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EXHIBIT 10.4
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT, made and entered into this 14 day of August, 2001,
between Bankers Insurance Group, Inc., a Florida corporation (hereinafter
"Optionor") and Insurance Management Solutions Group, Inc., a Florida
corporation (hereinafter "Optionee").
R E C I T A L S
1. Definitions. For purposes of this Agreement the terms listed below,
wherever capitalized, shall be given the following definitions:
1.1. "Affiliate" shall mean any Person who controls, is controlled by
or is under common control with another Person.
1.2. "Credit Line" shall mean the line of credit being established by
Optionee in favor of Optionor in the amount of five million
($5,000,000) dollars and evidenced by Optionor's Master
Promissory Note (herein, "Note") of even date herewith and in
like principal amount.
1.3. "DOI" shall mean the New York Department of Insurance.
1.4. "FCIC" shall mean First Community Insurance Company, a New York
domestic insurance company with its principal place of business
located in St. Petersburg, Florida and a wholly owned subsidiary
of Optionor.
1.5. "Loan Documents" shall mean the Note, Credit and Security
Agreement, Collateral Assignment of Flood Book, Absolute
Assignment of Flood Book, Further Assurances and Compliance
Agreement and the within Stock Option Agreement all executed of
even date herewith and which were executed and delivered to
create the Credit Line.
1.6. "Note" shall mean the Master Promissory Note dated of even date
herewith to evidence Optionor's obligations under the Credit
Line.
1.7. "Option" shall mean the option to purchase the Option Stock
granted by OPTIONOR to OPTIONEE hereunder.
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1.8. "Optionee" shall mean Insurance Management Solutions Group,
Inc., a Florida corporation.
1.9. "Optionor" shall mean Bankers Insurance Group, Inc., a Florida
corporation.
1.10. "Option Stock" shall mean the 10,898 shares of the common
capital stock, $318 par value of FCIC as to which OPTIONEE is
granted a purchase option hereunder.
1.11. "Person" shall mean any individual, corporation, partnership,
association, joint-stock company, trust, un-incorporated
organization, joint venture, court or government or political
subdivision or agency thereof.
1.12. "Permitted Encumbrances" shall mean the liens on the Option
Stock described in Exhibit A which is attached hereto and by
reference made a part hereof.
1.13. "Transaction" shall mean the purchase and sale of the Option
Stock hereunder and subsequent to the exercise of the Option.
2. This Stock Option Agreement was required by Optionee as a condition of
the establishment of the Credit Line.
NOW THEREFORE, FOR AND IN CONSIDERATION of the establishment of the Credit Line
as well as for other good and valuable consideration, it is hereby covenanted
and agreed among the parties hereto as follows:
1. GRANT OF OPTION
1.1. OPTIONOR hereby grants and conveys unto OPTIONEE or its assigns
an irrevocable and exclusive option to purchase the Option Stock
upon all the terms and conditions hereinafter set forth.
1.2. The term of this option to purchase shall commence on the day
and year first above set forth and shall initially extend
through and be irrevocable until all principal and accrued
interest due under the Credit Line is paid in full and all
obligations of Optionor under the Credit and Security Agreement
have been satisfied in full.
1.3. This option shall only be exercisable on or after such time as
(i) there shall be a default in payment of any sums due under
the Note for more than 10 days after the date when they shall
become due or (ii) there shall be any
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other default under the Loan Documents if after notice thereof,
such default has not been cured within thirty days of such
notice.
1.4. Subject to the restrictions set forth in paragraph 1.3 hereof,
OPTIONEE shall have the right to exercise the Option hereinabove
granted at any time within the term of this Option by OPTIONEE
giving written notice of such exercise delivered in person or
mailed to OPTIONOR. Upon the giving of such notice of the
exercise, this instrument shall thereupon constitute a firm and
binding contract of purchase and sale between OPTIONEE and
OPTIONOR at the price and upon the terms and conditions set
forth in this Agreement.
2. PURCHASE PRICE
2.1. The purchase price for said Option Stock shall be the sum of Ten
($10.00) per share or One Hundred Eight Thousand Nine Hundred
Eighty ($108,980) dollars.
2.2. The said purchase price of said Option Stock shall be paid in
cash at the Closing.
3. REPRESENTATIONS AND WARRANTIES.
3.1. OPTIONOR represents and warrants to OPTIONEE that:
3.1.1. OPTIONOR is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Florida. OPTIONOR has the corporate power and
is duly licensed or qualified to the extent required by
applicable law to carry on its business as now being
conducted and to own, hold and operate its properties
and assets.
3.1.2. The total authorized capital stock of the FCIC consists
of 10,898 shares of common stock, par value $318.00 per
share. Of this amount 10,898 shares have been issued and
are outstanding. Except for the rights of OPTIONEE with
respect to the Option Stock provided for herein and
except for the Permitted Encumbrances, OPTIONOR has no
stock appreciation rights options, warrants, rights,
agreements, understandings or commitments of any kind
entitling any person or persons to purchase, subscribe
for or otherwise acquire, or relating to the voting
rights, of any of OPTIONOR's common capital stock.
3.1.3. The execution, delivery and performance of this
Agreement by the OPTIONOR, and the consummation of the
transactions contemplated by this Agreement, will not
constitute a breach, violation or default, create a
lien, or give rise to any right of
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termination, cancellation, prepayment or acceleration,
under the certificate of incorporation or by-laws of the
OPTIONOR, or under any law, rule or regulation or any
judgment, decree, order, governmental permit or license,
or any note, mortgage, indenture, deed of trust,
license, lease, agreement or other instrument or
obligation to which OPTIONOR is a party or by which it
may be bound or affected.
3.1.4. Optionor is the legal owner and holder of the Option
Stock.COVENANTS OF OPTIONOR
4. COVENANTS OF OPTIONOR
4.1. From and after the date of the execution of this Agreement and
throughout the term hereof:
4.1.1. OPTIONOR agrees that it shall not, without the consent
of OPTIONEE permit FCIC to:
4.1.1.1. Reorganize its capital structure;
4.1.1.2. Merge or consolidate with any other corporation
or sell any of its assets except in the
ordinary course of business; or
4.1.1.3. Issue any additional shares of stock.
4.1.2. OPTIONEE shall have the right to examine the books and
records of OPTIONOR and FCIC from time to time and
receive copies of all accounting reports and tax returns
prepared for, or on behalf of, FCIC subject to any DOI
policies governing dissemination of examination reports
to unaffiliated parties.
4.1.3. As soon as practicable, and in any event within twenty
(20) days after the end of each calendar month, furnish
to OPTIONEE a monthly unaudited financial statement of
OPTIONOR and FCIC and each of its subsidiaries,
including balance sheets and income statements, for the
calendar month just ended, and for the calendar year to
date; and
4.1.4. As soon as practicable, and in any event within 180 days
after the end of each fiscal year, furnish to OPTIONEE
the annual audit report of OPTIONOR and FCIC and each of
its subsidiaries, certified without material
qualification by independent certified public
accountants selected by OPTIONOR and acceptable to
OPTIONEE, prepared in accordance with generally accepted
accounting principles and practices applied on a basis
consistently maintained throughout the period involved,
together with relevant
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financial statements of Borrower for the twelve
(12)-month period just ended.
5. CLOSING.
5.1. After delivery of the notice of intent to exercise the option
pursuant to Section 1.4 hereof, and prior to the closing
hereunder, OPTIONEE shall file with the DOI its completed
application for approval of the Transaction, and OPTIONEE and
OPTIONOR shall each use its good faith efforts to promptly
obtain the written consent or approval of each person whose
consent or approval is required to consummate the purchase and
sale of the Option Stock, including all required DOI approvals.
5.2. OPTIONEE and OPTIONOR shall consummate and close the sale
contemplated by this Agreement on or before the fifteenth
calendar day following the date of the receipt by OPTIONEE of
all required approvals from the DOI for the consummation of the
Transaction. The closing shall occur at such time, date and
location in St. Petersburg, Florida as is mutually agreed upon
by OPTIONEE and OPTIONOR.
5.3. At closing hereunder, said Option Stock shall be conveyed free
and clear of all liens and encumbrances other than the Permitted
Encumbrances. Optionor has delivered to Optionee, simultaneously
upon the execution hereof, stock powers and letters of
instruction to the lenders holding first lien security interests
in the Option Stock and otherwise disclosed in Exhibit A. Such
powers and letters are to be held by Optionee and not used or
delivered until the exercise of, and closing under, this Option.
5.4. Optionor shall make, execute and deliver such additional
instruments as Optionee may reasonably request to convey the
Optionor's interest in the Option Stock.
5.5. Optionor irrevocably nominates, constitutes and appoints
Optionee its true and lawful attorney in fact, with full power
of substitution and revocation for it, in its name, place and
stead and either in the name of Optionee or in the name of
Optionor to make, execute and deliver such stock powers, and
other instruments or agreements as may be necessary or
appropriate to close on the purchase of the Option Stock in
accordance with the terms of this Agreement and to transfer the
title to such stock from the name of the Optionor to the name of
the Optionee or its assigns. All rights, powers and authority of
said attorney-in-fact to exercise any and all rights and powers
herein granted shall commence and be in full force and effect as
of the date of this Agreement and such rights, powers and
authority shall remain in full force and effect thereafter until
the termination of this Agreement. However, Optionee shall not
deliver the Absolute Assignment or otherwise exercise its rights
under this Power of Attorney until there is an occurrence of an
Event of Default hereunder. The power set forth herein is a
power coupled with an interest.
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6. BOARD APPROVAL
6.1. This Agreement shall not be effective to bind the parties unless
and until the Credit Line and the Loan Documents have been
approved by the Optionee's Board of Directors and Audit
Committee.
7. MISCELLANEOUS.
7.1. Attorney's Fees. If either of the parties hereto 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.
7.2. Benefits. This Agreement shall be freely assignable and shall be
binding upon the parties, their heirs, legal representatives,
successors and assigns.
7.3. 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.
7.4. 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.
7.5. Counterparts. This Agreement may be executed in several
counterparts, each of which so executed shall be deemed to be an
original, and said counterparts shall together constitute and be
one and the same instrument.
7.6. 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
hereof, and all right which the respective parties may have had
with respect to the subject matter hereof under any written
agreements and/or oral agreements are hereby canceled and
terminated, and all parties agree that there are no
representations or warranties other than those set forth herein.
7.7. Invalidation. Should any part of this Agreement 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
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effect as if this 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.
7.8. Modification. No change or modification of this Agreement shall
be valid unless the same shall be in writing and signed by each
of the parties hereto.
7.9. Applicable 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. Further,
the venue for any action brought to enforce any of the
provisions hereof shall be in a state court of competent
jurisdiction in Pinellas County, Florida and any action
commenced in any other forum may be removed to a state court of
competent jurisdiction in Pinellas County, Florida.
7.10. Venue. The venue for any action brought to enforce the terms and
conditions of this Agreement shall be any court of competent
jurisdiction located in Pinellas County, Florida.
IN WITNESS WHEREOF, the parties have set their hands and seals hereunto and have
caused this Agreement to be executed in their names the day and year first above
written.
WITNESSES: Bankers Insurance Group, Inc.
s/s Lisa M. Powell
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s/s Harold David Holland BY: s/s G. Kristin Delano
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As Its: Secretary
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WITNESSES: Insurance Management Solutions
Group, Inc.
s/s Harold David Holland
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s/s Lisa Powell BY: Richard G. Torra
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As Its: Corporate Secretary
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Exhibits: A Permitted Encumbrances
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EXHIBIT A
PERMITTED ENCUMBRANCES
Bankers Insurance Group - Western International Insurance Company -
Bonded Builders
Loan: $9,000,000.00 / Advanced $8,600,000.00
Current Balance: $8,426,940.65
Lender: Western International Insurance Company
Borrower: Bankers Insurance Group, Inc.
Re: Financing for Bonded Builders acquisition
Issue Date April 16, 2000
Maturity Date: May 1, 2008
Collateral
Stock Pledged: FCIC 3,023 shares owned by BIG
BSIC 75,000 shares owned by BIG
BHWA 1,000 shares owned by BIG
SouthTrust - Bankers Insurance Group, Inc.
Loan: $6,000,000.00
Current Balance: $3,372,305.40
Lender: SouthTrust
Borrower: BIG
Issue Date October 1, 1993
Amended December 20, 1997
Maturity Date: December 30, 2002
Stock Pledged: 2,008,667 shares of BIG stock owned by BFC
7,875 shares of FCIC shares owned by BIG
BFC means Bankers Financial Corporation, a Florida corporation
BIG means Bankers Insurance Group, Inc.
BHWA means Bankers Home Warranty Association, a Florida corporation
BSIC means Bankers Security Insurance Company, a Florida insurance company
FCIC mean First Community Insurance Company, a New York insurance company
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