increase the Lease Rate. Lessee may terminate the Lease for the affected item by giving Lessor written notice prior to delivery. Otherwise, the Rent shall be adjusted to reflect such increase. 13. RENT COMMENCEMENT DATE. The Rent Commencement Date, unless otherwise specified in the Supplement, shall be the date payment is due IBM under the applicable referenced agreement. Lessee shall be notified of the Rent Commencement Date and the serial numbers of the Equipment. 14. LEASE TERM. The Lease shall be effective when signed by both parties. The initial Term of the Lease shall expire at the end of the number of Payment Periods, specified as 'Term' in the Supplement, after the Rent Commencement Date. However, obligations under the Lease shall continue until they have been performed in full. 15. RATE PROTECTION. Unless modified pursuant to Paragraph 12, the Rent shall be based on the Lease Rate specified in the Supplement or such greater Lease Rate as may be specified by written notice to Lessee more than one month before the Estimated Shipment Date or Effective Date for Additional License. By notice to Lessor in writing prior to delivery, or Effective Date for Additional License, and within 15 days after receipt of such notice, Lessee may terminate the Lease for the affected term. Otherwise, the Rent shall be adjusted to reflect the increase. The Unit Purchase Price and LPM Charges are subject to change in accordance with the referenced agreements. 16. RENT. During the initial Term, Lessee shall pay Lessor, for each Payment Period, Rent as determined in Paragraph 15. Lessee's obligation to pay shall begin on the Rent Commencement Date. Rent will be invoiced in advance as of the first day of each Payment Period and will be due on the day following the last day of the Payment Period. When the Rent Commencement Date is not on the fist day of a calendar month and/or when the initial Term does not expire on the last day of a calendar month, the applicable Rent will be prorated on the basis of 30-day months. Advance Rent, if any, will be applied to the initial invoice(s). 17. RENEWAL. If Lessee is not then in default under the Lease, Lessee may renew the Lease one or more times but not beyond six years from the expiration of the initial Term. Lessor shall offer renewal Terms of one year and may offer longer Terms if then generally available. For a renewal Term, upon request by Lessee, at least five months prior to Lease expiration, Lessor shall notify Lessee, at least four months prior to expiration, of the Rent, any changes to the Payment Period and due dates, and of any required Purchase Option or Renewal Option Percents not specified in the Supplement. The Rent shall be objectively determined by Lessor by using the projected fair market rental value of the Equipment as of the commencement of such renewal Term. However, for Option 3, the Rent shall be as specified in the Supplement. Lessee may renew for any renewal Term only by so notifying Lessor in writing at least three months before expiration. 18. PURCHASE OF EQUIPMENT. If Lessee is not then in default under the Lease, Lessee may, upon three months prior written notice to Lessor purchase Equipment upon expiration of the Lease. Under Option A or B, the purchase price shall be objectively determined by Lessor by using the projected fair market sales value of the Equipment as of such expiration date plus, for Equipment under Option A, any recapture of investment tax credit and any tax due thereon, Under Option B Prime (B) the purchase price shall be an amount determined by multiplying the Unit Purchase Price by the Purchase Option Percent, for such Equipment. If Lessee purchases and Equipment, Lessee shall, on or before the date of purchase, pay to Lessor the purchase price, any applicable taxes, all Rent due through the day preceding the date of purchase, any other amounts due, and the prepayment of Financing (Paragraph 35). Lessor shall, on the date of purchase, transfer to Lessee by bill of sale, without recourse or warranty of any kind, express or implied, all of Lessor's right, title and interest in and to such Equipment on an "As is, Where is" basis except that Lessor shall warrant titles free and clear of all encumbrances 19. OPTIONAL EXTENSION. If Lessee has not elected to renew or purchase, and as long as Lessee is not in default under the Lease, the Lease will be extended unless Lessee notifies Lessor in writing, not less than three months prior to Lease expiration, that Lessee does not want the extension. The extension will be under the same terms and conditions then in effect, including Rent (but, for Options A or B, not less than fair market rental value) and will continue until the earlier of termination by either party upon three months' prior written notice or six years after expiration of the initial Term. 20. INSPECTION; MARKING; FINANCING STATEMENT. Upon request, Lessee shall make the Equipment and its maintenance records available for inspection by Lessor during Lessee's normal business hours. Lessee shall affix to the Equipment any labels indicating ownership supplied by Lessor. Lessee shall execute and deliver to Lessor for filing any Uniform Commercial Code financing statements or similar documents Lessor may reasonably request. 21. EQUIPMENT USE. Lessee agrees that Equipment will be operated by competent, qualified personnel, in accordance with applicable operating instructions, laws and government regulations and that Equipment under Option A will be used only for business purposes. 22. MAINTENANCE. Lessee, at its expense, shall keep the Equipment in a suitable environment as specified by IBM and in good condition and working order, ordinary wear and tear excepted. 23. ALTERATIONS; MODIFICATIONS; PARTS. Lessee may alter or modify the Equipment only upon written notice to Lessor. Any non-IBM alteration is to be removed and the Equipment restored to its normal, unaltered condition at Lessee's expense prior to its return to Lessor. At Lessee's option, any IBM held installable upgrade, feature addition or accessory added to any item of Equipment (Modification) may be removed. If removed, the Equipment is to be restored at Lessee's expense to its normal, unmodified condition. If not removed, such Modification shall, upon return of the Equipment, become, without charge, the property of Lessor free of all encumbrances. Restoration will include replacement of any parts removed in connection with the installation of an alteration or Modification. Any part installed in connection with warranty or maintenance service shall be the property of Lessor. 24. LEASES FOR MODIFICATIONS AND ADDITIONS. Lessor will arrange for leasing of Modifications and Additions under terms and conditions then generally in effect, subject to satisfactory credit renew. Additions shall be machines, or LPM Charges for licensed program materials, which are associated with the Equipment. These Modifications and Additions must be ordered by Lessee from IBM. Any lease for Modifications shall, and any lease for Additions may, expire at the same time as the Lease for the Equipment. The rent shall be determined by Lessor and specified in a Supplement. If Lessee purchases Equipment prior to Lease expiration, Lessee shall simultaneously purchase any Modifications under the Lease. 25. RETURN OF EQUIPMENT. Upon expiration or termination of the Lease for any item of Equipment, or upon demand by Lessor pursuant to Paragraph 38, Lessee shall promptly return the Equipment, freight prepaid, to a location in the continental United States specified by Lessor. Except for Casualty Loss. Lessee shall pay and costs any expenses incurred by Lessor to inspect and 3 qualify the Equipment for IBM's maintenance agreement service. Any parts removed in connection therewith shall become Lessor's property. 26. CASUALTY INSURANCE; LOSS OR DAMAGE. Lessor will maintain, at its own expense, insurance covering loss of or damage to the Equipment (but excluding any Modifications not subject to a Lease and any non-IBM alterations) with a $5,000 deductible per incident. If any item of Equipment shall be lost, stolen, destroyed or irreparably damaged by any cause whatsoever (Casualty Loss) before the Date of installation as defined in the Purchase Agreement, the Lease for that item shall terminate. If any item of Equipment suffers Casualty Loss, or shall be otherwise damaged, on or after the Date of Installation, Lessee shall promptly inform Lessor. If Lessor determines that the item can be economically repaired, Lessee shall place the item in good condition and working order and Lessor will reimburse Lessee the reasonable cost of such repair, less the deductible. If not so repairable, Lessee shall pay Lessor the lesser of $5,000 or the fair market value of the Equipment immediately prior to the Casualty Loss. Upon Lessor's receipt of payment the Lease for that item shall terminate. 27. TAXES. Lessee shall promptly reimburse Lessor for, or shall pay directly if so requested by Lessor, as additional Rent, all taxes, charges, and fees imposed or lewed by any governmental body or agency upon or in connection with the purchase, ownership leasing, possession, use or relocation of the Equipment or Programming or in connection with the financing of LPM Charges or otherwise in connection with the transactions contemplated by the Lease, excluding, however, all taxes on or measured by the net income of Lessor. Upon request, Lessee will provide proof of payment. Any other taxes, charges and fees relating to the licensing, possession or use of licensed program materials will be governed by the License Agreement. 28. LESSOR'S PAYMENT. If Lessee fails to perform its obligations under Paragraph 27 or 31 or to discharge any encumbrances created by Lessee, Lessor shall have the right to substitute performances, in which case, Lessee shall pay Lessor the cost thereof. 29. TAX INDEMNIFICATION (APPLIES ONLY FOR EQUIPMENT UNDER OPTIONS A OR B). The Lease is entered into on the basis that under the Internal Revenue Code of 1986, as amended (Code), Lessor shall be entitled to (1) maximum Accelerated Cost Recovery System (ACRS) deductions for 5-year property and (2) deductions for interest expense incurred to finance purchase of the Equipment. The Bulletin "Lessor's Tax Assumptions" will be given to Lessee on request. Lessee represents, warrants and covenants that at all times during the Lease: (a) no item of Equipment will constitute "public utility property" as defined in the Code; (b) Lessee will not make any election under the Code or take any action, or fail to take any action, if such election, action or failure to act would cause any item of Equipment to cease to be eligible for any ACRS deductions or interest deductions; (c) Lessee will keep and make available to Lessor the records required to establish the matters referred to in this Paragraph 29; and (d) for Equipment located in a United States possession, Lessee represents that Lessee is a tax exempt entity as defined in the Code. Furthermore, if Lessee is a tax exempt entity, Lessee covenants that it will not renew or extend the Lease if such action shall cause Lessor a Tax Loss as described below. If, as a result of any act, failure to act, misrepresentation, inaccuracy, or breach of any warranty or covenant, or default under the Lease, by Lessee, and affiliate of Lessee, or any person who shall obtain the use of possession of any item of Equipment through Lessee, Lessor shall lose the right to claim or shall suffer any disallowance or recapture of all or any portion of any ACRS deductions or interest deductions (Tax Loss) with respect to any item of Equipment, then, promptly upon written notice to Lessee that a Tax Loss has occurred, Lessee shall reimburse Lessor the amount determined below. The reimbursement shall be an amount that, in the reasonable opinion of Lessor, shall make Lessor's after-tax rate of return and cash flows (Financial Returns), over the term of the Lease for such item of Equipment, equal to the expected Financial Returns that would have been otherwise available. The reimbursement shall take into account the effects of any interest, penalties and additions to tax required to be paid by Lessor as a result of such Tax Loss and all taxes required to be paid by Lessor as a result of any payments pursuant to this paragraph. Financial Returns shall be based on economic and tax assumptions used by Lessor in entering into the Lease. All the rights and privileges of Lessor arising from this Paragraph 29 shall survive the expiration or termination of the Lease. For purposes of determining tax effects under Paragraphs 18, 27, 29, 30, the term "Lessor" shall include, the extent of interests, any partner in Lessor and any affiliated group of corporations, and each member thereof, of which Lessor or any such partner is or shall become a member and with which Lessor or any such partner joins in the filing of consolidated or combined returns. 30. GENERAL INDEMNITY. This Lease is a net lease. Therefore, Lessee shall indemnify Lessor against, and hold Lessor harmless from, any and all claims, actions, damages, obligations, liabilities and items; and all costs and expenses, including legal fees, incurred by Lessor in connection therewith; arising out of the Lease including, without limitation, the purchase, ownership, lease, licensing, possession, maintenance, condition, use or return of the Equipment, Programming or licensed program materials; or arising by operation of law; excluding, however, any of the foregoing which result from the sole negligence or willful misconduct of Lessor. Lessee agrees that upon written notice by Lessor at the assertion of any claim, action, damage, obligation, liability or lien, Lessee shall assume full responsibility for the defense thereof. Any payment pursuant to this paragraph shall be of such amount as shall be necessary so that, after payment of any taxes required to be paid thereon by Lessor, including taxes on or measured by the net income of Lessor, the balance will equal the amount due hereunder. Lessee's obligations under this paragraph shall not constitute a guarantee of the residual value or useful life of any item of Equipment or a guarantee of any debt of Lessor. The provisions of this paragraph with regard to matters arising during the Lease shall survive the expiration or termination of the Lease. 31. LIABILITY INSURANCE. Lessee shall obtain and maintain comprehensive general liability insurance, in an amount of $1,000,000 or more for each occurrence, with an insurer having a "Best's Policyholders" rating or B+ or better. The policy shall name Lessor as an additional insured as Lessor's interests may appear and shall contain a clause requiring the insurer to give Lessor at least one month's prior written notice of the cancellation, or any alteration in the terms, of the policy. Lessee shall furnish to Lessor, upon request, evidence that such insurance coverage is in effect. 32. SUBLEASE AND RELOCATION OF EQUIPMENT; ASSIGNMENT BY LESSEE. Upon Lessor's prior written consent, which will not be unreasonably withheld, Lessee may sublet the Equipment or relocate it from the Equipment Location. No sublease or relocation shall relieve Lessee or its obligations under the Lease, in no event shall Lessee remove the Equipment from the United States. Lessee shall not assign, transfer or otherwise dispose of the Lease or Equipment, or any interest therein, or create or suffer any levy, lien or encumbrance thereof except those created by Lessor. 33. ASSIGNMENT BY LESSOR. Lessee acknowledges and understands that the terms and conditions of the Lease have been fixed to enable Lessor to sell and assign its interest or grant a security interest or interests in the Lease and the Equipment individually or together, in whole or in part, for the purpose of securing loans to Lessor or otherwise. If Lessee is given written notice of any assignment, it shall promptly acknowledge receipt thereof in writing. Each such assignee shall have all of the rights of Lessor under the Lease. Lessee shall not assert against any such assignee any set-off, defense or counterclaim that Lessee may have against Lessor or any other person. Lessor shall not be relieved of its obligations hereunder as a result of any assignment unless Lessee expressly consents thereto. 34. FINANCING. If the Lease provides for financing of LPM Charges, Lessor will pay such Charges directly to IBM. Any other charges due IBM under the License Agreement shall be paid directly to IBM by Lessee. Lessee's obligation to pay Rent shall not be affected by any discontinuance, return or destruction of any license or licensed program materials under the License Agreement on or after the date LPM Charges are due. If Lessee discontinues any of the licensed program materials in accordance with the terms of the License Agreement prior to the date LPM Charges are due, the financing of affected LPM Charges shall be cancelled. 4 35. FINANCING PREPAYMENT (Does Not Apply For Items of Equipment). Lessee may terminate an item of Financing (but not an item of Equipment) by prepaying its remaining Rent. Lessee shall provide Lessor with notice of the intended prepayment date which shall be at least one month after the date of the notice. Lessor may, depending on market conditions at the time, make an adjustment in the remaining Rent to reflect such prepayment and shall advise Lessee of the balance to be paid. If, prior to Lease expiration, Lessee purchases the Equipment or if the Lease is terminated, Lessee shall at the same time prepay any related Financing including that for programs licensed to the Equipment. 36. DELINQUENT PAYMENTS. If any amount to be paid to Lessor is not paid on or before its due date, Lessee shall pay Lessor on demand 2% or such late payment for each month or part thereof from the due date until the date paid or, if less, the maximum allowed by law. 37. DEFAULT: NO WAIVER. Lessee shall be in default under the Lease upon the occurrence of any of the following events: (a) Lessee fails to pay when due any amount required to be paid by Lessee under the Lease and such failure shall continue for a period of seven days after the due date: (b) Lessee fails to perform any other provisions under the Lease or violates any of the covenants or representations made by Lessee in the Lease, or Lessee fails to perform any of its obligations under any other Lease entered into pursuant to this Agreement, and such failure or breach shall continue unremedied for a period of 15 days after written notice is received by Lessee from Lessor: (c) Lessee violates any of the covenants or representations made by Lessee in any application for credit or in any agreement with IBM with respect to the Equipment or licensed program materials or fails to perform any provision in any such agreement (except the obligation to pay the purchase price or LPM Charges); (d) Lessee makes an assignment for the benefit of creditors, whether voluntary or involuntary, or consents to the appointment of a trustee or receiver, or if either shall be appointed for Lessee or for a substantial part of its property without its consent; (e) any petition or proceeding if filed by or against Lessee under any Federal or State bankruptcy or insolvency code or similar law; or (f) if applicable, Lessee makes a bulk transfer subject to the provisions of the Uniform Commercial Code. Any failure of Lessor to require strict performance by Lessee or any waiver by Lessor of any provision in the Lease shall not be construed as a consent or waiver of any other breach of the same or of any other person. 38. REMEDIES. If Lessee is in default under the Lease, Lessor shall have the right, in its sole discretion, to exercise any one or more of the following remedies in order to protect its interests, reasonably expected profits and economic benefits. Lessor may (a) declare any Lease entered into pursuant to this Agreement to be in default; (b) terminate in whole or in part any Lease; (c) recover from Lessee any and all amounts then due and to become due; (d) take possession of any or all items of Equipment, wherever located, without demand or notice, without any court order or other process of law; and (e) demand that Lessee return any or all such items of Equipment to Lessor in accordance with Paragraph 25, and for each day that Lessee shall fail to return any item of Equipment, Lessor may demand an amount equal to the Rent, prorated on the basis of a 30-day month, in effect, immediately prior to such default. Upon repossession or return of such item or items of Equipment, Lessor shall sell, lease or otherwise dispose of such item or items in a commercially reasonable manner, with or without notice and on public or private bid, and apply the net proceeds thereof towards the amounts due under the Lease but only after deducting (i) in the case of sale, the estimated fair market value of such item or items as of the scheduled expiration of the Lease; or (ii) in the case of any replacement lease, the rent due for any period beyond the scheduled expiration of the Lease for such item or items (iii) in either case, all expenses, including legal fees, incurred in connection therewith; and (iv) where appropriate, any amount in accordance with Paragraph 29. Any excess net proceeds are to be retained by Lessor. Lessor may pursue any other remedy available at law or in equity, including, but not limited to, seeking damages, specific performance and an injunction. No right or remedy is exclusive of any other provided herein or permitted by law or equity. All such rights and remedies shall be cumulative and may be enforced concurrently or individually from time to time. 39. LESSOR'S EXPENSE. Lessee shall pay Lessor on demand all costs and expense, including legal and collection fees, incurred by Lessor in enforcing the terms, conditions or provisions of the Lessee or in protecting Lessor's rights and interests in the Lease and the Equipment. 40. OWNERSHIP; PERSONAL PROPERTY; LICENSED PROGRAM MATERIALS. The Equipment under Lease is and shall be the property of Lessor. Lessees shall have no right, title or interest therein except as set forth in the Lease. The Equipment is, and shall at all times be and remain, personal property and shall not become a fixture or realty. Licensed program materials are licensed and provided by IBM directly to Lessee under the terms and conditions of the License Agreement. 41. NOTICES; ADMINISTRATION. Service of all notices under the Lease shall be sufficient if delivered personally or mailed to Lessee at its address specified in the Supplement or to IBM Credit Corporation as Lessor in care of the IBM Branch Office specified in the Supplement. Notice by mail shall be effective when deposited in the United States mail, duty addressed and with postage prepaid. Notices, consents and approvals from or by Lessor shall be given by Lessor or on its behalf by IBM and all payments shall be made to IBM until Lessor shall notify Lessee Otherwise. 42. LESSEE REPRESENTATION. If the Lease includes Financing, Lessee represents that it is (a) a corporation if any item of Equipment is located in Ohio, Mississippi, Virginia or West Virginia, and/or (b) a business corporation if any item of Equipment is located in Pennsylvania. 43. REVISIONS FOR PREVIOUSLY INSTALLED EQUIPMENT. Equipment installed with Lessee under an IBM Lease or rental agreement may be purchased by Lessor, on the Effective Date of Purchase Agreement), for lease to Lessee under Option B or S. For such Equipment, the Lease shall be revised as follows: Paragraphs 4 and 35 - replace "Estimated Ship Date" by "Intended Effective Date of Purchase," replace "delivery" and "Date of installation" by "Effective Date of Purchase." Paragraph 7 - add at the end of the first paragraph, "Assignment of the option to purchase installed Equipment at the net purchase option price under an IBM lease or rental agreement will be permitted only when Lessee submits the Supplement in sufficient time to achieve the intended Effective Date of Purchase. The Effective Date of Purchase under this assignment shall be the later of the first day of the Quotation Month or the day on which the applicable Supplement is accepted by Lessor. If the Quotation Month expires and the purchase of Equipment is not concluded, this assignment and Lease will be null and void regarding any such Equipment and all nights, duties and obligations or Lessee and IBM will remain in accordance with the provisions of the IBM agreement under which the Equipment is currently installed": Paragraphs 11 and 12 - delete both paragraphs: and Paragraphs 15 - replace the entire paragraph with the following: "The Rent shall be based on the Lease Rate specified in the Supplement or such greater Lease Rate as may be specified by written notice to Lessee more than one month before the Effective Date of Purchase. The Unit Purchase Price is subject to change in accordance with the referenced Purchase Agreement. Lessee may terminate the Lease for any item subject to an increase by giving Lessor written notice on or before the Effective Date of Purchase." 44. APPLICABLE LAW; SEVERABILITY. The Lease shall be governed by the laws of the State of Connecticut. If any provision shall be held to be invalid or unenforceable, the validity and enforceability of the remaining provisions shall not in any way be affected or impaired. THE ADDITIONAL TERMS AND CONDITIONS ON PAGES 2 THROUGH 4 ARE PART OF THIS AGREEMENT. LESSEE ACKNOWLEDGES THAT LESSEE HAS READ THIS AGREEMENT AND ITS SUPPLEMENT, UNDERSTANDS THEM, AND AGREES TO BE BOUND BY THEIR TERMS AND CONDITIONS. FURTHER, LESSEE AGREES THAT THIS AGREEMENT AND ITS SUPPLEMENT ARE THE COMPLETE, AND EXCLUSIVE STATEMENT OF THE AGREEMENT BETWEEN THE PARTIES, SUPERSEDING ALL PROPOSALS OR PRIOR AGREEMENTS, ORAL OR WRITTEN, AND ALL OTHER COMMUNICATIONS BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER THEREOF. / / INITIAL IF AGREEMENT COVERAGE PAGE IS ATTACHED. Accepted by: IBM Credit Corporation BANKERS INSURANCE CO -------------------------------- Customer For or as Lessor By: /s/ Eileen Torres By: /s/ S. Kyle Moll -------------------------- --------------------------- Authorized Signature Eileen Torres 8/6/96 S. Kyle Moll 7/25/96 - ----------------------------- -------------------------------- Name (Type or Print) Date Name (Type or Print) Date 5 IBM CREDIT CORPORATION STAMFORD, CT 06904 TERM LEASE MASTER AGREEMENT Agreement No.: 577LB05 Enterprise No.: 0776843 AGREEMENT COVERAGE PAGE List below all entities affiliated with Lessee that may execute Supplements and be deemed bound to this Agreement:
Entity Legal Name Address (if not all locations) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.
Page 5 of 5 EX-10.24 27 SALES AND ASSIGNMENT AGREEMENT 1 EXHIBIT 10.24 SALES AND ASSIGNMENT AGREEMENT This Sales and Assignment Agreement ("Agreement") is by and between Insurance Management Solutions Group, Inc. ("IMSG"), Insurance Management Solutions, Inc. ("IMS"), Bankers Insurance Group, Inc. ("BIG"), Bankers Insurance Services, Inc. ("BIS"), Bankers Life Insurance Company ("BLIC"), Southern Rental & Leasing Corporation ("Southern Rental"), Bankers Insurance Company ("BIC") and Bankers Security Insurance Company ("BSIC"). WHEREAS, IMSG is restructuring itself to better provide (i) comprehensive outsourcing services to the property and casualty insurance industry, with an emphasis on providing administration outsourcing services for flood insurers and (ii) flood zone determination and ancillary services primarily to insurance companies and financial institutions; and WHEREAS, in the process, IMSG and IMS will need certain assets which previously were held by other entities; and WHEREAS, certain other assets will no longer be needed by IMSG or IMS; NOW, THEREFORE, in consideration of the promises and of the mutual covenants herein contained, and intending to be legally bound hereby, the parties hereto agree as follows: 1. SALES AND ASSIGNMENTS. a) Southern Rental shall transfer to IMS certain telephone equipment described in Exhibit "A" attached hereto and incorporated herein by reference pursuant to the attached quit claim bill of sale attached as Exhibit "B". The consideration for said transfer shall be $448,750 as reflected in the Promissory Note attached hereto as Exhibit "C" to be executed by IMS and cash of $325,075.49. The cash represents the difference between the Promissory Note and net book value. This transaction is effective April 1, 1998. b) IMS agrees to convey to BLIC pursuant to the quit claim bill of sale attached as Exhibit "D" its ownership interest in the Stone Eagle software system in consideration for the payment of One Dollar ($1.00), the receipt of which is hereby acknowledged. The effective date of this transaction is April 1, 1998. c) IMS and BLIC agree to enter into the attached Storage and Use Agreement attached hereto as Exhibit "E" to account for the cost incurred by IMS on behalf of BLIC in storing the Stone Eagle software system on the AS/400 computer hardware of IMS. The effective date of this transaction is April 1, 1998. d) IMS shall transfer to BIS by the attached quit claim bill of sale referred to as Exhibit "F" the SiTech collateralized loan tracking program and source 1 2 codes known as SiTrac in consideration of the assumption of the outstanding indebtedness on the software as of the date of the original acquisition by IMS, said amount being $1,278,279.88, less option payments previously paid in the amount of $1,500,000.00 and the assumption by BIS of the Software Maintenance and Enhancement Agreement attached as Exhibit "G". e) BIC hereby assigns all of its right, title and interest to IMS in its leases with IBM Credit Corporation of various computer hardware as reflected in attached Exhibits "H", "I", "J", "K", "L" and "M" attached hereto. IMS hereby accepts such assignments. The consideration for this transfer is the assumption of all the obligations under the leases by IMS. The effective date of this transaction is April 1, 1998. f) Pursuant to Assignments of Registered Service Marks attached as Exhibit "N" and Exhibit "O", BIC, in consideration of One Dollar ($1.00) paid by IMS assigns to IMS its service mark registration in FLOODWRITER and UNDERCURRENTS. g) Additional assets consisting mainly of computer hardware and software, office equipment and furniture are hereby transferred to IMS pursuant to the attached quit claim bills of sale as Exhibits "P" and "Q" from BIG and BSIC respectively in consideration of inter-company transfers of $19,015.05 and $35,508.29, respectively and quit claim bill of sale labeled Exhibit "R" in consideration of a Promissory Note in the amount of $2,353,424.42 attached as Exhibit "S". All amounts represent net book value at the time of the transaction. The effective date of these transactions is April 1, 1998. 2. ASSIGNMENT. This Agreement and any rights pursuant hereto shall not be assignable by either party hereto, except by operation of law. Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto, or their respective legal successors, any rights, remedies, obligations or liabilities, or to relieve any person other that the parties hereto, or their respective legal successors, from any obligations or liabilities that would otherwise be applicable. 3. GOVERNING LAW. This Agreement is made pursuant to and shall be governed by, interpreted under, and the right of the parties determined in accordance with, the laws of the State of Florida. 4. NOTICE. All notices, statements or requests provided for hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand to an officer of the other party, or when deposited with the U.S. Postal Service, as certified or registered mail, postage prepaid, addressed 2 3 (a) If to IMSG or IMS to: 360 Central Avenue P.O. Box 15707 St. Petersburg, FL 33733 Attn: Jeffrey S. Bragg (813) 823-4000 x 4427 FAX (813) 823-6518 (b) If to BIG, BIS, BLIC, Southern Rental, BSIC or BIC to: 360 Central Avenue P.O. Box 15707 St. Petersburg, FL 33733 Attn: G. Kristin Delano (813) 823-4000 x 4416 FAX (813) 823-6518 or to such other person or place as each party may from time to time designate by written notice sent as aforesaid. 5. HEADINGS. The headings of the various paragraphs of this Agreement are for convenience only, and shall be accorded no weight in the construction of this Agreement. 6. ENTIRE AGREEMENT. This Agreement, together with such Amendment as may from time to time be executed in writing by the parties, constitutes the entire Agreement between the parties with respect to the subject matter hereof. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in duplicate by their respective officers duly authorized so to do, and their respective corporate seals to be attached hereto as of the date and year first above written. WITNESSES: INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. ("IMSG") /s/ C. Anthony Sexton BY: /s/ Jeffrey S. Bragg - --------------------------------- ------------------------------ AS ITS: COO - --------------------------------- -------------------------- DATE: 5/6/98 ---------------------------- 3 4 WITNESSES: BANKERS INSURANCE GROUP, INC. ("BIG") /s/ C. Anthony Sexton BY: /s/ G. Kristin Delano - --------------------------------- ----------------------------- AS ITS: - --------------------------------- ------------------------- DATE: 5/7/98 ------------------------- WITNESSES: BANKERS INSURANCE SERVICES ("BIS") /s/ C. Anthony Sexton BY: /s/ G. Kristin Delano - --------------------------------- ----------------------------- AS ITS: - --------------------------------- ------------------------- DATE: 5/7/98 ------------------------- WITNESSES: BANKERS LIFE INSURANCE COMPANY ("BLIC") /s/ C. Anthony Sexton BY: /s/ G. Kristin Delano - --------------------------------- ----------------------------- AS ITS: - --------------------------------- ------------------------- DATE: 5/7/98 ------------------------- WITNESSES: SOUTHERN RENTAL & LEASING CORPORATION ("Southern Rental") /s/ C. Anthony Sexton BY: /s/ G. Kristin Delano - --------------------------------- ----------------------------- AS ITS: - --------------------------------- ------------------------- DATE: 5/7/98 ------------------------- 4 5 WITNESSES: BANKERS INSURANCE COMPANY ("BIC") BY: /s/ G. Kristin Delano - --------------------------------- ----------------------------- AS ITS: - --------------------------------- ------------------------- DATE: ------------------------- WITNESSES: INSURANCE MANAGEMENT SOLUTIONS, INC. ("IMS") /s/ C. Anthony Sexton BY: /s/ Jeffrey S. Bragg - --------------------------------- ----------------------------- AS ITS: COO - --------------------------------- ------------------------- DATE: 5/6/98 ------------------------- WITNESSES: BANKERS SECURITY INSURANCE COMPANY ("BSIC") BY: /s/ G. Kristin Delano - --------------------------------- ----------------------------- AS ITS: - --------------------------------- ------------------------- DATE: ------------------------- 5 6
Exhibits: --------- Exhibit "A" Telephone Equipment Exhibit "B" Quit Claim Bill of Sale from Southern Rental to IMS Exhibit "C" Promissory Note to Southern Rental Exhibit "D" Quit Claim Bill of Sale from IMS to BLIC Exhibit "E" Storage and Use Agreement Exhibit "F" Quit Claim Bill of Sale from IMS to BIS Exhibit "G" Software Maintenance and Enhancement Agreement Exhibit "H" Leases with IBM Credit Corporation Exhibit "I" Leases with IBM Credit Corporation Exhibit "J" Leases with IBM Credit Corporation Exhibit "K" Leases with IBM Credit Corporation Exhibit "L" Leases with IBM Credit Corporation Exhibit "M" Leases with IBM Credit Corporation Exhibit "N" Assignments of Registered Service Marks Exhibit "O" Assignments of Registered Service Marks Exhibit "P" Quit Claim Bill of Sale from BIG to IMS Exhibit "Q" Quit Claim Bill of Sale from BSIC to IMS Exhibit "R" Quit Claim Bill of Sale from BIC to IMS Exhibit "S" Promissory Note to BIC
6 EX-10.25 28 SOFTWARE MAINTENANCE AND ENHANCEMENT AGREEMENT 1 EXHIBIT 10.25 SOFTWARE MAINTENANCE AND ENHANCEMENT AGREEMENT This Software Maintenance and Enhancement Agreement (this "Agreement") is made as of the date indicated below by and between Systems Integration and Imaging Technologies Incorporated, 7901 4th Street North, Suite 210, St. Petersburg, Florida 33702 (hereinafter referred to as "Si Tech"), and Insurance Management Information Services, Inc., 360 Central Avenue, St. Petersburg, Florida 33701 (hereinafter referred to as "IMIS"). WHEREAS, IMIS has exercised an option to purchase from SI Tech a collateralized loan tracking program known as SI TRAC I (hereinafter referred to as "PROGRAM"); and WHEREAS, IMIS desires to receive maintenance service for the Program and enhancements; and WHEREAS, SI Tech, desires to provide such maintenance and enhancement services of such Program. NOW, THEREFORE, for and in consideration of the covenants and promises herein recited, it is understood and agreed as follows: 1. Enhancements. To the extent that, during the term hereof, SI Tech shall enhance the Program, such enhancement shall be provided to IMIS via one (1) copy of every new release of the Program, including all modifications, enhancements and corresponding technical documentation of the Program subject to this Agreement which shall be provided in both source and object code in machine readable form. 2. Maintenance Services. SI Tech agrees, during the term hereof, to maintain the Program in such manner that the Program shall perform in substantial conformance with the then-existing published specifications which may be updated from time to time and furnished to IMIS and to ensure that the Program operates both source and object code in machine readable form. SI Tech shall be available during normal IMIS working hours to respond to inquiries by IMIS for technical consultation concerning maintenance and upgrading of the Program and management of employees working with the Program. 3. Modifications. Title to any and all property rights in any new version, modification, rewriting or enhancement of the Program and all related documentation and other materials supplied to IMIS hereunder are and shall become part of the assets being acquired by IMIS in an Asset Purchase Agreement of even date hereof. 4. Specially Requested Enhancements. SI Tech understands that IMIS may in the future request that SI Tech develop, at IMIS's expense, certain enhancements to the Program. SI Tech hereby agrees that it will develop all enhancements requested by IMIS which reasonably relate to the functions or processes 1 2 performed by Program. IMIS agrees to pay a reasonable rate for all services performed in developing any such enhancements and to reimburse Si Tech for all out-of-pocket expenses incurred in connection therewith. Si Tech reserves that right to reject requests by IMIS for enhancements which do not reasonably relate to the functions or processes performed by Program or which by their nature would require that Si Tech significantly restructure Program in order to make Program compatible with such requested enhancement. 5. Terms And Payment. This Agreement shall be for a term of five years commencing on April 1, 1997 with payment due to Si Tech of Twenty Five Thousand Dollars ($25,000.00) every three months on the first business day of that month for a total of Five Hundred Thousand Dollars ($500,000.00) over the five year term and can only be terminated pursuant to Section 8. 6. Employees. Employees shall mean those current employees of SI Tech who develop and service the Program. 7. Responsibilities of SI Tech. SI Tech, subject to available funding from and review by IMIS shall: a) Establish and maintain programs to promote the most effective utilization of the acquired Program; b) Maintain quality staffing; c) Maintain the Program and any enhancements or modifications so as to maximize the potential of the business serviced by the Program. 8. Default by SI Tech. SI Tech shall be deemed to be in default under this Agreement in the event it shall fail to maintain the Program, or fail to keep, observe or perform any covenant, agreement, term or provision of this Agreement to be kept, observed or performed by SI Tech, and such default shall continue for a period of thirty (30) days after written notice thereof by IMIS to SI Tech or, if such default cannot be cured within such thirty (30) day period, then such additional periods as shall be reasonable, provided SI Tech is capable of curing same, has proceeded to commence cure of such default within said period, and thereafter diligently prosecutes the cure to completion. 9. Remedies of IMIS. Upon the occurrence of an event of default by SI Tech as specified in Section 8 of this Agreement and expiration of any applicable cure period provided by this Agreement, or if IMIS does not exercise its option to acquire the Program, IMIS shall be entitled to terminate this Agreement. 10. No Waiver of Default. The failure of IMIS to seek remedy for any violation of, or to insist upon the strict performance of, any term or condition of this Agreement shall not prevent a subsequent act by SI Tech which would have originally constituted a violation of this Agreement, from having all the force and effect of an original violation. IMIS may waive any breach or threatened breach by SI Tech or any term or condition herein contained only by writing delivered to the 2 3 party in default. The failure by IMIS to insist upon the strict performance of any one of the terms or conditions of this Agreement or to exercise any right, remedy or election herein contained not permitted by law shall not constitute or be construed as a waiver or relinquishment for the future of such term, condition, right, remedy or election, but the same shall continue and remain in full force and effect. All rights and remedies IMIS may have at law, in equity or otherwise for any breach of any term or condition of this Agreement, shall be distinct, separate and cumulative rights and remedies and no one of them, whether or not exercised by IMIS, shall be deemed to be in exclusion of any right or remedy of IMIS. 11. Not Partners. SI Tech and IMIS and any of its affiliates are not and shall not be considered as joint venturers, partners or agents of each other and neither shall have the power to bind or obligate the other. 12. Construction of Agreement. Words of a gender used in this Agreement shall be held to include any other gender, the words in a singular number held to include the plural, when the sentence so requires. 13. Captions. The paragraph captions as to contents of the particular paragraphs herein are inserted only for convenience and are in no way to be construed as part of this Agreement or as a limitation of the scope of the particular paragraph in which they are referred. 14. Modification. No change or modification of this Agreement shall be valid unless the same shall be in writing and signed by all of the parties hereto. 15. Attorney's Fees. Subject to reasonable construction and sound business practices, if SI Tech, or IMIS should bring an action alleging breach of this Agreement or seeking to enforce, rescind, renounce, declare, void or terminate this Agreement or any provisions thereof, the prevailing party shall be entitled to recover all of its legal expenses, including reasonable attorney's fees and costs (including legal expenses for any appeals taken), and to have the same awarded as part of the judgment in the proceeding in which such legal expenses and attorney's fees were incurred. 16. Independent Contractor. IMIS and SI Tech agree that SI Tech will act as an independent contractor in the performance of its duties under this contract. The manner and means of conducting the work are under the sole control of SI Tech. Accordingly, SI Tech shall be responsible for the payment of all taxes including federal, state and local taxes arising out of SI Tech's activities in accordance with this contract, including by way of illustration, but not limitation, federal and state income tax, social security tax, unemployment insurance tax, and any other taxes or business license fees as required. In addition, as an independent contractor, SI Tech shall not be entitled to workers compensation benefits, unemployment benefits, insurance benefits, vacation pay, or any other employee benefit that IMIS may offer its full or part time employees. 3 4 17. Nondisclosure. SI Tech recognizes and acknowledges that the list of IMIS and its affiliates customers, trade secrets, data processing Programs, computer software, computer programs, or other Programs, data, methods, or procedures developed or used by IMIS, as they may exist from time to time, are valuable, special and unique assets of IMIS's business. SI Tech will not, during or after the term of this agreement without the prior written consent of IMIS, which consent may be arbitrarily withheld, and except to the extent necessary to accomplish assignments on behalf of IMIS in which SI Tech is, at any given time during the term of SI Tech's tenure with IMIS, currently and actively engaged, possess, transmit, copy, reproduce, or disclose the list of IMIS's customers or any part thereof or any of IMIS's present or future trade secrets, or any data processing Programs, computer software, computer programs or other Programs data, methods, or procedures except as provided in that Software License Agreement executed on even date herewith, or as required by legal process, to any person, firm, corporation, association, or any other entity for any reason or purpose whatsoever, nor will the undersigned assist anyone else to do so provided, however, that if IMIS is in material breach of this Agreement as determined by the arbitration panel as provided herein, then, in that instance, SI-Tech shall not be subject to the terms of this section with respect to the customers, trade secrets, data processing systems, computer software, programs or other systems, methods or procedures serviced or utilized by SI-Tech prior to the execution of this Agreement. In the event of a breach or threatened breach by SI Tech of the provisions hereof, IMIS shall be entitled to an injunction restraining SI Tech from disclosing in whole or in part, the list of IMIS's customers or IMIS's trade secrets, or from rendering any services to any person, firm, corporation, association, or other entity to whom such list or such trade secrets, in whole or in part, has been disclosed or is threatened to be disclosed and requiring the return to IMIS of all copies of customer lists, manuals, data, software, computer programs, or written procedures in the possession of SI Tech. Nothing herein shall be construed as prohibiting IMIS from pursuing any other remedies available to it for such breach or threatened breach, including the recovery of damages from SI Tech. No failure of IMIS to exercise any right given hereunder shall be taken or construed as a waiver of its right to seek any remedies by reason of any past, present, or future breaches of the Agreement on the part of SI Tech. 18. Assignment. IMIS may assign any or all of its rights and duties under this Agreement at any time and from time to time without the consent of SI Tech. SI Tech may not assign any of their rights or duties under this Agreement without the prior written consent of IMIS. 19. Severability. All agreements and covenants contained herein are severable and in the event any of them shall be held to be illegal, invalid or unenforceable by any Court of competent jurisdiction, this Agreement shall be interpreted as if such illegal, invalid, or unenforceable agreements or covenants were not contained herein. 20. Choice Of Law/Venue. This Agreement shall be construed in accordance with and governed by the laws of the State of Florida, without regard to choice of law 4 5 provisions. Venue for all actions arising out of this Agreement shall be in Pinellas County Florida. a) All disputes arising out of this Agreement shall be resolved by arbitration in St. Petersburg, Florida before three (3) neutral and independent arbitrators in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Arbitration may be commenced at any time by any party hereto giving written notice to each other party to a dispute that such dispute has been referred to arbitration under this Section. The arbitrators shall be selected by the joint agreement of the parties, but if they do not so agree within twenty (20) days after the date of notice referred to above, the selection shall be made pursuant to the American Arbitration Association rules from the panels of arbitrators maintained by such Association. Any award rendered by the arbitrators shall be conclusive and binding upon the parities hereto; provided, however, that any such award shall be accompanied by a written opinion of the arbitrators giving the reasons for the award. This provision of arbitration shall be specifically enforceable by the parties and the decision of the arbitrators in accordance herewith shall be final and binding and, except with respect to manifest errors of law, there shall be no right of appeal therefrom. Judgment upon the award rendered by the arbitrators may be entered in any court having jurisdiction thereof. The prevailing party shall be entitled recovery from the losing party all costs of enforcement and arbitration (including its attorneys' fees and costs) the losing party shall pay the fees and expenses of the arbitrators, all as determined by the arbitrators. The parties consent that an award may be vacated by a court of competent jurisdiction in the case of a manifest error of law on the part of arbitrators. The arbitrators have the power to grant compensatory damages, equitable relief and declaratory relief. b) Notwithstanding any choice of law provided for herein the section shall be governed by the Federal Arbitration Act and federal law applicable to arbitration. Any party hereto may seek any provisional remedy or interim relief in a court of competent jurisdiction without waiving the right to arbitration. c) Nothing contained in this Section shall prevent the parties from settling any dispute by mutual agreement at any time. 21. Notices. Any and all notices, designations, consents, offers, acceptances, or any other communication provided for herein shall be given in writing by hand delivery, by overnight carrier, by registered or certified mail or by facsimile transmission and shall be addressed as follows: To IMIS: Insurance Management Information Services, Inc. 360 Central Avenue St. Petersburg, FL 33701 Attention G. Kristin Delano Telephone (813) 823-4000 ext 4416 Fax (813) 823-6518 5 6 To: SI Tech Karl J. Wall Systems Integration and Imaging Technologies Incorporated 7901 4th Street North, Ste. 210 St. Petersburg, FL 33701 Telephone (813) 577-3771 ext. 201 Fax (813) 577-4671 Copy to: C. Philip Campbell, Jr. Attorney At Law Shumaker, Loop & Kendrick 101 East Kennedy Boulevard, Suite 2800 Tampa, FL 33602-5151 Telephone (813) 229-7600 Fax (813) 229-1660 Notices sent by hand delivery shall be deemed effective on the date of hand delivery. Notices sent by overnight carrier shall be deemed effective on the next business day after being placed into the hands of the overnight carrier. Notices sent by registered or certified mail shall be deemed effective on the third business day after being deposited into the post office. Notices sent by facsimile transmission shall be deemed to be effective on day when sent if sent prior to 4:30 p.m. (the time being determined by the time zone of the recipient) otherwise they shall be deemed effective on the next business day. IN WITNESS WHEREOF, the parties hereto executed this Agreement on the day and year set forth below in St. Petersburg, Florida. WITNESSES: "IMIS" Insurance Management Information Services, Inc. /s/ Thomas J. Balkan BY: /s/ G. Kristin Delano - ---------------------------------- -------------------------------- G. Kristin Delano, Secretary /s/ Joseph W. McNally Date: 1-7-97 - ---------------------------------- ------------------------------ 6 7 WITNESSES: "SI Tech" Systems Integration and Imaging Technologies Incorporated By: /s/ Karl J. Wall - --------------------------------- ----------------------------- Karl J. Wall, Chairman and CEO Date: 1-7-97 - --------------------------------- --------------------------- 7 EX-10.26 29 CORPORATE GOVERNANCE AGREEMENT 1 EXHIBIT 10.26 CORPORATE GOVERNANCE AGREEMENT THIS CORPORATE GOVERNANCE AGREEMENT ("Agreement") is entered into this ___ day of May, 1998 among Geotrac, Inc., a Florida corporation ("Geotrac"), Daniel J. White ("White") and Insurance Management Solutions Group, Inc., a Florida corporation ("IMSG"). RECITALS A. Geotrac, Inc., an Ohio corporation, White, Sandra White, Bankers Hazard Determination Services, Inc., a Florida corporation ("Bankers"), IMSG and Bankers Insurance Group, Inc., a Florida corporation have entered into a Merger Agreement dated as of May 12, 1998 (the "Merger Agreement"). B. Pursuant to the Merger Agreement, Geotrac merged into and with Bankers with Bankers being the surviving corporation and changing its name to Geotrac (the "Company"). C. IMSG owns one hundred percent (100%) of the issued and outstanding stock of the Company. D. White is a shareholder of IMSG. E. Geotrac and White have concurrently herewith entered into an Employment Agreement dated as of the date hereof pursuant to which the Company has employed White to serve as President and Chief Executive Officer of the Company (the "Employment Agreement"). F. The parties hereto desire to enter into this Agreement in order to confirm their understanding of the terms and conditions pursuant to which the Company will be operated. NOW, THEREFORE, in consideration of the premises and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows: 1. Articles of Incorporation and By-Laws. The Company's Amended and Restated Articles of Incorporation and By-Laws shall be adopted in the form of Exhibit A and Exhibit B attached to this Agreement. 2. Directors; Related Matters. For so long as White owns shares of capital stock of IMSG or owns shares of capital stock of the Company or has an option to acquire shares of capital stock of the Company: (a) IMSG will vote all shares of the Company (the "Shares") to fix and maintain the number of directors on the Board of Directors of the Company (the "Board") at five (5). (b) IMSG will vote the Shares to elect as directors of the Company two (2) persons designated by White ("White Directors"). In the event a White Director ceases to serve on the Board, White may designate a replacement director, and IMSG will vote all Shares to elect the designated replacement director to the Board. After the fourth anniversary of the date of this 2 Agreement, any White Director designated by White (other than White) shall be a person reasonably acceptable to IMSG. (c) The following matters will require the unanimous approval of the Board: (i) Any sale of the Shares or issuance of additional equity securities, or securities convertible into or exercisable or exchangeable for equity securities of the Company; (ii) Any sale of assets of the Company outside of the ordinary course of business or sale of its capital stock to anyone other than an affiliate. Notwithstanding the foregoing, a sale of assets or capital stock of the Company may be made without the unanimous approval of the Board, provided, however, that White shall have first been offered the option to purchase any assets or capital stock to be sold. White shall provide the Company with written notice the exercise of his option to purchase any such assets or capital stock of the Company within thirty (30) days of White's receipt of written terms of the proposed sale; (iii) The relocation of a significant portion of the Company's operations, of the headquarters of the Company or the Company's executive officers outside of the Norwalk, Ohio area; (iv) Entering into new agreements or amending or refinancing any agreements pertaining to indebtedness for borrowed money; (v) Making advances or loans to any party, other than to employees of the Company, in the ordinary course of business; (vi) Any modification of compensation of executive officers or directors of the Company; (vii) Any agreement of IMSG, any of its subsidiaries or parent or any of their affiliates, to provide services to the Company; (viii) Any payment of management or other similar fees, including allocation of corporate expenses, to IMSG, any of its subsidiaries or parent or any of their affiliates other than the actual cost of services provided by IMSG or its affiliates to the Company; (ix) Merging or consolidating with any other person or entity; (x) Making distributions, including dividends or any redemption of capital stock of the Company, the value of which may not exceed 25% of the prior 2 3 fiscal year earnings less reasonable reserves for cash flow for operations, capital expenditures and growth. (d) White hereby agrees that on any Board actions requiring the unanimous consent specified in Paragraphs 2(c) and (f) hereof, other than Paragraph 2(c)(iii), that White's consent will not be unreasonably withheld. (e) Any termination of White as an employee of the Company, with or without Cause (as defined in the Employment Agreement) shall require the vote of four (4) out of five (5) members of the Board. (f) The Articles of Incorporation and By-Laws of the Company may not be amended without the prior written consent of the White Directors. 3. Severability. If any provision of this Agreement is held invalid, unenforceable, or void by a court of competent jurisdiction, this Agreement shall be considered divisible as to such provision, and the remainder of the Agreement shall be valid and binding as though such provision were not included in this Agreement. 4. Termination. This Agreement shall terminate upon the occurrence of any of the following events: (a) Cessation of the Company's business; (b) Bankruptcy, receivership or dissolution of the Company; (c) The voluntary agreement of all of the parties bound by the terms of this Agreement; (d) Death or Permanent Disability of White; or (e) White voluntarily resigns from his position as a member of the Board of Directors or ceases to own shares of capital stock of IMSG or shares of capital stock of the Company or an option to acquire shares of capital stock of the Company. For purposes of this Agreement "Permanent Disability" if due to illness or injury, either physical or mental, White has been substantially unable to perform his customary duties as a Director of the Company for a period of one hundred eighty (180) consecutive days or an aggregate of one hundred eighty (180) days within a period of 365 consecutive days, provided the Company has given White thirty (30) days written notice of potential termination of this Agreement, and within said thirty (30) day period after written notice of termination had been given, White has not returned to the reasonable full-time performance of his duties as a Director of the Company. 3 4 5. Benefits; Binding Effect. This Agreement shall be for the benefit of, and shall be binding upon, the parties and their respective heirs, personal representatives, executors, legal representatives, successors and assigns. 6. Notices. All notices which are required or may be given pursuant to the terms of this Agreement shall be in writing and shall be sufficient in all respects if (i) delivered personally, (ii) mailed by registered or certified mail, return receipt requested and postage prepaid, or (iii) sent via a nationally recognized overnight courier service or (iv) sent via facsimile confirmed in writing to the recipient in each case as follows: If to the Company or White: Geotrac, Inc. 3900 Laylin Road Norwalk, Ohio 44057 Attention: Daniel J. White Telephone (419) 668-8899 Telecopy: (419) 668-9266 with a copy to: Benesch, Friedlander, Coplan & Aronoff LLP 2300 BP America Building 200 Public Square Cleveland, Ohio 44114 Attention: Ira Kaplan, Esq. Telephone (216) 363-4567 Telecopy: (216) 363-4588 and Insurance Management Solutions Group, Inc. 360 Central Avenue St. Petersburg, Florida 33701 Attention: C. Anthony Sexton, Esq. Telephone: (813) 823-4000 extension 4894 Telecopy: (813) 823-6518 4 5 If to IMSG: Insurance Management Solutions Group, Inc. 360 Central Avenue St. Petersburg, Florida 33701 Attention: C. Anthony Sexton, Esq. Telephone: (813) 823-4000 extension 4894 Telecopy: (813) 823-6518 or such other address or addresses as either party hereto shall have designated by notice in writing to the other party hereto. 7. Amendments, Supplements, Etc. This Agreement may be amended or supplemented at any time by such additional agreements, articles or certificates, as may be determined by the parties hereto to be necessary, desirable or expedient to further the purposes of this Agreement, or to clarify the intention of the parties hereto, or to add to or modify the covenants, terms or conditions hereof or to effect or facilitate any governmental approval or acceptance of this Agreement or to effect or facilitate the filing or recording of this Agreement or the consummation of any of the transactions contemplated hereby. Any such agreement, article or certificate must be in writing and signed by all parties. No oral or unexecuted agreement, promise or undertaking will be effective to modify, amend or alter the terms of this Agreement in any manner whatsoever. 8. Entire Agreement. This Agreement, its exhibits, schedules and annexes and the documents executed in connection herewith, constitute the entire agreement among the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings, oral and written, among the parties hereto with respect to the subject matter hereof. No representation, warranty promise, inducement or statement of intention has been made by any party which as not embodied in this Agreement or such other documents; and no party shall be bound by, or be liable for, any alleged representation, warranty, promise, inducement or statement or intention not embodied herein or therein. 9. Applicable Law. This Agreement will be governed by and construed in accordance with the laws of the State of Ohio, without regard to conflicts of law principles. However, jurisdiction and venue for any action brought to enforce the terms or conditions of this Agreement shall be the domicile of the defendant or respondent in any such action. 10. Attorneys' Fees. If any party to this Agreement should bring an action alleging breach of this Agreement or seeking to enforce, rescind, renounce, declare void or terminate this Agreement or any provisions thereof, the prevailing party shall be entitled to recover all of its legal expenses, including reasonable attorneys' fees and costs (including legal expenses for any appeals taken), and to have the same awarded as part of the judgment in the proceeding in which such legal expenses and attorneys' fees were incurred. 5 6 11. Representation Acknowledged. The parties acknowledge that each party and its counsel have reviewed and revised this Agreement and that the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments or exhibits, schedules or annexes hereto. IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officers of the parties hereto as of the day and year indicated below. GEOTRAC, INC. By: --------------------------------------- Its: -------------------------------------- INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. By: --------------------------------------- Its: -------------------------------------- ------------------------------------------ DANIEL J. WHITE 6 EX-10.27 30 TAX INDEMNITY AGREEMENT 1 EXHIBIT 10.27 TAX INDEMNITY AGREEMENT THIS TAX INDEMNITY AGREEMENT (the "Agreement") is made and entered into as of May __, 1998, by and among Bankers Insurance Group, Inc., a Florida corporation ("BIG"), Insurance Management Solutions Group, Inc., a Florida corporation ("IMSG") and Daniel J. and Sandra White (the "Whites"). WHEREAS, the parties hereto have entered into that certain Agreement and Plan of Merger (the "Merger Agreement") dated May 12, 1998 among Geotrac, Inc., an Ohio corporation ("Geotrac"), the Whites, Bankers Hazard Determination Services, Inc., a Florida corporation ("Bankers"), IMSG and BIG. WHEREAS, pursuant to the Merger Agreement, Geotrac will merge (the "Merger") with and into Bankers with Bankers being the surviving company in the Merger. WHEREAS, pursuant to the Merger, the Whites will receive, in exchange for their Geotrac stock, 480,515 shares of IMSG Common Stock and a subordinated promissory note (the "Note") in the amount of $1,500,000. WHEREAS, pursuant to Section 2.01 of the Merger Agreement, the number of shares of IMSG Common Stock that the Whites are entitled to receive in the Merger may be increased upon the occurrence of certain specified events (such additional shares to be referred to as "Contingent Shares"). WHEREAS, pursuant to Section 2.05 of the Merger Agreement, and the Option and Exchange Agreement described therein, the Whites will be granted certain put and exchange rights with respect to the IMSG Common Stock that they receive in the Merger (collectively, the "Rights"). WHEREAS, the Merger is intended to qualify as a reorganization described in Sections 368(a)(1)(A) and 368(a)(2)(D) of the Internal Revenue Code of 1986, as amended (the "Code"). WHEREAS, pursuant to Section 5.02(m)(3) of the Merger Agreement, IMSG and BIG are required to enter into this Tax Indemnity Agreement. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: 1. Tax Indemnity. BIG and IMSG jointly and severally covenant and agree to indemnify, defend and hold the Whites harmless from and against any and all costs, expenses, losses or liabilities ("Damages") including, without limitation, reasonable attorneys' fees, incurred or suffered by the Whites resulting from, attributable to or arising under any of the following: 2 (a) any federal, state or local income tax liabilities (including penalties, interest and additions to tax) assessed against, or owed or payable by, the Whites resulting from an assertion by the Internal Revenue Service that the Merger does not qualify as a tax-free reorganization within the meaning of Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code or otherwise with respect to the exchange by the Whites of their Geotrac stock for IMSG Common Stock, the Note and the Rights (other than any income tax liabilities attributable to their receipt of actual interest payments under the Note and, except as provided in clause (d) below, their receipt of the Note or principal payments on the Note); (b) in the event that the Whites receive any Contingent Shares, any federal, state or local income tax liabilities (including penalties, interest and additions to tax) of the Whites attributable to the portion of such Contingent Shares that is properly characterized as interest income under the Code; (c) any federal, state or local income tax liabilities (including penalties, interest and additions to tax) of the Whites attributable to their receipt of the Rights; and (d) if the White's receipt of the Notes is taxable as a dividend rather than capital gain, any incremental federal, state or local income tax liabilities (including penalties, interest and additions to tax) of the Whites attributable thereto (i.e., any excess tax liabilities resulting from the characterization of the White's receipt of the Notes as dividend versus capital gain income); (e) any federal, state or local income tax liabilities of the Whites attributable to their receipt of any payment pursuant to this Agreement, it being the intent of the parties that the Whites receive an after tax amount equal to any federal, state or local income tax liabilities (including penalties, interest and additions to tax) of theirs described in clauses (a)-(d) above. The amount of any Damages incurred or suffered by the Whites shall be determined by the certified public accountant retained by them to prepare their tax returns. Payment of any amount owed to the Whites hereunder shall be made within fifteen (15) days of the receipt by BIG and IMSG of a letter from such certified public accountant certifying the amount of the Damages incurred or suffered by the Whites, as long as BIG and IMSG have not delivered written notice of a disagreement ("Dispute Notice" with the amount of such Damages to the Whites within ten (10) days of the written notice of the certified public accountant to BIG and IMSG. IMSG and BIG agree to act in good faith in connection with their determination and delivery of any dispute notice. Upon receipt of a Dispute Notice the Whites and BIG and IMSG shall select another independent certified public accountant (the "Joint Accountant") within 5 business days to deliver a report as to the Damages, whose report shall be binding on the parties 2 3 hereto. In the event the parties are unable to agree on an independent certified public accountant, BIG and IMSG shall select their own certified public accountant within 10 days of such Dispute Notice who shall deliver its report as to Damages within 30 days of the Dispute Notice. In the event that the certified public accountant selected by BIG and IMSG does not agree with the Damages certified by the Whites certified public accountant, the accountants shall select a third independent certified public accountant (the "Third Accountant") within 40 days of the Dispute Notice, who will deliver its report as to the amount of the Damages within 30 days of its engagement and whose determination shall be final and binding on the parties hereto. Each party shall pay the costs of their own appraiser and shall split the costs of the Third Accountant. BIG and IMSG shall be responsible for the fees and expenses of the Joint Accountant. 2. Tax Returns. The Whites shall file their 1998 federal, state and local income tax returns consistent with the position that the Merger qualifies as a reorganization described in Sections 368(a)(1)(A) and 368(a)(2)(D) of the Code. 3. Settlement of Tax Claim. In case any claim, demand or deficiency is commenced or notice is given by the Internal Revenue Service against the Whites with respect to which payment may properly be sought against BIG and IMSG pursuant to this Agreement, the Whites shall promptly notify BIG and IMSG of such fact in writing. The Whites shall conduct the defense of any such claim, action or proceeding at BIG's and IMSG's expense with counsel reasonably acceptable to BIG and IMSG; provided, however, that the Whites shall not settle any such claim, action or proceeding without the prior written consent of BIG and IMSG, which consent shall not be unreasonably withheld; and provided, further that BIG and IMSG shall have the right to participate in such defense at their own expense. 4. Successors and Assigns. This Agreement shall be binding on and shall inure to the benefit of the parties hereto and their respective successors and assigns. 5. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall constitute the same document. 6. Ohio Law to Govern. This Agreement shall be governed by and construed in accordance with the laws of the State of Ohio. 3 4 IN WITNESS WHEREOF, the parties hereto have executed this Tax Indemnity Agreement as of May __, 1998. BANKERS INSURANCE GROUP, INC. By: ------------------------------------ Its: ----------------------------------- INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. By: ------------------------------------ Its: ----------------------------------- --------------------------------------- Daniel J. White --------------------------------------- Sandra White 4 EX-10.28 31 FLOOD INSURANCE AGREEMENT 1 EXHIBIT 10.28 FLOOD INSURANCE AGREEMENT THIS FLOOD INSURANCE AGREEMENT("Agreement")is entered into this 6TH day of January, 1998, by and between FIRST COMMUNITY INSURANCE COMPANY, 360 Central Avenue, St. Petersburg, Florida 33701 (hereinafter referred to as "FCIC") and KEYSTONE INSURANCE COMPANY, whose principal place of business is located at 2040 Market Street, Philadelphia, Pennsylvania 19103, and its Subsidiaries, (hereinafter collectively referred to as "Keystone"), who mutually agree as follows: I. Duties of Keystone as Broker: A. Keystone shall solicit and submit applications, together with premiums due, for the Flood Insurance Policies as authorized under the National Flood Insurance Act, subject to the published authority of the Federal Emergency Management Agency/Federal Insurance Administration (FEMA/FIA). B. Keystone shall comply with the underwriting guidelines, bulletins, manuals, and written instructions issued by the FCIC or the Federal Emergency Management Agency/Federal Insurance Administration (FEMA/FIA) regarding the solicitation and submission of flood insurance applications. C. Keystone shall report all claims and claims related activity promptly to FCIC. II. Duties of FCIC as Insurer: A. FCIC shall underwrite and issue Flood Insurance Policies to all applicants whose applications are submitted under this Agreement who qualify under the National Flood Insurance Act and comply with the underwriting guidelines, bulletins, manuals and written instructions of FCIC and FEMA/FIA. FCIC shall provide customary policyholder services to all FCIC policyholders, whose policies have been written under this Agreement. B. FCIC shall provide Keystone with all underwriting guidelines, bulletins, manuals and written instructions necessary for Keystone to perform its duties under this Agreement in compliance with the National Flood Insurance Act and implementing regulations of FEMA and FIA. C. FCIC shall adjust and pay all claims made by insureds under polices solicited by Keystone under this Agreement. D. FCIC shall provide a direct billed renewal premium notice to each designated payor of a flood insurance policy written pursuant to this Agreement prior to the expiration date of the policy and shall provide Keystone with notice of the upcoming expiration of such policies. III. Marketing Program: A. Keystone shall implement a marketing program, to cross sell FCIC flood insurance to Keystone's Homeowner File, using the Laser Integrated Method as provided by LIM Systems International, Inc. Additional insurance product lines may be cross sold, pursuant to this paragraph, upon mutual written agreement of the parties. B. "Keystone's Homeowner File" shall be defined as those homeowner files where Keystone is the insurer. 2 C. In order to implement the Marketing Program, Keystone shall provide FCIC with an electronic file showing the policyholder names and risk locations for renewing Keystone homeowner policyholders who have not previously been solicited or purchased flood insurance under this Agreement. Keystone shall submit such files on a quarterly basis, 120 days prior to the policy renewal date. FCIC shall designate the flood zone and community identifier, as determined by FEMA/FIA, for each policy and return the electronic file to Keystone or a third party designated by Keystone fifty (50) days prior to the policy renewal date. The format of the electronic file will be agreed upon by the parties. IV. Compensation: A. FCIC will compensate Keystone for all acts performed under Section I of this Agreement in accordance with the attached Commission Schedule "A". After this Agreement has been in effect for one (1) year, the Commission Schedule "A" may be amended by FCIC, from time to time, upon thirty (30) days written notice to Keystone. Notwithstanding, the Commission Schedule may be amended by FCIC, at any time, upon thirty (30) days written notice to Keystone, should the Fee Structure be amended or modified by FEMA/FIA or the NFIP. B. FCIC will compensate Keystone for all acts performed under Section III of this Agreement in accordance with the attached Commission Schedule "B". After this Agreement has been in effect for one (1) year, the Commission Schedule "B" may be amended by FCIC, from time to time, upon thirty (30) days written notice to Keystone. C. FCIC shall deduct from commission payments due Keystone, on business written pursuant to or as a result of Section I or Section III of this Agreement, compensation on canceled policies and on reductions in premiums at the rate at which such compensation was originally paid. Notwithstanding, if no commission is due Keystone, Keystone shall refund promptly to FCIC on business heretofore or hereafter written, pursuant to or as a result of Section I or Section III of this Agreement, compensation on canceled policies and on reductions in premiums at the rate at which such compensation was originally paid. D. Compensation due under this Agreement is to be payable only during the continuance of this Agreement and under its terms, and while Keystone is actively producing and servicing business hereunder. Any provision of this Agreement providing for payment off compensation shall be subject to any indebtedness by Keystone to FCIC arising out of flood insurance policy premium transactions. FCIC shall have the right to withhold payments to offset any such indebtedness; provided, however, that any withholding of compensation shall be only to the extent necessary to liquidate such indebtedness. V. Limitation of Authority: A. No provisions of this Agreement shall be construed to create the relation of employer and employee between Keystone and FCIC. Keystone and FCIC shall act as independent contractors and Keystone shall be free within the prescribed underwriting guidelines of FCIC or the Federal Emergency Management Agency /Federal Insurance Administration (FEMA/FIA) in force at the time to exercise its own judgment as to whom it will solicit, and the time, place and manner, and the amount of such solicitation. 3 B. Keystone has no authority to extend time of payment of premiums, or to waive or extend any obligation or condition of the Standard Flood Insurance Policy, or incur any liability on behalf of FCIC. C. Keystone shall not pay claims or commit FCIC to the payment of claims. VI. Assignment: All terms and conditions of this Agreement, including attachments, addendum, schedules and guaranty or indemnification agreements shall inure to the benefit of, and be binding upon, the parties hereto, their successors, heirs, administrators and assigns; provided, however, that this Agreement may not be assigned by either party without the prior written consent of the other party. VII. Warranties and Convents: A. Keystone hereby warrants and covenants that it will comply with all applicable state and federal statutes, rules and regulations governing the solicitation and sale of flood insurance under the National Flood insurance Act in the state(s) of performance under this Agreement and shall continue to comply with same so long as the Agreement shall remain in effect. Further, Keystone specifically warrants and covenants that any employee or agent acting on its behalf, when producing business for FCIC pursuant to this Agreement, shall comply with all of the applicable provisions of this Agreement, including, but not limited to Section I of this Agreement. B. FCIC hereby warrants and covenants that it will comply with all applicable state and federal statutes, rules and regulations governing the business of insurance in the state(s) of performance under this Agreement, including but not limited to the National Flood Insurance Act and regulations of FEMA/FIA, and shall continue to comply with same so long as the Agreement shall remain in effect. C. FCIC represents and warrants that the advent of the year 2000 shall not adversely affect the performance of its duties under this Agreement with respect to date and date dependent data and, more specifically, that all software used in the performance of such duties shall be capable of (i) date recognition and date calculations, comparison and sequencing, (ii) manipulating date and date related data with dates prior to, through and after January 1, 2000, (iii) transitioning correctly into the year 2000 with the correct system date without human intervention, including leap year calculations and (iv) providing correct results when moving forward or backward in time across the year 2000. VIII. Proprietary and Confidential Information: A. FCIC expressly acknowledges that certain information of Keystone, including but not limited to the names, addresses and policy information of its insureds, its business practices and strategies and its contracts with third parties (hereinafter "Proprietary and Confidential Information"), is proprietary and confidential information of Keystone that FCIC shall safeguard as it would FCIC's own such information. FCIC shall use the Proprietary and Confidential Information of Keystone solely to perform it duties under this Agreement and shall disclose such information to third parties only upon written authorization of Keystone. The term "Proprietary and Confidential Information" does not include information which is or becomes generally available to the public other than as a result of a disclosure by FCIC. The provisions of this Section shall survive the termination of this Agreement. 4 B. During the term of this Agreement and for a period of two (2) years following its termination, FCIC shall not solicit Keystone insureds for any insurance product other than Flood Insurance Policies under the National Flood Insurance Act without the express written authorization of Keystone. Notwithstanding the foregoing, it is understood and agreed that in the ordinary course of business of marketing its products to the general public, FCIC, its agents, affiliates or subsidiaries are likely to encounter certain Keystone insureds without emphasizing, targeting, or focusing upon them as such. This section is not intended to prohibit the above contacts or business resulting from the above contacts so long as they neither result from nor are the product of activity otherwise prohibited by this section. This provisions of this section shall survive the termination of this Agreement for the period stated above. IX. Termination: A. This Agreement shall be for a period of three (3) years, commencing upon the execution of this Agreement, provided, however, that this Agreement shall automatically be renewed for successive one (1) year terms thereafter, unless either party gives the other written notice to terminate the Agreement at the expiration of any term, which notice must be given at least sixty (60) days prior to the expiration of said term. B. Notwithstanding the foregoing, this Agreement may be terminated by either party upon giving to the other a written notice at least 90 days prior to the effective date of such termination; provided, however, either party may terminate this Agreement immediately without notice if the other party is guilty of any material violation of the terms hereof, and has not cured such material violation within thirty (30) days of written notice thereof. Keystone shall be liable for all costs incurred by FCIC to collect outstanding balances together with interest thereon in accordance with Paragraph hereof. C. In the event of termination of this Agreement, Keystone shall promptly account for all premiums and transactions covered by this Agreement, whereupon the ownership of the flood insurance business produced under this Agreement shall be left in the possession of Keystone. In the event Keystone shall fail to render such an accounting within 90 days of the termination hereof, any and all flood insurance business produced under this Agreement shall become the property of FCIC. X. Enforcement of Obligations: If FCIC refers this Agreement to any attorney for the enforcement or collection of the obligations of Keystone, Keystone agrees to pay to FCIC all costs of such enforcement or collection including any of FCIC's reasonable attorneys' fees prior to trial, at the trial court level, in connection with any appeal, and in connection with any Bankruptcy proceedings, which attorney's fees may be assessed and recovered in any proceeding brought hereunder. If Keystone fails to pay funds due FCIC as herein provided, including but not limited to return premiums, Keystone shall pay to FCIC in addition to all sums otherwise due, interest which shall accrue at 1.5% per month on such delinquency from the date as provided herein. Failure or forbearance to exercise any of its rights and privileges hereunder shall not constitute the forfeiture or waiver of such rights and privileges on the part of FCIC. XI. Indemnification: Keystone shall indemnify and save FCIC harmless from any and all costs, claims or demands (including FCIC's reasonable attorneys' fees whether incurred prior to the commencement of formal legal action, or at the trial, at the Appellate Court level or in Bankruptcy Court), resulting from any unauthorized acts, any error or omission, or any breach of any of the provisions in this Agreement by Keystone, its officers, directors, employees and agents (and specifically any agent writing business pursuant to this Agreement). FCIC shall hold Keystone harmless for any judgment for damages rendered against Keystone as a result of any court action 5 by a Policyholder or applicant arising out of a direct error or omission on the part of FCIC. FCIC shall not hold harmless or indemnify Keystone, or its directors, officers, employee or agents, for their own error and omissions. XII. Attorney's Fees: IF FCIC or Keystone bring a Court action alleging breach of this Agreement or seeking to enforce, rescind, renounce, declare void or terminate this Agreement or any provisions thereof, the prevailing party shall be entitled to recover all of its legal expenses, including reasonable attorney's fees and cost (including legal expenses for any appeals taken) and to have the same awarded as part of the judgment in the proceeding in which such legal expenses and attorney's fees were incurred. Further, it is understood and agreed that should Keystone institute any Court action against FCIC, that the Court action shall be brought in a court of competent jurisdiction in Pinellas County, Florida and this Agreement shall be construed in accordance with the laws of the State of Florida. Likewise, it is understood and agreed that should FCIC institute any Court action against Keystone, that this action shall be brought in a court of competent jurisdiction in Philadelphia County, Pennsylvania and the Agreement shall be construed in accordance with the laws of the Commonwealth of Pennsylvania. XIII. General Agreements: A. It is mutually agreed that if either parry deviates from the provisions of the Agreement, whether or not such deviation is protested by the other party or parties, such deviation shall not be held to have changed this Agreement, or the rights of the parties hereunder in any respect. No change in or modification to this Agreement, excluding specifically any change or modification to the attached Commission Schedule(s), shall be valid and binding unless reduced to writing and executed by both parties. The attached Commission Schedules may be amended as provided within this Agreement. B. Applications, advertising material and other material furnished by FCIC are the property of FCIC and will be returned to FCIC upon termination of the Agreement. All data, logos and other materials furnished to FCIC by Keystone are the property of Keystone and will be returned to Keystone upon termination of this Agreement. Further, Keystone shall review and approve, at origination, FCIC's use of the Keystone, AAA Mid-Atlantic logo. C. Keystone shall allow FCIC to audit all books and records relating to insurance written pursuant to this Agreement. D. All accounting, information system, agency licensing and cash flow functions shall be handled by FCIC and Keystone in accordance with standard insurance business practices and applicable federal and state statutes and regulations. XIV. Notices: Any and all notices, designations, consents, offers, acceptances, or any other communication provided for herein, shall be given in writing by certified mail, by hand delivery, by express overnight courier or by facsimile transmission. All notices sent by certified mail shall be deemed delivered on the second regular business day after the post mark. All notices sent by express overnight courier shall be deemed delivered on the day after pickup by the courier. All notices sent by hand delivery or facsimile transmission shall be deemed delivered on the day of hand delivery or facsimile transmission unless delivered or transmitted after 5 p.m., whereupon, delivery shall be deemed effective on the next regular business day. All notices shall be addressed as follows: 6 COMMISSION SCHEDULE "A" FCIC shall compensate Keystone for all acts performed and all flood insurance business produced pursuant to Section I of the Agreement in the amount of 18% on the annual written premium per policy issued by FCIC. This Commission Schedule may be amended, at any time, by FCIC upon thirty (30) days written notice to Keystone in accordance with the Agreement. Commission shall be paid monthly on the 15th day of the month following receipt of the corresponding premium by FCIC. 7 8 COMMISSION SCHEDULE "B" FCIC shall compensate Keystone for all acts performed and all flood insurance business produced pursuant to Section III of the Agreement in the amount of 10% on the annual written premium per policy issued by FCIC. This Commission Schedule may be amended, at any time, by FCIC upon thirty (30) days written notice to Keystone in accordance with the Agreement. Commission shall be paid monthly on the 15th day of the month following receipt of the corresponding premium by FCIC. 9 As to Keystone: Keystone Insurance Company 2040 Market Street ----------------------- Philadelphia, Pennsylvania 19103 --------- Attention: Robert Iwanczuk -------------------------- Fax No.: (215) 568-1153 -------------------------- As to FCIC: First Community Insurance Company 360 Central ------------------------------ St. Petersburg, FL 33701 ----------------- Attention: Kathleen M. Batson ---------------------- Fax No.: (813) 823-6518 --------------------------- This Agreement constitutes the full agreement, oral, or written, between FCIC, and Keystone, but shall be subject to such changes as may be provided in writing from time to time. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement. KEYSTONE INSURANCE COMPANY: Signed this 16 day of January, 1998 By /s/ Terrance R. Powers --------------------------- Title Executive Vice President ------------------------ Broker No. -------------------- Signed this 6 day of January, 1998 FIRST COMMUNITY INSURANCE COMPANY By /s/ Kathleen M. Batson ------------------------------ Title Senior Vice President --------------------------- EX-10.29 32 MARKETING AGREEMENT 1 EXHIBIT 10.29 MARKETING AGREEMENT THIS MARKETING AGREEMENT ("hereinafter Agreement") is entered into on this 14th day of November, 1997, by and between FIRST COMMUNITY INSURANCE COMPANY, (hereinafter "FCIC"), with its principal offices located at 360 Central Avenue, St. Petersburg, FL 33701, and NOBEL INSURANCE COMPANY (hereinafter "Nobel"), with its principal offices located at 8001 L.B.J. Freeway, Suite 300, Dallas, Texas 75251-1301. WHEREAS, Nobel is pleased with the service rendered by FCIC as a Write Your Own (hereinafter "WYO") servicing carrier for the National Flood Insurance Program (hereinafter "NFIP") and wishes to endorse FCIC as its exclusive "flood insurance carrier of choice"; WHEREAS, FCIC wishes to act as the NFIP servicing carrier for certain independent agents currently writing non-flood insurance business with Nobel ("Independent Agents"), and Nobel wishes to offer FCIC's services to these Independent Agents; NOW, THEREFORE, FCIC and Nobel, in consideration of the covenants and agreements contained herein and in further consideration of the benefits and advantages flowing from each to the other, covenant and agree as follows: I. NOBEL'S OBLIGATIONS: A. Nobel shall endorse FCIC as a WYO servicing carrier for the NFIP and shall communicate to Independent Agents that FCIC is the "flood insurance carrier of choice". B. Nobel shall lend support to FCIC's personnel in the training of Independent Agents involved with the NFIP. C. Nobel shall assist FCIC in enlisting Independent Agents to act as agents for FCIC. Independent Agents may enlist as FCIC's NFIP agents by executing a Flood Insurance Agreement and an Excess Flood Insurance Agreement. A copy of the Agreements are attached hereto as Exhibit "A" and Exhibit "B", respectively. Nobel shall promptly forward to FCIC any signed and executed Flood Insurance and Excess Flood Insurance Agreements, received by them directly, upon execution. D. Nobel shall have no authority to bind FCIC on any risk. II. FCIC OBLIGATIONS: A. As full and complete payment of the services provided by Nobel hereunder, FCIC shall pay to Nobel a management fee of five (5%) percent of the net direct written premium on flood insurance business, and excess flood insurance business, generated by Independent Agents who had previously executed the attached Flood Insurance and Excess Flood Insurance Agreements. The above management fee shall be in addition to any fee or commission on new business and subsequent renewals paid to any Independent Agents pursuant to their individual Flood Insurance and Excess Flood Insurance Agreements. Notwithstanding the foregoing, the management fee paid to Nobel and any commission paid any individual Independent Agent shall not exceed 20% of net direct written premium. 2 B. Nobel shall only be entitled to a management fee on business generated by Independent Agents whose Flood Insurance and Excess Flood Agreements have been received and duly processed by FCIC, under this Agreement. C. FCIC shall pay Nobel one half (1/2), currently totaling 1.65%, of all allocated catastrophe fees paid to FCIC pursuant to any numbered catastrophe claim that is generated by business specifically produced by Nobel and Independent Agents, under this Agreement. D. FCIC shall pay Nobel a marketing fee of five ($5.00) for each new business flood insurance application submitted by an Independent Agent via the Flood Writer(R) rating disk or through agency interface. III. TERMINATION A. This agreement shall be for a period of two (2) years, commencing upon the execution of this Agreement. B. This Agreement may, at the option of Nobel, be terminated for cause in the event that FCIC fails to perform any of the terms and conditions of this Agreement and such failure continues for a period of ninety (90) days after written notice has been given by Nobel to FCIC specifying the nature of the default(s). IV. INDEPENDENT CONTRACTOR FCIC and Nobel agree that Nobel shall act as an independent contractor in the performance of its duties under this Agreement. Accordingly, Nobel shall be responsible for payment of all taxes including Federal, State, and local taxes arising out of Nobel's activities in accordance with this Agreement, including, by way of illustration but not limitation, Federal and State Income Tax, Social Security Tax, Unemployment Insurance Tax and other taxes or business licenses as may be required. V. NON-COMPLETE During the term of the Agreement and for a period of one year after termination of this Agreement, unless authorized in writing, neither FCIC nor its subsidiaries shall directly or indirectly solicit, or assist any affiliate of FCIC in soliciting, any Independent Agent of Nobel, that had previously executed a Flood Insurance Agreement or Excess Flood Insurance Agreement with FCIC, for the purpose of retaining the Independent Agent to write any type of FCIC's non-flood insurance product business. Notwithstanding, this section shall not apply to Nobel's Independent Agents that had, prior to the execution of this Agreement, executed a Standard Agency Agreement with FCIC. VI. INDEMNIFICATION A. Nobel shall indemnify and save FCIC harmless from any and all cost, claims, or demands (including FCIC's reasonable attorney's fees, whether incurred prior to the commencement of formal legal action, or at the trial, or Appellate Court level) resulting from any unauthorized acts of Nobel, or any breach of any of the provisions of this Agreement by Nobel. B. FCIC shall indemnify and save Nobel harmless from any and all cost, claims, or demands (including Nobel's reasonable attorney's fees, whether incurred prior to the commencement of formal legal action, or at the trial, or Appellate Court level) resulting from any unauthorized acts of FCIC, or any breach of any of the provisions of this Agreement by FCIC. 3 VII. CONFIDENTIAL INFORMATION The parties agree that any and all information and printed material received during the furtherance of their obligations, in accordance with this Agreement, which concerns the finances, trade secrets, business arrangement, or other business affairs of either party, its customers or its affiliates shall be treated by the both parties as confidential and proprietary and shall not be revealed to any other person, firm, or organization, nor used by either party for its own benefit. VIII. COMPLIANCE WITH STATE LAW Nobel agrees to comply with the laws of the states covered by this Agreement and with the rules and regulations of all regulatory authorities having jurisdiction over the Nobel's activities, and shall, whenever necessary, maintain at its own expense, if so required, all licenses to transact business in such states. IX. ASSIGNMENT This Agreement shall be binding upon and inure to the benefit of all affiliated or subsidiary corporations of the respective parties. Otherwise, Nobel may not assign this Agreement without FCIC's written consent, which may be withheld for any reason or for no reason. X. ENTIRE AGREEMENT This Agreement contains all of the oral and/or previously written agreements, representations, and arrangements between the parties hereto, with respect to the subject matter of this Agreement, and all rights which the respective parties may have had under any written agreement and/or oral agreement are hereby canceled and terminated, and all parties agree that there are no representations or warranties other that those set forth herein. XI. ATTORNEY FEES If either of the parties hereto shall bring a court action alleging breach of this Agreement or seeking to enforce, rescind, renounce, declare void or terminate this Agreement or any provisions thereof, the prevailing party shall be entitled to recover all of the legal expenses, including reasonable attorney's fees and costs (including legal expenses for any appeals taken), and to have the same awarded as part of the judgment in the proceeding in which such legal expenses and attorney's fees were incurred. XII. CHOICE OF LAW/VENUE This Agreement shall be construed in accordance with and governed by the laws of the State of Florida without regard to choice of law provisions. XIII. MISCELLANEOUS No change or modification of this Agreement shall be valid unless the same be in writing and signed by all of the parties hereto. The paragraph captions as to the contents of the particular paragraph herein are inserted only for convenience and are in no way to be construed as a part of their Agreement or as a limitation of the scope of a particular paragraph in which they are contained. The words of a gender viewed in this Agreement shall be held to include any other gender, the words in a singular number held to include the plural, when the sentence so requires. Should any part of this Agreement for any reason be declared invalid, such decisions shall not affect the validity of any remaining portion, as if this Agreement had been executed with the invalid portion thereof eliminated. XIV. NOTICES Any and all notices, designations, consents, offers, acceptances, or any other communication provided for herein shall be given in writing by hand delivery, by overnight carrier, or by registered or certified mail or by facsimile transmission and shall be addressed as follows: 4 As to FCIC: FCIC Insurance Company 360 Central Avenue St. Petersburg, FL 33701 Attention: Kathleen M. Batson Fax: (813) 823-6518 As to Nobel: Nobel Insurance Company. PO Box 6108 Columbia, South Carolina 29260 Attention: Loren B. Gallogly III Fax: (803) 782-5569 Notices sent by hand delivery shall be deemed effective on the date of hand deliver. Notices sent by overnight carrier shall be deem effective on the next business day after being placed unto the hands of the overnight carrier. Notices sent by registered or certified mail shall be deemed effective on the third business day after being deposited onto the post officer. IN WITNESS WHEREOF, the parties hereto have placed their hand and seals this 14th day of November, 1997. WITNESS: FIRST COMMUNITY INSURANCE COMPANY /s/ Jeffrey S. Bragg BY: /s/ Kelly K. King - ---------------------------- ---------------------------------- /s/ Diane C. Hillard AS ITS: CFO - ---------------------------- ------------------------------ DATE: 11/14/97 -------------------------------- WITNESS: NOBEL INSURANCE COMPANY /s/ Illegible BY:/s/ Loren B. Gallogly III - ---------------------------- ---------------------------------- /s/ R. Mark Walsh AS ITS: Vice President of Bus Devel. - ---------------------------- ------------------------------ DATE: 11-19-97 -------------------------------- EX-10.30 33 FLOOD INSURANCE AGREEMENT 1 EXHIBIT 10.30 FLOOD INSURANCE AGREEMENT THIS FLOOD INSURANCE AGREEMENT ("Agreement") is entered into this 11th day of February, 1998, by and between FIRST COMMUNITY INSURANCE COMPANY, 360 Central Avenue, St. Petersburg, Florida 33701 (hereinafter referred to as "FCIC") and HORACE MANN INSURANCE COMPANY, whose principal place of business is located at 1 Horace Mann Plaza, Springfield, Illinois 62715-0001 (hereinafter referred to as "Horace Mann") mutually agree as follows: I. Duties: A. Horace Mann shall solicit and submit applications, together with premiums due, for the Flood Insurance Policies as authorized under the National Flood Insurance Act, subject to the published authority of the Federal Emergency Management Agency/Federal Insurance Administration (FEMA/FIA). B. Horace Mann shall comply with the underwriting guidelines, bulletins, manuals, and written instructions issued by the FCIC or the Federal Emergency Management Agency/Federal Insurance Administration (FEMA/FIA) regarding the solicitation and submission of flood insurance applications. C. Horace Mann shall report all claims and claims related activity promptly to the FCIC. II. Compensation: A. FCIC will compensate Horace Mann for all acts performed under the Agreement in accordance with the attached Commission Schedule. The Commission Schedule may be amended by FCIC, from time to time, upon thirty (30) days written notice to Horace Mann. B. Horace Mann shall refund promptly to FCIC, on business heretofore or hereafter written, compensation on canceled policies and on reductions in premiums at the rate at which such compensation was originally paid. C. Compensation due under this Agreement is to be payable only during the continuance of this Agreement and under its terms, and while Horace Mann is actively producing and servicing business hereunder. Any provision of this Agreement providing for payment of compensation shall be subject to any indebtedness by Horace Mann to FCIC arising out of flood insurance policy premium transactions. FCIC shall have the right to withhold payments to offset any such indebtedness; provided, however, that any withholding of compensation shall be only to the extent necessary to liquidate such indebtedness. III. Limitation of Authority: A. No provisions of this Agreement shall be construed to create the relation of employer and employee between Horace Mann and FCIC, and Horace Mann and FCIC shall act as independent contractors and be free within the prescribed underwriting guidelines of FCIC or the Federal Emergency Management Agency/Federal Insurance Administration (FEMA/FIA) in force at the time to exercise their own judgement as to whom they will solicit, and the time, place and manner, and the amount of such solicitation. B. Horace Mann has no authority to extend time of payment of premiums, or to waive or extend any obligation or condition of the Standard Flood Insurance Policy, or incur any liability on behalf of FCIC 2 C. Horace Mann shall not pay claims or commit FCIC to the payment of claims. IV. ASSIGNMENT: All terms and conditions of this Agreement, including attachments, addendum, schedules and guaranty or indemnification agreements shall inure to the benefit of, and be binding upon, the parties hereto, their successors, heirs, administrators and assigns; provided, however, that this Agreement may not be assigned without the prior written consent of FCIC. V. WARRANTIES AND CONVENTS: A. Horace Mann specifically warrants and covenants that they will comply with all applicable state and federal statutes, rules and regulations regulating insurance in the state of performance of the contract, and shall continue to comply with same so long as the Agreement shall remain in effect. B. FCIC specifically warrants and covenants that they will comply with all applicable state and federal statutes, rules and regulations regulating insurance in the state of performance of the contract, and shall continue to comply with same so long as the Agreement shall remain in effect. VI. TERMINATION: A. This Agreement shall continue in full force and effect until terminated by either party giving to the other a written notice at least one hundred and eighty (180) days prior to the effective date of such termination; provided, however, either party may terminate this Agreement immediately without notice if the other party is guilty of any material violation of the terms hereof. Horace Mann shall be liable for all costs incurred by FCIC to collect outstanding balances together with interest thereon in accordance with Paragraph VIII hereof. B. In the event of termination of this Agreement, and within one hundred and eighty (180) days after the termination of this Agreement, Horace Mann shall cause its employee agents to account for all premiums and transactions covered by this Agreement, whereupon the ownership of the flood insurance business produced under this Agreement shall be left in the possession of Horace Mann. VII. ENFORCEMENT OF OBLIGATIONS: A. If FCIC refers this Agreement to any attorney for the enforcement or collection of the obligations of Horace Mann, Horace Mann agrees to pay to FCIC all costs of such enforcement or collection including any of FCIC's reasonable attorneys' fees prior to trial, at the trial court level, in connection with any appeal, and in connection with any Bankruptcy proceedings, which attorney's fees may be assessed and recovered in any proceeding brought hereunder. If Horace Mann fails to pay funds due FCIC as herein provided, including but not limited to return premiums, Horace Mann shall pay to FCIC in addition to all sums otherwise due, interest which shall accrue at 1.5% per month on such delinquency from the date as provided herein. Failure or forbearance to exercise any of its rights and privileges hereunder shall not constitute the forfeiture or waiver of such rights and privileges on the part of FCIC. B. If Horace Mann refers this Agreement to any attorney for the enforcement or collection of the obligations of FCIC, FCIC agrees to pay to Horace Mann all costs of such enforcement or collection including any of Horace Mann's reasonable attorneys' fees prior to trial, at the trial court level, in connection with any appeal, and in connection 3 with any Bankruptcy proceedings, which attorney's fees may be assessed and recovered in any proceeding brought hereunder. If FCIC fails to pay funds due Horace Mann as herein provided, FCIC shall pay to Horace Mann in addition to all sums otherwise due, interest which shall accrue at 1.5% per month on such delinquency from the date as provided herein. Failure or forbearance to exercise any of its rights and privileges hereunder shall not constitute the forfeiture or waiver of such rights and privileges on the part of Horace Mann. VIII. INDEMNIFICATION: A. Horace Mann shall indemnify and save FCIC harmless from any and all costs, claims or demands (including FCIC's reasonable attorneys' fees whether incurred prior to the commencement of formal legal action, or at the trial, at the Appellate Court level or in Bankruptcy Court), resulting from any unauthorized acts, any error or omission, or any breach of any of the provisions in this Agreement by Horace Mann, its officers, directors, employee agents and employees. B. FCIC shall indemnify and save Horace Mann harmless from any and all costs, claims or demands (including Horace Mann's reasonable attorneys' fees whether incurred prior to the commencement of formal legal action, or at the trial, at the Appellate Court level or in Bankruptcy Court), resulting from any unauthorized acts, any error or omission, or any breach of any of the provisions in this Agreement by FCIC, its officers, directors, and employees. FCIC shall hold Horace Mann harmless for any judgment for damages rendered against Horace Mann as a result of any court action by a Policyholder or applicant arising out of a direct error or omission on the part of FCIC. FCIC shall not hold harmless or indemnify Horace Mann, or its directors, officers, employee agents or employees for their own errors and omissions. IX. ATTORNEY FEES: If Horace Mann or FCIC should bring a court action alleging breach of this Agreement or seeking to enforce, rescind, renounce, declare, void or terminate this Agreement or any provisions thereof, the prevailing party shall be entitled to recover all of its legal expenses, including reasonable attorney's fees and costs (including legal expenses for any appeals taken and any attorney's fees incurred as a result of Bankruptcy proceedings), and to have the same awarded as part of the judgment in the proceeding in which such legal expenses and attorney's fees were incurred. X. GENERAL AGREEMENTS: A. It is mutually agreed that if either party deviates from the provisions of the Agreement, whether or not such deviation is protested by the other party or parties, such deviation shall not be held to have changed this Agreement, or the rights of the parties hereunder in any respect. No change in or modification to this Agreement shall be valid and binding unless reduced to writing and executed by both parties. B. Applications, advertising material and other material furnished by FCIC are the property of FCIC and will be returned to FCIC upon termination of the Agreement. All advertising material furnished by FCIC to Horace Mann's employee agents pursuant to this agreement, shall be pre-approved by Horace Mann. C. This Agreement is subject to and governed by the laws and regulations of the state of Florida, without regards to choice of law provisions. Venue shall be in a court of competent jurisdiction in Pinellas County, Florida. 4 D. FCIC, shall provide direct billed renewal premium notice to the designated payor of the flood insurance policy prior to the expiration date of the policy and shall provide Horace Mann with either list notice or individual notice of the upcoming expiration of the policies serviced by Horace Mann under this Agreement E. Horace Mann shall allow FCIC to audit all books and records relating to insurance written pursuant to this Agreement. XI. NOTICES: Any and all notices, designations, consents, offers, acceptances, or any other communication provided herein, shall be given in writing by certified mail, by hand delivery, by express overnight courier or by facsimile transmission. All notices sent by certified mail should be deemed delivered on the second regular business day after the post mark. All notices sent by hand delivery or facsimile transmission shall be deemed delivered on the day of hand delivery or facsimile transmission unless delivered or transmitted after 5 p.m., whereupon, delivery shall be deemed effective on the next regular business day. All notices shall be addressed as follows: As to Horace Mann: Horace Mann Insurance Company 1 Horace Mann Plaza Springfield, IL 62715-0001 Attention: Ron Sholes - VP Property Operations, Mail #F124 Fax No.: (212) 535-7171 As to FCIC: First Community Insurance Company ------------------------------------ Attention: ------------------------------------ ------------------------------------ Fax No.: ( ) ------------------------------------ This Agreement constitutes the full agreement, oral or written, between FCIC, and Horace Mann, but shall be subject to changes as may be provided in writing from time to time. IN WITNESS WHEREOF, The Parties hereto have executed this Agreement. HORACE MANN INSURANCE COMPANY Signed this 11th day of February, 1998 By: William Hinkle ----------------------------------- Title VP P&C --------------------------------- Agency Horace Mann Insurance -------------------------------- Agency No. ---------------------------- Signed this 19th day of February, 1998 FIRST COMMUNITY INSURANCE COMPANY By /s/ Kathleen M. Batson ------------------------------------ Title Senior Vice President --------------------------------- 5 ADDENDUM COMMISSION SCHEDULE
PREMIUM COMMISSION CLAIMS ADM FEE (% OF Incurred Loss) - ---------------------------------------------------------------------- $0 - $2 M 19% 1% 1 1/2% $2. - $5 M 19.5% 1% 2% $5. M + 20% 1% 2%
NOTES 1. First Community Insurance Company will review our contract at the end of each fiscal year to determine if wee need to make adjustments in the commission schedule based on the expense allowance paid to First Community Insurance Company by FIA and the production of Horace Mann Insurance Company. 2. First Community Insurance Company will provide all services and systems to effect a private label operation for Horace Mann Insurance Company. EX-10.31 34 PROMISSORY NOTE 1 EXHIBIT 10.31 PROMISSORY NOTE $2,353,424.42 April 1, 1998 St. Petersburg, Florida FOR VALUE RECEIVED, the undersigned Insurance Management Solutions, Inc., jointly and severally, promises to pay to the order of Bankers Insurance Company, a Florida corporation, together with any other holder hereof (herein, "Holder"), the principal sum of Two Million Three Hundred Fifty Three Thousand Four Hundred Twenty Four and 42/100 Dollars, ($2,353,424.42) together with interest thereon from date at the rate per annum as described below until maturity on the balance of principal from time to time remaining unpaid, both principal and interest being payable at 360 Central Avenue, St. Petersburg, FL 33701, in the following manner: Principal and interest shall be due and payable in full on April 1, 1999. Interest shall accrue at 8 1/2% percent per annum. The makers hereof shall not incur any penalty upon the prepayment of all of or any part of the indebtedness evidenced hereby. Time is of the essence hereunder. Any payment of principal of interest which is not paid when due, whether upon maturity or acceleration or otherwise as provided herein, shall bear interest at the rate of Eighteen (18%) percent per annum from the due date until paid. This note has been executed and delivered in, and is to be governed by and construed under the laws of the State of Florida, as amended, except as modified by the laws and regulations of the United States of America. The undersigned shall have no obligation to pay interest or payments in the nature of interest in excess of the maximum rate of interest allowed to be contracted for by law, as changed from time to time, applicable to this Note (the "Maximum Rate"). Any interest in excess of the Maximum Rate paid by the undersigned ("excess sum") shall be credited as a payment of principal, or, if the undersigned together with interest at the same rate as was paid by the undersigned during such period. Any excess sum credit to principal shall be credited as of the date paid to Holder. Holder may, without such action constituting a breach of any obligations to the undersigned, seek judicial determination of the applicable rate of interest, and its obligation to pay or credit any proposed excess sum to the undersigned. Provided Holder has not exercised its right to accelerate this Note, then the undersigned hereof shall pay Holder a late charge of five percent (5%) of any required payment which is not received by Holder when said payment is due. The parties agree that said charge is a fair and reasonable charge for the late payment and shall not be deemed a penalty. Acceptance of partial payments or payments marked "payment in full" or "in satisfaction" or words to similar effect shall not affect the duty of the undersigned to pay all obligations due hereunder, and shall not affect the right of Holder to pursue all remedies available to it hereunder or under any other agreement between the maker hereof and the Holder Page 1 of 2 2 The remedies of Holder shall be cumulative and concurrent, and may be pursued singularly, successively or together, at the sole discretion of Holder, and may be exercised as often as occasion therefor shall arise. No action or omission of Holder, including specifically any failure to exercise or forbearance in the exercise of any remedy, shall be deemed to be a waiver or release of the same, such waiver or release to be effected only through a written document executed by Holder and then only to the extent specifically recited therein. A waiver or release with reference to any one event shall not be construed as continuing or as constituting a course of dealing, nor shall it be construed as a bar to, or as a waiver or release of, any subsequent remedy as to a subsequent event. The undersigned hereby consents and submits to the jurisdiction of the courts of the State of Florida, and, notwithstanding its place of residence or organization or the place of execution of this Note, any litigation relating hereto, whether arising in contract or tort, by statue or otherwise, shall be brought in (and, if brought elsewhere, may be transferred to) a State court of competent jurisdiction in Pinellas County, Florida. THE UNDERSIGNED AND ANY OTHER PERSON LIABLE FOR PAYMENT HEREOF, BY EXECUTING THIS NOTE OR ANY OTHER DOCUMENT CREATING SUCH LIABILITY, WAIVE THEIR RIGHTS TO A TRIAL BY JURY IN ANY ACTION, WHETHER ARISING IN CONTRACT OR TORT, BY STATUTE OR OTHERWISE, IN ANY WAY RELATED TO THIS NOTE. THIS PROVISION IS A MATERIAL INDUCEMENT FOR HOLDER'S EXTENDING CREDIT TO THE UNDERSIGNED AND NO WAIVER OR LIMITATION OF HOLDER'S RIGHTS UNDER THIS PARAGRAPH SHALL BE EFFECTIVE UNLESS IN WRITING AND MANUALLY SIGNED ON HOLDER'S BEHALF. The undersigned acknowledges that the above paragraph has been expressly bargained for by Holder as part of the loan evidenced hereby and that, but for the undersigned's agreement and the agreement of any other person liable for payment hereof thereto, Holder would not have extended the loan for the term and with the interest rate provided herein. Holder is hereby given a lien upon and a security interest in all property of the undersigned now or at any time hereafter in the possession of Holder in any capacity whatsoever, including but not limited to any balance or share of any deposit, trust or agency account, as security for the payment of this Note. INSURANCE MANAGEMENT SOLUTIONS, INC. By: /s/ Jeffrey S. Bragg -------------------------------- COO -- IMS Page 2 of 2 EX-10.32 35 PROMISSORY NOTE 1 EXHIBIT 10.32 PROMISSORY NOTE $448,749.95 April 1, 1998 St. Petersburg, Florida FOR VALUE RECEIVED, the undersigned Insurance Management Solutions, Inc., jointly and severally, promises to pay to the order of Southern Rental & Leasing Corporation, a Florida corporation, together with any other holder hereof (herein, "Holder") the principal sum of Four Hundred Forty-Eight Thousand Seven Hundred forty-nine and 95/100 Dollars, ($448,749.95) together with interest thereon from date at the rate per annum as described below until maturity on the balance of principal from time to time remaining unpaid, both principal and interest being payable at 360 Central Ave, St. Petersburg, FL 33701, in the following manner. Principal and interest shall be due and payable in an amount equal to the payments remaining due and payable on the attached promissory note in the original principal amount of Five Hundred Thousand Dollars ($500,000.00) dated December 30, 1994 and the attached promissory note in the amount of Three Hundred Thousand Dollars ($300,000.00) dated December 30, 1996. It is the intention of the parties that Insurance Management Solutions, Inc., make principal and interest payments to Holder in the identical amounts that Holder will be paying under the two attached promissory notes until paid in full, aside from any default by Holder. The makers hereof shall not incur any penalty upon the prepayment of all or any part of the indebtedness evidenced hereby. Time is of the essence hereunder. Any payment of principal or interest which is not paid when due, whether upon maturity or acceleration or otherwise as provided herein, shall bear interest at the rate of Eighteen (18%) percent per annum from the due date until paid. This Note has been executed and delivered in, and is to be governed by and construed under the laws of the State of Florida, as amended, except as modified by the laws and regulations of the United States of America. The undersigned shall have no obligation to pay interest or payments in the nature of interest in excess of the maximum rate of interest allowed to be contracted for by law, as changed from time to time, applicable to this Note (the "Maximum Rate"). Any interest in excess of the Maximum Rate paid by the undersigned ("excess sum") shall be credited as a payment of principal, or, if the undersigned so requests in writing, returned to the undersigned, or, if the indebtedness and other obligations evidenced by this Note have been paid in full, returned to the undersigned together with interest at the same rate as was paid by the undersigned during such period. Any excess sum credited to principal shall be credited as of the date paid to Holder. Holder may, without such action constituting a breach of any obligations to the undersigned, seek judicial determination of the applicable rate of interest, and its obligation to pay or credit any proposed excess sum to the undersigned. Provided Holder has not exercised its right to accelerate this Note, then the undersigned hereof shall pay Holder a late charge of five percent (5%) of any required payment which is not received by Holder when said payment is due. The parties agree that said charge is a fair and reasonable charge for the late payment and shall not be deemed a penalty. Acceptance of partial payments or payments marked "payment in full" or "in satisfaction" or words to similar effect shall not affect the duty of the undersigned to pay all obligations due hereunder, and shall not affect the right of Holder to pursue all remedies available to it hereunder or under any other agreement between the maker hereof and the Holder. 1 2 The remedies of Holder shall be cumulative and concurrent, and may be pursued singularly, successively or together, at the sole discretion of Holder, and may be exercised as often as occasion therefor shall arise. No action or omission of Holder, including specifically any failure to exercise or forbearance in the exercise of any remedy, shall be deemed to be a waiver or release of the same, such waiver or release to be effected only through a written document executed by Holder and then only to the extent specifically recited therein. A waiver or release with reference to any one event shall not be construed as continuing or as constituting a course of dealing, nor shall it be construed as a bar to, or as a waiver or release of, any subsequent remedy as to a subsequent event. The undersigned hereby consents and submits to the jurisdiction of the courts of the State of Florida, and notwithstanding its place of residence or organization or the place of execution of this Note, any litigation relating hereto, whether arising in contract or tort, by statute or otherwise, shall be brought in (and, if brought elsewhere, may be transferred to) a State court of competent jurisdiction in Pinellas County, Florida. The undersigned and any other person liable for the payment hereof respectively, hereby (a) expressly waive any presentment, demand for payment, notice of dishonor, protest, notice of nonpayment or protest, all other forms of notice whatsoever, and diligence in collection; and (b) agree that Holder, in order to enforce payment of this Note against any of them, shall not be required first to institute any suit or to exhaust any of its remedies against the undersigned (or any co-maker) or against any other person liable for payment hereof or to attempt to realize on any collateral for this Note. THE UNDERSIGNED AND ANY OTHER PERSON LIABLE FOR PAYMENT HEREOF, BY EXECUTING THIS NOTE OR ANY OTHER DOCUMENT CREATING SUCH LIABILITY, WAIVE THEIR RIGHTS TO A TRIAL BY JURY IN ANY ACTION, WHETHER ARISING IN CONTRACT OR TORT, BY STATUTE OR OTHERWISE, IN ANY WAY RELATED TO THIS NOTE. THIS PROVISION IS A MATERIAL INDUCEMENT FOR HOLDER'S RIGHTS UNDER THIS PARAGRAPH SHALL BE EFFECTIVE UNLESS IN WRITING AND MANUALLY SIGNED ON HOLDER'S BEHALF. The undersigned acknowledges that the above paragraph has been expressly bargained for by Holder as part of the loan evidenced hereby and that, but for the undersigned's agreement and the agreement of any other person liable for payment hereof thereto, Holder would not have extended the loan for the term and with the interest rate provided herein. Holder is hereby given a lien upon and a security interest in all property of the undersigned now or at any time hereafter in the possession of Holder in any capacity whatsoever, including but not limited to any balance or share of any deposit, trust or agency account, as security for the payment of this Note. INSURANCE MANAGEMENT SOLUTIONS, INC. By:/s/ Jeffrey S. Bragg --------------------------- EX-10.33 36 PROMISSORY NOTE 1 EXHIBIT 10.33 ALLONGE TO NOTE ALLONGE to that certain Promissory Note made by Insurance Management Solutions Group, Inc. payable to the order of Heritage Hotel Holding Company in the original principal amount of $6,750,000.00 dated May 8, 1998, and bearing interest at the rate of 8 1/2% percent per annum. Pay to the order of South Trust Bank, National Association without recourse. Dated: May 8, 1998 HERITAGE HOTEL HOLDING COMPANY BY: ------------------------------- G. Kristin Delano, Secretary THIS ALLONGE IS PART OF AND SHOULD BE PERMANENTLY AFFIXED TO THE NOTE. ============================================ Acknowledgment I hereby acknowledge receipt of this original Promissory Note on this 8th day of May, 1998. SouthTrust Bank, National Association By: /s/ Illegible Signature ---------------------------- As Its: Vice President 2 ALLONGE TO NOTE ALLONGE to that certain Promissory Note made by Insurance Management Solutions Group, Inc. payable to the order of Heritage Hotel Holding Company in the original principal amount of $6,750,000.00 dated May 8, 1998, and bearing interest at the rate of 8 1/2% percent per annum. Pay to the order of SouthTrust Bank, National Association without recourse. Dated: May 8, 1998 HERITAGE HOTEL HOLDING COMPANY BY: /s/ G. KRISTIN DELANO, Secretary ------------------------------------- G. Kristin Delano, Secretary THIS ALLONGE IS PART OF AND SHOULD BE PERMANENTLY AFFIXED TO THE NOTE. 3 PROMISSORY NOTE $6,750,000.00 May 8, 1998 St. Petersburg, Florida FOR VALUE RECEIVED, the undersigned Insurance Management Solutions Group, Inc., jointly and severally, promises to pay to the order of Heritage Hotel Holding Company, a Florida corporation, together with any other holder hereof (herein, "Holder"), the principal sum Six Million Seven Hundred Fifty Thousand and 00/100 Dollars ($6,750,000.00) together with interest thereon from date at the rate per annum as described below until maturity on the balance of principal from time to time remaining unpaid, both principal and interest being payable at 360 Central Avenue, St. Petersburg, FL 33701, in the following manner: Principal and interest shall be due and payable in full on December 31, 1998. Interest shall accrue at 8 1/2% percent per annum. The makers hereof shall not incur any penalty upon the prepayment of all or any part of the indebtedness evidenced hereby. Time is of the essence hereunder. Any payment of principal or interest which is not paid when due, whether upon maturity or acceleration or otherwise as provided herein, shall bear interest at the rate of Eighteen (18%) percent per annum from the due date until paid. This Note has been executed and delivered in, and is to be governed by and construed under the laws of the State of Florida, as amended, except as modified by the laws and regulations of the United States of America. The undersigned shall have no obligation to pay interest or payments in the nature of interest in excess of the maximum rate of interest allowed to be contracted for by law, as changed from time to time, applicable to this Note (the "Maximum Rate"). Any interest in excess of the Maximum Rate paid by the undersigned ("excess sum") shall be credited as a payment of principal, or, if the undersigned so requests in writing, returned to the undersigned, or, if the indebtedness and other obligations evidenced by this Note have been paid in full, returned to the undersigned together with interest at the same rate as was paid by the undersigned during such period. Any excess sum credited to principal shall be credited as of the date paid to Holder. Holder may, without such action constituting a breach of any obligations to the undersigned, seek judicial determination of the applicable rate of interest, and its obligation to pay or credit any proposed excess sum to the undersigned. Provided Holder has not exercised its right to accelerate this Note, then the undersigned hereof shall pay Holder a late charge of five percent (5%) of any required payment which is not received by Holder when said payment is due. The parties agree that said charge is a fair and reasonable charge for the late payment and shall not be deemed a penalty. Acceptance of partial payments or payments marked "payment in full" or "in satisfaction" or words to similar effect shall not affect the duty of the undersigned to pay all obligations due hereunder, and shall not affect the right of Holder to pursue all remedies available to it hereunder or under any other agreement between the maker hereof and the Holder. Page 1 of 2 4 The remedies of Holder shall be cumulative and concurrent, and may be pursued singularly, successively or together, at the sole discretion of Holder, and may be exercised as often as occasion therefor shall arise. No action or omission of Holder, including specifically any failure to exercise or forbearance in the exercise of any remedy, shall be deemed to be a waiver of release of the same, such waiver or release to be effected only through a written document executed by Holder and then only to the extent specifically recited therein. A waiver of release with reference to any one event shall not be construed as continuing or as constituting a course of dealing, nor shall it be construed as a bar to, or as a waiver or release, any subsequent remedy as to a subsequent event. The undersigned hereby consents and submits to the jurisdiction of the courts of the State of Florida, and, notwithstanding its place of residence or organization or the place of execution of this Note, any litigation relating hereto, whether arising in contract or tort, by statute or otherwise, shall be brought in (and, if brought elsewhere, may be transferred to) a State court of competent jurisdiction in Pinellas County, Florida. The undersigned and any other person liable for the payment hereof respectively, hereby (a) expressly waive any presentment, demand for payment, notice of dishonor, protest, notice of nonpayment or protest, all other forms of notice whatsoever, and diligence in collection; and (b) agree that Holder, in order to enforce payment of this Note against any of them, shall not be required first to institute any suit or to exhaust any of its remedies against the undersigned (or any co-maker) or against any other person liable for payment hereof or to attempt to realize on any collateral for this Note. THE UNDERSIGNED AND ANY OTHER PERSON LIABLE FOR PAYMENT HEREOF, BY EXECUTING THIS NOTE OR ANY OTHER DOCUMENT CREATING SUCH LIABILITY, WAIVE THEIR RIGHTS TO A TRIAL BY JURY IN ANY ACTION, WHETHER ARISING IN CONTRACT OR TORT, BY STATUTE OR OTHERWISE, IN ANY WAY RELATED TO THIS NOTE. THIS PROVISION IS A MATERIAL INDUCEMENT FOR HOLDER'S EXTENDING CREDIT TO THE UNDERSIGNED AND NO WAIVER OR LIMITATION OF HOLDER'S RIGHTS UNDER THIS PARAGRAPH SHALL BE EFFECTIVE UNLESS IN WRITING AND MANUALLY SIGNED ON HOLDER'S BEHALF. The undersigned acknowledges that the above paragraph has been expressly bargained for by Holder as part of the loan evidenced hereby and that, but for the undersigned's agreement and the agreement of any other person liable for payment hereof thereto, Holder would not have extended the loan for the term and with the interest rate provided herein. Holder, is hereby given a lien upon and a security interest in all property of the undersigned now or at any time hereafter in the possession of Holder in any capacity whatsoever, including but not limited to any balance or share of any deposit, trust or agency account, as security for the payment of this Note. INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. By: /s/ David K. Meehan -------------------------------- David K. Meehan, President Page 2 of 2 EX-10.34 37 NOTE DATED DECEMBER 30, 1994 1 EXHIBIT 10.34 NOTE $200,000.00 Pinellas County, Florida December 30, 1994 FOR VALUE RECEIVED, the undersigned, BANKERS DATA CENTER, INC., a Florida corporation (the "Borrower") promises to pay to the order of FIRST OF AMERICA BANK-FLORIDA F.S.B., a federal savings bank (the "Lender") the principal sum of TWO HUNDRED THOUSAND AND NO/100 DOLLARS ($200,000.00), together with interest on the principal balance remaining unpaid from time to time at the rate set forth below. Term. The term of this Note is from the date of this Note through and including the date that is exactly sixty (60) months following the date of this Note (the "Term"). The last day of the Term will be sometimes referred to below as the "Maturity Date". Interest. The principal balance remaining unpaid from time to time shall bear interest from the date of this Note through and including the date that all indebtedness evidenced hereby is paid in full at the rates per annum equal to Lender's Base Lending Rate (the "Lending Rate") announced or published by Lender from time to time, to be adjusted daily as and when the Lending Rate is adjusted. In the event the Lender shall cease or fail to announce or publish a Lending Rate, regardless of the reason therefor, then the Lender may utilize the Lending Rate announced or published by any other nationally known financial institution for purposes of determination of the interest rate for the remainder of the Term. In the event that all nationally known financial institutions shall cease or fail to announce or publish a Lending Rate, regardless of the reason therefor, then the Lender shall select a comparable national index, and if no comparable national index is available, then Lender shall establish the interest rate for the remainder of the loan Term. Lending Rate. The term "Lending Rate" shall mean the annual rate of interest announced from time to time by the Lender. The Lending Rate is a reference rate for the information and use of the Lender in establishing the actual rates to be charged its borrowers. It is not intended to and does not represent the best or lowest rate of interest available to any borrower or class of borrowers. Manner of Calculation. Interest shall be calculated on the basis of a three hundred sixty (360) day year for actual days elapsed. Interest will be charged on the principal balance of the loan that remains outstanding from time to time. Signed for Identification By: /s/ Edwin C. Hussemann -------------------------------- The Treasurer of Borrower 2 Interest Limitation. Notwithstanding any other provision of this Note or of any instrument securing this Note or any other instrument executed in connection with the loan evidenced hereby, it is expressly agreed that the amounts payable under this Note or under the other aforesaid instruments for the payment of interest or any other payment in the nature of or which would be considered as interest or other charge for the use or loan of money shall not exceed the highest rate allowed by law, from time to time, to be charged by Lender. In the event the provisions of this Note or of any instruments referred to in this paragraph, regarding the payment of interest or other payments in the nature of or which would be considered as interest or other charge for the use or loan of money operate to produce a rate that exceeds such limitation, then the excess over such limitation will not be payable and the amount otherwise agreed to have been paid shall be reduced by the excess so that such limitation will not be exceeded, and if any of the payment actually made shall result in such limitation being exceeded, the amount of the excess shall constitute and be treated as a payment on the principal hereof and shall operate to reduce such principal by the amount of such excess, or if in excess of the principal indebtedness, such excess shall be refunded. Payments. Principal plus interest shall be due and payable and shall be paid at 2100 66th Street North, St. Petersburg, Florida 33710, or at such other place as the Lender may designate from time to time, as follows: (a) Monthly Payments. Principal shall be due and payable and shall be paid in equal monthly installments of principal in the amount of THREE THOUSAND THIRTY-THREE AND 34/100 DOLLARS ($3,333.34) each, together with all accrued interest thereon, commencing exactly one (1) month from the date hereof, and on the same day of each succeeding month thereafter through and including the same day of the month next preceding the Maturity Date. (b) Maturity Date. On the Maturity Date, all indebtedness evidenced hereby (whether unpaid principal, accrued interest or otherwise) that remains unpaid shall be due and payable and shall be paid. Each installment of principal plus interest under subparagraph (a) above shall be credited first on account of any costs of collection, then on account of accrued interest and then in reduction of said unpaid principal. Late Charge. Any installment not received within fifteen (15) days when due shall be subject to, and it is agreed that the Lender shall collect thereon and therewith a "late charge" in the amount of five percent (5%) of the payment upon each such delinquent installment. Said "late charge" shall be immediately due and payable and shall be paid by the Borrower without notice or demand of the holder hereof. Signed for Identification By: /s/ Edwin C. Hussemann -------------------------------- The Treasurer of Borrower 3 Prepayment. Borrower shall have the option of prepaying all or any part of the principal of this Note at any time during the term of this Note, without notice, premium or penalty for the privilege of such prepayment. The Lender may require that any partial prepayments be made on the date prepayments are due. Any partial prepayments shall not postpone the due date of any subsequent monthly installments or change the amount of such installments, unless the Lender shall otherwise agree in writing. In the event of any full prepayment, all accrued interest and other charges evidenced by this Note and the instruments of security for this Note shall be paid at the same time as such full principal prepayments. Consent and Waiver. Each Obligor (which term shall mean and include the Borrower, each endorser, and all others who may become liable for all or any part of the obligations evidenced and secured hereby), does hereby, jointly and severally: (a) consent to any forbearance or extension of the time or manner of payment hereof and to the release of all or any part of any security held by the Lender to secure payment of this Note and to the subordination of the lien of the mortgage and any other instrument of security securing this Note as to all or any part of the property encumbered thereby, all without notice or consent of that party; (b) agree that no course or dealing or delay or omission of forbearance on the part of the Lender in exercising or enforcing any of its rights or remedies hereunder or under any instrument securing this Note shall impair or be prejudicial to any of the Lender's rights and remedies hereunder or to the enforcement hereof and that the Lender may extend or postpone the time and manner of payment and performance of this Note and any instrument securing this Note, may grant forbearances and may release, wholly or partially, any security held by the Lender as security for this Note and release, partially or wholly, any person or party primarily or secondarily liable with respect to this Note, all without notice to or consent by any party primarily or secondarily liable hereunder and without thereby releasing, discharging or diminishing its rights and remedies against any other party primarily or secondarily liable hereunder; and (c) waive notice of acceptance of this Note, notice of the occurrence of any default hereunder or under any instrument securing this Note and presentment, demand, protest, notice of dishonor and notice of protest and notices of any and all action at any time taken or omitted by the Lender in connection with this Note or any instrument securing this Note and waives all requirements necessary to hold that party to the liability of that party. Cross Default. A default under this Note shall be and constitute a default under any and all notes or other evidence of indebtedness and any instruments of security therefor in which an Obligor is liable and of which the Lender is the holder, including without limitation, (i) that certain Note executed on even date hereof by NATIONAL FLOOD CERTIFICATION SERVICES, INC., a Florida corporation, in favor of Lender in the original principal amount of $60,000.00 (the "Flood Note"); (ii) that certain Note executed on even date hereof by SOUTHERN RENTAL & LEASING CORPORATION, a Florida corporation, in favor of Lender in the original principal amount of $300,000.00(the "Southern Note"); and (iii) that certain Note Signed for Identification By: /s/ Edwin C. Hussemann ------------------------- The Treasurer of Borrower 3 4 executed on even date hereof by BANKERS INSURANCE GROUP, INC., a Florida corporation, in favor of Lender in the original principal amount of $270,000.00 (the "Bankers Note") (the Flood Note, the Southern Note and the Bankers Note will be sometimes collectively referred to below as the "Other Notes"). A default under any of the Other Notes or any of the instruments of security therefor, which is not cured within the applicable curative period set forth in such instruments shall constitute a default under this Note and all instruments of security therefor. Lien. The Lender is hereby granted a lien upon and a security interest in all property of each Obligor now or at any time hereafter in the possession of the Lender in any capacity whatsoever, including but not limited to any balance or share of any deposit account as security for the payment of this Note, and the Lender is hereby authorized upon default to apply, on or after maturity (whether by acceleration or otherwise) to the payment of this debt any such funds or property in possession of the Lender belonging to each Obligor, in such order of application as Lender may from time to time elect, without advance notice. Events of Default. The happening of any of the following events shall constitute a default hereunder: (a) failure of any Obligor to pay any principal, interest or any other sums required hereunder when due under this Note or the Other Notes; or (b) a default shall occur in any instrument securing this Note or in any other instrument executed in connection with the Loan evidenced hereby, which is not cured within the applicable curative period set forth in such instruments. Acceleration. If a monetary default shall occur hereunder (the default specified in (a) next above) which is not cured within thirty (30) days, or if a nonmonetary default shall occur hereunder (the default specified in (b) next above) and remains uncured for thirty (30) days or more following provision of written notice to Borrower from Lender specifying with particularity such event of nonmonetary default (or, if such nonmonetary default cannot be reasonably cured within the thirty (30) day period, if Borrower does not commence to cure such nonmonetary default within such thirty (30) day period or thereafter fails to diligently and continuously proceed to cure such nonmonetary default), then at the option of the Lender, the entire principal sum then remaining unpaid and accrued interest shall immediately become due and payable without notice or demand, and said principal shall bear interest from such date at the highest legal rate permitted by law, from time to time, to be charged by Lender; it being agreed that interest not paid when due shall, at the option of the Lender, draw interest at the rate provided for in this paragraph. Failure to exercise the above options shall not constitute a waiver of the right to exercise the same in the event of any subsequent default. Attorneys' Fees. All parties liable for the payment of this Note agree to pay the Lender reasonable attorneys' fees and costs, whether or not an action be brought, for the services of counsel employed after maturity or default to collect this Note or any principal or interest due Signed for Identification By: Edwin C. Hussemann --------------------------- The Treasurer of Borrower 4 5 hereunder, or to protect the security, if any, or enforce the performance of any other agreement contained in this Note or in any instrument of security executed in connection with this loan, including costs and attorney's fees on any appeal, or in any proceedings under the National Bankruptcy Code or in any post judgement proceedings. Set Off. The Obligors shall have no right of set off against the Lender under this Note or under any instruments securing this Note of executed in connection with the loan evidenced hereby. The Lender, however, shall have the right, immediately and without further action by it, to set of against this Note all money owed by the Lender in any capacity to each or any Obligor, whether or not due. Provided however, in the event the Federal Deposit Insurance Corporation shall assume control of the Lender and seize any deposits of any Obligor, the amounts seized shall reduce the indebtedness of the Borrower under this Note. Waiver of Jury Trial. Borrower hereby voluntarily and irrevocably waives the right to a trail by jury in connection with any litigation, action or cause of action arising out of or by virtue of: (i) this instrument; or (ii) any other agreement or document executed or contemplated to be in connection with the loan evidenced or secured hereby, or incident hereto (the "Loan"); or (iii) any course of conduct, course of dealing, representation, statement or other action of any party in connection with the Loan. The parties to the Loan have discussed this waiver, have agreed that it is an essential and material part of their agreement concerning the Loan, and that no officer or representative of Lender has the authority to modify, orally or in writing, the terms of this paragraph. This agreement shall be binding on the Borrower, and, if applicable, on all Obligors as defined herein, and constitutes a material inducement for Lender entering into the Loan transaction. Borrower. The Borrower warrants and represents to Lender that it is a corporation, duly formed, presently existing under the laws of the State of Florida, and that the individual executing this Note below is fully authorized to do so on behalf of the Borrower, so as to fully and legally bind the Borrower to the terms and provisions of this Note. Florida Law. This Note is executed under seal and constitutes a contract under the laws of the State of Florida, and shall be enforceable in a Court of competent jurisdiction in that State, regardless of in which State this Note is being executed. Headings. The headings of the paragraphs contained in this Note are for convenience of reference only and do not form a part hereof and in no way modify, interpret or construe the meaning of the parties hereto. Documentary Stamps. Documentary stamps in the amount required by Florida law have been purchased and affixed to this Note. 6 Identification. This Note consists of six (6) pages, all but the last of which have been signed only for identification by the Treasurer of the Borrower. THE UNDERSIGNED ACKNOWLEDGE THAT THE LOAN EVIDENCED HEREBY IS FOR COMMERCIAL PURPOSES ONLY AND NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES. Signed, sealed and delivered BANKERS DATA CENTER, INC., in the presence of: a Florida corporation /s/ A. M. Dahlquist By: /s/ Edwin C. Hussemann - --------------------------- --------------------------- SIGNATURE SIGNATURE A. M. DAHLQUIST EDWIN C. HUSSEMANN - --------------------------- --------------------------- NAME LEGIBLY PRINTED NAME LEGIBLY PRINTED TYPEWRITTEN OR STAMPED TYPEWRITTEN OR STAMPED /s/ Nancy C. Haire Its Treasurer - --------------------------- SIGNATURE NANCY C. HAIRE - --------------------------- NAME LEGIBLY PRINTED TYPEWRITTEN OR STAMPED (CORPORATE SEAL) As to Borrower STATE OF FLORIDA ) COUNTY OF PINELLAS ) The foregoing instrument was acknowledged before me this 29 day of December, 1994, by EDWIN C. HUSSEMANN, the Treasurer of BANKERS DATA CENTER, INC., a Florida corporation, on behalf of the corporation. Personally Known X OR Produced Identification -------- Type of Identification Provided -------------------------------- /s/ Nancy C. Haire ------------------------- SIGNATURE NANCY C. HAIRE ------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (SEAL) (NOTARY PUBLIC) My Commission Expires: 6 EX-10.35 38 LOAN AGREEMENT 1 EXHIBIT 10.35 LOAN AGREEMENT THIS LOAN AGREEMENT (the "Agreement") is executed on this 30 day of December, 1994, by and between FIRST OF AMERICA BANK-FLORIDA F.S.B., a federal savings bank (the "Lender"), NATIONAL FLOOD CERTIFICATION SERVICES, INC., a Florida corporation, SOUTHERN RENTAL & LEASING CORPORATION, a Florida corporation, BANKERS DATA CENTER, INC., a Florida corporation and BANKERS INSURANCE GROUP, INC., a Florida corporation (collectively the "Borrower Group"), and is made in reference to the following facts: (A) On or about the date hereof, the Lender has made four (4) separate loans to the entities comprising the Borrower Group in the original collective principal amount of EIGHT HUNDRED THIRTY THOUSAND AND NO/100 DOLLARS ($830,000.00) (collectively the "Loans"). (B) As a condition to making the Loans to the Borrower Group, the Lender has required the Borrower Group to furnish, or cause to be furnished to it, certain financial information more specifically described in this Agreement. NOW, THEREFORE, in consideration of the premises and for other valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows: 1. Recitals. The statements contained in the recitals of fact set forth above (the "Recitals") are true and correct, and the Recitals are by this reference made a part hereof. 2. Abbreviations and Definitions. The following abbreviations and definitions will be used for purposes of this Agreement: (a) The abbreviations of the parties set forth in the Preamble will be used for purposes of this Agreement; (b) The abbreviations and definitions set forth in the Recitals will be used for purposes of this Agreement; and (c) The term "Agreement" shall mean the Loan Agreement between the parties in the manner set forth herein. 3. Financial Information. At all times during the term of the Loans, or any of them, the Borrower Group shall provide, or cause to be provided to Lender, the following financial reports and information within the time periods indicated: 2 (a) Annual Financial Statements. No later than one hundred fifty (150) days following the end of each company's fiscal year end, the Borrower Group shall provide, or cause to be provided to Lender, the audited fiscal year end financial statements of Bankers Insurance Group, a Florida corporation ("BIG"), Bankers Insurance Company, a Florida corporation ("BIC"), Bankers Life Insurance Company, a Florida corporation ("BLIC") and First Community Insurance Company, a Florida corporation ("FCIC")(BIC, BLIC and FCIC will be sometimes collectively referred to below as the "Insurance Companies"). (b) Statutory Reports. Within thirty (30) days of the filing of the same with the Florida Department of Insurance, each of the Insurance Companies shall provide to Lender copies of the financial statements and reports that each is required to furnish to the Florida Insurance Commission in accordance with Florida law. (c) Quarterly Statements. No later than thirty (30) days following the end of each fiscal quarter end, each of the parties comprising the Borrower Group, and each of the parties comprising the Insurance Companies, shall provide to Lender copies of their internally prepared quarterly financial statements. (d) Investment Report. Within thirty (30) days following the end of each fiscal quarter end during the term of the Loans, BIG shall provide to Lender a copy of its quarterly Portfolio Investment Report. All of the aforementioned reports and financial information must be provided to Lender on a form acceptable to Lender in its reasonable discretion. Further, the failure of the Borrower Group to provide any of the aforementioned reports or financial information within the time periods indicated shall constitute a default under the Loans and all documents and instruments evidencing and securing the Loans. 4. Restriction on Dividends. At all times during the term of the Loans, there shall be an absolute prohibition on BIG paying any dividends or making any other similar distributions to any of its shareholders, without the prior written consent of Lender; provided however, that BIG shall be permitted without the prior consent of Lender to pay dividends during any given fiscal year not exceeding fifty percent (50%) of BIG's prior year's earnings. 5. Florida Contract. This Agreement shall be deemed a Florida contract and shall be construed according to the laws of the State of Florida, and shall be enforceable, at the option of Lender, in any court of competent jurisdiction in the State of Florida, regardless whether this Agreement is executed by certain of the parties hereto in other states. 6. Binding Effect. This Agreement shall bind the successors and assigns of the parties hereto; it constitutes the entire understanding of the parties and it may not be modified except in writing. 7. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original. 2 3 8. Execution. This Agreement shall not be effective nor shall it have any force and effect whatsoever until all the parties hereto have duly executed this Agreement. 9. Headings. The headings of the paragraphs contained in this Agreement are for convenience of reference only and do not form a part hereof and in no way modify, interpret or construe the meaning of the parties hereto. Signed, sealed and delivered FIRST OF AMERICA BANK-FLORIDA, in the presence of: F.S.B., a federal savings bank /s/ G. Kristin Delano By: /s/ A. M. Dahlquist - --------------------------- --------------------------- SIGNATURE /s/ Nancy C. Haire A. M. DAHLQUIST - --------------------------- --------------------------- As to Lender NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED Its Vice President Group Manager NATIONAL FLOOD CERTIFICATION SERVICES, INC., a Florida corporation /s/ G. Kristin Delano By: /s/ Edwin C. Hussemann - --------------------------- --------------------------- /s/ Nancy C. Haire Its Treasurer - --------------------------- As to Borrower (CORPORATE SEAL) SOUTHERN LEASING & RENTAL CORPORATION, a Florida corporation /s/ G. Kristin Delano By: /s/ Edwin C. Hussemann - --------------------------- --------------------------- /s/ Nancy C. Haire Its Treasurer - --------------------------- As to Borrower (CORPORATE SEAL) 3 4 BANKERS DATA CENTER, INC., a Florida corporation /s/ G. Kristin Delano By: /s/ Edwin C. Hussemann - --------------------------- --------------------------- Its Treasurer /s/ Nancy C. Haire - --------------------------- As to Borrower [CORPORATE SEAL] BANKERS INSURANCE GROUP, INC., a Florida corporation /s/ G. Kristin Delano By: /s/ Edwin C. Hussemann - --------------------------- --------------------------- Its Treasurer /s/ Nancy C. Haire - --------------------------- As to Borrower [CORPORATE SEAL] 4 EX-10.36 39 SECURITY AGREEMENT 1 EXHIBIT 10.36 SECURITY AGREEMENT THIS SECURITY AGREEMENT (the "Agreement") is executed this 30 day of December, 1994, by BANKERS DATA CENTER, INC., a Florida corporation (the "Borrower"), in favor of FIRST OF AMERICA BANK-FLORIDA F.S.B., a federal savings bank (the "Lender"), and is made in reference to the following facts: (A) On or about the date hereof, the Lender has agreed to make a loan to the Borrower in the original principal amount of TWO HUNDRED THOUSAND AND NO/100 DOLLARS ($200,000.00) (the "Loan"). The Loan is evidence by that certain Note executed by the Borrower in favor of the Lender (the "Note"). (B) As a condition to making the Loan, the Lender has required Borrower to grant Lender a first security interest and lien in certain tangible and intangible personal property of Borrower, as more particularly described in Exhibit "A" attached hereto and by this reference made a part hereof, together with all increases, accessions, replacements, upgrades, parts, fittings, accessories and equipment now or hereafter affixed to any or any part thereafter affixed to any or any part thereof, or used in connection therewith, and all replacements of all or any part thereof (collectively the "Collateral"). The Collateral will at all times be located at 360 central Avenue, St. Petersburg, Florida. NOW THEREFORE, for and in consideration of the premises and other good and valuable consideration, the Borrower does hereby covenant, agree, warrant and represent with and to the Lender as follows: 1. Recitals. The statements contained in the recitals of fact set forth above (the "Recitals") are true and correct and the Recitals by this reference are made a part of this Agreement. 2. security Interest. Borrower does hereby grant to Lender a first security interest and lien in the Collateral as security to secure the payment of principal, interest and other sums due or to become due under the Note, and any and all extensions, modifications or renewals of the Note, and all present and future indebtedness, obligations, and liabilities contained in or referred to or which may hereafter arise in connection with or as contemplated by the Note and any instruments of security therefor, and any and all modifications or extensions of the Note, and the instruments of security therefor, and all obligations and liabilities of Borrower hereunder, all of which are hereinafter referred to as the "Obligations." 3. Use and Location of Collateral. The collateral was and shall be acquired and is and shall be used primarily for business use. 4. Payment. The Borrower shall pay and perform, all and singular, the Obligations, including but not limited to the payment of sums of principal and interest and other 2 sums payable by virtue of the Note promptly when due, and shall perform all of Borrower's agreements in the Note and herein and pay all taxes and assessments levied or assessed against the Collateral, against this Agreement and against the Obligations, secured hereby, whether such taxes and assessments be against the Collateral, the Obligations, the Borrower, the Lender, or another. All such taxes and assessments shall be paid by Borrower before they become delinquent, and before the date they would have become delinquent or within ten (10) days after payment of same, whichever shall be sooner, Borrower shall deliver to Lender official receipts, or copies thereof, showing payment. 5. Insurance. To keep the tangible personal property portion of the Collateral continuously insured against loss by fire, theft, tornado, windstorm, flood and such other hazards, as may from time to time be required by Lender, in companies and in amounts in each company as may be approved by and acceptable to Lender; all such insurance policies shall be in form acceptable to Lender with loss payable to Lender as its interest may appear, and each and every such policy or certified copies thereof shall be promptly delivered to and held by Lender. Not less than thirty (30) days in advance of the expiration of each such policy Borrower shall deliver to Lender a renewal or certified copy thereof, together with the receipt, or copy thereof, for the premium for such renewal. In the event of loss the insurance claim proceeds, or any part thereof, shall be applied by Lender in the manner it deems proper, whether for reduction of the Loan indebtedness, restoration of the Collateral or otherwise. 6. Protection of Lender's Security. Borrower is and will be the owner of the Collateral free and clear from any lien, security interest or encumbrance, except for the lien and the obligations of this Agreement. No financing statement covering any of the collateral is on file in any public office. Borrower will from time to time at the request of Lender execute one or more financing statements and such other documents (and pay the costs of filing or recording the same in all public offices deemed necessary or desirable by Lender) and do such other acts and things, all as Lender may request to establish and maintain a valid perfected first security interest in the Collateral to secure the payment and performance of the Obligations. 7. Replacement of Collateral. To keep the tangible personal property portion of the Collateral, all and singular, on the property where presently located and not to remove or permit same to be removed therefrom without the prior written consent of the Lender except that Borrower shall be entitled to dispose of such of the Collateral as has become unfit for continued use provided Borrower simultaneously replaces same with property of similar kind and for like use and provided the purchase price of any such replacement shall have been paid in full and provided that the lien of this Agreement shall continue upon any such replacement. To use reasonable care and diligence to preserve and keep the Collateral in good condition and not to permit or commit any waste, impairment or deterioration thereof and to use same only for the purpose for which same is now agreed upon to be used in connection with said improvements. 8. Sale or Encumbrance. Except as set forth in paragraph 7 above, not to sell or attempt to sell any of the Collateral and not to create or permit any other security interest or other lien or encumbrance upon such Collateral without the prior written consent of the Lender. 2 3 9. Costs and Attorneys' Fees. To pay, all and singular, the expenditures, costs, charges and expenses, including reasonable attorneys' fees and costs of title searches and information requests, incurred or paid at any time by the Lender because of the failure on the part of the Borrower promptly and fully to perform and pay the Obligations, and all such costs, charges and expenses shall be immediately due and payable and shall bear interest at the highest legal rate permitted by law to be charged by Lender from time to time, from date of payment by Lender until repaid by Borrower and, together with such interest, shall be secured by the lien of this Agreement. 10. Default. Borrower shall be in default under this Agreement upon the happening of any of the following events or conditions: (a) failure or omission to perform or pay when due any of the Obligations (including any installment thereof or interest thereon); (b) any warranty, representation or statement made or furnished to Lender by or on behalf of Borrower proves to have been false in any material respect when made or furnished; (c) Borrower makes an assignment for the benefit of creditors; (d) a Receiver is appointed for Borrower or any part of the Collateral; (e) Borrower files a Petition in Bankruptcy, is adjudicated a bankrupt, or files any petition or institutes any proceedings under the Bankruptcy Code with respect to Borrower's assets and liabilities; (f) Borrower defaults in, breaches or fails to perform any one or more of the covenants and agreements contained in the Obligations, including without limitation, this Agreement, the Note or any of the instruments of security therefor executed by Borrower in connection with the loan secured hereby on even date herewith or hereafter. 11. Acceleration. Upon the occurrence of any monetary default which remains uncured for thirty (30) days or more, or should a nonmonetary default remain uncured for thirty (30) days or more following receipt of written notice to Borrower from Lender specifying with particularity such event of nonmonetary default (or, if such nonmonetary default cannot be reasonably cured within the thirty (30) day period, if the Borrower does not commence to cure such nonmonetary default within the thirty (30) day period or thereafter fails to diligently and continuously proceed to cure such nonmonetary default), Lender may, at its option, declare all Obligations, or any of them (notwithstanding any provision thereof), immediately due and payable without demand or notice of any kind and the same thereupon shall immediately become and be due and payable without demand or notice, and Lender shall have and may exercise from time to time any and all rights and remedies of a Lender under the Uniform Commercial Code of the State of Florida and any and all other rights and remedies available to it under any other applicable law, including the right to foreclose this Agreement and the other instruments of security in the same proceedings. A monetary default shall be deemed to include failure to make payments of principal, interest and late charges under the Note as well as payments of taxes and governmental assessments and premiums for insurance under any instruments of security for the Note and this Agreement. Notwithstanding anything contained in the preceding sentences of this paragraph 11 to the contrary, there shall be no requirement of a curative period as set forth above in the event of a default described in subparagraphs (c), (d) or (e) of paragraph 10 hereof. Upon request or demand of Lender, Borrower shall, at Borrower's expense, assemble the Collateral and make it available to the Lender and Borrower shall promptly pay all costs of Lender of collection of any and all of the Obligations and enforcements of rights hereunder, including reasonable 3 4 attorneys' fees and legal expenses and expenses of any repairs to any of the Collateral and expenses of any repairs to any realty or other property to which any of the Collateral may be affixed or be a part. Expenses of retaking, holding, preparing for sale, selling or the like, shall include those incurred on appeal, if any. 12. Waiver. No waiver by Lender of any default shall operate as a waiver of any other default or of the same default on a future occasion. No delay or omission on the part of Lender in exercising any right or remedy shall operate as a waiver thereof or the exercise of any other right or remedy. 13. Provisions Cumulative. The provisions of this Agreement are cumulative and in addition to the provisions of the Note secured by this Agreement and the provisions of the instruments securing the Note and Lender shall have all the benefits, rights and remedies of and under the Note and any other instrument securing same. All rights of Lender hereunder shall inure to the benefit of its successors and assigns and all obligations of Borrower hereunder shall bind the successors and assigns of Borrower. 14. Florida Contract. This Agreement has been delivered in the State of Florida and shall be construed in accordance with the laws of Florida and the venue for any litigation as a result of this Agreement shall be Hillsborough County, Florida. 15. Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity only, without invalidating the remainder of such provision or of the remaining provisions of this agreement. 16. Assignment by Lender. In the event of any assignment hereof by Lender, Borrower covenants and agrees that Borrower will not assert against any assignee hereof any claim or defense which Borrower may have against Lender, except Borrower may assert against any such assignee any defense of a type which may be asserted against a holder in due course of a negotiable instrument under the Uniform Commercial Code of the State of Florida. 17. Headings. The headings of the paragraphs contained in this Agreement are for convenience of reference only and do not form a part hereof and in no way modify, interpret or construe the meaning of the parties hereto. 4 5 EXHIBIT 10.36 IN WITNESS WHEREOF, Borrower has executed this instrument under seal the day and year first above written. Signed, sealed and delivered BANKERS DATA CENTER, INC., in the presence of: a Florida corporation /s/ A. M. Dahlquist By: /s/ Edwin C. Hussemann - --------------------------- --------------------------- SIGNATURE SIGNATURE A. M. DAHLQUIST EDWIN C. HUSSEMANN - --------------------------- --------------------------- NAME LEGIBLY PRINTED NAME LEGIBLY PRINTED TYPEWRITTEN OR STAMPED TYPEWRITTEN OR STAMPED /s/ Nancy C. Haire Its Treasurer - --------------------------- SIGNATURE NANCY C. HAIRE - --------------------------- NAME LEGIBLY PRINTED TYPEWRITTEN OR STAMPED (CORPORATE SEAL) As to Borrower STATE OF FLORIDA ) COUNTY OF PINELLAS ) The foregoing instrument was acknowledged before me this 27 day of December, 1994, by EDWIN C. HUSSEMANN, the Treasurer of BANKERS DATA CENTER, INC., a Florida corporation, on behalf of the corporation. Personally Known X OR Produced Identification -------- Type of Identification Provided ------------------------------ /s/ Nancy C. Haire ------------------------- SIGNATURE NANCY C. HAIRE ------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (SEAL) (NOTARY PUBLIC) My Commission Expires: 5 6 BANKERS DATA CENTER NET BOOK VALUE REPORT
Co Asset In-Svc Dep Rem Unadjusted Salvage Thru Current Accum Sec Net Bk Pct SYS No No Desc Date Meth Life Basis + S179 Value Date Depreciation 179 Value Dep - ------------------------------------------------------------------------------------------------------------------------------------ BOOK:INTERNAL FY:DECEMBER 000227 TBA STEEL CASE 01/01/94 SLMM 06 01 14957.00 0.00 11/94 1958.66 0.00 12998.34 13.1 000228 TBA S/C CHAIR 03/01/94 SLMM 04 03 219.57 0.00 11/94 32.94 0.00 186.63 15.0 000229 TBA S/C CHAIR 03/01/94 SLMM 04 03 219.57 0.00 11/94 32.94 0.00 186.63 15.0 000230 TBA S/C CHAIR 03/01/94 SLMM 04 03 219.57 0.00 11/94 32.94 0.00 186.63 15.0 000231 TBA S/C CHAIR 03/01/94 SLMM 04 03 219.57 0.00 11/94 32.94 0.00 186.63 15.0 000232 TBA S/C CHAIR 03/01/94 SLMM 04 03 219.57 0.00 11/94 32.94 0.00 186.63 15.0 000233 TBA S/C CHAIR 03/01/94 SLMM 04 03 219.57 0.00 11/94 32.94 0.00 186.63 15.0 000234 TBA S/C CHAIR 03/01/94 SLMM 04 03 219.57 0.00 11/94 32.94 0.00 186.63 15.0 000235 TBA S/C CHAIR 03/01/94 SLMM 04 03 219.57 0.00 11/94 32.94 0.00 186.63 15.0 000236 TBA S/C CHAIR 03/01/94 SLMM 04 03 219.57 0.00 11/94 32.94 0.00 186.63 15.0 000237 TBA S/C CHAIR 03/01/94 SLMM 04 03 219.57 0.00 11/94 32.94 0.00 186.63 15.0 000238 TBA S/C CHAIR 03/01/94 SLMM 04 03 219.57 0.00 11/94 32.94 0.00 186.63 15.0 000239 TBA S/C CHAIR 03/01/94 SLMM 04 03 219.57 0.00 11/94 32.94 0.00 186.63 15.0 000240 TBA S/C CHAIR 03/01/94 SLMM 04 03 219.57 0.00 11/94 32.94 0.00 186.63 15.0 000241 TBA S/C CHAIR 04/01/94 SLMM 04 04 219.57 0.00 11/94 29.28 0.00 190.29 13.3 000299 138-0885 S/C CHAIR 07/01/94 SLMM 04 07 232.64 0.00 11/94 19.39 0.00 213.25 8.3 000300 138-0886 S/C CHAIR 07/01/94 SLMM 04 07 232.64 0.00 11/94 19.39 0.00 213.25 8.3 000301 138-0887 S/C CHAIR 07/01/94 SLMM 04 07 232.64 0.00 11/94 19.39 0.00 213.25 8.3 000302 138-0888 S/C CHAIR 07/01/94 SLMM 04 07 232.64 0.00 11/94 19.39 0.00 213.25 8.3 000303 138-0889 S/C CHAIR 07/01/94 SLMM 04 07 232.64 0.00 11/94 19.39 0.00 213.25 8.3 000304 138-0890 S/C CHAIR 07/01/94 SLMM 04 07 232.64 0.00 11/94 19.39 0.00 213.23 8.3 000305 138-0891 S/C CHAIR 07/01/94 SLMM 04 07 232.64 0.00 11/94 19.39 0.00 213.25 8.3 000306 138-0862 S/C CHAIR 07/01/94 SLMM 04 07 232.64 0.00 11/94 19.39 0.00 213.25 8.3 -------- ---- ------- ---- -------- Class FF Count= 23 19892.10 0.00 2571.28 0.00 17320.82 Less disposals 0.00 0.00 0.00 0.00 0.00 -------- ---- ------- ---- -------- Net 19892.10 0.00 2571.28 0.00 17320.82 -------- ---- ------- ---- -------- 000246 500-0269 DELL 466/L 01/01/94 SLMM 04 01 3446.69 0.00 11/94 631.90 0.00 2814.79 18.3 000247 500-0270 DELL 466/L 01/01/94 SLMM 04 01 3446.69 0.00 11/94 631.90 0.00 2814.79 18.3 000248 501-0301 ULTRASCAN 01/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000249 501-0302 ULTRASCAN 01/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000250 502-0368 QUIET KEY 01/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000251 502-0369 QUIET KEY 01/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000252 622-0229 HP DIRECT 03/01/94 SLMM 04 03 619.82 0.00 11/94 92.97 0.00 526.85 15.0 000253 500-0282 COMPAQ PRO 03/01/94 SLMM 04 03 1501.26 0.00 11/94 225.19 0.00 1276.07 15.0 000254 501-0314 MAGNAVOX 1 03/01/94 SLMM 04 03 374.50 0.00 11/94 56.17 0.00 318.33 15.0 000255 502-0381 4 MB UPGRA 03/01/94 SLMM 04 03 205.14 0.00 11/94 30.77 0.00 174.37 15.0 000256 TBA COMPAQ 4/3 03/01/94 SLMM 04 03 1508.78 0.00 11/94 226.33 0.00 1282.45 15.0 000257 TBA 4MB UPGRAD 03/01/94 SLMM 04 03 210.30 0.00 11/94 31.56 0.00 178.74 15.0 000258 TBA SVGA COLOR 03/01/94 SLMM 04 03 374.50 0.00 11/94 56.17 0.00 318.33 15.0 000259 611-0042 SEAGATE 1. 04/01/94 SLMM 04 04 1069.65 0.00 11/94 142.63 0.00 927.02 13.3
EXHIBIT "A" 7 BANKERS DATA CENTER NET BOOK VALUE REPORT
Co Asset In-Svc Dep Rem Unadjusted Salvage Thru Current Accum Sec Net Bk Pct SYS No No Desc Date Meth Life Basis + S179 Value Date Depreciation 179 Value Dep - ------------------------------------------------------------------------------------------------------------------------------------ 000260 612-0014 ADAPTEC 15 04/01/94 SLMM 04 04 309.95 0.00 11/94 41.34 0.00 268.61 13.3 000261 500-0303 COMPAQ PRO 04/01/94 SLMM 04 04 2088.86 0.00 11/94 278.53 0.00 1810.33 13.3 000262 500-0304 COMPAQ PRO 04/01/94 SLMM 04 04 2088.86 0.00 11/94 278.53 0.00 1810.33 13.3 000263 501-0327 TRUE POINT 04/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000264 501-0328 TRUE POINT 04/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000265 502-0400 COMPAQ 4 M 04/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000266 502-0401 COMPAQ 4 M 04/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000267 510-0101 HP LASERJE 04/01/94 SLMM 04 04 1492.52 0.00 11/94 199.01 0.00 1293.51 13.3 000268 622-0270 HP JET DIR 04/01/94 SLMM 04 04 616.19 0.00 11/94 82.16 0.00 534.03 13.3 000269 612-0015 ADAPTER 15 04/01/94 SLMM 04 04 204.37 0.00 11/94 27.26 0.00 177.11 13.3 000270 500-0250 COMPAQ CON 04/01/94 SLMM 04 04 3406.13 0.00 11/94 454.15 0.00 2951.98 13.3 000271 TBA 4MB UPGRAD 04/01/94 SLMM 04 04 289.22 0.00 11/94 38.56 0.00 250.66 13.3 000275 500-0320 PROLINEA C 05/01/94 SLMM 04 05 2498.89 0.00 11/94 291.54 0.00 2207.35 11.7 000276 500-0321 PROLINEA C 05/01/94 SLMM 04 05 2498.89 0.00 11/94 291.54 0.00 2207.35 11.7 000277 500-0322 PROLINEA C 05/01/94 SLMM 04 05 2498.89 0.00 11/94 291.54 0.00 2207.35 11.7 000278 500-0323 PROLINEA C 05/01/94 SLMM 04 05 2498.89 0.00 11/94 291.54 0.00 2207.35 11.7 000279 501-0345 MONITOR (I 05/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000280 501-0346 MONITOR (I 05/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000281 501-0347 MONITOR (I 05/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000282 501-0348 MONITOR (I 05/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000283 502-0419 KEYBOARD ( 05/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000284 502-0420 KEYBOARD ( 05/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000285 502-0421 KEYBOARD ( 05/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000286 502-0422 KEYBOARD ( 05/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000287 500-0308 PROLINEA M 05/01/94 SLMM 04 05 3144.45 0.00 11/94 366.86 0.00 2777.59 11.7 000288 500-0309 PROLINEA M 05/01/94 SLMM 04 05 3144.45 0.00 11/94 366.86 0.00 2777.59 11.7 000289 500-0310 PROLINEA M 05/01/94 SLMM 04 05 3144.45 0.00 11/94 366.86 0.00 2777.59 11.7 000290 501-0334 MONITOR (I 05/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000291 501-0335 MONITOR (I 05/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000292 501-0336 MONITOR (I 05/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000293 502-0405 KEYBOARD ( 05/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000294 502-0406 KEYBOARD ( 05/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000295 502-0407 KEYBOARD ( 05/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000296 500-0302 PROLINEA C 06/01/94 SLMM 04 06 1710.13 0.00 11/94 171.01 0.00 1539.12 10.0 000297 502-0399 KEYBOARD ( 06/01/94 SLMM 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000298 501-0330 MAGNAVOX 1 07/01/94 SLMM 04 07 374.50 0.00 11/94 31.21 0.00 343.29 8.3 000309 622-0277 JETDIRECT 07/01/94 SLMM 04 07 522.55 0.00 11/94 43.55 0.00 479.00 8.3 000310 HEWLETT PA 07/01/94 SLMM 04 07 1739.49 0.00 11/94 144.96 0.00 1594.53 8.3 000311 520-0490 AS400 TERM 07/01/94 NoDep 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000312 500-0327 IDEA 277v 07/01/94 SLMM 04 07 1021.95 0.00 11/94 85.16 0.00 936.79 8.3 000313 501-0353 MONITOR (I 07/01/94 NoDep 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000314 502-0425 122 KEY KE 07/01/94 NoDep 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000315 500-0335 PROLINEA 4 08/01/94 SLMM 04 08 2065.72 0.00 11/94 137.72 0.00 1928.00 6.7 000316 500-0336 PROLINEA 4 08/01/94 SLMM 04 08 2065.72 0.00 11/94 137.72 0.00 1928.00 6.7 000317 500-0337 PROLINEA 4 08/01/94 SLMM 04 08 2065.72 0.00 11/94 137.72 0.00 1928.00 6.7
8 BANKERS DATA CENTER NET BOOK VALUE REPORT
Co Asset In-Svc Dep Rem Unadjusted Salvage Thru Current Accum Sec Net Bk Pct SYS No No Desc Date Meth Life Basis + S179 Value Date Depreciation 179 Value Dep - ------------------------------------------------------------------------------------------------------------------------------------ 000328 500-0341 COMPAQ PRO 08/01/94 SLMM 04 08 2270.12 0.00 11/94 151.35 0.00 2118.77 6.7 000329 501-0360 MONITOR (I 08/01/94 NoDep 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000330 601-0096 MODEM (INC 08/01/94 NoDep 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000331 601-0094 DATA RACE 09/01/94 MT200 05 01 529.00 0.00 11/94 96.99 0.00 432.01 18.3 000332 602-0064 KINGSTON 4 09/01/94 NoDep 00 00 0.00 0.00 11/94 0.00 0.00 0.00 0.0 000336 500-0380 COMPAQ PRO 11/01/94 SLMM 04 00 2014.10 0.00 0.00 0.00 2014.10 0.0 000337 500-0381 COMPAQ PRO 11/01/94 SLMM 04 00 2014.10 0.00 0.00 0.00 2014.10 0.0 000338 501-0390 MONITOR (S 11/01/94 NoDep 00 00 0.00 0.00 0.00 0.00 0.00 0.0 000339 501-0391 MONITOR (S 11/01/94 NoDep 00 00 0.00 0.00 0.00 0.00 0.00 0.0 000340 500-0408 DELL NOTEB 12/01/94 SLMM 04 00 4293.97 0.00 0.00 0.00 4293.97 0.0 000341 500-0409 DELL NOTEB 12/01/94 SLMM 04 00 4293.97 0.00 0.00 0.00 4293.97 0.0 000342 500-0410 DELL NOTEB 12/01/94 SLMM 04 00 4293.97 0.00 0.00 0.00 4293.97 0.0 000343 601-0113 AT&T DATA 12/01/94 SLMM 04 00 212.93 0.00 0.00 0.00 212.93 0.0 000344 601-0114 AT&T DATA 12/01/94 SLMM 04 00 212.93 0.00 0.00 0.00 212.93 0.0 000345 601-0115 AT&T DATA 12/01/94 SLMM 04 00 212.93 0.00 0.00 0.00 212.93 0.0 000346 601-0116 AT&T DATA 12/01/94 SLMM 04 00 212.93 0.00 0.00 0.00 212.93 0.0 000347 601-0117 AT&T DATA 12/01/94 SLMM 04 00 212.93 0.00 0.00 0.00 212.93 0.0 000348 601-0118 AT&T DATA 12/01/94 SLMM 04 00 212.93 0.00 0.00 0.00 212.93 0.0 000349 601-0119 AT&T DATA 12/01/94 SLMM 04 00 212.93 0.00 0.00 0.00 212.93 0.0 000350 601-0120 AT&T DATA 12/01/94 SLMM 04 00 212.93 0.00 0.00 0.00 212.93 0.0 -------- ---- ------ ---- -------- Class HW Count= 79 75660.79 0.00 6929.26 0.00 68731.53 Less disposals 0.00 0.00 0.00 0.00 0.00 -------- ---- ------- ---- -------- Net 75660.79 0.00 6929.26 0.00 68731.53 -------- ---- ------- ---- -------- 000242 550-0294 NORTON DES 03/01/94 SLMM 04 03 124.78 0.00 11/94 18.72 0.00 106.06 15.0 000243 550-0295 MS OFFICE 04/01/94 SLMM 04 04 499.29 0.00 11/94 66.57 0.00 432.72 13.3 000244 TBA POWER BUIL 04/01/94 SLMM 04 04 3357.95 0.00 11/94 447.74 0.00 2910.21 13.3 000245 TBA PPOWER BUI 04/01/94 SLMM 04 04 3357.95 0.00 11/94 447.74 0.00 2910.21 13.3 000272 CLARION DA 05/01/94 SLMM 04 05 609.20 0.00 11/94 71.07 0.00 538.13 11.7 000273 POWERBUILD 05/01/94 SLMM 04 05 615.54 0.00 11/94 71.82 0.00 543.72 11.7 000274 POWERBUILD 05/01/94 SLMM 04 05 615.54 0.00 11/94 71.82 0.00 543.72 11.7 000307 XTRT V1.5 07/01/94 SLMM 04 07 702.50 0.00 11/94 58.55 0.00 643.95 8.3 000308 POWERSOFT 07/01/94 SLMM 04 07 4281.00 0.00 11/94 356.75 0.00 3924.25 8.3 000333 EIS SOFTWA 09/01/94 MT200 05 01 856.00 0.00 11/94 156.94 0.00 699.06 18.3 000334 SEE NOTES MS OFFICE 11.01/94 SLMM 03 11 8877.79 0.00 11/94 184.95 0.00 8692.84 2.1 000351 STONE EAGLE 07/01/94 NoDep 00 00 100000.00 0.00 0.00 0.00 100000.00 0.0 SOFTWARE --------- ---- ------- ---- --------- Class SW Count= 12 123897.54 0.00 1952.67 0.00 121944.87 Less disposals 0.00 0.00 0.00 0.00 0.00 --------- ---- ------- ---- --------- Net 123897.54 0.00 1952.67 0.00 121944.87 --------- ---- ------- ---- ---------
9 BANKERS DATA CENTER NET BOOK VALUE REPORT
Co Asset In-Svc Dep Rem Unadjusted Salvage Thru Current Accum Sec Net Bk Pct SYS No No Desc Date Meth Life Basis + S179 Value Date Depreciation 179 Value Dep - ------------------------------------------------------------------------------------------------------------------------------------ --------- ---- -------- ---- --------- Grand Total Count= 114 219450.43 0.00 11453.21 0.00 207997.22 Less disposals 0.00 0.00 0.00 0.00 0.00 --------- ---- -------- ---- --------- Net 219450.43 0.00 11453.21 0.00 207997.22 ========= ==== ======== ==== =========
- ----------------------------------------------------- Calculation Assumptions ------------------------------------------------------ Book Short Years Midquarter Convention Adjustment Convention ---- ----------- --------------------- --------------------- Internal (N) (N) None
- -------------------------------------------------------- Asset Grouping/Sorting ---------------------------------------------------- Group: FILE LISTING Include Assets that meet the following conditions: Activity is currently A,D Internal Book Placed In Service Date is between 01/01/1994 and 12/31/1994 Sort Assets by: Class in ascending order and report subtotals
EX-10.37 40 NOTE DATED DECEMBER 30, 1994 1 EXHIBIT 10.37 NOTE $60,000.00 Pinellas County, Florida December 30, 1994 FOR VALUE RECEIVED, the undersigned, NATIONAL FLOOD CERTIFICATION SERVICES, INC., a Florida corporation (the "Borrower") promises to pay to the order of FIRST OF AMERICAN BANK-FLORIDA F.S.B., a federal savings bank (the "Lender") the principal sum of SIXTY THOUSAND AND NO/100 DOLLARS ($60,000.00), together with interest on the principal balance remaining unpaid from time to time at the rate set forth below. Term. The term of this Note is from the date of this Note through and including the date that is exactly sixty (60) months following the date of this Note (the "Term"). The last day of the Term will be sometimes referred to below as the "Maturity Date". Interest. The principal balance remaining unpaid from time to time shall bear interest from the date of this Note through and including the date that all indebtedness evidenced hereby is paid in full at the rates per annum equal to Lender's Base Lending Rate (the "Lending Rate") announced or published by Lender from time to time, to be adjusted daily as and when the Lending Rate is adjusted. In the event the Lender shall cease or fail to announce or publish a Lending Rate, regardless of the reason therefor, then the Lender may utilize the Lending Rate announced or published by any other nationally known financial institution for purposes of determination of the interest rate for the remainder of the Term. In the event that all nationally known financial institutions shall cease or fail to announce or publish a Lending Rate, regardless of the reason therefor, then the Lender shall select a comparable national index, and if no comparable national index is available, then Lender shall establish the interest rate for the remainder of the loan Term. Lending Rate. The term "Lending Rate" shall mean the annual rate of interest announced from time to time by the Lender. The Lending Rate is a reference rate for the information and use of the Lender in establishing the actual rates to be charged its borrowers. It is not intended to and does not represent the best or lowest rate of interest available to any borrower or class of borrowers. Manner of Calculation. Interest shall be calculated on the basis of a three hundred sixty (360) day year for actual days elapsed. Interest will be charged on the principal balance of the loan that remains outstanding from time to time. Signed for Identification By: Edwin C. Hussemann ---------------------- The Treasurer of Borrower 2 Interest Limitation. Notwithstanding any other provision of this Note or of any instrument securing this Note or any other instrument executed in connection with the loan evidenced hereby, it is expressly agreed that the amounts payable under this Note or under the other aforesaid instruments for the payment of interest or any other payment in the nature of or which would be considered as interest or other charge for the use or loan of money shall not exceed the highest rate allowed by law, from time to time, to be charged by Lender. In the event the provisions of this Note or of any instruments referred to in this paragraph, regarding the payment of interest or other payments in the nature of or which would be considered as interest or other charge for the use or loan of money operate to produce a rate that exceeds such limitation, then the excess over such limitation will not be payable and the amount otherwise agreed to have been paid shall be reduced by the excess so that such limitation will not be exceeded, and if any payment actually made shall result in such limitation being exceeded, the amount of the excess shall constitute and be treated as a payment on the principal hereof and shall operate to reduce such principal by the amount of such excess, or if in excess of the principal indebtedness, such excess shall be refunded. Payments. Principal plus interest shall be due and payable and shall be paid at 2100 66th Street North, St. Petersburg, Florida 33710, or at such other place as the Lender may designate from time to time, as follows: (a) Monthly Payments. Principal shall be due and payable and shall be paid in equal monthly installments of principal in the amount of ONE THOUSAND AND NO/1OO DOLLARS ($1,000.00) each, together with all accrued interest thereon, commencing exactly one (1) month from the date hereof, and on the same day of each succeeding month thereafter through and including the same day of the month next preceding the Maturity Date. (b) Maturity Date. On the Maturity Date, all indebtedness evidenced hereby (whether unpaid principal, accrued interest or otherwise) that remains unpaid shall be due and payable and shall be paid. Each installment of principal plus interest under subparagraph (a) above shall be credited first on account of any costs of collection, then on account of accrued interest and then in reduction of said unpaid principal. Late Charge. Any installment not received within fifteen (15) days when due shall be subject to, and it is agreed that the Lender shall collect thereon and therewith a "late charge" in the amount of five percent (5%) of the payment upon each such delinquent installment. Said "late charge" shall be immediately due and payable and shall be paid by the Borrower without notice or demand of the holder hereof. Signed for Identification By: Edwin C. Hussemann ---------------------- The Treasurer of Borrower 2 3 Payment. Borrower shall have the option of prepaying all or any part of the principal of this Note at any time during the term of this Note, without notice, premium or penalty for the privilege of such prepayment. The Lender may require that any partial prepayments be made on the date payments are due. Any partial prepayments shall not postpone the due date of any subsequent monthly installments or change the amount of such installments, unless the Lender shall otherwise agree in writing. In the event of any full prepayment, all accrued interest and other charges evidenced by this Note and the instruments of security for this Note shall be paid at the same time as such full principal prepayments. Consent and Waiver. Each Obligor (which term shall mean and include the Borrower, each endorser, and all others who may become liable for all or any part of the obligations evidenced and secured hereby), does hereby, jointly and severally: (a) consent to any forbearance or extension of the time or manner of payment hereof and to the release of all or any part of any security held by the Lender to secure payment of this Note and to the subordination of the lien of the mortgage and any other instrument of security securing this Note as to all or any part of the property encumbered thereby, all without notice or consent of that party; (b) agree that no course of dealing or delay or omission or forbearance on the part of the Lender in exercising or enforcing any of its rights or remedies hereunder or under any instrument securing this Note shall impair or be prejudicial to any of the Lender's rights and remedies hereunder or to the enforcement hereof and that the Lender may extend or postpone the time and manner of payment and performance of this Note and any instrument securing this Note, may grant forbearances and may release, wholly or partially, any security held by the Lender as security for this Note and release, partially or wholly, any person or party primarily or secondarily liable with respect to this Note, all without notice to or consent by any party primarily or secondarily liable hereunder and without thereby releasing, discharging or diminishing its rights and remedies against any other party primarily or secondarily liable hereunder; and (c) waive notice of acceptance of this Note, notice of the occurrence of any default hereunder or under any instrument securing this Note and presentment, demand, protest, notice of dishonor and notice of protest and notices of any and all action at any time taken or omitted by the Lender in connection with this Note or any instrument securing this Note and waives all requirements necessary to hold that party to the liability of that party. Cross Default. A default under this Note shall be and constitute a default under any and all other notes or other evidence of indebtedness and any instruments of security therefor in which an Obligor is liable and of which the Lender is the holder, including without limitation, (i) that certain Note executed on even date hereof by BANKERS INSURANCE GROUP, INC., a Florida corporation, in favor of Lender in the original principal amount of $270,000.00 (the "Bankers Note"); (ii) that certain Note executed on even date hereof by SOUTHERN RENTAL & LEASING CORPORATION, a Florida corporation, in favor of Lender in the original principal amount of $300,000.00 (the "Southern Note"); and (iii) that certain Note executed on even date Signed for Identification By: Edwin C. Hussemann ---------------------- The Treasurer of Borrower 3 4 hereof by BANKERS DATA CENTER, INC., a Florida corporation, in favor of Lender in the original principal amount of $200,000.00 (the "Data Note") (the Bankers Note, the Southern Note and the Data Note will be sometimes collectively referred to below as the "Other Notes"). A default under any of the Other Notes or any of the instruments of security therefor, which is not cured within the applicable curative period set forth in such instruments shall constitute a default under this Note and all instruments of security therefor. Lien. The Lender is hereby granted a lien upon and a security interest in all property of each Obligor now or at any time hereafter in the possession of the Lender in any capacity whatsoever, including but not limited to any balance or share of any deposit account as security for the payment of this Note, and the Lender is hereby authorized upon default to apply, on or after maturity (whether by acceleration or otherwise) to the payment of this debt any such funds or property in possession of the Lender belonging to each Obligor, in such order of application as Lender may from time to time elect, without advance notice. Events of Default. The happening of any of the following events shall constitute a default hereunder: (a) failure of any Obligor to pay any principal, interest or any other sums required hereunder when due under this Note or the Other Notes; or (b) a default shall occur in any instrument securing this Note or in any other instrument executed in connection with the Loan evidenced hereby, which is not cured within the applicable curative period set forth in such instruments. Acceleration. If a monetary default shall occur hereunder (the default specified in (a) next above) which is not cured within thirty (30) days, or if a nonmonetary default shall occur hereunder (the default specified in (b) next above) and remains uncured for thirty (30) days or more following provision of written notice to Borrower from Lender specifying with particularity such event of nonmonetary default (or, if such nonmonetary default cannot be reasonably cured within the thirty (30) day period, if Borrower does not commence to cure such nonmonetary default within such thirty (30) day period or thereafter fails to diligently and continuously proceed to cure such nonmonetary default), then at the option of the Lender, the entire principal sum then remaining unpaid and accrued interest shall immediately become due and payable without notice or demand, and said principal shall bear interest from such date at the highest legal rate permitted by law, from time to time, to be charged by Lender; it being agreed that interest not paid when due shall, at the option of the Lender, draw interest at the rate provided for in this paragraph. Failure to exercise the above options shall not constitute a waiver of the right to exercise the same in the event of any subsequent default. Attorneys' Fees. All parties liable for the payment of this Note agree to pay the lender reasonable attorneys' fees and costs, whether or not an action be brought, for the services of counsel employed after maturity or default to collect this Note or any principal or interest due Signed for Identification By: Edwin C. Hussemann ---------------------- The Treasurer of Borrower 4 5 hereunder, or to protect the security, if any, or enforce the performance of any other agreement contained in this Note or in any instrument of security executed in connection with this loan, including costs and attorneys' fees on any appeal, or in any proceedings under the National Bankruptcy Code or in any post judgment proceedings. Set Off. The Obligors shall have no right of set off against the Lender under this Note or under any instruments securing this Note or executed in connection with the loan evidenced hereby. The Lender, however, shall have the right, immediately and without further action by it, to set off against this Note all money owed by the Lender in any capacity to each or any Obligor, whether or not due. Provided however, in the event the Federal Deposit Insurance Corporation shall assume control of the Lender and seize any deposits of any Obligor, the amounts seized shall reduce the indebtedness of the Borrower under this Note. Waiver of Jury Trial. Borrower hereby voluntarily and irrevocably waives the right to a trial by jury in connection with any litigation, action or cause of action arising out of or by virtue of: (i) this instrument; or (ii) any other agreement or document executed or contemplated to be in connection with the loan evidenced or secured hereby, or incident hereto (the "Loan"); or (iii) any course of conduct, course of dealing, representation, statement or other action of any party in connection with the Loan. The parties to the Loan have discussed this waiver, have agreed that it is an essential and material part of their agreement concerning the Loan, and that no officer or representative of Lender has the authority to modify, orally or in writing, the terms of this paragraph. This agreement shall be binding on the Borrower, and, if applicable, on all Obligors as defined herein, and constitutes a material inducement for Lender entering into the Loan transaction. Borrower. The Borrower warrants and represents to Lender that it is a corporation, duly formed, presently existing under the laws of the State of Florida, and that the individual executing this Note below is fully authorized to do so on behalf of the Borrower, so as to fully and legally bind the Borrower to the terms and provisions of this Note. Florida Law. This Note is executed under seal and constitutes a contract under the laws of the State of Florida, and shall be enforceable in a Court of competent jurisdiction in that State, regardless of in which State this Note is being executed. Headings. The headings of the paragraphs contained in this Note are for convenience of reference only and do not form a part hereof and in no way modify, interpret or construe the meaning of the parties hereto. Documentary Stamps. Documentary stamps in the amount required by Florida law have been purchased and affixed to this Note. Signed for Identification By: Edwin C. Hussemann ---------------------- The Treasurer of Borrower 5 6 Identification. This Note consists of six (6) pages, all but the last of which have been signed only for identification by the Treasurer of the Borrower. THE UNDERSIGNED ACKNOWLEDGE THAT THE LOAN EVIDENCED HEREBY IS FOR COMMERCIAL PURPOSES ONLY AND NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES. Signed, sealed and delivered NATIONAL FLOOD CERTIFICATION in the presence of: SERVICES, INC., a Florida corporation /s/ A. M. Dahlquist By: /s/ Edwin C. Hussemann - --------------------------- --------------------------- SIGNATURE SIGNATURE A. M. DAHLQUIST EDWIN C. HUSSEMANN - --------------------------- --------------------------- NAME LEGIBLY PRINTED NAME LEGIBLY PRINTED TYPEWRITTEN OR STAMPED TYPEWRITTEN OR STAMPED /s/ Nancy C. Haire Its Treasurer - --------------------------- SIGNATURE NANCY C. HAIRE - --------------------------- NAME LEGIBLY PRINTED TYPEWRITTEN OR STAMPED (CORPORATE SEAL) As to Borrower STATE OF FLORIDA ) COUNTY OF PINELLAS ) The foregoing instrument was acknowledged before me this 29 day of December, 1994, by EDWIN C. HUSSEMANN, the Treasurer of NATIONAL FLOOD CERTIFICATION SERVICES, INC., a Florida corporation, on behalf of the corporation. Personally Known X OR Produced Identification -------- Type of Identification Provided ------------------------- /s/ Nancy C. Haire ------------------------- SIGNATURE NANCY C. HAIRE ------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (SEAL) (NOTARY PUBLIC) My Commission Expires: 3/25/96 6 EX-10.38 41 SECURITY AGREEMENT 1 EXHIBIT 10.38 SECURITY AGREEMENT THIS SECURITY AGREEMENT (the "Agreement") is executed this 30 day of December, 1994, by NATIONAL FLOOD CERTIFICATION SERVICES, INC., a Florida corporation (the "Borrower"), in favor of FIRST OF AMERICA BANK-FLORIDA F.S.B., a federal savings bank (the "Lender"), and is made in reference to the following facts: (A) On or about the date hereof, the Lender has agreed to make a loan to the Borrower in the original principal amount of SIXTY THOUSAND AND NO/1OO DOLLARS ($60,000.00) (the "Loan"). The Loan is evidenced by that certain Note executed by the Borrower in favor of the Lender (the "Note"). (B) As a condition to making the Loan, the Lender has required Borrower to grant Lender a first security interest and lien in certain tangible and intangible personal property of Borrower, as more particularly described in Exhibit "A" attached hereto and by this reference made a part hereof, together with all increases, accessions, replacements, upgrades, parts, fittings, accessories and equipment, now or hereafter affixed to all or any part thereof, or used in connection therewith, and all replacements of all or any part thereof (collectively the "Collateral"). The Collateral will at times be located at 10051 5th Street North, St. Petersburg, Florida. NOW THEREFORE, for and in consideration of the premises and other good and valuable consideration, the Borrower does hereby covenant, agree, warrant and represent with and to the Lender as follows: 1. Recitals. The statements contained in the recitals of fact set forth above (the "Recitals") are true and correct and the Recitals by this reference are made a part of this Agreement. 2. Security Interest. Borrower does hereby grant to Lender a first security interest and lien in the Collateral as security to secure the payment of principal, interest and other sums due or to become due under the Note, and any and all extensions, modifications or renewals of the Note, and all present and future indebtedness, obligations, and liabilities contained in or referred to or which may hereafter arise in connection with or as contemplated by the Note and any instruments of security therefor, and any and all modifications or extensions of the Note, and the instruments of security therefor, and all obligations and liabilities of Borrower hereunder, all of which are hereinafter referred to as the "Obligations." 3. Use and Location of Collateral. The Collateral was and shall be acquired and is and shall be used primarily for business use. 2 4. Payment. The Borrower shall pay and perform, all and singular, the Obligations, including but not limited to the payment of sums of principal and interest and other sums payable by virtue of the Note promptly when due, and shall perform all of Borrower's agreements in the Note and herein and pay all taxes and assessments levied or assessed against the Collateral, against this Agreement and against the Obligations secured hereby, whether such taxes and assessments be against the Collateral, the Obligations, the Borrower, the Lender, or another. All such taxes and assessments shall be paid by Borrower before they become delinquent, and before the date they would have become delinquent or within ten (10) days after payment of same, whichever shall be sooner, Borrower shall deliver to Lender official receipts, or copies thereof, showing payment. 5. Insurance. To keep the tangible personal property portion of the Collateral continuously insured against loss by fire, theft, tornado, windstorm, flood and such other hazards, as may be approved by Lender, in companies and in amounts each company as may be approved by and acceptable to Lender; all such insurance policies shall be in form acceptable to Lender with loss payable to Lender as its interest may appear, and in each and every such policy or certified copies thereof shall be promptly delivered to and held by Lender. Not less than thirty (30) days in advance of the expiration of each such policy Borrower shall deliver to Lender a renewal or certified copy thereof, together with the receipt, or copy thereof, for the premium for such renewal. In the event of loss the insurance claim proceeds, or any part thereof, shall be applied by Lender in the manner it deems proper, whether for reduction of the Loan indebtedness, restoration of the Collateral or otherwise. 6. Protection of Lender's Security. Borrower is and will be the owner of the Collateral free and clear from any lien, security interest or encumbrance, except for the lien and the obligations of this Agreement. No financing statement covering any of the Collateral is on file in any public office. Borrower will from time to time at the request of Lender execute one or more financing statements and such other documents (and pay the costs of filing or recording the same in all public offices deemed necessary or desirable by Lender) and do such other acts and things, all as Lender may request to establish and maintain a valid perfected first security interest in the Collateral to secure the payment and performance of the Obligations. 7. Replacement of Collateral. To keep the tangible personal property portion of the Collateral, all and singular, on the property where presently located and not to remove or permit same to be removed therefrom without the prior written consent of the Lender except that Borrower shall be entitled to dispose of such of the Collateral as has become unfit for continued use provided Borrower simultaneously replaces same with property of similar kind and for like use and provided the purchase price of any such replacement shall have been paid in full and provided that the lien of this Agreement shall continue upon any such replacement. To use reasonable care and diligence to preserve and keep the Collateral in good condition and not to permit or commit any waste, impairment or deterioration thereof and to use same only for the purpose for which same is now agreed upon to be used in connection with said improvements. 2 3 8. Sale or Encumbrance. Except as set forth in paragraph 7 above, not to sell or attempt to sell any of the Collateral and not to create or permit any other security interest or other lien or encumbrance upon such Collateral without the prior written consent of the Lender. 9. Costs and Attorneys' Fees. To pay, all and singular, the expenditures, costs, charges and expenses, including reasonable attorneys' fees and costs of title searches and information requests, incurred or paid at any time by the Lender because of the failure on the part of the Borrower promptly and fully to perform and pay the Obligations, and all such costs, charges and expenses shall be immediately due and payable and shall bear interest at the highest legal rate permitted by law to be charged by Lender from time to time, from date of payment by Lender until repaid by Borrower and, together with such interest, shall be secured by the lien of this Agreement. 10. Default. Borrower shall be in default under this Agreement upon the happening of any of the following events or conditions: (a) failure or omission to perform or pay when due any of the Obligations (including any installment thereof or interest thereon); (b) any warranty, representation or statement made or furnished to lender by or on behalf of Borrower proves to have been false in any material respect when made or furnished; (c) Borrower makes an assignment for the benefit of creditors; (d) a Receiver is appointed for Borrower or any part of the Collateral; (e) Borrower files a Petition in Bankruptcy, is adjudicated a bankrupt, or files any petition or institutes any proceedings under the Bankruptcy Code with respect to Borrower's assets and liabilities; (f) Borrower defaults in, breaches or fails to perform any one or more of the covenants and agreements contained in the Obligations, including without limitation, this Agreement, the Note or any of the instruments of security therefor executed by Borrower in connection with the loan secured hereby on even date herewith or hereafter. 11. Acceleration. Upon the occurrence of any monetary default which remains uncured for (30) days or more, or should a nonmonetary default remain uncured for thirty (30) days or more following receipt of written notice to Borrower from Lender specifying with particularity such event of nonmonetary default (or, if such nonmonetary default cannot be reasonably cured within the thirty (30) day period, if the Borrower does not commence to cure such nonmonetary default within the thirty (30) day period or thereafter fails to diligently and continuously proceed to cure such nonmonetary default), Lender may, at its option, declare all Obligations, or any of them (notwithstanding any provision thereof), immediately due and payable without demand or notice of any kind and the same thereupon shall immediately become and be due and payable without demand or notice, and Lender shall have and may exercise from time to time any and all rights and remedies of a Lender under the Uniform Commercial Code of the State of Florida and any and all other rights and remedies available to it under any other applicable law, including the right to foreclose this Agreement and the other instruments of security in the same proceedings. A monetary default shall be deemed to include failure to make payments of principal, interest and late charges under the Note as well as payments of taxes and governmental assessments and premiums for insurance under any instruments of security for the Note and this Agreement. Notwithstanding anything contained in the preceding sentences of this paragraph 11 to the contrary, there shall be no requirement of a curative period as set forth above 3 4 in the event of a default described in subparagraphs (c), (d) or (e) of paragraph 10 hereof. Upon request or demand of Lender, Borrower shall, at Borrower's expense, assemble the Collateral and make it available to the Lender and Borrower shall promptly pay all costs of Lender of collection of any and all of the Obligations and enforcements of rights hereunder, including reasonable attorneys' fees and legal expenses and expenses of any repairs to any of the Collateral and expenses of any repairs to any realty or other property to which any of the Collateral may be affixed or be a part. Expenses of retaking, holding, preparing for sale, selling or the like, shall include those incurred on appeal, if any. 12. Waiver. No waiver by Lender of any default shall operate as a waiver of any other default or of the same default on a future occasion. No delay or omission on the part of Lender in exercising any right or remedy shall operate as a waiver thereof or the exercise of any other right or remedy. 13. Provisions Cumulative. The provisions of this Agreement are cumulative and in addition to the provisions of the Note secured by this Agreement and the provisions of the instruments securing the Note and Lender shall have all the benefits, rights and remedies of and under the Note and any other instrument securing same. All rights of Lender hereunder shall inure to the benefit of its successors and assigns and all obligations of Borrower hereunder shall bind the successors and assigns of Borrower. 14. Florida Contract. This Agreement has been delivered in the State of Florida and shall be construed in accordance with the laws of Florida and the venue for any litigation as a result of this Agreement shall be Hillsborough County, Florida. 15. Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity only, without invalidating the remainder of such provision or of the remaining provisions of this agreement. 16. Assignment by Lender. In the event of any assignment hereof by Lender, Borrower covenants and agrees that Borrower will not assert against any assignee hereof any claim or defense which Borrower may have against Lender, except Borrower may assert against any such assignee any defense of a type which may be asserted against a holder in due course of a negotiable instrument under the Uniform Commercial Code of the State of Florida. 17. Headings. The headings of the paragraphs contained in this Agreement are for convenience of reference only and do not form a part hereof and in no way modify, interpret or construe the meaning of the parties hereto. 4 5 IN WITNESS WHEREOF, Borrower has executed this instrument under seal the day and year first above written. Signed, sealed and delivered NATIONAL FLOOD CERTIFICATION in the presence of: SERVICES, INC., a Florida corporation /s/ A. M. Dahlquist By: /s/ Edwin C. Hussemann - --------------------------- --------------------------- SIGNATURE SIGNATURE A. M. DAHLQUIST EDWIN C. HUSSEMANN - --------------------------- --------------------------- NAME LEGIBLY PRINTED NAME LEGIBLY PRINTED TYPEWRITTEN OR STAMPED TYPEWRITTEN OR STAMPED /s/ Nancy C. Haire Its Treasurer - --------------------------- SIGNATURE NANCY C. HAIRE - --------------------------- NAME LEGIBLY PRINTED TYPEWRITTEN OR STAMPED (CORPORATE SEAL) As to Borrower STATE OF FLORIDA ) COUNTY OF PINELLAS ) The foregoing instrument was acknowledged before me this 29 day of December, 1994, by EDWIN C. HUSSEMANN, the Treasurer of NATIONAL FLOOD CERTIFICATION SERVICES, INC., a Florida corporation, on behalf of the corporation. Personally Known OR Produced Identification -------- Type of Identification Provided ------------------------------------ /s/ Nancy C. Haire ------------------------- SIGNATURE NANCY C. HAIRE ------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (SEAL) (NOTARY PUBLIC) My Commission Expires: 5 6 NATIONAL FLOOD CERT. SERVICE FILE LISTING REPORT
A Co Asset G/L Asset In-Svc P Dep Vendor/ Disposal Acquired SYS No C No Desc Location CL Acct No Date T Meth Mfg Date Value - ------------------------------------------------------------------------------------------------------------------------------------ BOOK:INTERNAL FY:DECEMBER 000152 A TBA FF 03/01/94 P NoDep 219.57 S/C CHAIR 000153 A TBA FF 03/01/94 P NoDep 219.57 S/C CHAIR 000154 A TBA FF 03/01/94 P NoDep 219.57 S/C CHAIR 000155 A TBA FF 03/01/94 P NoDep 219.57 S/C CHAIR 000156 A TBA FF 03/01/94 P NoDep 219.57 S/C CHAIR 000174 A 138-0924 FF 07/01/94 P SLMM 232.64 S/C CHAIR 000175 A 138-0925 FF 07/01/94 P SLMM 232.64 S/C CHAIR 000176 A 138-0926 FF 07/01/94 P SLMM 232.64 S/C CHAIR 000177 A 138-0927 FF 07/01/94 P SLMM 232.64 S/C CHAIR 000178 A 138-0928 FF 07/01/94 P SLMM 232.64 S/C CHAIR 000179 A 138-0929 FF 07/01/94 P SLMM 232.64 S/C CHAIR 000180 A 138-0930 FF 07/01/94 P SLMM 232.64 S/C CHAIR 000181 A 138-0931 FF 07/01/94 P SLMM 232.64 S/C CHAIR 000182 A 138-0932 FF 07/01/94 P SLMM 232.64 S/C CHAIR 000183 A 138-0933 FF 07/01/94 P SLMM 232.64 ------- Class: FF Count= 15 3424.25 000157 A 500-0277 HW 02/01/94 P SLMM 2177.79 DELL 433/NP BASE 000158 A 501-0309 HW 02/01/94 P SLMM 0.00 VS14 COLOR MONITOR (INCLUDED IN 500-0277) 000159 A 502-0376 HW 02/01/94 P SLMM 0.00 SPACESAVER QUIET KEY KEYBOARD (INCLUDED IN 500-0277) 000160 A 500-0271 HW 02/01/94 P SLMM 2314.40 DELL 433/NP BASE COMPUTER 000161 A 501-0303 HW 02/01/94 P SLMM 0.00 ULTRASCAN 14C MONITOR (INCLUDED IN 500-0271)
7 December 17, 1994 12:58 PM Page NATIONAL FLOOD CERT. SERVICE FILE LISTING REPORT
- ------------------------------------------------------------------------------------------------------------------------------------ SYS No A Co Asset No Desc Location Cl G/L Asset Acct In-Svc P Dep Vendor/Mfg Disposal Acquired C No Date T Meth Date Value - ------------------------------------------------------------------------------------------------------------------------------------ 000162 A 502-0370 HW 02/01/94 P SLMM 0.00 SPACESAVER QUIET KEY KEYBOARD (INCLUDED IN 500-0271) 000163 A 611-0040 HW 02/01/94 P SLMM 1219.53 MICROPOLIS HARD DRIVE 000164 A 611-0040 HW 02/01/94 P SLMM 1219.53 MICROPOLIS HARD DRIVE 000165 A 611-0040 HW 02/01/94 P SLMM 1219.54 MICROPOLIS HARD DRIVE 000166 A 611-0040 HW 02/01/94 P SLMM 1219.54 MICROPOLIS HARD DRIVE 000167 A 500-0307 HW 04/01/94 P SLMM 2088.08 COMPAQ PROLINEA D486 DX 33 000168 A 501-0333 HW 04/01/94 P SLMM 0.00 MAGNAVOX 14 SVGA COLOR MONITOR (INCLUDED IN 500-0307) 000169 A 502-0404 HW 04/01/94 P SLMM 0.00 KEYBOARD (INCLUDED IN 500-0307) 000170 A HW 04/01/94 P SLMM 7390.00 DELL 466/T SYSTEM, 3 HAYES JT FAX 14400B, ANDREW 000184 A 500-0325 HW 07/01/94 P SLMM 2045.14 PROLINEA 4 33 MODEL 120 W LB COMPUTER 000185 A 500-0324 HW 07/01/94 P SLMM 2045.14 PROLINEA 4 33 MODEL 120 W LB COMPUTER 000186 A 501-0350 HW 07/01/94 P NoDep 0.00 MONITOR (INCLUDED IN 500-0325) 000187 A 501-0349 HW 07/01/94 P NoDep 0.00 MONITOR (INCLUDED IN 500-0324) 000188 A 502-0423 HW 07/01/94 P NoDep 0.00 KEYBOARD (INCLUDED IN 500-0325) 000189 A 502-0422 HW 07/01/94 P NoDep 0.00 KEYBOARD (INCLUDED IN 500-0324) 000190 A 622-0256 HW 07/01/94 P NoDep 0.00 NIC (INCLUDED IN 500-0325) 000191 A 622-0274 HW 07/01/94 P NoDep 0.00 NIC (INCLUDED IN 500-0324) 000194 A HW 08/01/94 P MT200 1370.50 EXPANSION CARD FOR FOCUS CHASSIS 000195 A 602-0071 HW 09/01/94 P MT200 1631.06 64 MB UPGRADE FOR SERVER 000196 A 602-0072 HW 09/01/94 P MT200 1631.06 64 MB UPGRADE FOR SERVER 000197 A 503-0006 HW 10/01/94 P MT200 6728.20 DISK SUBSYSTEM UPGRADE FOR SERVERS AT NFCS (SEE NOTES) 000198 A 647-0005 HW 10/01/94 P MT200 1037.90 APC SMRT-UPS 2000-2000VA LOGIC (SEE NOTES)
8 December 17, 1994 12:58 PM Page 3 NATIONAL FLOOD CERT. SERVICE FILE LISTING REPORT
- ------------------------------------------------------------------------------------------------------------------------------------ SYS No A Co Asset No Desc Location Cl G/L Asset Acct In-Svc P Dep Vendor/Mfg Disposal Acquired C No Date T Meth Date Value - ------------------------------------------------------------------------------------------------------------------------------------ ---------- Class: HW Count= 27 35337.41 000171 A SW 04/01/94 P SLMM 9900.00 HOST - FAX SOFTWARE 000172 A SW 05/01/94 P SLMM 8500.00 ZIP + 4 CENTROIDS FOR THE US 000173 A SW 06/01/94 P SLMM 2000.00 MAP SOFTWARE 10 USER NETWORK PAK 000192 A SW 07/01/94 P SLMM 2000.00 NETWORK PAK OF 10 000193 A SW 07/01/94 P SLMM 2000.00 NETWORK PAK OF 10 ---------- Class: SW Count= 5 24400.00 ---------- Grand Total Count= 47 63161.66 ==========
- ----------------------------Calculation Assumptions-----------------------------
Book Short Years Midquarter Convention Adjustment Convention - ---- ----------- --------------------- --------------------- Internal [N] [N] None
- -----------------------------Asset Grouping/Sorting----------------------------- Group: FILE LISTING Include Assets that meet the following conditions: Internal Book Placed in Service Date is between 01/01/1994 and 12/31/1994 Sort Assets by: Class in ascending order and report subtotals EX-10.39 42 NOTE DATED DECEMBER 30, 1996 1 EXHIBIT 10.39 NOTE $245,000.00 Valdosta, Georgia December 30, 1996 FOR VALUE RECEIVED, the undersigned, BANKERS HAZARD DETERMINATION SERVICES, INC., a Florida corporation (the "Borrower") promises to pay to the order of FIRST OF AMERICA BANK - FLORIDA, F.S.B., a federal saving bank (the "Lender") the principal sum of TWO HUNDRED FORTY-FIVE THOUSAND AND NO/100 DOLLARS ($245,000.00), together with interest on the principal balance remaining unpaid from time to time at the rates set forth below. Term. The term of this Note shall be from the date of this Note through and including the date that is exactly forty-eight (48) months following the date of this Note (the "Term"). The last day of the Term will be sometimes referred to below as the "Maturity Date". Interest. The principal balance of this Note remaining unpaid from time to time shall bear interest from the date of this Note through and including the date that all indebtedness evidenced hereby is paid in full at the rates per annum equal to the Lender's Base Lending Rate (the "Lending Rate") announced or published by Lender from time to time, to be adjusted daily as and when the Lending Rate is adjusted. In the event the Lender shall cease or fail to announce or publish a Lending Rate, regardless of the reason therefor, then the Lender may utilize the Lending Rate announced or published by any other nationally known financial institution for purposes of determination of the interest rate for the remainder of the Term. In the event that all nationally known financial institutions shall cease or fail to announce or publish a Lending Rate, regardless of the reason therefor, then the Lender shall select a comparable national index, and if no comparable national index is available, then Lender shall establish the interest rate for the remainder of the loan Term. The term "Lending Rate" shall mean the annual rate of interest announced from time to time by the Lender. The Lending Rate is a reference rate for the information and use of the Lender in establishing the actual rates to be charged its borrowers. It is not intended to and does not represent the best or lowest rate of interest available to any borrower or class of borrowers. Manner of Calculation. Interest shall be calculated on the basis of a three hundred sixty (360) day year for actual days elapsed. Interest will be charged on the principal balance of the loan that remains outstanding from time to time. Signed for Identification By: /s/ G. Kristin Delano ------------------------------- The Secretary of Borrower 2 Interest Limitation. Notwithstanding any other provision of this Note or any other instrument executed in connection with the loan evidenced hereby, it is expressly agreed that the amounts payable under this Note or under the other aforesaid instruments for the payment of interest or any other payment in the nature of or which would be considered as interest or other charge for the use or loan of money shall not exceed the highest rate allowed by law, from time to time, to be charged by Lender. In the event the provisions of this Note or of any instrument referred to in this paragraph, regarding the payment of interest or other payments in the nature of or which would be considered as interest or other charge for the use or loan of money operate to produce a rate that exceeds such limitation, then the excess over such limitation will not be payable and the amount otherwise agreed to have been paid shall be reduced by the excess so that such limitation will not be exceeded, and if any payment actually made shall result in such limitation being exceeded, the amount of the excess shall constitute and be treated as a payment on the principal hereof and shall operate to reduce such principal by the amount of such excess, or if in excess of the principal indebtedness, such excess shall be refunded. Payments. Principal plus interest shall be due and payable and shall be paid at 201 East Kennedy Boulevard, Tampa, Florida 33602, Attn.: Commercial Loan Department, or at such other place as the Lender may designate from time to time, as follows: (i) Monthly Payments. Except as provided below, principal shall be due and payable and shall be paid monthly in the amount of FIVE THOUSAND ONE HUNDRED FOUR AND 17/100 DOLLARS ($5,104.17) each, plus accrued interest, commencing on the date exactly one (1) month following the date of this Note, and on the same day of each succeeding month thereafter through and including the same day of the month next preceding the Maturity Date. (ii) Maturity Date. On the Maturity Date, all indebtedness evidenced by this Note (whether unpaid principal, accrued interest or otherwise) that remains unpaid shall be due and payable and shall be paid. Each installment of principal plus interest under subparagraph (i) above shall be credited first on account of the interest then accrued on said principal remaining unpaid and then in reduction of said unpaid principal. Further, because of increases in the interest rate, should any installment of principal and interest set forth in subparagraph (i) above be insufficient to: (A) pay in full the accrued interest on this Note; or (B) fully amortize the principal amount of this Note on or before the date exactly four (4) years from the date of this Note (the "Amortization Period"), Lender shall notify Borrower of the same, and the Borrower shall automatically pay such higher amount as Lender determines is Signed for Identification By: /s/ G. Kristin Delano ------------------------------- The Secretary of Borrower 2 3 necessary to: (A) prevent negative amortization from occurring under this Note; and/or (B) fully amortize the principal amount of this Note during the Amortization Period. Late Charge. Any payment not received within ten (10) days when due shall be subject to, and it is agreed that the Lender shall collect thereon and therewith a "late charge" in the amount of five percent (5%) of the payment upon each such delinquent payment. Said "late charge" shall be immediately due and payable and shall be paid by the Borrower without notice or demand of the holder hereof. Prepayment. Borrower shall have the option of prepaying all or any part of the principal of this Note at any time during the term of this Note, without notice, premium or penalty for the privilege of such prepayment. The Lender may require that any partial prepayments be made on the date payments are due. Any partial prepayments shall not postpone the due date of any subsequent monthly installments or change the amount of such installments, unless the Lender shall otherwise agree in writing. In the event of any full prepayment, all accrued interest and other charges evidenced by this Note and the instruments of security for this Note shall be paid at the same time as such full principal prepayment. Consent and Waiver. Each Obligor (which term shall mean and include the Borrower, each guarantor, each endorser, and all others who may become liable for all or any part of the obligations evidenced and secured hereby), does hereby, jointly and severally: (a) consent to any forbearance or extension of the time or manner of payment hereof and to the release of all or any part of any security held by the Lender to secure payment of this Note and to the subordination of any instrument of security securing this Note as to all or any part of the property encumbered thereby, all without notice or consent of that party; (b) agree that no course of dealing or delay or omission or forbearance on the part of the Lender in exercising or enforcing any of its rights or remedies hereunder or under any instrument securing this Note shall impair or be prejudicial to any of the Lender's rights and remedies hereunder or to the enforcement hereof and that the Lender may extend or postpone the time and manner of payment and performance of this Note and any instrument securing this Note, may grant forbearances and may release, wholly or partially, any security held by the Lender as security for this Note and release, partially or wholly, any person or party primarily or secondarily liable with respect to this Note, all without notice to or consent by any party primarily or secondarily liable hereunder and without thereby releasing, discharging or diminishing its rights and remedies against any other party primarily or secondarily liable hereunder; and (c) except as otherwise set forth in the instruments of security for this Note, waive notice of acceptance of this Note, notice of the occurrence of any default hereunder or under any instrument securing this Note and presentment, demand, protest, notice of dishonor and notice of protest and notices of any and all action at any Signed for Identification By: /s/ G. Kristin Delano ------------------------------- The Secretary of Borrower 3 4 time taken or omitted by the Lender in connection with this Note or any instrument securing this Note and waives all requirements necessary to hold that party to the liability of that party. Lien. The Lender is hereby granted a lien upon and a security interest in all property of each Obligor now or at any time hereafter in the possession of the Lender in any capacity whatsoever, including but not limited to any balance or share of any deposit, trust or agency account as security for the payment of this Note, and the Lender is hereby authorized upon default to apply, on or after maturity (whether by acceleration or otherwise) to the payment of this debt any such funds or property in possession of the Lender belonging to each Obligor, in such order of application as Lender may from time to time elect, without advance notice. Cross Default. A default under this Note shall be and constitute a default under any and all other notes or other evidence of indebtedness and any instruments of security therefor in which the Borrower is liable and of which the Lender is the holder (collectively the "Other Notes"). A default under any other notes or other evidence of indebtedness or any instrument of security therefor in which the Borrower is liable and the Lender is the holder, including, without limitation, under the Other Notes, shall constitute a default under this Note and any instruments of security therefor. Events of Default. The happening of any of the following events shall constitute a default hereunder: (a) failure of any Obligor to pay any principal, interest or any other sums required hereunder when due under this Note; or (b) a default shall occur in any instrument securing this Note or in any other instrument executed in connection with the Loan evidenced hereby, which is not cured within the applicable curative period set forth in such instruments; or (c) a default shall occur under the Other Notes which is not cured within the applicable curative period set forth in the Other Notes. Acceleration. If a default shall occur hereunder which is not cured within ten (10) days or more, then at the option of the Lender, the entire principal sum then remaining unpaid shall immediately become due and payable without notice or demand, and said principal shall bear interest from such date at the highest legal rate permitted by law, from time to time, to be charged by Lender; it being agreed that interest not paid when due shall, at the option of the Lender, draw interest at the rate provided for in this paragraph. Failure to exercise the above options shall not constitute a waiver of the right to exercise the same in the event of any subsequent default. Attorneys' Fees. All parties liable for the payment of this Note agree to pay the Lender reasonable attorneys' fees and costs, whether or not an action be brought, for the services Signed for Identification By: /s/ G. Kristin Delano ------------------------------- The Secretary of Borrower 4 5 of counsel employed after maturity or default to collect this Note or any principal or interest hereunder, or to protect the security, if any, or enforce the performance of any other agreement contained in this Note or in any instrument of security executed in connection with the Loan, including costs and attorneys' fees on any appeal, or in any proceedings under the National Bankruptcy Code or in any post judgment proceedings. Indemnification. The Borrower hereby agrees to indemnify and hold Lender harmless from and against any and all loss, damage, cost and expense, including attorney's fees, that the Lender may incur or sustain by reason of the assertion of a claim or ruling by a governmental entity that documentary stamp tax or intangible tax (or any similar tax), or any penalties or interest associated therewith, must be paid by reason of the execution and delivery of this Note or any documents or instruments securing this Note (collectively the "Collateral Documents"), or any subsequent renewals, modifications or amendments of this Note or the Collateral Documents. Waiver of Jury Trial. Borrower hereby voluntarily and irrevocably waives the right to a trial by jury in connection with any litigation, action or cause of action arising out of or by virtue of: (i) this instrument; or (ii) any other agreement or document executed or contemplated to be in connection with the loan evidenced or secured hereby, or incident hereto (the "Loan"); or (iii) any course of conduct, course of dealing, representation, statement or other action of any party in connection with the Loan. The parties to the Loan have discussed this waiver, have agreed that it is an essential and material part of their agreement concerning the Loan, and that no officer or representative of Lender has the authority to modify, orally or in writing, the terms of this paragraph. This agreement shall be binding on the Borrower, and, if applicable, on all Obligors as defined herein, and constitutes a material inducement for Lender entering into the Loan transaction. Borrower. The Borrower warrants and represents to Lender that it is a corporation duly formed, presently existing and in good standing under the laws of the State of Florida. Florida Law. This Note is executed under seal and constitutes a contract under the laws of the State of Florida, and shall be enforceable in a Court of competent jurisdiction in that State, regardless of in which State this Note is being executed. Set Off. The Obligors shall have no right of set off against the Lender under this Note or under any instruments securing this Note or executed in connection with the loan evidenced hereby. The Lender, however, shall have the right, immediately and without further action by it, to set off against this Note all money owed by the Lender in any capacity to each or any Obligor, whether or not due. Provided however, in the event the Office of Thrift Signed for Identification By: /s/ G. Kristin Delano ------------------------------- The Secretary of Borrower 5 6 Supervision, Federal Deposit Insurance Corporation, or any similar successor governmental entity, shall assume control of Lender and seize deposits of any Obligor, the amounts seized shall reduce the indebtedness of the Borrower under the Note, dollar for dollar. Headings. The headings of the paragraphs contained in this Note are for convenience of reference only and do not form a part hereof and in no way modify, interpret or construe the meaning of the parties hereto. Documentary Stamps. Documentary stamp tax is not due and payable on this Note. Identification. This Note consists of seven (7) pages, all but the last two of which have been signed only for identification by the Secretary of Borrower. THE UNDERSIGNED ACKNOWLEDGE THAT THE LOAN EVIDENCED HEREBY IS FOR COMMERCIAL PURPOSES ONLY AND NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES. Signed, sealed and delivered BANKERS HAZARD DETERMINATION in the presence of: SERVICES, INC., a Florida corporation /s/ Signature Illegible By: /s/ G. Kristin Delano - ----------------------------------- ---------------------------- Its Secretary /s/ Tina S. Wyers - ----------------------------------- (CORPORATE SEAL) As to Borrower 6 7 STATE OF GEORGIA ) COUNTY OF LOWNDES ) The foregoing instrument was acknowledged before me this 30 day of December, 1996, by G. KRISTIN DELANO, the Secretary of BANKERS HAZARD DETERMINATION SERVICES, INC., a Florida corporation, on behalf of the corporation, who is personally known to me or who has produced (TYPE OF IDENTIFICATION: Driver License) as identification. /s/ Tina S. Wyers ------------------------- SIGNATURE TINA S. WYERS ------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (SEAL) NOTARY PUBLIC My Commission Expires: 08/02/00 7 EX-10.40 43 NOTE DATED DECEMBER 30, 1996 1 EXHIBIT 10.40 NOTE $809,000.00 Valdosta, Georgia December 30, 1996 FOR VALUE RECEIVED, the undersigned, INSURANCE MANAGEMENT INFORMATION SERVICES, INC., a Florida corporation (the "Borrower") promises to pay to the Order of FIRST OF AMERICA BANK - FLORIDA, F.S.B., a federal saving bank (the "Lender") the principal sum of EIGHT HUNDRED NINE THOUSAND DOLLARS ($809,000.00), together with interest on the principal balance remaining unpaid from time to time at the rates set forth below. Term. The term of this Note shall be from the date of this Note through and including the date that is exactly forty-eight (48) months following the date of this Note (the "Term"). The last day of the Term will be sometimes referred to below as the "Maturity Date". Interest. The principal balance of this Note remaining unpaid from time to time shall bear interest from the date of this Note through and including the date that all indebtedness evidenced hereby is paid in full at the rates per annum equal to the Lender's Base Lending Rate (the "Lending Rate") announced or published by Lender from time to time, to be adjusted daily as and when the Lending Rate is adjusted. In the event the Lender shall cease or fail to announce or publish a Lending Rate, regardless of the reason therefor, then the Lender may utilize the Lending Rate announced or published by any other nationally known financial institution for Purposes of determination of the interest rate for the remainder of the Term. In the event that all nationally known financial institutions shall cease or fail to announce or publishing a Lending Rate, regardless of the reason therefor, then the Lender shall select a comparable national index, and if no comparable national index is available, then Lender shall establish the interest rate for the remainder of the loan Term. The term "Lending Rate" shall mean the annual rate of interest announced from time to time by the Lender. The ending Rate is a reference rate for the information and use of the Lender in establishing the actual rates to be charged its borrowers. It is not intended to and does not represent the best or lowest rate of interest available to any borrower or class of borrowers. Manner of Calculation. Interest shall be calculated on the basis of a three hundred sixty (360) day year for actual days elapsed. Interest will be charged on the principal balance of the loan that remains outstanding from time to time. Signed for Identification By: /s/ G. Kristin Delano --------------------------------- The Secretary of Borrower 2 Interest Limitation. Notwithstanding any other provision of this Note or any other instrument executed in connection with the loan evidenced hereby, it is expressly agreed that the amounts payable under this Note or under the other aforesaid instruments for the payment of interest or any other payment in the nature of or which would be considered as interest or other charge for the use or loan of money shall not exceed the highest rate allowed by law, from time to time, to be charged by Lender. In the event the provisions of this Note or of any instruments referred to in this paragraph, regarding the payment of interest or other payments in the nature of or which would be considered as interest or other charge for the use or loan of money to produce a rate that exceeds such limitation, then the excess over such limitation will not be payable and the amount otherwise agreed to have been paid shall be reduced by the excess so that such limitation will not be exceeded, and if any payment actually made shall result in such limitation being exceeded, the amount of the excess so that such limitation will not be exceeded, and if any payment actually made shall result in such limitation being exceeded, the amount of the excess shall operate to reduce such principal by the amount of such excess, or if in excess of the principal indebtedness, such excess shall be refunded. Payments. Principal plus in shall be due and payable and shall be paid at 201 Kennedy Boulevard, Tampa, Florida 33602, Attn.: Commercial Loan Department, or at such other place as the Lender may designate from time to time, as follows: (i) Monthly Payments. Except as provided below, principal shall be due and payable and shall be paid monthly in the amount of SIXTEEN THOUSAND EIGHT HUNDRED FIFTY-FOUR AND 17/100 DOLLARS ($16,854.17), each, plus accrued interest, commencing on the date exactly one (1) month following the date of this Note, and on the same day of each succeeding month thereafter through and including the same day of the month next preceding the Maturity Date. (ii) Maturity Date. On the Maturity Date, all indebtedness evidenced by this Note (whether unpaid principal, accrued interest or otherwise) that remains unpaid shall be due and payable and shall be paid. Each installment of principal plus interest under subparagraph (i) above shall be credited first on account of the interest then accrued on said principal remaining unpaid and then in reduction of said unpaid principal. Further, because of increases in the interest rate, should any installment of principal and interest set forth in subparagraph (i) above be insufficient to: (A) pay in full the accrued interest on this Note; or (B) fully amortize the principal amount of this Note on or before the date exactly four (4) years from the date of this Note (the "Amortization Period"), Lender shall notify Borrower of Signed for Identification By: /s/ G. Kristin Delano --------------------------------- The Secretary of Borrower 2 3 the same, and the Borrower shall automatically pay such higher amount as Lender determines is necessary to: (A) Prevent negative amortization from occurring under this Note and/or (B) fully amortize the principal amount of this Note during the Amortization period. Late Charge. Any payment not received within ten (10) days when due be subject to, and it is agreed that the Lender shall collect thereon and therewith a "late charge" in the amount of five percent (5%) of the payment upon each such delinquent payment. Said "late charge" shall be immediately due and payable and shall be paid by the Borrower without notice or demand of the holder hereof. Prepayment. Borrower shall have the option of prepaying all or any part of the principal of this Note at any time during the term of this Note, without notice, premium or penalty for the privilege of such prepayment. The Lender may require that any partial prepayments be made on the date payments are due. Any partial prepayments shall not postpone the due date of any subsequent monthly installments or change the amount of such installments, unless the Lender shall otherwise agree in writing. In the event of any full prepayment, all accrued interest and other charges evidenced by this Note and the instruments of security for this Note shall be paid at the same time as such full principal prepayment. Consent and Waiver. Each Obligor (which term shall mean and include the Borrower, each guarantor, each endorser, and all others who may become liable for all or any part of the obligations evidenced and secured hereby), does hereby, jointly and severally: (a) consent to any forbearance or extension of the time or manner of payment hereof and to the release of all or any part of any security held by the Lender to secure payment of this Note and to the subordination of any instrument of security securing this Note as to all or any part of the property encumbered thereby, all without notice or consent of that party; (b) agree that no course of dealing or delay or omission or forbearance on the part of the Lender in exercising or enforcing any of its rights or remedies hereunder or under any instrument securing this Note shall impair or be prejudicial to any of the Lender's rights and remedies hereunder or to the enforcement hereof manner of payment and performance of this Note and any instrument securing release or wholly, any person or party primarily or secondarily hereunder; and (c) except as otherwise set forth in the instruments of security for this Note, waive notice of acceptance of this Note, notice of the occurrence of any default hereunder or under any instrument securing this Note and prepayment, Signed for Identification By: /s/ G. Kristin Delano --------------------------------- The Secretary of Borrower 3 4 demand, protest, notice of dishonor and notice of protest and notices of any and all action at any time taken or omitted by the Lender in connection with this Note or any instrument Note and waives all requirements necessary to hold that party to the liability of that party. Lien. The Lender is hereby granted a lien upon and a security interest in all property of each Obligor now or at any time hereafter in the possession of the Lender in any capacity whatsoever, including but not limited to any balance or share of any deposit, trust or agency account as security for the payment of this Note, and the Lender is hereby authorized upon default to apply, on or after maturity (whether by acceleration or otherwise) to the payment of this debt any such funds or property in possession of the Lender belonging to each Obligor, in such order of application as Lender may from time to time elect, without advance notice. Cross Default. A default under this Note shall be and constitute a default under any and all other notes or other evidence of indebtedness and any instruments of security therefor in which the Borrower is liable and of which the Lender is the holder (collectively the "Other Notes"). A default under any other notes or other evidence of indebtedness or any instrument of security therefor in which the Borrower is liable and the Lender is the holder, including, without limitation, under the Other Notes, shall constitute a default under this Note and any instruments of security therefor. Events of Default. The happening of any of the following events shall constitute a default hereunder: (a) failure of any Obligor to pay any principal, interest or any other sums required hereunder when due under this Note; or (b) a default shall occur in any instrument securing this Note or in any other instrument executed in connection with the Loan evidenced hereby, which is not cured within the applicable curative period set forth in such instruments; or (c) a default shall occur under the Other Notes which is not cured within the applicable curative period set forth in the Other Notes. Acceleration. If a default shall occur hereunder which is not cured within ten (10) days or more, then at the option of the Lender, the entire principal sum then remaining unpaid shall immediately become due and payable without notice or demand, and said principal shall bear interest from such date at the highest to legal rate permitted by law, from time to time, to be charged by Lender; it being agreed that interest not paid when due shall, at the option of the Lender, draw interest at the rate provided for in this paragraph. Failure to exercise the above options shall not constitute a waiver of the right to exercise the same in the event of any subsequent default. Signed for Identification By: /s/ G. Kristin Delano --------------------------------- The Secretary of Borrower 4 5 Attorneys' Fees. All parties liable for the payment of this Note agree to pay the Lender reasonable attorneys' fees and costs, whether or not an action be brought, for the services of counsel employed after maturity or default to collect this Note or any principal or interest due hereunder or to protect the security, if any, or enforce the performance of any other agreement contained in this Note any instrument of security executed in connection with the Loan, including costs and attorneys' fees on any appeal, or in any proceedings under the National Bankruptcy Code or in any post judgment proceedings. Indemnification. The Borrower hereby agrees to indemnify and hold Lender harmless from and against any and all loss, damage, cost and expense, including attorney's fees, that the Lender may incur or sustain by reason of the assertion of a claim or ruling by a governmental entity that documentary stamp tax or intangible tax (or any similar tax), or any penalties or interest associated therewith, must be paid by reason of the execution and delivery of this Note or any documents securing this Note (collectively the "Collateral Documents"), or any subsequent renewals, modifications or amendments of this Note or the Collateral Documents. Waiver of Jury Trial. Borrower hereby voluntarily and irrevocably waives the right to a trial by jury with any litigation, action or cause of action arising out of or by virtue of (i) this instrument; or (ii) any other agreement or document executed or contemplated to be in connection with the loan evidenced or secured hereby, or incident hereto (the "Loan"); or (iii) any course of conduct, course of dealing, representation, statement or other action of any party in connection with the Loan. The parties to the Loan have discussed this waiver, have agreed that it is an essential and material part of their agreement concerning the Loan, and that no officer or representative of Lender has the authority to modify, orally or in writing, the terms of this paragraph. This agreement shall be binding on the Borrower, and, if applicable, on all Obligors as defined herein, and constitutes a material inducement for Lender entering into the transaction. Borrower. The Borrower warrants and represents to Lender that it is a corporation duly formed, presently existing and in good standing under the laws of the State of Florida. Florida Law. This Note is executed under seal and constitutes a contract under the laws of the State of Florida, and shall be enforceable in a Court of competent jurisdiction in that State, regardless of in which State this Note is being executed. Set Off. The Obligors shall have no right of set off against the Lender under this Note or under any instruments securing this Note or executed in connection with the loan evidenced hereby. The Lender, however, shall have the right, immediately and without further Signed for Identification By: /s/ G. Kristin Delano --------------------------------- The Secretary of Borrower 5 6 action by it, to set off against this Note all money owed by the Lender in any capacity to each or any Obligor, whether or not due. Provided however, in the event the Office of Thrift Supervision, Federal Deposit Insurance Corporation, or any similar successor governmental entity, shall assume control of Lender and seize deposits of any Obligor, the amounts seized shall reduce the indebtedness of the Borrower under the Note, dollar for dollar. Headings. The headings of the paragraphs contained in this Note are for convenience of reference only and do not form a part hereof and in no way modify, interpret or construe the meaning of the parties hereto. Documentary Stamps. Documentary stamp tax is not due and payable on this Note. Identification. This Note consists of seven (7) pages, all but the last two of which have been signed only for identification by the Secretary of Borrower. THE UNDERSIGNED ACKNOWLEDGE THAT THE LOAN EVIDENCED HEREBY IS FOR COMMERCIAL PURPOSES ONLY AND NOT FOR PERSONAL, FAMILY OR HOUSEHOLD PURPOSES. Signed, sealed and delivered INSURANCE MANAGEMENT in the presence of: INFORMATION SERVICES, INC., a Florida corporation By: /s/ G. Kristin Delano - ---------------------------------- -------------------------------- Its Secretary - ---------------------------------- (CORPORATE SEAL) As to Borrower 6 7 STATE OF GEORGIA ) COUNTY OF LOWNDES ) The foregoing instrument was acknowledged before me this 30th day of December, 1996, by G. KRISTIN DELANO, the Secretary of INSURANCE MANAGEMENT INFORMATION SERVICES, INC., a Florida corporation, on behalf of the corporation, who is personally known to me or who has produced (TYPE OF IDENTIFICATION: Drivers License) as identification. /s/ Tina S. Wyers ------------------------- SIGNATURE TINA S. WYERS ------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (SEAL) NOTARY PUBLIC My Commission Expires: 08/02/00 7 EX-10.41 44 LOAN AGREEMENT 1 EXHIBIT 10.41 LOAN AGREEMENT THIS LOAN AGREEMENT (the "Agreement") is entered into effective the, 30 day of December, 1996, by and between FIRST OF AMERICA BANK - FLORIDA, F.S.B., a federal saving bank (the "Lender"), BANKERS HAZARD DETERMINATION SERVICES, INC., a Florida corporation ("BHDS"), BANKERS INSURANCE GROUP, INC., a Florida corporation ("BIG"), BANKERS RISK MANAGEMENT SERVICES, INC., a Florida corporation ("BRMS"), BANKERS UNDERWRITERS, INC., a Florida corporation ("BUI"), INSURANCE MANAGEMENT INFORMATION SERVICES, INC., a Florida corporation ("IMIS"), and SOUTHERN RENTAL & LEASING CORPORATION, a Florida corporation ("SRL"), (BHDS, BIG, BRMS, BUI, IMIS and SRL will be sometimes collectively referred to below as the "Borrowers"), and BANKERS FINANCIAL CORPORATION, a Florida corporation ("BFC"), and BANKERS INTERNATIONAL FINANCIAL CORPORATION, a Florida corporation ("BIC"), (BFC and BIC, together with BIG, will be sometimes collectively referred to below as the "Guarantors"), (the Borrowers and the Guarantors will be sometimes collectively referred to below as the "Borrower Group"), and is made in reference to the following facts: (A) As of the date hereof: (i) All of the BHDS Collateral (as defined below) is owned by BHDS, free and clear of all liens, encumbrances and security interests; (ii) All of the BIG Collateral (as defined below) is owned by BIG, free and clear of all liens, encumbrances and security interests; (iii) All of the BRMS Collateral (as defined below) is owned by BRMS, free and clear of all liens, encumbrances and security interests; (iv) All of the BUI Collateral (as defined below) is owned by BUI, free and clear of all liens, encumbrances and security interests; (v) All of the IMIS Collateral (as defined below) is owned by IMIS, free and clear of all liens, encumbrances and security interests; (vi) All of the SRL Collateral (as defined below) is owned by SRL, free and clear of all liens, encumbrances and security interests; (B) On or about the date hereof, the Lender has made or will make six (6) secured loans, as follows: (i) loan to BHDS in the original principal amount of $245,000.00 (the "BHDS" Loan"); (ii) loan to BIG in the original principal amount of $466,000.00 (the "BIG Loan"); (iii) loan to BRMS in the original principal amount of $85,000.00 (the "BRMS Loan"); (iv) loan to BUI in the original principal amount of $52,000.00 (the "BUI Loan"); (v) loan to 2 IMIS in the original principal amount of $809,000.00 (the "IMIS Loan"); and (vi) loan to SRL in the original principal amount of $500,000.00 (the "SRL Loan"). The BHDS Loan, BRMS Loan, BIG Loan, BUI Loan, IMIS Loan, and SRL Loan will be sometimes collectively referred to below as the "Loans". The BRMS Loan, BIG Loan, BUI Loan and SRL Loan will be sometimes collectively referred to below as the "Four Loans". In connection with the the Borrower Group and the Lender have executed the following documents and instruments: (i) Note executed by BHDS in favor of Lender in the original principal amount of the BHDS Loan (the "BHDS Note"); (ii) Note executed by BRMS in favor of Lender in the original principal amount of the BRMS Loan (the "BRMS Note"); (iii) Note executed by BIG in favor of Lender in the original principal amount of the BIG Loan (the "BIG Note"); (iv) Note executed by BUI in favor of Lender in the original principal amount of the BUI Loan (the "BUI Note); (v) Note executed by IMIS in favor of Lender in the original principal amount of the IMIS Loan (the "IMIS Note"); (vi) Note executed by SRL in favor of Lender in the original principal amount of the SRL Loan (the "SRL Note"); (vii) Guaranty Agreement executed by BIFC, in favor of Lender guaranteeing the Loans (the "BIFC Guaranty"); (viii) Guaranty Agreement executed by BIG in favor of Lender guaranteeing the Loans, except the BIG Loan and the SRL Loan (the "BIG Guaranty"); (ix) Guaranty Agreement executed by BFC, in favor of Lender guaranteeing the Loans (the "BFC Guaranty"); (x) Security Agreement executed by BHDS in favor of the Lender, granting a first security interest in the collateral described therein as security for the BHDS Loan (the "BHDS Security Agreement"); (xi) Security Agreement executed by BRMS in favor of the Lender, granting a first security interest in the collateral described therein as security for the Four Loans (the "BRMS Security Agreement"); -2- 3 (xii) Security Agreement executed by BIG in favor of the first security in the collateral described therein as security for the Four Loans (the "BIG Security Agreement"); (xiii) Security Agreement executed by BUI in favor of the Lender granting a first security interest in the collateral described therein as security for the Four Loans (the "BUI Security Agreement"); (xiv) Security Agreement executed by IMIS in favor of the Lender, granting a first security interest in the collateral described therein as security for the IMIS Loan (the "IMIS Security Agreement"); (xv) Security Agreement executed by SRL in favor of the Lender, granting a first security interest in the collateral described therein as security for the Four Loans (the "SRL Security Agreement"); (xvi) UCC-1 Financing Statement executed by BHDS, as debtor, and Lender, as secured party, which will be filed with the Secretary of State of the State of Florida (the "BHDS UCC"); (xvii) UCC-1 Financing Statement executed by BRMS, as debtor, and Lender, as secured party, which will be filed with the Secretary of State of the State of Florida (the "BRMS UCC"); (xviii) UCC-1 Financing Statement executed by BIG, as debtor, and Lender, as secured party, which will be filed with the Secretary of State of the State of Florida (the "BIG UCC"); (xix) UCC-1 Financing Statement executed by BUI, as debtor, and Lender, as secured party, which will be filed with the Secretary of State of the State of Florida (the "BUI UCC"); (xx) UCC-1 Financing Statement executed by IMIS, as debtor; and Lender, as secured party, which will be filed with the Secretary of State of the State of Florida (the "SRL UCC"); (xxi) UCC-1 Financing Statement executed by SRL, as debtor, and Lender, as secured party, which will be filed with the Secretary of State of the State of Florida (the "SRL UCC"); (xxii) this Agreement; and (xiii) Numerous other miscellaneous documents (collectively the "Other Documents"). -3- 4 The BHDS Note, BRMS Note, BIG Note, BUI Note, IMIS Note and SRL Note will be sometimes collectively referred to below as the "Notes". The BRMS Note, BIG Note, BUI and SRL Note will be sometimes collectively referred to below as the "Four Loan Notes". The BFC Guaranty, BIG Guaranty, BIFC Guaranty, BHDS Security Agreement, BIG Security Agreement, BRMS Security Agreement, BUI Security Agreement, IMIS Security Agreement, SRL Security Agreement, BHDS UCC, BIG UCC, BRMS UCC, BUI UCC, IMIS UCC, SRL UCC, this Agreement and Other Documents will be sometimes collectively referred to below as the "Instruments of Security". The Notes and Instruments of Security will be sometimes collectively referred to below as the "Loan Documents". The BFC Guaranty, BIG Guaranty and BIFC Guaranty will be sometimes collectively referred to below as the "Guaranties". (C) The sole collateral for the Four Loans will be (i) the Four Loans Equipment Collateral (as defined below), and (ii) the Guaranties excluding the BIG Guaranty as to the BIG Loan and the SRL Loan (collectively the "Four Collateral"). The sole collateral for the BHDS will be (i) the BHDS Equipment Collateral (as defined below), and (ii) the Guaranties. The sole collateral for the IMIS Loan will be (i) the IMIS Equipment Collateral (as defined below), and (ii) the Guaranties. (D) The Lender has required the execution of this Agreement as a condition to making the Loans, and the Borrower Group is agreeable to such. NOW, THEREFORE, in consideration of the Lender making the Loans to the Borrowers and the mutual agreements contained herein, and for other valuable consideration, the adequacy and receipt of which is hereby acknowledged by each party to this Agreement, the parties agree as follows: ARTICLE ONE - INTRODUCTORY PROVISIONS 1.1 Recitals. The statements of fact contained in the recitals set forth above (the "Recitals") are true and correct, and the Recitals are by this reference made a part of this Agreement. 1.2 Exhibits. The exhibits which are attached to this Agreement are by this reference made a part hereof. 1.3 Abbreviations and Definitions. The following abbreviations and definitions will be used for purposes of this Agreement: (a) The abbreviations and definitions contained in the Preamble will be used for purposes of this Agreement. (b) The abbreviations and definitions contained in the Recitals will be used for purposes of this Agreement. -4- 5 (c) The term "Agreement" shall mean the Loan Agreement between the set forth herein. (d) The term "Affiliate" shall mean any Person which directly or indirectly owns or controls, on an aggregate basis, including all beneficial ownership and ownership or control as a trustee, guardian or other fiduciary, at least ten percent (10%) of the outstanding capital stock having or voting power to elect the board of directors (irrespective of whether, at the time, stock of any other class or classes of such corporation shall have or might have voting power by reason of the happening of any contingency) of Borrowers or any Subsidiary (as defined below), or which otherwise controls, is controlled by or is under common control with Borrowers or any stockholder of Borrowers, or any Subsidiary or any Person which controls any stockholder of Borrowers. For the purpose of this definition, "control" means the possession, directly or indirectly, of the power to direct or to cause the direction of management and policies, whether through the ownership of voting securities, by contract or otherwise. (e) The term "Bank Regulations" shall mean any and all laws, rules and regulations of the United States, any state and any regulatory body having jurisdiction at any time over the formation, ownership, control, operations and good standing of the Borrower Group, including, without limitation, and the Federal Deposit Insurance Corporation. (f) The term "Base Lending Rate" shall mean the rate of interest publicly announced by the Lender from time to time as its base lending rate, which rate is not necessarily the best or lowest rate offered by the Lender to its best customers. (g) The phrase "Blue Sky Law" shall mean state securities laws. (h) The term "Closing Date" shall mean the date that the Loans are closed, which should be on or about the date of this Agreement. (i) The term "Code" shall mean the Uniform Commercial Code of the State of Florida as in effect from time to time. (j) The term "Collateral" shall mean the collateral described in Recital (C) above, and all other property and interests in property which shall from time to time secure payment of the Loans. (k) The term "Equipment Collateral" shall mean the items of personal property owned by the respective Borrowers, together with all parts, accessions, replacements, and all proceeds thereof, including insurance proceeds, as to which the Borrowers have granted or will grant to Lender a first security interest in and lien on such collateral as security for the Loans, which Equipment Collateral is composed of the BHDS Equipment Collateral, Four Loans Collateral, and IMIS Equipment Collateral, as more particularly described as follows: -5- 6 (1) The BHDS "Equipment Collateral" described in Exhibit "A" attached hereto, which is collateral solely for the BHDS Loan; (2) (i) The "BIG Equipment Collateral" described in Exhibit "B" attached hereto; (ii) The "BRMS Equipment Collateral" as described in Exhibit "C" attached hereto; (iii) The "BUI Equipment Collateral" as described in Exhibit "D" attached hereto; and attached hereto and (iv) The "SRL Equipment Collateral" as described in Exhibit "F" attached hereto. The Big Equipment Collateral, BRMS Equipment Collateral, BUI Equipment Collateral and SRL Equipment Collateral will be sometimes collectively referred to below as the "Four Equipment Collateral"; and (3) The "IMIS Collateral" as described in Exhibit "E" attached hereto, which is collateral solely for the IMIS Loan. (l) The term "Event(s) of Default" (whether or not capitalized) shall mean an event listed or referred to under Article Nine of this Agreement. (m) The phrase "Federal Securities Law" shall mean, collectively, the Securities Act of 1933 and the Securities Exchange Act of 1934, as they are now or hereafter amended, and all rules and regulations promulgated thereunder. (n) The term "GAAP" shall mean generally accepted accounting principles consistently applied in the United States of America. (o) The term "Lien" shall mean any mortgage, pledge, security interest, encumbrance, lien, charge or claim upon property of any kind, whether or not voluntarily given (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction. (p) The term "Opinion of Counsel" shall mean an opinion or opinions of counsel, who are counsel for Borrower Group, satisfactory to the Lender. (q) The term "Person" (whether capitalized or not capitalized) shall mean any individual, sole proprietorship, partnership, joint venture, trust, unincorporated organization, association, corporation, institution, entity, party or government (whether national, federal, state, -6- 7 county, city, municipal or otherwise, including, without limitation, any instrumentality, division, agency, body or department thereof). (r) The term "Prior Security Interest" shall mean a valid and enforceable perfected first priority security interest under the Code which is subject only to Liens for taxes not yet due and payable, to the extent such prospective tax payments are given priority by statute. (s) The term "Statutory Accounting" shall mean the manner in which insurance company related entities are required to report and account pursuant to Florida law from time to time. (t) The term "Subsidiary" shall mean any person 50% or more of the voting stock of which, or 50% or more of the interest in profits, losses or capital of which, is directly or indirectly through one or more persons owned or controlled by the parent company. (u) The definitions and abbreviations set forth in other portions of this Agreement shall also be used for the purposes of this Agreement. 1.4 Accounting Terms. All accounting terms not specifically defined herein shall be construed in accordance with, as applicable, GAAP standards, Statutory Accounting standards, and as acceptable to the Lender, in its sole and absolute discretion, and all financial data submitted and requirements pursuant to this Agreement shall be prepared in accordance with such standards. ARTICLE TWO - LOAN TERMS 2.1 Loans. Lender has made or will make the Loans to Borrowers as described in Recital (B) above, which in the aggregate total a principal amount due Lender of TWO MILLION ONE HUNDRED FIFTY-SEVEN THOUSAND AND NO/100 DOLLARS ($2,157,000.00). The respective principal amounts that are disbursed by Lender to Borrowers thereunder shall bear interest and be repaid in the manner set forth in the Notes and as set forth in this Article Two. 2.2 Purpose. The proceeds of the Loans will be used to provide funds to Borrowers as to repayment for equipment purchases and improvements. Any other uses of such Loans proceeds is subject to the prior written consent of the Lender in its sole discretion. 2.3 Manner of Disbursement. Proceeds of the Notes shall be disbursed on the Closing Date, at which time the Loans will be fully funded, or will be disbursed after the Closing Date by Lender from time to time in Lender's sole and absolute discretion. -7- 8 2.4 Manner of Repayment. Principal and any unpaid interest under the Notes shall be due and payable and shall be paid by Borrower to the Lender as set forth in the Notes. 2.5 Interest Rate. The principal balances of the Loans, as evidenced by the Notes, remaining unpaid from time to time shall bear interest at the rates per annum equal to the Base Lending Rate, which shall be adjusted daily as and when the Base Lending Rate is adjusted. Interest shall be calculated using a year base of 360 days, and shall be charged for the number of days elapsed in an interest period. 2.6 Financial Disclosures. The Borrower Group hereby agrees to provide the following financial information to Lender within the time periods indicated during the term of the Loan: (a) No later than one hundred twenty (120) days following each fiscal year end, the Borrower Group shall provide to the Lender Borrowers' and Borrowers' Subsidiaries' audited consolidated and consolidating financial statements prepared in accordance with, as applicable, either GAAP standards or Statutory Accounting standards, which shall be prepared by a certified public accountant approved by the Lender, in its sole and absolute discretion, and which must be in comparative form as to the preceding fiscal year. (b) No later than one hundred twenty (120) days following each fiscal year end, the Borrower Group shall provide to the Lender Guarantors' (other than BIFC which financial statements shall not be audited, but internally prepared certified in favor of Lender by the Treasurer or Chief Financial Officer of BIFC) and Guarantors' Subsidiaries' audited consolidated and consolidating financial statements prepared in accordance with, as applicable, either GAAP standards or Statutory Accounting standards, which shall be prepared by a certified public accountant approved by the Lender, in its sole and absolute discretion, and which shall be in comparative form as to the preceding fiscal year. (c) No later than forty-five (45) days following the end of each fiscal quarter, the Borrower Group shall provide to the Lender Borrowers' and Borrowers' Subsidiaries' internally prepared consolidated and consolidating financial statements prepared in accordance with, as applicable, either GAAP standards or Statutory Accounting standards, certified to Lender on a form acceptable to Lender by the Chief Financial Officer of the Borrowers. (d) No later than forty-five (45) days following the end of each quarter, the Borrower Group shall provide to the Lender Guarantors' and Guarantors' Subsidiaries' internally prepared consolidated and consolidating financial statements prepared in accordance with, as applicable, either GAAP standards or Statutory Accounting standards, certified to Lender on a form acceptable to Lender by the Chief Financial Officer of the Guarantors. (e) No later than thirty (30) days of the date of filing, the Borrower Group shall provide to the Lender, as applicable, the Borrower Group's insurance Subsidiaries' annual and quarterly Florida Insurance Department statutory reports. -8- 9 (f) No later than thirty (30) days of the date of submission, the Borrower provide to the Lender, as applicable, the Borrower Group's insurance Subsidiaries' annual Florida Insurance Department examination report/management letter and such Subsidiaries' response thereto. (g) No later than thirty (30) days following the end of each quarter, Borrower Group shall Provide to the Lender, as applicable, the Borrower Group's insurance Subsidiaries' quarterly portfolio investment report. (h) No later than thirty (30) days following their submission to the Internal Revenue Service ("IRS), the Borrower Group shall provide to Lender copies of their corporate tax returns each year, together with all supporting documentation therefor, as filed with the IRS. (i) The Borrower Group shall provide such additional financial information and documentation as the Lender shall require from time to time, in its sole and absolute discretion. Additionally, Borrowers shall furnish to Lender such additional information or reports concerning their Equipment Collateral as Lender shall request from time to time in its sole discretion. 2.8 Examination by Lender. The Borrower Group shall allow the Lender to conduct an audit and examination of their books and records from time to time as determined by the Lender, in its sole and absolute discretion, at the cost of the Lender if no default exists in the Loans, or at the expense of the Borrowers if a default does exist in the Loans (or any of them). 2.9 Cross Default. Borrower Group agrees that a default under any of the Four Loan Notes or any of the Instruments of Security therefor shall constitute a default under the other Four Loan Notes and any Instruments of Security therefor. Borrower Group further agrees that a default under any of the Four Loan Notes or any of the Instruments of Security therefor shall constitute a default under that certain note executed on the date hereof by GILCHRIST TIMBER CO., INC., a Florida corporation, in favor of the Lender, in the original principal amount of FOUR HUNDRED EIGHTY-EIGHT THOUSAND SEVEN HUNDRED FIFTY AND NO/100 DOLLARS ($488,750,000) (the "Gilchrist Note"), or under any instruments of security therefor, and a default under the Gilchrist Note or under any instruments of security therefor shall constitute a default under the Four Notes and any Instruments of Security therefor. ARTICLE THREE - USURY It is not the intention of the parties hereto to make any agreement which shall be violative of applicable laws relating to usury. In no event shall Borrowers or Lender accept or charge any interest which, together with any other charges upon the principal or any portion thereof, howsoever computed, shall exceed the maximum legal rate of interest allowable under applicable laws. Should any provisions of this Agreement or any existing or further Notes, Loan Agreement or any other agreements between the parties be construed to require the payment of -9- 10 interest which, together with any other charges upon the principal, or any portion thereof, exceeds such maximum legal rate of interest, then any such excess shall be and is hereby expressly waived, and shall be credited to the outstanding principal balance. ARTICLE FOUR - REPRESENTATIONS AND WARRANTIES The Borrower Group, jointly and severally, represents and warrants to the Lender as follows: 4.1 Organization, Standing, Corporate Power. The entities comprising the Borrower Group are corporations duly formed, validly existing and in good standing under the laws of the State of Florida. On the date hereof and at all times hereafter until the Loans are paid in full, the ownership of the Equipment Collateral, without additional liens, encumbrances or security interests are and shall be as set forth in Recital (A) hereof. 4.2 This Agreement. The execution and performance by the Borrower Group of this Agreement, the borrowing hereunder, and the execution and delivery of the Notes and all other documents, instruments and agreements provided for herein (a) have been duly authorized by all requisite corporate action by the Borrower Group; (b) will not violate any provision of law or of the charter documents as amended to the Closing Date of Borrower Group; and (c) will not violate or be in conflict with, result in a breach of, or constitute a default under any indenture, agreement and other instrument to which the Borrower Group, or any of them, is a party or by which they or any of their properties are bound, or any order, writ, injunction or decree of any court or governmental institution. 4.3 Litigation. There are no actions, suits or proceedings pending, or to the knowledge of the Borrower Group, threatened against or adversely affecting the Borrower Group at law or in equity or before or by any federal agency or instrumentality, domestic or foreign, which involve any of the transactions herein contemplated or the possibility of any judgment or liability which may result in any material and adverse change in the business, operations, prospects, property or assets, or in the condition, financial or otherwise, of the Borrower Group. The Borrower Group is not in default with respect to any judgment, order, writ, injunction, decree, rule or regulation of any court, or federal, state, municipal or other governmental department. 4.4 Financial Statements. The Borrower Group, as applicable, have heretofore furnished to the Lender the financial information and reporting, as required by the Lender, which are, to the best of their knowledge, correct and complete and accurately present the financial condition and the results of the operation of the Borrower Group as of the dates thereof. Since the date of the last furnishing of such financial information and reporting, there has been no material adverse change in the financial condition of the Borrower Group. -10- 11 4.5 Taxes. Borrower Group have filed or caused to be filed all federal and and tax returns which, to the knowledge of the officers of the Borrower Group are required to be filed, and has paid or caused to be paid all taxes as shown on said returns or on any assessment received by them and not being contested in good faith, to the extent that such taxes have become due. 4.6 Other Instruments. The Borrower Group (or any of them) is not a party to any agreement or instrument or subject to any charter or other restrictions adversely affecting their business, properties or assets, operations or condition, financial or otherwise. 4.7 Property and Assets. The Borrower Group each has good and marketable title to all the property and assets reflected on the most recent financial statements furnished to the Lender, except such as have been disposed of in the ordinary course of business since the date of said financial statement and all such property and assets are free and clear of mortgages, pledges, liens, charges or other encumbrances, except as are reflected on the financial statements. 4.8 Regulation U. No part of the proceeds of any Loans hereunder will be used to purchase or carry, or to reduce or retire any loan incurred to purchase or carry, any margin stocks (within the meaning of Regulation U of the Board of Governors of the Federal Reserve System) or to extend credit to others for the purpose of purchasing or carrying any such margin stocks. The Borrower Group is not engaged in the business of extending credit, nor is one of the Borrower Group's important activities extending of credit, for the purpose of purchasing or carrying such margin stocks. If requested by the Lender, the Borrower shall furnish to the Lender in connection with any loan hereunder a statement in conformity with the requirements of Federal Reserve Form U-1 referred to in said regulation. 4.9 Regulations. The Borrower Group (or any of them), or any Subsidiary thereof, is not in violation of any applicable law or governmental regulations (including without limitation, the Lender Regulations, the Blue Sky Law, the Federal Securities Law, and Regulations G, T, U, and X of the Board of Governors of the Federal Reserve System). 4.10 Continuity of Representations and Warranties. A11 of the foregoing representations and warranties shall be true and correct at the time of the making of each advance under the Loans pursuant to this Agreement and thereafter until such Loans are paid in full as though made as of such time, and the Borrower Group shall not then be in default hereunder, nor shall any event have occurred or failed to occur that with the passage of time, or service of notice, or both, would constitute a default. The Lender may consider the conditions specified in this Section 4.10 to be fulfilled if no prior written notice to the contrary is received from the Borrower Group. ARTICLE FIVE - CONDITIONS PRECEDENT -11- 12 The obligation of the Lender to make the Loans hereunder on the Closing Date and to fund the Loans proceeds is subject to the following conditions precedent: (a) The Lender has received on or prior to the Closing Date from the Borrower Group: (i) All Loan Documents duly executed in favor of the Lender by the Borrower Group in form and content acceptable to the Lender, in its sole and absolute discretion; (ii) All due diligence, including but not limited to such financial information and reporting, as required by and acceptable to the Lender, as set forth in the loan commitment letter, dated December 23, 1996, executed by Lender to Borrowers, and accepted by the Borrowers, the terms and provisions of which are incorporated herein by reference; (iii) The Instruments of Security and such other instruments in form and content acceptable to the Lender in its sole and absolute discretion in order to create, continue or perfect a Prior Security Interest and first Lien in favor of the Lender on the Equipment Collateral for the purpose of securing payment of the Loans, and the indebtedness evidenced thereby, and any and all recording and other fees and taxes in connection therewith shall have been paid by the Borrower Group; (b) The representations and warranties of the Borrower Group contained in Article Four hereof shall be true on and as of the Closing Date, except to the extent of changes caused by the transactions herein contemplated; there shall exist on the Closing Date, no Event of Default and no event, which with notice, lapse of time or the happening of any further condition, event or act, would constitute an Event of Default. (c) The disbursement of the Loans proceeds (including the use by Borrower of such Loans proceeds) shall not violate any applicable law or governmental regulation (including without limitation, the Lender Regulations, the Blue Sky Law and the Federal Securities Law. (d) If required by Lender, Lender has received the Opinion of Counsel, duly executed in favor of Lender, in form and content acceptable to it in its sole and absolute discretion. (e) As of the Closing Date, there are no actions, suits, proceedings or claims pending or threatened against or affecting the Borrower Group, the result of which might substantially affect the financial condition, business or operations of the Borrower Group. (f) This Agreement and the other Loan Documents provided for herein are valid and binding obligations of the Borrower Group. (g) The Loans and the Loan Documents are current in all respects and no defaults exist thereunder. -12- 13 ARTICLE SIX - AFFIRMATIVE COVENANTS The Borrower Group, jointly and severally, covenants and agrees with the Lender from the Closing Date and so long as any sums are outstanding or may be borrowed hereunder, unless the Lender shall otherwise consent in writing delivered to the Borrower Group, they will: 6.1 Entity Existence. Do or cause to be done all things necessary to preserve, renew and keep in full force and effect Borrower Group's corporate existence, and all the Borrower Group's rights, licenses, permits and franchises required at the Closing Date, or which may be required in the future conduct of its businesses, and comply with all laws and regulations applicable to them that materially affect the Borrower Group, and conduct and operate their businesses in the same lines and in substantially the same manner in which presently conducted and operated (subject to changes in the ordinary course of business), and at all times maintain, preserve and protect all property used and useful in the conduct of their businesses, and maintain same in good working order and condition. 6.2 Insurance. Keep the insurable properties of the Borrower Group adequately insured at all times by financially sound and reputable insurers, and maintain such other insurance to such extent and against such risks, including liability insurance, fire, windstorm, and other risks insured against by extended coverage as the Lender shall require in its sole discretion. 6.3 Obligations and Taxes. Cause the Borrower Group to pay all indebtedness and obligations promptly and in accordance with normal terms, and pay and discharge promptly all taxes, assessments and governmental charges or levies imposed upon them or in respect of their properties, before the same shall become in default, as well as all lawful claims for labor, materials and supplies or otherwise which, if unpaid, might become a lien or charge upon such properties or any part thereof; provided, however, that the Borrower Group shall not be required to pay and discharge or cause to be paid and discharged any such tax assessment, charge, levy or claim so long as the validity thereof shall be contested in good faith by appropriate proceedings and the Borrower Group shall set aside on its books adequate reserves with respect to any such tax, assessment, charge, levy or claim so contested. 6.4 Financial Statements and Other Information. Furnish to Lender during the term of the Loans, (a) the financial information and reports referred to in Article Two; and (b) such other financial information and schedules as Lender may require, in its sole and absolute discretion. If requested by Lender, the Borrower Group will furnish Lender with a quarterly compliance certificate in the form acceptable to Lender, in its sole and absolute discretion, indicating compliance with all of the foregoing. 6.6 Notice of Default. The Borrower Group will give prompt written notice to Lender of all events of default under any of the terms and provisions of this Agreement, the Notes, or of any other agreement, contract, indenture, document or instrument entered, or to be entered into by it; if applicable, changes in management, litigation, and of any other matter which has -13- 14 resulted in, or might result in, a materially adverse change in its financial condition or operation; and immediately provide Lender with a copy, if applicable, of any 8-K report the Borrower Group may file with the Securities and Exchange Commission. 6.7 Records. The Borrower Group will keep and maintain full and accurate accounts and records of their operations according to GAAP, and will permit Lender and its designated officers, employees, agents and representatives, to have access thereto and to make examination thereof at all reasonable times, to make audits, and to inspect and otherwise check its properties, real, personal and mixed. 6.8 Execution of Other Documents. The Borrower Group will promptly, upon demand by Lender, execute all such additional agreements, contracts, indentures, documents and instruments in connection with this Agreement as Lender, in its sole discretion, may reasonably deem necessary. ARTICLE SEVEN - NEGATIVE COVENANTS The Borrower Group, jointly and severally, covenants and agrees with Lender that from the date hereof and so long as any sums are outstanding or may be borrowed under the Loans, unless the Lender shall otherwise consent in writing delivered to the Borrower Group, they will not, for themselves: 7.1. Notes, Accounts. Following an Event of Default, sell, discount or otherwise dispose of notes, accounts or other rights to receive payments, with or without recourse. 7.2 Disposal of Property; Merger. Following an Event of Default, sell, lease, transfer or otherwise dispose of their properties and assets, whether now owned or hereafter acquired except in the ordinary course of business; or consolidate with or merge into any other corporation, or acquire all or substantially all the assets of any other person, firm or corporation, except that unless the Lender otherwise consents, in its sole and absolute discretion, (i) there shall be no sale or transfer of assets out of the standard course of business by any of the Borrower Group, and (ii) there shall be no mergers, acquisitions, reorganizations, reclassifications or other extraordinary corporate transactions or creation of any Subsidiary by any of the Borrower Group. 7.3 Loans. Following an Event of Default, make any loans to any person, firm or corporation, nor become a guarantor or surety, nor pledge its credit in any manner, directly or indirectly. 7.4 Liens. Incur, create, assume or permit to exist any mortgage, except as set forth herein, pledge, lien, charge or other encumbrance of any nature whatsoever on the Collateral, except to Lender and entities approved in writing by Lender, other than liens for taxes or assessments and similar charges either: (i) not delinquent; or (ii) being contested in good faith -14- 15 by appropriate proceedings and as to which the Borrower Group shall have set aside on their books adequate reserves. 7.5 Sale and Leaseback. Following an Event of Default, the Borrower Group will not enter into any sale and leaseback agreement with respect to any of Borrower Group's fixed assets. 7.6 Default Under Other Agreements or Contracts. The Borrower Group will not commit to do or fail to commit to do, any act or thing which would constitute an event of default under any of the terms or provisions of any other agreement, mortgage, contract, indenture, document or instrument executed by them, except those that may be contested in good faith, and would not, if settled unfavorably, materially and adversely affect the financial condition of the Borrower Group. 7.7 New Projects. Change the type or character of the Borrower Group's currently operated business or commence or pursue any new projects, ventures or developments of any kind or nature outside the Borrower Group's current line of business for either cash investment or recourse debt greater than ten percent (10%) of the present net worth of BIFC on a GAAP basis during any calendar year. 7.8 Compliance with Law Generally. Be in violation of any law, ordinance, governmental rules or regulations to which Borrower Group or any Subsidiary thereof, is subject, or fail to obtain any licenses, permits, franchises or other governmental authorizations necessary to the ownership of the properties of Borrower Group or to the conduct of their businesses, which violation or failure to obtain might materially adversely affect the business, prospects, profits, properties or condition (financial or otherwise) of Borrower Group. 7.9 Dividends. Unless the Lender otherwise consents and so long as the Loans are outstanding, the Borrower Group will not distribute or make cash dividends draws or other distributions or set asides to stockholders, except dividends paid among the Borrower Group to each other. ARTICLE EIGHT - COLLATERAL As security for the full and timely payment of the Notes, including future advances, together with interest thereon, as well as any renewals, modifications or extensions thereof, and to secure performance of all obligations of Borrower Group to Lender, however or whenever created, Borrower Group, jointly and severally, covenants and agrees to execute security agreements and financing statements in favor of Lender, in form and substance acceptable to Lender, granting to Lender a Prior Security Interest and first Lien subject to no other liens, encumbrances, or security interests in and to the items set forth in the Instruments of Security, and all of the above, together with all proceeds and products thereof and all instruments and documents thereto will hereafter be collectively referred to as "Equipment Collateral, to the extent as set forth in Section 1.3(k) above. -15- 16 ARTICLE NINE - DEFAULTS AND REMEDIES 9.1 Events of Default. If any one or more of the following events (herein called "Events of Default") shall occur for any reason whatsoever (and whether such occurrences shall be voluntary or involuntary, or come about or be effected by operation of law or pursuant to or in compliance with any judgment, decree or order of any court, or any order, rule or regulation of any administrative or governmental body), then Lender shall be entitled to the remedies set forth in Section 9.2 of this Agreement. The Events of Default shall include, but not be limited to, the following: (a) Any representation or warranty made herein or in any report, certificate, financial statement or other instrument furnished in connection with this Agreement, or the borrowing hereunder shall prove to be false or misleading in any material respect; (b) Failure to pay interest or principal on any indebtedness referred to herein, including the Notes within ten (10) days, when and as the same shall become due and payable, whether at the due date thereof or by acceleration or otherwise, or failure of the Borrowers to make payment of principal or interest on any other obligation for borrowed money beyond any period of grace provided with respect thereto, or in the performance of any other agreement, term or condition contained in any agreement under which any such obligation is created, if the effect of such default is to cause or permit the holder or holders of such obligation to accelerate the maturity thereof; (c) Any default shall occur in the due observance or performance of any covenant, agreement or other provision of this Agreement or the Instruments of Security referred to above other than for the payment of money, which is not cured within fifteen (15) days following the placement of written notice of such default by Lender to Borrowers in the United States Mail or from the date of hand delivery. (d) The Borrower Group (or any of them) shall: (i) apply for or consent to the appointment of a receiver, trustee in bankruptcy for benefit of creditors, or liquidator of it or any of its property; (ii) admit in writing its inability to pay its debts as they mature; (iii) make a general assignment for the benefit of creditors; (iv) be adjudicated a bankrupt or insolvent; (v) file a voluntary petition in bankruptcy, or a petition or an answer seeking reorganization or an arrangement with creditors, or seeking to take advantage of any bankruptcy, reorganization, insolvency, readjustment of debt, dissolution or liquidation law or statute or an answer admitting an act of bankruptcy alleged in a petition filed against it in any proceeding under any such law; or (vi) take any action for the purposes of effecting any of the foregoing; (e) An order, judgment or decree shall be entered against the Borrower Group (or any of them) with the application, approval or consent of the Borrower Group (or any of them), by any court of competent jurisdiction, approving a petition seeking its reorganization or appointing a receiver, trustee or liquidator of the Borrower Group (or any of them), or of all or -16- 17 a substantial part of the assets thereof, and such order, judgement or decree shall continue unstayed and in effect for any period of sixty (60) days from the date of entry thereof; (f) Final judgments for the payment of money in excess of an aggregate of $50,000.00, excluding claims covered by insurance, shall be rendered against the Borrower Group (or any of them), and the same shall remain undischarged for a period of thirty (30) consecutive days during which execution shall not be effectively stayed, provided that a judgment shall be deemed "final" only when the time for appeal shall have expired without an appeal having been claimed, or all appeals and further review claimed to have been determined adversely to the Borrower Group (or any of them); or (g) Default by the Borrower Group (or any of them), in the terms and provisions of any mortgages on its facilities which are not cured within any applicable grace period; or (h) Failure to provide the financial information required hereunder when due. 9.2 Remedy. Upon the occurrence of any such Event of Default which is not cured within applicable grace or curative period provided in this Agreement and the other Loan Documents, Lender may, at its option, declare all indebtedness of principal and interest due and payable, whereupon the Notes, (notwithstanding any provisions hereof) shall be immediately due and payable, and Lender shall have and may exercise from time to time any and all rights and remedies available to it under any applicable law; and Borrowers shall promptly pay all costs of Lender of collection of any and all liabilities, and enforcement of rights hereunder, including reasonable attorneys' fees, and legal expenses of any repairs to any of the Equipment Collateral, and expenses of repairs to any realty or other property to which any of the Equipment Collateral may be affixed. Any notice of sale, disposition or other intended action by Lender sent to Borrowers, at the address of Borrowers specified herein or at any other address shown on the records of the Lender at least ten (10) days prior to such action, shall constitute reasonable notice to Borrowers. Expenses of retaking, holding, preparing for sale, selling, or the like, shall include Lender's reasonable attorney's fees and legal expenses. Upon disposition by Lender of any property of Borrowers in which Lender has a security interest, Borrowers shall be and remain liable for any deficiency, and Lender shall account to Borrowers for any surplus, and to hold the same as a reserve against all or any liabilities of Borrowers to Lender whether or not they, or any of them be then due, and in such order of application as Lender may, from time to time, elect. All rights, powers and remedies contained herein or in any other agreement, instrument or document executed in connection herewith are cumulative. ARTICLE TEN - APPOINTMENT OF A RECEIVER In case of default beyond the applicable curative period in any of the terms, covenants and provisions of the Agreement, or upon the institution of suit to enforce any rights and remedies of Lender hereunder, then Lender shall immediately and without notice, be entitled as a matter of right, and without regard to the value of the Equipment Collateral, or the solvency -17- 18 or insolvency of the Borrower Group, to the appointment of a Receiver of all assets of Borrower Group, or any of them, with the usual powers of Receivers in such cases, said Receiver to continue to act for such period of time as the Court appointing said Receiver may deem just and proper. ARTICLE ELEVEN - MISCELLANEOUS 11.1 Notices. Any notice shall be conclusively deemed to have been received by the Borrower Group and be effective on the day on which delivered to the Borrower Group or if sent by telegram, on the next business day after the day on which sent, addressed to Borrower Group as their address is shown on the records of Lender, or if sent by registered or certified mail, addressed to Borrower Group at said address, on the second business day after the day on which mailed. 11.2 Survival of Representations. All covenants, agreements, representations and warranties made herein and in the certificates delivered pursuant hereto shall survive the making by Lender of the Loans herein contemplated and the execution and delivery to Lender of the Notes evidencing such Loans and shall continue in full force and effect so long as any indebtedness created hereunder is outstanding and unpaid. All covenants and agreements by or on behalf of either party which are contained or incorporated in this Agreement shall bind and inure to the benefit of the successors and assigns of both parties hereto. 11.3 Effect of Delay. Neither any failure nor any delay on the part of Lender in exercising any right, power or privilege hereunder or under the Notes shall operate as a waiver thereof, nor shall a single or partial exercise thereof preclude any other or further exercise or the exercise of any other right, power or privilege. 11.4 Expenses. The Borrowers will pay all out-of-pocket expenses reasonably incurred by Lender in connection with the preparation of this Agreement, the borrowings hereunder, and the enforcement of the rights of Lender in connection with this Agreement, or with the Loans made or the Notes issued hereunder, including but not limited to the fees of and expenses of counsel for Lender. 11.5 Modification and Waivers. No modification or waiver of any provision of this Agreement or of the Notes nor consent to any departure by the Borrowers therefrom shall in any event be effective unless the same shall be in writing, and then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No notice to or demand on the Borrowers in any case shall thereby entitle the Borrowers to any other or further notice or demand in the same, similar or other circumstances. 11.6 Business Day. Should any installment on the Notes become due and payable on other than a business day of the Lender, the maturity thereof shall be extended to the next succeeding business day with interest on the principal amount thereof at the rate set forth herein. -18- 19 11.7 Remedies Cumulative. Any rights or remedies of the Lender hereunder or under the Notes, or any other security agreement or writing shall be cumulative and in addition to every other right or remedy contained therein or herein, whether now existing or hereafter at law or in equity or by statute or otherwise. 11.8 Binding Agreement This Agreement shall be binding upon Borrower Group and its successors, heirs, personal representatives, and assigns and the terms hereof shall inure the benefit of Lender and its successors and assigns. 11.9 Exhibits. All references to "Exhibits" contained herein are references to exhibits attached to the Agreement, the terms and conditions of which are made a part hereof for all purposes, the same as if set forth herein verbatim. 11.10 Number and Gender of Words. Whenever herein the singular number is used, the same shall include the plural where appropriate, and words of any gender shall include each other gender where appropriate. 11.11 Captions. The captions, headings, and arrangements used in this Agreement are for convenience only and do not in any way affect, limit, amplify, or modify the terms and provisions hereof. 11.12 Invalid Provisions. If any provision of this Agreement is held to be illegal, invalid, or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable; this Agreement shall be construed and enforced as if such illegal, invalid, or unenforceable provision had never comprised a part. 11.13 Governing Law. All documents executed pursuant to the transactions contemplated herein, including, without limitation, this Agreement and each of the Loan Documents, shall be deemed to be contracts made under, and for all purposes shall be construed in accordance with, the internal laws and judicial decisions of the State of Florida even though executed outside thereof; provided that this Section 11.13 shall not affect the applicability of, and interpretation or construction of, appropriate terms and provisions under the Uniform Commercial Code of any jurisdiction which govern the security interests in any of the Equipment Collateral. The Borrower Group hereby submits to the jurisdiction and venue of the state and federal courts of Florida for the purposes of resolving disputes hereunder or for the purposes of collection. 11.14 Indemnification. The Borrower Group, jointly and severally, hereby agrees to indemnify and hold Lender harmless from and against any and all loss, damage, cost and expense, including attorney's fees and costs, that the Lender may incur or sustain by reason of the assertion of a claim or ruling by a governmental entity that documentary stamp tax, intangible tax or any penalties or interest associated therewith must be paid by reason of the execution and delivery of any of the Notes, Loan Documents, or this Agreement, or any subsequent renewals, modifications, or amendments of the Note, Loan Documents, or this Agreement. -19- 20 IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above set forth. Signed, sealed and delivered FIRST OF AMERICA BANK - FLORIDA in the presence of: F.S.B., a federal savings bank /s/ Harold David Holland By: /s/ Stephen C. Green - --------------------------- --------------------------- SIGNATURE SIGNATURE HAROLD DAVID HOLLAND STEPHEN C. GREEN - --------------------------- --------------------------- NAME LEGIBLY PRINTED NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED TYPEWRITTEN OR STAMPED Its Vice President - --------------------------- SIGNATURE - --------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (CORPORATE SEAL) As to Lender STATE OF GEORGIA ) COUNTY OF LOWNDES ) The foregoing instrument was acknowledged before me this 30 day of December, 1996, by STEPHEN C. GREEN, the Vice President of FIRST OF AMERICA BANK - FLORIDA, F.S.B., a federal savings bank, on behalf of the bank. Personally Known OR Produced Identification -------- Type of Identification Provided Drivers License ---------------------- /s/ Tina S. Wyers ------------------------- SIGNATURE TINA S. WYERS ------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (SEAL) NOTARY PUBLIC My Commission Expires: 08/02/00 -20- 21 Signed, sealed and delivered BANKERS HAZARD DETERMINATION in the presence of: SERVICES, INC., a Florida corporation /s/ Harold David Holland By: /s/ G. Kristin Delano - --------------------------- --------------------------- SIGNATURE SIGNATURE HAROLD DAVID HOLLAND G. KRISTIN DELANO - --------------------------- --------------------------- NAME LEGIBLY PRINTED, NAME LEGIBLY PRINTED TYPEWRITTEN OR STAMPED TYPEWRITTEN OR STAMPED Its Secretary - --------------------------- SIGNATURE - --------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (CORPORATE SEAL) As to BHDS STATE OF GEORGIA ) COUNTY OF LOWNDES ) The foregoing instrument was acknowledged before me this 30 day of December, 1996, by G. KRISTIN DELANO, the Secretary of BANKERS HAZARD DETERMINATION SERVICES, INC., a Florida corporation, on behalf of the corporation. Personally Known OR Produced Identification -------- Type of Identification Provided Drivers License ---------------------- /s/ Tina S. Wyers ------------------------- SIGNATURE TINA S. WYERS ------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (SEAL) NOTARY PUBLIC My Commission Expires: 08/02/00 -21- 22 Signed, sealed and delivered BANKERS INSURANCE GROUP, INC., in the presence of: a Florida corporation /s/ Harold David Holland By: /s/ G. Kristin Delano - --------------------------- --------------------------- SIGNATURE SIGNATURE HAROLD DAVID HOLLAND G. KRISTIN DELANO - --------------------------- --------------------------- NAME LEGIBLY PRINTED, NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED TYPEWRITTEN OR STAMPED Its Secretary - --------------------------- SIGNATURE - --------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (CORPORATE SEAL) As to BIG, as Borrower STATE OF GEORGIA ) COUNTY OF LOWNDES ) The foregoing instrument was acknowledged before me this 30 day of December, 1996, by G. KRISTIN DELANO, the Secretary of BANKERS INSURANCE GROUP, INC., a Florida corporation, on behalf of the corporation. Personally Known OR Produced Identification -------- Type of Identification Provided Drivers License ---------------------- /s/ Tina S. Wyers ------------------------- SIGNATURE TINA S. WYERS ------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (SEAL) NOTARY PUBLIC My Commission Expires: 08/02/00 -22- 23 Signed, sealed and delivered BANKERS RISK MANAGEMENT in the presence of: SERVICES, INC., a Florida corporation /s/ Harold David Holland By: /s/ G. Kristin Delano - --------------------------- --------------------------- SIGNATURE SIGNATURE HAROLD DAVID HOLLAND G. KRISTIN DELANO - --------------------------- --------------------------- NAME LEGIBLY PRINTED, NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED TYPEWRITTEN OR STAMPED Its Secretary - --------------------------- SIGNATURE - --------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (CORPORATE SEAL) As to BRMS STATE OF GEORGIA ) COUNTY OF LOWNDES ) The foregoing instrument was acknowledged before me this 30 day of December, 1996, by G. KRISTIN DELANO, the Secretary of BANKERS RISK MANAGEMENT SERVICES, INC., a Florida corporation, on behalf of the corporation. Personally Known OR Produced Identification -------- Type of Identification Provided Drivers License ---------------------- /s/ Tina S. Wyers ------------------------- SIGNATURE TINA S. WYERS ------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (SEAL) NOTARY PUBLIC My Commission Expires: 08/02/00 -23- 24 Signed, sealed and delivered BANKERS UNDERWRITERS, INC., in the presence of: INC., a Florida corporation /s/ Harold David Holland By: /s/ G. Kristin Delano - --------------------------- --------------------------- SIGNATURE SIGNATURE HAROLD DAVID HOLLAND G. KRISTIN DELANO - --------------------------- --------------------------- NAME LEGIBLY PRINTED, NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED TYPEWRITTEN OR STAMPED Its Secretary - --------------------------- SIGNATURE - --------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (CORPORATE SEAL) As to BHDS STATE OF GEORGIA ) COUNTY OF LOWNDES ) The foregoing instrument was acknowledged before me this 30 day of December, 1996, by G. KRISTIN DELANO, the Secretary of BANKERS UNDERWRITERS, INC., a Florida corporation, on behalf of the corporation. Personally Known OR Produced Identification -------- Type of Identification Provided Drivers License ---------------------- /s/ Tina S. Wyers ------------------------- SIGNATURE TINA S. WYERS ------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (SEAL) NOTARY PUBLIC My Commission Expires: 08/02/00 -24- 25 Signed, sealed and delivered INSURANCE MANAGEMENT in the presence of: INFORMATION SERVICES, INC., a Florida corporation /s/ Harold David Holland By: /s/ G. Kristin Delano - --------------------------- --------------------------- SIGNATURE SIGNATURE HAROLD DAVID HOLLAND G. KRISTIN DELANO - --------------------------- --------------------------- NAME LEGIBLY PRINTED, NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED TYPEWRITTEN OR STAMPED Its Secretary - --------------------------- SIGNATURE - --------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (CORPORATE SEAL) As to IMIS STATE OF GEORGIA ) COUNTY OF LOWNDES ) The foregoing instrument was acknowledged before me this 30 day of December, 1996, by G. KRISTIN DELANO, the Secretary of INSURANCE MANAGEMENT INFORMATION SERVICES, INC., a Florida corporation, on behalf of the corporation. Personally Known OR Produced Identification -------- Type of Identification Provided Drivers License ---------------------- /s/ Tina S. Wyers ------------------------- SIGNATURE TINA S. WYERS ------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (SEAL) NOTARY PUBLIC My Commission Expires: 08/02/00 -25- 26 Signed, sealed and delivered SOUTHERN RENTAL & LEASING in the presence of: CORPORATION, a Florida corporation /s/ Harold David Holland By: /s/ G. Kristin Delano - --------------------------- --------------------------- SIGNATURE SIGNATURE HAROLD DAVID HOLLAND G. KRISTIN DELANO - --------------------------- --------------------------- NAME LEGIBLY PRINTED, NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED TYPEWRITTEN OR STAMPED Its Secretary - --------------------------- SIGNATURE - --------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (CORPORATE SEAL) As to SRL STATE OF GEORGIA ) COUNTY OF LOWNDES ) The foregoing instrument was acknowledged before me this 30 day of December, 1996, by G. KRISTIN DELANO, the Secretary of SOUTHERN RENTAL & LEASING CORPORATION, a Florida corporation, on behalf of the corporation. Personally Known OR Produced Identification -------- Type of Identification Provided Drivers License ---------------------- /s/ Tina S. Wyers ------------------------- SIGNATURE TINA S. WYERS ------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (SEAL) NOTARY PUBLIC My Commission Expires: 08/02/00 -26- 27 Signed, sealed and delivered BANKERS FINANCIAL CORPORATION, in the presence of: a Florida corporation /s/ Harold David Holland By: /s/ G. Kristin Delano - --------------------------- --------------------------- SIGNATURE SIGNATURE HAROLD DAVID HOLLAND G. KRISTIN DELANO - --------------------------- --------------------------- NAME LEGIBLY PRINTED, NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED TYPEWRITTEN OR STAMPED Its Secretary - --------------------------- SIGNATURE - --------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (CORPORATE SEAL) As to BFC STATE OF GEORGIA ) COUNTY OF LOWNDES ) The foregoing instrument was acknowledged before me this 30 day of December, 1996, by G. KRISTIN DELANO, the Secretary of BANKERS FINANCIAL CORPORATION, a Florida corporation, on behalf of the corporation. Personally Known OR Produced Identification -------- Type of Identification Provided Drivers License ---------------------- /s/ Tina S. Wyers ------------------------- SIGNATURE TINA S. WYERS ------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (SEAL) NOTARY PUBLIC My Commission Expires: 08/02/00 -27- 28 Signed, sealed and delivered BANKERS INTERNATIONAL FINANCIAL in the presence of: CORPORATION, a Florida corporation /s/ Harold David Holland By: /s/ G. Kristin Delano - --------------------------- --------------------------- SIGNATURE SIGNATURE HAROLD DAVID HOLLAND G. KRISTIN DELANO - --------------------------- --------------------------- NAME LEGIBLY PRINTED, NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED TYPEWRITTEN OR STAMPED Its Secretary - --------------------------- SIGNATURE - --------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (CORPORATE SEAL) As to BIFC STATE OF GEORGIA ) COUNTY OF LOWNDES ) The foregoing instrument was acknowledged before me this 30 day of December, 1996, by G. KRISTIN DELANO, the Secretary of BANKERS INTERNATIONAL FINANCIAL CORPORATION, a Florida corporation, on behalf of the corporation. Personally Known OR Produced Identification -------- Type of Identification Provided Drivers License ---------------------- /s/ Tina S. Wyers ------------------------- SIGNATURE TINA S. WYERS ------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (SEAL) NOTARY PUBLIC My Commission Expires: 08/02/00 -28- 29 Signed, sealed and delivered BANKERS INSURANCE GROUP, INC., in the presence of: a Florida corporation /s/ Harold David Holland By: /s/ G. Kristin Delano - --------------------------- --------------------------- SIGNATURE SIGNATURE HAROLD DAVID HOLLAND G. KRISTIN DELANO - --------------------------- --------------------------- NAME LEGIBLY PRINTED, NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED TYPEWRITTEN OR STAMPED Its Secretary - --------------------------- SIGNATURE - --------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (CORPORATE SEAL) As to BIG, as Guarantor STATE OF GEORGIA ) COUNTY OF LOWNDES ) The foregoing instrument was acknowledged before me this 30 day of December, 1996, by G. KRISTIN DELANO, the Secretary of BANKERS INSURANCE GROUP, INC., a Florida corporation, on behalf of the corporation. Personally Known OR Produced Identification -------- Type of Identification Provided Drivers License ---------------------- /s/ Tina S. Wyers ------------------------- SIGNATURE TINA S. WYERS ------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (SEAL) NOTARY PUBLIC My Commission Expires: 08/02/00 -29- EX-10.42 45 SECURITY AGREEMENT 1 EXHIBIT 10.42 SECURITY AGREEMENT (BANKERS HAZARD DETERMINATION SERVICES, INC.) THIS SECURITY AGREEMENT (the "Agreement") is executed this 30 day of December, 1996, by BANKERS HAZARD DETERMINATION SERVICES, INC., a Florida corporation (the "Borrower"), in favor of FIRST OF AMERICA BANK - FLORIDA, F.S.B., a federal savings bank (the "Lender"), and is made in reference to the following facts: (A) On or about the date hereof, the Lender has agreed to make a secured loan to the Borrower in the original principal amount of $245,000.00 (the "Loan"). The Borrower will be sometimes referred to below as the "Obligor". The Loan is evidenced by a note executed by the Borrower, which will be sometimes referred to below as the "Note", and is secured by numerous instruments of security, including without limitation, Guaranty Agreements, Loan Agreement, other Security Agreements, and UCC-1 Financing Statements, the terms and provisions of all of which are incorporated in and made a part hereof, all of which Note and instruments of security collectively comprise the "Loan Documents". (B) As a condition to making the Loan, Lender has required the Borrower to grant the Lender a perfected first security interest in and lien on all of the items described on Exhibit "A" attached hereto, together with all parts, accessions, replacements, and all proceeds thereof, including insurance proceeds (collectively the "Collateral"). NOW THEREFORE, for and in consideration of the premises and other good and valuable consideration, the Borrower does hereby covenant, agree, warrant and represent with and to the Lender as follows: 1. Recitals. The statements contained in the recitals of fact set forth above (the "Recitals") are true and correct and the Recitals by this reference are made a part of this Agreement. 2. Security Interest. Borrower does hereby grant to Lender a first security interest in and lien on the Collateral as additional security to secure the payment of principal, interest and other sums due or to become due under the Note and any and all extensions, modifications or renewals of the Note, and all present and future indebtedness, obligations, and liabilities contained in or referred to or which may hereafter arise in connection with or as contemplated by the instruments of security for the Note, and any and all modifications or extensions of the Note and the instruments of security therefor, and all obligations and liabilities of Borrower hereunder, all of which are hereinafter referred to as the "Obligations." 3. Location of Collateral. The Collateral will at all times be located solely within the State of Florida, and will not be removed from the State of Florida without the prior written consent of Lender. 2 4. Payment. The Obligor shall pay and perform, all and singular, the Obligations, including but not limited to the payment of sums of principal and interest and other sums payable by virtue of the Loan Documents promptly when due, and shall perform all of Obligor's agreements in the Loan Documents and herein and to pay all taxes and assessments levied or assessed against the Collateral, against this Agreement and against the Obligations secured hereby, whether such taxes and assessments be against the Collateral, the Obligations, the Obligor, the Lender, or another. All such taxes and assessments shall be paid by the Obligor before they become delinquent, and before the date they would have become delinquent or within ten (10) days after payment of same, whichever shall be sooner, obliger shall deliver to Lender official receipts, or copies thereof, showing payment. 5. Protection of Lender's Security. Borrower is and will be the owner of the Collateral free and clear from any lien, security interest or encumbrance, except for the lien and the obligations of this Agreement. No financing statement covering any of the Collateral is on file in any public office. Borrower will from time to time at the request of Lender execute one or more financing statements and such other documents (and pay the costs of filing or recording the same in all public offices deemed necessary or desirable by Lender) and do such other acts and things, all as Lender may request to establish and maintain a valid perfected security interest in the Collateral to secure the payment and performance of the Obligations. 6. Costs and Attorneys' Fees. Borrower shall pay, all and singular, the expenditures, costs, charges and expenses, including reasonable attorneys' fees and costs information requests, incurred or paid at any time by the Lender because of the failure on the part of the Obligor promptly and fully to perform and pay the Obligations, and all such costs, charges and expenses shall be immediately due and payable and shall bear interest at the highest legal rate permitted by law to be charged by Lender from time to time, from date of payment by Lender until repaid by Borrower and, together with such interest, shall be secured by the lien of this Agreement. 7. Default. Borrower shall be in default under this Agreement upon the happening of any of the following events or conditions: (a) failure or omission to perform or pay when due any of the Obligations (including any installment thereof or interest thereon); (b) any warranty, representation or statement made or furnished to Lender by or on behalf of Borrower prove to have been false in any material respect when made or furnished; (c) Borrower makes an assignment for the benefit of creditors; (d) a Receiver is appointed for Borrower or any part of the Collateral; (e) Borrower files a Petition in Bankruptcy, is adjudicated a bankrupt, or files any petition or institutes any proceedings under the Bankruptcy Code with respect to Borrower's assets and liabilities; or (f) Borrower defaults in, breaches or fails to perform any one or more of the covenants and agreements contained in the Obligations, including without limitation, this Agreement, the Note, or any other instrument executed by Borrower in connection with the Loan secured hereby on even date herewith or hereafter. 2 3 8. Acceleration. Upon the occurrence of any default which remains uncured for ten (10) days or more, Lender may, at its option, declare all Obligations, or any of them (notwithstanding any provision thereof), immediately due and payable without demand or notice of any kind and the same thereupon shall immediately become and be due and payable without demand or notice, and Lender shall have and may exercise from time to time any and all rights and remedies of a Lender under the Uniform Commercial Code of the State of Florida and any and all other rights and remedies available to it under any other applicable law, including the right to foreclose this Agreement and the other instruments of security in the same proceedings. A monetary default shall be deemed to include failure to make payments of principal, interest and late charges under the Note as well as payments of taxes and governmental assessments and premiums for insurance under this Agreement and the other instruments of security for the Loan. Notwithstanding anything contained in the preceding sentences of this paragraph 8 to the contrary, there shall be no requirement of a curative period as set forth above in the event of a default described in subparagraphs (c), (d) or (e) of paragraph 7 hereof. Upon request or demand of Lender, Borrower shall, at Borrower's expense, assemble the Collateral and make it available to the Lender and Borrower shall promptly pay all costs of Lender of collection of any and all of the Obligations and enforcements of rights hereunder, including reasonable attorneys' fees and legal expenses. Expenses of retaking, holding, preparing for sale, selling or the like, shall include those incurred on appeal, if any. 9. Waiver. No waiver by Lender of any default shall operate as a waiver of any other default or of the same default on a future occasion. No delay or omission on the part of Lender in exercising any right or remedy shall operate as a waiver thereof or the exercise of any other right or remedy. 10. Provisions Cumulative. The provisions of this Agreement are cumulative and in addition to the provisions of the Note secured by this Agreement and the provisions of the instruments securing the Note and Lender shall have all the benefits, rights and remedies of and under the Note and any other instrument securing same. All rights of Lender hereunder shall inure to the benefit of its successors and assigns and all obligations of Borrower hereunder shall bind the successors and assigns of Borrower. 11. Florida Contract. This Agreement has been delivered in the State of Florida and shall be construed in accordance with the laws of Florida. 12. Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity only, without invalidating the remainder of such provision or of the remaining provisions of this agreement. 13. Assignment by Lender. In the event of any assignment hereof by Lender, Borrower, jointly and severally, covenant and agree that Borrower will not assert against any assignee hereof any claim or defense which Borrower may have against Lender, except Borrower 3 4 may assert against any such assignee any defense of a type which may be asserted against a holder in due course of a negotiable instrument under the Uniform Commercial Code of the State of Florida. 14. Headings. The headings of the paragraphs contained in this Agreement are for convenience of reference only and do not form a part hereof and in no way modify, interpret or construe the meaning of the parties hereto. IN WITNESS WHEREOF, Borrower has executed this instrument under seal the day and year first above written. Signed, sealed and delivered BANKERS HAZARD DETERMINATION in the presence of: SERVICES, INC., a Florida corporation /s/ Harold David Holland By: /s/ G. Kristin Delano - --------------------------- --------------------------- Its Secretary (CORPORATE SEAL) - --------------------------- As to Borrower STATE OF GEORGIA ) COUNTY OF LOWNDES ) The foregoing instrument was acknowledged before me this 30 day of December, 1996, by G. KRISTIN DELANO, the Secretary of BANKERS HAZARD DETERMINATION SERVICES, INC., a Florida corporation, on behalf of the corporation. Personally Known OR Produced Identification -------- Type of Identification Provided Drivers License ---------------------- /s/ Tina S. Wyers ------------------------- SIGNATURE TINA S. WYERS ------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (SEAL) NOTARY PUBLIC My Commission Expires: 08/02/00 4 5 1995 & 1996 NET BOOK VALUE REPORT
Placed in Acquisition Accumulated Net Book Company Sys # Description Service Value Depreciation Value - ---------------------------------------------------------------------------------------------------------------------- BHDS 208 INTEL STORAGE EXPRESS W/2ND DRIVE 01/01/95 10,394.00 4,547.37 5,846.6? BHDS 209 TOKEN RING OPTION 01/01/95 657.00 287.42 369.5? BHDS 210 ATLAS PROGRAM CENSUS CODE 01/01/95 800.00 350.00 450.0? BHDS 211 NOTEBOOK PC DELL 75 MHZ W/CARRYING CASE 01/01/95 3,667.45 1,604.50 2,062.9? BHDS 212 COMPAQ PROLINEA PC 02/01/95 1,836.07 765.03 1,071.0? BHDS 214 COMPAQ PROLINEA PC 03/01/95 2,281.24 902.99 1,378.25 BHDS 216 LASERJET 4 PLUS PRINTER 03/01/95 1,549.33 613.29 936.06 BHDS 217 COMPAQ PROLIANT S-1007 (SEE NOTES) 04/01/95 27,536.90 10,326.34 17,210.56 BHDS 218 COMPAQ PROLINEA PC 04/01/95 2,503.14 938.68 1,564.46 BHDS 219 COMPAQ PROLINEA PC 04/01/95 2,503.14 938.68 1,564.46 BHDS 220 COMPAQ PROLINEA PC 04/01/95 2,503.13 938.67 1,564.46 BHDS 224 S/C CHAIR 05/01/95 228.40 64.71 163.69 BHDS 225 S/C CHAIR 05/01/95 228.40 64.71 163.69 BHDS 226 S/C CHAIR 05/01/95 228.40 64.71 163.69 BHDS 227 S/C CHAIR 05/01/95 228.40 64.71 163.69 BHDS 228 S/C CHAIR 05/01/95 228.40 64.71 163.69 BHDS 229 S/C CHAIR 05/01/95 228.40 64.71 163.69 BHDS 230 S/C CHAIR 05/01/95 228.40 64.71 163.69 BHDS 231 S/C CHAIR 05/01/95 228.40 64.71 163.69 BHDS 232 S/C CHAIR 05/01/95 228.40 64.71 163.69 BHDS 233 S/C CHAIR 05/01/95 228.42 64.73 163.69 BHDS 234 GRAPHIC INFORMATION SYSTEMS FOR WINDOWS 06/01/95 544.70 181.57 363.13 BHDS 235 SEGATE 1 GIG DRIVE 06/01/95 1,583.70 527.90 1,055.80 BHDS 236 COMPAQ PROLINEA PC 06/01/95 1,954.28 651.42 1,302.86 BHDS 238 MADGE EISA TOKEN RING 06/01/95 724.20 241.39 482.81 BHDS 239 MADGE EISA TOKEN RING 06/01/95 724.20 241.39 482.81 BHDS 240 COMPAQ NETFLEX TOKEN RING CARD 06/01/95 521.85 173.94 347.91 BHDS 241 COMPAQ NETFLEX TOKEN RING CARD 06/01/95 521.85 173.94 347.91 BHDS 245 TOPOGRAPHICAL RATE MAPS (SEE NOTES) 06/01/95 14,892.04 3,971.21 10,920.83 BHDS 242 COMPAQ 4 ?GB HARD DRIVE 07/01/95 2,921.68 913.02 2,008.66 BHDS 243 UNIVERSAL WAN 50MM (SEE NOTES) 07/01/95 327.54 102.35 225.19 BHDS 244 PERLE 494E-56 CONTROLLER (SEE NOTES) 07/01/95 3,525.80 1,104.94 2,430.86 BHDS 246 TRADE SHOW DISPLAY/BOOTH (SEE NOTES) 07/01/95 6,783.49 1,695.87 5,087.62 BHDS 247 PROLINEA P/75 PC (SEE NOTES) 08/01/95 2,803.09 817.56 1,985.53 BHDS 248 PROLINEA P/75 PC (SEE NOTES) 08/01/95 2,803.09 817.56 1,985.53 BHDS 249 PROLINEA P/75 PC (SEE NOTES) 08/01/95 2,803.09 817.56 1,985.53 BHDS 253 COMPAQ PROLINEA 456DX4 PC (SEE NOTES) 08/01/95 2,508.84 731.74 1,777.10 BHDS 255 SUMMAGRAPHICS 36 X 48 DIGITIZER 08/01/95 1,578.25 368.25 1,210.00 BHDS 260 MITA 4086 COPIER 08/01/95 8,239.87 1,922.63 6,317.24 BHDS 256 HP JETDIRECT EXT PRINT SERVER 09/01/95 619.20 167.70 451.50 BHDS 257 IBM P/75 LAPTOP W/LCD & MISC. SOFTWARE 10/01/95 6,152.19 1,538.04 4,614.15 BHDS 258 SUMMAGRAPHICS DIGITIZER 11/01/95 1,567.55 399.23 1,208.32 BHDS 259 AGISW LAN PAX V3.01 10-USERS 11/01/95 4,041.64 926.20 3,115.44 BHDS 261 DELL DIMENSION S100T PC (SEE NOTES) 12/01/95 2,528.41 526.75 2,001.66 BHDS 262 DELL DIMENSION S100T PC (SEE NOTES) 12/01/95 2,528.41 526.75 2,001.66 BHDS 263 COMPAQ PROLINEA E5100 2/630 (SEE NOTES) 01/01/96 2,871.20 538.35 2,332.85 BHDS 264 COMPAQ PROLINEA E5100 2/630 (SEE NOTES) 01/01/96 2,871.20 538.35 2,332.85 BHDS 265 COMPAQ PROLINEA E5100 2/630 (SEE NOTES) 01/01/96 2,871.20 538.35 2,332.85 BHDS 266 COMPAQ PROLINEA E5100 2/630 (SEE NOTES) 01/01/96 2,871.20 538.35 2,332.85 BHDS 267 COMPAQ PROLINEA E5100 2/630 (SEE NOTES) 01/01/96 2,871.20 538.35 2,332.85 BHDS 268 COMPAQ PROLINEA E5100 2/630 (SEE NOTES) 01/01/96 2,871.20 538.35 2,332.85 BHDS 269 COMPAQ PROLINEA E5100 2/630 (SEE NOTES) 01/01/96 2,871.20 538.35 2,332.85 BHDS 270 COMPAQ PROLINEA E5100 2/630 (SEE NOTES) 01/01/96 2,871.20 538.35 2,332.85 BHDS 271 DELL DIMENSION 590T PC (SEE NOTES) 01/01/96 2,734.07 512.64 2,221.43 BHDS 272 DELL DIMENSION 590T PC (SEE NOTES) 01/01/96 2,734.07 512.64 2,221.43 BHDS 273 MADGE CARDS FOR ASSET PS261 & 262 01/01/96 597.51 112.03 485.48
EXHIBIT "A" Page 1 of 2 6 1995 & 1996 NET BOOK VALUE REPORT
Placed In Acquisition Accumulated Net Book Company Sys # Description Service Value Depreciation Value - ---------------------------------------------------------------------------------------------------------------------- BHDS 274 COMPAQ PROLINEA 575E PC (SEE NOTES) 01/01/96 2,451.89 459.72 1,992.17 BHDS 276 ATLAS SELECT 95/00 SUMMER 95 V3.02 SOFTWARE 01/01/96 872.70 163.63 709.07 BHDS 275 COMPAQ 4.3GB HOT PLUGGABLE DRIVE 02/01/96 1,870.75 311.78 1,558.97 BHDS 277 COMPAQ PROLINEA E 5/100 8/1060 (SEE NOTES) 032/01/96 3,498.07 510.13 2,987.94 BHDS 278 COMPAQ PROLINEA E 5/100 8/1060 (SEE NOTES) 03/01/96 3,498.07 510.13 2,987.94 BHDS 279 COMPAQ PROLINEA E 5/100 8/1060 (SEE NOTES) 03/01/96 3,498.07 510.13 2,987.94 BHDS 280 COMPAQ PROLINEA E 5/100 8/1060 (SEE NOTES) 03/01/96 3,498.07 510.13 2,987.94 BHDS 281 COMPAQ PROLINEA E 5/100 8/1060 (SEE NOTES) 03/01/96 3,498.07 510.13 2,987.94 BHDS 282 COMPAQ PROLINEA E 5/100 8/1060 (SEE NOTES) 03/01/96 3,498.07 510.13 2,987.94 BHDS 283 COMPAQ PROLINEA E 5/100 8/1060 (SEE NOTES) 03/01/96 3,498.01 510.12 2,987.89 BHDS 284 GEO CODER STAR DATA GDT DATABASE NATIONAL 04/01/96 17,134.65 2,141.83 14,992.82 BHDS 285 SUMMA GRAPHIC DIGITIZING TABLE 04/01/96 1,720.25 172.02 1,548.23 BHDS 286 INTERNAL HP JET DIRECT PRINT SERVER 04/01/96 567.80 70.97 496.83 BHDS 287 EXTERNAL HP JET DIRECT PRINT SERVER 04/01/96 607.80 75.97 531.83 BHDS 288 COMPAQ PROLINEA E 5100 E/630 04/01/96 3,003.31 375.41 2,627.90 BHDS 289 DELORME MAPPING SOFTWARE 05/01/96 1,179.00 122.81 1,056.19 BHDS 297 COMPAQ PROLINEA 5133 16/2 GB MINITOWER 05/01/96 4,015.56 418.28 3,597.28 BHDS 291 COMPAQ PROLINEA E 5100 8/630 (SEE NOTES) 05/01/96 2,939.14 306.16 2,632.98 BHDS 292 COMPAQ PROLINEA E 5100 8/630 (SEE NOTES) 05/01/96 2,939.14 306.16 2,632.98 BHDS 293 COMPAQ PROLINEA E 5100 8/630 (SEE NOTES) 05/01/96 2,939.14 306.16 2,632.98 BHDS 294 QUASAR 27" TV/VCR 05/01/96 629.15 65.58 563.62 BHDS 295 ACD MANAGER VERSION 2.0 SOFTWARE 07/01/96 4,260.00 266.25 3,993.75 BHDS 297 GEO LOCATOR SOFTWARE 07/01/96 10,000.00 625.00 9,375.00 BHDS 295 COMPAQ SMEM 64MB EXPANSION KIT 07/01/96 2,350.14 146.88 2,203.26 E 299 GEOSTAN DLL UPGRADE 08/01/96 2,180.00 90.83 2,089.17 BHDS 300 HOST FAX SERVER SOFTWARE & EQUIPMENT 08/01/96 33,090.00 0.00 33,090.00 BHDS 301 COMPAQ PROLINEA E 5100 (SEE NOTES) 08/01/96 2,261.63 94.23 2,167.40 BHDS 302 COMPAQ PROLINEA E 5100 (SEE NOTES) 08/01/96 2,261.63 94.23 2,167.40 BHDS 303 COMPAQ PROLINEA E 5100 (SEE NOTES) 08/01/96 2,261.63 94.23 2,167.40 BHDS 304 COMPAQ PROLINEA E 5100 (SEE NOTES) 08/01/96 2,261.63 94.23 2,167.40 BHDS 305 COMPAQ PROLINEA E 5100 (SEE NOTES) 08/01/96 2,689.64 112.06 2,577.58 BHDS 306 COMPAQ PROLINEA E 5100 (SEE NOTES) 08/01/96 2,689.64 112.06 2,577.58 BHDS 307 CTX 17" MONITOR 08/01/96 798.00 33.25 764.75 BHDS 308 CTX 17" MONITOR 08/01/96 798.00 33.25 764.75 BHDS 309 CTX 17" MONITOR 08/01/96 798.00 33.25 764.75 BHDS 310 CTX 17" MONITOR 08/01/96 798.00 33.25 764.75 BHDS 311 CTX 17" MONITOR 08/01/96 798.00 33.25 764.75 BHDS 312 CTX 17" MONITOR 08/01/96 798.00 33.25 764.75 BHDS 313 COMPAQ PROLINEA E 5100 (SEE NOTES) 08/01/96 3,240.36 135.01 3,105.35 BHDS 314 ARTMEDIA 17" MONITOR 08/01/96 798.00 33.25 764.75 BHDS 316 COVERMATE 600 BINDING SYSTEM 10/01/96 854.93 0.00 854.93 ---------- --------- ---------- TOTAL BHDS 304,103.57 58,768.19 245,335.38
EXHIBIT "A" Page 2 of 2 EX-10.43 46 SECURITY AGREEMENT 1 EXHIBIT 10.43 SECURITY AGREEMENT (INSURANCE MANAGEMENT INFORMATION SERVICES, INC.) THIS SECURITY AGREEMENT (the "Agreement") is executed this 30 day of December, 1996, by INSURANCE MANAGEMENT INFORMATION SERVICES, INC., a Florida corporation (the "Borrower"), in favor of FIRST OF AMERICA BANK - FLORIDA, F.S.B., a federal savings bank (the "Lender"), and is made in reference to the following facts: (A) On or about the date hereof, the Lender has agreed to make a secured loan to the Borrower in the original principal amount of $809,000.00 (the "Loan"). The borrower will be sometimes referred to below as the "Obligor". The Loan is evidenced by a note executed by the Borrower, which will be sometimes referred to below as the "Note", and is secured by numerous instruments of security, including without limitation, Guaranty Agreements, Loan Agreement, other Security Agreements, and UCC-1 Financing Statements, the terms and provisions of all of which are incorporated in and made a part hereof, all of which Note and instruments of security collectively comprise the "Loan Documents". (B) As a condition to making the Loan, Lender has required the Borrower to grant the Lender a perfected first security interest in and lien on all of the items described on Exhibit "A" attached hereto, together with all parts, accessions, replacements, and all proceeds thereof, including insurance proceeds (collectively the "Collateral"). NOW THEREFORE, for and in consideration of the premises and other good and valuable consideration, the Borrower does hereby covenant, agree, warrant and represent with and to the Lender as follows: 1. Recitals. The statements contained in the recitals of fact set forth above (the "Recitals") are true and correct and the Recitals by this reference are made a part of this Agreement. 2. Security Interest. Borrower does hereby grant to Lender a first security interest in and lien on the Collateral as additional security to secure the payment of principal, interest and other sums due or to become due under the Note and any and all extensions, modifications or renewals of the Note, and all present and future indebtedness, obligations, and liabilities contained in or referred to or which may hereafter arise in connection with or as contemplated by the instruments of security for the Note, and any and all modifications or extensions of the Note and the instruments of security therefor, and all obligations and liabilities of Borrower hereunder, all of which are hereinafter referred to as the "Obligations." 3. Location of Collateral. The Collateral will at all times be located solely within the State of Florida, and will not be removed from the State of Florida without the prior written consent of Lender. 2 4. Payment. The Obligor shall pay and perform, all and singular, the Obligations, including but not limited to the payment of sums of principal and interest and other sums payable by virtue of the Loan Documents promptly when due, and shall perform all of Obligor's agreements in the Loan Documents and herein and to pay all taxes and assessments levied or assessed against the Collateral, against this Agreement and against the Obligations secured hereby, whether such taxes and assessments be against the Collateral, the Obligations, the Obligor, the Lender, or another. All such taxes and assessments shall be paid by the Obligor before they become delinquent, and before the date they would have become delinquent or within ten (10) days after payment of same, whichever shall be sooner, Obligor shall deliver to Lender official receipts, or copies thereof, showing payment. 5. Protection of Lender's Security. Borrower is and will be the owner of the Collateral free and clear from any lien, security interest or encumbrance, except for the lien and the obligations of this Agreement No financing statement covering any of the collateral is on file in any public office. Borrower will from time to time at the request of Lender execute one or more financing statements and such other documents (and pay the costs of filing or recording the same in all public offices deemed necessary or desirable by Lender) and do such other acts and things, all as Lender may request to establish and maintain a valid perfected security interest in the Collateral to secure the payment and performance of the Obligations. 6. Costs and Attorneys' Fees. Borrower shall pay, all and singular, the expenditures, costs, charges and expenses, including reasonable attorneys' fees and costs information requests, incurred or paid at any time by the Lender because of the failure on the part of the Obligor promptly and fully to perform and pay the Obligations, and all such costs, charges and expenses shall be immediately due and payable and shall bear interest at the highest legal rate permitted by law to be charged by Lender from time to time, from date of payment by Lender until repaid by Borrower and, together with such interest, shall be secured by the lien of this Agreement. 7. Default. Borrower shall be in default under this Agreement upon the happening of any of the following events or conditions: (a) failure or omission to perform or pay when due any of the Obligations (including any installment thereof or interest thereof); (b) any warranty, representation or statement made or furnished to Lender by or on behalf of Borrower prove to have been false in any material respect when made or furnished; (c) Borrower makes an assignment for the benefit of creditors; (d) a Receiver is appointed for Borrower or any part of the Collateral; (e) Borrower files a Petition in Bankruptcy, is adjudicated a bankrupt, or files any petition or institutes any proceedings under the Bankruptcy Code with respect to Borrower's assets and liabilities; or (f) Borrower defaults in, breaches or fails to perform any one or more of the covenants and agreements contained in the Obligations, including without limitation, this Agreement, the Note, or any other instrument executed by Borrower in connection with the Loan secured hereby on even date herewith or hereafter. 2 3 8. Acceleration. Upon the occurrence of any default which remains uncured for ten (10) days or more, Lender may, at its option, declare all Obligations, or any of them (notwithstanding any provision thereof), immediately due and payable without demand or notice of any kind and the same thereupon shall immediately become and be due and payable without demand or notice, and Lender shall have and may exercise from time to time any and all rights and remedies of a Lender under the Uniform Commercial Code of the State of Florida and any and all other rights and remedies available to it under any other applicable law, including the right to foreclose this Agreement and the other instrument of security in the same proceedings. A monetary default shall be deemed to include failure to make payments of principal, interest and late charges under the Note as well as payments of taxes and governmental assessments and premiums for instance under this Agreement and the other instruments of security for the Loan. Notwithstanding anything contained in the preceding sentences of this paragraph 8 to the contrary, there shall be no requirement of a curative period as set forth above in the event of a default described in subparagraphs (c), (d) or (e) or paragraph 7 hereof. Upon request or demand of Lender, Borrower shall, at Borrower's expense, assemble the Collateral and make it available to the Lender and Borrower shall promptly pay all costs of Lender of collection of any and all of the Obligations and enforcements of rights hereunder, including reasonable attorneys' fees and legal expenses. Expenses of retaking, holding, preparing for sale, selling or the like, shall include those incurred on appeal, if any. 9. Waiver. No waiver by Lender of any default shall operate as a waiver of any other default or of the same default on a future occasion. No delay or omission on the part of Lender in exercising any right or remedy shall operate as a waiver thereof or the exercise of any other right or remedy. 10. Provisions Cumulative. The provisions of this Agreement are cumulative and in addition to the provisions of the Note secured by this Agreement and the provisions of the instruments securing the Note and Lender shall have all the benefits, rights and remedies of and under the Note any other instrument securing same. All rights of Lender hereunder shall inure to the benefit of its successors and assigns and all obligations of Borrower hereunder shall bind the successors and assigns of Borrower. 11. Florida Contract. This Agreement has been delivered in the State of Florida and shall be construed in accordance with the laws of Florida. 12. Severability. Wherever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity only, without invalidating the remainder of such provision or of the remaining provisions of this agreement. 13. Assignment by Lender. In the event of any assignment hereof by Lender, Borrower, jointly and severally, covenant and agree that Borrower will not assert against any assignee hereof any claim or defense which Borrower may have against Lender, except Borrower 3 4 may assert against any such assignee any defense of a type which may be asserted against a holder in due course of a negotiable instrument under the Uniform Commercial Code of the State of Florida. 14. Headings. The headings of the paragraphs contained in this Agreement are for convenience of reference only and do not form a part hereof and in no way modify, interpret or construe the meaning of the parties hereto. IN WITNESS WHEREOF, Borrower has executed this instrument under seal the day and year first above written. Signed, sealed and delivered INSURANCE MANAGEMENT INFORMATION in the presence of: SERVICES, INC., a Florida corporation /s/ Harold David Holland By: /s/ G. Kristin Delano - --------------------------- --------------------------- Its Secretary (CORPORATE SEAL) - --------------------------- As to Borrower STATE OF GEORGIA ) COUNTY OF LOWNDES ) The foregoing instrument was acknowledged before me this 30 day of December, 1996, by G. KRISTIN DELANO, the Secretary of INSURANCE MANAGEMENT INFORMATION SERVICES, INC., a Florida corporation, on behalf of the corporation. Personally Known OR Produced Identification -------- Type of Identification Provided Drivers License ---------------------- /s/ Tina S. Wyers ------------------------- SIGNATURE TINA S. WYERS ------------------------- NAME LEGIBLY PRINTED, TYPEWRITTEN OR STAMPED (SEAL) NOTARY PUBLIC My Commission Expires: 08/02/00 4 5 1995 & 1996 NET BOOK VALUE REPORT
Placed In Acquisition Accumulated Net Book Company Sys # Description Service Value Depreciation Value - ---------------------------------------------------------------------------------------------------------------------- IMIS 1 COMPAQ PROLINEA PC 02/01/95 1,836.06 76.50 1,759.56 IMIS 3 8MB UPGRADE FOR COMPAQ PROLINEA 03/01/95 393.40 8.20 385.20 IMIS 4 DELL LATITUDE i486 NOTEBOOK PC (SEE NOTES) 04/01/95 4,034.60 1,597.03 2,437.57 IMIS 5 TOKEN RING 04/01/95 447.19 177.01 270.18 IMIS 6 DEVELOPMENT FEES SOFTWARE FOR BRMS & WORKER'S COMP 05/01/95 8,640.00 0.00 8,640.00 IMIS 9 DELL DIMENSION P90 PC 12/01/95 2,432.11 557.36 1,874.75 IMIS 10 COMPAQ PROLINEA E 5100 8/630 04/01/96 2,932.28 427.62 2,504.66 IMIS 480 BELL & HOWELL MAILSTAR SYSTEM 04/01/96 414,005.30 0.00 414,005.30 IMIS 479 BELL & HOWELL MAIL WEIGH EQUIPMENT 10/01/96 13,000.00 216.67 12,783.33 IMIS 373 HP EXT JET DIRECT PRINT SERVER 01/01/95 516.81 226.10 290.71 IMIS 374 EPSON STYLUS COLOR PRINTER 01/01/95 561.75 245.77 315.98 IMIS 362 AS400 TERMINAL 02/01/95 983.55 409.81 573.74 IMIS 375 MODEM 7855 V.32 02/01/95 1,043.09 434.61 608.48 IMIS 376 UPS MAINTENANCE BYPASS SWITCH 02/01/95 1,284.00 535.00 749.00 IMIS 377 AS400 TERMINAL 02/01/95 983.55 409.81 573.74 IMIS 379 AS400 TERMINAL 02/01/95 983.80 409.92 573.88 IMIS 380 AS400 TERMINAL 02/01/95 983.80 409.92 573.88 IMIS 383 COMPAQ PROLINEA PC 02/01/95 1,836.07 765.03 1,071.04 IMIS 384 COMPAQ PROLINEA PC 02/01/95 1,836.06 765.02 1,071.04 IMIS 387 COMPAQ PROLINEA PC 02/01/95 1,836.66 765.27 1,071.39 IMIS 389 MADGE SMART 16/4 TOKEN RING CARD 03/01/95 489.26 193.67 295.59 IMIS 390 MADGE SMART 16/4 TOKEN RING CARD 03/01/95 489.26 193.67 295.59 IMIS 391 MADGE SMART 16/4 TOKEN RING CARD 03/01/95 489.26 193.67 295.59 IMIS 392 MADGE SMART 16/4 TOKEN RING CARD 03/01/95 489.26 193.67 295.59 IMIS 393 MADGE SMART 16/4 TOKEN RING CARD 03/01/95 489.25 193.66 295.59 IMIS 394 MADGE SMART 16/4 TOKEN RING CARD 03/01/95 489.25 193.66 295.59 IMIS 395 MADGE SMART 16/4 TOKEN RING CARD 03/01/95 489.25 193.66 295.59 IMIS 396 MADGE SMART 16/4 TOKEN RING CARD 03/01/95 489.25 193.66 295.59 IMIS 397 MADGE SMART 16/4 TOKEN RING CARD 03/01/95 489.25 193.66 295.59 IMIS 398 MADGE SMART 16/4 TOKEN RING CARD 03/01/95 489.25 193.66 295.59 IMIS 399 MADGE SMART 16/4 TOKEN RING CARD 03/01/95 489.25 193.66 295.59 IMIS 400 MADGE SMART 16/4 TOKEN RING CARD 03/01/95 489.25 193.66 295.59 IMIS 401 MADGE SMART 16/4 TOKEN RING CARD 03/01/95 489.25 193.66 295.59 IMIS 402 MADGE SMART 16/4 TOKEN RING CARD 03/01/95 489.25 193.66 295.59 IMIS 403 MADGE SMART 16/4 TOKEN RING CARD 03/01/95 489.25 193.66 295.59 IMIS 404 MADGE SMART 16/4 TOKEN RING CARD 03/01/95 489.25 193.66 295.59 IMIS 405 MADGE SMART 16/4 TOKEN RING CARD 03/01/95 489.25 193.66 295.59 IMIS 406 MADGE SMART 16/4 TOKEN RING CARD 03/01/95 489.25 193.66 295.59 IMIS 407 MADGE SMART 16/4 TOKEN RING CARD 03/01/95 489.25 193.66 295.59 IMIS 408 MADGE SMART 16/4 TOKEN RING CARD 03/01/95 489.25 193.66 295.59 IMIS 409 MODULYNK TERMINAL 04/01/95 913.30 342.48 570.82 IMIS 410 COMPAQ PROLINEA PC 04/01/95 2,144.76 804.28 1,340.48 IMIS 412 AS/400 TERMINAL 04/01/95 913.30 273.99 639.31 IMIS 413 COMPAQ PROLINEA PC 04/01/95 2,295.25 860.71 1,434.54 IMIS 415 COMPAQ PROLINEA PC 04/01/95 2,324.20 871.57 1,452.63 IMIS 417 COMPAQ PROLINEA PC 04/01/95 2,498.98 937.12 1,561.86 IMIS 418 COMPAQ PROLINEA PC 04/01/95 2,498.98 937.12 1,561.86 IMIS 421 COMPAQ PROLINEA PC 04/01/95 2,498.98 937.12 1,561.86 IMIS 423 540 MB IDE PLUS MISC COMPUTER EQUIPMENT 04/01/95 812.02 304.50 507.52 IMIS 424 16MB AND 8MB SIM 04/01/95 960.24 360.09 600.15 IMIS 425 DELL LATITUDE 486 NOTEBOOK PC (SEE NOTES) 05/01/95 4,367.38 1,546.78 2,820.60 IMIS 426 MADGE 16/4 SMART RING NODE PLUS 05/01/95 488.46 173.00 315.46 IMIS 427 MADGE 16/4 SMART RING NODE PLUS 05/01/95 488.46 173.00 315.46 IMIS 428 MADGE 16/4 SMART RING NODE PLUS 05/01/95 488.46 173.00 315.46 IMIS 429 MADGE 16/4 SMART RING NODE PLUS 05/01/95 488.46 173.00 315.46 IMIS 430 MADGE 16/4 SMART RING NODE PLUS 05/01/95 488.46 173.00 315.46 IMIS 431 MADGE 16/4 SMART RING NODE PLUS 05/01/95 488.46 173.00 315.46 IMIS 432 MADGE 16/4 SMART RING NODE PLUS 05/01/95 488.46 173.00 315.46 IMIS 433 MADGE 16/4 SMART RING NODE PLUS 05/01/95 488.46 173.00 315.46
EXHIBIT "A" Page 1 of 5 6 1995 & 1996 NET BOOK VALUE REPORT
Placed In Acquisition Accumulated Net Book Company Sys # Description Service Value Depreciation Value - ---------------------------------------------------------------------------------------------------------------------- IMIS 434 MADGE 16/4 SMART RING NODE PLUS 05/01/95 488.46 173.00 315.46 IMIS 435 MADGE 16/4 SMART RING NODE PLUS 05/01/95 488.46 173.00 315.46 IMIS 436 MADGE 16/4 SMART RING NODE PLUS 05/01/95 488.46 173.00 315.46 IMIS 437 MADGE 16/4 SMART RING NODE PLUS 05/01/95 488.46 173.00 315.46 IMIS 438 MADGE 16/4 SMART RING NODE PLUS 05/01/95 488.46 173.00 315.46 IMIS 439 MADGE 16/4 SMART RING NODE PLUS 05/01/95 488.46 173.00 315.46 IMIS 440 MADGE 16/4 SMART RING NODE PLUS 05/01/95 488.45 172.99 315.46 IMIS 441 MADGE 16/4 SMART RING NODE PLUS 05/01/95 488.45 172.99 315.46 IMIS 442 MADGE 16/4 SMART RING NODE PLUS 05/01/95 488.45 172.99 315.46 IMIS 443 MADGE 16/4 SMART RING NODE PLUS 05/01/95 488.45 172.99 315.46 IMIS 444 MADGE 16/4 SMART RING NODE PLUS 05/01/95 488.45 172.99 315.46 IMIS 445 MADGE 16/4 SMART RING NODE PLUS 05/01/95 488.45 172.99 315.46 IMIS 446 SEAGATE ST31230N 05/01/95 627.44 222.21 405.23 IMIS 447 SEAGATE ST31230N 05/01/95 627.44 222.21 405.23 IMIS 448 STARTEK 2 PORT TWINAX HUB 05/01/95 858.14 303.92 554.22 IMIS 449 STARTEK 2 PORT TWINAX HUB 05/01/95 858.14 303.92 554.22 IMIS 450 STARTEK 2 PORT TWINAX HUB 05/01/95 858.14 303.92 554.22 IMIS 451 SEAGATE SCSI HARDDRIVE 05/01/95 1,192.80 422.45 770.35 IMIS 452 2 PORT TWINAX HUB 05/01/95 858.14 303.92 554.22 IMIS 453 COMPAQ PROLINEA PC (SEE NOTES) 06/01/95 2,013.58 671.20 1,342.38 IMIS 455 PERLE 394E-32 CONTROLLER 06/01/95 4,946.75 1,648.91 3,297.84 IMIS 456 LYNK 3487 TERMINAL 06/01/95 876.55 292.18 584.37 IMIS 457 SILVON SOFTWARE (SEE NOTES) 06/01/95 25,800.00 8,600.00 17,200.00 IMIS 458 COMPAQ PROLINEA PC (SEE NOTES) 06/01/95 2,271.78 757.26 1,514.52 IMIS 460 COMPAQ PROLINEA PC (SEE NOTES) 06/01/95 2,085.42 695.14 1,390.28 IMIS 462 COMPAQ PROLINEA PC (SEE NOTES) 06/01/95 2,085.42 695.14 1,390.28 IMIS 464 COMPAQ PROLINEA PC (SEE NOTES) 06/01/95 2,674.93 891.63 1,783.30 IMIS 466 COMPAQ 4/16 DDS DAT TAPE DRIVE 06/01/95 1,868.01 622.67 1,243.34 IMIS 467 COMPAQ PROLINEA PC (SEE NOTES) 06/01/95 2,132.68 710.89 1,421.79 IMIS 469 MADGE SMART AT RING 06/01/95 473.93 157.98 315.95 IMIS 470 MADGE SMART AT RING 06/01/95 473.93 157.98 315.95 IMIS 471 MADGE SMART AT RING 06/01/95 473.93 157.98 315.95 IMIS 472 MADGE SMART AT RING 06/01/95 473.93 157.98 315.95 IMIS 473 MADGE SMART AT RING 06/01/95 473.93 157.98 315.95 IMIS 474 MADGE SMART AT RING 06/01/95 473.93 157.98 315.95 IMIS 475 MADGE SMART AT RING 06/01/95 473.93 157.98 315.95 IMIS 476 MADGE SMART AT RING 06/01/95 473.93 157.98 315.95 IMIS 477 MADGE SMART AT RING 06/01/95 473.93 157.98 315.95 IMIS 478 MADGE SMART AT RING 06/01/95 473.93 157.98 315.95 IMIS 479 MADGE SMART AT RING 06/01/95 473.92 157.97 315.95 IMIS 480 MADGE SMART AT RING 06/01/95 473.92 157.97 315.95 IMIS 481 MADGE SMART AT RING 06/01/95 473.92 157.97 315.95 IMIS 482 MADGE SMART AT RING 06/01/95 473.92 157.97 315.95 IMIS 483 MADGE SMART AT RING 06/01/95 473.92 157.97 315.95 IMIS 484 MADGE SMART AT RING 06/01/95 473.92 157.97 315.95 IMIS 485 MADGE SMART AT RING 06/01/95 473.92 157.97 315.95 IMIS 486 MADGE SMART AT RING 06/01/95 473.92 157.97 315.95 IMIS 487 MADGE SMART AT RING 06/01/95 473.92 157.97 315.95 IMIS 488 MADGE SMART AT RING 06/01/95 473.92 157.97 315.95 IMIS 489 COMPAQ PROLINEA PC (SEE NOTES) 06/01/95 2,283.68 761.23 1,522.45 IMIS 491 IBM 2613 FEATURE (V.35 ADAPTER AND 20" CABLE)06/01/95 834.50 278.17 556.33 IMIS 492 SR-DFD/RDM/WRM PRODUCT/DATA MODELING SW 06/01/95 14,500.00 4,833.33 9,666.67 IMIS 494 ARCADA BACKUP EXEC ENTERPRISE V6.0 SOFTWARE 06/01/95 813.20 271.06 342.14 IMIS 493 CD ROM DRIVE AND CD ROM CONTROLLER 07/01/95 769.90 240.60 529.30 IMIS 495 COMPAQ PROLINEA PC (SEE NOTES) 07/01/95 2,620.61 818.94 1,301.67 IMIS 497 COMPAQ PROSIGNIA 300 PENT PC (SEE NOTES) 07/01/95 7,105.40 2,220.44 4,884.96 IMIS 499 COMPAQ PROLINEA PC (SEE NOTES) 07/01/95 2,210.26 690.70 1,519.56 IMIS 501 8 MB UPGRADE 07/01/95 393.07 122.83 270.24
7 1995 & 1996 NET BOOK VALUE REPORT
Placed In Acquisition Accumulated Net Book Company Sys # Description Service Value Depreciation Value - ---------------------------------------------------------------------------------------------------------------------- IMIS 502 ADAPTEC 1744 SCSI ADAPTER 07/01/95 506.11 158.15 347.96 IMIS 503 LASERJET 4 PLUS PRINTER 07/01/95 1,535.23 479.75 1,055.48 IMIS 504 EXTERNAL JET DIRECT PRINT SERVER 07/01/95 511.46 159.83 351.63 IMIS 505 WINDOWS NT SERVER V3.5 08/01/95 670.85 195.66 475.19 IMIS 506 SQL WINDOWS SERVER V6.0 08/01/95 944.81 275.57 669.24 IMIS 507 NT WORKSTATION MS WINDOWS V3.5 08/01/95 298.53 87.07 211.46 IMIS 508 DELL LATITUDE i486 NOTEBOOK PC 08/01/95 3,657.60 1,066.80 2,590.80 IMIS 510 DELL DIMENSION P75 TOWER BASE PC (SEE NOTES) 08/01/95 2,234.16 651.63 1,582.53 IMIS 511 S/C CHAIR 08/01/95 285.16 66.53 218.63 IMIS 512 S/C CHAIR 08/01/95 285.16 66.53 218.63 IMIS 513 S/C CHAIR 08/01/95 285.16 66.53 218.63 IMIS 514 S/C CHAIR 08/01/95 285.16 66.53 218.63 IMIS 515 S/C CHAIR 08/01/95 285.16 66.53 218.63 IMIS 516 S/C CHAIR 08/01/95 285.16 66.53 218.63 IMIS 517 S/C CHAIR 08/01/95 285.16 66.53 218.63 IMIS 518 S/C CHAIR 08/01/95 285.16 66.53 218.63 IMIS 519 S/C CHAIR 08/01/95 285.16 66.53 218.63 IMIS 520 STARTEK HUB 2-PORT ACTIVE TWINAX 08/01/95 858.14 250.29 607.85 IMIS 521 COMPAQ PROSIGNIA 300 PENT 90 MODEL 1 08/01/95 6,308.48 1,839.97 4,468.51 IMIS 522 DELL LATITUDE XP i486 NOTEBOOK PC (SEE NOTES) 08/01/95 4,073.43 1,188.09 2,885.34 IMIS 523 PENTIUM PROLINEA 5/100 PC (SEE NOTES) 08/01/95 6,862.39 2,001.53 4,860.86 IMIS 525 COMPAQ PROLINEA 486DX 100 PC (SEE NOTES) 08/01/95 2,508.84 731.74 1,777.10 IMIS 527 SMART 16/4 TOKEN RINGNODE 08/01/95 547.20 159.60 387.60 IMIS 528 SMART 16/4 TOKEN RINGNODE 08/01/95 547.20 159.60 387.60 IMIS 529 SMART 16/4 TOKEN RINGNODE 08/01/95 547.20 159.60 387.60 IMIS 530 SMART 16/4 TOKEN RINGNODE 08/01/95 547.20 159.60 387.60 IMIS 531 SMART 16/4 TOKEN RINGNODE 08/01/95 547.20 159.60 387.60 IMIS 532 SMART 16/4 TOKEN RINGNODE 08/01/95 547.20 159.60 387.60 IMIS 533 SMART 16/4 TOKEN RINGNODE 08/01/95 547.20 159.60 387.60 IMIS 534 SMART 16/4 TOKEN RINGNODE 08/01/95 547.20 159.60 387.60 IMIS 535 SMART 16/4 TOKEN RINGNODE 08/01/95 547.20 159.60 387.60 IMIS 536 SMART 16/4 TOKEN RINGNODE 08/01/95 547.20 159.60 387.60 IMIS 537 SMART 16/4 TOKEN RINGNODE 08/01/95 547.20 159.60 387.60 IMIS 538 SMART 16/4 TOKEN RINGNODE 08/01/95 547.20 159.60 387.60 IMIS 539 SMART 16/4 TOKEN RINGNODE 08/01/95 547.20 159.60 387.60 IMIS 540 SMART 16/4 TOKEN RINGNODE 08/01/95 547.20 159.60 387.60 IMIS 541 SMART 16/4 TOKEN RINGNODE 08/01/95 547.20 159.60 387.60 IMIS 542 SMART 16/4 TOKEN RINGNODE 08/01/95 547.20 159.60 387.60 IMIS 543 SMART 16/4 TOKEN RINGNODE 08/01/95 547.20 159.60 387.60 IMIS 544 SMART 16/4 TOKEN RINGNODE 08/01/95 547.20 159.60 387.60 IMIS 545 SMART 16/4 TOKEN RINGNODE 08/01/95 547.20 159.60 387.60 IMIS 546 SMART 16/4 TOKEN RINGNODE 08/01/95 547.20 159.60 387.60 IMIS 547 STEEL CASE FURNITURE 09/01/95 3,232.61 700.40 2,532.21 IMIS 548 COMPAQ PROLINEA P/90 8/420 (SEE NOTES) 09/01/95 3,292.45 891.70 2,400.75 IMIS 549 STARTEK 299AT HUB 2PT ACT TWINAX 09/01/95 868.14 235.13 633.01 IMIS 550 MS WINDOWS 95 & MS OFFICE (SEE NOTES) 09/01/95 6,261.10 1,695.72 4,565.38 IMIS 551 MISCELLANEOUS (SEE NOTES) 09/01/95 170.09 46.07 124.02 IMIS 552 STEEL CASE EQUIPMENT 10/01/95 576.20 115.24 460.96 IMIS 553 HP LASERJET 5L PRINTER 10/01/95 620.31 155.08 465.23 IMIS 554 PC-DELL DIMENSION 575 T (SEE NOTES) 10/01/95 2,217.04 554.26 1,662.78 IMIS 555 MULTIMEDIA MT PROJECTOR 10/01/95 6,708.66 1,677.16 5,031.50 IMIS 556 NT SERVER 3.51 COMPAQ OEM VERSION 10/01/95 692.25 173.06 519.19 IMIS 557 1 COMPAQ PROLINEA (SEE NOTES) 10/01/95 3,407.64 851.91 2,555.73 IMIS 567 CHAIR 10/01/95 287.35 57.47 229.88 IMIS 568 CHAIR 10/01/95 287.35 57.47 229.88 IMIS 558 COMPAQ PROLINEA P90 8/630 (SEE NOTES) 11/01/95 4,157.38 952.74 3,204.64 IMIS 559 COMPAQ PROLINEA P90 8/630 (SEE NOTES) 11/01/95 4,157.38 952.74 3,204.64 IMIS 560 COMPAQ PROLINEA P90 8/420 (SEE NOTES) 11/01/95 3,292.45 754.52 2,537.93
EXHIBIT "A" Page 3 of 5 8 1995 & 1996 NET BOOK VALUE REPORT
Placed In Acquisition Accumulated Net Book Company Sys # Description Service Value Depreciation Value - ---------------------------------------------------------------------------------------------------------------------- IMIS 561 COMPAQ PROLINEA P/90 8/420 (SEE NOTES) 11/01/95 3,614.47 828.31 2,786.16 IMIS 562 ARCSERVE NLM WINDOWS v5.01 250 USER 11/01/95 1,459.09 334.37 1,124.72 IMIS 563 DATABASE UTILITY 11/01/95 1,495.00 342.60 1,152.40 IMIS 564 DELL DIMENSION P90 PC 12/01/95 3,176,23 661.71 2,514.52 IMIS 565 DELL DIMENSION P/90 PC 11/01/95 2,432.11 506.69 1,925.42 IMIS 566 AS400 MODEL SEQUEL KERNEL 12/01/95 6,615.00 1,378.12 5,236.88 IMIS 569 DATA BASE UTILITY FOR CALVIN & HOBBES 12/01/95 1,495.00 311.46 1,183.54 IMIS 570 DELL LATITUDE LAPTOP 12/01/95 3,757.90 782.90 2,975.00 IMIS 571 DELL LATITUDE LAPTOP 12/01/95 3,187.33 664.02 2,523.31 IMIS 572 DELL LATITUDE LAPTOP 12/01/95 3,187.33 664.02 2,523.31 IMIS 573 DELL LATITUDE LAPTOP 12/01/95 3,247.67 676.60 2,571.07 IMIS 574 DELL LATITUDE LAPTOP 12/01/95 3,499.26 729.01 2,770.25 IMIS 575 SECURITY DOOR INFO SYSTEMS 12/01/95 1,192.00 198.67 993.33 IMIS 576 MADGE CARD (SEE ASSET #571) 12/01/95 1,377.86 287.06 1,090.80 IMIS 577 MADGE CARD (SEE ASSET #572) 12/01/95 1,077.35 224.45 852.90 IMIS 578 HP INTERNAL JETDIRECT TR CARD 01/01/96 565.40 106.01 459.39 IMIS 579 HP INTERNAL JETDIRECT TR CARD 01/01/96 565.40 106.01 459.39 IMIS 580 I/O TERMINALS 01/01/96 862.65 161.74 700.91 IMIS 581 I/O TERMINALS 01/01/96 862.65 161.74 700.91 IMIS 582 DELL LATITUDE LX i486 LAPTOP 01/01/96 3,905.08 732.20 3,172.88 IMIS 583 COMPAQ PROLINEA E 5100 8/630 (SEE NOTES) 01/01/96 2,891.20 542.10 2,349.10 IMIS 584 HP JET DIRECT EXTERNAL 5SI 01/01/96 619.20 116.10 503.10 IMIS 585 16 MB UPGRADE FOR PROLINEA 01/01/96 1,081.25 202.73 878.52 IMIS 586 NT SERVER SOFTWARE 3.51 (SEE NOTES) 01/01/96 1,944.19 364.53 1,579.66 IMIS 587 S - DESIGNER ENTERPRISE FOR PB V.4.X WIN 01/01/96 2,881.51 540.28 2,341.23 IMIS 588 COMPAQ PROLINEA 575E MODEL 630 (SEE NOTES) 01/01/96 3,202.47 600.46 2,602.01 IMIS 589 NETWORK LINKBUILDER FMS TR-24 PORT HUB 01/01/96 2,023.08 379.32 1,643.76 IMIS 590 NETWORK LINKBUILDER FMS TR-24 PORT HUB 01/01/96 2,023.08 379.32 1,643.76 IMIS 591 LINKBUILDER FMS TR 12 PT HUB 01/01/96 1,365.56 256.04 1,109.52 IMIS 592 NETWORK LINKBUILDER FMS TR FIBER RJ/RO 01/01/96 485.65 91.05 394.60 IMIS 593 PADLOCK SECURITY SOFTWARE 01/01/96 1,685.25 315.98 1,369.27 IMIS 594 POWERTOOL ENTERPRISE 01/01/96 1,524.75 285.89 1,238.86 IMIS 595 DELL DIMENSION 5100T PC (SEE NOTES) 01/01/96 3,041.20 570.22 2,470.98 IMIS 596 DELL DIMENSION 5100T PC (SEE NOTES) 01/01/96 3,041.21 570.22 2,470.99 IMIS 597 17" MONITOR UPGRADE 01/01/96 808.96 151.68 657.28 IMIS 598 COMPAQ PROLIANT 1500 R 5/133 MODEL 01/01/96 8,237.69 1,544.56 6,693.13 IMIS 599 COMPAQ HD ACC SMART SCSI ARRAY CONTROLLER 01/01/96 2,254.57 422.73 1,831.84 IMIS 602 COMPAQ HD 4.3GB PLUGGABLE FAST-SCSI-2 01/01/96 1,584.79 297.15 1,287.64 IMIS 603 COMPAQ HD 4.3GB PLUGGABLE FAST-SCSI-2 01/01/96 1,584.79 297.15 1,287.64 IMIS 604 COMPAQ HD 4.3GB PLUGGABLE FAST-SCSI-2 01/01/96 1,584.79 297.15 1,287.64 IMIS 600 COMPAQ SMEM KIT 64MB EXPN 02/01/96 3,268.48 611.00 2,657.48 IMIS 601 COMPAQ SMEM KIT 64MB EXPN 02/01/96 3,268.48 611.00 2,657.48 IMIS 605 HAYES MODEM CENTURY 8 RACK OPTIMA 288R 02/01/96 4,609,40 768.23 3,841.17 IMIS 606 COMPAQ PROSIGNIA 300 MODEL (SEE NOTES) 02/01/96 7,244.98 1,207.49 6,037.49 IMIS 607 COMPAQ PROSIGNIA 300 MODEL (SEE NOTES) 02/01/96 7,244.98 1,207.49 6,037.48 IMIS 608 KINGSTON 16 MB UPGRADE FOR DELL 02/01/96 747.25 124.54 622.71 IMIS 609 RENEWAL UPGRADE FOR WINDOWS ENTERPRISE 03/01/96 1,316.10 191.93 1,124.17 IMIS 610 COMPAQ PROLINEA E 5100 8/1060 03/01/96 3,047.09 355.49 2,691.60 IMIS 611 COMPAQ PROLINEA E P100 8/630 NC 03/01/96 2,791.63 407.11 2,384.52 IMIS 612 COMPAQ PROLINEA E 5100 8/1060 03/01/96 4,146.31 604.67 3,541.64 IMIS 613 COMPAQ PROLINEA E P100 8/630 NC 03/01/96 3,031.90 442.15 2,589.75 IMIS 614 COMPAQ PROLINEA E 5100 8/1060 03/01/96 4,598.78 670.65 3,928.13 IMIS 615 SYNON SOFTWARE WITH UPGRADES AND SUPPORT 03/01/96 50,455.00 7,358.02 43,096.98 IMIS 616 COMPAQ PROLINEA E 5100 8/630 (SEE NOTES) 03/01/96 2,932.78 422.69 2,510.09 IMIS 617 COMPAQ PROLINEA E 5100 8/630 (SEE NOTES) 03/01/96 4,229.29 609.80 3,619.49 IMIS 618 8 PORT DIGI BOARD 04/01/96 732.89 91.61 641.28 IMIS 619 COMPAQ PROLINEA E 5100 8/630 04/01/96 2,931.83 366.48 2,565.35 IMIS 620 VIEWSTAR MONITOR (SEE NOTES) 05/01/96 2,297.70 239.34 2,058.36
EXHIBIT "A" Page 4 of 5 9 1995 & 1996 NET BOOK VALUE REPORT
Placed In Acquisition Accumulated Net Book Company Sys # Description Service Value Depreciation Value - ---------------------------------------------------------------------------------------------------------------------- IMIS 621 COMPAQ PROLINEA E 5100 8/630 (SEE NOTES) 05/01/96 2,925.41 304.73 2,620.68 IMIS 622 COMPAQ PROLINE E 5100 8/630 (SEE NOTES) 05/01/96 3,005.58 313.08 2,692.50 IMIS 623 COMPAQ PROLINE E 5100 8/630 (SEE NOTES) 05/01/96 3,005.59 313.08 2,692.51 IMIS 624 COMPAQ PROLINEA E 5100 8/630 (SEE NOTES) 06/01/96 3,525.60 293.80 2,231.80 IMIS 625 S-DESIGNOR ENTERPRISE SOFTWARE 06/01/96 914.94 76.24 838.70 IMIS 626 ARTMEDIA 17" MONITOR 07/01/96 893.86 55.86 838.00 IMIS 627 COMPAQ PROLINEA 120 E 07/01/96 3,287.42 205.46 3,081.96 IMIS 628 HITACHI 20" MONITOR 07/01/96 1,678.91 104.93 1,573.98 IMIS 629 COMPAQ PROLINEA E 5100 07/01/96 2,389.04 149.31 2,239.73 IMIS 630 STARTEK HUB 07/01/96 896.22 56.01 840.21 IMIS 633 PVCS VERSION MANAGER V5.2 WINDOWS NT 07/01/96 2,911.84 181.99 2,729.85 IMIS 634 COMPAQ PROLINEA E 5100 (SEE NOTES) 08/01/96 2,435.39 101.47 2,333.92 IMIS 635 CTX 14" MONITOR 08/01/96 260.00 10.83 249.17 IMIS 636 COMPAQ PROLINEA E 5100 (SEE NOTES) 08/01/96 2,349.07 97.88 2,251.19 IMIS 637 COMPAQ DESKPRO 2000 MODEL 5100/1200 08/01/96 2,114.53 88.10 2,026.43 IMIS 638 CTX 15" MONITOR 08/01/96 360.00 15.00 345.00 IMIS 639 CTX 15" MONITOR 08/01/96 360.00 15.00 345.00 IMIS 640 20" CORNERSTONE GRAYSCALE 09/01/96 1,931.68 40.24 1,891.44 IMIS 641 20" CORNERSTONE GRAYSCALE 09/01/96 1,931.68 40.24 1,891.44 IMIS 642 COMPAQ PROLINEA 5100E (SEE NOTES) 09/01/96 2,361.83 49.20 2,312.63 IMIS 643 COMPAQ PROLINEA 5100E (SEE NOTES) 09/01/96 2,361.83 49.20 2,312.63 IMIS 644 HP JETDIRECT PRINT SERVER EXT. 09/01/96 668.75 13.93 654.82 ---------- --------- ---------- TOTAL IMIS 923,609.00 114,705.10 808,903.90
EXHIBIT "A" Page 5 of 5 EX-10.44 47 INSTALLMENT NOTE 1 EXHIBIT 10.44 INSTALLMENT NOTE $184,000.00 Mobile , AL December 30 , 1997 - --------------------- --------------- ------------------------- -- (City) (State) (Date) For the value received, the undersigned (whether one or more, hereinafter called the "Obligors") promise(s) to pay to the order of SouthTrust Bank, National Association (hereinafter called the "Bank" or, together with any other holder of this note, the "Holder"), at any office of the Bank in Birmingham, Alabama, or at such other place as the Holder may designate, the principal sum of One Hundred Eighty Four Thousand and 00/100 Dollars, together with interest thereon at the rate provided below from the date of this note (or, other interest accrual date shown below) until maturity (whether as originally scheduled or upon acceleration following default), and with interest on the unpaid balance of the principal sum (plus accrued but unpaid interest at maturity, to the extent permitted by law) at the rate which is 2 percent per annum in excess of the rate provided below or the maximum rate allowed by law, whichever is less, from maturity until said indebtedness is paid in full. Interest will continue to accrue daily on the entire unpaid balance of the principal sum of this note until each payment under this note is received by the Holder at the address provided above. Interest will accrue beginning on the date of this note unless another date is show here:_______________________, 19____. INTEREST RATE Interest will accrue on the above-stated principal sum as Variable Rate follows (mark applicable provision): - --- Interest will accrue on the above-stated principal sum at the rate per annum which is ___________________ percentage points in excess of the Index Rate. Unless another rate is made applicable below, the "Index Rate" is the rate of interest designated by the Bank periodically as its Base Rate. The Base Rate is not necessarily the lowest rate charged by the Bank. The Base Rate on the date of this note is __________________ percent ____(check box if applicable) The "Index Rate" is the weekly auction average yield of ____________ - week U.S. Treasury Bills at the most recent auction prior to the date the interest rate payable under this note is calculated. The Index Rate on the date of this note is ___________ percent. The rate of interest payable under this note will change to reflect any change in the Index Rate: ____ on any day the Index ____ on the ____________ day Rate changes of each month hereafter. ____ on the day each payment ___ ________________________ of Interest is due as provided below. Obligors may prepay this note in full at any time without penalty. X Fixed Rate Interest will accrue on the above-stated principal sum at - --- the rate of 8.19 percent per annum. Interest on the principal sum will be calculated at the rate set forth above on the basis of a 360-day year and the actual number of days elapsed by multiplying the principal sum by the per annum rate set forth above, multiplying the product thereof by the actual number of days elapsed, and dividing the product so obtained by 360. PAYMENT SCHEDULE The above-stated principal sum and interest thereon shall be paid as follows (mark applicable provision): __ Installments The Obligors promise to pay the above-stated principal sum of Principal, in __________ consecutive of Principal, Interest Paid ___ monthly installments ___ quarterly installments ____________ installments in the amount of Separately $_________________________ each, beginning _______________, 19____ and continuing on the same day of each month, quarter, or other period (as applicable) thereafter until ______________, 19_______ at which time a final installment in the amount of the unpaid balance of the principal sum and all accrued but unpaid interest thereon shall be due and payable. The Obligors promise to pay accrued interest on the principal sum: _________ monthly _________ quarterly ______________________________________ beginning ______________________________, 19____ and continuing on the same day of each month, quarter, or other period (as applicable) thereafter until final maturity of the principal sum. ___ Installments The Obligors promise to pay the above-stated principal sum and interest thereon in 35 consecutive of Principal x monthly installments _____ quarterly installments ____________________ installments in and Interest the amount of $5,782.03 each, beginning January 30, 1998 and continuing on the same day of each month, quarter, or other period (as applicable) thereafter until December 30, 2000 at which time a final installment in the amount of the unpaid balance of the principal sum and all accrued but unpaid interest thereon shall be due and payable.
payments under this note shall be made in U.S. dollars and in immediately available funds at the place where the payment is due. LOAN FEE (This provision applicable only if completed): A loan in the amount of $_______________ has been _________ included in the amount of this note and paid to the Bank from the loan proceeds _____________ paid to the Bank by cash or check at closing. The loan fee is earned by the Bank when paid and is not subject to refund except to the extent required by law. LATE CHARGE If any, scheduled payment is in default 10 days or more, Obligors agree to pay a late charge equal to 5% of the amount of the payment which is in default, not less than $50 or more than the maximum amount allowed by applicable law. The preceding sentence does not apply if the original principal amount ??? this Note is less than $2,000. PREPAYMENT If the interest rate on this note is a variable rate, Obligors may prepay this note in full at any time without premium or penalty. If the interest rate on this note is a fixed rate, unless the paragraph which follows is applicable, prepayment of the principal sum of this note in whole or in part is permitted. If this line is marked, and if the interest rate on this note is a fixed rate, Obligors may not prepay this note in whole or in part during the first year after date of this note unless the Holder consents. Thereafter, prepayment will be permitted on any scheduled payment date on condition that the amount of the payment must equal the sum of (a) the principal amount prepaid plus (b) accrued interest on the amount prepaid plus (c) a premium equal to 1% of the principal amount prepaid multiplied times the number of years or parts of a year remaining until final scheduled maturity of this note. No prepayment premium need be paid if prepayment is made within one year prior to the final scheduled maturity of this note. As used in paragraph, "prepayment" includes payment following acceleration of the maturity of this note after default by the Obligors if the Obligors were able to pay as agreed but failed to pay in order to induce Holder to accelerate the maturity of this note. If prepayment in full without penalty or premium is required to be permitted by applicable law, the foregoing provisions will not apply and prepayment will be allowed in accordance with such law. COLLATERAL This note is secured by every security agreement, pledge, assignment, stock power, mortgage, deed of trust, security deed and/or other instrument covering personal or real property (all of which are hereinafter included in the term "Separate Agreements") which secures an obligation so defined as to include this note, including without limitation all such Separate Agreements which are of even date herewith and/or described in the space below. In addition, as security for the payment of any and all liabilities and obligations of the Obligors to the Holder (including this note and the indebtedness evidenced by this note and extensions, renewals and modifications thereof, and all writings delivered in substitution therefor) and all claims of every nature of the Holder against the Obligors, whether present or future, and whether joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, direct or indirect (all the foregoing are hereinafter included in the term "Obligations"), the Obligors hereby assign to the Holder and grant to the Holder a security interest in and ??? title to the property (the "Collateral") described below: (Describe Separate Agreements and Collateral.) Equipment as more fully described in Exhibit A attached hereto and made a part hereof, along with any renewals, substitutions, attachments, replacements and cash or non-cash proceeds of the foregoing. The Obligors are jointly and severally liable for the payment of this note and have subscribed their names hereto without condition that anyone else should or become bound hereon and without any other condition whatever being made. The provisions printed on the back of this page are a part of this note. Provisions of this note are binding on the heirs, executors, administrators, successors and assigns of each and every Obligor and shall inure to the behalf of Holder, its successors and assigns. This note is executed under the seal of each of the Obligors and of the indorsers, if any, with the intention that it be an instrument under seal. CAUTION: IT IS IMPORTANT THAT YOU THOROUGHLY READ THE CONTRACT BEFORE YOU SIGN IT. Address of Obligor: 360 Central Avenue Bankers Hazard Determination Services, Inc. [LS] - ------------------------ ---------------------------------------------- St. Petersburg, FL 33701 By: /s/ G. Kristin Delano Secretary - ------------------------ ------------------------------------------------ Title AKT Signature [LS] - ------------------------ ------------------------------------- ?? - ------------------------ 2 EXHIBIT A This Exhibit describes the property to be included in the "Collateral or Security" referred to in a Note, Security Agreement and in any Financing Statement delivered by BANKERS HAZARD DETERMINATION SERVICES, INC. (Borrower) to SouthTrust Bank, National Association to which this Exhibit is attached, to wit:
SYS# DESCRIPTION - ---- ----------- 322 HP LASERJET 5 PRINTER WITH PRINT SERVER 323 HP JETDIRECT INT T/R PRINT SERVER 324 HO JETDIRECT INTERNAL PRINT SERVER 325 HO JETDIRECT INTERNAL PRINT SERVER 326 HP SCANJET 4c SCANNER PC 300 HOST FAX SERVE SOFTWARE & EQUIPMENT 315 COMPAQ PROLINEA E 5/100 WITH 32 MB RAM 327 COMPAQ DESKPRO 4000 5/166 328 COMPAQ DESKPRO 4000 5/166 329 HITACHI SUPERSCAN ELITE 20 MONITOR 330 HITACHI SUPERSCAN ELITE 20 MONITOR 331 HP 5 SI PRINTER W/PRINT SERVER 332 HP 5 SI PRINTER W/PRINT SERVER 333 COMPAQ DESKPRO 4000 5/166 W/16MB 334 COMPAQ DESKPRO 4000 5/166 W/16MB 335 COMPAQ DESKPRO 4000 5/166 W/16MB 336 HITACHI SUPERSCAN ELITE 17" MONITOR 337 HITACHI SUPERSCAN ELITE 17" MONITOR 338 HITACHI SUPERSCAN ELITE 17" MONITOR 339 HP 5 SI PRINTER W/PRINT SERVER 340 HITACHI SUPERSCAN ELITE 17 MONITOR 341 HITACHI SUPERSCAN ELITE 17 MONITOR 342 HITACHI SUPERSCAN ELITE 17 MONITOR 343 COMPAQ DESKPRO 4000 5/166 344 COMPAQ DESKPRO 4000 5/166 345 COMPAQ DESKRPO 4000 5/166 346 COMPAQ PROLINEA 6150E PENTIUM 347 COMPAQ PROLINEA 6150E PENTIUM 348 COMPAQ PROLINEA 6150E PENTIUM 349 COMPAQ PROLINEA 6150E PENTIUM 350 COMPAQ PROLINEA 6150E PENTIUM 351 COMPAQ PROLINEA 6150E PENTIUM 352 COMPAQ PROLINEA 6150E PENTIUM 353 COMPAQ PROLINEA 6150E PENTIUM 354 COMPAQ PROLINEA 6150E PENTIUM 355 COMPAQ PROLINEA 6150E PENTIUM 356 COMPAQ PROLINEA 6150E PENTIUM 357 COMPAQ PROLINEA 6150E PENTIUM 358 COMPAQ PROLINEA 6150E PENTIUM 359 COMPAQ PROLINEA 6150E PENTIUM 360 COMPAQ PROLINEA 6150E PENTIUM 361 COMPAQ PROLINEA 6150E PENTIUM 362 COMPAQ PROLINEA 6150E PENTIUM 363 COMPAQ PROLINEA 6150E PENTIUM 364 COMPAQ PROLINEA 6150E PENTIUM 365 COMPAQ PROLINEA 6150E PENTIUM 366 COMPAQ PROLINEA 6150E PENTIUM
3 367 COMPAQ PROLINEA 6150E PENTIUM 368 COMPAQ PROLINEA 6150E PENTIUM 369 COMPAQ PROLINEA 6150E PENTIUM 370 COMPAQ PROLINEA 6150E PENTIUM 371 ORACLE DESIGNER/2000 SOFTWARE 372 1 TIME LICENSING ORDER (ORACLE) 373 COMPAQ PROLINEA 6150E 374 COMPAQ PROLINEA 6150E 375 COMPAQ PROLINEA 6150E 376 COMPAQ PROLINEA 6150E 377 COMPAQ PROLINEA 6150E 378 COMPAQ PROLINEA 6150E 379 COMPAQ PROLINEA 6150E 380 COMPAQ PROLINEA 6150E 381 COMPAQ PROLINEA 6150E 382 COMPAQ PROLINEA 6150E 383 COMPAQ PROLINEA 6150E 384 COMPAQ PROLINEA 6150E 385 COMPAQ PROLINEA 6150E 386 COMPAQ PROLINEA 6150E 387 COMPAQ PROLINEA 6150E 388 COMPAQ PROLINEA 6150E 389 COMPAQ PROLINEA 6150E 390 COMPAQ PROLINEA 6150E 392 COMPAQ 64MB UPGRADE PROSIGNIA 300 393 COMPAQ 64MB UPGRADE PROSIGNIA 300 394 COMPAQ 9.1 GB PLIGGABLE HARD DRIVE 395 COMPAQ 9.1 GB PLIGGABLE HARD DRIVE 396 COMPAQ 9.1 GB PLIGGABLE HARD DRIVE 397 COMPAQ 9.1 GB PLIGGABLE HARD DRIVE 398 COMPAQ 9.1 GB PLIGGABLE HARD DRIVE 399 COMPAQ SMART-2 ARRAY CONTROLLER/P3 400 COMPAQ ARMADA LAPTOP 401 HP LASERJET 5 SI PRINTER
EX-10.45 48 CROSS-COLLATERALIZATION & CROSS-DEFAULT AGREEMENT 1 EXHIBIT 10.45 CROSS-COLLATERALIZATION AND CROSS-DEFAULT AGREEMENT The parties agree as of the 30 day of December, 1997 that all indebtedness owed by Bankers Financial Corporation, Bankers Insurance Group, Inc., Insurance Management Solutions, Inc., and Bankers Hazard Determination Services, Inc. (the "Obligors") to SouthTrust Bank, National Association (the "Bank") shall be secured by all Collateral granted by the Obligors and Bankers Insurance Services, Inc., Bankers International Securities, Inc., Bankers Risk Management Services, Inc., Bankers Underwriters, Inc., Executive Aviation Charters, Inc., Gilchrist Timber Co., Inc., and Southern Rental & Leasing Corporation (the "Pledgors") to Bank at any time to the end that all such indebtedness shall be cross-collateralized and that a default by the Obligors under the terms of any promissory notes and all other loan documents executed by the Obligors in connection with any loan, shall be deemed a default under the terms of all promissory notes and all other loan documents executed by the Obligors in connection with all loans by Bank, to the end that upon the happening of any such default, Bank may, at its option, declare the entire outstanding indebtedness owed by the Obligors to Bank evidenced by all promissory notes to be immediately due and payable in full. BANKERS FINANCIAL CORPORATION /s/ G. Kristin Delano ---------------------------------------- Witness: By: /s/ Sandy F. Hesley - ---------------------------------- BANKERS INSURANCE GROUP, INC. /s/ G. Kristin Delano ---------------------------------------- Witness: By: /s/ Sandy F. Hesley - ---------------------------------- INSURANCE MANAGEMENT SOLUTIONS, INC. /s/ G. Kristin Delano ---------------------------------------- Witness: By: /s/ Sandy F. Hesley - ---------------------------------- BANKERS HAZARD DETERMINATION SERVICES, INC. /s/ G. Kristin Delano ---------------------------------------- Witness: By: /s/ Sandy F. Hesley - ---------------------------------- EX-10.46 49 SECURITY AGREEMENT 1 EXHIBIT 10.46 SECURITY AGREEMENT EQUIPMENT, FARM EQUIPMENT OR CONSUMER GOODS Debtor(s) [last name(s) first]: Secured Party: Bankers Hazard Determination SouthTrust Bank, National Association - ------------------------------------- --------------------------------------- Name Services, Inc. 420 N. 20th Street - ------------------------------------- --------------------------------------- Name Address 360 Central Avenue Birmingham, AL 35203 - ------------------------------------- --------------------------------------- Mailing Address City State Zip St. Petersburg/Pinellas, FL 33701 December 30 , 1997 - ------------------------------------- --------------------------------- -- City County State Zip 1. In consideration of the loan or other extension of credit this day made to the undersigned or any of them by the Secured Party named above (hereinafter called "Secured Party"), and of any loans or other extensions of credit presently outstanding and any loans or other extensions of credit hereafter made to the undersigned or any of them by the Secured Party, and of the renewal or extension of any such loan or other extensions of credit, and of any loan or other extension of credit to any other person or entity the payment of which is guaranteed by any of the undersigned, and in consideration of $10 and other valuable consideration to Debtor, receipt of which is hereby acknowledged, and for the purpose of securing the payment as and when due of all such loans and extensions of credit and the interest and other lawful charges thereon and any and all other indebtedness or liability of the undersigned or any of them to the Secured Party, the undersigned (whether one or more, hereinafter called "Debtor") hereby assigns, transfers and conveys to Secured Party, and grants to Secured Party a security interest in, the property described below, all substitutions therefor, and all additions, accessions, accessories and option equipment now or hereafter affixed thereto or used in connection therewith (sometimes hereinafter collectively referred to as "the Collateral"); (Describe Collateral) Equipment as more fully described on Exhibit A attached hereto and made a part hereof, along with any renewals, substitutions, attachments, replacements and cash or non-cash proceeds of the foregoing. Including the following motor vehicles which are a part of the Collateral:
- ------------------------------------------------------------------------------------------------------------------------------------ New or Year Number of Body, Type, if Truck Model or Manufacturer's Motor Used Model Cylinders Make Ton Capacity Series Serial Number Number - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------
Proceeds and products of the above described property are also covered by the security interest created by this agreement. Coverage of proceeds and products shall not be construed as giving Debtor any additional rights with respect to the Collateral, and Debtor is not authorized to sell, lease, otherwise transfer, furnish under contract of service, manufacture, process or assemble the Collateral except in accordance with Secured Party's written consent obtained in advance. 2. A security interest in, and title to, the Collateral shall be and remain in Secured Party until all sums secured by this agreement have been paid in full and Secured Party has duly executed and delivered a written termination of its interest hereunder. The security interest of Secured Party hereunder secures the performance of the covenants and agreements herein set forth, the payment of all indebtedness and other obligations described in paragraph 1 hereof and the interest thereon, all costs and expenses incurred by Secured Party in the collection of said indebtedness, the enforcement of Secured Party's rights hereunder, including the payment of legal expenses and attorney's fees as herein provided, and the payment of any and all liabilities and obligations of Debtor to Secured Party and claims of every nature and description of Secured Party against Debtor, whether present or future, contracted directly with Secured Party or acquired by Secured Party from another, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, direct or indirect. (All of the foregoing in this paragraph are hereinafter included in the term "the Obligations"). 3. Debtor hereby warrants, represents and agrees that: (a) Except for the security interest created by this agreement, Debtor is the absolute owner of the Collateral free from any adverse claim, lien, security interest or encumbrance, and the same shall be true of Collateral acquired hereafter when acquired; no financing statement or other record of lien, security interest, or encumbrance has been filed which relates to the Collateral or which through general language or inclusion of proceeds could relate thereto; and Debtor at Debtor's cost and expense will protect and defend the Collateral against all claims and demands of all persons at any time claiming the same or any interest therein. (b) The Collateral has been acquired and is used, or will be acquired and will be used, by Debtor primarily for the purpose checked below. (Check 1, 2 or 3). [X] 1. In Business. [ ] 2. For Personal, Family or Household Purposes. [ ] 3. In Farming Operations. (c) [ ] If this block is checked, this agreement creates a purchase money security interest, and the consideration given for this agreement and for the promissory note(s) executed in connection herewith shall be used to purchase the Collateral, and Secured Party is authorized to disburse such consideration directly to the seller of the Collateral. (d) The Collateral is kept and will be kept at (attach additional sheets if necessary) - ------------------- ------------------- ------------------- -------------------- Street Address City County State/Zip or if left blank, at the address shown at the beginning of this agreement. (e) If the Collateral has been acquired or is used primarily for personal, family or household purposes or for farming operations, Debtor's residence is at the address shown at the beginning of this agreement; and if the address so shown is in a different state from the address shown in (d) above, then Debtor has no residence in the state where the Collateral is kept. (f) If the Collateral includes equipment which is normally used in more than one state (such as motor vehicles, rolling stock, airplanes, road building equipment, commercial harvesting equipment, and construction machinery) and Debtor has a place of business in more than one state, Debtor's chief place of business is - ------------------- ------------------- ------------------- -------------------- Street Address City County State/Zip or if left blank, is the address shown at the beginning of this agreement. If certificates of title are issued or outstanding with respect to any of the Collateral, Debtor will cause the interest of Secured Party to be properly noted thereon. (g) The Collateral is not and shall not be affixed to real estate so as to be or become a fixture or fixtures, unless such is indicated below in this agreement or unless such is subsequently consented to in writing by Secured Party. [ ] If this block is checked, the Collateral is or will be affixed to the real estate described on an exhibit attached hereto and made a part hereof. The name of the record owner of the real estate is ___________________________. If the Collateral is affixed to real estate prior to the perfection of the security interest created by this agreement, Debtor will, on demand of Secured Party, furnish Secured Party with a disclaimer or disclaimers, signed by all persons having an interest in the real estate, of any interest in the Collateral which is prior to Secured Party's interest. 4. Debtor agrees not to use the Collateral in violation of any law nor give a security interest in, assign, sell, transfer, mortgage or in any way encumber any of the Collateral without the written consent of Secured Party. Debtor agrees not to conceal nor abandon the Collateral nor remove the Collateral to an address other than the address specified in this agreement as the place where the Collateral will be kept without giving written notice to Secured Party of such removal within five (5) days thereof. Debtor agrees not to rent or lend any motor vehicle or other Collateral to any person or persons or permit the same to be used as a taxi for hire. Debtor agrees to pay when due all rents, taxes, assessments and charges levied against the Collateral and other claims which are or may become liens against the Collateral or any part thereof and all charges for the use, storage, maintenance and repair of the Collateral. Debtor agrees to perform or comply with the terms of any lease covering the premises wherein the Collateral is located and any orders, ordinances, and laws of any governmental body or agency concerning such premises or the conduct of business therein. 2 ADDITIONAL PROVISIONS FORMING PART OF SECURITY AGREEMENT ON REVERSE SIDE 5. Debtor agrees to keep the Collateral in good condition and repair, normal wear and tear alone excepted, without any cost or liability to Secured Party. Debtor not to permit anything to be done that may impair the value of the Collateral or the security intended to be afforded by this agreement. In the event of loss or damaged Collateral, Debtor will immediately send Secured Party written notice thereof and of the extent thereof. The loss, injury or destruction of the Collateral shall not release on any of the Debtor's Obligations to Secured Party. If for any reason whatsoever the Collateral shall cease to be satisfactory to Secured Party, Debtor agrees to give Secured Party such additional Collateral or other security for the payment of the Obligations as Secured Party may demand. 6. Secured Party may, in its discretion and before or after default: (a) inspect the Collateral and inspect and copy all records relating to the Collateral and the Obligation; (b) terminate, on notice to Debtor, Debtor's authority to sell, lease, otherwise transfer, manufacture, process, assemble, or furnish under contracts of service any Collateral as to which any such permission has been given; (c) require Debtor to give possession or control of the Collateral to Secured Party; (d) take possession or control of all proceeds of the Collateral, including cash and insurance proceeds payable in the event of any damage to or loss of the Collateral, and apply such proceeds in payment of, or as a reserve against, any of the Obligations, the manner, order and extent of such application to be in the sole discretion of Secured Party; (e) take any action Debtor is required to take or which is necessary to obtain, preserve or enforce the security interest created by this agreement, or to maintain ad preserve the Collateral, without notice to Debtor, and add the costs of same to the Obligations (but Secured Party is under no duty to take any such action); (f) release any Collateral in Secured Party's possession to Debtor, temporarily or otherwise, without waiving any rights to retake or repossess such Collateral; and (g) reject as unsatisfactory any property hereafter offered by Debtor as Collateral. 7. Debtor agrees at all times to maintain insurance against loss of or damage to the Collateral against risks of fire (including so-called extended coverage), theft, collision and such other risks as Secured Party may require, and as are allowed by law, in an amount not less than the fair market value of the Collateral or the unpaid balance of the Obligations, whichever is less, and written by such insurance companies as shall be satisfactory to Secured Party. Debtor may provide such insurance through an existing policy or a policy independently obtained and paid for by Debtor. Debtor hereby assigns to Secured Party all of Debtor's right, title and interest in and to any and all insurance policies covering the Collateral now or hereafter obtained, including all losses payable thereunder, if any, and agrees to deliver said policies or, at Secured Party's election, certificates thereof, to Secured Party. Secured Parties shall be named as loss payee in all such policies of insurance and all such policies shall provide a minimum 10 days written notice to Secured Party before cancellation. Debtor authorizes Secured Party to procure such insurance and/or to pay the premiums therefor, if Debtor shall fail to procure such insurance and/or to pay the premiums therefor, and to add the amounts so paid to the Obligations hereby secured; however, Secured Party is under no duty either to procure such insurance and/or to pay the premiums therefor. Secured Party is hereby appointed attorney-in-fact for Debtor with power to compromise, settle or release any claims pertaining to or arising out of said policies and to take possession of and indorse in the name of Debtor any checks or other instruments for the payment of money representing losses payable, return or unearned premiums, and all rights under said policies. Every power herein conferred upon Secured Party is coupled with an interest and is irrevocable by the death or dissolution of Debtor or otherwise. All moneys received by Secured Party on account of losses payable, return or unearned premiums, and all other rights under said policies may, at Secured Party's option, be used to purchase other insurance or to repair, restore, or replace the Collateral or may be applied in payment of, or as a reserve against, any of the Obligations, the manner, order and extent of such use or application to be in the sole discretion of Secured Party. 8. Debtor agrees to notify Secured Party in writing within five (5) days after any change in (a) Debtor's name, identity or form or organization; (b) Debtor's mailing address; (c) Debtor's corporate structure; (d) Debtor's chief executive office, principal place of business and/or residence; or (e) any change of use or location of any part of the Collateral in any jurisdiction. 9. Debtor promises to pay all fees, taxes and other costs connected with filing any financing or continuation statements and notation of liens on certificates of title which Secured Party deems necessary or desirable with respect to the security interest created by this agreement. Secured Party is hereby appointed the Debtor's attorney-in-fact to do, at Secured Party's option and at Debtor's expense, all acts and things which Secured Party may deem necessary to perfect and continue perfected the security interest created by this agreement and to protect the Collateral, including, without limitation, the completion of this agreement and/or any financing statement consistent with the parties' agreement and the signing and filing of financing statements and/or any applications for certificates of title or notation of liens thereon for Debtor at any time with respect to the Collateral. Debtor agrees that a carbon or photostatic copy of this agreement may be filed as a financing statement in any public office. 10. As additional Collateral for the payment of the Obligations, Debtor hereby grants to Secured Party a continuing lien upon and security interest in any and all property of Debtor that for any purpose, whether in trust for Debtor or for custody, pledge, collection or otherwise, is now or hereafter in the actual or constructive possession of, or in transit to, Secured Party in any capacity, or its correspondents or agents, and also a continuing lien upon and right of set-off against all deposits and credits of Debtor with, and all claims of Debtor against, Secured Party at any time existing. Secured Party is hereby authorized, at any time or times and without prior notice, to apply such property, deposits, credits and claims, in whole or in part and in such order as Secured Party may elect, to the payment of, or as a reserve against, one or more of the Obligations, whether other Collateral therefor is deemed adequate or not. 11. If default occurs in the payment as and when due of the Obligations hereby secured or any part thereof; or if Debtor breaches or fails to keep any of the covenants or warranties herein contained; or if for any reason whatever the Collateral shall cease to be satisfactory to Secured Party; or if Debtor abandons the Collateral; or if any representation made by Debtor herein or in any statement given to Secured Party shall be materially untrue when made; or if at any time, in the sole opinion of Secured Party, the financial responsibility of Debtor shall become materially impaired; or if any of the following events should occur with respect to Debtor; death (if an individual) or dissolution (if a partnership or corporation); Insolvency; assignment for the benefit of creditors; calling of a meeting of any creditors; appointment of a committee of any creditors or liquidating agent; offering to or receiving from any creditors a composition or extension of any Debtor's indebtedness; making, or sending notice of an intended, bulk transfer; the whole or partial suspension of payment; the whole or partial suspension or liquidation of Debtor's usual business; Debtor's failing, after demand, to furnish Secured Party any financial information or to permit Secured Party to inspect Debtor's books or records of account; commencement of any proceeding, suit, or action (at law or in equity, or under any provisions of the Bankruptcy Code or amendments thereto) for entry of an order for relief, reorganization, composition, arrangement, wage earner's plan, receivership, appointment of a trustee, liquidation or dissolution, whether filed by or against Debtor; entry of a judgment or issuance of a writ of attachment or garnishment against, or against any of the property of, Debtor; issuance of an execution against property of Debtor or commencement against Debtor of any proceeding for enforcement of money judgment; then, upon the happening of any of the foregoing in this paragraph, the Obligations hereby secured, although not yet due, shall at the option of the Secured Party and with or without notice or demand, become immediately due and payable, notwithstanding any time or credit allowed under any of the Obligations or under any instrument evidencing the same. 12. Upon the happening of any default or event set forth in the preceding paragraph, Secured Party will have the right to take possession of the Collateral, and with or without taking possession thereof, to sell or otherwise the Collateral and make it available to Secured Party at a place designated by Secured Party. Sale or other disposition of the Collateral may be made, at any time and from time to time, at one or more public or private sales, at the option of Secured Party, without advertisement or notice to Debtor, except such notice as is required by law and cannot be waived. To the extent notice of any sale or other disposition of the Collateral is required by law to be given to Debtor and cannot be waived, the requirement of reasonable notice shall be met by giving such notice, as provided below, at least ten (10) calendar days before the time of sale or disposition. Secured Party may purchase the Collateral at any such sale (unless prohibited by law) free from any equity of redemption and from all other claims. After deducting all expenses, including legal expenses and attorney's fees in the amount of 15% of the unpaid Obligations in default, for retaking, maintaining and selling the Collateral and for collecting the proceeds of sale. Secured Party shall have the right to apply the remainder of said proceeds in payment of, or as a reserve against, any of the Obligations, the manner, order and extent of such application to be in the sole discretion of Secured Party, Debtor shall remain liable to Secured Party for the Payment of any deficiency. Secured Party shall not be obligated to resort to any Collateral but, at its election, may proceed to enforce any of the Obligations in default against Debtor. 13. Secured Party and its agents may come upon any premises where the Collateral is located from time to time to inspect the Collateral and, if any event described in paragraph 11 above, shall have occurred, to repossess the Collateral. Debtor agrees that any entry upon such premises for these purposes will not be a trespass on the premises and that Secured Party's repossession of the Collateral after default will not be a trespass to, or a conversion of, the Collateral. Upon the occurrence of any event set forth in paragraph 11 above, Debtor agrees to remove any non-collateral personal property from the Collateral. If Secured Party should repossess the Collateral or any part of it when Debtor is not in default, or should Secured Party take possession of any non-Collateral personal property in connection with any repossession of the Collateral, Debtor agrees that Secured Party's liability will be limited solely to the fair rental value of any such property during the period after Debtor makes formal demand on Secured Party for the return of such property wrongfully taken, which demand must describe specifically the property requested to be returned, and the time Secured Party returns possession of such property to Debtor. 14. All rights and powers of Secured Party under this agreement and all right, title and interest of Secured Party in and to the Collateral herein described shall inure to the benefit of Secured Party and its successors and assigns. All covenants, representations, warranties, and agreements of Debtor contained in this agreement are joint and several if there is more than one Debtor, and shall bind each such Debtor's personal representatives, heirs, successors, and assigns. Secured Party will not by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies hereunder or under any applicable law, and no waiver or amendment of any kind shall be valid unless in writing and signed by Secured Party. All rights and remedies of Secured Party under this agreement and under any statute or rule of law shall be cumulative and may be exercised successively or concurrently. This agreement shall not be terminated, but instead shall continue in force and effect and shall secure all Obligations of Debtor to Secured Party incurred or arising prior to the execution and delivery of a written termination of this agreement by Secured Party, even though from time to time there may be no outstanding Obligations. Any provision of this agreement which may be unenforceable or invalid under applicable law shall be ineffective to the extent of such unenforceability or validity of any other provision hereof. Debtor hereby waives with respect to the Obligations all rights of exemption of the Collateral from levy or sale under execution or other process for collection of debts under the constitution and laws of the United States or of any state thereof. This agreement shall be governed by and construed according to the substantive laws, other than rules governing conflicts of law, of the state where the address of Secured Party set forth above is located. Any notice required to be given to any person shall be deemed given when delivered or mailed, postage prepaid, to such person's address as it appears on this agreement or the address such person shall have furnished to the other party hereto in writing for such purpose after the date of this agreement. Secured Party has the right to correct patent errors herein. 15. Notwithstanding any provision of this agreement to the contrary, if the Debtor is one or more natural persons and the Obligations are used for personal, family, or household use other than the purchase of real property, the following provisions are applicable: (a) the waivers of exemption of property from levy or sale under execution or other process for the collection of debts, as hereinabove provided, applies only with respect to the Collateral; (b) to the extent that the Collateral includes property which is "household goods", as that term is defined in 12 C.F.R. Section 227.12(d), and to the extent the Obligations were not used to purchase such property, such "household goods" do not constitute any part of the Collateral for such non-purchase money Obligations, and (c) no consumer protection provision of applicable law and no limitation on the remedy of garnishment provided under federal or state law is waived hereby. Notwithstanding any provision of this agreement to the contrary, if the Obligations were used primarily for personal, family, household or agricultural purposes, the agreement hereinabove made to pay an attorney's fee following default applies only if the original balance of the Obligations exceeds $300, and the attorney's fee shall be a reasonable fee not exceeding 15% of the unpaid balance of the Obligations after default and referral of the Obligations or this agreement to an attorney, not a salaried employee of Secured Party, for collection or foreclosure, and Debtor acknowledges Secured Party's banker's lien and right of set off by operation of law but does not grant a lien or security interest under paragraph 10 hereof unless such security interest is properly disclosed on the disclosure statement provided to Debtor. Time is of the essence of the payment and performance of every covenant of Debtor under this agreement. IN WITNESS WHEREOF, the undersigned has executed this agreement, consisting of both sides of this page, and any attachments hereto, on the date first set forth above, with the intention that it constitute a contract under seal. DEBTOR(S): BANKERS HAZARD DETERMINATION SERVICES, INC. /s/ G. KRISTIN DELANO, Secretary ------------------------------------------- 3 EXHIBIT A This Exhibit describes the property to be included in the "Collateral or Security" referred to in a Note, Security Agreement and in any Financing Statement delivered by BANKERS HAZARD DETERMINATION SERVICES, INC. (Borrower) to SouthTrust Bank, National Association to which this Exhibit is attached, to wit:
SYS# DESCRIPTION - ---- ----------- 322 HP LASERJET 5 PRINTER WITH PRINT SERVER 323 HP JETDIRECT INT T/R PRINT SERVER 324 HO JETDIRECT INTERNAL PRINT SERVER 325 HO JETDIRECT INTERNAL PRINT SERVER 326 HP SCANJET 4c SCANNER PC 300 HOST FAX SERVE SOFTWARE & EQUIPMENT 315 COMPAQ PROLINEA E 5/100 WITH 32 MB RAM 327 COMPAQ DESKPRO 4000 5/166 328 COMPAQ DESKPRO 4000 5/166 329 HITACHI SUPERSCAN ELITE 20 MONITOR 330 HITACHI SUPERSCAN ELITE 20 MONITOR 331 HP 5 SI PRINTER W/PRINT SERVER 332 HP 5 SI PRINTER W/PRINT SERVER 333 COMPAQ DESKPRO 4000 5/166 W/16MB 334 COMPAQ DESKPRO 4000 5/166 W/16MB 335 COMPAQ DESKPRO 4000 5/166 W/16MB 336 HITACHI SUPERSCAN ELITE 17" MONITOR 337 HITACHI SUPERSCAN ELITE 17" MONITOR 338 HITACHI SUPERSCAN ELITE 17" MONITOR 339 HP 5 SI PRINTER W/PRINT SERVER 340 HITACHI SUPERSCAN ELITE 17 MONITOR 341 HITACHI SUPERSCAN ELITE 17 MONITOR 342 HITACHI SUPERSCAN ELITE 17 MONITOR 343 COMPAQ DESKPRO 4000 5/166 344 COMPAQ DESKPRO 4000 5/166 345 COMPAQ DESKPRO 4000 5/166 346 COMPAQ PROLINEA 6150E PENTIUM 347 COMPAQ PROLINEA 6150E PENTIUM 348 COMPAQ PROLINEA 6150E PENTIUM 349 COMPAQ PROLINEA 6150E PENTIUM 350 COMPAQ PROLINEA 6150E PENTIUM 351 COMPAQ PROLINEA 6150E PENTIUM 352 COMPAQ PROLINEA 6150E PENTIUM 353 COMPAQ PROLINEA 6150E PENTIUM 354 COMPAQ PROLINEA 6150E PENTIUM 355 COMPAQ PROLINEA 6150E PENTIUM 356 COMPAQ PROLINEA 6150E PENTIUM 357 COMPAQ PROLINEA 6150E PENTIUM 358 COMPAQ PROLINEA 6150E PENTIUM 359 COMPAQ PROLINEA 6150E PENTIUM 360 COMPAQ PROLINEA 6150E PENTIUM 361 COMPAQ PROLINEA 6150E PENTIUM 362 COMPAQ PROLINEA 6150E PENTIUM 363 COMPAQ PROLINEA 6150E PENTIUM 364 COMPAQ PROLINEA 6150E PENTIUM 365 COMPAQ PROLINEA 6150E PENTIUM 366 COMPAQ PROLINEA 6150E PENTIUM
4 367 COMPAQ PROLINEA 6150E PENTIUM 368 COMPAQ PROLINEA 6150E PENTIUM 369 COMPAQ PROLINEA 6150E PENTIUM 370 COMPAQ PROLINEA 6150E PENTIUM 371 ORACLE DESIGNER/2000 SOFTWARE 372 1 TIME LICENSING ORDER (ORACLE) 373 COMPAQ PROLINEA 6150E 374 COMPAQ PROLINEA 6150E 375 COMPAQ PROLINEA 6150E 376 COMPAQ PROLINEA 6150E 377 COMPAQ PROLINEA 6150E 378 COMPAQ PROLINEA 6150E 379 COMPAQ PROLINEA 6150E 380 COMPAQ PROLINEA 6150E 381 COMPAQ PROLINEA 6150E 382 COMPAQ PROLINEA 6150E 383 COMPAQ PROLINEA 6150E 384 COMPAQ PROLINEA 6150E 385 COMPAQ PROLINEA 6150E 386 COMPAQ PROLINEA 6150E 387 COMPAQ PROLINEA 6150E 388 COMPAQ PROLINEA 6150E 389 COMPAQ PROLINEA 6150E 390 COMPAQ PROLINEA 6150E 392 COMPAQ 64MB UPGRADE PROSIGNIA 300 393 COMPAQ 64MB UPGRADE PROSIGNIA 300 394 COMPAQ 9.1 GB PLIGGABLE HARD DRIVE 395 COMPAQ 9.1 GB PLIGGABLE HARD DRIVE 396 COMPAQ 9.1 GB PLIGGABLE HARD DRIVE 397 COMPAQ 9.1 GB PLIGGABLE HARD DRIVE 398 COMPAQ 9.1 GB PLIGGABLE HARD DRIVE 399 COMPAQ SMART-2 ARRAY CONTROLLER/P3 400 COMPAQ ARMADA LAPTOP 401 HP LASERJET 5 SI PRINTER
EX-10.47 50 REVOLVING LINE OF CREDIT NOTE 1 EXHIBIT 10.47 REVOLVING LINE OF CREDIT NOTE US $600,000.00 St. Petersburg, Florida December 27, 1993 FOR VALUE RECEIVED, the undersigned ("Borrower") promises to pay MARINE BANK, or order, the principal sum of SIX HUNDRED THOUSAND AND NO/100THS - - - - - - ($600,000.00) Dollars, with interest on the unpaid principal balance from the date of this Note, until paid, at the rate equal to the MARINE BANK base rate charged from time to time as announced by MARINE BANK plus ONE PER CENT PER ANNUM (1.00%). Principal and interest shall be payable at 9400 9th Street North, St. Petersburg, FL 33702, or such other place as the Note holder may designate, as follows: INTEREST ONLY MONTHLY, COMMENCING JANUARY 27, 1994, WITH THE ENTIRE PRINCIPAL BALANCE PLUS ACCRUED INTEREST DUE ON DEMAND. THIS PROMISSORY NOTE SHALL CONSTITUTE A REVOLVING LINE OF CREDIT AGREEMENT WHEREBY LENDER MAY MAKE ADVANCES OF PRINCIPAL TO THE UNDERSIGNED FROM TIME TO TIME HEREAFTER. THE INDEBTEDNESS OF THE UNDERSIGNED TO THE LENDER FOR SUCH ADVANCES OF PRINCIPAL OUTSTANDING AT ANY ONE TIME HEREUNDER SHALL NOT EXCEED $600,000.00. THE OUTSTANDING PRINCIPAL BALANCE MAY DECREASE OR INCREASE FROM TIME TO TIME AS PRINCIPAL PAYMENTS ARE MADE BY UNDERSIGNED OR ADDITIONAL ADVANCES OF PRINCIPAL ARE MADE BY THE LENDER TO THE UNDERSIGNED. ADVANCES UNDER THIS NOTE MAY BE REQUESTED ORALLY BY BORROWER OR BY AN AUTHORIZED PERSON. LENDER MAY, BUT NEED NOT, REQUIRE THAT ALL ORAL REQUESTS BE CONFIRMED IN WRITING. ALL COMMUNICATIONS, INSTRUCTIONS, OR DIRECTIONS BY TELEPHONE OR OTHERWISE TO LENDER ARE TO BE DIRECTED TO LENDERS OFFICE SHOWN ABOVE. THE FOLLOWING PARTY OR PARTIES ARE AUTHORIZED TO REQUEST ADVANCES UNDER THE LINE OF CREDIT UNTIL LENDER RECEIVES FROM BORROWER AT LENDER'S ADDRESS SHOWN ABOVE WRITTEN NOTICE OF REVOCATION OF THEIR AUTHORITY: ANY SENIOR OFFICER. BORROWER AGREES TO BE LIABLE FOR ALL SUMS EITHER: (a) ADVANCED IN ACCORDANCE WITH THE INSTRUCTIONS OF AN AUTHORIZED PERSON OR ENDORSEMENTS ON THIS NOTE OR BY LENDER'S INTERNAL RECORDS, INCLUDING DAILY COMPUTER PRINT-OUTS. LENDER WILL HAVE NO OBLIGATION TO ADVANCE FUNDS UNDER THIS NOTE IF: (a) BORROWER OR ANY GUARANTOR IS IN DEFAULT UNDER THE TERMS OF THIS NOTE OR ANY AGREEMENT THAT BORROWER OR ANY GUARANTOR HAS WITH LENDER, INCLUDING ANY AGREEMENT MADE IN CONNECTION WITH THE SIGNING OF THIS NOTE; (b) BORROWER OR ANY GUARANTOR CEASES DOING BUSINESS OR IS INSOLVENT; (c) BORROWER HAS APPLIED FUNDS PROVIDED PURSUANT TO THIS NOTE FOR PURPOSES OTHER THAN THOSE AUTHORIZED BY LENDER; OR (e) LENDER IN GOOD FAITH DEEMS ITSELF INSECURE UNDER THIS NOTE OR ANY OTHER AGREEMENT BETWEEN LENDER AND BORROWER. If any monthly installment under this Note is not paid when due and remains unpaid after a date specified by a notice to Borrower, the entire principal amount outstanding and accrued interest thereon shall at once become due and payable at the option of the Note holder. The Note holder may exercise this option to accelerate during any fault by Borrower regardless of any prior forbearance. If suit is brought to collect this Note, the Note holder shall be entitled to collect all reasonable costs and expenses of suit, including, but not limited to, reasonable costs and expenses of suit, including, but not limited to, reasonable attorney's fees. Borrower shall pay to the Note holder a late charge of 5.0 percent of any monthly installment not received by the Note holder within 10 days after the installment is due. 2 Borrower may prepay the principal amount outstanding in whole or in part. The Note holder may require that any partial prepayments (i) be made on the date monthly installments are due and (ii) be in the amount of that part of one or more monthly installments which would be applicable to principal. Any partial prepayment shall be applied against the principal amount outstanding and shall not postpone the due date of any subsequent monthly installments or change the amount of such installments, unless the Note holder shall otherwise agree in writing. PRESENTMENT, notice of dishonor, and protest are hereby waived by all makers, sureties, guarantors and endorsers thereof. This Note shall be the joint and several obligation of all makers, sureties, guarantors and endorser, and shall be binding upon them and their successors and assigns. Any notice to Borrower provided for in this Note shall be given by mailing such notice by mail addressed to Borrower at the Property Address stated below, or to such other address as borrower may designate by notice to the Note holder. Any notice to the Note holder shall be given by mailing such notice, to the Note holder at the address stated in the first paragraph of this Note, or at such other address as may have been designated by notice to Borrower. The indebtedness evidenced by this Note is secured by: SEE SCHEDULE "A" ATTACHED HERETO. BORROWERS ADDRESS: NATIONAL FLOOD CERTIFICATION SERVICES, INC. 10051 5TH STREET NORTH ST. PETERSBURG, FL 33702 /s/ Edwin C. Husseman ------------------------------------------ BY: Edwin C. Husseman, Treasurer ------------------------------------------ BY: (execute original only) 3 ATTACHMENT TO REVOLVING LINE OF CREDIT DATED DECEMBER 27, 1993 Interest will be billed monthly. Interim quarterly financial statements on Bankers Insurance Group, Inc. and National Flood Certification Services, Inc. are due to Marine Bank within 30 days of Quarter ends. National Flood Certification Services, Inc. agrees to provide a full accounts receivable aging within 10 business days of each month end. That aging should support the outstanding balance on the Revolving Line (80%) advance on eligible receivables, (less than 120 days). If there are not sufficient receivables to support the outstanding balance, then a check will accompany the receivables aging report, reducing the outstanding balance to compliance (aging report and check, if required, are due and payable within 10 days of each month end). If there are sufficient receivables, reflected in the report, to warrant an additional advance, according to the above formula, that request may accompany the aging report up to the maximum $600,000.00 approved line. Audited year end financial statements on Bankers Insurance Group, Inc. and Bankers Insurance Company are due by May 31 of the year following the year end. Dated this 23rd Day of December 1993. NATIONAL FLOOD CERTIFICATION SERVICES, INC. /s/ Edwin C. Hussemann -------------------------------- BY: Edwin C. Husseman, Treasurer -------------------------------- BY: 4 SCHEDULE "A" NOW EXISTING OR HEREAFTER ACQUIRED ACCOUNTS RECEIVABLE INCLUDING INSTRUMENTS, DOCUMENTS, CHATTEL PAPER, GENERAL INTANGIBLES AND ALL FORMS OF OBLIGATION OWING TO MAKER AND ALL OF MAKER RIGHTS, TITLE, SECURITY AND GUARANTIES WITH RESPECT TO EACH ACCOUNT, INCLUDING THE RIGHT OF STOPPAGE IN TRANSIT; EX-10.48 51 SECURITY AGREEMENT 1 EXHIBIT 10.48 SECURITY AGREEMENT (ACCOUNTS AND CONTRACT RIGHTS) - -------------------- Contract No. THIS ASSIGNMENT AND AGREEMENT made December 27, 1993, by and between MARINE BANK herein call "Secured Party", and NATIONAL FLOOD CERTIFICATION SERVICES, INC. - ------------------------------------------------------------------------------- 10051 5th Street North St. Petersburg Pinellas FL - ------------------------------------------------------------------------------- (No. and Street) (City) (County) (State) herein called ""Borrower". In consideration of loans or advances made or to be made by Secured Party to Borrower, and for other value received by Borrower, the parties hereto, intending to be legally bound, agree as follows: 1. As used herein: (a) "Account" means an immediate right to payment for goods sold and for goods leased and for services rendered, or any of them, and includes a right to payment which has been earned under a contract right. "Qualified account" means an account which has been due less than 120 days; (b) "Contract right" means a right to payment under a contract not yet earned by performance; (c) "Goods" means all articles of tangible personal property, sold, supplied, or otherwise disposed of, represented by an account; (d) "Purchaser" includes the buyer of goods from Borrower, the customer for whom services have been rendered or materials furnished by Borrower, or the party with whom Borrower has contracted; (e) "Borrower" includes all corporations and all individuals executing this agreement as parties hereto, and all members of a partnership, each of whom shall be jointly and severally liable individually and as partners hereunder; (f) "Security interest" means an interest in property which secures payment or performance of an obligation; (h) "Liability" or "liabilities" includes all liabilities (primary, secondary, direct, contingent, sole, joint or several) due or to become due or that may be hereafter contracted or acquired, of Borrower to Secured Party. 2. Secured Party will from time to time hereafter lend Borrower, on the security of accounts and contract rights, or either of them, acceptable to Secured Party, such amounts as Secured Party may determine from time to time, at such rates of interest and payable on such terms as Secured Party may from time to time specify or require, and Secured Party may require that such loans, or any of them, be evidenced by promissory note or notes of the Borrower in form satisfactory to Secured Party. For the convenience of the Borrower, the Secured Party may make loan advances to the Borrower under any promissory note the principal face amount of which is in excess of the actual unpaid principal balance at such time. 3. As security for the payment of all loans and advances now or in the future made hereunder and for all Borrower's liabilities, including any extensions, renewals, or changes in form of any thereof: (a) if the office where Borrower keeps its records concerning its accounts and contract rights is in this or any other state in which the Uniform Commercial Code is in effect, Borrower hereby assigns to Secured Party and grants to Secured Party a security interest in: (i) all accounts owned by Borrower at the date of this agreement; (ii) all accounts at any time hereafter acquired by Borrower; (iii) all Borrower's existing contract rights and all of Borrower's contract rights which come into existence at any time hereafter; and (iv) all proceeds of all such accounts and contract rights; or (b) if such office of Borrower is located elsewhere, Borrower agrees that Secured Party shall have a security interest in such accounts and contract rights as Borrower may from time to time assign to Secured Party, and all proceeds thereof, as security for all Borrower's liabilities. As further security, Borrower grants to Secured Party a security interest in all property of Borrower which is or may hereafter be in Secured Party's possession in any capacity, including all monies owed or to be owed by Secured Party to Borrower; and with respect to all of such property, Secured Party shall have the same rights as it has with respect to the accounts and contract rights. 4. So long as any liability to Secured Party is outstanding, Borrower will not, without the prior written consent of Secured Party, borrow from anyone except Secured Party on the security of, or pledge or grant any security interest in, any account or contract right or any of Borrower's inventory to anyone except Secured Party, or permit any lien or encumbrance to attach to any of the foregoing, or any levy to be made thereon, or any financing statement (except Secured Party's financing statement) to be on file with respect thereto. 5. Borrower represents and warrants that the office where it keeps its records concerning all of its accounts and contract rights is at the address specified in the preamble to this agreement, unless a different address has been specified in the following space: 10051 5th Street North St. Petersburg Pinellas FL - ------------------------------------------------------------------------------- (No. and Street) (City) (County) (State) Borrower will immediately notify Secured Party in writing of any change in the location of the place of business where the records concerning its accounts and contract rights are kept. 6. Borrower will (a) maintain accounts in such quantities so that at all times 80% of the face amount of its qualified accounts, less allowable discount, plus 100% of the balance in the Cash Collateral Account hereinafter referred to, or such other percentage thereof as may from time to time be fixed by Secured Party upon notice to Borrower, shall be at least equal to Borrower's liabilities to Secured Party; and Borrower will pay to Secured Party, in reduction of its liabilities, such sums as may be necessary from time to time to maintain such ratio; (b) collect its accounts only in the ordinary course of business; (c) furnish Secured Party at the time of each borrowing, and at such other intervals as Secured Party may prescribe, with a Borrower's Certificate (in such form as Secured Party may from time to time specify or require) showing the aggregate face amount of its qualified accounts; (d) keep accurate and complete records of its accounts and contract rights; (e) pay and discharge when due all taxes, levies and other charges on its property, and on account of or in connection with its liabilities and notes evidencing the same, including documentary tax stamps. 7. Unless Secured Party notifies Borrower in writing that it dispenses with any one or more of the following requirements, Borrower will: (a) give Secured Party assignments, in form acceptable to Secured Party, of specific accounts or groups of accounts, and of moneys due and to become due under specific contracts; (b) furnish to Secured Party a copy of the invoice applicable to each account assigned to Secured Party or arising out of a contract right, bearing a statement that such account has been assigned to Secured Party and such additional statements as Secured Party may require; (c) furnish Secured Party at the time of each borrowing, and at such other intervals as Secured Party may prescribe or require, with a schedule (in such form as Secured Party may from time to time specify or require) of Borrower's qualified accounts which describe the same, or such thereof as Secured Party may require, together with such other information relating thereto as the Secured Party may specify or require; (d) make no change in any assigned account or in any account arising out of a contract right assigned to Secured Party, and make no material change in the terms of any such contract; (e) furnish to Secured Party all information received by Borrower affecting the financial standing of any Purchaser whose account or contract right has been assigned to Secured Party; (f) receive as the sole property of Secured Party and hold as trustee for Secured Party all moneys, checks, notes, drafts, and other property therein called "items of payment" representing the proceeds of any account, contract right or inventory in which Secured Party has a security interest, which comes into the possession of Borrower; and deposit all such items of payment immediately in the exact form received in a special account of Borrower in Secured Party entitled "Cash Collateral Account" in which account Secured Party shall have a security interest to secure all Borrower's liabilities and with respect to which account Secured Party alone shall have power of withdrawal; (g) pay Secured Party the amount loaned against any account or contract right assigned to Secured Party where the goods are returned by the Purchaser, or where the contract is cancelled or terminated; (h) immediately notify Secured Party if any of its contracts arise out of contracts with the United States or any department, agency, or instrumentality thereof, and execute any instruments and take any steps required by Secured Party in order that all moneys due and to become due under any such contract shall be assigned to Secured Party and notice thereof given to the Government under the Federal Assignment of Claims Act: (i) keep returned goods segregated from Borrower's other property, and hold such goods as trustee for Secured Party until it has paid Secured Party the amount required by Secured Party with respect to the related account, and deliver such goods on demand to Secured Party, which shall have a security interest in such goods; (j) deliver to Secured Party, with appropriate indorsement or assignment, as Secured Party may require, any instrument or chattel paper representing an account or contract right. Any permission granted to Borrower to omit any of the requirements of this paragraph 7 may be revoked by Secured Party at any time. 8. Borrower will promptly, if requested by Secured Party: (a) mark its records evidencing its accounts in a manner satisfactory to Secured Party so as to show the same have been assigned to Secured Party; (b) pay Secured Party the unpaid portion of any assigned account or contract right if Secured Party shall at any time reject the account as unsatisfactory, which right Secured Party shall have and may exercise at any time and for any reason whatsoever; and until such payment is made by Borrower, Secured Party may retain any such account or contract right as security and may charge any deposit account of Borrower with any such amounts; (c) join with Secured Party in executing a financing statement, notice, affidavit, or similar instrument in form satisfactory to Secured Party, and such other instruments as Secured Party may from time to time request; and pay the cost of filing the same in any public office deemed advisable by Secured Party; and (d) give Secured Party such financial statements, reports, certificates, lists of Purchasers (showing names, addresses, and amounts owing), and other data concerning its accounts, contracts, collections, inventory and other matters as Secured Party may from time to time specify; and permit Secured Party or its nominee to examine all of Borrower's records relating thereto at any time, and to make extracts therefrom; and (e) keep any goods specified by Secured Party, including returned merchandise, insured for the benefit of Secured Party (to whom loss shall be payable) for their full value until the risk of loss has passed to the Purchaser, against loss resulting from all risks designated by Secured Party, and pay the cost of all such insurance, and Borrower assigns to Secured Party all right to receive proceeds of such insurance, directs any insurer to pay all proceeds directly to Secured Party, and authorizes Secured Party to endorse Borrower's name upon any draft for such purposes. Borrower authorizes Secured Party at Borrower's expense to file any financing statement or statements relating to accounts and contract rights (without any Borrower's signature thereon) which Secured Party deems appropriate, and Borrower irrevocably appoints Secured Party as Borrower's attorney-in-fact to execute any such financing statement or statements in Borrower's name and to do such other acts and things, all as Secured Party may request, to establish and maintain a valid security interest in the accounts and contract rights (free of all other liens and claims whatsoever) to secure the payment of the liabilities. 2 9. Borrower warrants (a) in connection with each account covered by this agreement: (i) it constitutes a qualified account as defined herein, is not evidenced by a judgment, an instrument or chattel paper (except such judgment as has been assigned to Secured Party, and except such instrument or chattel paper as has been indorsed and delivered to Secured Party), and represents a bona fide completed transaction and Borrower has possession of (and will promptly deliver to Secured Party upon Secured Party's request) or has delivered to Secured Party shipping or delivery receipts evidencing shipment or delivery of the goods and, if representing services, the services have been fully performed; (ii) the amount shown on Borrower's books and on any invoice or statement delivered to Secured Party is owing to Borrower; (iii) the title of Borrower to the account and, except as against the Purchaser, to any goods is absolute; (iv) the account has not been transferred to any other person, and no person, except Borrower, has any claim thereto, or, with the sole exception of Purchaser, to the goods; (v) no partial payment has been made by anyone; and (vi) no set-off or counterclaim to such account exists and no agreement has been made with any person under which any deduction or discount may be claimed, except regular discounts allowed by Borrower for prompt payments; and (b) in connection with each contract right covered by this agreement: (i) it arises under an existing binding written contract between Borrower and Purchaser, is not evidenced by an instrument or chattel paper, and represents a bona fide transaction; (ii) the title of Borrower to the contract right is absolute; (iii) the contract right has not been transferred to any other person, and no person, except Borrower, has any claim thereto; (iv) no partial payment has been made by anyone; and (v) no set-off or counterclaim to any moneys due under such contract exists, and no agreement has been made with any person under which any deduction or discount may be claimed, except as set forth in the contract. 10. Borrower shall pay Secured Party such interest as may be specified in any note evidencing a loan or advance made hereunder and such service charges as may be agreed upon and shall pay to Secured Party all costs and expenses, including attorneys' fees, incurred by it in the preservation or collection of collateral. Changes in interest rate and service charges may be made by Secured Party from time to time, notwithstanding the interest rate specified in any note evidencing a loan or advance hereunder, upon notice to Borrower and shall become effective on the date therein specified. 11. Secured Party shall have the right at any time and from time to time, without notice, to: (a) apply any part or all of the moneys in the Cash Collateral Account representing collected items against any liability of Borrower to Secured Party, and Secured Party shall upon demand by Borrower make such application against such liability or liabilities as Secured Party may itself select; (b) release to Borrower such part of the moneys in the Cash Collateral Account as Secured Party may elect; (c) charge to Borrower's deposit account any item of payment credited to the Cash Collateral Account which is dishonored by the drawee or maker thereof; (d) indorse all items of payment which may come into its hands payable to Borrower; (e) notify Purchasers that accounts or contract rights have been assigned to Secured Party, forward invoices to Purchasers, directing them to make payments to Secured Party, collect all accounts in its or Borrower's name, and take control of any cash or non-cash proceeds of accounts any of any returned or repossessed goods; (f) compromise, extend, or renew any account or deal with the same as it may deem advisable; (g) make exchanges, substitutions or surrenders of collateral; (h) pay, for the account of Borrower, any taxes, levies, or other charges affecting Borrower's property or upon or on account of this Security Agreement or any liability or any writing evidencing any liability, which Borrower fails to pay, and any such payment shall constitute a liability of Borrower. 12. Borrower shall be in default of this agreement upon the happening of any of the following events or conditions: (a) failure of any Obligor (which term as used herein shall mean each Borrower and each other party primarily or secondarily or contingently liable on any of the liabilities) to pay when due (whether by acceleration or otherwise), any amount payable on any of the liabilities or to perform any agreement or term hereof; (b) any warranty, representation, or statement made or furnished to Secured Party by or on behalf of any Obligor proves to have been false in any material respect when made or furnished; (c) loss, theft, substantial damage, destruction, sale or encumbrance to or of any of the Collateral, or the making of any levy, seizure, or attachment thereof or thereon; (d) the death of any Obligor; (e) the filing of any petition under the Bankruptcy Code, or any similar Federal or state statute, by or against any Obligor; (f) the filing of an application for the appointment of a receiver for, the making of a general assignment for the benefit of creditors by, or the insolvency of any Obligor; (g) the entry of a judgment against any Obligor; (h) the issuing of any attachment or garnishment or the filing of any lien, against any property of any Obligor; (i) the taking of possession of any substantial part of the property of any Obligor at the instance of any governmental authority; (j) the dissolution, incompetency, consolidation or reorganization of any Obligor. Upon the occurrence of any such default or upon the happening of any default as defined in any note evidencing any of the liabilities or in any other agreement or instrument securing or otherwise related to any of the liabilities, or at any time thereafter, or whenever Secured Party feels insecure for any reason whatsoever, Secured Party may, at its option, declare all liabilities of each Borrower to Secured Party immediately due and payable without demand or notice of any kind and the same thereupon shall become and be due and payable (but with such adjustments, if any, with respect to interest, or other charges as may be provided for in the promissory note or other writing evidencing such liability); shall have the remedies of a Secured Party under the Uniform Commercial Code of Florida and any and all rights and remedies available to it under any other applicable law; may set off against the liabilities all monies then owed to Borrower by Secured Party in any capacity whether or not due and Secured Party shall be deemed to have exercised its right of set-off immediately at the time its right to such election accrues even though charge is made or entered on the books of Secured Party subsequent thereto; and upon request or demand of Secured Party, Borrower shall, at its expense, assemble the Collateral and make it available to Secured Party at a convenient place acceptable to Secured Party; and Borrower shall promptly pay all expenses of retaking, holding, preparing for sale, selling, or the like, all expenses of collection of any and all the liabilities, all expenses of any repairs to any of the Collateral and expenses of any repairs to any realty or other property to which any of the Collateral may be affixed or be a part and all other expenses of enforcement of rights hereunder. Expenses of retaking, holding, preparing for sale, selling or the like, expenses of collection and other expenses of enforcement of rights hereunder shall include Secured Party's reasonable attorneys' fees and legal expenses. In connection with the exercise of any rights available upon default, Secured Party or its agents may enter upon any premises of Borrower and Borrower expressly waives any and all claims for damage, trespass or other injury occasioned thereby. Unless the Collateral is perishable or threatens to decline speedily in value or is of a type customarily sold on a recognized market, Secured Party will give Borrower reasonable notice of the time and place of any public sale thereof or of the time after which any private sale or any other intended disposition thereof is to be made. The requirements of reasonable notice shall be met if such notice is mailed, postage prepaid, to any Borrower at the address of Borrower shown at the beginning of this agreement or at any other address shown on the records of Secured Party, at least five days before the time of the sale or disposition. Upon disposition of any Collateral, Borrower shall be and remain liable for any deficiency; and Secured Party shall account to Borrower for any surplus, but Secured Party shall have the right to apply all or any part of such surplus (or to hold the same as a reserve against) all or any of the liabilities of each Borrower to Secured Party, whether or not they, or any of them, be then due, or in such order of application as Secured Party may from time to time elect. 13. Borrower waives protest of all commercial paper at any time held by Secured Party on which Borrower is in any way liable, notice of non-payment at maturity of any and all accounts, and except where required hereby, notice of action taken by Secured Party; and hereby ratifies and confirms whatever Secured Party may do. 14. No waiver by Secured Party of any default shall operate as a waiver of any other default or of the same default on a future occasion. No delay or omission on the part of Secured Party in exercising any right or remedy shall operate as a waiver thereof, and no single or partial exercise by Secured Party of any right or remedy shall preclude any other or further exercise thereof or the exercise of any other right or remedy. Time is of the essence of this agreement. The provisions of this agreement are cumulative and in addition to the provisions of any liability and any note or other writing evidencing any liability secured by this agreement, and Secured Party shall have all the benefits, rights and remedies of and under any liability and any note or other writing evidencing any liability secured hereby. If more than one party shall execute this agreement, the term "Borrower" shall mean all parties signing this agreement and each of them, and all such parties shall be jointly and severally obligated and liable hereunder. The singular pronoun, when used herein, shall include the plural, and the neuter shall include the masculine and feminine. All rights of Secured Party hereunder shall inure to the benefit of its successors and assigns; and all obligations of Borrower shall bind the heirs, executors, administrators, successors and assigns of each Borrower. 15. Borrower releases Secured Party from all claims for loss or damage caused by any failure to collect any account or enforce any contract right or by any act or omission on the part of Secured Party, its officers, agents and employees, except willful misconduct. 16. This agreement may be terminated by either party giving the other written notice of intention to terminate on a date named in said notice, mailed to the last known address of the party to whom such notice is addressed; but no such termination shall in any way affect the rights and liabilities of the parties hereunder relating to loans or advances made, accounts, contract rights, or other property pledged prior to the date named in such notice. This agreement has been delivered in the State of Florida and shall be construed in accordance with the laws of Florida. Wherever possible, each provision of this agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this statement. This agreement may not be modified or amended nor shall any provision of it be waived except by writing signed by the parties. IN WITNESS WHEREOF, this agreement has been duly executed as of the date hereinabove first written. Signed, sealed and delivered in the presence of: NATIONAL FLOOD CERTIFICATION SERVICES, INC. (SEAL) - ------------------------- ---------------------------- BY: /s/ EDWIN C. HUSSEMAN (SEAL) - ------------------------- ---------------------------- Edwin C. Husseman, Treasurer (CORPORATE SEAL) BY: (SEAL) ---------------------------- ATTEST: BORROWER By - ------------------------- ----------------------------- As its As its President SECURED PARTY EX-10.49 52 INSTALLMENT NOTE 1 EXHIBIT 10.49 INSTALLMENT NOTE $2,131,000.00 Mobile AL December 1997 ---------------- -----------------, ------- ------------------, -- (City) (State) (Date) For value received, the undersigned (whether one or more, hereinafter called the "Obligors") promise(s) to pay to the order of SouthTrust Bank, National Association (hereinafter called the "Bank" or, together with any other holder of this note, the "Holder"), at any office of the Bank in Birmingham, Alabama, or at such other place as the Holder may designate, the principal sum of Two Million One Hundred Thirty One Thousand and no/100------- Dollars, together with interest thereon at the rate provided below from the date of this note (or other interest accrual date shown below) until maturity (whether as originally scheduled or upon acceleration following default), and with interest on the unpaid balance of the principal sum (plus accrued but unpaid interest at maturity, to the extent permitted by law) at the rate which is 2 percent per annum in excess of the rate provided below or the maximum rate allowed by law, whichever is less, from maturity until said indebtedness is paid in full. Interest will continue to accrue daily on the entire unpaid balance of the principal sum of this note until each payment under this note is received by the Holder at the address provided above. Interest will accrue beginning on the date of this note unless another date is shown here: _________________, 19__. INTEREST RATE. Interest will accrue on the above-stated principal sum as follows (mark applicable provision): ___ Variable Rate Interest will accrue on the above-stated principal sum at the rate per annum which is ____________ percentage points in excess of the Index Rate. Unless another rate is made applicable below, the "Index Rate" is the rate of interest designated by the Bank periodically as its Base Rate. The Base Rate is not necessarily the lowest rate charged by the Bank. The Base Rate on the date of this note is _________ percent. ___ (check box if applicable) The "Index Rate is the weekly auction average yield of ________-week U.S. Treasury Bills at the most recent auction prior to the date the interest rate payable under this note is calculated. The Index Rate on the date of this note is _______ percent. The rate of interest payable under this note will change to reflect any change on the Index Rate: ___ on any day the Index Rate changes. ___ on the _________ day of each month hereafter. ___ on the day each payment of interest is due as provided below. ___ _____________________________________. Obligors may prepay this note in full at any time without penalty. _X_ Fixed Rate Interest will accrue on the above-stated principal sum at the rate of 8.19 percent per annum.
Interest on the principal sum will be calculated at the rate set forth above on the basis of a 360-day year and the actual number of days elapsed by multiplying the principal sum by the per annum rate set forth above, multiplying the product thereof by the actual number of days elapsed, and dividing the product so obtained by 360. PAYMENT SCHEDULE. The above-stated principal sum and interest thereon shall be paid as follows (mark applicable provision): ___ Installments The Obligors promise to pay the above-stated principal sum in __________ consecutive of Principal, ___ monthly installments ___ quarterly installments ___ __________________ installments in the amount Interest Paid of $_____________________ each, beginning _____________________, 19____ and continuing on the same day of each Separately month, quarter, or other period (as applicable) thereafter until ___________________________, 19____ at which time a final installment in the amount of the unpaid balance of the principal sum and all accrued but unpaid interest thereon shall be due and payable. The Obligors promise to pay accrued interest on the principal sum ___ monthly ___ quarterly ___ ______________________________________ beginning _________________________________, 19____ and continuing on the same day of each month, quarter, or other period (as applicable) thereafter until final maturity of the principal sum. _X_ Installments The Obligors promise to pay the above-stated principal sum and interest thereon in 35 consecutive of Principal _X_ monthly installments ___ quarterly installments ___ __________________ installments in the amount and Interest of $66,964.74 each, beginning January, 1998 and continuing on the same day of each month, quarter, or other period (as applicable) thereafter until December, 2000 at which time a final installment in the amount of the unpaid balance of the principal sum and all accrued but unpaid interest thereon shall be due and payable.
All payments under this note shall be made in U.S. dollars and in immediately available funds at the place where payment is due. LOAN FEE. (This provision applicable only if completed): A loan fee in the amount of $________________________ has been _____ included in the amount of this note and paid to the Bank from the loan proceeds. _____ paid to the Bank by cash or check at closing. The loan fee is earned by the Bank when paid and is not subject to refund except to the extent required by law. LATE CHARGE. If any scheduled payment is in default 10 days or more, Obligors agree to pay a late charge equal to 5% of the amount of the payment which is in default, but not less than $.50 or more than the maximum amount allowed by applicable law. The preceding sentence does not apply if the original principal amount of this Note is less than $2,000. PREPAYMENT. If the interest rate on this note is a variable rate, Obligors may prepay this note in full at any time without premium or penalty. If the interest rate on this note is a fixed rate, unless the paragraph which follows is applicable, prepayment of the principal sum of this note in whole or in part is not permitted. ___ If this line is marked, and if the interest rate on this note is a fixed rate, Obligors may not prepay this note in whole or in part during the first year after the date of this note unless the Holder consents. Thereafter, prepayment will be permitted on any scheduled payment date on condition that the amount of the prepayment must equal the sum of (a) the principal amount prepaid plus (b) accrued interest on the amount (c) a premium equal to 1% of the 2 LATE CHARGE. If any scheduled payment is in default 10 days or more, Obligors agree to pay a late charge equal to 5% of the amount of the payment which is in default, but not less than $.50 or more than the maximum amount allowed by applicable law. The preceding sentence does not apply if the original principal amount of this Note is less than $2,000. PREPAYMENT. If the interest rate on this note is a variable rate, Obligors may prepay this note in full at any time without premium or penalty. If the interest rate on this note is a fixed rate, unless the paragraph which follows is applicable, prepayment of the principal sum of this note in whole or in part is not permitted. ______If this line is marked, and if the interest rate on this note is a fixed rate, Obligors may not prepay this note in whole or in part during the first year after the date of this note unless the Holder consents. Thereafter, prepayment will be permitted on any scheduled payment date on condition that the amount of the prepayment must equal the sum of (a) the principal amount prepaid plus (b) accrued interest on the amount prepaid plus (c) a premium equal to 1% of the principal amount prepaid multiplied times the number of years or parts of a year remaining until final scheduled maturity of this note. No prepayment premium need be paid if prepayment is made within one year prior to the final scheduled maturity of this note. As used in this paragraph, "prepayment" includes payment following acceleration of the maturity of this note after default by the Obligors if the Obligors were able to pay as agreed but failed to pay in order to induce the Holder to accelerate the maturity of this note. If prepayment in full without penalty or premium is required to be permitted by applicable law, the foregoing provisions will not apply and prepayment will be allowed in accordance with such law. COLLATERAL. This note is secured by every security agreement, pledge, assignment, stock power, mortgage, deed of trust, security deed and/or other instrument covering personal or real property (all of which are hereinafter included in the term "Separate Agreements") which secures an obligation so defined as to include this note, including without limitation all such Separate Agreements which are of even date herewith and/or described in the space below. In addition, as security for the payment of any and all liabilities and obligations of the Obligors to the Holder (including this note and the indebtedness evidenced by this note and all extensions, renewals and modifications thereof, and all writings delivered in substitution therefor) and all claims of every nature of the Holder against the Obligors, whether present or future, and whether joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, direct or indirect (all of the foregoing are hereinafter included in the term "Obligations"), the Obligors hereby assign to the Holder and grant to the Holder a security interest in and security title to the property (the "Collateral") described below: (Describe Separate Agreements and Collateral.) Equipment as more fully described on Exhibit A attached hereto and made a part hereof, along with any renewals, substitutions, attachments, replacements and cash or non-cash proceeds of the foregoing. The Obligors are jointly and severally liable for the payment of this note and subscribed their names hereto without condition that anyone else should sign or become bound hereon and without any other condition whatever being made. The provisions printed on the back of this page are a part of this note. The provisions of this note are binding on the heirs, executors, administrators, successors and assigns of each and every Obligor and shall inure to the behalf of the Holder, its successors and assigns. This note is executed under the seal of each of the Obligors and of the indorsers, if any, with the intention that it be an instrument under seal. CAUTION: IT IS IMPORTANT THAT YOU THOROUGHLY READ THE CONTRACT BEFORE YOU SIGN IT. Address of Obligor: 360 Central Avenue Insurance Management Solutions, Inc. [L.S.] - -------------------------- ------------------------------------ St. Petersburg, FL 33701 By /s/ G. Kristin Delano Secretary - -------------------------- --------------------------------------- Title No. AKT ----------------------- Officer: TM Signature [L.S.] ----------------- -------------------------- Branch: 52 Signature [L.S.] ------------------ -------------------------- EX-10.50 53 PROMISSORY NOTE 1 EXHIBIT 10.50 PROMISSORY NOTE $500,000.00 Mobile , AL December 30, 1997 - ------------------ ------------------- -------- -------------- -- (City) (State) (Date) For the value received, the undersigned (whether one or more, hereinafter called the "Obligors") promise(s) to pay to the order of SouthTrust Bank, National Association (hereinafter called the "Bank" or, together with any other holder of this note, the "Holder"), at any office of the Bank in Birmingham, Alabama, or at such other place as the Holder may designate, the principal sum of Five Hundred Thousand and no/100 Dollars, together with interest thereon at the rate and on the date(s) provided below from the date of this note (or other interest accrual date shown below) until maturity of the principal sum, and with interest on the unpaid balance of the principal sum (plus accrued but unpaid interest at maturity, to the extent permitted by law) at the rate which is 2 percent per annum in excess of the rate stated below or the maximum rate allowed by law, whichever is less, from maturity until said aggregate indebtedness is paid in full. Interest will accrue beginning on the date of this note unless another date is shown here: ________________________, 19 ___. INTEREST RATE The above-stated principal sum shall accrue interest as follows (mark applicable provision): - ------------- Interest will accrue on the above-stated principal sum at the rate per annum which is _____________ Variable Rate percentage points in excess of the Index Rate. Unless another rate is made applicable below, the - ----- "Index Rate" is the rate of interest designated by the Bank periodically as its Base Rate. The Base Rate is not necessarily the lowest rate charged by the Bank. The Base Rate on the date of this note is _______________ percent. ____ (mark line if applicable) The "Index Rate" is the weekly auction average yield of _____________ -week U.S. Treasury Bills at the most recent auction prior to the date the Index Rate is calculated. The Index Rate on the date of this note is ________________ percent. The rate of interest payable under this note will change to reflect to any change in the Index Rate. ____ on any day the Index Rate changes. ___ on the __________ day of each month thereafter. ____ on the day each payment of interest is due ___ ______________________________________________. as provided below. Obligors may prepay this note in full at any time without penalty. X Fixed Rate Interest will accrue on the above-stated principal sum at the rate of 8.19 percent per annum. - ----- Interest on the principal sum will be calculated at the rate set forth above on the basis of a 360-day year and the actual number of days elapsed by multiplying the principal sum by the per annum rate set forth above, multiplying the product thereof by the actual number of days elapsed, and dividing the product so obtained by 360. PAYMENT SCHEDULE The above-stated principal sum and interest thereon shall be paid as follows (mark applicable provision): - ------------------- The Obligors promise to pay the above-stated principal sum in full: X Single Payment - ---- of Principal X on February 28, 1998. _________ on demand. ___ on demand, but if no demand is made, then on _____________ ____ ______________________________________ ________________________________________________, 19______. ____ ______________________________________ The Obligors promise to pay accrued interest on the principal sum: ___ at maturity of the principal sum. X monthly on the 30th day of each month ---- January 30, 1998, and at maturity. ___ quarterly beginning on _____________________, 19____, on the same day every three months thereafter, and at maturity. ____ ________________________________________
All payments under this note shall be made in U.S. dollars and in immediately available funds at the place where payments is due. LOAN FEE (This provision applicable only if completed): A loan fee in the amount of $__________________ has been ________ included in the amount of this note and paid to the Bank from the loan proceeds. _______ paid to the Bank by cash or check at closing. The loan fee is earned by the Bank when paid and is not subject to refund except to the extent required by law. LATE CHARGE If payment of the principal sum or any scheduled payment of interest is late 10 days or more, Obligors promise to pay a late charge equal to one-half of one percent (1/2%) of the amount of the payment which is late, subject to a minimum late charge of $.50 and a maximum late charge of $250.00. This note is secured by every security agreement, pledge, assignment, stock power, mortgage, deed of trust, security deed and/or other instrument covering personal or real property (all of which are hereinafter included in the term Separate Agreements) which secures an obligation so defined as to include this note, including without limitation all such Separate Agreements which are of even date herewith and/or described in the space below. In addition, as security for the payment of any and all liabilities and obligations of the Obligors to the Holder (including this note and the indebtedness evidenced by this note and all extensions, renewals and modification thereof, and all writings delivered in substitution therefor) and all claims of every nature of the Holder against the Obligors, whether present or future, and whether joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, direct or indirect (all of the foregoing are hereinafter included in the term Obligations), the Obligors hereby grant to the Holder a security interest in and security title to the property described below: (Describe Separate Agreements and Collateral.) Equipment as more fully described on Exhibit A attached hereto and made a part hereof, along with any renewals, substitutions, attachments, replacements and cash or non-cash proceeds of the foregoing. 2 renewals and modification thereof, and all writings delivered in substitution therefor) and all claims of every nature of the Holder against the Obligors, whether present or future, and whether joint or several absolute or contingent, matured or unmatured, liquidate ??? unliquidated, direct or indirect (all of the foregoing are hereinafter included in the term Obligation ??? the Obligors hereby grant to the Holder a security ?????? and security title to the property described below: (Describe Separate Agreements and Collateral ???) Equipment as more fully described on Exhibit A attached hereto and made a part hereof, along with any renewals, substitutions, attachments, replacements and cash or non-cash proceeds of the foregoing. If this note is payable on demand, or on demand but not later than a stated date, all of the Obligations shall be due and payable in full upon demand by the Holder, whether or not any default described below has occurred and whether or not the Holder reasonably deems itself to be insecure. If this note has no provision for payment on demand, the following terms apply: if default occurs in the payment of any principal or interest or any other sum under this note exactly when due or with respect to any promise or agreement contained in this note (time being of the essence of every provision of this note); or if any of the Obligors shall fail to pay any other debt or obligation to the Holder exactly when due; or if for any reason whatever the Collateral shall cease to be satisfactory to the Holder; or if any of the Obligors or any guarantor or indorser of this note shall die (if an individual) or dissolve or cease to do business (if a partnership or corporation); or if any of the Obligors or any guarantor or indorser of this note becomes insolvent, or makes a general assignment of the benefit of creditors, or files or has filed against him, her, or if a petition under any chapter of the United States Bankruptcy Code, or files or has filed against him, her, or if an application in any court of the appointment of a receiver of trustee for any substantial part of his, her, or its property or assets, or if a judgment or arbitration award is entered against any Obligor or any guarantor or indorser of this note or a levy, writ of execution, attachment, garnishment, seizure, or similar writ or judicial process is issued against any of the Obligors or any such guarantor or indorser or any of his, her, or its property or assets; or if any Obligor, indorser or guarantor of this note transfers all or any valuable part of his, her, or its assets outside the ordinary course of business, or wastes loses, or dissipates or permits waste, loss or dissipation of any valuable part of such person's assets; or if any Obligor, indorser or guarantor of this note is a partnership and any general partner of such partnership withdraws or is removed; or if any Obligor, indorser or guarantor of this note is a corporation and ownership or power to vote more than 50 percent of the voting stock of such corporation is transferred, directly or indirectly (including through any voting trust, irrevocable proxy, or the like), during any 12 month period; or if there occurs any default or event authorizing acceleration as provided under any Separate Agreement; or if any of the Obligors or any indorser or guarantor breaches any subordination agrement or intercreditor agreement made with or for the benefit of the Holder; or if at any time in the sole opinion of the Holder the financial responsibility of any Obligor or any indorser or guarantor of this note shall become impaired; or the Holder otherwise deems itself to be insecure then, if any of the foregoing occur, all unpaid amount of any or all of the Obligations (including this note) and all accrued but unpaid interest thereon shall, at the option of the Holder and without notice or demand, become immediately due and payable, notwithstanding any time or credit allowed under any of the Obligations or under any instrument evidencing the same. The Obligors are jointly and severally liable for the payment of this note and have subscribed their names hereto without condition that anyone else should sign or become bound hereon and without any other condition whatever being made. The provisions printed on the back of this page are a part of this note. The provisions of this note are binding on the heirs, executors, administrators, successors and assigns of each and every Obligor and shall inure to the benefit of the Holder, its successors and assigns. This note is executed under the seal of each of the Obligors and the of the indorsers, if any, with the intention that it be an instrument under seal. CAUTION -- IT IS IMPORTANT THAT YOU THOROUGHLY READ THE CONTRACT BEFORE YOU SIGN IT. Address of Obligor: 360 Central Avenue INSURANCE MANAGEMENT SOLUTIONS, INC. - ------------------------------ -----------------------------------[LS.] St. Petersburg, FL 33701 By /s/ G. Kristin Delano Secretary - ------------------------------ --------------------------------[LS.] Title No. AKT Signature -------------------------- -----------------------------------[LS.] Officer: TM --------------------- Branch: 52 Signature ---------------------- -----------------------------------[LS.] Sandy F. Hesley EX-10.51 54 SECURITY AGREEMENT 1 EXHIBIT 10.51 SECURITY AGREEMENT EQUIPMENT, FARM EQUIPMENT OR CONSUMER GOODS Debtor(s) [last name(s) first]: Secured Party: Insurance Management Solutions, Inc. SouthTrust Bank, National Association - ------------------------------------- --------------------------------------- Name 420 N. 20th Street - ------------------------------------- --------------------------------------- Name Address 360 Central Avenue Birmingham, AL 35203 - ------------------------------------- --------------------------------------- Mailing Address City State Zip St. Petersburg/Pinellas, FL 33701 December 30 , 1997 - ------------------------------------- --------------------------------- -- City County State Zip 1. In consideration of the loan or other extension of credit this day made to the undersigned or any of them by the Secured Party named above (hereinafter called "Secured Party"), and of any loans or other extensions of credit presently outstanding and any loans or other extensions of credit hereafter made to the undersigned or any of them by the Secured Party, and of the renewal or extension of any such loan or other extensions of credit, and of any loan or other extension of credit to any other person or entity the payment of which is guaranteed by any of the undersigned, and in consideration of $10 and other valuable consideration to Debtor, receipt of which is hereby acknowledged, and for the purpose of securing the payment as and when due of all such loans and extensions of credit and the interest and other lawful charges thereon and any and all other indebtedness or liability of the undersigned or any of them to the Secured Party, the undersigned (whether one or more, hereinafter called "Debtor") hereby assigns, transfers and conveys to Secured Party, and grants to Secured Party a security interest in, the property described below, all substitutions therefor, and all additions, accessions, accessories and option equipment now or hereafter affixed thereto or used in connection therewith (sometimes hereinafter collectively referred to as "the Collateral"); (Describe Collateral) Equipment as more fully described on Exhibit A attached hereto and made a part hereof, along with any renewals, substitutions, attachments, replacements and cash or non-cash proceeds of the foregoing. Including the following motor vehicles which are a part of the Collateral:
- ------------------------------------------------------------------------------------------------------------------------------------ New or Year Number of Body, Type, if Truck Model or Manufacturer's Motor Used Model Cylinders Make Ton Capacity Series Serial Number Number - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------
Proceeds and products of the above described property are also covered by the security interest created by this agreement. Coverage of proceeds and products shall not be construed as giving Debtor any additional rights with respect to the Collateral, and Debtor is not authorized to sell, lease, otherwise transfer, furnish under contract of service, manufacture, process or assemble the Collateral except in accordance with Secured Party's written consent obtained in advance. 2. A security interest in, and title to, the Collateral shall be and remain in Secured Party until all sums secured by this agreement have been paid in full and Secured Party has duly executed and delivered a written termination of its interest hereunder. The security interest of Secured Party hereunder secures the performance of the covenants and agreements herein set forth, the payment of all indebtedness and other obligations described in paragraph 1 hereof and the interest thereon, all costs and expenses incurred by Secured Party in the collection of said indebtedness, the enforcement of Secured Party's rights hereunder, including the payment of legal expenses and attorney's fees as herein provided, and the payment of any and all liabilities and obligations of Debtor to Secured Party and claims of every nature and description of Secured Party against Debtor, whether present or future, contracted directly with Secured Party or acquired by Secured Party from another, joint or several, absolute or contingent, matured or unmatured, liquidated or unliquidated, direct or indirect. (All of the foregoing in this paragraph are hereinafter included in the term "the Obligations"). 3. Debtor hereby warrants, represents and agrees that: (a) Except for the security interest created by this agreement, Debtor is the absolute owner of the Collateral free from any adverse claim, lien, security interest or encumbrance, and the same shall be true of Collateral acquired hereafter when acquired; no financing statement or other record of lien, security interest, or encumbrance has been filed which relates to the Collateral or which through general language or inclusion of proceeds could relate thereto; and Debtor at Debtor's cost and expense will protect and defend the Collateral against all claims and demands of all persons at any time claiming the same or any interest therein. (b) The Collateral has been acquired and is used, or will be acquired and will be used, by Debtor primarily for the purpose checked below. (Check 1, 2 or 3). [X] 1. In Business. [ ] 2. For Personal, Family or Household Purposes. [ ] 3. In Farming Operations. (c) [ ] If this block is checked, this agreement creates a purchase money security interest, and the consideration given for this agreement and for the promissory note(s) executed in connection herewith shall be used to purchase the Collateral, and Secured Party is authorized to disburse such consideration directly to the seller of the Collateral. (d) The Collateral is kept and will be kept at (attach additional sheets if necessary) - ------------------- ------------------- ------------------- -------------------- Street Address City County State/Zip or if left blank, at the address shown at the beginning of this agreement. (e) If the Collateral has been acquired or is used primarily for personal, family or household purposes or for farming operations, Debtor's residence is at the address shown at the beginning of this agreement; and if the address so shown is in a different state from the address shown in (d) above, then Debtor has no residence in the state where the Collateral is kept. (f) If the Collateral includes equipment which is normally used in more than one state (such as motor vehicles, rolling stock, airplanes, road building equipment, commercial harvesting equipment, and construction machinery) and Debtor has a place of business in more than one state, Debtor's chief place of business is - ------------------- ------------------- ------------------- -------------------- Street Address City County State/Zip or if left blank, is the address shown at the beginning of this agreement. If certificates of title are issued or outstanding with respect to any of the Collateral, Debtor will cause the interest of Secured Party to be properly noted thereon. (g) The Collateral is not and shall not be affixed to real estate so as to be or become a fixture or fixtures, unless such is indicated below in this agreement or unless such is subsequently consented to in writing by Secured Party. [ ] If this block is checked, the Collateral is or will be affixed to the real estate described on an exhibit attached hereto and made a part hereof. The name of the record owner of the real estate is ___________________________. If the Collateral is affixed to real estate prior to the perfection of the security interest created by this agreement, Debtor will, on demand of Secured Party, furnish Secured Party with a disclaimer or disclaimers, signed by all persons having an interest in the real estate, of any interest in the Collateral which is prior to Secured Party's interest. 4. Debtor agrees not to use the Collateral in violation of any law nor give a security interest in, assign, sell, transfer, mortgage or in any way encumber any of the Collateral without the written consent of Secured Party. Debtor agrees not to conceal nor abandon the Collateral nor remove the Collateral to an address other than the address specified in this agreement as the place where the Collateral will be kept without giving written notice to Secured Party of such removal within five (5) days thereof. Debtor agrees not to rent or lend any motor vehicle or other Collateral to any person or persons or permit the same to be used as a taxi for hire. Debtor agrees to pay when due all rents, taxes, assessments and charges levied against the Collateral and other claims which are or may become liens against the Collateral or any part thereof and all charges for the use, storage, maintenance and repair of the Collateral. Debtor agrees to perform or comply with the terms of any lease covering the premises wherein the Collateral is located and any orders, ordinances, and laws of any governmental body or agency concerning such premises or the conduct of business therein. 2 ADDITIONAL PROVISIONS FORMING PART OF SECURITY AGREEMENT ON REVERSE SIDE 5. Debtor agrees to keep the Collateral in good condition and repair, normal wear and tear alone excepted, without any cost or liability to Secured Party. Debtor agrees not to permit anything to be done that may impair the value of the Collateral or the security intended to be afforded by this agreement. In the event of loss or damage to the Collateral, Debtor will immediately send Secured Party written notice thereof and of the extent thereof. The loss, injury or destruction of the Collateral shall not release or abate any of the Debtor's Obligations to Secured Party. If for any reason whatever the Collateral shall cease to be satisfactory to Secured Party, Debtor agrees to give Secured Party such additional Collateral or other security for the payment of the Obligations as Secured Party may demand. 6. Secured Party may, in its discretion and before or after default: (a) inspect the Collateral and inspect and copy all records relating to the Collateral and the Obligations; (b) terminate, on notice to Debtor, Debtor's authority to sell, lease, otherwise transfer, manufacture, process, assemble, or furnish under contracts of service any Collateral as to which any such permission has been given; (c) require Debtor to give possession or control of the Collateral to Secured Party; (d) take possession or control of all proceeds of the Collateral, including cash and insurance proceeds payable in the event of any damage to or loss of the Collateral, and apply such proceeds in payment of, or as a reserve against, any of the Obligations, the manner, order and extent of such application to be in the sole discretion of Secured Party; (e) take any action Debtor is required to take or which is necessary to obtain, preserve or enforce the security interest created by this agreement, or to maintain and preserve the Collateral, without notice to Debtor, and add the costs of same to the Obligations (but Secured Party is under no duty to take any such action); (f) release any Collateral in Secured Party's possession to Debtor, temporarily or otherwise, without waiving any rights to retake or repossess such Collateral; and (g) reject as unsatisfactory any property hereafter offered by Debtor as Collateral. 7. Debtor agrees at all times to maintain insurance against loss of or damage to the Collateral against risks of fire (including so-called extended coverage), theft, collision and such other risks as Secured Party may require, and as are allowed by law, in an amount not less than the fair market value of the Collateral or the unpaid balance of the Obligations, whichever is less, and written by such insurance companies as shall be satisfactory to Secured Party. Debtor may provide such insurance through an existing policy or a policy independently obtained and paid for by Debtor. Debtor hereby assigns to Secured Party all of Debtor's right, title and interest in and to any and all insurance policies covering the Collateral now or hereafter obtained, including all losses payable thereunder, if any, and agrees to deliver said policies or, at Secured Party's election, certificates thereof, to Secured Party. Secured Parties shall be named as loss payee in all such policies of insurance and all such policies shall provide a minimum 10 days written notice to Secured Party before cancellation. Debtor authorizes Secured Party to procure such insurance and/or to pay the premiums therefor, if Debtor shall fail to procure such insurance and/or to pay the premiums therefor, and to add the amounts so paid to the Obligations hereby secured; however, Secured Party is under no duty either to procure such insurance and/or to pay the premiums therefor. Secured Party is hereby appointed attorney-in-fact for Debtor with power to compromise, settle or release any claims pertaining to or arising out of said policies and to take possession of and indorse in the name of Debtor any checks or other instruments for the payment of money representing losses payable, return or unearned premiums, and all rights under said policies. Every power herein conferred upon Secured Party is coupled with an interest and is irrevocable by the death or dissolution of Debtor or otherwise. All moneys received by Secured Party on account of losses payable, return or unearned premiums, and all other rights under said policies may, at Secured Party's option, be used to purchase other insurance or to repair, restore, or replace the Collateral or may be applied in payment of, or as a reserve against, any of the Obligations, the manner, order and extent of such use or application to be in the sole discretion of Secured Party. 8. Debtor agrees to notify Secured Party in writing within five (5) days after any change in (a) Debtor's name, identity or form or organization; (b) Debtor's mailing address; (c) Debtor's corporate structure; (d) Debtor's chief executive office, principal place of business and/or residence; or (e) any change of use or location of any part of the Collateral in any jurisdiction. 9. Debtor promises to pay all fees, taxes and other costs connected with filing any financing or continuation statements and notation of liens on certificates of title which Secured Party deems necessary or desirable with respect to the security interest created by this agreement. Secured Party is hereby appointed the Debtor's attorney-in-fact to do, at Secured Party's option and at Debtor's expense, all acts and things which Secured Party may deem necessary to perfect and continue perfected the security interest created by this agreement and to protect the Collateral, including, without limitation, the completion of this agreement and/or any financing statement consistent with the parties' agreement and the signing and filing of financing statements and/or any applications for certificates of title or notation of liens thereon for Debtor at any time with respect to the Collateral. Debtor agrees that a carbon or photostatic copy of this agreement may be filed as a financing statement in any public office. 10. As additional Collateral for the payment of the Obligations, Debtor hereby grants to Secured Party a continuing lien upon and security interest in any and all property of Debtor that for any purpose, whether in trust for Debtor or for custody, pledge, collection or otherwise, is now or hereafter in the actual or constructive possession of, or in transit to, Secured Party in any capacity, or its correspondents or agents, and also a continuing lien upon and right of set-off against all deposits and credits of Debtor with, and all claims of Debtor against, Secured Party at any time existing. Secured Party is hereby authorized, at any time or times and without prior notice, to apply such property, deposits, credits and claims, in whole or in part and in such order as Secured Party may elect, to the payment of, or as a reserve against, one or more of the Obligations, whether other Collateral therefor is deemed adequate or not. 11. If default occurs in the payment as and when due of the Obligations hereby secured or any part thereof; or if Debtor breaches or fails to keep any of the covenants or warranties herein contained; or if for any reason whatever the Collateral shall cease to be satisfactory to Secured Party; or if Debtor abandons the Collateral; or if any representation made by Debtor herein or in any statement given to Secured Party shall be materially untrue when made; or if at any time, in the sole opinion of Secured Party, the financial responsibility of Debtor shall become materially impaired; or if any of the following events should occur with respect to Debtor: death (if an individual) or dissolution (if a partnership or corporation); insolvency; assignment for the benefit of creditors; calling of a meeting of any creditors; appointment of a committee of any creditors or liquidating agent; offering to or receiving from any creditors a composition or extension of any of Debtor's indebtedness; making, or sending notice of an intended, bulk transfer; the whole or partial suspension of payment; the whole or partial suspension or liquidation of Debtor's usual business; Debtor's failing, after demand, to furnish Secured Party any financial information or to permit Secured Party to inspect Debtor's books or records of account; commencement of any proceeding, suit, or action (at law or in equity, or under any provisions of the Bankruptcy Code or amendments thereto) for entry of an order for relief, reorganization, composition, arrangement, wage earner's plan, receivership, appointment of a trustee, liquidation or dissolution, whether filed by or against Debtor; entry of a judgment or issuance of a writ of attachment or garnishment against, or against any of the property of, Debtor; issuance of an execution against property of Debtor or commencement against Debtor of any proceeding for enforcement of a money judgment; then, upon the happening of any of the foregoing in this paragraph, the Obligations hereby secured, although not yet due, shall at the option of the Secured Party and with or without notice or demand, become immediately due and payable, notwithstanding any time or credit allowed under any of the Obligations or under any instrument evidencing the same. 12. Upon the happening of any default or event set forth in the preceding paragraph, Secured Party will have the right to take possession of the Collateral, and with or without taking possession thereof, to sell or otherwise dispose of the Collateral. Upon demand by Secured Party, Debtor will assemble the Collateral and make it available to Secured Party at a place designated by Secured Party. Sale or other disposition of the Collateral may be made, at any time and from time to time, at one or more public or private sales, at the option of Secured Party, without advertisement or notice to Debtor, except such notice as is required by law and cannot be waived. To the extent notice of any sale or other disposition of the Collateral is required by law to be given to Debtor and cannot be waived, the requirement of reasonable notice shall be met by giving such notice, as provided below, at least ten (10) calendar days before the time of sale or disposition. Secured Party may purchase the Collateral at any such sale (unless prohibited by law) free from any equity of redemption and from all other claims. After deducting all expenses, including legal expenses and attorney's fees in the amount of 15% of the unpaid Obligations in default, for retaking, maintaining and selling the Collateral and for collecting the proceeds of sale, Secured Party shall have the right to apply the remainder of said proceeds in payment of, or as a reserve against, any of the Obligations, the manner, order and extent of such application to be in the sole discretion of Secured Party. Debtor shall remain liable to Secured Party for the payment of any deficiency. Secured Party shall not be obligated to resort to any Collateral but, at its election, may proceed to enforce any of the Obligations in default against Debtor. 13. Secured Party and its agents may come upon any premises where the Collateral is located from time to time to inspect the Collateral and, if any event described in paragraph 11 above, shall have occurred, to repossess the Collateral. Debtor agrees that any entry upon such premises for these purposes will not be a trespass on the premises and that Secured Party's repossession of the Collateral after default will not be a trespass to, or a conversion of, the Collateral. Upon the occurrence of any event set forth in paragraph 11 above, Debtor agrees to remove any non-collateral personal property from the Collateral. If Secured Party should repossess the Collateral or any part of it when Debtor is not in default, or should Secured Party take possession of any non-Collateral personal property in connection with any repossession of the Collateral, Debtor agrees that Secured Party's liability will be limited solely to the fair rental value of any such property during the period after Debtor makes formal demand on Secured Party for the return of such property wrongfully taken, which demand must describe specifically the property requested to be returned, and the time Secured Party returns possession of such property to Debtor. 14. All rights and powers of Secured Party under this agreement and all right, title and interest of Secured Party in and to the Collateral herein described shall inure to the benefit of Secured Party and its successors and assigns. All covenants, representations, warranties, and agreements of Debtor contained in this agreement are joint and several if there is more than one Debtor, and shall bind each such Debtor's personal representatives, heirs, successors, and assigns. Secured Party will not by any act, delay, omission or otherwise be deemed to have waived any of its rights or remedies hereunder or under any applicable law, and no waiver or amendment of any kind shall be valid unless in writing and signed by Secured Party. All rights and remedies of Secured Party under this agreement and under any statute or rule of law shall be cumulative and may be exercised successively or concurrently. This agreement shall not be terminated, but instead shall continue in force and effect and shall secure all Obligations of Debtor to Secured Party incurred or arising prior to the execution and delivery of a written termination of this agreement by Secured Party, even though from time to time there may be no outstanding Obligations. Any provision of this agreement which may be unenforceable or invalid under applicable law shall be ineffective to the extent of such unenforceability or invalidity without affecting the enforceability or validity of any other provision hereof. Debtor hereby waives with respect to the Obligations all rights of exemption of the Collateral from levy or sale under execution or other process for collection of debts under the constitution and laws of the United States or of any state thereof. This agreement shall be governed by and construed according to the substantive laws, other than rules governing conflicts of law, of the state where the address of Secured Party set forth above is located. Any notice required to be given to any person shall be deemed given when delivered or mailed, postage prepaid, to such person's address as it appears on this agreement or the address such person shall have furnished to the other party hereto in writing for such purpose after the date of this agreement. Secured Party has the right to correct patent errors herein. 15. Notwithstanding any provision of this agreement to the contrary, if the Debtor is one or more natural persons and the Obligations are used for personal, family, or household use other than the purchase of real property, the following provisions are applicable: (a) the waivers of exemption of property from levy or sale under execution or other process for the collection of debts, as hereinabove provided, applies only with respect to the Collateral; (b) to the extent that the Collateral includes property which is "household goods," as that term is defined in 12 C.F.R. Section 227.12(d), and to the extent the Obligations were not used to purchase such property, such "household goods" do not constitute any part of the Collateral for such non-purchase money Obligations, and (c) no consumer protection provision of applicable law and no limitation on the remedy of garnishment provided under federal or state law is waived hereby. Notwithstanding any provision of this agreement to the contrary, if the Obligations were used primarily for personal, family, household or agricultural purposes, the agreement hereinabove made to pay an attorney's fee following default applies only if the original balance of the Obligations exceeds $300, and the attorney's fee shall be a reasonable fee not exceeding 15% of the unpaid balance of the Obligations after default and referral of the Obligations or this agreement to an attorney, not a salaried employee of Secured Party, for collection or foreclosure, and Debtor acknowledges Secured Party's banker's lien and right of set off by operation of law but does not grant a lien or security interest under paragraph 10 hereof unless such security interest is properly disclosed on the disclosure statement provided to Debtor. Time is of the essence of the payment and performance of every covenant of Debtor under this agreement. IN WITNESS WHEREOF, the undersigned has executed this agreement, consisting of both sides of this page, and any attachments hereto, on the date first set forth above, with the intention that it constitute a contract under seal. DEBTOR(S): Insurance Management Solutions, Inc. -----------------------------------(L.S.) /s/ G. Kristin Delano, Secretary -----------------------------------(L.S.) EX-10.52 55 FLOOD COMPLIANCE SERVICE AGREEMENT 1 EXHIBIT 10.52 FLOOD COMPLIANCE SERVICE AGREEMENT THIS AGREEMENT is entered into effective November 1, 1996, by and between SMS Geotrac, a Delaware Corporation located at 3900 Laylin Road, Norwalk, Ohio ("Company") and Mortgage Corporation of America located at 23999 Northwestern Highway, Suite 102, Southfield, MI 48075 ("Client"). WHEREAS, Client desires a Flood Compliance program for compliance with regulations passed pursuant to the 1973 Flood Disaster Protection Act as amended to determine whether improved real estate securing a loan from Client to a borrower is or is not in a FEMA defined Special Flood Hazard Area ("Flood Area"), and other National Flood Insurance Program (NFIP) information, and whereas Company is in the business of supplying such information. WHEREAS, Client wishes to retain Company upon the terms and conditions contained in this Agreement; NOW THEREFORE, for mutual consideration, the parties do hereby agree as follows: A. GEOTRAC NFIP COMPLIANCE PACKET(SM) In consideration of Company's attached fee schedule and pursuant to the terms of this Agreement, Client will submit all mortgage or trust deed loan origination applications to Company for the purpose of making Flood Determinations and certain other NFIP Compliance work commencing November l, 1996. Company will provide to Client on each application a Geotrac NFIP Compliance Packet(sm) containing the following information: 1. Current-In-Force NFIP Community Status Information Company will supply Current-In-Force NFIP Community Status information consisting of NFIP Community Number, Program or Suspension/Sanction Date, and NFIP Program Status (Emergency, Regular, Non-Participating, Suspended/Sanctioned). 2. Detailed FEMA Flood Zone Code Company will supply the Detailed FEMA Flood Zone Code of the location of the structure(s) securing the loan. Company will use Client supplied location information and location information it derives to locate structures. In those cases where neither Client nor Company has sufficient information to locate the structure, Company will gather information on-site at its expense. While the Company assumes no responsibility for incorrect or incomplete location information supplied by Client, Company will make its best effort to assure location information is correct and complete. 3. Current-In-Force NFIP Flood Map Panel Company will identify the Current-In-Force NFIP Flood Map Panel consisting of the full eleven digit FEMA map number and panel date. 4. Requirement for and Availability of NFIP Flood Insurance 2 Company will indicate the requirement for and the availability of NFIP Flood Insurance. 5. Secondary Market/Government Program Loan Restrictions Company will designate loans which do not qualify for secondary market resale or Government program lending based on NFIP Community Status and NFIP Flood Zone problems. 6. Borrower Notification On each Geotrac NFIP Compliance Packet(SM) Company will supply to Client a borrower notification form which complies with all federal statutory and regulatory requirements. B. FLOOD RISK ASSESSMENT IN NON-PARTICIPATING NON-MAPPED COMMUNICATES Company will prepare an appendix attached to the standard Geotrac NFIP Compliance Packet(SM) containing a flood risk assessment in NFIP non-participating non-mapped communities. C. HMDA DATA ELEMENTS Company will supply HMDA State Code and County Code on all loans, and MSA Code and 1990 Census Tract on each loan where: a) 1990 Tracts are published, and b) the Federal Reserve indicates that Tract reporting is required. AD HMDA data elements will be edited against government supplied information (i.e. Census Bureau's file of 1990 Census Tract and the Federal Reserve's list of State, County and MSA designations). In the event of an error Company's obligation shall be limited to correction of the error. D. GEOLIFE-OF-LOAN(R) For mortgage or trust deed loans Company will track both NFIP Community Status and FEMA Flood Map changes on a daily basis for the lifetime of the loan on Client's servicing system. Lists (hard copy or electronic) of loans affected will be generated monthly. From the supplied lists Client will inform Company of loans still active and Company will generate new Flood Determinations or other reports as needed. If NFIP Community Status changes affect the required flood insurance amount of a loan, Company will notify Client of the need to require changed amounts. GeoLife-of-Loan(R) service is available for transfer at no additional charge should Client sell or transfer the loan or servicing. Client is obligated to inform Company of the sale or transfer and if GeoLife-of-Loan(R) service is to transfer with the loan(s). In addition, Client shall supply Company a listing of affected loans, identified by loan number or another mutually agreeable item, in machine readable form in a mutually agreeable format on a media acceptable to both parties. Geotrac NFIP Compliance Packet(SM)s will be produced free of charge on Client recaptured refinances where the original loan is covered by GeoLife-of-Loan(R) service. It is Client's obligation to inform Company that a refinance is covered by GeoLife-of-Loan(R) service 2 3 and to supply either a copy of the original Geotrac NFIP Compliance Packet(SM)or its identifying number (GeoNumber). E.TRANSMISSIONS OF INFORMATION Client will transmit requests to Company EDI, fax or via Geotrac's PC based on-line system GeoCompass(SM) one or more times a day. It is Client's obligation to supply, at a minimum: loan/application identification number, borrower name; location-State, County, City/Place, full street address, and 5 digit zip code. Client shall provide a valid street address. Valid street addressees are defined as those found in the quarterly update of the USPS Zip +4 data base, and do not include P.O. Box or Rural Route and box. In those instances where Client does not supply a valid address, Company will place the order on hold, and inform Client's ordering location of the invalid address. It is Client's obligation to supply to Company, as soon as possible, the completed or corrected address information. Orders placed on hold will be reactivated the day valid address information supplied. All turn time and other parameters win be calculated based on the date valid address information is supplied. Company will transmit key data elements back to Client EDI or Fax. The full Geotrac NFIP Compliance Packet(SM) can be faced to Client. Average turn around shall be two business days. Both parties recognize that it is not in Client's best interest to emphasize speed of turn around over accuracy of flood certifications. Each party agrees to work in good faith to meet the data and turn around needs of the other. F. PORTFOLIO AUDIT Client would supply Company with a computer tape in a mutually agreeable format of its existing mortgage portfolio. It would be Client's obligation to supply, at a minimum: loan/application identification number; date of origination; borrower name; location State, County, City/Place, full street address, and 5 digit zip code. In addition, Client would supply site surveys, legal descriptions and other location information when requested by Company and where Client has this information. Company will perform a Risk-Based Cluster Analysis(R) audit. This audit process will achieve a statistical risk study of Client's existing portfolio. After receiving Risk-Based Cluster Analysis(R), the Client and Company may exercise the option to proceed with researching those higher risk loans. Mutually agreed upon higher risk loans would be researched through Company's loan origination process over a period of time to be determined by Company and Client at the cost set forth in Addendum "A". Under title "Audit Loans". The Risk-Based Cluster Analysis(R) will also be used to register the FEMA panel and FEMA community numbers to Client's portfolio loans at no cost to Client. Should the loans be affected by new mapping or community status information rendering them noncompliant, Client may chose to have these loans re-determined by the company. The cost for the re-determination is set forth in Addendum "A" under title "Non-Compliant Loans". 3 4 G. CLIENT SERVICE It is recognized that it is Clients' obligation to service its customers needs. However, Company will assist Client by providing the following services: 1. National 800 service for use by Client or Client's customers. 2. Letter of Map Amendment (LOMA)/Letter of Map Revision (LOMR) assistance to Client or Client's customers. Company will supply the necessary forms and directions and assist the borrower in filing the application. 3. Company will assist Client's customers in finding an agent to write flood insurance. 4. Advise the Client's customers or Client on ways to lower the flood premium within the context of investor/lender parameters and regulator requirements. 5. Company will supply free re-checks on disputed determinations. 6. Company will provide Client with educational seminars on NFIP Compliance and will answer Client's NFIP Compliance questions. 7. Company will assist Client's customers in procuring elevation certificates. 8. Company will, in general replace the lender's flood determination customer service function. H. USE OF SERVICES Client agrees that during the term hereof it will use the services of Company for the purpose of providing Flood Compliance and Flood Determinations for all funding mortgage or trust deed loan origination applications. I. COST OF SERVICES Services to be provided by Company and the cost for services hereunder are described in Addendum "A." J. TERM This Agreement shall have an initial term of two (2) years, commencing on the date of this Agreement. The term shall be automatically renewed thereafter for successive one (1) year periods, unless either party shall provide to the other no less than thirty (30) days written notice of the intention to terminate this Agreement as of the end of the said initial or extended term. K. TERMINATION Either party may terminate this Agreement for non-performance or upon voluntary or involuntary bankruptcy proceedings by the other party. In the event of the failure of performance by either party hereunder, the non-performing party shall have a period of thirty (30) days from the date of receiving written notice from the other party to cure any such breach. If such breach is not cured within 30 days the other party may terminate this contract with 10 days written notice to the non-performing company. 4 5 L. CONFIDENTIAL INFORMATION Company acknowledges that it may gain access to certain information regarding Borrowers of Client. Company agrees that this information shall not be disclosed or made available to any third or entity, except that in the instance of loan applications where the applicant(s) is also the owner(s) of the real property that will secure the loan, the Company may disclose to a third party the name of a mortgage loan applicant(s) for the sole purpose of obtaining information necessary to determine the location of buildings located upon the property that will secure the loan without the specific authorization of Client. Company agrees that when information is disclosed to a third party, Company will notify Client of this disclosure. In like manner Client acknowledges that it may gain access to certain information regarding business practices, technology and pricing of Company. Client agrees that this information shall not be disclosed or made available to any third person or entity, except as necessary for Client to perform its obligations under this Agreement or for auditing or regulatory purposes without the specific authorization of Company. M. USE OF INFORMATION Information supplied by Company to Client is to be used by Client for Client's compliance with the Flood Disaster Protection Act of 1973 as amended within the context of the NFIP and/or for HMDA/CRA compliance and for no other purposes. N. SYSTEMS USED IN SERVICES Client has been advised that the computer software used or employed by Company in making and/or printing Geotrac NFIP Compliance Packet(SM)s hereunder, and in tracking the loan portfolio of Client for the Life of Loan service referred to above if included within this Agreement (collectively referred to as the "Systems") are and shall remain at all times the sole property of Company and constitute material and confidential trade secrets of Company. This includes, without limitation, its source codes, screens, documentation and any improvements or modifications of the Systems. Client agrees for itself and its employees to protect the confidentiality of the Systems. O. INDEMNIFICATION Flood Zone Determinations made by Company represent a good faith interpretation of Federal Flood Insurance Rate Maps, or Federal Flood Hazard Boundary Maps, and information from government and private sources along with the lender. Although Company does not guarantee the accuracy of these outside information sources, it does assume responsibility for the completeness and timeliness of this information. Company shall hold Client safe and harmless from and against any and all loss or expense arising from claims or actions by any customer of Client based upon the negligence of Company in interpreting the above referenced Federal Flood Maps and hence failing to correctly identify and report to Client that a particular insurable structure securing a loan by Client is within (false flood negative) or outside (false flood positive) a Federally defined NFIP Special Flood Hazard Area; provided however, that such liability shall in no 5 6 event exceed the actual loss and expenses to client less any insurance or recovery from another source. This indemnification provision is only applicable to claims made by Client or customer's of Client against Client, resulting from damage to Client or customer's improved real property caused by flooding as defined by the NFIP (false flood negative) or customer or Client's payment of unnecessary NFIP flood insurance premiums (false flood positive), provided Client supplies verbal notice as soon as is practicable and written notice within 30 days of Client's first becoming aware of such claims, and further provided the Company has full and fair opportunity to participate in any adjusting, settlement negotiation and litigation. P. ARBITRATION Any controversy or claim arising out of or related to this Agreement or the breach thereof, shall be settled in Ohio by binding arbitration in accordance with the Arbitration Rules of the American Arbitration Association then prevailing, and judgment upon the award rendered by the arbitration arbitrators may be entered in any court having jurisdiction thereof. Q. INDEPENDENT CONTRACTOR Company shall perform services under this Agreement as an independent contractor and not as the agent of Client. Company shall not be authorized to act on behalf of Client except as provided herein or as otherwise specifically directed by Client. R. ENTIRE AGREEMENT This Agreement constitutes the entire understanding between the parties with respect to the subject matter of this Agreement. This Agreement may only be modified by a written document executed by both parties. S. SEVERABILITY If any term or provision of this Agreement is held by a court of competent jurisdiction to be unenforceable or void, such term or provision shall be severed from the remaining provisions and such remaining provisions shall remain in full force and effect. 6 7 T. NOTICES Any notice or other communication to be given under the terms of this Agreement, shall be in writing and shall be delivered in person, or mailed by certified mail, return receipt requested, postage prepaid, addressed as follows: If to Company: Geotrac 3900 Laylin Rd. Norwalk, OH 44857 Attention: Daniel J. White If to Client: Mortgage Corporation of America 23999 Northwestern Highway Suite 102 Southfield, MI 48075 Attention: John O'Leary U. WAIVER Waiver by one party of the performance of any covenant, condition or obligation of another party shall not invalidate this Agreement, nor shall such waiver be considered to be a waiver by such party of any other covenant, condition or obligation contained in this Agreement. V. ATTORNEY'S FEES In the event any party to this Agreement institutes an action or other proceeding to enforce any rights arising under this Agreement, the party prevailing in any such action or other proceeding shall be paid all reasonable costs and attorney's fees by the other party. W. TIME IS OF THE ESSENCE Time is of the essence in performance under this Agreement. X. GOVERNING LAW This Agreement is made pursuant to and shall be construed and governed by the laws of the State of Ohio. 7 8 Y. HEADINGS The subject headings of this Agreement are included for the purposes of convenience only and shall not effect the construction or interpretation of any of the provisions of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. Company: Geotrac By /s/ John F. Marion ------------------------------------------- Title Asst. to the President ----------------------------------------- Date 1/9/97 -------- Client: Mortgage Corporation of America By /s/ John O'Leary ------------------------------------------- Title S.V.P. & C.F.O. ----------------------------------------- Date 12-20-96 -------- 8 9 ADDENDUM "A"
ORIGINATION SERVICES Client Selections Initial /s/ Geotrac NFIP Compliance Packet(SM) $ 15.00/ea. ------- /s/ GeoLife-of-Loan(R) $ 4.00/additional ea. ------- /s/ HMDA/CRA $ .50/additional ea. ------- PORTFOLIO SERVICE Existing Portfolio (as of 2/95 initiation of service with Geotrac) Life of Loan Lite /S/ Loading No charge ------- Reprocessing $ 7.50 ------- Acquisitions (since 2/95) Life of Loan Lite /S/ Loading $1,500.00 ------- Reprocessing 7.50 -------
OPTIONAL SERVICES ORDERED ON INDIVIDUAL DETERMINATIONS Priority Rush Service (Same day service) $ 5.00/additional ea. 9 EX-10.53 56 FLOOD COMPLIANCE SERVICE AGREEMENT 1 EXHIBIT 10.53 FLOOD COMPLIANCE SERVICE AGREEMENT THIS AGREEMENT is entered into effective March 1, 1997, by and between SMS Geotrac, a Delaware Corporation located at 3900 Laylin Road, Norwalk, Ohio ("Company") and CitFed Mortgage Corporation of Antlered One Clemens Federal Centre,America Dayton, Ohio ( "Client") WHEREAS, Client desires a Flood Compliance program for compliance with regulations passed pursuant to the 1973 Flood Disaster Protection Act as amended to determine whether improved real estate securing a loan from Client to a borrower is or Is not in a FEMA defined Special Flood Hazard Area ("Flood Area"), and other National Flood Insurance Program (NFIP) information, and whereas Company is in the business of supplying such information. WHEREAS, Client wishes to retain Company upon the terms and conditions contained in this Agreement; NOW THEREFORE, for mutual consideration, the parties do hereby agree as follows: A. GEOTRAC NFIP COMPLIANCE PACKET In consideration of Company's attached fee schedule and pursuant to the terms of this Agreement, Client will submit mortgage or trust deed loan origination applications to Company for the purpose of making Flood Determinations and certain other NFIP Compliance work commencing March 1, 1997. Company will provide to Client on each application a Geotrac NFIP Compliance Packet containing the following information: 1. Current-In-Force NFIP Community Status Information Company will supply Current-In-Force NFIP Community Status Information consisting of NFIP Community Number, Program or Suspension/Sanction Date, and NFIP Program Status (Emergency, Regular, Non-Participating, Suspended/Sanctioned). 2. Detailed FEMA Flood Zone Code Company will supply the Detailed FEMA Flood Zone Code of the location of the structure(s) securing the loan. Company will use Client supplied location information and location information it derives to locate structures. In those cases where neither Client nor Company has sufficient information to locate the structure, Company will gather information on-site at its expense. While the Company assumes no responsibility for incorrect or incomplete location information supplied by Client, Company will make its best effort to assure location information is correct and complete. 3. Current-In-Force NFIP Flood Map Panel Company will identify the Current-In-Force NFIP Flood Map Panel consisting of the full eleven digit FEMA map number and panel date. 4. Requirement for and Availability of NFIP Flood Insurance 1 2 Company will indicate the requirement for and the availability of NFIP Hood Insurance. 5. Secondary Market/Government Program Loan Restrictions Company will designate loans which do not qualify for secondary market resale or Government program lending based on NFIP Community Status and NFIP Flood Zone problems. 6. Borrower Notification Forms On each Geotrac NFIP Compliance Packet Company All supply to Client a borrower notification form which complies with all federal statutory and regulatory requirements. B. FLOOD RISK ASSESSMENT IN NON-PARTICIPATING NON-MAPPED COMMUNITIES Company Frill prepare an appendix attached to the standard Geotrac NFIP Compliance Packet containing a flood risk assessment~in NFIP non-participating non-mapped communities. C. HMDA DATA ELEMENT Company win supply HONDA State Code and County Code on all loans, and MSA Code and 1990 Census Tract on each loan where: a) 1990 Tracts are published, and b) the Federal Reserve indicates that Tract reporting is requited. All HMDA data elements will be edited against government supplied information (i.e. Census Bureau's file of 1990 Census Tract and the Federal Reserve's list of State, County and MSA designations). In the event of an error Company's obligation shall be limited to correction of the error. D. GEOLIFE-OF-LOAN(R) For mortgage or trust deed loans Company win track both NFIP Community Status and FEMA Flood Map changes on a daily basis for the lifetime of the loan on Client's servicing system. Lists (hard copy or electronic) of loans affected win be generated monthly. From the supplied lists Client win inform Company of loans still active and Company win generate new Flood Determinations or other reports as needed. If NFIP Community Status changes affect the required flood insurance amount of a loan, Company win notify Client of the need to require changed amounts. GeoLife-of-Loan(R) service is available for transfer at no additional charge should Client sell or transfer the loan or servicing. Client is obligated to inform Company of the sale or transfer and if GeoLife-of-Loan(R) service is to transfer with the loan(s). In addition, Client shall supply Company a listing of affected loans, identified by loan number or another mutually agreeable item, in machine readable form in a mutually agreeable format on a media acceptable to both parties. Geotrac NFIP Compliance Packets will be produced free of charge on Client recaptured refinances where the original loan is covered by GeoLife-of-Loan(R) service. It is Client's obligation to inform Company that a refinance is covered by GeoLife-of-Loan(R) service 2 3 and to supply either a copy of the original Geotrac NFIP Compliance Packet or its identifying number (GeoNumber). E. Transmissions of Information Client will transmit requests to Company EDI, fax or via Geotrac's PC based on-line system GeoCompass(SM) one or more times a day. It is Client's obligation to supply, at a minimum: loan/application identification number, borrower name; location-State, County, City/Place, full street address, and 5 digit zip code. Client shall provide a valid street address. Valid street addresses are defined as those found in the quarterly update of the USPS Zip +4 data base, and do not include P.O. Box or Rural Route and box. In those instances where Client does not supply a valid address, Company will place the order on hold, and inform Client's ordering location of the invalid address. It is Client's obligation to supply to Company, as soon as possible, the completed or corrected address information. Orders placed on hold will be reactivated the day valid address information is supplied. All turn time and other parameters will be calculated based on the date valid address information is supplied. Company will transmit key data elements back to Client EDI or Fax. The full Geotrac NFIP Compliance Packet can be faxed to Client. Average turn around shall be two business days. Both parties recognize that it is not in Client's best interest to emphasize speed of turn around over accuracy of flood certifications. Each party agrees to work in good faith to meet the data and turn around needs of the other. F. PORTFOLIO AUDIT Client would supply Company with a computer tape in a mutually agreeable format of its existing mortgage portfolio. It would be Client's obligation to supply, at a minimum loan/application identification number; date of origination; borrower none; location State, County, City/Place, full street address, and 5 digit zip code. In addition, Client would supply site surveys, legal descriptions and other location information when requested by Company and where Client has this information. Company will perform a Risk-Based Cluster Analysis audit. This audit process will achieve a statistical risk study of Client's existing portfolio. After receiving Risk-Based Cluster Analysis(R), the Client and Company may exercise the option to proceed with researching those higher risk loans. Mutually agreed upon higher risk loans would be researched through Company's loan origination process over a period of time to be determined by Company and Client at the cost set forth in Section Z. Under title "Audit Loans". Other customized portfolio audit options, if selected, are documented on Addendums attached. The Freddie Mac audit procedure will be shown as Addendum "A" and the Fanny Mae audit procedure will be shown as Addendum "B." 3 4 G. Client Service It is recognized that it is Clients' obligation to service its customers needs. However, Company will assist Client by providing the following services: 1. National 800 service for use by Client or Client's customers. 2. Letter of Map Amendment (LOMA/Letter of Map Revision (LOMR) assistance to Client or Client's customers. Company will supply the necessary forms and directions and assist the borrower in filing the application. 3. Company will assist Client's customers in finding an agent to write flood insurance. 4. Advise the Client's customers or Client on ways to lower the flood premium within the context of investor/lender parameters and regulator requirements. 5. Company will supply free re-checks on disputed determinations. 6. Company will provide Client with educational seminars on NFIP Compliance and will answer Client's NFIP Compliance questions. 7. Company will assist Client's customers in procuring elevation certificates. 8. Company will in general, replace the lender's flood determination customer service function. H. USE OF SERVICES Client agrees that during the term hereof it will use the services of Company for the purpose of providing Flood Compliance and Flood Determinations for mortgage or trust deed loan origination applications. Company understands and agrees that in the event that loans are originated by the client for which the clients servicing rights are sold to the investor, the client may be required by the investor to use another flood determination company. Company agrees that this will not violate the terms of the agreement. I. COST OF SERVICES Services to be provided by Company and the cost for services hereunder are described in Section Z. J. TERM This Agreement shall have an initial term of three (3) years, commencing on the date of this Agreement. The term shall be automatically renewed thereafter for successive one (l) year periods, unless either patty shall provide to the other no less than thirty (30) days written notice of the intention to terminate this Agreement as of the end of the said initial or extended term. K. TERMINATION Either party may terminate this Agreement for non-performance or upon voluntary or involuntary bankruptcy proceedings by the other party. In the event of the failure of performance by either party hereunder, the non-performing party shall have a period of 4 5 thirty (30) days from the date of receiving written notice from the other party to cure any such breach. If such breach is not cured within 30 days the other party may terminate this contract with 10 days written notice to the non-performing company. L. CONFIDENTIAL INFORMATION Company acknowledges that it may gain access to certain information regarding Borrowers of Client. Company agrees that this information shall not be disclosed or made available to any third person or entity, except that in the instance of loan applications where the applicant(s) is also the owner(s) of the real property that will secure the loan, the Company may disclose to a third party the name of a mortgage loan applicant(s) for the sole purpose of obtaining information necessary to determine the location of buildings located upon the property that will secure the loan without the specific authorization of Client. Company agrees that when information is disclosed to a third party, Company will notify Client of this disclosure. In like manner Client acknowledges that it may gain access to certain information regarding business practices, technology and pacing of Company. Client agrees that this information shall not be disclosed or made available to any third person or entity, except as necessary for Client to perform its obligations under this Agreement or for auditing or regulatory purposes without the specific authorization of Company. M. USE OF INFORMATION Information supplied by Company to Client is to be used by Client for Client's compliance with the Flood Disaster Protection Act of 1973 as amended within the context of the NFIP and/or for HMDA/CRA compliance and for no other purposes. N. SYSTEMS USED IN SERVICES Client has been advised that the computer software used or employed by Company in making and/or printing Geotrac NFIP Compliance Packets hereunder, and in tracking the loan portfolio of Client for the Life of Loan service referred to above if included within this Agreement (collectively referred to as the "Systems") are and shall remain at all times the sole property of Company and constitute material and confidential trade secrets of Company. This includes, without limitation, its source codes, screens, documentation and any improvements or modifications of the Systems. Client agrees for itself and its employees to protect the confidentiality of the Systems. O. INDEMNIFICATION Flood Zone Determinations made by Company represent a good faith interpretation of Federal Flood Insurance Rate Maps, or Federal Flood Hazard Boundary Maps, and information from government and private sources along with the lender. Although Company does not guarantee the accuracy of these outside information sources, it does assume responsibility for the completeness and timeliness of this information. Company shall hold Client safe and harmless from and against any and all loss or expense arising from claims or actions by any customer of Client based upon the negligence of 5 6 Company in interpreting the above referenced Federal Flood Maps and hence failing to correctly identify and report to Client that a particular insurable structure securing a loan by Client is within (false flood negative) or outside (false flood positive) a Federally defined NFIP Special Flood Hazard Area; provided however, that such liability shall in no event exceed the actual loss and expenses to client less any insurance or recovery from another source. This indemnification provision is only applicable to claims made by Client or customer's of Client against Client, resulting from damage to Client or customers improved real property caused by flooding as defined by the NFIP (false flood negative) or customer or Client's payment of unnecessary NFIP flood insurance premiums (false flood positive), provided Client supplies verbal notice as soon as is practicable and written notice within 30 days of Client's fast becoming aware of such claims, and further provided the Company has full and fair opportunity to participate in any adjusting, settlement negotiation and litigation. P. ARBITRATION Any controversy or claim arising out of or related to this Agreement or the breach thereof, shall be settled in Ohio by binding arbitration in accordance with the Arbitration Rules of the American Arbitration Association then prevailing, and judgment upon the award rendered by the arbitration arbitrators may be entered in any court having jurisdiction thereof. Q. INDEPENDENT CONTRACTOR Company shall perform services under this Agreement as an independent contractor and not as the agent of Client. Company shall not be authorized to act on behalf of Client except as provided herein or as otherwise specifically directed by Client. R. ENTIRE AGREEMENT This Agreement constitutes the entire understanding between the parties with respect to the subject matter of this Agreement. This Agreement may only be modified by a written document executed by both parties. S. SEVERABILITY If any term or provision of this agreement is held by a court of competent jurisdiction to be unenforceable or void, such term or provision shall be severed from the remaining provisions and such remaining provisions shall remain in full force and effect T. NOTICES Any notice or other communication to be given under the terms of this Agreement, shall be in writing and shall be delivered in person, or mailed by certified mail, return receipt requested, postage prepaid, addressed as follows: 6 7 If to Company: Geotrac 3900 Laylin Rd. Norwalk, OH 44857 Attention: Daniel J. White If to Client: CitFed Mortgage Corporation of America One Citizens Federal Centre Dayton, OH 45402 Attention: Harry Ness U. WAIVER Waiver by one party of the performance of any covenant, condition or obligation of another party shall not invalidate this Agreement, nor shall such waiver be considered to be a waiver by such park of any other covenant, condition or obligation contained in this Agreement. V. ATTORNEY'S FEES Removed. W. TIME IS OF THE ESSENCE Time is of the essence in performance under this Agent. X. GOVERNING LAW This Agreement is made pursuant to and shall be construed and governed by the laws of the State of Ohio. Y. HEADINGS The subject headings of this Agreement are included for the purposes of convenience only and shall not effect the construction or interpretation of any of the provisions of this Agreement. 7 8 Z. PRICING ORIGINATION SERVICES Geotrac NFIP Compliance Packet $15.00/ea. GeoLife-of-Loan(R) $ 4.50/additional ea. HMDA/CRA $ .50/additional ea. PORTFOLIO SERVICE Audit Loans $ 8.00/ea. Life of Loan Lite (reprocessing) $ 8.00/ea. Freddie Mac Review $ 8.00/ea. per loan or $500.00 which ever is less Fannie Mae Review $ 8.00/ea. per loan or $500.00 which ever is less OPTIONAL SERVICES ORDERED ON INDIVIDUAL DETERMINATIONS Priority Rush Service (Same day service) $ 5.00/additional ea. If during the term of this contract company contracts with a similar account (volume blend of business, etc.) at lower prices Company will adjust clients pricing to match. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. Company: Geotrac By /s/ John Marion --------------------------------------------- Title Asst to the President ----------------------------------------- Date 4/2/97 ---------- Client: CitFed Mortgage Corporation of America By /s/ Harry A. Ness --------------------------------------------- Title Vice President ------------------------------------------ Date 4-22-97 ---------- 8 9 Addendum "A" Freddie Mac Audit Company will use Freddie Mac Flood Bulletins 94-18 and 95-3 to establish the required flood audit requirements from October 1993 forward. Client will furnish a readable tape with valid address information, in a mutually agreeable format to Company. Company will process the Client furnished information Through a process to identify loans affected by FEMA Map Changes and NFIP Community Status changes since October 2993. It is agreed that any given address determined to be unreadable or invalid by Company will be returned to Client for further work before resubmitting such loans. Invalid addresses will not be the Company responsibility to audit. Any loans furnished by Client provided information that are within the establish audit requirements of Bulletins 94-18 and 95-3 will receive a full Flood Compliance audit from Company. After completion of the Compliance audit, any such loan will carry a full Flood Compliance guarantee with GeoLife-of-Loan(R). The cost incurred by Client for the full Flood Compliance review will be $8.00 per loan or a flat cap of $500.00 which ever is less. Any loans furnished by Client provided information that are outside the established audit requirements of Bulletins 94-18 and 95-3 will be placed under GeoLife-of-Loan Lite(R) tracking service and will be subject to a future reprocessing fee at such time there is a FEMA Map Change or NFIP Community Status change that affects the loans. No loading fee will be required for this service at this time. Any future acquisition of Freddie Mac loans by Client need to be discussed on an individual basis to establish an agreeable auditing cost. Company would recommend discussion of future pacing take place prior to final bid for acquisition. Attest /s/ Harry A. Ness Date 4-22-97 ---------------------------- ------------------ 9 10 Addendum "B" Fannie Mae Audit Company will use the Fannie Mae Flood Guidelines released on June 8, 1995 to establish the required flood audit procedures. The June 8, 1995 Guideline does not require a portfolio audit but does require a full Flood Compliance review with Life-of-Loan service going forward from June 8, 1995. Client will furnish a readable tape with valid address information, in a mutually agreeable format to Company. Company will pass the Client furnished information through a process to identify loans affected by FEMA Map Changes and NFIP Community Status Changes since June 8, 1995. It is agreed that any given address determined to be unreadable or invalid by Company will be returned to Client for further work before resubmitting such loan. Invalid addresses will not be the Company responsibility to audit. Any loans furnished by Client provided information that are within the established audit requirements of Announcement 95-10 will receive a full Flood Compliance audit from Company. After completion of the Compliance audit, any such loan will carry a full Flood Compliance guarantee with GeoLife-of-Loan(R). The cost incurred by Client for the full Flood Compliance review will be $8.00 per loan or a flat cap of $500,00 which ever is less. All loans not affected by this compliance audit will be placed under the GeoLife-of-Loan Lite(R) tracking service and will be subject to a future reprocessing fee at such time there a FEMA Map Change or NFIP Community Status Change that affects the loans. No loading fee will be required for this service at this time. Any future acquisition of Fannie Mae loans by Client need to be discussed on an individual basis to establish an agreeable auditing cost. Company would recommend discussion of future pricing take place prior to final bid for acquisition. Attest /s/ Harry A. Ness Date 4-22-97 ----------------------------------- -------------------- 10 EX-10.54 57 FLOOD COMPLIANCE SERVICE AGREEMENT 1 EXHIBIT 10.54 FLOOD COMPLIANCE SERVICE AGREEMENT THIS AGREEMENT is entered into effective March 1, 1998, by and between Geotrac, a Delaware Corporation located at 3900 Laylin Road, Norwalk, Ohio ("Company") and ABN AMRO North American, located at 135 South LaSalle St. Chicago, Illinois and its affiliates listed in Addendum "B" as ("Client"). WHEREAS, Client desires a Flood Compliance program for compliance with regulations passed pursuant to the 1973 Flood Disaster Protection Act as amended to determine whether improved real estate securing a loan from Client to a borrower is or is not in a FEMA defined Special Flood Hazard Area ("Flood Area"), and other National Flood Insurance Program (NFIP) information, and whereas Company is in the business of supplying such information. WHEREAS, Client wishes to retain Company upon the terms and conditions contained in this Agreement; NOW THEREFORE, for mutual consideration, the parties do hereby agree as follows: A. GEOTRAC NFIP COMPLIANCE PACKET In consideration of Company's attached fee schedule and pursuant to the terms of this Agreement, Client will submit retail mortgage or trust deed loan applications originated or purchased to Company for the purpose of making Flood Determinations and certain other NFIP Compliance work commencing March 1, 1998. Client will only pay fees shown in Addendum "A" for closed loans. Company will provide to Client on each application a Geotrac NFIP Compliance Packet(SM) containing the following information: 1. Current-In-Force NFIP Community Status Information Company will supply Current-In-Force NFIP Community Status Information consisting of NFIP Community Number, Program or Suspension/Sanction Date, and NFIP Program Status (Emergency, Regular, Non-Participating, Suspended/Sanctioned) in a format that complies with all requirements of FEMA, OTS, Fannie Mae, Freddie Mac and other applicable regulatory agencies. 2. Detailed FEMA Flood Zone Code Company will supply the Detailed FEMA Flood Zone Code of the location of the structure(s) securing the loan. Company will use Client supplied location information, valid street address and location information it derives to locate structures. In those cases where neither Client nor Company has sufficient information to locate the structure, Company will gather information on-site at its expense. While the Company assumes no responsibility for incorrect or incomplete location information supplied by Client, Company will make its best effort to assure location information is correct and complete. 1 2 3. Current-In-Force NFIP Flood Map Panel Company will identify the Current-In-Force NFIP Flood Map Panel consisting of the full eleven digit FEMA map number and panel date. 4. Requirement for and Availability of NFIP Flood Insurance Company will indicate the requirement for and the availability of NFIP Flood Insurance. 5. Secondary Market/Government Program Loan Restrictions Company will designate loans which do not qualify for secondary market resale or Government program lending based on NFIP Community Status and NFIP Flood Zone problems. Company will comply with all Freddie Mac, Fannie Mae, Ginnie Mae and FEMA requirements then in effect in conducting flood searches and notifying Client of results. 6. Borrower Notification Forms On each Geotrac NFIP Compliance Packet Company will supply to Client a borrower notification form, on or before date of Client closing or purchasing a loan subject to all other terms of this agreement. Notification form will be in compliance with all federal statutory and regulatory requirements including FEMA, OTS, Freddie Mac, Fannie Mae, and Ginnie Mae regarding notifying borrowers. B. FLOOD RISK ASSESSMENT IN NON-PARTICIPATING NON-MAPPED COMMUNITIES Company will prepare an appendix attached to the standard Geotrac NFIP Compliance Packet containing a flood risk assessment in NFIP non-participating non-mapped communities, as requested by Client Cost set forth in Addendum "A" as Determinations in Non-Mapped Communities. C. HMDA DATA ELEMENTS Company at request of Client will supply HMDA State Code and County Code on some or all loan requests, with or without flood order, and MSA Code and 1990 Census Tract on each loan where: a) 1990 Tracts are published, and b) the Federal Reserve indicates that Tract reporting is required. All HMDA data elements will be edited against government supplied information (i.e. Census Bureau's file of 1990 Census Tract and the Federal Reserve's list of State, County and MSA designations). In the event of an error Company's obligation shall be limited to correction of the error. Client is under no obligation to order HMDA. This paragraph shall not limit Company's liability as otherwise provided in the is Agreement for incorrect flood determinations. 2 3 D. TRANSMISSIONS OF INFORMATION Client will transmit requests to Company EDI, fax or via Geotrac's PC based on-line system GeoCompass(SM) one or more times a day. It is Client's obligation to supply, at a minimum: loan/application identification number; borrower none; location State, County, City/Place, full street address, and 5 digit zip code. Client shall provide valid street addresses. "Valid Addresses" (VA) are defined as those found in the quarterly update of the USPS Zip +4 data base, and do not include P.O. Box or Rural Route and box. In those instances where Client does not supply a valid address, Company will place the order on hold, and inform Client's ordering location of the invalid address. It is Client's obligation to supply to Company, as soon as possible, the completed or corrected address information. Orders placed on hold will be reactivated the day valid address information is supplied. All turn time and other parameters will be calculated based on the date valid address information is supplied. Company will transmit key data elements back to Client EDI or Fax. The full Geotrac NFIP Compliance Packet can be transmitted back to Client EDI or Fax. Average turn around shall be less than two business days. Both parties recognize that it is not in Client's best interest to emphasize speed of turn around over accuracy of flood certifications. Each party agrees to work in good faith to meet the data and turn around needs of the other. E. LIFE OF LOAN GEOLIFE-OF-LOAN(R) GeoLife-of-Loan is a tracking service designed to detect changes in: - FEMA NFIP FLOOD MAP - FEMA NFIP COMMUNITY STATUS Once changes are detected, reprocessing the loan for the Client is done at no charge. Company will track both NFIP Community Status and FEMA Flood Map changes for the lifetime the loan is on Client's servicing system. Electronically, Client will communicate all payoffs and cancels to Company. Company will generate new flood determinations on all affected loans of the above changes. List (hard copy or electronic) of loans affected will be generated monthly. Client may choose to electronically inform Company of changes in the servicing portfolio proactively. Company will reprocess active loans that are affected by new FEMA NFIP mapping and/or revised FEMA NFIP Community Status. For those loans affected by new FEMA NFIP mapping and/or FEMA NFIP Community Status changes Company will reprocess the loan by generating a new Flood Determination (for new mapping) and/or by notifying Client of the need to require changed flood insurance amounts (for changes in Community Status), at no charge. 3 4 GeoLife-of-Loan(R) service is available for transfer at no additional charge should Client sell or transfer the loan or servicing. Client is obligated to inform Company of the sale or transfer and if GeoLife-of-Loan(R) service is to transfer with the loan, on a monthly basis. Client shall supply Company a listing of affected loans, identified by loan number or another mutually agreeable item, in machine readable form in a mutually agreeable format on a media acceptable to both parties. Geotrac NFIP Compliance Packets will be produced free of charge on Client recaptured refinances where the original loan is covered by GeoLife-of-Loan(R) service. It is Client's obligation to inform Company that a refinance is covered by GeoLife-of-Loan(R) service and to supply either a copy of the original Geotrac NIP Compliance Packet or its identifying number (GeoNumber). Client will place GeoLife-of-Loan(R) service on mortgage and trust deed loan originations. GEOLIFE-OF-LOANLITE GeoLife-of-LoanLite is a tracking service designed to detect changes in: - FEMA NFIP FLOOD MAP - FEMA NFIP COMMUNITY STATUS Once changes are detected, reprocessing the loan for Client is done for a fee. Company will track both NFIP Community Status and FEMA Flood Map changes on a daily basis for the lifetime of the loan on the Client's servicing system. Lists (hard copy or electronic) of loans affected will be generated monthly. Client will communicate all payoffs and cancels to Company. Company will generate new flood determinations on all affected loans of the above changes. Client may choose to electronically inform company of changes in the servicing portfolio proactively. The fee for GeoLife-of-LoanLite tracking is listed in Addendum "A" as GeoLife-of-LoanLite Reprocessing. After a loan has been "reprocessed" under GeoLife-of-LoanLite service it is covered by Company's full GeoLife-of-Loan service, in which case all subsequent reprocessing is at no charge to the client. Client will place GeoLife-of-LoanLite service on equity and installment loan originations and on some or all of existing portfolio loans at Client's discretion. FOREIGN FLOOD CERTIFICATION DATA, LIFE-OF-LOAN REGISTRATION PROCESS For those loans in existing portfolios, that have the data elements required for life-of-loan tracking derived from a source other than Company, Company will use the existing data elements to life-of-loan track. However, Company in no way indemnifies or guarantees these elements. However, Company guarantees the accurate tracking of the elements provided. For those loan originations processed with a foreign flood certification (data from a provider other than Company) that have the data elements required for life-of-loan tracking, Company will use the foreign data elements to track life-of-loan. However, 4 5 company in no way indemnifies or guarantees these data elements. However, Company guarantees the accurate tracking of the elements provided. In either case (portfolio, or loan origination) where Company determines that the foreign data elements are incomplete or inaccurate, Company will place these loans on an exception report. Company and Client will work in good faith to resolve the exceptions before the loans are tracked for life-of-loan. Company to guarantee mutual results. F. CLIENT SERVICE It is recognized that it is Client's obligation to service its customers' needs. However, Company will assist Client by providing the following services: 1. National 800 service for use by Client or Client's customers. 2. Letter of Map Amendment (LOMA) Letter of Map Revision (LOMR) assistance to Client or Client's customers. Company will supply the necessary forms and directions and assist the borrower in filing the application. 3. Company will assist Client's customers in finding an agent to write flood insurance. 4. Advise the Client's customers or Client on ways to lower the flood premium within the context of investor/lender parameters and regulator requirements. 5. Company will supply free re-checks on disputed determinations. 6. Company will provide Client with educational seminars on NFIP Compliance and will answer Client's NFIP Compliance questions. 7. Company will assist Client's customers in procuring elevation certificates. 8. Company will, in general, replace the lender's flood determination customer service function. G. USE OF SERVICES Client agrees that during the term hereof it will use its best efforts to utilize the services of Company for the purpose of providing Flood Compliance and Flood Determinations for all retail single family and multi unit residential mortgage or trust deed loan applications originated by Client, as long as such use does not violate RESPA. H. COST OF SERVICES Sentences to be provided by Company and the cost for services hereunder are described in Addendum "A". Client will only pay for closed loans at the end of every month net 30 days. I. TERM This Agreement shall have an initial term of two (2) years, commencing on the date of this Agreement. The term shall be automatically renewed thereafter for successive one (1) year periods, unless either party shall provide to the other no less than thirty (30) days written notice of the intention to terminate this Agreement as of the end of the said initial or extended term. 5 6 J. TERMINATION Either party may terminate this Agreement for non-performance or upon voluntary or involuntary bankruptcy proceedings by the other party. In the event of the failure of performance by either party hereunder, the non-performing party shall have a period of thirty (30) days from the date of receiving written notice from the other party to cure any such breach. If such breach is not cured within 30 days the other party may terminate this contract with 10 days written notice to the non-performing company. K. CONFIDENTIAL INFORMATION Company acknowledges that it may gain access to certain information regarding Borrowers and Brokers of Client. Company agrees that this information shall not be disclosed or made available to any third person or entity, except as necessary for Company to perform its obligations under this agreement, without the specific authorization of Client. Company agrees that when information is disclosed to a third party, Company will notify Client of this disclosure. In like manner Client acknowledge that it may gain access to certain information regarding business practices, technology and pricing of Company. Client agrees that this information shall not be disclosed or made available to any third person or entity, except as necessary for Client to perform its obligations under this Agreement or for auditing or regulatory purposes without the specific authorization of Company. L.Z.C. STERLING Client has requested that Company pass Client flood information to Z.C. Sterling 900 Murilands Blvd., Irvine, CA. 92618 in a format mutually agreeable between Company and Z.C. Sterling. M. USE OF INFORMATION Information supplied by Company to Client is to be used by Client for Client's compliance with the Flood Disaster Protection Act of 1973 as amended within the context of the NFIP and/or for HMDA/CRA compliance and for no other purposes. N. SYSTEMS USED IN SERVICES Client has been advised that the computer software used or employed by Company in making and/or printing Geotrac NFIP Compliance Packets hereunder, and in tracking the loan portfolio of Client for the Life of Loan service referred to above if included within this Agreement (collectively referred to as the "Systems") are and shall remain at all times the sole property of Company and constitute material and confidential trade secrets of Company. This includes without limitation, its source codes, screens, documentation and any improvements or modifications of the Systems. Client agrees for itself and its employees to protect the confidentiality of the Systems. 6 7 O. INDEMNIFICATION Flood Zone Determinations made by Company represent a good faith interpretation of Federal Flood Insurance Rate Maps, or Federal Flood Hazard Boundary Maps, and information from government and private sources along with the lender. Although Company does not guarantee the accuracy of these outside information sources, it does assume responsibility for the completeness and timeliness of this information. Company shall hold Client safe and harmless from and against any and all loss or expense arising from claims or actions by any customer, investor or regulatory agency of Client based upon the negligence of Company in interpreting the above referenced Federal Flood Maps and hence failing to correctly identify and report to Client that a particular insurable structure securing a loan originated or serviced by Client is within (false flood negative) or outside (false flood positive) a Federally defined Special Flood Hazard Area; provided however, that such Liability shall in no event exceed the actual flood loss (flood loss to include all insurance premiums paid for a false flood positive) or false flood negative less any insurance recovery from another source. This indemnification provision includes claims made by Client or customer's of Client against Client, resulting from damage to Client or customer's improved real property caused by flooding or payment of future flood insurance premiums as defined by the NFIP (false flood negative) or customer or Client's payment of unnecessary NFIP flood insurance premiums (false flood positive), provided Client supplies verbal notice as soon as is practicable and written notice within 30 days of Client's first becoming aware of such claims, and further provided the Company has full and fair opportunity to participate in any adjusting, settlement negotiation and litigation. Company agrees to maintain adequate liability, errors and omissions, or other type of insurance policy that provides coverage for claims arising out of the performance of the service under this Agreement by Company, it's employees or agents, and Company, shall if requested by Client, provide Client a Certificate of insurance evidencing such insurance coverage. Company agrees to provide Client with audited financial statements periodically upon request of Client. P. INDEPENDENT CONTRACTOR Company shall perform services under this Agreement as an independent contractor and not as the agent of Client. Company shall not be authorized to act on behalf of Client except as provided herein or as otherwise specifically directed by Client. Q. ENTIRE AGREEMENT This Agreement constitutes the entire understanding between the parties with respect to the subject matter of this Agreement. This Agreement may only be modified by a written document executed by both parties. 7 8 R. SEVERABILITY If any term or provision of this Agreement is held by a court of competent jurisdiction to be unenforceable or void, such term or provision shall be severed from the remaining provisions and such remaining provisions shall remain in full force and effect. S. NOTICES Any notice or other communication to be given under the terms of this Agreement, shall be in writing and shall be delivered in person, or mailed by certified mail, return receipt request, postage prepaid, adressed as follows: If to Company: Geotrac 3900 Laylin Rd Norwalk, OH 44857 Attention: Daniel J. White If to Client: LaSalle Home Mortgage Corporation & Standard Federal Bank 4242 North Harlem 2600 W. Big Beaver Norridge, IL 60634 Troy, MI 48084 Attention: Richard Geary Attention: David Trahan Attention: Robert Spohar T. WAIVER Waiver by one party of the performance of any covenant, condition or obligation of another party shall not invalidate this Agreement, nor shall such waiver be considered to be a waiver by such party of any other covenant, condition or obligation contained in this Agreement. U. ATTORNEY'S FEES In the event any party to this Agreement institutes an action or other proceeding to enforce any rights arising under this Agreement, the party prevailing in any such action or other proceeding shall be paid all reasonable costs and attorney's fees by the other party. V. TIME IS OF THE ESSENCE Time is of the essence in performance under this Agreement. W. GOVERNING LAW This Agreement is made pursuant to and shall be construed and governed by the laws of the State of Illinois. Company and Client agree that if litigation should become necessary, venue would take place in the State of Ohio 8 9 X. YEAR 2000 COMPLIANCE Company warrants that as of September 30, 1998, the hardware, software and other products and services which are supplied to ABN-AMRO pursuant to this agreement, will, independently, in combination with each other and in connection with the system of which they are or will become part, operate without any malfunctions, errors or other deficiencies which in any way result from or are connected with the date data (among which data in connection with leap years) and the incorporation, operation or processing thereof, and otherwise suffer no adverse effects from the transition to the year 2000 in respect of their operation and/or functionality. This warranty is of unlimited duration. If ABN-MARO's believes there is defect, Company will, at ABN-AMRO's request and at Company expense, ensure that any defect is repaired in full and without delay. If ABN-AMRO believes that Company has not fulfilled its obligation under this section, to repair a defend Company will, at its expense, provide to ABN-AMRO the source codes and any and all other technical and other documentation which in the opinion of ABN-AMRO are necessary to a repair defect or have it repaired Company hereby irrevocably and in advance authorizes ABN-AMRO and any third party engaged by ABN-AMRO to use or have need the source codes and other technical documentation and to make or have made such alterations, amendments and improvements as ABN-AMRO deems necessary for the repair of the defect. The costs of the repair of a defect shall be borne by the Company. Y. HEADINGS The subject headings of this Agreement are included for the purposes of convenience only and shall not effect the construction or interpretation of any of the provisions of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. Company: GeoTrac By /s/ Daniel J. White ------------------------------------- Title President ---------------------------------- Date as of 3/1/98 ----------------------------------- Client: ABN AMR0 North America, Inc. By /s/ Signature Illegible ------------------------------------- Title Senior Vice President ---------------------------------- Date as of 3-1-98 ----------------------------------- 9 10 ADDENDUM "A" SERVICES Geotrac NFIP Compliance Packet $15.00/ea. (Client will pay only for closed loans at the end of each month net 30 days.) GeoLife-of-Loan(R) $ 4.00/additional ea. or Life of Loan Lite (tracking), $ .50/additional ea. Life of Loan Lite (reprocessing) $13.00/additional ea. HMDA/CRA (optional) $ 1.00/additional ea. Portfolio Service Bank Priced on a case by case basis. OPTIONAL SERVICES ORDERED ON INDIVIDUAL DETERMINATIONS High Risk/Non-Compliant loans $ 8.00/ea. GeoQuake $ .50/ea. Determination In Non-Mapped Communities $10.00 additional ea. Priority Rush Service (same day service) $ 5.00 additional ea.
10 11 ADDENDUM "B" The following list are the affiliate companies of ABN AMRO, North American affected by this contract. Standard Federal Bank, a federal savings bank, located at 2600 West Big Beaver Rd, Troy, Michigan. LaSalle Home Mortgage Corporation, an Illinois Corporation an wholly owned operating subsidiary of LaSalle Bank, FSB located at 4242 North Harlem, Norridge, Illinois LaSalle Bank, FSB located at 8303 West Higgins Rd, Chicago, Illinois LaSalle National Bank, located at 8303 West Higgins Rd, Chicago, Illinois LaSalle Bank, NA, located at 8303 West Higgins Rd, Chicago, Illinois European American Bank, a New York chartered bank, located at One EAB Plaza, 5th floor, Uniondale, New York Citizens Bank, a Michigan chartered bank, located at 328 South Saginaw, Flint, Michigan Heigl Mortgage, located at 7803 Glenroy Rd, Suite 200, Bloomington, Minnesota 11 EX-10.55 58 FLOOD COMPLIANCE SERVICE AGREEMENT 1 EXHIBIT 10.55 FLOOD COMPLIANCE SERVICE AGREEMENT THIS AGREEMENT is entered into effective April 12, 1997, by and between SMS Geotrac, a Delaware Corporation located at 3900 Laylin Road, Norwalk, Ohio ("Company") and Third Federal Savings, 5711 Grant Avenue, Cleveland, OH 44105 ("Client"). WHEREAS, Client desires a Flood Compliance program for compliance with regulations passed pursuant to the 1973 Flood Disaster Protection Act as amended to determine whether improved real estate securing a loan from Client to a borrower is or is not in a FEMA defined Special Flood Hazard Area ("Flood Area"), and other National Flood Insurance Program (NFIP) information, and whereas Company is in the business of supplying such information. WHEREAS, Client wishes to retain Company upon the terms and conditions contained in this Agreement; NOW THEREFORE, for mutual consideration, the parties do hereby agree as follows: A. GEOTRAC NFIP COMPLIANCE PACKET(SM) In consideration of Company's attached fee schedule and pursuant to the terms of this Agreement, Client will submit all mortgage or trust deed loan origination applications to Company for the purpose of making Flood Determinations and certain other NFIP Compliance work commencing April 12, 1997. Company will provide to Client on each application a Geotrac NFIP Compliance Packet(SM) containing the following information: 1. Current-In-Force NFIP Community Status Information Company will supply Current-In-Force NFIP Community Status Information consisting of NFIP Community Number, Program or Suspension/Sanction Date, and NFIP Program Status (Emergency, Regular, Non-Participating, Suspended/Sanctioned). 2. Detailed FEMA Flood Zone Code Company will supply the Detailed FEMA Flood Zone Code of the location of the structure(s) securing the loan. Company will use Client supplied location information and location information it derives to locate structures. In those cases where neither Client nor Company has sufficient information to locate the structure, Company will gather information on-site at its expense. While the Company assumes no responsibility for incorrect or incomplete location information supplied by Client, Company will make its best effort to assure location information is correct and complete. 3. Current-In-Force NFIP Flood Map Panel Company will identify the Current-In-Force NFIP Flood Map Panel consisthng of the full eleven digit FEMA map number and panel date. 4. Requirement for and Availability of NFIP Flood Insurance 2 Company will indicate the requirement and the availability of NFIP Flood Insurance. 5. Secondary Market/Government Program Loan Restrictions Company will designate loans which do not qualify for secondary market resale or Government program coding based on NFIP Community Status and NPIP Flood Zone problems. 6. Borrower Notification Forms On each Geotrac NFIP Compliance Packet(SM) Company will supply to Client a borrower notification form which complies with all federal statutory and regulatory requirements. B. FLOOD RISK ASSESSMENT IN NON-PARTICIPATING NON-MAPPED COMMUNITIES Companies will prepare an appendix attached to the standard Geotrac NFIP Compliance Packet(SM) containing a flood risk assessment in NFIP non-participating non-mapped communities C. HMDA DATA ELEMENTS Company will supply HMDA State Code and County Code on all loans, and MSA Code and 1990 Census Tract on each loan where: a) 1990 Tracts are published, and b) the Federal Reserve indicates that Tract reporting is required. All HMDA data elements will be edited against government supplied information (i.e. Census Bureau's file of 1990 Census Tract and the Federal Reserve's list of State, County and MSA designations). In the event of an error Company's obligation shall be limited to correction of the error. D. GEOLIFE-OF-LOAN(R) For mortgage or trust deed loans Company will track both NFIP Community Status and FEMA Flood Map changes on a daily basis for the lifetime of the loan on Client's servicing system. Lists (hard copy or electronic) of loans affected will be generated monthly. From the supplied lists Client win inform Company of loans still active and Company will generate new Flood Determinations or other reports as needed. If NFIP Community Status changes affect the required flood insurance amount of a loan, Company will notify Client of the need to require changed amounts. GeoLife-of-Loan(R) service is available for transfer at no additional charge should Client sell or transfer the loan or servicing. Client is obligated to inform Company of the sale or transfer and if GeoLife-of-Loan(R) service is to transfer with the loan(s). In addition, Client shall supply Company a listing of affected loans, identified by loan number or another mutually agreeable item, in machine readable form in a mutually agreeable format on a media acceptable to both parties. Geotrac NFIP Compliance Packet(SM)s will be produced free of charge on Client recaptured refinances where the original loan is covered by GeoLife-of-Loan(R) service. It is Client's obligation to inform Company that a refinance is covered by GeoLife-of-Loan(R) service 2 3 and to supply either a copy of the original Geotrac NFIP Compliance Packet(SM) or its identifying number (GeoNumber). E. TRANSMISSION OF INFORMATION Client will transmit requests to Company EDI, fax or via Geotrac's PC based on-line system GeoCompass(SM) one or more times a day. It is Client's obligation to supply, at a minimum: loan/application identification number, borrower name; location-State, County, City/Place, full street address, and 5 digit zip code. Client shall provide a valid street address. Valid street addressees are defined as those found in the quarterly update of the USPS Zip +4 data base, and do not include P.O. Box or Rural Route and box. In those instances where Client does not supply a valid address, Company will place the order on hold, and inform Client's ordering location of the invalid address. It is Client's obligation to supply to Company, as soon as possible, the completed or corrected address information. Orders placed on hold will be reactivated the day valid address information is supplied. All turn time and other parameters will be calculated based on the date valid address information is supplied. Company will transmit key data elements back to Client EDI or Fax. The full Geotrae NFIP Compliance Packet(SM) can be faxed to Client. Average turn around shall be two business days. Both parties recognize that it is not in Client's best interest to emphasize speed of turn around over accuracy of flood certifications. Each party agrees to work in good faith to meet the data and turn around needs of the other. F. PORTFOLIO AUDIT Client would supply Company with a computer tape in a mutually agreeable format of its existing mortgage portfolio. It would be Client's obligation to supply, at a minimum: loan/application identification number, date of origination; borrower name; location State, County, City/Place, full street address, and 5 digit zip code. In addition, Client would supply site surveys, legal descriptions and other location information when requested by Company and where Client has this information. Company will perform a Risk-Based Cluster Analysis(R) audit. This audit process will achieve a statistical risk study of Client's existing portfolio. After receiving Risk-Based Cluster Analysis(R), the Client and Company may exercise the option to proceed with researching those higher risk loans. Mutually agreed upon higher risk loans would be researched through Company's loan origination process over a period of time to be determined by Company and Client at the cost set forth in Addendum "A". Under title "Audit Loans". The Risk-Based Cluster Analysis(R) will also be used to register the FEMA panel and FEMA community numbers to Client's portfolio loans at no cost to Client. Should the loans be affected by new mapping or community status information rendering them non-compliant, Client may chose to have these loans re-determined by the company. The cost for the re-determination is set forth in Addendum "A" under title "Non-Compliant Loans". 3 4 L. CONFIDENTIAL INFORMATION Company acknowledges that it may gain access to certain information regarding Borrowers of Client. Company agrees that this information shall not be disclosed or made available to any third person or entity, except that in the instance of loan applications where the applicant(s) is also the owner(s) of the real property that will secure the loan, the Company may disclose to a third party the name of a mortgage loan applicant(s) for the sole purpose of obtaining information necessary to determine the location of buildings located upon the property that will secure the loan without the specific authorization of Client. Company agrees that when information is disclosed to a third party, Company will notify Client of this disclosure. In like manner Client acknowledges that it may gain access to certain information regarding business practices, technology and pricing of Company. Client agrees that this information shall not be disclosed or made available to any third person or entity, except as necessary for Client to perform its obligations under this Agreement for auditing or regulatory purposes without the specific authorization of Company. M. USE OF INFORMATION Information supplied by Company to Client is to be used by Client for Client's compliance with the Flood Disaster Protection Act of 1973 as amended within the context of the NFIP and/or for HMDA/CRA compliance and for no other purposes. N. SYSTEM USED IN SERVICES Client has been advised that the computer software used or employed by Company in making and/or printing Geotrac NFIP Compliance Packet(SM)s hereunder, and in tracking the loan portfolio of Client for the Life of Loan service referred to above if included widen this Agreement (collectively referred to as the "Systems") are and shall remain at all times the sole property of Company and constitute material and confidential trade secrets of Company. This includes, without limitation, its source codes, screens, documentation and any improvements or modifications of the Systems. Client agrees for itself and its employees to protect the confidentiality of the Systems. O. INDEMNIFICATION Flood Zone Determinations made by Company represent a good faith interpretation of Federal Flood Insurance Rate Maps, or Federal Plood Hazard Boundary Maps, and information from government and private sources along with the lender. Although Company does not guarantee the accuracy of these outside information sources, it does assume responsibility for the completeness and timeliness of this information. Company shall hold Client safe and harmless from and against any and all loss or expense arising from claims or actions by any customer of Client based upon the negligence of Company in interpreting the above referenced Federal Flood Maps and hence failing to correctly identify and report to Client that a particular insurable structure securing a loan by Client is within (false flood negative) or outside (false flood positive) a Federally defined NFIP Special Flood Hazard Area; provided however, that such liability shall in no 5 5 event exceed the actual loss and expenses to client less any insurance or recovery from another source. This indemnification provision is only applicable to claims made by Client or customer's of Client against Client, resulting from damage to Client or customers improved real property caused by flooding as defined by the NFIP (false flood negative) or customer or Client's payment of unnecessary NFIP flood insurance premiums (false flood positive), provided Client supplies verbal notice as soon as is practicable and written notice within 30 days of Client's first becoming aware of such claims, and further provided the Company has full and fair opportunity to participate in any adjusting, settlement negotiation and litigation. P. ARBITRATION Any controversy or claim arising out of or related to this Agreement or the breach thereof, shall be settled in Ohio by binding arbitration in accordance with the Arbitration Rules of the American Arbitration Association then prevailing, and judgment upon the award rendered by the arbitration arbitrators may be entered in any court having jurisdiction thereof. Q. INDEPENDENT CONTRACTOR Company shall perform services under this Agreement as an independent contractor and not as the agent of Client. Company shall not be authorized to act on behalf of Client except as provided herein or as otherwise specifically directed by Client. R. ENTIRE AGREEMENT This Agreement constitutes the entire understanding between the parties with respect to the subject matter of this Agreement. This Agreement may only be modified by a written document executed by both parties. S. SEVERABILITY If any term or provision of this Agreement is held by a court of competent jurisdiction to be unenforceable or void, such term or provision shall be severed from the remaining provisions and such remaining provisions shall remain in full force and effect. 6 6 T. NOTICES Any notice or other communication to be given under the terms of this Agreement, shall be in writing and shall be delivered in person, or mailed by certified mail, return receipt requested, postage prepaid, addressed as follows: If to Company: Geotrac 3900 Laylin Rd. Norwalk, OH 44857 Attention: Daniel J. white If to Client: Third Federal Savings 5711 Grant Avenue Cleveland, OH 44105 Attention; Diane Gielski U. WAIVER Waiver by one party of the performance of any covenant, condition or obligation of another party shall not invalidate this Agreement, nor shall such waiver be considered to be a waiver by such park of any other covenant, condition or obligation contained in this Agreement. V. ATTORNEY'S FEES In the event any party to this Agreement institutes an action or other primming to enforce any rights arising under this Agreement, the party prevailing in any such action or other proceeding shall be paid all reasonable costs and attorney's fees by the other party. W. TIME IS OF THE ESSENCE Time is of the essence in performance under this Agreement. X. GOVERNING LAW This Agreement is made pursuant to and shall be construed and governed by the laws of the State of Ohio. 7 7 Y. HEADINGS The subject headings of this Agreement are included for the purposes of convenience only and shall not effect the construction or interpretation of any of the provisions of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. Company: Geotrac By /s/ John Marion ------------------------------- Title Asst. to the President ---------------------------- Date 3/7/98 ----------------------------- Client: Third Federal Savings By /s/ Diane Gielski ------------------------------- Title Vice President ---------------------------- Date 3/12/97 ----------------------------- 8 8 ADDENDUM "A" ORIGINATION SERVICES Client Selections
Initial Geotrac NFIP Compliance Packet(SM) $ 6.50/ea /s/ ------- GeoLife-of-Loan(R) $ 4.50/additional ea. /s/ ------- HMDA/CRA $ .50/additional ea. /s/ -------
EX-10.56 59 FLOOD COMPLIANCE SERVICE AGREEMENT 1 EXHIBIT 10.56 FLOOD COMPLIANCE SERVICE AGREEMENT THIS AGREEMENT is entered into effective April 9, 1997, by and between SMS Geotrac, a Delaware Corporation located at 3900 Laylin Road, Norwalk, Ohio ("Company") and MidAm, Inc. (Client) 221 S. Church Street, Bowling Green Ohio 43402. WHEREAS, Client desires a Flood Compliance program for compliance with regulations passed pursuant to the 1973 Flood Disaster Protection Act as amended to determine whether improved real estate securing a loan from Client to a borrower is or is not in a FEMA defined Special Flood Hazard Area ("Flood Area"), and other National Flood Insurance Program (NFIP) information, and whereas Company is in the business of supplying such information. WHEREAS, Client wishes to retain Company upon the terms and conditions contained in this Agreement; NOW THEREFORE, for mutual consideration, the parties do hereby agree as follows: A. Geotrac NFIP Compliance Packet In consideration of Company's fee schedule in section Z and pursuant to the terms of this Agreement, Client will submit mortgage or trust deed loan origination applications to Company for the purpose of making Flood Determinations and certain other NFIP Compliance work commencing April 9, 1997. Company will provide to Client on each application a Geotrac NFIP Compliance Packet containing the following information: 1. Current-In-Force NFIP Community Status Information Company will supply Current-In-Force NFIP Community Status Information consisting of NFIP Community Number, Program or Suspension/Sanction Date, and NFIP Program Status (Emergency, Regular, Non-Participating, Suspended/Sanctioned). 2. Detailed FEMA Flood Zone Code Company will supply the Detailed FEMA Flood Zone Code of the location of the structure(s) securing the loan. Company will use Client supplied location information and location information it derives to locate structures. In those cases where neither Client nor Company has sufficient information to locate the structure, Company will gather information on-site at its expense. While the Company assumes no responsibility for incorrect or incomplete location information supplied by Client, Company will make its best effort to assure location information is correct and complete. 3. Current-In-Force NFIP Flood Map Panel Company will identify the Current-In-Force NFIP Flood Map Panel consisting of the full eleven digit FEMA map number and panel date. 1 2 4. Requirement for and Availability of NFIP Flood Insurance. Company will indicate the requirement for and the availability of NFIP Flood Insurance. 5. Secondary Market/Government Program Loan Restrictions Company will designate loans which do not qualify for secondary market resale or Government program lending based on NFIP Community Status and NFIP Flood Zone problems. 6. Borrower Notification Forms On each Geotrac NFIP Compliance Packet Company will supply to Client a borrower notification form which complies with all federal statutory and regulatory requirements. B. Flood Risk Assessment in Non-Participating Non-Mapped Communities Company will prepare an appendix attached to the standard Geotrac NFIP Compliance Packet containing a flood risk assessment in NFIP non-participating non-mapped communities. C. HMDA Data Elements Company will supply HMDA State Code and County Code on all loans, and MSA Code and 1990 Census Tract on each loan where: a) 1990 Tracts are published, and b) the Federal Reserve indicates that Tract reporting is required. All HMDA data elements will be edited against government supplied information (i.e. Census Bureau's file of 1990 Census Tract and the Federal Reserve's list of State, County and MSA designations). In the event of an error Company's obligation shall be limited to correction of the error. D. GeoLife-of-Loan(R) For mortgage or trust deed loans Company will track both NFIP Community Status and FEMA Flood Map changes on a daily basis for the lifetime of the loan on Client's servicing system. Lists (hard copy or electronic) of loans affected will be generated monthly. From the supplied lists Client will inform Company of loans still active and Company will generate new Flood Determinations or other reports as needed. If NFIP Community Status changes affect the required flood insurance amount of a loan, Company will notify Client of the need to require changed amounts. GeoLife-of-Loan(R) service is available for transfer at no additional charge should Client sell or transfer the loan or servicing. Client is obligated to inform Company of the sale or transfer and if GeoLife-of-Loan(R) service is to transfer with the loan(s). In addition, Client shall supply Company a listing of affected loans, identified by loan number or another mutually agreeable item, in a mutually agreeable format on a media acceptable to both parties. 2 3 Geotrac NFIP Compliance Packets will be produced free of charge on Client recaptured refinances, home equity, and other secured loans where the original loan is already secured by the same property covered by GeoLife-of-Loan(R) service. It is Client's obligation to inform Company that these loans are covered by GeoLife-of-Loan(R) service and to supply either a copy of the original Geotrac NFIP Compliance Packet or its identifying number (GeoNumber). E. Transmissions of Information Client will transmit requests to Company EDI, fax or via Geotrac's PC based on-line system GeoCompass(SM) one or more times a day. It is Client's obligation to supply, at a minimum: loan/application identification number; borrower name; location-State, County, City/Place, full street address, and 5 digit zip code. Client shall provide a valid street address. Valid street addresses are defined as those found in the quarterly update of the USPS Zip +4 data base, and do not include P.O. Box or Rural Route and box. In those instances where Client does not supply a valid address, Company will place the order on hold, and inform Client's ordering location of the invalid address. It is Client's obligation to supply to Company, as soon as possible, the completed or corrected address information. Orders placed on hold will be reactivated the day valid address information is supplied. All turn time and other parameters will be calculated based on the date valid address information is supplied. Company will transmit key data elements to Client EDI or Fax. The full Geotrac NFIP Compliance Packet can be faxed to Client. Average turn around shall be two business days. Both parties recognize that it is not in Client's best interest to emphasize speed of turn around over accuracy of flood certifications. Each party agrees to work in good faith to meet the data and turn around needs of the other. F. Portfolio Audit Customized portfolio audit options, if selected, are documented in section Z attached. G. Client Service It is recognized that it is Clients' obligation to service its customers needs. However, Company will assist Client by providing the following services at no additional charge: 1. National 800 service for use by Client or Client's customers. 2. Letter of Map Amendment (LOMA)/Letter of Map Revision (LOMR) assistance to Client or Client's customers. Company will supply the necessary forms and directions and assist the borrower in filing the application. 3. Company will assist Client's customers in finding an agent to write flood insurance. 4. Advise the Client's customers or Client on ways to lower the flood premium within the context of investor/lender parameters and regulator requirements. 5. Company will supply free re-checks on disputed determinations. 6. Company will provide Client with educational seminars on NFIP Compliance and will answer Client's NFIP Compliance questions. 7. Company will assist Client's customers in procuring elevation certificates. 3 4 8. Company will, in general, replace the lender's flood determination customer service function. H. Use of Services Client agrees that during the term hereof it will use the services of Company for the purpose of providing Flood Compliance and Flood Determinations for mortgage or trust deed loan origination applications. I. Cost of Services Services to be provided by Company and the cost for services hereunder are described in Section Z. J. Term This Agreement shall have an initial term of three (3) years, commencing on the date of this Agreement. The term shall be automatically renewed thereafter for successive one (1) year periods, unless either party shall provide to the other no less than thirty (30) days written notice of the intention to terminate this Agreement as of the end of the said initial or extended term. K. Termination Either party may terminate this Agreement for non-performance or upon voluntary or involuntary bankruptcy proceedings by the other party. In the event of the failure of performance by either party hereunder, the non-performing party shall have a period of thirty (30) days from the date of receiving written notice from the other party to cure any such breach. If such breach is not cured within 30 days the other party may terminate this contract with 10 days written notice to the non-performing company. L. Confidential Information Company acknowledges that it may gain access to certain information regarding Borrowers of Client. Company agrees that this information shall not be disclosed or made available to any third person or entity, except that in the instance of loan applications where the applicant(s) is also the owner(s) of the real property that will secure the loan, the Company may disclose to a third party the name of a mortgage loan applicant(s) for the sole purpose of obtaining information necessary to determine the location of buildings located upon the property that will secure the loan without the specific authorization of Client. Company agrees that when information is disclosed to a third party, Company will notify Client of this disclosure. In like manner Client acknowledges that it may gain access to certain information regarding business practices, technology and pricing of Company. Client agrees that this information shall not be disclosed or made available to any third person or entity, except as necessary for Client to perform its obligations under this Agreement or for auditing or regulatory purposes without the specific authorization of Company. 4 5 M. Use of Information Information supplied by Company to Client is to be used by Client for Client's compliance with the Flood Disaster Protection Act of 1973 as amended within the context of the NFIP and/or for HMDA/CRA compliance and for no other purposes. N. Systems Used in Services Client has been advised that the computer software used or employed by Company in making and/or printing Geotrac NFIP Compliance Packets hereunder, and in tracking the loan portfolio of Client for the Life of Loan service referred to above if included within this Agreement (collectively referred to as the "Systems") are and shall remain at all times the sole property of Company and constitute material and confidential trade secrets of Company. This includes, without limitation, its source codes, screens, documentation and any improvements or modifications of the Systems. Client agrees for itself and its employees to protect the confidentiality of the Systems. O. Indemnification Flood Zone Determinations made by Company represent a good faith interpretation of Federal Flood Insurance Rate Maps, or Federal Flood Hazard Boundary Maps, and information from government and private sources along with the lender. Although Company does not guarantee the accuracy of these outside information sources, it does assume responsibility for the completeness and timeliness of this information. Company shall hold Client safe and harmless from and against any and all loss or expense arising from claims or actions by any customer of Client based upon the negligence of Company in interpreting the above referenced Federal Flood Maps and hence failing to correctly identify and report to Client that a particular insurable structure securing a loan by Client is within (false flood negative) or outside (false flood positive) a Federally defined NFIP Special Flood Hazard Area; provided however, that such liability shall in no event exceed the actual loss and expenses to client less any insurance or recovery from another source. This indemnification provision is only applicable to claims made by Client or customer's of Client against Client, resulting from damage to Client or customer's improved real property caused by flooding as defined by the NFIP (false flood negative) or customer or Client's payment of unnecessary NFIP flood insurance premiums (false flood positive), provided Client supplies verbal notice as soon as is practicable and written notice within 30 days of Client's first becoming aware of such claims, and further provided the Company has full and fair opportunity to participate in any adjusting, settlement negotiation and litigation. P. Arbitration Any controversy or claim arising out of or related to this Agreement or the breach thereof, shall be settled in Ohio by binding arbitration in accordance with the Arbitration Rules of the American Arbitration Association then prevailing, and judgment upon the award rendered by the arbitration arbitrators may be entered in any court having jurisdiction thereof. 5 6 Q. Independent Contractor Company shall perform services under this Agreement as an independent contractor and not as the agent of Client. Company shall not be authorized to act on behalf of Client except as provided herein or as otherwise specifically directed by Client. R. Entire Agreement This Agreement constitutes the entire understanding between the parties with respect to the subject matter of this Agreement. This Agreement may only be modified by a written document executed by both parties. S. Severability If any term or provision of this Agreement is held by a court of competent jurisdiction to be unenforceable or void, such term or provision shall be severed from the remaining provisions and such remaining provisions shall remain in full force and effect. T. Notices Any notice or other communication to be given under the terms of this Agreement, shall be in writing and shall be delivered in person, or mailed by certified mail, return receipt requested, postage prepaid, addressed as follows: If to Company: Geotrac 3900 Laylin Rd. Norwalk, OH 44857 Attention: Daniel J. White If to Client: Mid Am, Inc. 221 S. Church Street, P.O. Box 428 Bowling Green, Ohio 43402 Attention: John Reisner, VP U. Waiver Waiver by one party of the performance of any covenant, condition or obligation of another party shall not invalidate this Agreement, nor shall such waiver be considered to be a waiver by such party of any other covenant, condition or obligation contained in this Agreement. V. Attorney's Fees In the event any party to this Agreement institutes an action or other proceeding to enforce any rights arising under this Agreement, the party prevailing in any such action or other proceeding shall be paid all reasonable costs and attorney's fees by the other party. 6 7 W. Time is of the Essence Time is of the essence in performance under this Agreement. X. Governing Law This Agreement is made pursuant to and shall be construed and governed by the laws of the State of Ohio. Y. Headings The subject headings of this Agreement are included for the purposes of convenience only and shall not effect the construction or interpretation of any of the provisions of this Agreement. 7 8 Z. PRICING Origination Services Geotrac NFIP Compliance Packet $ 11.50/ea. GeoLife-of-Loan(R) $ 4.50/additional ea. HMDA/CRA (optional) $ 1.00/additional ea. Priority Rush Service (Same day service) $ 5.00/additional ea. Portfolio Service Portfolio services will be offered by Company to Client with pricing to be negotiated on a case by case basis. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. Company: Geotrac By /s/ John Marion --------------------------------- Title Assistant to the President ------------------------------ Date 5/5/97 ------------------------------- Client: MidAm, Inc. By /s/ Illegible --------------------------------- Title EVP/General Counsel ------------------------------ Date 5/16/97 ------------------------------- EX-10.57 60 FLOOD COMPLIANCE SERVICE AGREEMENT 1 EXHIBIT 10.57 FLOOD COMPLIANCE SERVICE AGREEMENT THIS AGREEMENT is entered into December 28, 1995 by and between Geotrac, a Delaware Corporation located at 3900 Laylin Road, Norwalk, Ohio ("Company") and Crestar Bank, Commercial Credit Operations, 10710 Midlothian Turnpike 5th Floor, Richmond, VA 23235 ("Client"). WHEREAS, Client desires a Flood Compliance program for compliance with the National Flood Insurance Act of 1968, the Flood Disaster Protection Act of 1973. The National Flood Insurance Reform Act or 1994, all as may be amended from time to time ("the Acts") and regulations promulgated pursuant thereto ("the Regulations"), including a determination whether improved real estate securing a loan from Client to a borrower is or is not in a FEMA defined Special Flood Hazard Area ("Flood Area"), and other National Flood Insurance Program (NFIP) information, and whereas Company is in the business of supplying such information. WHEREAS, Client wishes to retain Company upon the terms and conditions contained in this Agreement; NOW THEREFORE, for mutual consideration, the parties do hereby agree as follows: A. GEOTRAC NFIP COMPLIANCE PACKET(SM) In consideration of Company's attached fee schedule and pursuant to the terms of this Agreement, Client will submit approved mortgage loan origination applications ("the loans") to Company for the purpose of making Flood Determinations and certain other NFIP Compliance work, as described herein, commencing December 28, 1995. Company will provide to Client on all such loan applications a Geotrac NFIP Compliance Packet(SM) containing the following information: 1. Current-In-Force NFIP Community Status Information Company will supply Current-In-Force NFIP Community Status Information consisting of NFIP Community Number, Program or Suspension/Sanction Date, and NFIP Program Status (Emergency, Regular, Non-Participating, Suspended/Sanctioned). 2. Detailed FEMA Flood Zone Code Company will supply the Detailed FEMA Flood Zone Code of the location of the structure(s) securing the loan. Company will use Client supplied location information and location information it derives to locate structures. In those cases where neither Client nor Company has sufficient information to locate the structure, Company will gather information on-site at its expense. While the Company assumes no responsibility for incorrect or incomplete location information supplied by Client, Company will make its best effort to assure location information is correct and complete. 1 2 3. Current-In-Force NFIP Flood Map Panel Company will identify the Current-In-Force NFIP Flood Map Panel consisting of the full eleven digit FEMA map number and panel date. 4. Requirement for and Availability of NFIP Flood Insurance Company will indicate the requirement for and the availability of NFIP Flood Insurance. 5. Secondary Market/Government Program Loan Restrictions Company will designate loans which do not qualify for secondary market resale or Government program lending based on NFIP Community Status and NFIP Flood Zone problems. 6. Borrower Notification Forms On each Geotrac NFIP Compliance Packet(SM) Company will supply to Client a borrower notification form containing the information required by the Acts and Regulations and in a form acceptable to the Client. 7. All such other information as is, or may be, required with the Acts and Regulations. 8. The Company shall utilize the standard hazard determination form as may be developed by FEMA in determining whether the building is located in an area having special flood hazards and in which flood insurance is available. Not withstanding anything to the contrary herein, in providing the information regarding special flood hazards on the above form, the Company guarantees the accuracy of the information. B. FLOOD RISK ASSESSMENT IN NON-PARTICIPATING NON-MAPPED COMMUNITIES Company will prepare an appendix attached to the standard Geotrac NFIP Compliance Packet(SM) containing a flood risk assessment in NFIP non-participating non-mapped communities. C. HMDA DATA ELEMENTS At Client's option, Company will supply HMDA State Code and County Code on all loans, and MSA Code and 1990 Census Tract on each loan where: a) 1990 Tracts are published, and b) The Federal Reserve indicates that Tract reporting is required. All HMDA data elements will be edited against government supplied information (i.e. Census Bureau's file of 1990 Census Tract and the Federal Reserve's list of State, County and MSA designations). In the event of an error Company's obligation shall be limited to correction of the error. 2 3 D. LIFE OF LOAN 1.) GEOLIFE-OF-LOAN(R) For mortgage or trust deed loans Company will track both NFIP Community Status and FEMA Flood Map changes on a daily basis for the lifetime of the loan. Lists (hard copy or electronic) of loans affected will be generated monthly. From the supplied lists Client will inform Company of loans still active and Company will generate new Flood determinations or other reports as needed. If NFIP Community Status changes affect the required flood insurance amount of a loan, Company will notify Client of the need to require changed amounts. GeoLife-of-Loan(R) service is available for transfer at no additional charge should Client sell or transfer the loan or servicing. Client is obligated to inform Company of the sale or transfer and if GeoLife-of-Loan(R) service is to transfer with the loan(s). In addition, Client shall supply Company a listing of affected loans, identified by loan number or another mutually agreeable item, in machine readable form in a mutually agreeable format on a media acceptable to both parties. Geotrac NFIP Compliance Packet(SM)'s will be produced free of charge on Client recaptured refinances where the original loan is covered by GeoLife-of-Loan(R) service. It is Client's obligation to inform Company that a refinance is covered by GeoLife-of-Loan(R) service and to supply either a copy of the original Geotrac NFIP Compliance Packet(SM) or its identifying number (GeoNumber). The cost for GeoLife-of-Loan(R) is set forth in Addendum "A" under "Origination Services - GeoLife-of-Loan(R)". 2.) GEOLIFE-OF-LOAN LITE For mortgage or trust deed loans Company will track both NFIP Community Status and FEMA Flood Map changes on a daily basis for the lifetime of the loan on Client's servicing system. Lists (hard copy or electronic) of loans affected will be generated monthly. From the supplied lists Client will inform Company of loans still active and Company will generate new Flood Determinations or other reports as needed. If NFIP Community Status changes affect the required flood insurance amount of a loan, Company will notify Client of the need to require changed amounts. Cost for GeoLife-of-Loan Lite tracking service is set forth in Addendum "A" under Origination Services - GeoLife-of-Loan Lite - Tracking. Cost for new Flood Determination or notification of insurance change is set forth in Addendum "A" under Origination Services - GeoLife-of-Loan Lite - Redetermination. GeoLife-of-Loan Lite service is available for transfer should Client sell or transfer the loan or servicing. Client is obligated to inform Company of the sale or transfer and if 3 4 GeoLife-of-Loan Lite service is to transfer with the loan(s). In addition, Client shall supply Company a listing of affected loans, identified by loan number, Client's account number, Company order number or other mutually agreeable items, in machine readable form in a mutually agreeable format on a media acceptable to both parties. Cost for transfer of GeoLife-of-Loan Lite service is set forth in Addendum "A" under GeoLife-of-Loan Lite - Transfers. E. TRANSMISSIONS OF INFORMATION Client will transmit request to Client EDI, fax or via Geotrac's PC based GeoCompass one or more times a day. It is Client's obligation to supply, at a minimum: loan/application identification number; borrower name; location State, County, City/Place, full street address, and 5 digit zip code. Client shall supply valid street addresses. Valid addresses are defined as those found in the quarterly update of USPS Zip +4 database, and do not include P.O. Box or Rural Route and box. In those instances where Client does not supply a valid address, Company will place order on hold, and inform Client's ordering location of the invalid address. It is Client's obligation to supply to Company, as soon as possible, the completed or corrected address information. Orders placed on hold will be reactivated the day the valid address information is supplied. All turn around time and other parameters will be calculated based on the date the valid address information is supplied. As a supplemental document, Client will supply a list of origination offices, contact persons and phone numbers. In addition, Client is to supply site surveys, legal descriptions and other location information when requested by Company and where Client has already access to this information. Company will transmit key data elements back to Client EDI. The full Geotrac NFIP Compliance Packet(SM) can be faxed to Client. Average turn around shall be two business days for orders submitted with valid street address information. Company will notify Client of orders submitted with invalid or incomplete addresses including rural route and P.O. Box numbers. Orders submitted with invalid addresses must be corrected and resubmitted by Client. When available, Client will submit property legal description and current owner name of the property to Company. Both parties recognize that it is not in Client's best interest to emphasize speed of turn around over accuracy of flood certifications. Each party agrees to work in good faith to meet the data and turn around needs of the other. F. PORTFOLIO SERVICES 1.) Life of Loan At it's option, Client would supply Company with a computer tape in a mutually agreeable format of its existing mortgage portfolio. It would be Client's obligation to supply, at a minimum: loan/application identification number; date of origination; 4 5 borrower name; location State, County, City/Place, valid street address, and 5 digit zip code. Company will assign FEMA map panel and jurisdictional community tracking elements to portfolio loans and load into GeoLife-of-Loan(R) service. Life of Loan tracking will be enabled and redeterminations will be generated as a result of future FEMA remapping. Client will be charged a per loan GeoLife-of-Loan(R) registration fee at the time of portfolio loading. Subsequent redeterminations are performed at no cost. The cost for portfolio GeoLife-of-Loan(R) service is set forth in Addendum "A" under "Portfolio Services - GeoLife-of-Loan(R)." 2.) GeoLife-of-Loan Lite At it's option, Client would supply Company with a computer take in a mutually agreeable format of its existing mortgage portfolio. It would be Client's obligation to supply, at a minimum: loan/application identification number, date of origination; borrower name; location State, County, City/Place, full street address, and 5 digit zip code. Company will assign FEMA map panel and jurisdictional community tracking elements to portfolio loans and load into GeoLife-of-Loan(R) service. Life of Loan tracking will be enabled and redeterminations will be generated as a result of future FEMA remapping. Client will be charged a per loan registration fee at the time of portfolio loading. Subsequent charges for any redetermination required as a result of community status or FEMA map changes are incurred at the time of the redetermination. The cost for Map Panel Registration process and redeterminations is set forth in Addendum "A" under "Portfolio Services - Life-of-Loan Lite". 3.) Risk-Based Cluster Analysis(R) At it's option, Client would supply Company with a computer tape in a mutually agreeable format of its existing mortgage portfolio. It would be Client's obligation to supply, at a minimum: loan/application identification number; date of origination; borrower name; location State, County, City/Place, full street address, and 5 digit zip code. In addition, Client would supply site surveys, legal descriptions and other location information when requested by Company and where Client has this information. Company will perform a Risk-Based Cluster Analysis(R) audit. This audit process will achieve a statistical risk study of client's existing portfolio at no cost to client. After receiving the Risk-Based Cluster Analysis(R), client and company may exercise the option to proceed with researching those higher risk loans. Mutually agreed upon higher risk loans would be researched through Company's loan origination process over a 5 6 period of time to be determined by Company and Client at the cost set forth in Addendum "A". Under title "High Risk Loans" The Risk-Based Cluster Analysis(R) will also be used to register the FEMA panel and FEMA community numbers to Client portfolio loans at no cost to Client. Should the loans be affected by new mapping or community status information rendering them non-compliant, Client may chose to have these loans re-determined by the company. The cost for the re-determination is set forth in Addendum "A" under title "Portfolio Services - Risk Based Cluster Analysis" G. CLIENT SERVICE It is recognized that it is Clients obligation to service its customers' needs. However Company can assist by providing the following services. 1. National 800 service for use by Client or Client's customers. 2. Letter of Map Amendment (LOMA)/Letter of Map Revision (LOMR) assistance to Client or Client's customers. Company will supply the necessary forms and directions and assist the borrower in filing the application. 3. Company will assist Client's customers in finding an agent to write flood insurance. 4. Advise the Client's customers or Client on ways to lower the flood premium within the context of investor/lender parameters and regulator requirements. 5. Company will supply free re-checks on disputed determinations. 6. Company will provide Client with educational seminars on NFIP Compliance and will answer Client's NFIP Compliance questions. 7. Company will assist Client's customers in procuring elevation certificates. 8. Company will, in general, replace the lender's flood determination customer service function. H. USE OF SERVICES. Client agrees that during the term hereof it will use the services of Company for the purpose of providing Flood Compliance and Flood Determinations for funding mortgage or trust deed loan origination applications. I. COST OF SERVICES Services to be provided by Company and the cost for services hereunder are described in Addendum "A." J. TERM This Agreement shall have an initial term of three (3) years, commencing on the date of this Agreement. The term shall be automatically renewed thereafter for successive one (1) year periods, unless either party shall provide to the other no less than thirty (30) days written notice of the intention to terminate this Agreement as of the end of the said initial or extended term. Company will provide audited financial statement on an annual basis within 90 days of completion of fiscal year. 6 7 K. TERMINATION Either party may terminate this Agreement for non-performance or upon voluntary or involuntary bankruptcy proceedings by the other party. In the event of the failure of performance by either party hereunder, the non-performing party shall have a period of thirty (30) days from the date of receiving written notice from the other party to cure any such breach. If such breach is not cured within 30 days the other party may terminate this contract with 10 days written notice to the non-performing company. L. CONFIDENTIAL INFORMATION Company acknowledges that it may gain access to certain information regarding Borrowers of Client. Company agrees that this information shall not be disclosed or made available to any third person or entity, except as necessary for Company to perform its obligations under this Agreement, without the specific authorization of Client. Company agrees that when information is disclosed to a third party, Company will notify Client of this disclosure. In like manner Client acknowledges that it may gain access to certain information regarding business practices, technology and pricing of Company. Client agrees that this information shall not be disclosed or made available to any third person or entity, except as necessary for Client to perform its obligations under this Agreement or for auditing or regulatory purposes without the specific authorization of Company. M. USE OF INFORMATION Information supplied by Company to Client is to be used by Client for Client's compliance with the Flood Disaster Protection Act of 1973 as amended within the context of the NFIP and/or for HMDA/CRA compliance and for no other purposes. N. SYSTEMS USED IN SERVICES. Client has been advised that the computer software used or employed by Company in making and/or printing Geotrac NFIP Compliance Packet(SM)'s hereunder, and in tracking the loan portfolio of Client for the Life of Loan service referred to above if included within this Agreement (collectively referred to as the "Systems") are and shall remain at all times the sole property of Company and constitute material and confidential trade secrets of the Company. This includes, without limitation, its source codes, screens, documentation and any improvements or modifications of the Systems. Client agrees for itself and its employees to protect the confidentiality of the Systems. O. INDEMNIFICATION. Flood Zone Determinations made by Company represent a good faith interpretation of Federal Flood Insurance Rate Maps, or Federal Flood Hazard Boundary Maps, and information from government and private sources along with the lender. Although Company does not guarantee the accuracy of these outside information sources, it does assume responsibility for the completeness and timeliness of this information. 7 8 Company shall hold Client safe and harmless from and against any and all loss and expense arising from claims or actions by any customer of Client based upon the negligence of Company in interpreting the above referenced Federal Flood Maps and hence failing to correctly identify and report to Client that a particular insurable structure securing a loan by Client is within (false flood negative) or outside (false flood positive) a Federally defined NFIP Special Flood Hazard Area; provided however, that such liability shall in no event exceed the actual loss and any expenses to client less any insurance or recovery from another source. This indemnification provision is only applicable to claims made by client or customer's of Client against Client, resulting from damage to client or customer's improved real property caused by flooding as defined by the NFIP (false flood negative) or customer or client payment of unnecessary NFIP flood insurance premiums (false flood positive), provided Client supplies verbal notice as soon as is practicable and written notice within 30 days of Client's first becoming aware of such claims, and further provided the Company has full and fair opportunity to participate in any adjusting, settlement negotiation and litigation. P. ARBITRATION Any controversy or claim arising out of or related to the contract or the breach thereof, shall be settled in Ohio by binding arbitration in accordance with the Arbitration Rules of the American Arbitration Association then prevailing, and judgment upon the award rendered by the arbitration arbitrators may be entered in any court having jurisdiction thereof. Q. INDEPENDENT CONTRACTOR Company shall perform services under this Agreement as an independent contractor and not as the agent of Client. Company shall not be authorized to act on behalf of Client except as provided herein or as otherwise specifically directed by Client. R. ENTIRE AGREEMENT This Agreement constitutes the entire understanding between the parties with respect to the subject matter of this Agreement. This Agreement may only be modified by a written document executed by both parties. S. SEVERABILITY If any term or provision of this Agreement is held by a court of competent jurisdiction to be unenforceable or void, such term or provision shall be severed from the remaining provisions and such remaining provisions shall remain in full force and effect. 8 9 T. NOTICES Any notice or other communication to be given under the terms of this Agreement, shall be in writing and shall be delivered in person, or mailed by certified mail, return receipt requested, postage prepaid, addressed as follows: If to Company: Geotrac 3900 Laylin Rd. Norwalk, OH 44857 Attention: Daniel J. White If to Client: Crestar Bank Commercial Credit Operations 10710 Midlothian Turnpike 5th Floor Richmond, VA 23235 Attention: Nanette Towmazatos U. WAIVER Waiver by one party of the performance of any covenant, condition or obligation of another party shall not invalidate this Agreement, nor shall such waiver be considered to be a waiver by such party of any other covenant, condition or obligation contained in this Agreement. V. TIME IS OF THE ESSENCE Time is of the essence in performance under this Agreement. W. GOVERNING LAW This Agreement is made pursuant to and shall be construed and governed by the laws of the State of Ohio. X. ASSIGNMENT This agreement may not be assigned by the company without the prior written consent of the Client. Y. HEADINGS The subject headings of this Agreement are included for the purposes of convenience only and shall not effect the construction or interpretation of any of the provisions of this Agreement. 10 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. Company: Geotrac By /s/ Dale P. Casper Date 12/28/95 ------------------------------------- ----------------------- Title VP/CFO ---------------------------------- Client: Crestar Bank, Commercial Credit Operations By /s/ Nanette Towmazatos Date 1/3/96 ------------------------------------- ------------------------ Title VP ---------------------------------- 10 11 ADDENDUM "A" SERVICES CLIENT SELECTIONS ORIGINATION SERVICES Geotrac NFIP Compliance Packet(SM) $15.00/ea. X ----------- GeoLife-of-Loan(R) $ 4.50/ea. ----------- GeoLife-of-Loan Lite - Tracking $ .50/ea. X ----------- GeoLife-of-Loan - Redetermination $ 7.50 additional X ----------- GeoLife-of-Loan Lite - Transfers $ 1.00 additional ----------- PORTFOLIO SERVICES - - LIFE OF LOAN Loan Registration $ .50/ea. ----------- GeoLife-of-Loan(R) $ 7.50/ea. ----------- GeoLife-of-Loan Lite $10.00/ea. - - RISK BASED CLUSTER ANALYSIS Risk Based Cluster Analysis No Charge Determinations on "High Risk" Loans $10.00/ea. ----------- OPTIONAL SERVICES ORDERED ON INDIVIDUAL DETERMINATIONS Determination In Non-Mapped Communities $10.00 additional ea. ----------- Priority Rush Service (Same day service) $ 5.00 additional ea. ----------- 11 EX-10.58 61 FLOOD COMPLIANCE SERVICE AGREEMENT 1 EXHIBIT 10.58 FLOOD COMPLIANCE SERVICE AGREEMENT THIS AGREEMENT is entered into effective April 1, 1996 between SMS Geotrac, a Delaware Corporation located at 3900 Laylin Road, Norwalk, Ohio ("Company") and ReliaStar Mortgage Corporation, an Iowa corporation located at 7015 Vista Drive, West Des Moines, IA 50266 ("Client"). WHEREAS, Client desires a Flood Compliance program for compliance with regulations passed pursuant to the 1973 Flood Disaster Protection Act ("Act") as amended to determine whether improved real estate securing a loan from Client to a borrower is or is not in a Federal Emergency Management Agency (FEMA) defined Special Flood Hazard Area ("Flood Area"), and other National Flood Insurance Program (NFIP) information, as whereas Company is in the business of supplying such information; WHEREAS, Company has agreed to provide to Client a flood compliance program which complies in all material respects with the Act as it exists now and is amended in the future. NOW THEREFORE, for mutual consideration, the parties do hereby agree as follows: A. Geotrac NFIP Compliance Packet(SM) In consideration of Company's fee schedule attached hereto as Addendum "A" and pursuant to the terms of this Agreement, Client will submit mortgage or trust deed loan origination applications to Company for the purpose of making Flood Determinations and certain other NFIP Compliance work as defined in this contract, commencing April 1, 1996. Company will provide to Client on each application a Geotrac NFIP Compliance Packet containing the following information: 1. Current-In-Force NFIP Community Status Information Company will supply Current-In-Force NFIP Community Status Information consisting of NFIP Community Number, Program or Suspension/Sanction Date, and NFIP Program Status (Emergency, Regular, Non-Participating, Suspended/Sanctioned). 2. Detailed FEMA Flood Zone Code Company will supply the detailed FEMA Flood Zone Code of the location of the structure(s) securing the loan. Company will use Client supplied location information and location information it derives to locate structures. In those cases where neither Client nor Company has sufficient information to locate the structure, Company will gather information on-site at its expense. While the Company assumes no responsibility for incorrect or incomplete location information supplied by Client, Company will make its best effort to assure location information is correct and complete. 3. Current-In-Force NFIP Flood Map Panel Company will identify the Current-In-Force NFIP Flood Map Panel consisting of the full eleven digit FEMA map number and panel date. 2 4. Requirement for and Availability of NFIP Flood Insurance Company will indicate the requirement for and the availability of NFIP Flood Insurance. 5. Secondary Market/Government Program Loan Restrictions Company will designate loans which do not qualify for secondary market resale or Government program lending based on NFIP Community Status and NFIP Flood Zone problems. 6. Borrower Notification Forms On each Geotrac NFIP Compliance Packet Company will supply to Client a completed borrower notification form which complies with all applicable federal regulations. B. Flood Risk Assessment in Non-Participating Non-Mapped Communities Company will prepare an appendix attached to the standard Geotrac NFIP Compliance Packet containing a flood risk assessment in NFIP non-participating non-mapped communities. C. Life-of-Loan(R) 1) GeoLife-of-Loans is a tracking service designed to detect changes in: o FEMA NFIP Flood Map o FEMA NFIP Community Status Once changes are detected, reprocessing the loan for Client is done at no charge. Company will track both NFIP Community Status and FEMA Flood Map changes for the lifetime the loan is on Client's servicing system. Lists (hard copy or electronic) of loans affected will be generated monthly. From the supplied lists Client will inform Company of loans still active. Client may choose to electronically inform company of changes in the servicing portfolio proactively. Company will reprocess active loans that are affected by new FEMA NFIP mapping and/or revised FEMA NFIP Community Status. For those loans affected by new FEMA NFIP mapping and/or FEMA NFIP Community Status changes Company will reprocess the loan by generating a new Flood Determination (for new mapping) and/or by notifying Client of the need to require changed flood insurance amounts (for changes in Community Status), at no charge. GeoLife-of-Loan service is available for transfer at no additional charge should Client sell or transfer the loan or servicing. Client is obligated to inform Company of the sale or transfer of loans and if GeoLife-of-Loan service is to transfer with the loan, on a monthly basis. Client shall supply Company a listing of affected loans, identified by loan 3 number or another mutually agreeable item, in machine readable form in a mutually agreeable format on a media acceptable to both parties. Geotrac NFIP Compliance Packets will be produced free of charge on Client recaptured refinances where the original loan is covered by GeoLife-of-Loan service. It is Client's obligation to inform Company that a refinance is covered by GeoLife-of-Loan service and to supply either a copy of the original Geotrac NFIP Compliance Packet or it's identifying number (Geo Number). Client will place GeoLife-of-Loan service on new mortgage and trust deed loan originations where the original determination was done by Geotrac or by one of the mutually approved flood determination companies. This mutually acceptable list is outlined in a letter of approval from company to client attached as "Addendum C". 2) Foreign Flood Certification Data, Life-of-Loan Registration Process For those loans in existing portfolios, that have the data elements required for life-of-loan tracking derived from a source, at inception, other than Company, Company will use the existing data elements of life-of-loan track. Fee to be found in Addendum "A" as Foreign Flood Certification. However, Company in no way indemnifies or guarantees these data elements. However, Company guarantees the accurate tracking of the elements provided as provided in Addendum "B". For those loan originations processed with a foreign flood certification (data from a provider other than Company) that have the data elements required for life-of-loan tracking, Company will use the foreign data elements to track life-of-loan. However, Company in no way indemnifies or guarantees these data elements. However, Company guarantees the accurate tracking of the elements provided. In either case (portfolio or loan origination) where Company determines that the foreign data elements are incomplete or inaccurate, Company will place these loans on an exception report. As agreed, Company and Client will work in good faith to resolve the exceptions before the loans are tracked for life-of-loan. For mortgage or trust deed loans Company will track both NFIP Community Status and FEMA Flood Map changes on a daily basis for the lifetime of the loan on Client's servicing system. Lists (hard copy or electronic) of loans affected will be generated monthly. From the supplied lists Client will inform Company of loans still active and Company will generate new Flood Determinations or other reports as needed. If NFIP Community Status changes affect the required flood insurance amount of a loan, Company will notify Client of the need to require changed amounts. GeoLife-of-Loan service is available for transfer at no additional charge should Client sell or transfer the loan or servicing. Client is obligated to inform Company of the sale or transfer and if GeoLife-of-Loans service is to transfer with the loan(s). In addition, Client shall supply Company a listing of affected loans, identified by loan number or another mutually agreeable item, in machine readable form in a mutually agreeable format on a media acceptable to both parties. 4 Geotrac NFIP Compliance Packets will be produced free of charge on Client recaptured refinances where the original loan is covered by GeoLife-of-Loan service. It is Client's obligation to inform Company that a refinance is covered by GeoLife-of-Loan service and to supply either a copy of the original Geotrac NFIP Compliance Packet(TM) or its identifying number (GeoNumber). D. Transmissions of Information Client will transmit requests to Company electronically, fax or via Geotrac's PC based on-line system GeoCompass one or more times a day. It is Client's obligation to supply, at a minimum: loan/application identification number. borrower name; location - State, County, City/Place, valid street address, and 5 digit zip code. Valid street addresses are defined as those found in the quarterly update of the USPS Zip+ 4 data base, and do not include P.O. Box or Rural Route and box. In those instances where Client does not supply a valid address, Company will place the order on hold, and inform Client's ordering location of the invalid address. It is Client's obligation to supply to Company, as soon as possible, the completed or corrected address information. Orders placed on hold will be reactivated the day valid address information is supplied. All turn time and other parameters will be calculated based on the date valid address information is supplied. Company will transmit key data elements back to Client electronically or Fax. The full Geotrac NFIP Compliance Packet can be faxed to Client. Average turn around shall be 24 hours from receipt of the order, excluding weekends and holidays. Notice shall be given to Client for delays greater than 24 hours. Both parties recognize that it is not in Client's best interest to emphasize speed of turn around over accuracy of flood certifications. Each party agrees to work in good faith to meet the data and turn around needs of the other. E. Portfolio Audit Client will supply Company with a computer tape in a mutually agreeable format of its existing mortgage portfolio. Company will register and track existing mortgage portfolio from information provided by Client. It would be Client's obligation to supply, at a minimum: loan/application identification number; date of origination; borrower name; location (State, County, City/Place, full street address, 5 digit zip code) and flood zone if available. In addition, Client would supply site surveys, legal descriptions and other location information when requested by Company and where Client has this information. Cost reflected in Addendum "A" as Portfolio Registration and Portfolio tracking. Company will perform a Risk-Based Cluster Analysis(R) audit. This audit process will provide a statistical risk study of client's existing portfolio. After receiving Risk-Based Cluster Analysis, the client and company may exercise the option to proceed with researching those higher risk loans. Mutually agreed upon higher risk loans would be researched through Company's loan origination process over a period of time to be determined by Company and Client at the cost set forth in Addendum "A", under title "High Risk/Non Compliant Loans". Should the existing mortgage portfolio loans be affected by new mapping or community status information rendering them non-compliant, Client may chose to have these loans 5 re-determined by the company. The cost of redetermination is set forth in Addendum "A" under title "High Risk/Non Compliant Loans". If a portfolio loan loaded for portfolio lite tracking is transferred, client may choose to have a full audit completed and transferred to the new servicer at a cost addressed in "Addendum A" as Portfolio Lite Recertification ($8.00). F. Client Service It is recognized that it is Client's obligation to service its customers' needs. However, Company will assist by providing the following services; 1. National 800 service for use by Client or Client's customers. 2. Letter of Map Amendment (LOMA)/Letter of Map Revision (LOMR) assistance to Client or Client's customers. Company will supply the necessary forms and directions and assist the borrower and or client in filing the application and tracking the progress to a completion of the LOMA or LOMR process. 3. Company will assist Client's customers in finding an agent to write flood insurance. 4. Advise the Client's customers or Client on ways to lower the flood premium within the context of investor/lender parameters and regulator requirements. 5. Company will supply free re-checks on disputed determinations. 6. Company will provide Client with educational seminars on NFIP Compliance and will answer Client's NFIP Compliance questions semiannually at client's request at a mutually agreeable location. 7. Company will assist Client's customers in procuring elevation certificates. 8. Company will, in general, replace the lender flood determination customer service function. G. Use of Services Client agrees that during the term hereof it will recommend the services of Company as one of the selected companies for the purpose of providing Flood Compliance and Flood Determinations for mortgage or trusteed loan origination applications. H. Cost of Services Services to be provided by Company and the cost for services hereunder are described in Addendum "A." I. Term This Agreement shall have an initial term of (2) years, commencing on the date of this Agreement. The term shall be automatically renewed thereafter for successive one (1) year periods, unless either party shall provide to the other no less than thirty (30) days written notice of the intention to terminate this Agreement as of the end of the said initial or extended term. J. Termination 6 Either party may terminate this Agreement for non-performance or upon voluntary or involuntary bankruptcy proceedings by the other party. In the event of the failure of performance by either party hereunder, the non-performing party shall have a period of thirty (30) days from the date of receiving written notice from the other party to cure any such breach. If such breach is not cured within 30 days the other party may terminate this contract within 10 days written notice to the non-performing company. K. Confidential Information Company acknowledges that it may gain access to certain information regarding Borrowers of Client. Company agrees that this information shall not be disclosed or made available to any third person or entity, except as necessary for Company to perform its obligations under this Agreement, without the specific authorization of Client. Company agrees that when information is disclosed to a third party, Company will provide written notice to Client of this disclosure within 10 days of said disclosure. Client acknowledges that it may gain access to certain information regarding business practices, technology and pricing of Company. Client agrees that this information shall not be disclosed or made available to any third person or entity, except as necessary for Client to perform its obligations under this Agreement or for auditing or regulatory purposes without the specific authorization of Company. L. Use of Information Information supplied by Company to Client is to be used by Client for Client's compliance with the Flood Disaster Protection Act of 1973 as amended within the context of the NFIP and/or for HMDA/CRA compliance and for no purposes other than internal reports, studies and training. M. Systems Used in Services Client has been advised that the computer software used or employed by Company in making and/or printing Geotrac NFIP Compliance Packets hereunder, and in tracking the loan portfolio of Client for the Life of Loan service referred to above if included within this Agreement (collectively referred to as the "Systems") are and shall remain at all times the sole property of Company and constitute material and confidential trade secrets of Company. This includes, without limitation, its source codes, screens, documentation and any improvements or modifications of the Systems. Client agrees for itself and its employees to protect the confidentiality of the Systems. N. Indemnification Flood Zone Determinations made by Company represent a good faith interpretation of Federal Flood Insurance Rate Maps, or Federal Flood Hazard Boundary Maps, and information from government and private sources along with the lender. Although Company does not guarantee the accuracy of these outside information sources, it does assume responsibility for the completeness and timeliness of this information. 7 Company will indemnify Client for all damages which result from Company's failure to provide services which insure Client's compliance with the Act. Company shall hold Client safe and harmless from and against any and all loss and expense arising from claims or actions by any customer of Client based upon the negligence of Company in interpreting the above referenced Federal Flood Maps and its failure to correctly identify and report to Client that a particular insurable structure securing a loan by Client is within (false flood negative) or outside (false flood positive) a Federally defined NFIP Special Flood Hazard Area; provided however, that such liability shall in no event exceed the actual loss and expenses to client less any insurance or recovery from another source. This indemnification provision is only applicable to claims made by Client or customers of Client against Client, resulting from damage to Client or customer's improved real property caused by flooding as defined by the NFIP (false flood negative) or customer or client payment of unnecessary NFIP flood insurance premiums (false flood positive), provided Client supplies verbal notice as soon as is practicable and written notice within 30 days of Client's first becoming aware of such claims, and further provided the Company has full and fair opportunity to participate in any adjusting, settlement negotiation and litigation. Company agrees to maintain adequate liability, errors and omissions, or other type of insurance policy that provides coverage aims arising out of the performance of the service under this agreement by Company, its employees or agents, and Company, shall provide Client a certificate evidencing such insurance coverage. Company agrees to provide Client with audited financial statements and updated Errors and Omissions declarations page. O. Arbitration Any controversy or claim arising out of or related to the contract or the breach thereof, shall be settled in Ohio by binding arbitration in accordance with the Arbitration Rules of the American Arbitration Association then prevailing, and judgment upon the award rendered by the arbitration arbitrators may be entered in any court having jurisdiction thereof. P. Independent Contractor Company shall perform services under this Agreement as an independent contractor and not as the agent or employee of Client. Company shall not be authorized to act on behalf of Client except as provided herein or as otherwise specifically directed by Client. Q. Entire Agreement This Agreement constitutes the entire understanding between the parties with respect to the subject matter of this Agreement. This Agreement may only be modified by a written document executed by both parties. R. Severability 8 If any term or provision of this Agreement is held by a court of competent jurisdiction to be unenforceable or void, such term or provision shall be severed from the remaining provisions and such remaining provisions shall remain in full force and effect. S. NOTICES Any notice or other communication to be given under the terms of this Agreement, shall be in writing and shall be delivered in person, or mailed by certified mail, return receipt requested, postage prepaid, addressed as follows: 9 If to Company: SMS Geotrac 3900 Laylin Rd. Norwalk, OH 44857 Attention: Daniel J. White If to Client: ReliaStar Mortgage Corporation 7015 Vista Drive West Des Moines, IA 50266 Attention: Ardys Anderson T. Waiver Waiver by one party of the performance of any covenant, condition or obligation of another party shall not invalidate this Agreement, nor shall such waiver be considered to be a waiver by such party of any other covenant, condition or obligation contained in this Agreement. U. Attorney's Fees In the event any party to this Agreement institutes an action or other proceeding to enforce any rights arising under this Agreement, the party prevailing in any such action or other proceeding shall be paid all reasonable costs and attorney's fees by the other party. V. Time is of the Essence Time is of the essence in performance under this Agreement. W. Governing Law This Agreement is made pursuant to and shall be construed and governed by the laws of the State of Ohio. X. Headings The subject headings of this Agreement are included for the purposes of convenience only and shall not effect the construction or interpretation of any of the provisions of this Agreement. IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above. 10 Company: SMS Geotrac By /s/ John Marion -------------------------------- Title Asst. to the President Date 1/24/97 ----------------------------- ----------- Client: ReliaStar Mortgage Corporation By /s/ Ardys A. Anderson -------------------------------- Title Senior Vice President Date 12/30/96 ----------------------------- ----------- 11 ADDENDUM "A"
SERVICES Client Selections Initial Geotrac NFIP Compliance Packet $15.00/ea. ____________ Foreign Flood Certification $8.00/ea. ____________ Geo Life-of-Loan $4.50/additional ea. ____________ Risk Based Cluster Analysis audit flat fee of $500 ____________ Portfolio Lite Registration and Tracking $1500.00 ____________ Portfolio Lite Recertification $8.00/ea. ____________ OPTIONAL SERVICES ORDERED ON INDIVIDUAL DETERMINATIONS High Risk/Non Compliant Loans $10.00/additional ea. ____________ Determination in Non-Mapped Communities $10.00/additional ea. ____________ Priority Rush Service (Same day service) $5.00/additional ea. ____________
12 ADDENDUM "B" Required information of Client for acceptance by Company of Foreign Flood Certification to be placed under Company GeoLife-of-Loan Foreign Flood Certification. Account Number; Type of Life of Loan; Borrower Name; Property Type; loan identifier; loan amount; collateral location address; NFIP Community number, NFIP Map Panel number; Guarantor Provided Flood Zone; Guarantor Provided Flood Certification Number; Guarantor Provided Jurisdictional Community Number. Guarantor Provided Map Panel and Revision; Guarantor Number Company accepts liability for accuracy ONLY after reprocessing should occur. GeoLife-of-Loans will be generated when loans are affected by FEMA mapping changes. Company will report to Client loans affected by NFIP Community Status changes, however, Guarantor remains the original Foreign Flood Certification Company. Company will inform Client of changes requiring and changes relieving insurance placement. 13 ADDENDUM "C" The following is a listing of mutually approved companies providing flood certifications: American Flood Research, Inc. 1-800-995-8667 National Flood Information Services, Inc. 1-800-833-6347 GE Capital Flood Services 1-817-279-9158 Transamerica Flood Services 1-800-247-3384 The above mentioned companies will be reviewed at least annually, if not more. EX-10.59 62 FLOOD ZONE DETERMINATION AGREEMENT 1 EXHIBIT 10.59 [NFCS LETTERHEAD] FLOOD ZONE DETERMINATION AGREEMENT THIS AGREEMENT is entered into this 25 day of March, 1993, (Effective Date), between National Flood Certification Services ("NFCS"), a Florida Corporation with principal offices at McCormick Center 3, 1000 112th Circle, Suite 100, St. Petersburg, FL 33716, and AIG Consultants Inc. located at 5 Concourse Parkway, Atlanta, GA 30328 ("Customer"). WHEREAS, Customer desires to use NFCS for either new loans or to insure that properties in their client's mortgage loan portfolios are in compliance as described in the "Flood Disaster Protection Act of 1973". WHEREAS, NFCS desires to provide flood zone determinations and documentation of same to Customer. 1. TERM A. The term of this Agreement shall commence on a date which shall be the later of (i) the effective date entered above or (ii) the date signed by both parties and shall continue thereafter until terminated by either party upon thirty (30) days written notice to the other party. B. Either party may terminate this agreement immediately upon written notice, if the other party is adjudicated a bankrupt, files a voluntary petition in bankruptcy, is declared insolvent by a regulator, or makes an assignment for benefit of creditors and becomes unable to meet its obligations in the normal course of business as they fall due. 2. COVENANTS AND WARRANTIES A. FOR ALL CUSTOMERS. NFCS shall provide certification of the determined zone, community name and number, panel-suffix, map date, firm date and the base flood elevation, if applicable, as required in order for Customer to be in compliance. In addition if specifically requested by Customer, NFCS will provide an original Flood Zone Certificate for the file to all Customers using the service for new loans; otherwise, a faxed copy will be sufficient. B. FOR AUTOMATED DELIVERY USERS ONLY. Given the nature of the electronic transfer of flood policy information from NFCS to customer, customer shall indemnify and hold NFCS, its officers, directors, employees, agents, and other affiliates harmless against any and all expenses or fees resulting from the subsequent manipulation of said electronic data following the transfer of the data from NFCS. Customer specifically recognizes, understands, and agrees that all electronic data transferred from NFCS shall have the presumption of validity and accuracy at the moment of receipt of such data. This clause is intended to protect NFCS, its associated personnel and its affiliates from any losses, claims, disputes or material problems regarding the electronic data due to the potential for manipulation of such data following the transfer from NFCS. 2 C. Customer shall pay to NFCS, compensation for selected services in the amounts set forth in Schedule "A" which is attached hereto and by reference made a part hereof. D. NFCS shall not, without the written consent of Customer, disclose to any third party any information it obtains or is provided by Customer. NFCS shall undertake all reasonable precautions at least equivalent to the same precautions it takes in preserving the confidentiality of NFCS' own confidential or proprietary information, to preserve the confidentiality of Confidential Information. 3. TERMS AND CONDITIONS A. The zone determination is exclusively for the benefit of Customer, their clients and/or the borrower for whose benefit the search is performed and for no other party. B. The zone determination is based upon an examination of the current Flood Insurance Rate Maps as published by the Federal Emergency Management Agency as well as other sources of information as required and applies only to Subject Property identified by the Flood Insurance Rate Map Panels(s). C. NFCS shall indemnify and hold harmless the above named organization for liability on any uninsured flood loss, up to, and only up to, the maximum available insurance coverage under the NFIP program for the property, if the improved property was in a special flood area at the time of certification and NFCS incorrectly certified that said property was not in such area. Additionally, if any improved property was not in a special flood hazard area at the time of certification and NFCS incorrectly certifies that said property was in the special flood hazard area, NFCS shall reimburse the borrower for all flood insurance premiums paid that were not refunded by the named flood carrier's cancellation process. Errors and Omissions coverage will be maintained by NFCS. NFCS warrants and represents that there is no requirement under its error and omissions policy that suit be filed against NFCS in order to collect damages under the policy. D. The zone determination may contain information from public land records and U.S. Government agencies relating to floodplain location. However, this determination is based on the data which is currently available from government sources and does not necessarily include all possible flood hazards. NFCS shall not be liable for not reporting flood zone information that was not generally available or inaccurate at the time of this determination. This determination is based on information supplied by customers, their clients and/or the borrower and NFCS will not be responsible for inaccuracies in their submission. A zone determination is valid only if signed by an authorized representative of NFCS. NFCS GUIDELINES When the subject property is in a dual zone, we will certify a flood zone determination using the most hazardous zone unless additional information is povided. We will also identify both zones in a dual zone situation. 3 4. NOT A PARTNERSHIP Nothing in this Agreement shall be construed to cause Customer to be in a partnership with NFCS. 5. GOVERNING LAW This agreement shall be governed by the laws of the State of Florida. Venue for all legal actions commenced under this Agreement shall be in Pinellas County, Florida. 6. INTEREST ON LATE PAYMENTS In the event that sums due and payable hereunder shall remain unpaid 15 days after the party entitled to payment has served written notice on the defaulting party that such sums are due but remain unpaid, then interest shall accrue thereon until paid at the highest rate permitted by law. 7. ATTORNEY'S FEES If customer or National Flood Certification Services, Inc. should bring a Court action alleging breach of this Agreement or seeking to enforce, rescind, renounce, declare void or terminate this Agreement or any provision thereof, the prevailing party shall be entitled to recover all of its legal expenses, including reasonable attorney's fees and costs (including legal expenses for any appeals taken), and to have the same awarded as part of the judgment in the proceeding in which legal expenses and attorney's fees were incurred. IN WITNESS WHEREOF, WE HAVE SET OUR HANDS AND SEALS AS OF THE DAY AND YEAR FIRST ABOVE SET FORTH. NATIONAL FLOOD CERTIFICATION AIG Consultants Inc. SERVICES, INC. ------------------------------------- Company/Customer Name /s/ D. M. Howard, Vice Pres. /s/ Cecil L. Chapman Regional Manager - ------------------------------- ------------------------------------- Signature/Title Signature/Title 3/25/94 March 21, 1994 - ------------------------------- ------------------------------------- Date Date (404) 671-2189 ------------------------------------- Company/Customer Phone Number (404) 399-4149 ------------------------------------- Company/Customer Fax Number 4 SCHEDULE A New Loan Zone Determinations Standard Service $15.00 each (In by 3:00 p.m., out by 5:00 p.m. in two business days) Next Day Service $ 2.00 add'l (In by 3:00 a.m., out by 5:00 p.m. following business day) Same Day Service $ 5.00 add'l (In by 9:00 a.m., out by 5:00 p.m. In after 9:00 a.m., out before Noon the following business day) (Times above are Eastern Standard Time.) Recertifications $ 8.00 each Zone Guard* $24.00 each Billing amount to be due and payable within 30 days of Customer's receipt of invoice. *ZONE GUARD PROGRAM Part A For a one time fee of $24.00, NFCS shall provide Customer an unlimited number of recertifications of flood zone determinations relating to the same property at no additional charge. (As mandated by regulations of the Federal Insurance Administration, recertification is required should there be any subsequent making, increasing, extension or renewal of a loan following loan origination.) Part B Zone Guard will also include notification if the flood hazard status of a property in which Customer is the mortgagee changes as a result of the issuance of a new flood map by the Federal Emergency Management Agency. Transferring Zone Guard Zone Guard is actually an "add-on" to the New Loan Determination or Portfolio Analysis Zone Determination. After the date of the initial Certification, whenever the applicable FEMA map panel is revised, each property will again be assessed and certified within sixty (60) days after the date the FEMA map panel is revised and generally available to NFCS. The Zone Guard recertifications are transferable to subsequent mortgagees. However, all Zone Guard recertifications shall be sent by regular mail to the address set forth on the face of this Agreement or such alternative address as Customer (or its assignees) may, from time to time designate in writing to NFCS. EX-10.60 63 FLOOD ZONE COMPLIANCE DETERMINATION AGREEMENT 1 EXHIBIT 10.60 [BANKERS INSURANCE GROUP LETTERHEAD] REP: House ----------- FLOOD ZONE DETERMINATION AGREEMENT THIS AGREEMENT is entered into this 28th day of December 1995, (Effective Date), between Bankers Hazard Determination Services, Inc. ("BHDS"), a Florida Corporation with principal offices at 10051 5th Street North, St. Petersburg, FL 33702, and SouthTrust Corporation located at (Primary Address) P O Box 2554 Birmingham AL 35290 ("Customer"). WHEREAS, Customer desires to use BHDS for either new loans or to insure that properties in their client's mortgage loan portfolios are in compliance as described in the "Flood Disaster Protection Act of 1973". WHEREAS, BHDS desires to provide flood zone determinations and documentation of same to Customer. NOW, THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the parties hereto agree as follows: 1. TERM A. The term of this Agreement shall commence on a date which shall be the later of (i) the effective date entered above or (ii) the date signed by both parties, and shall continue thereafter until terminated by either party upon thirty (30) days written notice to the other party. B. Either party may terminate this agreement immediately upon written notice if the other party is adjudicated a bankrupt, files a voluntary petition in bankruptcy, is declared insolvent by a regulator, or makes an assignment for benefit of creditors and becomes unable to meet its obligations in the normal course of business as they fall due. 2. COVENANTS AND WARRANTIES A. FOR ALL CUSTOMERS. BHDS shall provide certification of the determined zone, community name and number, panel-suffix, map date, and firm date, as required in order for Customer to be in compliance. In addition if specifically requested by Customer, BHDS will provide an original Flood Zone Certificate for the file to all Customers using the service for new loans; otherwise, a faxed copy will be sufficient. B. FOR AUTOMATED DELIVERY USERS ONLY. Given the nature of the electronic transfer of flood policy information from BHDS to Customer, Customer shall indemnify and hold BHDS, its officers, directors, employees, agents, and other affiliates harmless against any and all expenses or fees resulting from the subsequent manipulation of said electronic data following the transfer of the data from BHDS. Customer specifically recognizes, understands, and agrees that all electronic data transferred from BHDS shall have the presumption of validity and accuracy at the moment of receipt of such data. This clause is intended to protect BHDS, its associated personnel and its affiliates from any losses, claims, disputes or material problems regarding the electronic data due to the potential for manipulation of such data following the transfer from BHDS. 2 C. Customer shall pay to BHDS compensation for selected services in the amounts set forth in Schedule "A" which is attached hereto and by reference made a part hereof. D. BHDS shall not, without the written consent of Customer, disclose to any third party any information it obtains or is provided by Customer. BHDS shall undertake all reasonable precautions at least equivalent to the same precautions it takes in preserving the confidentiality of BHDS' own confidential or proprietary information, to preserve the confidentiality of Customer's Information. 3. TERMS AND CONDITIONS A. The zone determination is exclusively for the benefit of Customer, their clients and/or the borrower for whose benefit the search is performed and for no other party. B. The zone determination is based upon an examination of the current Flood Insurance Rate Maps as published by the Federal Emergency Management Agency as well as other sources of information as required and applies only to Subject Property identified by the Flood Insurance Rate Map Panels. C. BHDS shall indemnify and hold harmless the above named organization for liability on any uninsured flood loss, up to, and only up to, the maximum available insurance coverage under the NFIP program for the property, if the improved property was in a special flood area at the time of certification and BHDS incorrectly certified that said property was not in such area. Additionally, if any improved property was not in a special flood hazard area at the time of certification and BHDS incorrectly certifies that said property was in the special flood hazard area, BHDS shall reimburse the borrower for all flood insurance premiums paid that were not refunded by the named flood carrier's cancellation process. Errors and Omissions coverage will be maintained by BHDS. BHDS warrants and represents that there is no requirement under its error and omissions policy that suit be filed against BHDS in order to collect damages under the policy. D. The zone determination may contain information from public land records and U.S. Government agencies relating to floodplain location. However, this determination is based on the data which is currently available from government sources and does not necessarily include all possible flood hazards. BHDS shall not be liable for not reporting flood zone information that was not generally available, at the time of this determination nor shall BHDS be held liable for any damages that result from the use of inaccurate information supplied to BHDS from FEMA or any agency of the U.S. Government. This determination is based on information supplied by customers, their clients and/or the borrower and BHDS will not be responsible for inaccuracies in their submission. E. Customer shall pay BHDS, in accordance with statements of account rendered by BHDS, all amounts billed, whether or not collected, within 30 days after the end of the month in which said certification was requested. F. A zone determination is valid only if signed by an authorized representative of BHDS. G. BHDS Guidelines. When the subject property is in a dual zone, BHDS will certify a flood zone determination using the most hazardous zone unless additional information is provided. BHDS will also identify both zones in a dual zone situation. 3 4. NOT A PARTNERSHIP Nothing in this Agreement shall be construed to cause Customer to be in a partnership with BHDS. 5. GOVERNING LAW This Agreement shall be governed by the laws of the State of Florida. Venue for all legal actions commenced under this Agreement shall be in Pinellas County, Florida. 6. INTEREST ON LATE PAYMENTS In the event that sums due and payable hereunder shall remain unpaid 15 days after the party entitled to payment has served written notice on the defaulting party that such sums are due but remain unpaid, then interest shall accrue thereon until paid at the highest rate permitted by law. 7. ATTORNEY'S FEES If Customer or BHDS should bring a Court action alleging breach of this Agreement or seeking to enforce, rescind, renounce, declare void or terminate this Agreement or any provision thereof, the prevailing party shall be entitled to recover all of its legal expenses, including reasonable attorney's fees and costs (including legal expenses for any appeals taken), and to have the same awarded as part of the judgment in the proceeding in which legal expenses and attorney's fees were incurred. 8. CREDIT REPORT This agreement gives BHDS the permission to request a credit report to extend or maintain credit terms. IN WITNESS WHEREOF, WE HAVE SET OUR HANDS AND SEALS AS OF THE DAY AND YEAR FIRST ABOVE SET FORTH. BANKERS HAZARD DETERMINATION SOUTHTRUST CORPORATION SERVICES, INC. /s/ D. M. Howard /s/ Don L. Hurt - ------------------------------- ------------------------------------- David M. Howard, President Signature/Title 1/3/96 Don L. Hurt /12-28-95 - ------------------------------- ------------------------------------- Date Please Print Name /Date SouthTrust Corporation 205-254-5769 ------------------------------------- Company/Customer Phone Number 205-254-5508 ------------------------------------- Company/Customer Fax Number 4 SCHEDULE A NEW LOAN ZONE DETERMINATIONS ZONE GUARD (LIFE OF LOAN) $18.00 per certificate 24 Hour Service No Charge (In by 3:00 p.m., out by 5:00 p.m. following business day) 8 Hour Service $5.00 add'l (In by 9:00 a.m., out by 5:00 p.m. In after 9:00 a.m., out before Noon the following business day) (Times above are Eastern Standard Time.) 5 Hour or Less $7.00 add'l (Five hour turnaround time.) PORTFOLIO ANALYSIS BHDS will perform a flood scan on portfolio loans for SouthTrust at no charge. The properties located in areas with high probability of flood risk will be certified with life of loan coverage at the price of $7.50 per loan. Billing amount to be due and payable within 30 days of Customer's receipt of invoice. Bankers Hazard Determination Services, South Trust Corporation Inc. /s/ D. M. Howard 1/3/96 /s/ Don L. Hurt 12-28-95 - ------------------------------------- ------------------------------- David M. Howard Date Signature/Title Date Credit Insurance Manager Schedule A as addendum to BHDS Flood Zone Determination Agreement dated 12/28/95. EX-10.61 64 FLOOD ZONE DETERMINATION AGREEMENT 1 EXHIBIT 10.61 [NFCS LETTERHEAD] FLOOD ZONE DETERMINATION AGREEMENT THIS AGREEMENT is entered into this 14th day of July, 1994, (Effective Date), between National Flood Certification Services ("NFCS"), a Florida Corporation with principal offices at McCormick Center 3, 1000 112th Circle, Suite 100, St. Petersburg, FL 33716, and SunBank NA, located at 200 S. Orange Avenue Twr. 5, Orlando FL 32801 ("Customer"). WHEREAS, Customer desires to use NFCS for either new loans or to insure that properties in their mortgage loan portfolios are in compliance as described in the "Flood Disaster Protection Act of 1973". WHEREAS, NFCS desires to provide flood zone determinations and documentation of same to Customer. 1. TERM A. The term of this Agreement shall commence on a date which shall be the later of (i) the effective date entered above or (ii) the date signed by both parties and shall continue thereafter until terminated by either party upon thirty (30) days written notice to the other party. B. Either party may terminate this agreement immediately upon written notice, if the other party is adjudicated a bankrupt, files a voluntary petition in bankruptcy, is declared insolvent by a regulator, or makes an assignment for benefit of creditors or becomes unable to meet its obligations in the normal course of business as they fall due. Additionally, this agreement may be terminated in the event of fraud or misconduct by either party. 2. COVENANTS AND WARRANTIES A. FOR ALL CUSTOMERS. NFCS shall provide certification of the determined zone, community name and number, panel-suffix, map date, firm date and the base flood elevation, if applicable, as required in order for Customer to be in compliance with the Flood Disaster Protection Act. In addition if specifically requested by Customer, NFCS will provide an original Flood Zone Certificate for the file to all Customers using the service for new loans; otherwise, a faxed copy will be sufficient. B. FOR AUTOMATED DELIVERY USERS ONLY. Given the nature of the electronic transfer of flood policy information from NFCS to customer, customer shall indemnify and hold NFCS, its officers, directors, employees, agents, and other affiliates harmless against any and all expenses or fees resulting from the subsequent manipulation of said electronic data following the transfer of the data from NFCS. Customer specifically recognizes, understands, and agrees that all electronic data transferred from NFCS shall have the presumption of validity and accuracy at the moment of transmission. This clause is intended to protect NFCS, its associated personnel and its affiliates from any losses, claims, disputes or material problems regarding the electronic data due to the potential for manipulation of such data following the transfer from NFCS, as long as the loss, claim, dispute or material problem is not due to the negligence or misconduct of NFCS, its officers, directors, employees, agents or other affiliates. 2 C. Customer shall pay to NFCS, compensation for selected services in the amounts set forth in Schedule "A" which is attached hereto and by reference made a part hereof. D. NFCS shall not, without the written consent of Customer, disclose to any third party any information it obtains or information provided by Customer. NFCS shall undertake all reasonable precautions at least equivalent to the same precautions it takes in preserving the confidentiality of NFCS' own confidential or proprietary information, to preserve the confidentiality of customer's information. 3. TERMS AND CONDITIONS A. The zone determination is exclusively for the benefit of Customer, their clients and/or the borrower for whose benefit the search is performed and for no other party. B. The zone determination is based upon an examination of the current Flood Insurance Rate Maps as published by the Federal Emergency Management Agency as well as other sources of information as required and applies only to Subject Property identified by the Flood Insurance Rate Map Panels(s). C. NFCS shall indemnify and hold harmless the above named organization for liability on any uninsured flood loss, up to, and only up to, the maximum available insurance coverage under the NFIP program for the property, if the improved property was in a special flood area at the time of certification and NFCS incorrectly certified that said property was not in such area. Additionally, if any improved property was not in a special flood hazard area at the time of certification and NFCS incorrectly certifies that said property was in the special flood hazard area, NFCS shall reimburse the borrower for all flood insurance premiums paid that were not refunded by the named flood carrier's cancellation process. Errors and Omissions coverage in the amount of $10 million will be maintained by NFCS. NFCS warrants and represents that there is no requirement under its error and omissions policy that suit be filed against NFCS in order to collect damages under the policy. D. The zone determination may contain information from public land records and U.S. Government agencies relating to floodplain location. However, this determination is based on the data which is currently available from government sources and does not necessarily include all possible flood hazards. NFCS shall not be liable for not reporting flood zone information that was not generally available or was inaccurately shown on Government records. This determination is based on information supplied by customers, their clients and/or the borrower and NFCS will not be responsible for inaccuracies in their submission. A zone determination is valid only if signed by an authorized representative of NFCS. NFCS GUIDELINES When the subject property is in a dual zone, we will certify a flood zone determination using the most hazardous zone unless additional information is povided. We will also identify both zones in a dual zone situation. 3 4. NOT A PARTNERSHIP Nothing in this Agreement shall be construed to cause Customer to be in a partnership with NFCS. 5. GOVERNING LAW This Agreement shall be governed by the laws of the State of Florida. Venue for all legal actions commenced under this Agreement shall be in Orange County, Florida. 6. INTEREST ON LATE PAYMENTS In the event that sums due and payable hereunder shall remain unpaid 15 days after the party entitled to payment has served written notice on the defaulting party that such sums are due but remain unpaid, then interest shall accrue thereon until paid at the highest rate permitted by law. 7. ATTORNEY'S FEES If customer or National Flood Certification Services, Inc. should bring a Court action alleging breach of this Agreement or seeking to enforce, rescind, renounce, declare void or terminate this Agreement or any provision thereof, the prevailing party shall be entitled to recover all of its legal expenses, including reasonable attorney's fees and costs (including legal expenses for any appeals taken), and to have the same awarded as part of the judgment in the proceeding in which legal expenses and attorney's fees were incurred. IN WITNESS WHEREOF, WE HAVE SET OUR HANDS AND SEALS AS OF THE DAY AND YEAR FIRST ABOVE SET FORTH. NATIONAL FLOOD CERTIFICATION Sunbank, National Association SERVICES, INC. ------------------------------------- Company/Customer Name /s/ D. M. Howard, Vice Pres. /s/ Sandra W. Jansky, E.V.P. - ------------------------------- ------------------------------------- David M. Howard, Vice President Signature/Title 7/11/94 7/14/94 - ------------------------------- ------------------------------------- Date Date (407) 237-6778 ------------------------------------- Company/Customer Phone Number (407) 237-4531 ------------------------------------- Company/Customer Fax Number 4 SCHEDULE A New Loan Zone Determinations Standard Service $12.50 each (In by 3:00 p.m., out by 5:00 p.m. in two business days) Zone Guard* $24.00 each Next Day Service $ 00. add'l (In by 3:00 p.m., out by 5:00 p.m. following business day) Same Day Service $ 5.00 add'l (In by 9:00 a.m., out by 5:00 p.m. In after 9:00 a.m., out before Noon the following business day) (Times above are Eastern Standard Time.) Fleet Service $ 7.00 add'l (Five hour turnaround time.) Recertifications $ 8.00 each Billing amount to be due and payable within 30 days of Customer's receipt of invoice. *ZONE GUARD PROGRAM Part A For a one time fee, NFCS shall provide Customer an unlimited number of recertifications of flood zone determinations relating to the same property at no additional charge. (As mandated by regulations of the Federal Insurance Administration, recertification is required should there be any subsequent making, increasing, extension or renewal of a loan following loan origination.) Part B Zone Guard will also include notification if the flood hazard status of a property in which Customer is the mortgagee changes as a result of the issuance of a new flood map by the Federal Emergency Management Agency. Transferring Zone Guard Zone Guard is actually an "add-on" to the New Loan Determination or Portfolio Analysis Zone Determination. After the date of the initial Certification, whenever the applicable FEMA map panel is revised, each property will again be assessed and certified within sixty (60) days after the date the FEMA map panel is revised and generally available to NFCS. The Zone Guard recertifications are transferable to subsequent mortgagees. However, all Zone Guard recertifications shall be sent by regular mail to the address set forth on the face of this Agreement or such alternative address as Customer (or its assignees) may, from time to time designate in writing to NFCS. EX-10.62 65 FLOOD ZONE DETERMINATION AGREEMENT 1 EXHIBIT 10.62 NFCS FLOOD ZONE DETERMINATION AGREEMENT THIS AGREEMENT is entered into this 8th day of November, 1993 ("Effective Date"), between National Flood Certification Services ("NFCS"), a Florida Corporation with principal offices at McCormick Center 3, 1000 112th Circle, Suite 100, St. Petersburg, FL 33716, and Royal Indemnity Company for itself and on behalf of its affiliates as their interests may appear and exist ("Royal"), a Delaware corporation with its principal office located at 9300 Arrowpoint Boulevard, Charlotte, North Carolina 28273-8135. WHEREAS, Royal desires to use NFCS to determine if a policyholder's property - either residential or commercial - is located within a special flood hazard area and if flood insurance is available on such property. WHEREAS, NFCS desires to provide special flood hazard area and flood insurance availability determinations and documentation of same to Royal. 1. TERM A. The term of this Agreement shall commence on a date which shall be the later of (i) the effective date entered above or (ii) the date signed by both parties and shall continue thereafter until terminated by either party thirty (30) days written notice to the other party. B. Either party may terminate this agreement immediately upon written notice, if the other party is adjudicated a bankrupt, files a voluntary petition in bankruptcy, is declared insolvent by a regulator, or makes an assignment for benefit or creditors and becomes unable to meet its obligations in the normal course of business as they fall due. 2. COVENANTS AND WARRANTIES A. NFCS shall provide certification of the determined special flood hazard area, community name and number, panel-suffix map date, firm date and the base flood elevation, if applicable, as required by Royal in the request form sent to NFCS by Royal. In addition, if specifically requested by Royal in the request form sent to NFCS by Royal, NFCS will provide a faxed copy of the Flood Zone Certificate to Royal; an original Certificate will be provided upon request for same by Royal. B. Royal shall pay to NFCS compensation for selected services in the amounts and time frame set forth in Schedule "A" which is attached hereto and by reference made a part hereof. 2 C. NFCS shall not, without the written consent of Royal, disclose to any third party any information it obtains or is provided by Royal. NFCS shall undertake all reasonable precautions at least equivalent to the same precautions it takes in preserving the confidentiality of NFCS' own confidential or proprietary information, to preserve the secrecy of Confidential Information. 3. TERMS AND CONDITIONS A. The zone determination is exclusively for the benefit of Royal, its clients and/or the insured or policyholder for whose benefit the search is performed and for no other party. B. The zone determination is based upon an examination of the current Flood Insurance Rate Maps as published by the Federal Emergency Management Agency as well as other sources of information as required and applies only to Subject Property identified by the Flood Insurance Rate Map Panels(s). C. NFCS shall indemnify and hold harmless Royal for liability on any uninsured flood loss, up to, and only up to, the maximum available insurance coverage under the NFIP program for the property, if the property was in a special flood hazard area at the time of certification and NFCS incorrectly certified such property and said that the property in question was not in such a special flood hazard area. NFCS warrants and represents that there is no requirement under its error and omissions policy that suit be filed against NFCS in order to collect damages under the policy. D. The zone determination may contain information from public land records and U.S. Government agencies relating to floodplain location. However, this determination is based on the data which is currently available from government sources and does not necessarily include all possible flood hazards. NFCS shall not be liable for not reporting flood zone information that was not generally available or inaccurate at the time of this determination. This determination is based on information supplied by Royal, its clients and/or the insured/policyholder and NFCS will not be responsible for inaccuracies in their submission. A zone determination is valid only if signed by an authorized representative of NFCS. NFCS GUIDELINES When the subject property is in a dual zone, we will certify a flood zone determination using the most hazardous zone unless additional information is provided We will also identify both zones in a dual zone situation. -2- 3 4. NOT A PARTNERSHIP Nothing in this Agreement shall be construed to cause Royal to be in a partnership with NFCS. 5. GOVERNING LAW This Agreement shall be governed by the laws of the State of Florida. Venue for all legal actions commenced under this Agreement shall be in Pinellas county, Florida. 6. INTEREST ON LATE PAYMENTS In the event that sums due and payable hereunder in accordance with the payment time frame set forth in Schedule A shall remain unpaid 15 days after the party entitled to payment has served written notice on the defaulting party that such sums are due but remain unpaid, then interest shall accrue thereon until paid, at the highest rate permitted by law. 7. ATTORNEY'S FEES If NFCS should bring a Court action alleging breach of this Agreement or seeking to enforce, rescind, renounce, declare void or terminate this Agreement or any provision thereof, the prevailing party shall be entitled to recover all of its legal expenses, including reasonable attorney's fees and costs (including legal expenses for any appeals taken), and to have the same awarded as part of the judgement in the proceeding in which legal expenses and attorney's fees were incurred. IN WITNESS WHEREOF, we have set our hands and seals as of the day and year first above set forth. -3- 4 NATIONAL FLOOD CERTIFICATION ROYAL INDEMNITY COMPANY for SERVICES, INC. itself and on behalf of its affiliate as their as their interests may appear and exist /s/ D. M. Howard /s/ David H. Martin V.P. - ------------------------------- ------------------------------------- David Howard, Signature/Title Vice President - Marketing 10/15/93 11/8/93 - ------------------------------- ------------------------------------- Date Date ------------------------------------- Royal Phone Number -4- EX-10.63 66 FLOOD INSURANCE AGREEMENT 1 [FCIC LOGO] EXHIBIT 10.63 First Community Insurance Company P.O. Box 33027 St. Petersburg, FL 33733 FLOOD INSURANCE AGREEMENT This agreement is entered into this 17th day of February, 1995, by and between First Community Insurance Company, 360 Central Avenue, St. Petersburg, Florida 33701 (hereinafter referred to as "General Agent") and Armed Forces Insurance Exchange whose principal office is located at 550 Eisenhower Road, Leavenworth, KS 66048-4864 (hereinafter referred to as "Broker") mutually agree as follows: I. DUTIES OF BROKER A. To solicit and submit applications together with premiums due, for the Flood Insurance Policies as authorized under the National Flood Insurance Act, subject to the published authority of the Federal Emergency Management Agency/Federal Insurance Administration (FEMA/FIA). B. To obey and comply with all State Insurance Department regulations governing the territory in which the Broker is authorized to solicit business. C. To comply with the underwriting guides, bulletins, manuals, and written instructions issued by the General Agent or the Federal Emergency Management Agency/Federal Insurance Administration (FEMA/FIA) regarding the solicitation and submission of flood insurance applications. D. To report all claims and claims related activity promptly to the Company. II. COMPENSATION A. The General Agent will compensate the Broker for all acts performed under the Agreement in the amount of 15 percent on the annual premium per policy issued by the W.Y.O. Flood Insurance Carrier up to $2,000.00 and in the amount of 5 percent on the premium per policy in excess of $2,000.00 B. The Broker shall refund promptly to the General Agent on business heretofore or hereafter written, compensation on cancelled policies and on reduction in premiums at the rate at which such compensation was originally paid. C. Compensation due under this Agreement is to be payable only during the continuance of this Agreement and under its terms, and while the Broker is actively producing and servicing business, hereunder. Any provision of this Agreement providing for payment of compensation shall be subject to any indebtedness by the Broker to the General Agent arising out of Flood insurance policy premium transactions. The General Agent shall have the right to withhold payments to offset any such indebtedness; provided, however, that any withholding of compensation shall be only to the extent necessary to liquidate such indebtedness. III. LIMITATION OF AUTHORITY A. No provision of this Agreement shall be construed to create the relation of employer and employee between the General Agent and Broker, and the Broker and the General Agent shall act as independent contractors and be free within the prescribed underwriting guidelines of the Company or the Federal Emergency Management Agency/Federal Insurance Administration (FEMA/FIA) in force at the time to exercise their own judgement as to whom they will solicit, and the time, place and manner, and the amount of such solicitation. B. The Broker has no authority to extend time of payment of premiums, or to waive or extend any obligation or condition of the Standard Flood Insurance Policy, or incur any liability on behalf of the Company. 2 C. The Broker shall not participate in the settlement of claims, pay claims or commit the Company to the payment of claims. IV. GENERAL AGREEMENTS A. In the event of termination of this Agreement, the Broker shall promptly account for all premiums and transactions covered by this agreement, whereupon the ownership of the flood insurance business produced under this Agreement is left in the possession of the Broker. In the event the Broker shall fail to render such an accounting within 90 days of the termination hereof, the flood insurance business provided under this Agreement shall become the property of the General Agent. B. It is mutually agreed that if either party deviates from the provisions of the Agreement, whether or not such deviation is protested by the other party or parties, such deviation shall not be held to have changed this Agreement, or the rights of the parties hereunder in any respect. No change in or modification to this Agreement shall be valid and binding unless reduced in writing and executed by both parties. C. This Agreement shall continue in full force and effect until terminated by either party giving to the other a written notice at least 90 days prior to the effective date of such termination; provided, however, either party may terminate this Agreement immediately with notice if the other party is guilty of any material violation of the terms hereof. D. Applications, advertising material and other material furnished by the Company are the property of the Company and will be returned to the Company upon termination of the Agreement. E. The General Agent, through the W.Y.O. flood insurance carrier, shall provide direct billed renewal premium notice to the designated payor of the flood insurance policy prior to the expiration date of the policy and shall provide the Broker with either list notice or individual notice of the upcoming expiration of the policies serviced by the Broker under this Agreement. F. Each party agrees to hold the other parties harmless and free of liability arising from any act or omission or responsibility of themselves under this Agreement. G. Broker shall allow the General Agent to audit all books and records relating to insurance written pursuant to this Agreement. H. This Agreement cannot be assigned to others without written agreement of the General Agent. This Agreement constitutes the full agreement, oral or written, between the General Agent, and the Broker, but shall be subject to such changes as may be provided in writing from time to time. IN WITNESS WHEREOF, The Parties hereto have executed this Agreement. Broker: Signed this----- day By: /s/ Edward Felker of -----, 19 -- --------------------------------- Title: Vice President ------------------------------ Agency: Armed Forces Ins. Exchange ----------------------------- Agency No.: 82-357 ------------------------- First Community Insurance Company Signed this 7th day of March, 1995 By: /s/ Yolanda D. Becker --------------------------------- Title: Assistant Vice President ------------------------------ 3 COMMISSION ADDENDUM ------------------- THIS ADDENDUM shall be attached to and form a part of the Flood Insurance Agreement between Armed Forces Insurance Exchange and First Community Insurance Company dated February 20, 1995 It is hereby agreed by both parties shown above that Section II, Part A, compensation is amended in part to read as follows: New Business 20% Until December 31, 1999 Rollovers 20% Until December 31, 1999 Renewals 18% Until December 31, 1999 The above Commissions are based on a reasonably estimated number of policies. If the actual policy count does not reach 90% of this estimate, the commission amount may be adjusted at the discretion of First Community Insurance Company. This addendum is hereby agreed to and shall become effective on the 17th day of February, 1995. ARMED FORCES FIRST COMMUNITY INSURANCE EXCHANGE INSURANCE COMPANY /S/ Edward Felker /S/ Kathleen M. Batson - ----------------------- ---------------------------- By By Vice President Senior Vice President - ----------------------- ---------------------------- Title Title 2-22-95 2-22-95 - ----------------------- ---------------------------- Date Date 4 [BANKERS INSURANCE GROUP LOGO] Bankers Underwriters, Inc. P.O. Box 15707 St. Petersburg, FL 33733 Armed Forces Ins. Exchange 82357 FLOOD INSURANCE AGREEMENT This agreement is entered into this 17th day of February, 1995, by and between Bankers Underwriters, Inc. of St. Petersburg, Florida (hereinafter referred to as "General Agent") and Armed Forces Central Insurance Exchange whose principal office is located at 550 Eisenhower Road, Leavenworth, KS 66048-4864 (hereinafter referred to as "Broker") mutually agree as follows: I. Duties of Broker A. To solicit and submit applications together with premiums due, for the Flood Insurance Policies as authorized under the National Flood Insurance Act, subject to the published authority of the Federal Emergency Management Agency/Federal Insurance Administration (FEMA/FIA). B. To obey and comply with all State Insurance Department regulations governing the territory in which the Broker is authorized to solicit business. C. To comply with the underwriting guides, bulletins, manuals, and written instructions issued by the General Agent or the Federal Emergency Management Agency/Federal Insurance Administration (FEMA/FIA) regarding the solicitation and submission of flood insurance applications. D. To report all claims and claims related activity promptly to the Company. II. Compensation A. The General Agent will compensate the Broker for all acts performed under the Agreement in the amount of 15 percent of the annual premium per policy issued by the W.Y.O. Flood Insurance Carrier up to $2,000.00 and in the amount of 5 percent on the premium per policy in excess of $2,000.00. B. The Broker shall refund promptly to the General Agent on business heretofore or hereafter written, compensation on cancelled policies and on reductions in premiums at the rate at which such compensation was originally paid. C. Compensation due under this Agreement is to be payable only during the continuance of this Agreement and under its terms, and while the Broker is actively producing and servicing business, hereunder. Any provision of this Agreement providing for payment of compensation shall be subject to any indebtedness by the Broker to the General Agent arising out of Flood insurance policy premium transactions. The General Agent shall have the right to withhold payments to offset any such indebtedness; provided, however, that any withholding of compensation shall be only to the extent necessary to liquidate such indebtedness. III. Limitation of Authority A. No provision of this Agreement shall be construed to create the relation of employer and employee between the General Agent and Broker, and the Broker and the General Agent shall act as independent contractors and be free within the prescribed underwriting guidelines of the Company or the Federal Emergency Management Agency/Federal Insurance Administration (FEMA/FIA) in force at the time to exercise their own judgement as to whom they will solicit, and the time, place and manner, and the amount of such solicitation. B. The Broker has no authority to extent time of payment of premiums, or to waive or extend any obligation or condition of the Standard Flood Insurance Policy, or incur any liability on behalf of the Company. 5 C. The Broker shall not participate in the settlement of claims, pay claims or commit the Company to the payment of claims. IV. General Agreements A. In the event of termination of this Agreement, the Broker shall promptly account for all premiums and transactions covered by this agreement, whereupon the ownership of the flood insurance business produced under this Agreement is left in the possession of the Broker. In the event the Broker shall fail to render such an accounting within 90 days of the termination hereof, the flood insurance business provided under this Agreement shall become the property of the General Agent. B. It is mutually agreed that if either party deviates from the provisions of the Agreement, whether or not such deviation is protested by the other party or parties, such deviation shall not be held to have changed this Agreement, or the rights of the parties hereunder in any respect. No change in or modification to this Agreement shall be valid and binding unless reduced to writing and executed by both parties. C. This Agreement shall continue in full force and effect until terminated by either party giving to the other a written notice at least 90 days prior to the effective date of such termination; provided, however, either party may terminate this Agreement immediately with notice if the other party is guilty of any material violation of the terms hereof. D. Applications, advertising material and other material furnished by the Company are the property of the Company and will be returned to the Company upon termination of the Agreement. E. The General Agent, through the W.Y.O. flood insurance carrier, shall provide direct billed renewal premium notice to the designated payor of the flood insurance policy prior to the expiration date of the policy and shall provide the Broker with either list notice or individual notice of the upcoming expiration of the policies serviced by the Broker under this Agreement. F. Each party agrees to hold the other parties harmless and free of liability arising from any act or omission or responsibility of themselves under this Agreement. G. Broker shall allow the General Agent to audit all books and records relating to insurance written pursuant to this Agreement. H. This Agreement cannot be assigned to others without written agreement of the General Agent. This Agreement constitutes the full agreement, oral or written, between the General Agent, and the Broker, but shall be subject to such changes as many be provided in writing from time to time. IN WITNESS WHEREOF, The Parties hereto have executed this Agreement. Broker: Signed this day of , 19 By: /S/ Edward Felker -- ------ -- ------------------------------ Title: Vice President --------------------------- Agency: Armed Forces Ins. Exchange -------------------------- Agency No.: 82-357 ---------------------- Bankers Underwriters, Inc. Signed this 7th day of March, 1995 By: /S/ Yolanda D. Becker ----------------------------- Title: Assistant Vice President --------------------------- 6 COMMISSION ADDENDUM THIS ADDENDUM shall be attached to and form a part of the Flood Insurance Agreement between Armed Forces Insurance Exchange and Bankers Insurance Company dated February 20, 1995 It is hereby agreed by both parties shown above that Section II, Part A, compensation is amended in part to read as follows: New Business 20% Until December 31, 1999 Rollovers 20% Until December 31, 1999 Renewals 18% Until December 31, 1999 The above Commissions are based on a reasonably estimated number of policies. If the actual policy count does not reach 90% of this estimate, the commission amount may be adjusted at the discretion of Bankers Insurance Company. This addendum is hereby agreed to and shall become effective on the 17th day of February, 1995. ARMED FORCES BANKERS INSURANCE EXCHANGE INSURANCE COMPANY /s/ Edward Felker /s/ Kathleen M. Batson - ------------------------------ ----------------------------- By By Vice President Senior Vice President - ------------------------------ ----------------------------- Title Title 2-22-95 2-22-95 - ----------------------------- ----------------------------- Date Date 7 COMMISSION ADDENDUM THIS ADDENDUM shall be attached to and form a part of the Flood Insurance Agreement between ARMED FORCES INSURANCE EXCHANGE and Bankers Insurance Company/First Community Insurance Company. It is hereby agreed by both parties shown above that Section II, Part A, compensation is amended in part to read as follows: New Business- 20% Rollover- 20% RENEWALS- 20% The above commissions are based on a reasonably estimated number of policies. If the actual policy count drops below 90% of this estimate, the commission amount may be adjusted at the discretion of Bankers Insurance Company/First Community Insurance Company. The addendum is hereby agreed to and shall become effective on OCTOBER 1, 1997. ARMED FORCES INSURANCE EXCHANGE BANKERS INSURANCE CO./ FIRST COMMUNITY INSURANCE CO. /s/ Gerald Frietchen /s/ Gregg Barrett - ----------------------------------- ----------------------------- Gerald Frietchen Gregg Barrett - ----------------------------------- ----------------------------- Vice President Insurance Operations Vice President 9/22/97 9/23/97 - ------------------------------ ----------------------------- Date Date Producer Number- 82357 ARMED FORCES INS EXCHANGE 10-1-97 EX-10.64 67 FLOOD INSURANCE AGREEMENT 1 [FCIC LOGO] EXHIBIT 10.64 First Community Insurance Company P.O. Box 33027 St. Petersburg, FL 33733-8027 FLOOD INSURANCE AGREEMENT This agreement is entered into this 17th day of November, 1995, by and between First Community Insurance Company, 360 Central Avenue, St. Petersburg, Florida 33701 (hereinafter referred to as "Company") and Amica Mutual Insurance Company whose principal office is located at Lincoln Center Office Park, 10 Lincoln Center Boulevard, Lincoln, RI 02865 (hereinafter referred to as "Amica") mutually agree as follows: I. DUTIES OF AMICA A. To solicit and submit applications together with premiums due, for the Flood Insurance Policies as authorized under the National Flood Insurance Act, subject to the published authority of the Federal Emergency Management Agency/Federal Insurance Administration (FEMA/FIA) B. To obey and comply with all State Insurance Department regulations governing the territory in which Amica is authorized to solicit business. C. To comply with the underwriting guides, bulletins, manuals, and written instructions issued by the Company or the Federal Emergency Management Agency/Federal Insurance Administration (FEMA/FIA) regarding the solicitation and submission of flood insurance applications. D. To report all claims and claims related activity promptly to the Company. II. COMPENSATION A. The Company will compensate Amica for all acts performed under the Agreement in the amount of 15 percent on the annual premium per policy issued by the W.Y.O. Flood Insurance Carrier up to $2,000.00 and in the amount of 5 percent on the premium per policy in excess of $2,000.00. See Addendum. B. Amica shall refund promptly to the Company on business heretofore or hereafter written, compensation on cancelled policies and on reductions in premiums at the rate at which such compensation was originally paid. C. Compensation due under this Agreement is to be payable only during the continuance of this Agreement and under its terms, and while Amica is actively producing and servicing business, hereunder. Any provision of this Agreement providing for payment of compensation shall be subject to any indebtedness by Amica to the Company arising out of Flood insurance policy premium transactions. The Company shall have the right to withhold payments to offset any such indebtedness; provided, however, that any withholding of compensation shall be only to the extent necessary to liquidate such indebtedness. III. LIMITATION OF AUTHORITY A. No provision of this Agreement shall be construed to create the relation of employer and employee between the Company and Amica, and Amica and the Company shall act as independent contractors and be free within the prescribed underwriting guidelines of the Company or the Federal Emergency Management Agency/Federal Insurance Administration (FEMA/FIA) in force at the time to exercise their own judgement as to whom they will solicit, and the time, place and manner, and the amount of such solicitation. B. Amica has no authority to extend time of payment of premiums, or to waive or extend any obligation or condition of the Standard Flood Insurance Policy, or incur any liability on behalf of the Company. 2 C. Amica shall not participate in the settlement of claims, pay claims or commit the Company to the payment of claims. IV. GENERAL AGREEMENTS A. In the event of termination of this Agreement, Amica shall promptly account for all premiums and transactions covered by this agreement, whereupon the ownership of the flood insurance business produced under this Agreement is left in the possession of Amica. In the event Amica shall fail to render such an accounting within 90 days of the termination hereof, the flood insurance business provided under this Agreement shall become the property of the Company. B. It is mutually agreed that if either party deviates from the provisions of the Agrement, whether or not such deviation is protested by the other party or parties, such deviation shall not be held to have changed this Agreement, or the rights of the parties hereunder in any respect. No change in or modification to this Agreement shall be valid and binding unless reduced to writing and executed by both parties. C. This Agreement shall continue in full force and effect until terminated by either party giving to the other a written notice at least 90 days prior to the effective date of such termination; provided, however, either party may terminate this Agreement immediately with notice if the other party is guilty of any material violation of the terms hereof. D. Applications, advertising material and other material furnished by the Company are the property of the Company and will be returned to the Company upon termination of the Agreement. E. The Company, shall provide direct billed renewal premium notice to the designated payor of the flood insurance policy prior to the expiration date of the policy and shall provide Amica with either list notice or individual notice of the upcoming expiration of the policies serviced by Amica under this Agreement. F. Each party agrees to hold the other parties harmless and free of liability arising from any act or omission or responsibility of themselves under this Agreement. G. Amica shall allow the Company to audit all books and records relating to insurance written pursuant to this Agreement. H. This Agreement cannot be assigned to others without written agreement of the Company. This Agreement constitutes the full agreement, oral or written, between the Company, and Amica, but shall be subject to such changes as may be provided in writing from time to time. IN WITNESS WHEREOF, The Parties hereto have executed this Agreement. Amica: Signed this 17th day of November, 1995 By /s/ Richard R. McLaughlin, Jr. ---------------------------------- Title Vice President ------------------------------- Agency Amica Mutual Insurance Company ------------------------------ Agency No. 89-760 -------------------------- First Community Insurance Company Signed this 18 day of Oct., 1995 By /s/ Kathleen M. Batson ---------------------------------- Title Senior Vice President ------------------------------- 3 ADDENDUM THIS ADDENDUM shall be attached to and form a part of the Flood Insurance Agreement between Amica Mutual Insurance Company and First Community Insurance Company dated of even date herewith. It is hereby agreed by both parties indicated above that the following changes will be made to the attached Flood Insurance Agreement: 1) Section II A is amended in part to read as follows: . New Business 20% Until December 31, 1999 . Rollovers 20% Until December 31, 1999 . Renewals 20% Until December 31, 1999 First Community Insurance company shall have the discretion to adjust the commission compensation following the dates indicated above. 2) First Community Insurance Company hereby agrees to appoint such agents of Amica Mutual Insurance Company as shall be necessary under the various state laws and regulations. This addendum is hereby agreed to and shall become effective upon the date of execution. AMICA MUTUAL INSURANCE CO. FIRST COMMUNITY INSURANCE CO. /s/ Richard R. McLaughlin, Jr. /s/ Kathleen M. Batson - ------------------------------ ----------------------------- by: by: Vice President Senior Vice President - ------------------------------ ----------------------------- Title: Title: 11/17/95 10/18/95 - ------------------------------ ----------------------------- Date: Date: 4 [FCIC LOGO] FIRST COMMUNITY INSURANCE COMPANY ADDENDUM TO FLOOD INSURANCE AGREEMENT This Addendum to the Flood Insurance Agreement (hereinafter the "Agreement") dated Sept 27, 1996, between FIRST COMMUNITY INSURANCE COMPANY, (hereinafter the "General Agent") and AMICA MUTUAL INS COMPANY (hereinafter "Amica"), modifies and supplements the Agreement, and shall be attached to and form a part of the Agreement. I. DUTIES OF AMICA To solicit and submit proposals for EXCESS FLOOD INSURANCE, in addition to and distinct from the solicitation and submission of Flood Insurance Policies authorized under the National Flood Insurance Act. The solicitation and submission of Excess Flood Insurance shall be within the limits fixed by the General Agent and in accordance with the specific directions of the General Agent. II. COMPENSATION A. The General Agent will compensate Amica for all acts performed under this Addendum, per Excess Flood Insurance Policy issued by the Company, as specified in the following commission schedule: New Business 20% Renewals 20% B. Any provision of this Addendum, or of the Agreement, providing for payment of compensation shall be subject to any indebtedness by Amica to the General Agent arising out of Flood or Excess Flood Insurance policy premium transactions. The General Agent shall have the right to withhold payments to offset any such indebtedness; provided, however, that any withholding of compensation shall be only to the extent necessary to liquidate such indebtedness. III. LIMITATION OF AUTHORITY Amica has no authority to extend time of payment of premiums, or to waive or extend any obligation or condition of the Excess Flood Insurance Policy, or incur any liability on behalf of the General Agent or the Excess Flood Insurance Carrier. IV. GENERAL AGREEMENTS A. The General Agent, through the Excess Flood Insurance Carrier, shall provide direct billed renewal premium notice to the designated payor of the Excess Flood Insurance policy prior to the expiration date of the policy and shall provide Amica with either list notice or individual notice of the upcoming expiration of the policies serviced by Amica under this Addendum. B. All provisions within the Agreement, not inconsistent with this Addendum, are applicable to any duty, compensation, limitation of authority or general agreement specified by this Addendum. This Addendum is hereby agreed to and shall become effective on the 27th day of September, 1996. AMICA Signed This 27 day of By: /s/ Richard R. McLaughlin Jr. September, 1996 ---------------------------------- Title: Vice President ------------------------------- Agency: Amica Mutual Ins. Company ------------------------------ Agency No.: 38-89760 -------------------------- FIRST COMMUNITY INSURANCE COMPANY Signed This 30th day of By: /s/ Kelly K. King September, 1996 ---------------------------------- Title: Vice President ------------------------------- 5 [BANKERS INSURANCE GROUP LOGO] Bankers Underwriters, Inc. ADDENDUM TO FLOOD INSURANCE AGREEMENT This Addendum to the Flood Insurance Agreement (hereinafter the "Agreement") dated OCTOBER 1ST, 1997, between Bankers Underwriters, Inc., (hereinafter the "General Agent") and Amica Mutual Insurance Company (hereinafter "Amica"), modifies and supplements the Agreement, and shall be attached to and form a part of the Agreement. I. DUTIES OF AMICA To solicit and submit proposals for Excess Flood Insurance, in addition to and distinct from the solicitation and submission of Flood Insurance Policies authorized under the National Flood Insurance Act. The solicitation and submission of Excess Flood Insurance shall be within the limits fixed by the General Agent and in accordance with the specific directions of the General Agent. II. COMPENSATION A. The General Agent will compensate Amica for all acts performed under this Addendum, per Excess Flood Insurance Policy issued by the Company, as specified in the following commission schedule: New Business 20% Renewals 20% B. Any provision of this Addendum, or of the Agreement, providing for payment of compensation shall be subject to any indebtedness by Amica to the General Agent arising out of Flood or Excess Flood Insurance policy premium transactions. The General Agent shall have the right to withhold payments to offset any such indebtedness; provided, however, that any withholding of compensation shall be only to the extent necessary to liquidate such indebtedness. III. LIMITATION OF AUTHORITY Amica has no authority to extend time of payment of premiums, or to waive or extend any obligation or condition of the Excess Flood Insurance Policy, or incur any liability on behalf of the General Agent or the Excess Flood Insurance Carrier. IV. GENERAL AGREEMENTS A. The General Agent, through the Excess Flood Insurance Carrier, shall provide direct billed renewal premium notice to the designated payor of the Excess Flood Insurance policy prior to the expiration date of the policy and shall provide Amica with either list notice or individual notice of the upcoming expiration of the policies serviced by Amica under this Addendum. B. All provisions within this Agreement, not inconsistent with this Addendum, are applicable to any duty, compensation, limitation of authority or general agreement specified by this Addendum. This Addendum is hereby agreed to and shall become effective on the 1ST day of OCTOBER 1997. AMICA Signed This 4th day of By: /s/ Richard R. McLaughlin Jr. December, 1997 ----------------------------- Title: Vice President -------------------------- Agency: Amica Mutual Ins. Company ------------------------- Agency No.: 38-89760 --------------------- BANKERS UNDERWRITERS, INC. Signed This 8th day of By: /s/ Kelly K. King December, 1997 ----------------------------- Title: Vice President -------------------------- EX-10.65 68 NON-QUALIFIED STOCK OPTION PLAN 1 Exhibit 10.65 INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. NON-QUALIFIED STOCK OPTION PLAN ARTICLE 1: 1. ESTABLISHMENT; PURPOSE: 1.1. ESTABLISHMENT. Insurance Management Solutions Group, Inc., a Florida corporation, (the "Company") hereby establishes an incentive compensation plan to be known as the "Insurance Management Solutions Group, Inc. Non-Qualified Stock Option Plan" (the "Plan"). 1.2. PURPOSE. The purpose of the Plan is to retain, motivate, and reward participating advisors and consultants of the Company and its subsidiaries through an award of shares of the Common Stock of the Company (the "Shares"). 1.3. MAXIMUM NUMBER OF SHARES. The number of Shares to be issued under the Plan is 125,000, subject to adjustment as provided in Section 6.1. Such Shares may be issued through the purchase of either authorized and unissued Shares, or issued Shares acquired by the Company. If an Option is surrendered or for any other reason ceases to be exercisable in whole or in part, the Shares that are subject to such Option, but as to which the Option has not been exercised, shall again become available for offering under the Plan. 1.4. STATUS. No Award under the Plan is intended to qualify for special treatment or status under the Code. ARTICLE 2: 2. DEFINITIONS: 2.1. DEFINITIONS. The following words and terms as used herein shall have that meaning set forth therefor in this Article 2 unless a different meaning is clearly required by the context. 2.1.1. "Award" shall mean any Option granted or awarded under the Plan. 2.1.2. "Award Agreement(s)" shall mean any document, agreement or certificate deemed by the Committee as necessary or advisable to be entered into with or delivered to a Participant in connection with the grant of an Award under the Plan. 2.1.3. "Board" or "Board of Directors" shall mean the Board of Directors of the Company. 2.1.4. "Committee" is defined in Article 3.1. 2 2.1.3. "Code" shall mean the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code shall include a reference to any successor provision. 2.1.6. "Company" shall mean Insurance Management Solutions Group, Inc., a Florida corporation, and its successors. 2.1.7. "Effective Date" is defined in Section 6.6.3 2.1.8. "Eligible Individual" shall mean any individual who is employed as a consultant or advisor by the Company that provides bona fide services not in connection with a capital raising transaction. 2.1.9. "Fair Market Value" of the Shares shall mean the closing price on the date in question (or, if no Shares are traded on such day, on the next preceding day on which Shares were traded) of the Shares on the principal securities exchange in the United States on which such stock is listed, or if such Shares are not listed on a securities exchange in the United States, the closing price on such day in the over-the-counter market as reported by the National Association of Security Dealers Automated Quotation System (NASDAQ), or NASDAQ's successor, or if not reported on NASDAQ, the fair market value of such Shares as determined by the Committee in good faith and based on all relevant factors. 2.1.10. "NSO" shall mean a nonqualified stock option granted in accordance with the provisions of Article 5 of the Plan. 2.1.11. "Option" shall mean an NSO. 2.1.12. "Optionee" shall mean an Eligible Individual to whom an Option is granted under the Plan. 2.1.13. "Participant" shall mean an Eligible Individual, who in accordance with the terms of the Plan, is approved by the Committee for participation in the Plan as a recipient of an Award and who receives an Award. 2.1.14. "Plan" shall mean the Insurance Management Solutions Group, Inc. Non-Qualified Stock Option Plan, as set forth herein and as amended from time to time. 2.1.15. "Shares" shall mean shares of the common stock of the Company. 2.1.16. "Subsidiary" shall mean any corporation that at the time qualifies as a subsidiary of the Company under the definition of "subsidiary corporation" contained in Section 424(f) of the Code. 2.2. USAGE. Whenever appropriate, words used in the singular shall be deemed to include the plural and vice versa, and the masculine gender shall be deemed to include the feminine gender. 3 ARTICLE 3 3. ADMINISTRATION 3.1. COMMITTEE. This Plan shall be administered by a committee appointed by the Board of Directors (the "Committee"). The Committee shall consist of not less than two (2) nor more than five (5) persons, each of whom shall be a member of the Board and none of whom shall be eligible to participate under the Plan. The Board of Directors may from time to time remove members from, or add members to, the Committee. Vacancies on the Committee, howsoever caused, shall be filled by the Board of Directors. 3.2. ORGANIZATION. The Committee shall select one of its members as chairman, and shall hold meetings at such time and places as it may determine. The acts of a majority of the Committee at which a quorum is present, or acts reduced to or approved in writing by a majority of the members of the Committee, shall be valid acts of the Committee. 3.3. POWER AND AUTHORITY. Subject to the provisions of the Plan, the Committee shall have full authority, in its discretion: (a) to determine from among Eligible Individuals those persons who shall become Participants; (b) to determine the nature, amount and terms and conditions of all Awards under the Plan, in accordance with and subject to the specific limitations and requirements set forth in the Plan; and (c) to interpret the Plan, the terms of all Awards and Award Agreements and any other agreement or instrument awarded, issued or entered into under the Plan, and to prescribe, amend and rescind rules and regulations with respect to the administration of the Plan. The interpretation and construction by the Committee of any provision of the Plan, any Award or any other agreement or instrument awarded, issued or entered into under the Plan, and all other determinations and decisions of the Committee pursuant to the provisions of the Plan, shall be final, conclusive and binding on all Participants and other affected persons. Notwithstanding the foregoing, the Committee shall only have authority within this Plan to issue Awards to a maximum of five Participants and up to a maximum 25,000 Shares per Participant. 3.4. DISCRETIONARY AUTHORITY. The Committee's decision to authorize the grant of an Award to an Eligible Individual at any time shall not require the Committee to authorize the grant of an Award to that employee at any other time or to any other employee at any time; nor shall its determination with respect to the size, type or terms and conditions of the Award to be granted to an Eligible Individual at any time require it to authorize the grant of an Award of the same type or size or with the same terms and conditions to that employee at any other time or to any other employee at any time. The Committee shall not be precluded from authorizing the grant of an Award to any Eligible Individual solely because the employee previously may have been granted an Award of any kind under the Plan. Furthermore, without limiting its authority, the Committee may condition the grant of an Award on a Participant providing appropriate investment representations and / or otherwise complying with state and federal rules and regulations that would enable the Company to meet applicable exceptions under state and federal securities laws. 3.5. NO LIABILITY. No member of the Committee shall be liable for any action or determination made in good faith with respect to the Plan. 4 ARTICLE 4 4. INDIVIDUALS ELIGIBLE TO PARTICIPATE 4.1. GENERALLY. Any person, that provides bona fide services to the Company not in connection with a capital raising transaction, who is acting in the capacity of an advisor or consultant to the Company or to any Subsidiary of the Company on the date of a grant of an Award shall be an Eligible Individual, able to participate in the Plan in accordance with the terms of the Plan. The Committee shall have the sole power to determine if the eligibility requirements have been satisfied. 4.2. PARTICIPANT STATUS. In accordance with the provisions of Section 3.3, the Committee, in its sole discretion, from time to time may select from among Eligible Individuals persons to become Participants in the Plan. Any Eligible Individual so selected and who remains an Eligible Individual shall become a Participant upon the approval of such status by the Committee, which approval shall be conclusively evidenced by the award or grant of an Award to a Participant. ARTICLE 5 5. TERMS AND CONDITIONS OF NONQUALIFIED STOCK OPTIONS 5.1. GRANT. Any NSO granted pursuant to the Plan shall be authorized by the Committee and shall be evidenced by certificates or agreements in such form as the Committee from time to time shall approve, which certificates or agreements shall comply with and be subject to the terms and conditions hereinafter specified. Upon the granting of any NSO, the Committee shall promptly cause the Optionee to be notified of the fact that such Option has been granted. The date on which the Committee approves the grant of a NSO shall be considered to be the date on which such Option is granted. 5.2. NUMBER OF SHARES. Each NSO shall state the number of Shares to which it pertains. 5.3. OPTION PRICE. Each NSO shall state the option price, which option price shall be determined by the Committee in its discretion and may be equal to, less than or greater than 100% of the Fair Market Value of the Shares on the date of grant. 5.4. METHOD OF EXERCISE. An Optionee may exercise a NSO during such time as may be permitted by the Option and the Plan by providing written notice to the Committee, tendering the purchase price in accordance with the provisions of Section 5.5, and complying with any other exercise requirements contained in the Option or promulgated from time to time by the Committee. 5.5. METHOD OF PAYMENT. Payment of the option price upon the exercise of the NSO shall be: (a) in United States dollars in cash or by check, bank draft or money order payable to the order of the Company; (b) in the discretion of and in the manner determined by the Committee, by the delivery of Shares already owned by the Optionee; (c) by any other legally permissible means acceptable to the Committee at the time of grant of the Option (including cashless exercise as 5 permitted under the Federal Reserve Board's Regulation T, subject to applicable legal restrictions); or in the discretion of the Committee, through a combination of (a), (b) and (c) of this Section. If the option price is paid in whole or in part through the delivery of Shares, the decision of the Committee with respect to the Fair Market Value of such Shares shall be final and conclusive. 5.6. TERM AND EXERCISE OF OPTIONS. 5.6.1. Unless otherwise specified in writing by the Committee at the time of grant or in the Award Agreement, each NSO shall be exercisable, in whole or in part, only in accordance with the attached Vesting Schedule. To the extent not exercised, exercisable installments of NSOs shall be exercisable, in whole or in part, in any subsequent period, but not later than the expiration date of the Option. The Committee shall determine the expiration date of the Option at the time of the grant of the Option; provided, however, that no NSO shall be exercisable after the expiration of ten (10) years from the date it is granted. Not less than one hundred (100) Shares may be exercised at any one time unless the number exercised is the total number at the time exercisable under the Option. 5.6.2. Within the limits described above, the Committee may impose additional requirements on the exercise of NSOs. When it deems special circumstances to exist, the Committee in its discretion may accelerate the time at which a NSO may be exercised if, under previously established exercise terms, such Option was not immediately exercisable in full, even if the acceleration would permit the Option to be exercised more rapidly than the vesting set forth in the attached Vesting Schedule, or as otherwise specified by the Committee, would permit. 5.7. DEATH OR OTHER TERMINATION OF EMPLOYMENT. 5.7.1. In the event that an Optionee shall cease to be employed by the Company or a Subsidiary for any reason other than his or her death, subject to the conditions that no NSO shall be exercisable after its expiration date, such Optionee shall have the right to exercise the NSO at any time within ninety (90) days after such termination of employment to the extent his or her right to exercise such Option had accrued pursuant to this Article 5 at the date of such termination and had not previously been exercised; such ninety (90) day period shall be increased to one (1) year for any Optionee who ceases to be employed by the Company or a Subsidiary because he is disabled (within the meaning of Section 22(e)( 3) of the Code) or who dies during the ninety (90) day period, and the Option may be exercised within such extended time limit by the Optionee or in the case of death, the personal representative of the Optionee or by any person or persons who shall have acquired the Option directly from the Optionee by bequest or inheritance. Whether an authorized leave of absence or absence for military or governmental service shall constitute termination of employment for purposes of the Plan shall be determined by the Committee, whose determination shall be final and conclusive. 5.7.2. In the event that an Optionee shall die while in the employ of the Company or a Subsidiary and shall not have fully exercised any NSO, the NSO may be exercised, 6 subject to the conditions that no NSO shall be exercisable after its expiration date, to the extent that the Optionee's right to exercise such Option had accrued pursuant to this Article 5 at the time of his or her death and had not previously been exercised, at any time within one (1) year after the Optionee's death, by the personal representative of the Optionee or by any person or persons who shall have acquired the Option directly from the Optionee by bequest or inheritance. 5.7.3. No NSO shall be transferable by the Optionee otherwise than by will or the laws of descent and distribution. 5.7.4. During the lifetime of the Optionee, an NSO shall be exercisable only by him or her and shall not be assignable or transferable, and no other person shall acquire any rights therein. 5.8. DELIVERY OF CERTIFICATES REPRESENTING SHARES. 5.8.1. As soon as practicable after the exercise of a NSO, the Company shall deliver or cause to be delivered to the Optionee exercising the NSO a certificate or certificates representing the Shares purchased upon the exercise. 5.8.2. Certificates representing Shares to be delivered to an Optionee under the Plan will be registered in the name of the Optionee, or if the Optionee so directs, by written notice to the Company, and to the extent permitted by applicable law, in the names of the Optionee and one such other person as may be designated by the Optionee, as joint tenants with rights of survivorship. 5.9. RIGHTS AS A STOCKHOLDER. An Optionee shall have no rights as a stockholder with respect to any Shares covered by his or her NSO until the date on which he or she becomes a record owner of the Shares purchased upon the exercise of the Option (the "record ownership date"). No adjustment shall be made for dividends (ordinary or extraordinary, whether in cash, securities or other property), distributions, or other rights for which the record date is prior to the record ownership date, except as provided in Article 6. 5.10. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS. Subject to the terms and conditions and within the limitations of the Plan, the Committee may modify outstanding NSOs granted under the Plan, or accept the surrender of outstanding NSOs (to the extent not theretofore exercised) and authorize the granting of new Options in substitution therefor (to the extent not theretofore exercised). The Committee shall not, however, modify any outstanding NSO so as to specify a lower option price or accept the surrender of outstanding NSOs and authorize the granting of new Options in substitution therefor specifying a lower option price. Notwithstanding the foregoing, however, no modification of an NSO shall, without the consent of the Optionee, alter or impair any of the rights or obligations under any NSO theretofore granted under the Plan. 5.11 LISTING AND REGISTRATION OF SHARES. Each NSO shall be subject to the requirement that if at any time the Committee shall determine, in its discretion, that the listing, registration or qualification of the Shares covered thereby upon any securities exchange or under any state or federal laws, or 7 the consent or approval of any governmental regulatory body, is necessary or desirable as a condition of, or in connection with, the granting of such NSO or the issuance or purchase of shares thereunder, such NSO may not be exercised unless and until such listing, registration, qualification, consent or approval shall have been effected or obtained free of any conditions not acceptable to the Committee. Notwithstanding anything in the Plan to the contrary, if the provisions of this Section become operative, and if, as a result thereof, the exercise of a NSO is delayed, then and in that event, the term of the NSO shall not be affected. 5.12. OTHER PROVISIONS. The NSO certificates or agreements authorized under the Plan shall contain such other provisions, including, without limitation, restrictions upon the exercise of the Option, as the Committee shall deem advisable. 8 ARTICLE 6 6. MISCELLANEOUS 6.1. STOCK ADJUSTMENTS. 6.1.1. In the event of any increase or decrease in the number of issued Shares resulting from a stock split or other division or consolidation of shares or the payment of a stock dividend (but only on Shares) or any other increase or decrease in the number of Shares effected without any receipt of consideration by the Company, then, in any such event, the number of Shares that remain available under the Plan, the number of Shares covered by each outstanding Option, and the exercise price per Share covered by each outstanding Option, shall be proportionately and appropriately adjusted for any such increase or decrease. 6.1.2. Subject to any required action by the stockholders, if any change occurs in the Shares by reason of any recapitalization, reorganization, merger, consolidation, split-up, combination or exchange of shares, or of any similar change affecting Shares, then, in any such event, the number and type of Shares then covered by each outstanding Option, and the purchase price per Share covered by each outstanding Option, shall be proportionately and appropriately adjusted for any such change. 6.1.3. In the event of a change in the Shares as presently constituted that is limited to a change of all of its authorized shares with par value into the same number of shares with a different par value or without par value, the shares resulting from any change shall be deemed to be Shares within the meaning of the Plan. 6.1.4. To the extent that the foregoing adjustments relate to stock or securities of the Company, such adjustments shall be made by, and in the discretion of, the Committee, whose determination in that respect shall be final, binding and conclusive. 6.1.5. Except as hereinabove expressly provided in this Section, an Eligible Individual or a Participant shall have no rights by reason of any division or consolidation of shares of stock of any class or the payment of any stock dividend or any other increase or decrease the number of shares of stock of any class or by reason of any dissolution, liquidation, merger or consolidation, or spin-off of assets or stock of another corporation; and any issuance by the Company of shares of stock of any class, securities convertible into shares of stock of any class, or warrants or options for shares of stock of any class shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares or any Option granted but not yet issued. 6.1.6. The existence of the Plan, or the grant of an Option under the Plan, shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure or to merge or to consolidate, or to dissolve, to liquidate, to sell, or to transfer all or any part of its business or assets. 9 6.2. TAX ABSORPTION PAYMENTS. The Company may, but is not required to, make a cash payment, either directly to any Participant or on a Participant's behalf, in an amount that the Committee estimates to be equal (after taking into account any federal and state taxes that the Committee estimates to be applicable to such cash payment) to any additional federal and state income taxes that are imposed upon a Participant as a result of the granting of any Award under the Plan (a "Tax Absorption Payment"). In determining the amount of any Tax Absorption Payment, the Committee may adopt such methods and assumptions as it considers appropriate, and it shall not be required to examine the individual tax liability of any Participant. The decision to make any Tax Absorption Payment shall be made by the Committee at the same time as the grant of the Award to which it relates. 6.3. AMENDMENT OF THE PLAN; TERMINATION. The Board shall have the right to revise, amend or terminate the Plan at any time without notice; provided, however, that without shareholder approval the Board may not (a) increase the aggregate number of Shares that may be issued pursuant to this Plan, (b) extend the period during which any Award may be granted, (c) extend the term of the Plan, or (d) modify the requirements as to eligibility for participation hereunder; provided, further, that no such action may be taken, without the consent of the Participant to whom any Award shall have been granted, that adversely affects the rights of such Participant concerning such Award, except as such termination or amendment of this Plan is required by statute, or rules or regulations promulgated thereunder, or as otherwise permitted hereunder. The foregoing prohibitions in this Section shall not be affected by adjustments in shares and purchase price made in accordance with the provisions of Section 6.1. 6.4. APPLICATION OF FUNDS. The proceeds received by the Company from the sale of Shares or the exercise of Awards pursuant to the Plan will be used for general corporate purposes. 6.5. NO IMPLIED RIGHTS TO PARTICIPANTS. The existence of the Plan and the granting of Awards under the Plan shall in no way give any employee the right to continued employment or the right to receive any additional Awards or any additional compensation under the Plan, or otherwise provide any employee any rights not specifically set forth in the Plan or in any Option or Award Agreement. 6.6. WITHHOLDING. 6.6.1. The Company shall have the power to withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy any federal, state or local withholding or other tax due from the Company with respect to any amount payable and/or shares issuable under the Plan, and the Company may defer such payment or issuance unless indemnified to its satisfaction. Whenever under the Plan payments are to be made in cash, such payments shall be made net of an amount sufficient to satisfy any federal, state or local withholding tax liability. 6.6.2. Subject to the consent of the Committee, with respect to the exercise of an NSO, a Participant may make an irrevocable election (an "Election") to (A) have shares of Common Stock otherwise issuable withheld, or (B) tender back to the Company shares of Common Stock or (C) deliver back to the Company previously acquired shares of 10 Common Stock having a Fair Market Value sufficient to satisfy all or part of the Participant's estimated tax obligations associated with the transaction. Such Election must be made by a Participant prior to the date on which the relevant tax obligation arises. The Committee may disapprove of any Election, may suspend or terminate the right to make Elections, or may provide with respect to any Award under this Plan that the right to make Elections shall not apply to such Awards. 6.6.3. CONDITIONS PRECEDENT TO EFFECTIVENESS. The Plan shall become effective upon the satisfaction of all the following conditions, with the Effective Date of the Plan being the date that the last of the following conditions is satisfied: 6.6.3.1. the adoption of the Plan by the Board of Directors; and 6.6.3.2. the effectiveness of the Company's Registration Statement on Form S-1 relating to the Company's initial public offering, as filed with the SEC (File No. _____________________). 11 VESTING SCHEDULE: Number of Years from Percentage of Shares Date Option is Granted Exercisable - ---------------------- --------------------- Less than 1 year 0% 1 year but less than 2 years 20% 2 years but less than 3 years 40% 3 years but less than 4 years 60% 4 years but less than 5 years 80% 5 years or more 100% EX-10.66 69 FUNDING AGREEMENT 1 EXHIBIT 10.66 FUNDING AGREEMENT This Funding Agreement ("Agreement") is by and between Bankers Insurance Group, Inc. ("BIG") and Insurance Management Solutions Group, Inc. ("IMSG"), both of 360 Central Avenue, St. Petersburg, FL 33701. WHEREAS, IMSG is currently a wholly owned subsidiary of BIG; and WHEREAS, there currently exists certain intercompany balances both payable and receivable as between BIG and IMSG and its subsidiaries; and WHEREAS, BIG is entering into a loan agreement with Venture Capital Corporation or subsidiary thereof ("Venture") whereby BIG will be borrowing funds from Venture; NOW, THEREFORE, in consideration of the premises and other valuable consideration the receipt and value of which is hereby acknowledged, the parties hereto agree as follows: 1. FUNDING. Within ten (10) business days of receipt of the loan proceeds by BIG from Venture, the respective parties to this Agreement will settle all intercompany balances including all accounts payables and receivables and notes payables and receivables and any income tax payables or receivables as between the parties. 2. ASSIGNMENT. This Agreement and any rights pursuant hereto shall not be assignable by either party hereto, except by operation of law. Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto, or their respective legal successors, any rights, remedies, obligations or liabilities, or to relieve any person other than the parties hereto, or their respective legal successors, from any obligations or liabilities that would otherwise be applicable. 3. GOVERNING LAW. This Agreement is made pursuant to and shall be governed by, interpreted under, and the right of the parties determined in accordance with, the laws of the State of Florida. 4. NOTICE. All notices, statements or requests provided for hereunder shall be in writing and shall be deemed to have been duly given when delivered by hand to an officer of the other party, or when deposited with the U.S. Postal Service, as certified or registered mail, postage prepaid, addressed 2 (a) If to IMSG to: 360 Central Avenue P.O. Box 15707 St. Petersburg, FL 33733 Attn: David K. Meehan, President (813) 823-4000 x 4201 FAX (813) 823-6518 (b) If to BIG to: 360 Central Avenue P.O. Box 15707 St. Petersburg, FL 33733 Attn: G. Kristin Delano (813) 803-4016 FAX (813) 823-6518 or to such other person or place as each party may from time to time designate by written notice sent as aforesaid. 5. HEADINGS. The headings of the various paragraphs of this Agreement are for convenience only, and shall be accorded no weight in the construction of this Agreement. 6. ENTIRE AGREEMENT. This Agreement, together with such Amendment as may from time to time be executed in writing by the parties, constitutes the entire Agreement between the parties with respect to the subject matter hereof. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed in duplicate by their respective officers duly authorized so to do, and their respective corporate seals to be attached hereto as of the date and year first above written. WITNESSES: BANKERS INSURANCE GROUP, INC. BY: - ----------------------------- -------------------------------- AS ITS: - ----------------------------- ---------------------------- INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. BY: - ----------------------------- -------------------------------- AS ITS: - ----------------------------- ---------------------------- EX-10.67 70 ASSIGNMENT OF REGISTERED SERVICE MARK 1 EXHIBIT 10.67 ASSIGNMENT OF REGISTERED SERVICE MARK WHEREAS, BANKERS INSURANCE COMPANY, a Florida corporation, having its principle place of business at 360 Central Avenue, St. Petersburg, FL 33701 ("ASSIGNOR"), is the owner of the following service mark which is registered on the Principal Register of the United States Patent and Trademark Office: Service Mark Reg. No. Reg. Date ------------ -------- --------- FLOODWRITER 1,987,105 July 16, 1996 WHEREAS, INSURANCE MANAGEMENT SOLUTIONS, INC., a Florida Corporation, having its principle place of business at 360 Central Avenue, St. Petersburg, Florida 33701 ("ASSIGNEE"), is desirous of acquiring said service mark registration: NOW, THEREFORE, in consideration of book value and in exchange for the sum of ten dollars ($10.00) and other good and valuable consideration, receipt of which is hereby acknowledged, ASSIGNOR does hereby assign to ASSIGNEE all right, title and interest in and to the aforementioned registered service mark together with the goodwill of the business connected therewith. This Assignment shall be governed by an interpreted in accordance with the laws of the State of Florida. 2 IN WITNESS WHEREOF, ASSIGNOR has caused this instrument to be executed this 7 day of May, 1998. BANKERS INSURANCE COMPANY /s/ G. Kristin Delano ---------------------------- G. Kristin Delano Corporate Secretary and General Counsel STATE OF FLORIDA COUNTY OF PINELLAS The foregoing instrument was acknowledged before me this 7 day of May, 1998 by G. Kristin Delano, as Secretary of Bankers Insurance Company, who is personally known to me to be the individual described herein (or who has produced ______________ and _____________ as identification) who did (did not) take an oath and acknowledged that said instrument is the act and deed of said corporation. IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the said County and State as of the day and year first above set forth. [SEAL] /s/ Nancy C. Haire ----------------------------- Nancy C. Haire, Notary Public Serial Number: CC 440661 My Commission Expires: 3/25/99 EX-10.68 71 ASSIGNMENT OF REGISTERED SERVICE MARK 1 EXHIBIT 10.68 ASSIGNMENT OF REGISTERED SERVICE MARK WHEREAS, BANKERS INSURANCE COMPANY, a Florida corporation, having its principle place of business at 360 Central Avenue, St. Petersburg, FL 33701 ("ASSIGNOR"), is the owner of the following service mark which is registered on the Principal Register of the United States Patent and Trademark Office: Service Mark Reg. No. Reg. Date ------------ -------- --------- UNDERCURRENTS 1,979,788 June 11, 1996 WHEREAS, INSURANCE MANAGEMENT SOLUTIONS, INC., a Florida Corporation, having its principle place of business at 360 Central Avenue, St. Petersburg, Florida 33701 ("ASSIGNEE"), is desirous of acquiring said service mark registration: NOW, THEREFORE, in consideration of book value and in exchange for the sum of ten dollars ($10.00) and other good and valuable consideration, receipt of which is hereby acknowledged, ASSIGNOR does hereby assign to ASSIGNEE all right, title and interest in and to the aforementioned registered service mark together with the goodwill of the business connected therewith. This Assignment shall be governed by an interpreted in accordance with the laws of the State of Florida. 2 IN WITNESS WHEREOF, ASSIGNOR has caused this instrument to be executed this 7 day of May, 1998. BANKERS INSURANCE COMPANY /s/ G. Kristin Delano ---------------------------- G. Kristin Delano Corporate Secretary and General Counsel STATE OF FLORIDA COUNTY OF PINELLAS The foregoing instrument was acknowledged before me this 7 day of May, 1998 by G. Kristin Delano, as Secretary of Bankers Insurance Company, who is personally known to me to be the individual described herein (or who has produced ______________ and _____________ as identification) who did (did not) take an oath and acknowledged that said instrument is the act and deed of said corporation. IN WITNESS WHEREOF, I have hereunto set my hand and official seal in the said County and State as of the day and year first above set forth. [SEAL] /s/ Nancy C. Haire ----------------------------- Nancy C. Haire, Notary Public Serial Number: CC 440661 My Commission Expires: 3/25/99 EX-10.69 72 REGISTRATION RIGHTS SERVICE AGREEMENT 1 EXHIBIT 10.69 REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT ("Agreement") is made as of May __, 1998 between Information Solutions Group, Inc., a Florida corporation (the "Company"), and Daniel J. and Sandra White (including permitted successors and assigns hereunder) (the "Stockholders") of shares of Common Stock, par value $.01 per share ("Common Stock"), of the Company. WHEREAS, on May 12, 1998, the Stockholders, the Company, Bankers Hazard Determination Services, Inc. ("Bankers"), Bankers Insurance Group, Inc. ("BIG") and Geotrac, Inc., an Ohio corporation ("Geotrac") entered into an Agreement and Plan of Merger (the "Merger Agreement"); WHEREAS, pursuant to the terms of the Merger Agreement Geotrac merged (the "Merger") with and into Bankers, with Bankers being the surviving corporation, and changing its name to Geotrac,Inc.; WHEREAS, as part of the Merger consideration, for their shares of Geotrac, the Whites received or will receive up to 480,515 shares of common stock of IMSG; and WHEREAS, under the Merger Agreement, it is a condition to the obligations of the Stockholders and Geotrac to consummate the Merger that the Company execute this Agreement. NOW, THEREFORE, in consideration of the foregoing and the respective covenants and agreements set forth in this Agreement, the parties agree as follows: 1. Demand Registration. Subject to the terms and conditions of this Agreement, at any time on or after the first anniversary of the Closing Date of an initial public offering ("IPO") or registration of the Company's capital stock under the Securities Exchange Act of 1934, as amended, the Stockholders may deliver a written request (a "Demand Notice") to the Company to register under the Securities Act of 1933, as amended (the "1933 Act"), on Form S-3 any or all shares of Common Stock owned by such Stockholders (such shares of Common Stock as to which any such request is made pursuant to this Section 1 or Section 2 hereof being the "Registrable Securities"). The Company agrees that is will use reasonable efforts to cause the prompt registration of all such Registrable Securities; provided however, the Company may postpone for a limited time, which in no event shall be longer than ninety (90) days, compliance with a request for registration pursuant to this Section 1 if (i) such compliance would materially adversely affect (including, without limitation, through the premature disclosure thereof) a proposed material financing, reorganization, recapitalization, acquisition, consolidation or similar transaction, (ii) the Company is conducting a public offering of capital stock and the managing underwriter concludes in its reasonable judgment that such compliance would materially adversely affect such offering or (iii) the Company notifies 2 the Stockholders that a material event has occurred or is likely to occur that has not been publicly disclosed and if disclosed would have a material adverse effect on the Company and its ability to consummate any offering of the Registrable Securities subject to the Demand Notice. If there is a postponement under any of clause (i), (ii) or (iii) above, the Demand Notice may be withdrawn by the Stockholders by notice to the Company. In such case, no demand shall have been made for the purposes of this Section 1. The Stockholders shall not make a demand for registration of shares of Common Stock pursuant to this Section 1 within six (6) months following the effective date of the registration for a "piggyback" registration pursuant to Section 2 below. Notwithstanding anything in this Section 1 to the contrary, the Company shall not be required to comply with more than one (1) request of the Stockholders pursuant to this Section 1. Any underwriter selected by the Stockholders to act as such in connection with a registration pursuant to this Section 1 must be reasonably acceptable to the Company. 2. "Piggyback" Registration. Whenever the Company proposes to file a registration statement relating to any of its securities under the 1933 Act for its account or the account of any other stockholder of the Company (other than a registration statement required to be filed in respect of employee benefit plans of the Company on Form S-8 or any similar form from time to time in effect or any registration statement on Form S-4 or similar successor form), the Company shall, at least twenty-one (21) days (or if such twenty-one (21) day period is not practicable, then a reasonable shorter period which shall not be less than seven (7) days) prior to such filing, give written notice of such proposed filing to the Stockholders, and such notice shall offer each of the Stockholders the opportunity to register such Registrable Securities as such Stockholder may request, and such notice shall state the name of the managing underwriter for such registration, the number of securities to be registered for the account of the Company and for the account of any stockholder, and the intended method of disposition of such securities. Upon the written request of a Stockholder, given within five (5) days after receipt of any such notice of registration from the Company, to register any shares of Common Stock owned by him or her (which request shall state the amount of Registrable Securities requested to be registered), the Company shall include such Registrable Securities in such registration statement or in a separate registration statement concurrently filed on terms and conditions comparable to those of the securities offered on behalf of the Company or for the account of any other stockholder of the Company, unless the managing underwriter therefor concludes in its reasonable judgment that the inclusion of such Registrable Securities in such offering would materially adversely affect such offering, in which event the number of shares that may be sold in such offering shall be allocated, first, to the Company (or, if the offering is being made principally for the account of another person, to such person), second to the Stockholders pro rata in accordance with their percentage of shares of Common Stock included in the offering and, third, to any other third party having registration rights with respect to shares. If any of the Registrable Securities that a Stockholder has requested be included in such offering are not so included, then the Company shall cause such Registrable Securities to be registered under a separate registration statement a limited period of time thereafter, which in no event shall be more than six (6) months. 2 3 3. General Provisions. (a) The Company shall use all reasonable efforts to cause any registration statement referred to in Section 1 or Section 2 to become effective and to remain effective (with a prospectus at all times meeting the requirements of the 1933 Act) until the earlier of (i) six (6) months from the effective date of the registration statement or (ii) the date the Stockholder(s) complete the distribution of Registrable Securities. The Company will use all reasonable efforts to effect such qualifications under applicable "blue sky" or other state securities laws as may be reasonably requested by the Stockholders (provided that the Company shall not be obligated to file a general consent to service of process or qualify to do business as a foreign corporation or otherwise subject itself to taxation in any jurisdiction solely for the purpose of any such qualification) to permit or facilitate such sale or other distribution. (b) To the extent not inconsistent with applicable law, the Company and each of the Stockholders agrees not to effect any public sale or distribution of their respective shares of Common Stock, including, without limitation, a sale pursuant to Rule 144 promulgated under the 1933 Act or pursuant to the Stockholders Agreement, during the sixty (60) day period prior to, and during the ninety (90) day period beginning on, the effective date of a registration statement in which shares of its Registrable Securities are registered (except as part of such registration), if and to the extent requested by the Company or by the underwriter(s) in the case of an underwritten public offering. 4. Information, Documents, Etc. Upon making a request for registration pursuant to Section 1 or Section 2, each of the Stockholders shall furnish to the Company such information regarding his or her holdings and the proposed manner of distribution thereof as shall be required in connection with any registration qualification or compliance referred to in this Agreement. The Company agrees that it will furnish to each of the Stockholders the number of prospectuses, offering circulars or other documents, or any amendments or supplements thereto, incident to any registration, qualification or compliance referred to in this Agreement as the Stockholders from time to time may reasonably request. 5. Expenses. The Company will bear all expenses of registrations incident to its performance of or compliance with this Agreement, including, without limitation, registration and filing fees, exchange listing fees, printing expenses, fees and expenses of compliance with blue sky or other state securities law and fees and disbursements of (a) counsel for the Company, (b) all independent certified public accountants, (c) underwriters, and (d) any and all other persons retained by the Company; provided, however, the Company will not pay (i) underwriting discounts and commissions and brokerage commissions and fees, if any, payable with respect to Registrable Securities sold by a Stockholder, (ii) filing fees attributable to a Stockholder's Registrable Securities, (iii) fees and expenses of compliance with blue sky or other state securities laws that are required by law to be paid directly by a Stockholder, and (iv) fees and expenses of any counsel and accountants for any Stockholder. 3 4 6. Cooperation. In connection with any registration of Registrable Securities pursuant to this Agreement, the Company agrees to: (a) enter into such customary agreements (including an underwriting agreement containing such representations and warranties by the Company and such other terms and provisions, including indemnification provisions, as are customarily contained in underwriting agreements for comparable offerings and, if no underwriting agreement is entered into, an indemnification agreement on such terms as is customary in transactions of such nature) and take all such other actions as the Stockholders or the underwriters, if any, participating in such offering and sale may reasonably request in order to expedite or facilitate such offering and sale; (b) furnish, at the request of the Stockholders or any underwriters participating in such offering and sale, (i) a comfort letter or letters, dated the date of the final prospectus with respect to the Registrable Securities and/or the date of the closing for the sale of the Registrable Securities, from the independent certified public accountants of the Company and addressed to the Stockholders and any underwriters participating in such offering and sale, which letter or letters shall state that such accountants are independent with respect to the Company within the meaning of Rule 1.01 of the Code of Professional Ethics of the American Institute of Certified Public Accountants and shall address such matters as the Stockholders and underwriters may reasonably request and as may be customary in transactions of a similar nature for similar entities and (ii) an opinion, dated the date of the closing for the sale of the Registrable Securities, of the counsel representing the Company with respect to such offering and sale, addressed to the Stockholders and any such underwriters, which opinion shall address such matters as they may reasonably request and as may be customary in transactions of a similar nature for similar entities; and (c) make available for inspection by the Stockholders, the underwriters, if any, participating in such offering and sale (which inspecting underwriters shall, if reasonably possible, be limited to any manager or managers for such participating underwriters), the counsel for the Stockholders, one accountant or accounting firm retained by the Stockholders and any such underwriters, or any other agent retained for purposes of effecting the registration of the Registrable Securities by the Stockholders or such underwriters, all financial and other records, corporate documents and properties of the Company, and supply such additional information, as they shall reasonably request. 7. Action to Suspend Effectiveness; Supplement to Registration Statement. (a) The Company will notify each of the Stockholders and their counsel promptly of (i) any action by the Securities and Exchange Commission ("SEC") to suspend the effectiveness of the registration statement covering the Registrable Securities or the institution or threatening of any proceeding for such purpose (a "stop order") or (ii) the receipt by the Company of any notification with respect to the suspension of the qualification of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any 4 5 proceeding for such purpose. Immediately upon receipt of any such notice, the Stockholders shall cease to offer or sell any Registrable Securities pursuant to the registration statement in the jurisdiction to which such stop order or suspension relates. The Company will use all reasonable efforts to prevent the issuance of any such stop order or the suspension of any such qualifications and, if any such stop order is issued or any such qualification is suspended, to obtain as soon as possible the withdrawal or revocation thereof, and will notify each of the Stockholders and their counsel at the earliest practicable date of the date on which the Stockholders may offer and sell the Registrable Securities pursuant to the registration statement. (b) Within the applicable period referred to in Section 3(a) following the effectiveness of a registration statement filed pursuant to this Agreement, the Company will notify each of the Stockholders promptly of the occurrence of any event or the existence of any state of facts that, in the judgment of the Company, should be set forth in such registration statement. Immediately upon receipt of such notice, the Stockholders shall cease to deliver or use the prospectus relating to such registration statement, and if so requested by the Company, return to the Company, at its expense, all copies (other than permanent file copies) of such registration statement and prospectus. The Company will, as promptly as practicable, take such action as may be necessary to amend or supplement such registration statement in order to set forth or reflect such event or state of facts. The Company will furnish copies of such proposed amendment or supplement to the Stockholders and will not file or distribute such amendment or supplement without the prior consent of the Stockholders, which consent shall not be unreasonably withheld. 8. Indemnification. (a) The Company hereby agrees to indemnify and hold harmless each Stockholder and their agents (including counsel), and agrees to indemnify each underwriter participating in such offering and sale and each Person, if any, who controls such underwriter within the meaning of the 1933 Act, against any losses, claims, damages or liabilities, joint or several, to which the Stockholders, any agent or any such underwriter or controlling Person may become subject under the 1933 Act 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 any material fact contained in any registration statement under which such Registrable Securities were registered under the 1933 Act pursuant to Section 1 or Section 2, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon 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 (ii) any violation by the Company of the 1933 Act or the Securities Exchange Act of 1934, as amended (the "1934 Act"), or other federal or state law applicable to the Company and relating to any action or inaction required of the Company in connection with such registration, and will reimburse the Stockholders, each such agent and underwriter and each such controlling Person for any legal 5 6 or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in reliance upon and in conformity with information pertaining to such Stockholder, such underwriter or controlling Person, furnished in writing to the Company by the Stockholder, such underwriter or such controlling Person for use in such registration statement or prospectus or by a Stockholder's or such controlling Person's failure to deliver a copy of the registration statement or prospectus or any amendment or supplement thereto after being furnished with a sufficient number of copies of the same by the Company. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Stockholders, such underwriter or such controlling Person and shall survive any transfer by the Stockholders. (b) If the Stockholders sell Registrable Securities under a prospectus that is part of a registration statement, then the Stockholder(s) participating in such offering (the "Participating Stockholders"), by exercising their registration rights hereunder, hereby agree, jointly and severally (if applicable), to indemnify and hold harmless the Company, its agents (including counsel) and each Person, if any, who controls the Company within the meaning of the 1933 Act, each officer of the Company who signs the registration statement, each director of the Company, each underwriter and each Person who controls any underwriter within the meaning of the 1933 Act, against all losses, claims, damages or liabilities, joint or several, to which the Company or such agent, officer or director or underwriter or controlling Person may become subject under the 1933 Act 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 any material fact contained in the registration statement under which such Registrable Securities were registered under the 1933 Act, any preliminary prospectus or final prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon 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 (ii) any violation by the Participating Stockholders of the 1933 Act or the 1934 Act, or other federal or state law applicable to the Participating Stockholders and relating to any action or inaction required by the Participating Stockholders in connection with such registration, and will reimburse the Company and each such agent, officer, director, underwriter and controlling Person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Participating Stockholders will be liable hereunder in any such case if and only to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in reliance upon and in conformity with information furnished in writing to the Company by the Participating Stockholders specifically for use in such registration statement or prospectus. 6 7 (c) Promptly after receipt by an indemnified party hereunder of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof may be made against the indemnifying party hereunder, notify the indemnifying party in writing thereof, but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party hereunder except to the extent such indemnifying party is prejudiced by such failure to so notify nor shall it relieve it from any liability which it may have to any indemnified party other than under this Agreement. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate in and, to the extent it shall desire, to assume and undertake the defense thereof with counsel satisfactory to such indemnified party, and, after notice from the indemnifying party to such indemnified party of its election so to assume and undertake the defense thereof, the indemnifying party shall not be liable to such indemnified party under this Section 8 for any legal expenses subsequently incurred by such indemnified party in connection with the defense thereof; provided, however, that, if the defendants in any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be reasonable defenses available to it which are different from or additional to those available to the indemnifying party or if the interests of the indemnified party reasonably may be deemed to conflict with the interests of the indemnifying party, the indemnified party shall so notify the indemnifying party in writing and shall have the right to select a separate counsel and to control the defense of such action, with the reasonable expenses and fees of such separate counsel and other reasonable expenses related to such participation to be reimbursed by the indemnifying party as incurred. In any such action, any indemnified party shall have the right to retain its own counsel, but, except as provided above, the fees and disbursements of such counsel shall be at the expense of such indemnified party unless (i) the indemnifying party shall have failed to retain counsel for the indemnified party as aforesaid or (ii) the indemnifying party and such indemnified party shall have mutually agreed in writing to the retention of such counsel. It is understood that the indemnifying party shall not, in connection with any action or related actions in the same jurisdiction, be liable for the fees and disbursements of more than one separate firm qualified in such jurisdiction to act as counsel for the indemnified party and shall not be obligated to pay the fees and expenses of more than one counsel (and any required local counsel) for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest exists between such indemnified party and any other of such indemnified parties with respect to such claim. The indemnifying party shall not be liable for any settlement of any proceeding effected without its prior written consent, which consent shall not be unreasonably withheld, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment. 7 8 If the indemnification provided for in this Section 8 is unavailable for any reason or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages or liabilities or actions referred to herein, then each indemnifying party shall in lieu of indemnifying such indemnified party contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or actions in such proportion as is appropriate to reflect the relative fault of the Company, on the one hand, and the Stockholder, on the other, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or actions as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact relates to information supplied by the Company, on the one hand, or the Stockholders, on the other hand, and to the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement of omission. The parties hereto agree that it would not be just and equitable if contributions pursuant to this paragraph were determined by any method of allocation which did not take account of the equitable considerations referred to above in this paragraph. Subject to the provisions of this Section 8, the amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or actions in respect thereof, referred to above in this paragraph, shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. 9. Amendments. This Agreement may not be modified, amended, altered or supplemented except upon the execution and delivery of a written agreement executed by the Company and each of the Stockholders. 10. Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally, telecopied (which is confirmed) or sent by an overnight courier service, such as Federal Express, or by registered or certified mail, return receipt requested, to the parties at the following addresses (or at such other address for a party as shall be specified by like notice): (a) If to the Company: Insurance Management Solutions Group, Inc. 360 Central Avenue St. Petersburg, Florida 33701 Attention: C. Anthony Sexton, Esq. Telephone: (813) 823-4000, ext. 4894 Telecopy: (813) 823-6518 8 9 (b) If to the Stockholders: at each of the Stockholder's last address on the stock records of the Company or the last address given by each Stockholder to the Company for notices under this Agreement with copies to: Benesch, Friedlander, Coplan & Aronoff LLP 2300 BP America Building 200 Public Square Cleveland, OH 44114 Attention: Ira Kaplan, Esq. Telephone No.: (216) 363-4500 Telecopy No.: (216) 363-4588 Any notice given by (i) telecopier will be effective when confirmed if given prior to 6:00 p.m., local time, on a Business Day, otherwise it will be effective on the next succeeding business day; (ii) overnight courier or personal delivery will be effective on the day delivered, unless such day is not a Business Day, in which case it will be effective on the next succeeding Business Day; and (iii) registered or certified mail will be effective three Business Days after deposit in the mails, all fees prepaid. 11. Interpretation and Definitions. When a reference is made in this Agreement to Sections, such reference shall be to a Section of this Agreement unless otherwise indicated. Whenever the words "include," "includes" or "including" are used in this Agreement they shall be deemed to be followed by the words "without limitation." 12. Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same agreement and shall become effective when two or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. 13. Entire Agreement; Limitation on Third Party Beneficiaries. This Agreement (including the documents and the instruments referred to herein) constitutes the entire agreement and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement. Nothing expressed or implied in this Agreement is intended, or shall be construed, to confer upon any Person other than the parties hereto and their permitted successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement or result in any such Person being deemed a third party beneficiary of this Agreement. 9 10 14. Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. 15. Specific Performance. The parties agree that irreparable damage would occur in the event any provision of this Agreement was not performed in accordance with the terms of this Agreement and that the parties shall be entitled to the remedy of specific performance of the terms of this Agreement, in addition to any other remedy at law or equity. 16. Governing Law. This Agreement shall be governed and construed in accordance with the laws of the State of Ohio without giving effect to the principles of conflicts of law thereof. However, jurisdiction and venue for any action brought to enforce the terms or conditions of this Agreement shall be the domicile of the defendant or respondent in any such action. 17. Assignment. Each of the terms, provisions and obligations of this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective legal representatives, successors and assigns. Notwithstanding the foregoing, the Stockholders shall not be permitted to assign their interests, during their life, under this Agreement to any person or entity other than Permitted Assigns. For purposes of this Agreement "Permitted Assigns" shall mean Daniel J. or Sandra White, their lineal descendants and any trust or other fiduciary for the benefit of such individual; and/or such individual's spouse and/or lineal descendants, and such individual's parents. 18. Number; Gender. Whenever the context so requires, the singular number shall include the plural and the plural shall include the singular, and the gender of any pronoun shall include the other genders. 19. Captions. The titles, captions and headings contained in this Agreement are inserted herein only as a matter of convenience and for reference and in no way define, limit, extend or describe the scope of this Agreement or the intent of any provision hereof. 20. Termination of Registration Rights. The registration rights provided by this Agreement shall terminate and be of no further force and effect unless exercised prior to the earlier of: (a) the sixth anniversary of the Closing Date of an IPO or other registration of the Company's securities under the Securities Exchange Act of 1934, as amended; (b) with respect to any Stockholder, such time as the Stockholder has an unlimited right to sell all of his or her Registrable Securities in the public market without restriction on volume or otherwise; or (c) Daniel J. White 10 11 voluntarily leaves the employ of the Company for any reason other than "Good Reason" as defined in the Employment Agreement dated the date hereof, between the Company and Daniel J. White. IN WITNESS WHEREOF, the Company and the Stockholders have duly executed this Registration Rights Agreement as of the date first written above. "COMPANY" INFORMATION MANAGEMENT SOLUTIONS GROUP, INC. By: -------------------------------- "STOCKHOLDERS" ------------------------------------ DANIEL J. WHITE ------------------------------------ SANDRA WHITE 11 EX-21.1 73 LIST OF SUBSIDARIES 1 EXHIBIT 21.1 LIST OF SUBSIDIARIES OF INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. 1. Insurance Management Solutions, Inc. 2. Geotrac, Inc. EX-23.2 74 CONSENT 1 EXHIBIT 23.2 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We have included our report dated May 29, 1998, accompanying the consolidated financial statements of Insurance Management Solutions Group, Inc. and subsidiaries contained in the Registration Statement and Prospectus, which will be signed upon consummation of the transaction described in Notes 1 and 3 to the consolidated financial statements. We consent to the use of the aforementioned report in the Registration Statement and Prospectus, and to the use of our name as it appears under the caption "Experts". GRANT THORNTON LLP Tampa, Florida June 25, 1998 EX-23.3 75 CONSENT 1 EXHIBIT 23.3 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We have issued our report dated May 29, 1998, accompanying the financial statements of Geotrac, Inc. contained in the Registration Statement and Prospectus. We consent to the use of the aforementioned report in the Registration Statement and Prospectus and to the use of our name as it appears under the caption "Experts". GRANT THORNTON LLP Tampa, Florida June 25, 1998 EX-23.4 76 CONSENT 1 EXHIBIT 23.4 CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS We have issued our report dated May 29, 1998, accompanying the financial statements of SMS Geotrac, Inc. contained in the Registration Statement and Prospectus. We consent to the use of the aforementioned report in the Registration Statement and Prospectus, and to the use of our name as it appears under the caption "Experts". GRANT THORNTON LLP Tampa, Florida June 25, 1998 EX-27.1 77 FINANCIAL DATA SCHEDULE (FOR SEC USE ONLY) WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM S-1. 1 U.S. DOLLARS YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 1 115,070 0 1,218,741 0 0 10,276,694 3,666,915 1,335,579 19,531,705 10,425,061 2,186,653 0 6,750,000 200,000 (30,009) 19,531,705 0 38,505,979 0 32,806,473 0 0 149,345 5,751,170 2,112,200 0 0 0 0 3,409,655 .17 .17
EX-27.2 78 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM S-1. 1 U.S. DOLLARS 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 1 0 0 1,251,564 0 0 10,714,698 3,898,687 1,564,278 25,418,525 11,619,519 1,920,647 0 6,750,000 200,000 (21,641) 25,418,525 0 10,945,939 0 9,494,468 0 0 83,190 1,776,419 534,900 0 0 0 0 1,241,519 .06 .06
EX-27.3 79 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF GEOTRAC, INC. FOR THE YEAR ENDED DECEMBER 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM S-1. 1 U.S.DOLLARS YEAR DEC-31-1997 JAN-01-1997 DEC-31-1997 1 1,897,262 0 2,227,236 0 0 4,693,232 3,726,200 306,284 18,636,682 3,291,024 7,187,500 0 0 10 7,125,792 18,636,682 0 6,336,025 0 5,324,831 0 0 338,391 2,372,803 272,000 0 0 0 0 2,100,803 0 0
EX-27.4 80 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF GEOTRAC, INC. FOR THE THREE MONTH PERIOD ENDED MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM S-1. 1 U.S. DOLLARS 3-MOS DEC-31-1998 JAN-01-1998 MAR-31-1998 1 2,073,279 0 2,844,241 0 0 5,465,648 3,806,824 494,154 19,112,401 3,637,872 6,562,500 0 0 10 7,958,726 19,112,401 0 4,572,866 0 2,996,325 0 0 189,607 1,386,934 554,000 0 0 0 0 832,934 0 0
EX-27.5 81 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF SMS GEOTRAC, INC. FOR THE YEAR ENDED JUNE 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM S-1. 1 U.S. DOLLARS YEAR JUN-30-1997 JUL-01-1996 JUN-30-1997 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 12,521,507 0 10,084,109 0 0 78,850 2,358,598 1,079,100 0 0 0 0 1,279,448 0 0
EX-27.6 82 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS OF SMS GEOTRAC, INC. FOR THE ONE MONTH PERIOD ENDED JULY 31, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM S-1. 1 U.S. DOLLAR 1-MO JUL-31-1997 JUL-01-1997 JUL-31-1997 1 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,209,679 0 860,443 0 0 8,215 341,021 148,000 0 0 0 0 193,021 0 0
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