SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<Table>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
</Table>
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
- - --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- - --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] No fee required.
[X] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
Not applicable.
(2) Aggregate number of securities to which transaction applies:
Not applicable.
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
Filing fee calculated as one-fiftieth of one percent of cash to be
received ($19,000,000) plus one-fiftieth of one percent of the bona
fide estimate of the maximum present value to the registrant of a
long-term services contract to be executed at closing ($2,800,000).
(4) Proposed maximum aggregate value of transaction: $21,800,000
(excluding, pursuant to Rule 0-11(c), securities of the registrant
to be received by the registrant).
(5) Total fee paid: $4,360.
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[LOGO HERE]
360 CENTRAL AVENUE
ST. PETERSBURG, FLORIDA 33701
Dear Shareholder:
You are cordially invited to attend a Special Meeting (the "Special
Meeting") of the Shareholders of Insurance Management Solutions Group, Inc.
("IMSG"), to be held on Wednesday, December 26, 2001, at IMSG's offices at 360
Central Avenue, St. Petersburg, Florida. The Special Meeting will begin at 10:00
a.m. local time.
At the Special Meeting, you will be asked to consider and vote solely
upon a proposal to approve the sale by IMSG of all of the issued and outstanding
shares of capital stock of its wholly-owned subsidiary, Geotrac of America,
Inc., a Florida corporation ("Geotrac"), pursuant to a Stock Purchase Agreement,
dated as of September 20, 2001 (the "Geotrac Sale Agreement"), by and among
IMSG; Geotrac; Geotrac Holdings, Inc., a Delaware corporation ("Geotrac
Holdings"); Daniel J. White; two trusts controlled respectively by Daniel J.
White and his spouse (the Daniel J. White Trust and the Sandra A. White Trust);
and, solely for the limited purposes of a non-competition covenant, Bankers
Insurance Group, Inc., a Florida corporation ("BIG"). Daniel J. White is
currently President and a director of Geotrac and a director of IMSG. The
transactions contemplated by the Geotrac Sale Agreement are collectively
referred to herein as the "Geotrac Sale." A copy of the Geotrac Sale Agreement
is attached as Appendix A to, and a description of the Geotrac Purchase
Agreement is included in, the accompanying Proxy Statement.
Because Daniel J. White is a member of IMSG's Board of Directors (the
"Board of Directors" or "Board") and the beneficial owner of approximately 4.1%
of IMSG's outstanding common stock, Mr. White recused himself from all Board and
committee meetings and proceedings pertaining to the Geotrac Sale. In connection
with its review and consideration of the Geotrac Sale, the Board of Directors
retained Raymond James & Associates, Inc. ("Raymond James") to act as IMSG's
independent financial advisor and, on September 20, 2001, Raymond James
delivered its oral opinion, which was subsequently confirmed in writing, to the
Board to the effect that, as of the date of its opinion, the consideration to be
received in the Geotrac Sale by IMSG is fair to the shareholders of IMSG from a
financial point of view. A copy of the opinion of Raymond James is attached as
Appendix B to, and a description of its opinion is included in, the accompanying
Proxy Statement.
YOUR BOARD OF DIRECTORS HAS DETERMINED THAT THE GEOTRAC SALE IS FAIR TO
AND IN THE BEST INTERESTS OF IMSG AND ITS SHAREHOLDERS (OTHER THAN DANIEL J.
WHITE AND HIS AFFILIATES), HAS APPROVED AND ADOPTED THE GEOTRAC SALE AGREEMENT
AND THE GEOTRAC SALE (SUBJECT TO IMSG SHAREHOLDER APPROVAL)
AND RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE APPROVAL OF THE GEOTRAC SALE
AGREEMENT AND THE GEOTRAC SALE. In arriving at its recommendation, the Board of
Directors gave careful consideration to a number of factors, as described in the
accompanying Proxy Statement, regarding the fairness to IMSG and its
shareholders of the consideration to be received by IMSG.
DETAILS OF THE GEOTRAC SALE AGREEMENT AND THE GEOTRAC SALE APPEAR IN
THE ACCOMPANYING PROXY STATEMENT. PLEASE GIVE THIS MATERIAL YOUR CAREFUL
ATTENTION.
It is important that your shares be represented at the Special Meeting.
Whether or not you plan to attend the Special Meeting, please complete, sign and
date the enclosed proxy card and mail it promptly using the enclosed,
pre-addressed, postage-paid, return envelope. If you attend the Special Meeting,
you may revoke the proxy given and vote in person if you wish, even if you have
previously returned your proxy card. Your prompt attention will be greatly
appreciated.
Sincerely,
David M. Howard
President and Chief Executive Officer
YOUR VOTE IS IMPORTANT
PLEASE RETURN YOUR PROXY PROMPTLY
November , 2001
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[LOGO HERE]
360 CENTRAL AVENUE
ST. PETERSBURG, FLORIDA 33701
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 26, 2001
A Special Meeting of Shareholders of Insurance Management Solutions
Group, Inc. ("IMSG") will be held at IMSG's offices at 360 Central Avenue, St.
Petersburg, Florida, on Wednesday, December 26, 2001. The Special Meeting will
begin at 10:00 a.m. local time and will be held for the following purposes:
1. To approve the sale by IMSG of all of the issued and
outstanding shares of capital stock of its wholly-owned subsidiary, Geotrac of
America, Inc., a Florida corporation ("Geotrac"), pursuant to a Stock Purchase
Agreement, dated as of September 20, 2001 (the "Geotrac Sale Agreement"), by and
among IMSG; Geotrac; Geotrac Holdings, Inc., a Delaware corporation ("Geotrac
Holdings"); Daniel J. White, the Daniel J. White Trust and the Sandra A. White
Trust (collectively, the "Whites"); and, solely for the limited purposes of a
non-competition covenant, Bankers Insurance Group, Inc., a Florida corporation
("BIG"). (The transactions contemplated by the Geotrac Sale Agreement are
collectively referred to herein as the "Geotrac Sale."); and
2. To transact any other business as may properly come before the
Special Meeting or any adjournment or postponement of the Special Meeting.
THE BOARD OF DIRECTORS HAS APPROVED THE GEOTRAC SALE AGREEMENT AND THE
GEOTRAC SALE (SUBJECT TO IMSG SHAREHOLDER APPROVAL) AND HAS DETERMINED THAT THE
GEOTRAC SALE AGREEMENT AND THE GEOTRAC SALE ARE FAIR TO, AND IN THE BEST
INTERESTS OF, IMSG AND ITS SHAREHOLDERS (OTHER THAN DANIEL J. WHITE AND HIS
AFFILIATES). THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS OF IMSG
VOTE "FOR" THE APPROVAL OF THE GEOTRAC SALE AGREEMENT AND THE GEOTRAC SALE AT
THE SPECIAL MEETING.
Approval of the Geotrac Sale Agreement and the Geotrac Sale requires
the affirmative vote of the holders of a majority of IMSG's issued and
outstanding shares of common stock, $.01 par value per share ("IMSG Common
Stock"). Each share of IMSG Common Stock is entitled to one vote on all matters
to come before the Special Meeting. The IMSG Common Stock constitutes the only
outstanding class of capital stock of IMSG. BIG (including certain of its
subsidiaries) owns, as of the record date for the Special Meeting, approximately
65.2% of the total issued and outstanding shares of IMSG Common Stock. BIG and
its subsidiaries have informed IMSG that they will vote their shares of IMSG
Common Stock with respect to the Geotrac Sale Agreement and the Geotrac Sale in
accordance with the vote of a majority of votes cast by all other holders of
shares of IMSG Common Stock.
Florida law provides that you may dissent from the "sale of assets,"
namely Geotrac's outstanding capital stock, involved in the Geotrac Sale. To
perfect your dissenter's rights under the Florida Business Corporation Act (the
"FBCA"), you must first notify IMSG in writing prior to the Special Meeting that
you intend to demand payment for your shares and you must not vote your shares
in favor of the Geotrac Sale Agreement and the Geotrac Sale. If the Geotrac Sale
Agreement and the Geotrac Sale are approved by IMSG's shareholders, IMSG will
then notify you that you are entitled to demand payment for your shares and
instruct you of the necessary steps in order to obtain such payment. If you do
not comply with the procedures governing dissenters' rights set forth under
Florida law and explained elsewhere in the accompanying Proxy Statement, you may
not be entitled to payment for your shares. A copy of the relevant provisions of
Florida law is attached as Appendix C to the Proxy Statement.
Only shareholders of record, as shown by the transfer books of IMSG, as
of the close of business on November 8, 2001, will be entitled to notice of and
to vote at the Special Meeting or any adjournment or postponement thereof. A
list of shareholders entitled to vote at the Special Meeting will be available
for examination by any shareholder for a proper purpose during normal business
hours at our offices for a period of at least 10 days preceding the Special
Meeting. Information relating to the sole matter to be considered and voted on
at the Special Meeting is set forth in the Proxy Statement accompanying this
notice.
By order of the Board of Directors,
Richard G. Torra
Secretary
November , 2001
---
YOUR VOTE IS IMPORTANT. TO ASSURE YOUR REPRESENTATION
AT THE SPECIAL MEETING, PLEASE VOTE ON THE MATTER TO BE CONSIDERED
AT THE SPECIAL MEETING BY COMPLETING THE ENCLOSED PROXY AND MAILING
IT PROMPTLY IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
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[LOGO HERE]
360 CENTRAL AVENUE
ST. PETERSBURG, FLORIDA 33701
This proxy statement (the "Proxy Statement") is being furnished to
shareholders in connection with the solicitation of proxies on behalf of the
Board of Directors (the "Board of Directors" or "Board") of Insurance Management
Solutions Group, Inc. ("IMSG") for the Special Meeting (the "Special Meeting")
of shareholders to be held at IMSG's offices at 360 Central Avenue, St.
Petersburg, Florida on Wednesday, December 26, 2001, at 10:00 a.m. local time,
or any adjournment or postponement thereof.
If the accompanying proxy form is completed, signed and returned, the
shares represented thereby will be voted at the Special Meeting. Your giving of
a proxy does not affect your right to vote in person if you attend the Special
Meeting. You may revoke your proxy at any time prior to the voting thereof.
Shares of IMSG common stock, $.01 par value per share ("IMSG Common
Stock"), are currently traded on the OTC Bulletin Board under the symbol
"INMG.OB." On November ___, 2001, the most recent practicable trading day prior
to the date of this Proxy Statement, the reported closing sale price of IMSG
Common Stock on the OTC Bulletin Board was $___ per share.
As used in this Proxy Statement, unless the context otherwise requires,
the term "IMSG" refers to Insurance Management Solutions Group, Inc. and its
subsidiaries. All information regarding IMSG and its subsidiaries contained in
this Proxy Statement has been supplied by IMSG, other than information regarding
Geotrac of America, Inc., a Florida corporation ("Geotrac"), contained in this
Proxy Statement, which has been supplied by Geotrac.
This Proxy Statement and the accompanying proxy are first being mailed
on or about November __, 2001 to shareholders entitled to vote at the Special
Meeting.
Shareholders of record as of the close of business on November 8, 2001
(the "Record Date") are entitled to notice of and to vote at the Special
Meeting. At that date, there were 12,800,261 shares of IMSG Common Stock
outstanding and entitled to vote. Each outstanding share of IMSG Common Stock is
entitled to one vote on all matters submitted to a vote of shareholders.
Votes cast by proxy or in person at the Special Meeting will be
tabulated by the inspector of elections appointed for the Special Meeting, who
will also determine whether a quorum is present for the transaction of business.
IMSG's bylaws provide that a quorum is present if the holders of a majority of
the issued and outstanding shares of IMSG Common Stock entitled to vote at the
meeting are present in person or represented by proxy. Abstentions will be
counted as shares that are present and entitled to vote for purposes of
determining whether a quorum is present. Shares held by nominees for beneficial
owners will also be counted for purposes of determining whether a quorum is
present if the nominee has the discretion to vote on at least one matter
presented, even though the nominee may not exercise discretionary voting power
with
respect to other matters and even though voting instructions have not been
received from the beneficial owner (a "broker non-vote"). Neither abstentions
nor broker non-votes are counted in determining whether a proposal has been
approved.
Under Florida law, approval of the Geotrac Sale Agreement and the
Geotrac Sale (as hereinafter defined) requires the affirmative vote of the
holders of a majority of the issued and outstanding shares of IMSG Common Stock.
You are requested to vote by completing the enclosed proxy and
returning it signed and dated in the enclosed postage-paid envelope. You are
urged to indicate your vote in the space provided on the proxy. Proxies
solicited by the Board of Directors of IMSG will be voted in accordance with
the directions given by the giver of the proxy. If no instructions are made,
signed proxies will be voted FOR the Geotrac Sale Agreement and the Geotrac
Sale, as more fully described in this Proxy Statement. Returning your completed
proxy will not prevent you from voting in person at the Special Meeting if you
are present and wish to do so.
If you give a proxy you may revoke it at any time before it is
exercised by: (i) filing with the Secretary of IMSG written notice that you wish
to revoke your proxy; (ii) submitting a properly executed proxy bearing a later
date; or (iii) appearing at the Special Meeting and giving the Secretary notice
of your intention to vote in person. Proxies solicited by this Proxy Statement
may be exercised only at the Special Meeting and any adjournment or postponement
thereof and will not be used for any other meeting. Proxies solicited hereby
will be returned to the Board of Directors and will be tabulated by the
inspector of elections designated by the Board of Directors, who will not be
an employee of IMSG or any of its affiliates.
The cost of solicitation of proxies by mail on behalf of the Board of
Directors will be borne by IMSG. Proxies also may be solicited by personal
interview or by telephone, in addition to the use of the mails, by directors,
officers and regular employees of IMSG without additional compensation for those
activities. IMSG also has made arrangements with brokerage firms, banks,
nominees and other fiduciaries to forward proxy solicitation materials for
shares of IMSG Common Stock held of record to the beneficial owners of such
shares. IMSG will reimburse such record holders for their reasonable
out-of-pocket expenses.
-2-
SUMMARY OF TERMS
This summary highlights selected information in this Proxy Statement
and may not contain all of the information that is important to you. You should
carefully read this entire Proxy Statement and the other documents we refer you
to for a more complete understanding of the matters being considered at the
Special Meeting.
Date, Time and Place of the Special The Special Meeting will be held
Meeting (page ___) on Wednesday, December 26, 2001,
at 10:00 a.m. local time at
IMSG's offices at 360 Central
Avenue, St. Petersburg, Florida.
Purpose of the Special Meeting At the Special Meeting, you will
(page ___) be asked to consider and vote
upon a proposal to approve the
sale (the "Geotrac Sale") by
us of all of the outstanding
shares of our wholly-owned
subsidiary, Geotrac of
America, Inc. ("Geotrac"),
pursuant to a Stock Purchase
Agreement, dated September 20,
2001 (the "Geotrac Sale
Agreement").
Record Date and Shareholders You are entitled to vote at the
Entitled to Vote (page ___) Special Meeting if you owned
shares of IMSG Common Stock at
the close of business on
Thursday, November 8, 2001, the
Record Date for the Special
Meeting. You will have one vote
for each share of IMSG Common
Stock that you owned on the
Record Date. As of November 8,
2001, there were 12,800,261
shares of IMSG Common Stock
entitled to be voted.
Shareholder Approval of the Geotrac To approve the sale of
Sale (page ___) Geotrac, we will need to obtain
the affirmative vote of the
holders of a majority of the
issued and outstanding shares
of IMSG Common Stock. The Board
of Directors of IMSG has been
informed that the largest
shareholder of IMSG (which,
together with certain of its
wholly-owned subsidiaries,
holds approximately 65.2% of
the IMSG Common Stock entitled,
to vote at the Special Meeting),
will vote all of such shares
with respect to the Geotrac
Sale Agreement and the Geotrac
Sale in the same way as a
majority of votes cast by all
other holders of shares of IMSG
Common Stock. Also, Daniel J.
White, his spouse and two trusts
respectively controlled by
them, who collectively owned
approximately 4.1% of the
issued and outstanding IMSG
Common Stock as of the Record
Date, have agreed to vote their
shares of IMSG Common Stock in
favor of the Geotrac Sale.
Finally, certain directors of
IMSG have agreed to vote the
shares of Common Stock owned by
them in favor of the Geotrac
Sale Agreement. As of the Record
Date, such directors
beneficially owned collectively
an aggregate of 417,500 shares
of IMSG Common Stock, or
approximately 3.3% of the total
number of shares of IMSG Common
Stock outstanding and entitled
to vote at the Special Meeting.
-3-
Background of and IMSG's Reasons On September 2, 1999, IMSG
for the Geotrac Sale (page ___) retained Raymond James &
Associates, Inc. ("Raymond
James") to assist with exploring
the possible sale of Geotrac.
This retention resulted from the
Board's determination to pursue
various strategic alternatives
for Geotrac, including its
possible sale, as a result of
IMSG's decision to focus more on
its insurance outsourcing
services line of business.
During the fall of 1999 through
approximately the end of
January, 2000, Raymond James
contacted potential buyers for
Geotrac, executed
confidentiality agreements with
sixteen potential buyers, and
received indications of interest
from seven of those potential
buyers. Of these seven potential
buyers, two made formal
proposals. A key element of
discussions regarding the
potential sale of Geotrac was
the existence of the Corporate
Governance Agreement, dated July
31, 1998, by and among IMSG,
Geotrac and Daniel J. White,
which IMSG is unable to
unilaterally terminate and which
IMSG believes reduced the
attractiveness of Geotrac to
certain potential purchasers.
After evaluation and
negotiation, after August, 2000,
negotiations regarding the sale
of Geotrac ceased. In late 2000,
however, IMSG's $12.0 million
line of credit with a major
financial institution was
terminated and, despite efforts
by management, IMSG was unable
to replace it on reasonably
acceptable terms. Due to this
event, IMSG had to re-evaluate
its cash flow position and
needs, particularly in light of
the restrictions placed upon
IMSG's access to Geotrac's cash
flow by the Corporate Governance
Agreement, which, among other
things, restricts Geotrac's
ability to take certain actions,
including the ability to
upstream cash to IMSG, without
the unanimous approval of the
Geotrac board of directors,
including Mr. White, even if
such action were in the best
interests of IMSG as the sole
shareholder of Geotrac. After
attempting various measures that
did not adequately resolve these
issues, IMSG received, on
February 14, 2001, an
unsolicited offer from a group
formed by Daniel J. White.
Negotiations between the parties
commenced shortly thereafter,
culminating in the execution of
the Geotrac Sale Agreement on
September 20, 2001.
Some of the factors that
influenced IMSG to agree to the
Geotrac Sale are that: given the
existence of the Corporate
Governance Agreement and what
management of IMSG currently
believes to be the long-term
prospects for Geotrac and its
business, the purchase price to
be received by IMSG in
connection with the Geotrac Sale
is regarded by the Board as
being favorable; the net cash
proceeds anticipated to be
received by IMSG from the
Geotrac Sale should be
sufficient to satisfy IMSG's
liquidity needs for the
foreseeable future and should
enable IMSG to pursue possible
growth opportunities as they
arise in its business
process outsourcing business;
the reduction in the number of
outstanding shares of IMSG
Common Stock by 524,198 shares
should have a positive impact on
IMSG's earnings per share
("EPS"), provided IMSG is able
to generate positive net income;
and the long-term flood zone
determination service agreement
to be executed at closing should
result in an immediate positive
impact on IMSG's cost of
outsourcing due to the currently
favorable pricing contained
therein.
The Board of Directors also
considered various potentially
negative factors in its
deliberations concerning the
Geotrac Sale, including that:
the sale of Geotrac will tie
IMSG's performance to a single
line of business, namely
business process outsourcing, as
well as increase its dependence
on a single affiliated customer,
BIG; the cash flow generated by
Geotrac, whether restricted or
not, will no longer be available
to IMSG for other corporate
purposes; if Geotrac were to
experience an increase in
business and/or profitability
due to significant mortgage
activity or other factors, the
aggregate purchase price to be
received by IMSG in connection
with the Geotrac Sale might no
longer be regarded as favorable;
the current tax liability
associated with the gain on the
sale reportable under a Section
338(h)(10) election would
potentially exceed the tax
liability otherwise reportable
on the sale of the Geotrac stock
without the election; because of
the existence of unamortized,
non-deductible goodwill (for
income tax purposes), which was
created when Geotrac was
acquired by IMSG, the current
tax liability and income tax
expense for financial statement
purposes associated with the
Geotrac Sale would be greater by
the tax effect of the remaining
balance of non-deductible
goodwill; no assurances can be
given that Geotrac Holdings will
be able to obtain the financing
required to consummate the
Geotrac Sale; and, pursuant to
the Geotrac Sale Agreement, IMSG
will have certain
indemnification and other
ongoing obligations to Geotrac
Holdings, Geotrac, the Whites
and certain other persons that
could adversely impact the
overall value of the Geotrac
Sale to IMSG. The Board does not
believe that the negative
factors were sufficient to
outweigh the potential
advantages of the Geotrac Sale.
The Geotrac Sale Agreement The Geotrac Sale Agreement
relating to the purchase of the
capital stock of Geotrac by
Geotrac Holdings is attached to
this Proxy Statement as Appendix
A. We encourage you to read the
Geotrac Sale Agreement, as it is
the legal document that governs
the Geotrac Sale. The closing of
the Geotrac Sale is conditioned
upon several conditions, some of
which are summarized in this
Proxy Statement and all of which
are set forth in the Geotrac
Sale Agreement. We, Geotrac
Holdings and Daniel White and
his affiliates each made
representations and warranties
and made other agreements among
ourselves, all of which are set
forth in the Geotrac Sale
Agreement.
If the Geotrac Sale is
consummated, IMSG will receive
at closing $19,000,000 in cash
and 524,198 shares of IMSG
Common Stock currently owned by
two trusts beneficially owned by
Daniel J. White and his spouse.
In addition, pursuant to a Flood
Zone Determination Service
Agreement to be executed at
closing, Geotrac will provide
IMSG with flood zone
determination service for up to
ten years at pricing management
of IMSG currently considers to
be favorable.
Use of Proceeds (page ___) We intend to consider various
alternatives for the use of the
estimated $18.3 million in
net cash proceeds anticipated to
be received from the Geotrac
Sale. Among these alternatives
are a one-time shareholder
dividend, a stock repurchase
program, retention for working
capital and other general
corporate purposes, and funding
operational growth
opportunities.
-4-
We do not yet know if the money
will be used for any of these
alternatives.
Geotrac Holdings (page ___) Geotrac Holdings is a Delaware
corporation established by
Daniel J. White for the specific
purpose of acquiring Geotrac.
Geotrac Holdings is currently
owned by two trusts beneficially
owned by Daniel J. White and his
spouse.
Geotrac Holdings has only
nominal assets and presently
does not have sufficient funds
to consummate the Geotrac Sale.
Geotrac Holdings and Daniel J.
White have received non-binding
letters from financing entities
offering funding for the Geotrac
Sale, but there can be no
assurance that those entities
will actually be willing to
provide Geotrac Holdings
sufficient funds to consummate
the Geotrac Sale. If they do not
provide such financing, the
Geotrac Sale probably will not
occur and IMSG will have limited
remedies under the Geotrac Sale
Agreement.
Opinion of Raymond James (page ___) IMSG retained Raymond James to
act as its independent financial
advisor with respect to the
Geotrac Sale. Raymond James has
delivered its opinion to IMSG
that, as of the date of its
opinion, the consideration to be
received in the Geotrac Sale by
IMSG is fair to the shareholders
of IMSG from a financial point
of view. A copy of the opinion
of Raymond James is attached as
Appendix B to, and a description
of its opinion is included in,
the Proxy Statement. We
encourage you to read this
opinion carefully in its
entirety for a description of
the assumptions made, matters
considered and limitations on
the review undertaken. The
opinion does not constitute a
recommendation to any
shareholder as to how to vote
with respect to matters relating
to the Geotrac Sale.
Recommendation of the Board of The Board of Directors of IMSG
Directors (page ___) has approved the Geotrac Sale
Agreement and the Geotrac Sale
and believes that they are in
the best interests of IMSG and
its shareholders (other than
Daniel J. White and his
affiliates). Therefore, the
Board of Directors recommends
that you vote to approve the
Geotrac Sale Agreement and the
Geotrac Sale.
Interests of Daniel J. White and In considering the Geotrac
Affiliates (page ___) Sale Agreement and the Geotrac
Sale, you should be aware that
Daniel J. White is a director
of IMSG,the President and a
-5-
director of Geotrac and the
beneficial owner of 524,198
shares of IMSG Common Stock.
Daniel J. White and affiliates
of his have agreed to vote those
shares in favor of the Geotrac
Sale. Therefore, Mr. White and
those affiliates have interests
in the Geotrac Sale in addition
to, and different from, the
interests of IMSG's shareholders
generally.
Dissenters' Rights (page ___) You will have dissenters' rights
as a result of the Geotrac Sale.
If you choose to exercise those
rights and do so properly, you
will be entitled to obtain
payment of the fair value of
your shares if and when the
Geotrac Sale is effectuated. It
is very important that you
review your rights in detail. If
you choose to exercise your
dissenters' rights, you must
carefully follow certain
procedures set out in this Proxy
Statement or you may permanently
lose your right to exercise
dissenters' rights.
-6-
TABLE OF CONTENTS
SUMMARY OF TERMS......................................................................
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING......................................
ITEM 1. APPROVAL OF THE GEOTRAC SALE AGREEMENT AND THE GEOTRAC SALE.................
THE GEOTRAC SALE.....................................................................
General..................................................................
Geotrac Holdings.........................................................
Use Of Proceeds..........................................................
Background Of The Geotrac Sale...........................................
Shareholder Approval Of The Geotrac Sale.................................
IMSG's Reasons For The Geotrac Sale; Recommendation Of The Board Of
Directors..............................................................
Regulatory Approvals.....................................................
Interests Of Daniel J. White And Affiliates..............................
Certain Federal Income Tax Consequences..................................
Accounting Treatment.....................................................
Expenses And Other Fees In Connection With The Geotrac Sale..............
Recent Developments OF IMSG..............................................
THE GEOTRAC SALE AGREEMENT...........................................................
Purchase Price...........................................................
The Closing..............................................................
The Geotrac Shares.......................................................
Representations And Warranties...........................................
Indemnification..........................................................
Expenses.................................................................
Conditions Of The Geotrac Sale...........................................
Covenants................................................................
No Competition Or Solicitation...........................................
Termination..............................................................
Consequences Of Termination..............................................
Flood Zone Determination Service Agreement...............................
Indemnification Agreement................................................
Termination and Release Agreement........................................
INFORMATION REGARDING OPINION OF RAYMOND JAMES.......................................
CERTAIN TRANSACTIONS OF GEOTRAC......................................................
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SHAREHOLDER PROPOSALS................................................................
VOTING PROCEDURES/REVOKING YOUR PROXY................................................
Voting...................................................................
Revocability Of Proxies..................................................
Solicitation.............................................................
DISSENTERS' RIGHTS...................................................................
Rights to Dissent........................................................
Procedures for Exercise of Dissenters' Rights............................
Judicial Appraisal of Shares.............................................
WHERE YOU CAN FIND MORE INFORMATION..................................................
SELECTED FINANCIAL DATA..............................................................
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION...............................
OTHER MATTERS........................................................................
APPENDICES
APPENDIX A: GEOTRAC SALE AGREEMENT
APPENDIX B: OPINION OF RAYMOND JAMES & ASSOCIATES, INC.
APPENDIX C: FLORIDA DISSENTERS' RIGHTS STATUTES
-8-
QUESTIONS AND ANSWERS
ABOUT THE SPECIAL MEETING
Q. Who is soliciting my proxy?
A. The Board of Directors of Insurance Management Solutions Group, Inc.
("IMSG").
Q. When and where is the Special Meeting being held?
A. The Special Meeting is being held at 10:00 a.m., local time, on
Wednesday, December 26, 2001, at IMSG's offices, 360 Central Avenue,
St. Petersburg, Florida.
Q. What am I voting on?
A. Shareholders of IMSG will be voting to approve or disapprove the sale
(the "Geotrac Sale") of all of the issued and outstanding capital stock
of our wholly-owned subsidiary, Geotrac of America, Inc., a Florida
corporation ("Geotrac"), to Geotrac Holdings, Inc. The outstanding
capital stock of Geotrac may, for purposes of Florida law, be deemed to
constitute substantially all of the assets of IMSG. If the Geotrac Sale
is consummated, IMSG will receive at closing $19,000,000 in cash, as
well as 524,198 shares of IMSG Common Stock currently beneficially
owned by Daniel J. White and his spouse. In addition, pursuant to a
Flood Zone Determination Service Agreement to be executed at closing,
Geotrac will provide IMSG with flood zone determination services for up
to ten years at pricing management of IMSG currently considers to be
favorable.
Q. Who is purchasing the capital stock of Geotrac?
A. Geotrac Holdings, Inc. ("Geotrac Holdings"), which is a Delaware
corporation established by Daniel J. White for the specific purpose of
acquiring Geotrac. Geotrac Holdings is currently owned by two trusts
beneficially owned by Daniel J. White and his spouse. Daniel J. White
is currently the Chief Executive Officer and President of Geotrac, as
well as a member of the Board of Directors of IMSG. Geotrac Holdings
presently does not have sufficient funds to consummate the Geotrac
Sale. Geotrac Holdings and Daniel J. White have received (1) a
non-binding commitment letter from a national bank relating to a senior
secured credit facility in an aggregate amount of up to $11.5 million
and (2) a non-binding term sheet from a venture capital firm relating
to up to $5.5 million in subordinated indebtedness.
Q. Why should IMSG sell Geotrac?
A. The Board of Directors of IMSG has thoroughly considered the advantages
and disadvantages of selling the capital stock of Geotrac at this time,
as compared to continuing to own and operate Geotrac as a separate
subsidiary subject to the Corporate Governance Agreement, dated July
31, 1998, by and among IMSG, Geotrac and Daniel J. White (the
"Corporate Governance Agreement"). As described in greater detail in
this Proxy Statement, the Board of Directors believes that it is in the
best interests of IMSG and its shareholders to convert the assets of
IMSG which are invested in Geotrac into cash and redeploy that cash in
connection with various alternatives to be considered by IMSG's Board
of Directors after the closing of the Geotrac Sale.
-9-
Q. How do I know if IMSG is receiving fair value for the stock of Geotrac?
A. Shareholders should consider a variety of factors in determining the
fair value of the stock of Geotrac, including (i) IMSG's
overall goals and future business plans, (ii) the changing and highly
competitive nature of the flood risk analysis industry in which Geotrac
competes and management's expectations regarding probable trends in the
industry, (iii) the lack of additional offers to purchase the Geotrac
capital stock, and (iv) the existence of the Corporate Governance
Agreement and its impact on the fair value of the Geotrac capital
stock.
Q: What is the business of Geotrac?
A: Geotrac is in the business of providing flood zone certifications and
related services.
Q. Has the Board of Directors obtained a "fairness opinion" in connection
with the Geotrac Sale?
A. Yes. The Board of Directors has obtained an opinion from Raymond James
& Associates, Inc., an independent financial services firm, that the
consideration to be received by IMSG in the Geotrac Sale is fair, from
a financial point of view, to the shareholders of IMSG other than
Daniel J. White and his affiliates.
Q. Will any of the money received from the Geotrac Sale be distributed to
IMSG's shareholders?
A. IMSG currently has no definite plans to distribute any of the net
proceeds from the Geotrac Sale to its shareholders or to take any other
action with the proceeds. IMSG intends to consider various alternatives
for the use of the net proceeds (estimated to be $18.3 million),
including, but not necessarily limited to, the payment of a one-time
shareholder dividend, the implementation of a stock repurchase program,
retention for working capital and other general corporate purposes, and
funding operational growth opportunities. No assurances can be given,
however, that the net proceeds of the Geotrac Sale will be used for any
of the foregoing alternatives.
Q. Will shareholders have dissenters' rights?
A. Yes. Shareholders of IMSG will have dissenters' rights as a result of
the Geotrac Sale. See "DISSENTERS' RIGHTS" on page __ of this Proxy
Statement.
Q. What should I do now?
A. You should mail your signed and dated proxy card in the enclosed
envelope, as soon as possible, so that your shares will be represented
at the Special Meeting.
Q. Can I change my vote after I have mailed a signed proxy card?
A. Yes. You can change your vote in one of three ways at any time before
their proxies are used:
- You can revoke your proxy by written notice to the Secretary
of IMSG;
- You can complete a new, later-dated proxy card; or
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- You can attend the Special Meeting and vote in person.
Q. How are shares held in a broker's name voted?
A. Brokers will vote shares nominally held in their name (or in what is
commonly called "street name") only if you provide the broker with
written instructions on how to vote. Without such instructions such
shares will not be voted. If you hold shares in this manner, we urge
you to instruct your broker in writing to vote shares held in street
name for the Geotrac Sale Agreement and the Geotrac Sale.
Q. Whom should I call with questions?
A. If you have questions about the Geotrac Sale you should call David M.
Howard, President and Chief Executive Officer of IMSG, at 727-803-2040.
-11-
ITEM 1. APPROVAL OF THE GEOTRAC AGREEMENT AND THE GEOTRAC SALE
At the Special Meeting, holders of IMSG Common Stock will consider and
vote upon a proposal to approve the sale by IMSG of all of the issued and
outstanding shares of capital stock of its wholly-owned subsidiary, Geotrac of
America, Inc., a Florida corporation ("Geotrac"), pursuant to a Stock Purchase
Agreement, dated as of September 20, 2001 (the "Geotrac Sale Agreement"), by and
among IMSG; Geotrac; Geotrac Holdings, Inc., a Delaware corporation ("Geotrac
Holdings"); Daniel J. White, the Daniel J. White Trust and the Sandra A. White
Trust (collectively, the "Whites"); and, solely for the limited purposes of a
non-competition covenant, Bankers Insurance Group, Inc., a Florida corporation
("BIG"). (The transactions contemplated by the Geotrac Sale Agreement are
collectively referred to herein as the "Geotrac Sale.") Geotrac is one of two
principal operating subsidiaries of IMSG, and the proposed transaction may
therefore be deemed to constitute the sale of substantially all of IMSG's assets
for purposes of the FBCA. Accordingly, pursuant to the applicable provisions of
the Florida Business Corporation Act (the "FBCA"), IMSG is required to obtain
the affirmative vote of a majority of the outstanding shares of IMSG Common
Stock approving the Geotrac Sale Agreement and the Geotrac Sale prior to
consummating such transaction. As consideration for the Geotrac Sale under the
terms of the Geotrac Sale Agreement, IMSG expects to receive at closing
$19,000,000 in cash, as well as 524,198 shares of IMSG Common Stock currently
beneficially owned by the Whites. In addition, at the closing of the Geotrac
Sale, Geotrac and Insurance Management Solutions, Inc., a subsidiary of IMSG
("IMS"), will enter into a Flood Zone Determination Service Agreement pursuant
to which Geotrac will provide IMS with flood zone determination services for up
to ten years at pricing management of IMSG currently considers to be favorable.
A copy of the Geotrac Sale Agreement (without schedules) is attached as
Appendix A to this Proxy Statement. See "The Geotrac Sale Agreement."
THE BOARD OF DIRECTORS HAS APPROVED THE GEOTRAC SALE AGREEMENT AND THE
GEOTRAC SALE (SUBJECT TO IMSG SHAREHOLDER APPROVAL) AND RECOMMENDS A VOTE
"FOR" THE APPROVAL OF THE GEOTRAC SALE AGREEMENT AND THE GEOTRAC SALE.
THE GEOTRAC SALE
GENERAL
The Geotrac Sale Agreement, which was executed and delivered by IMSG,
Geotrac and the other signatories on September 20, 2001, provides for the sale
of all of the outstanding capital stock of Geotrac to Geotrac Holdings. IMSG
expects to receive at closing, as consideration for the sale of the Geotrac
shares, $19,000,000 in cash as well as 524,198 shares of IMSG Common Stock
currently beneficially owned by the Whites. In addition, at the closing of the
Geotrac Sale, Geotrac and Insurance Management Solutions, Inc., a subsidiary of
IMSG ("IMS"), will enter into a Flood Zone Determination Service Agreement
pursuant to which Geotrac will provide IMS with flood zone determination
services for up to ten years at pricing management of IMSG considers to be
favorable.
-12-
GEOTRAC HOLDINGS
Geotrac Holdings is a Delaware corporation organized by Daniel J. White
for the specific purpose of acquiring Geotrac. Geotrac Holdings is currently
wholly owned by two trusts - the Daniel J. White Trust and the Sandra A. White
Trust - beneficially owned by Daniel J. White and his spouse. Daniel J. White is
currently the sole director and executive officer of Geotrac Holdings. He is
also currently the Chief Executive Officer and President of Geotrac, as well as
a member of the Board of Directors of IMSG.
Geotrac Holdings has only nominal assets and presently does not have
sufficient funds to consummate the Geotrac Sale. Geotrac Holdings and Daniel J.
White have received (1) a non-binding commitment letter from a national bank
relating to a senior secured credit facility in an aggregate amount of up to
$11.5 million and (2) a non-binding term sheet from a venture capital firm
relating to up to $5.5 million in subordinated indebtedness.
Geotrac Holdings anticipates that its obligation to purchase the
capital stock of Geotrac from IMSG will be funded principally by monies borrowed
from the bank and the venture capital firm from which letters have been
received. (The remaining funds necessary to consummate the Geotrac Sale are
expected to come principally from equity investments in Geotrac Holdings by the
Whites.) However, there can be no assurance that either entity will be willing
to provide Geotrac Holdings sufficient funds to consummate the Geotrac Sale. If
they do not provide such financing, the Geotrac Sale probably will not occur and
the only remedies IMSG will have under the terms of the Geotrac Sale Agreement
are (i) to receive a termination fee of $400,000 from the Whites and automatic
termination of the Corporate Governance Agreement, dated July 31, 1998, by and
among IMSG, Daniel J. White and Geotrac and (ii) to seek damages or other
remedies from Geotrac Holdings (but not the Whites). Because Geotrac Holdings
has only nominal assets, any recovery from Geotrac Holdings for additional
damages would be highly unlikely. The Special Committee and the Board considered
this to be a factor weighing against the Geotrac Sale.
USE OF PROCEEDS
Following the closing of the Geotrac Sale, IMSG intends to consider
various alternatives for the use of the estimated $18.3 million in net cash
proceeds anticipated to be received from the Geotrac Sale, including, but not
necessarily limited to, payment of a one-time shareholder dividend,
implementation of or a stock repurchase program, retention for working capital
and other general corporate purposes, and funding operational growth
opportunities. No assurances can be given, however, that such net proceeds will
be used for any of the foregoing alternatives.
BACKGROUND OF THE GEOTRAC SALE
On September 2, 1999, IMSG retained Raymond James & Associates, Inc.
("Raymond James") to act as the sole external financial advisor to IMSG
regarding the potential sale of Geotrac. Throughout the process leading to the
signing of the Geotrac Sale Agreement, discussions and negotiations with Mr.
White and members of his larger group were conducted principally by David M.
Howard, President and Chief Executive Officer of IMSG, and certain authorized
disinterested directors of IMSG. In addition, at any time when the Board as a
whole, or IMSG's disinterested directors as a group, addressed the Geotrac Sale
or any related matters, Mr. White recused himself from such discussions.
During the second and third quarters of 1999, Geotrac, IMSG's flood
zone determination services subsidiary, was experiencing lower than expected
earnings due to a decline in business resulting primarily from a decrease in
mortgage refinancing activity. In August, 1999, David M. Howard was appointed
President of IMSG. Shortly thereafter, the Board, upon Mr. Howard's
recommendation, decided to focus IMSG on its insurance outsourcing services line
of business, primarily because the Board determined such business was less
cyclical than the flood zone determination services business and offered greater
opportunities for growth. In an effort to enhance its ability to fund possible
growth efforts in IMSG's outsourcing services business, the Board determined to
pursue various strategic alternatives for Geotrac, including the possible sale
thereof. This process resulted in the retention of Raymond James as described in
the preceding paragraph.
During the fall of 1999 through approximately the end of January, 2000,
Raymond James contacted approximately 40 potential buyers for Geotrac, including
a group led by Daniel J. White. Confidentiality agreements were signed between
Raymond James, on behalf of IMSG, and sixteen potential buyers (including Mr.
White's group), and indications of interest were received from seven of those
sixteen potential buyers. Of these seven potential buyers, only two made formal
proposals. A key element of discussions regarding the potential sale of Geotrac
was the existence of the Corporate Governance Agreement, which IMSG is unable to
unilaterally terminate and which IMSG believes reduced the attractiveness of
Geotrac to certain potential purchasers.
The Board of Directors held a special meeting on February 14, 2000. At
that meeting the Board was presented with two proposals for the purchase of
Geotrac. One proposal was made on behalf of Mr. White and a potential financial
partner of Mr. White. The other was made by another potential acquiror. The
Board asked questions regarding each proposal. Raymond James then provided an
overview and comparison of the two proposals, and the Board discussed both
proposals at length. The Board resolved to continue negotiations with both
potential acquirors and to further study the potential impact of the Corporate
Governance Agreement on any proposal, particularly on any proposals not made by
Mr. White or parties affiliated with him.
The Board of Directors held a special meeting on March 5, 2000. The
Board discussed various tentative proposals for the acquisition of Geotrac,
including the proposal from Mr. White and a financial partner, as well as
another potential acquiror, each of which had submitted proposals that had been
discussed at the February 14, 2000 special meeting of the Board. The Board
discussed the proposals in light of various issues relating to IMSG. The Board
also received a verbal financial summary of the offers from Raymond James. After
extensive discussion, the Board authorized management to further consider Mr.
White's proposal and move forward with negotiations. The Board also authorized
management to continue negotiations with the other potential acquiror whose
proposal had been discussed at the meeting, but resolved to indicate that IMSG
would be unwilling to proceed with negotiations unless the potential acquiror
agreed to contractual arrangements protecting IMSG in case of a decline in the
market value of the stock potentially offered as consideration. Finally, the
Board resolved to request additional information from a third potential
acquiror.
The Board of Directors held a regularly scheduled meeting on April 25,
2000. At such time, IMSG signed an exclusivity letter with Mr. White and a
financial partner of Mr. White, in which IMSG agreed not to affirmatively
solicit offers to purchase Geotrac from other potential bidders for a limited
period of time while the parties continued to negotiate toward a possible
transaction. The Board continued discussions regarding the status of the
potential sale of Geotrac. The Board authorized continued negotiations with
Mr. White, subject to Board approval upon reaching a proposed definitive
agreement.
The Board of Directors met at regularly scheduled meetings on April 18,
June 1 and July 28, 2000. The Board discussed continued negotiations regarding
the sale of Geotrac and authorized a continued review of a possible sale of
Geotrac.
The Executive Committee of the Board of Directors held a regularly
scheduled meeting on August 30, 2000. The Executive Committee discussed the
status of negotiations with Mr. White and resolved to reject Mr. White's
then-current proposal. All agreements with Mr. White terminated or lapsed and
negotiations with Mr. White regarding the possible sale of Geotrac ceased.
Subsequently, during the fourth quarter of 2000, IMSG's $12.0 million
line of credit with a major financial institution was terminated and, despite
efforts by management, IMSG was unable to replace it on reasonably acceptable
terms. Due to this event, IMSG had to re-evaluate its cash flow position and
needs, particularly in light of the restrictions placed upon IMSG's access to
Geotrac's cash flow by the Corporate Governance Agreement. The Corporate
Governance Agreement, among other things, restricts Geotrac's ability to take
certain actions, including the ability to upstream cash to IMSG, without the
unanimous approval of the Geotrac Board of Directors, including Mr. White, even
if such action may be in the best interests of IMSG as the sole shareholder of
Geotrac. Thus, even though Geotrac has historically generated positive cash
flow, limitations on IMSG's ability to access that cash flow may adversely
affect IMSG's financial position and liquidity.
IMSG's Board of Directors held a meeting on January 31, 2001. Measures
to improve IMSG's cash flow position were extensively discussed. Various
measures were taken to improve cash flow, including full repayment of all
inter-company debt between Geotrac and IMSG and the approval of a dividend
payment from Geotrac to IMSG. The Board authorized renewed discussions
with Mr. White regarding the deployment of Geotrac's excess cash and related
issues. The Board decided, and informed Mr. White, that it was not actively
attempting to sell Geotrac but would review any offer to purchase Geotrac.
Despite the Board's actions, IMSG's cash flow issues remained
unresolved. Following discussions with members of the Board, on February 14,
2001, IMSG received an unsolicited offer from Daniel J. White and certain
prospective financial partners to buy Geotrac. The disinterested directors
reviewed the terms of the offer and decided that they were inadequate, in part
because a portion of the consideration was to be a note and because the
aggregate consideration was too low. On February 24, 2001, authorized members of
the Board of Directors communicated a counter-proposal to Mr. White, which Mr.
White did not accept.
On February 28, 2001, at a regularly scheduled meeting of the Board of
Directors, the Board discussed Mr. White's rejected proposal and the
counter-proposal Mr. White had rejected. The Board determined to revise its
counter-proposal regarding the sale of Geotrac and thereupon informed Mr. White
of such revised counter-proposal. Mr. White responded that he might be able to
make an offer to purchase Geotrac on the indicated terms.
On March 7, 2001, the Board of Directors received from Mr. White a
proposed letter of intent for the purchase of Geotrac. The terms of the letter
were substantially the same as outlined in the Board's revised counter-proposal.
Over the next several days, authorized members of the Board discussed the
proposal, both among disinterested members of the Board and with Mr. White.
These discussions included an evaluation of an appropriate exclusivity period
and break-up fee, tax treatment of the proposed transaction (including a
potential Section 338(h)(10) election) and the potential for an ongoing flood
zone determination services agreement as part of the proposed transaction.
On March 13, 2001, disinterested members of the Board of Directors
discussed with Raymond James the current status of Raymond James's search for
potential buyers for Geotrac, as well as the impact of the existing Corporate
Governance Agreement on the value of Geotrac in the view of some potential
buyers. Raymond James was asked to contact the seven potential buyers who had
previously indicated an interest and determine their current level of interest.
Of these potential buyers, only one again indicated an interest, and the terms
of such proposed offer were inferior to the terms of the Geotrac Sale.
On March 14, 2001, Mr. Howard and authorized disinterested members of
the Board of Directors again met with Raymond James and evaluated financial
statistics related to the proposed sale of Geotrac, including comparable
transactions engaged in by other companies. Discussions were also continued with
Mr. White regarding the terms of his offer to acquire Geotrac, including the
terms and conditions of, as well as financing for, the proposed acquisition.
The Board of Directors held a regularly scheduled meeting on March 26,
2001. The Board discussed the status of the exploration of strategic
alternatives for Geotrac. Among other things, the Board also discussed fiduciary
concerns with entering into any letter of intent or similar arrangement with
respect to Geotrac that contained higher than customary break-up fees. The Board
authorized disinterested members of the Board of Directors to continue looking
at all viable options concerning the sale of Geotrac.
During March and April, 2001, Mr. Howard and disinterested members of
the Board, together with Raymond James, discussed the proposed Geotrac sale and
letter of intent with Mr. White on several occasions. Among other topics of
discussion were terms of the proposed sale and letter of intent with Mr. White,
the effect of the Corporate Governance Agreement upon the terms and upon the
negotiations, and the possibility of other acquisition proposals.
The Board of Directors held a special meeting on April 13, 2001. The
Board discussed the status of negotiations with Mr. White and his group and
IMSG's position with respect to provisions of a proposed definitive agreement to
purchase Geotrac. The Board also discussed other entities that might possibly
have an interest in purchasing Geotrac.
The Board of Directors held a special meeting on April 18, 2001. At
that meeting, the Board discussed executing a letter of intent with Mr. White to
purchase Geotrac and authorized management to enter into a letter of intent. As
part of that discussion, the Board discussed, among other things, the inclusion
of Mr. White as a party to any definitive agreement, the termination of the
Corporate Governance Agreement, termination fees in case of termination of any
definitive agreement that might be reached, and use of any proceeds that might
be received from the sale of Geotrac for cash.
On April 18, 2001, IMSG and Mr. White entered into a letter agreement
outlining the proposed terms of a purchase of Geotrac by Mr. White or an entity
to be formed by him. This letter agreement was subsequently amended on May 3,
2001, May 17, 2001, June 1, 2001, June 20, 2001, June 27, 2001, July 6, 2001,
July 13, 2001 and July 19, 2001, principally to extend the termination date
thereof pending continued negotiations.
Negotiations continued with Mr. White and his group. The Board of
Directors held a regular meeting on June 21, 2001. The Board discussed certain
of the points at issue in the negotiations with Mr. White in the proposed
purchase of Geotrac and the related definitive agreement. On July 27, 2001, Mr.
White terminated the letter agreement. Nevertheless, discussions between the two
sides continued.
The Board of Directors held a special meeting on August 14, 2001. The
Board discussed the status of the negotiations regarding the sale of Geotrac. On
August 8, 2001, IMSG and Mr. White entered into a second letter agreement
outlining the proposed terms of a purchase of Geotrac by Mr. White or an entity
to be formed by him. These terms were largely identical to the terms of the
original letter of intent. Thereafter, the parties continued to negotiate toward
a definitive agreement.
The Board of Directors held a regularly scheduled meeting on September
20, 2001. The Board received an in-depth presentation by Raymond James and the
opinion of Raymond James as to the fairness to holders of IMSG Common Stock,
from a financial point of view, of the consideration proposed to be paid to IMSG
in connection with the proposed Geotrac Sale Agreement. Raymond James informed
the Board that upon the signing of the proposed definitive agreement Raymond
James was prepared to provide IMSG with a written fairness opinion to the effect
that the proposed transaction was fair, from a financial point of view, to the
holders of IMSG Common Stock. The Board thereupon extensively discussed the
proposed definitive agreement. The Board authorized the execution of the
proposed definitive agreement. The Geotrac Sale Agreement was thereupon executed
by all parties on September 20, 2001.
-13-
SHAREHOLDER APPROVAL OF THE GEOTRAC SALE
Pursuant to the FBCA and the Geotrac Sale Agreement, the approval of
the Geotrac Sale Agreement and the Geotrac Sale by a majority of the outstanding
shares of IMSG Common Stock entitled to vote at the Special Meeting is required
in order to consummate the Geotrac Sale. The Board of Directors has been
informed that BIG, which, as of the Record Date, beneficially owned 8,349,884
shares, or approximately 65.2%, of the outstanding shares of IMSG Common Stock,
will vote all of such shares with respect to the Geotrac Sale in accordance with
the vote of a majority of votes cast by all other holders of shares of IMSG
Common Stock at the Special Meeting. In addition, pursuant to the terms of the
Geotrac Sale Agreement, (i) the Whites have entered into written agreements to
vote the 524,198 shares of IMSG Common Stock beneficially owned by the Whites
(constituting approximately 4.1% of the total number of shares of IMSG Common
Stock entitled to vote at the Special Meeting) in favor of the Geotrac Sale
Agreement and the Geotrac Sale, and (ii) each of David K. Meehan, David M.
Howard, John A. Grant, Jr., William D. Hussey, E. Ray Solomon, Alejandro M.
Sanchez and John S. McMullen, all directors of IMSG, has agreed in writing to
vote the shares of IMSG Common Stock owned by him in favor of the Geotrac Sale
Agreement and the Geotrac Sale. As of November 8, 2001 (the "Record Date"), such
directors beneficially owned collectively an aggregate of 417,500 shares of IMSG
Common Stock, or approximately 3.3% of the total number of shares of IMSG Common
Stock outstanding and entitled to vote at the Special Meeting.
IMSG'S REASONS FOR THE GEOTRAC SALE; RECOMMENDATION OF THE BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF IMSG BELIEVES THAT THE GEOTRAC SALE IS IN THE
BEST INTERESTS OF IMSG AND ITS SHAREHOLDERS (OTHER THAN DANIEL J. WHITE AND HIS
AFFILIATES). ACCORDINGLY, THE BOARD OF DIRECTORS HAS APPROVED THE GEOTRAC SALE
AGREEMENT AND THE
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GEOTRAC SALE AND RECOMMENDS THAT IMSG'S SHAREHOLDERS VOTE FOR THE APPROVAL
THEREOF.
As described above under "Background of the Geotrac Sale," the decision
of the Board of Directors to approve the Geotrac Sale Agreement and the Geotrac
Sale followed months of exploring and analyzing the advantages and disadvantages
of selling Geotrac and redeploying IMSG's assets. In making its recommendation
to the shareholders of IMSG, the Board of Directors considered a number of
factors, including those noted immediately below which were determined by the
Board to favor a decision to consummate the Geotrac Sale:
- Given the existence of the Corporate Governance Agreement and
what management of IMSG currently believes to be the long term
prospects for Geotrac and its business, the purchase price to
be received by IMSG in connection with the Geotrac Sale is
regarded by the Board as being favorable.
- The net cash proceeds to be received by IMSG from the Geotrac
Sale should be sufficient to satisfy IMSG's liquidity needs
for the foreseeable future and should enable IMSG to pursue
possible growth opportunities as they arise in its business
process outsourcing business. IMSG will effectively replace
the $12.0 million credit facility with a major financial
institution that it lost during 2000 with the net cash
proceeds from the Geotrac Sale.
- The reduction in the number of outstanding shares of IMSG
Common Stock by 524,198 shares will have a positive impact on
IMSG's earnings per share (EPS), provided IMSG is able to
generate positive net income.
- The long-term Flood Zone Determination Service Agreement to be
executed at closing should result in an immediate positive
impact on IMSG's cost of outsourcing due to the currently
favorable pricing contained therein.
The Board of Directors also considered a number of potentially negative
factors in its deliberations concerning the Geotrac Sale, including the
following:
- The sale of Geotrac will tie IMSG's performance to a single
line of business, namely business process outsourcing, as well
as increase its dependence on a single affiliated customer,
BIG.
- The current tax liability associated with the gain on the sale
reportable under a Section 338(h)(10) election would
potentially exceed the tax liability otherwise reportable on
the sale of the Geotrac stock without the election.
- Because of the existence of unamortized, non-deductible
goodwill (for income tax purposes), which was created when
Geotrac was acquired by IMSG, the current tax liability and
income tax expense for financial statement purposes associated
with the Geotrac Sale would be greater by the tax effect of
the remaining balance of non-deductible goodwill.
- The cash flow generated by Geotrac, whether currently
restricted due to the Corporate Governance Agreement or not,
will no longer be available to IMSG for other corporate
purposes.
- If Geotrac were to experience an increase in business and/or
profitability due to significant mortgage activity or other
factors, the aggregate purchase price to be received by IMSG
in connection with the Geotrac Sale might no longer be
regarded as favorable.
- Pursuant to the Geotrac Sale Agreement, IMSG will have certain
indemnification and other ongoing obligations to Geotrac
Holdings, Geotrac, the Whites and certain other persons that
could adversely affect the overall value of the Geotrac Sale
to IMSG.
In addition, although the Board of Directors anticipates that Geotrac
Holdings will be able to obtain the financing required to consummate the Geotrac
Sale, no assurances can be given that such financing will be obtained. If such
financing is not obtained, it is unlikely the Geotrac Sale will be consummated.
In such event, the remedies available to IMSG would be limited under the terms
of the Geotrac Sale Agreement. The Board considered this to be an additional
negative factor weighing against the Geotrac Sale. The Board did not believe
that the negative factors were sufficient, either individually or collectively,
to outweigh the potential advantages of the Geotrac Sale.
The foregoing discussion of the information and factors considered by
the Board of Directors is not intended to be exhaustive, but includes material
factors considered by the Board. The Board of Directors did not attempt to
quantify or otherwise assign relative weights to the specific factors it
considered nor did it determine that any factor was of particular importance. A
determination of various weightings would, in the view of the Board of
Directors, be impractical. In addition, individual members of the Board may have
given different weight to different factors. Rather, the Board of Directors
viewed its position and recommendations as being based on the totality of the
information presented to, and considered by, the Board.
-15-
REGULATORY APPROVALS
The consummation of the Geotrac Sale does not require any regulatory
approvals other than the federal filings required under applicable U.S.
securities laws in connection with this Proxy Statement.
INTERESTS OF DANIEL J. WHITE AND AFFILIATES
In considering the Geotrac Sale, you should be aware that Daniel J.
White is a director of IMSG, the President and a director of Geotrac and the
beneficial owner of 524,198 shares of IMSG Common Stock. The Whites have agreed
to vote those shares in favor of the Geotrac Sale Agreement and the Geotrac
Sale. Therefore, the Whites have interests in the Geotrac Sale in addition to,
and different from, the interests of IMSG's shareholders generally.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The consummation of the Geotrac Sale will not be a taxable event for
federal income tax purposes for the shareholders of IMSG because no distribution
of sale proceeds will be made to the shareholders. (If a dividend of all part of
sale proceeds is later made to shareholders, dividend proceeds may be taxable to
shareholders.) The consummation of the Geotrac Sale will be a taxable event for
federal income tax purposes for IMSG. Pursuant to the Geotrac Sale Agreement,
IMSG agreed to join with Geotrac Holdings, at Geotrac Holdings' option, in the
filing of an election under Section 338(h)(10) of the Internal Revenue Code of
1986, as amended (the "Internal Revenue Code"), and any comparable election
under state or local tax law. These elections would result in the Geotrac Sale
being deemed to be a sale of Geotrac's assets for income tax purposes, with
Geotrac being deemed to have sold its assets while still a member of IMSG's
"affiliated group" (as defined in the Internal Revenue Code). Accordingly, IMSG
would recognize gain in the amount that the purchase price received exceeds the
tax basis of the assets held by Geotrac. For this purpose, the purchase price
would be the amount of cash received, the value of the shares of IMSG Common
Stock received and the value of any services received under the ten-year Flood
Zone Determination Service Agreement to be executed at closing with Geotrac in
excess of any amounts paid by IMSG thereunder. Because any value received under
the Flood Zone Determination Service Agreement is contingent upon the degree of
IMSG's usage thereunder, the income and gain attributable to this portion of the
purchase consideration may be taxable over the ten-year term of such agreement
as opposed to in the year of sale.
The discussion set forth above as to certain federal income tax
consequences of the Geotrac Sale is based upon the provisions of the Internal
Revenue Code, applicable Treasury Regulations thereunder, judicial decisions and
current administrative rulings, any of which may be changed at any time with
retroactive effect. The discussion does not address any aspect of state, local
or foreign taxation. No rulings have been or will be requested from the Internal
Revenue Service with respect to any of the matters discussed herein. There can
be no assurance that future legislation, regulations, administrative rulings or
court decisions would not alter the tax consequences set forth above.
-16-
ACCOUNTING TREATMENT
This transaction will be recorded as a sale of the outstanding capital
stock of Geotrac, which is equivalent to the sale of Geotrac's net assets.
EXPENSES AND OTHER FEES IN CONNECTION WITH THE GEOTRAC SALE
Each party will bear its own expenses in respect of the Geotrac Sale,
whether or not the Geotrac Sale is actually consummated.
RECENT DEVELOPMENTS OF IMSG
IMSG has recently received several unsolicited inquiries and/or
proposals from unaffiliated third parties regarding the possible sale of all of
the business and assets of IMSG (including its subsidiaries) after the
consummation of the Geotrac Sale. Although IMSG continues to engage in informal
discussions with certain of such third parties regarding a possible transaction,
as of the date of this Proxy Statement, IMSG is not a party to any letter of
intent or similar agreement with respect to any such proposed transaction.
Consequently, regardless of whether the Geotrac Sale is consummated, no
assurances can be given as to whether IMSG will seek, or be able to enter into,
a transaction relating to the sale of the business and assets of IMSG other than
Geotrac.
On September 28, 2000, October 25, 2000 and October 30, 2000, three
alleged shareholders of IMSG filed three nearly identical lawsuits in the United
States District Court for the Middle District of Florida, each on behalf of a
putative class of all persons who purchased shares of IMSG Common Stock pursuant
and/or traceable to the registration statement for IMSG's February 1999 initial
public offering (the "IPO"). The lawsuits were consolidated on December 1, 2000,
and the consolidated action is proceeding under Case No. 8:00-CV-2013-T-26MAP.
The plaintiffs' Consolidated Amended Class Action Complaint, filed February 7,
2001, names as defendants the following parties: IMSG, BIG, Venture Capital
Corporation, a selling shareholder in the IPO; the five inside directors of IMSG
at the time of the IPO; and Raymond James & Associates, Inc. and Keefe, Bruyette
& Woods, Inc., the underwriters for the IPO. The complaint alleges, among other
things, that the defendants violated Sections 11, 12(a)(2) and 15 of the
Securities Act of 1933, as amended, by making certain false and misleading
statements in the roadshow presentations, registration statement and prospectus
relating to the IPO. More specifically, the complaint alleges that, in
connection with the IPO, the defendants made various material misrepresentations
and/or omissions relating to: (i) IMSG's ability to integrate Geotrac's flood
zone determination business with IMSG's own flood zone determination business
and with its insurance outsourcing services business; (ii) actual and
anticipated synergies between IMSG's flood zone determination and outsourcing
services business lines; and (iii) IMSG's use of the IPO proceeds. The complaint
seeks unspecified damages, including interest, and equitable relief, including a
rescission remedy. On July 11, 2001, U.S. District Judge Richard A. Lazzara
denied all of the defendants' motions to dismiss the Amended Complaint.
The defendants' answers to the Amended Complaint were filed in late
August 2001. Written discovery has commenced, and, later this year, various
pre-trial deadlines and a trial date likely will be set. Management of IMSG
believes the material allegations of the Amended Complaint are without merit
and intends to vigorously defend the lawsuit. No assurances can be given,
however, with respect to the outcome of the litigation, and an adverse result
could have a material adverse effect on IMSG's business, financial condition
and results of operations.
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THE GEOTRAC SALE AGREEMENT
The following is a brief summary of certain provisions of the Geotrac
Sale Agreement. THIS DESCRIPTION IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO
THE COMPLETE TEXT OF THE GEOTRAC SALE AGREEMENT, A COPY OF WHICH IS ATTACHED TO
THIS PROXY STATEMENT AS APPENDIX A AND IS INCORPORATED HEREIN BY REFERENCE. THE
TERMS NOT OTHERWISE DEFINED IN THIS SUMMARY OR ELSEWHERE IN THIS PROXY STATEMENT
HAVE THE MEANINGS SET FORTH IN THE GEOTRAC SALE AGREEMENT. ALL SHAREHOLDERS ARE
URGED TO CAREFULLY READ THE GEOTRAC SALE AGREEMENT IN ITS ENTIRETY.
PURCHASE PRICE
If the transaction with Geotrac is consummated, IMSG will receive at
closing (i) $19,000,000 in cash and (ii) 524,198 shares of IMSG Common Stock
that are currently beneficially owned by the Whites. In addition, at the closing
of the Geotrac Sale, Geotrac and Insurance Management Solutions, Inc. ("IMS"), a
subsidiary of IMSG, will enter into a Flood Zone Determination Service
Agreement pursuant to which Geotrac will provide IMS with flood zone
determination services for up to ten years at pricing management of IMSG
currently considers to be favorable.
THE CLOSING
IMSG anticipates that the closing of the Geotrac Sale will take place
not later than January 31, 2002, on the second business day after the conditions
to closing set forth in the Geotrac Sale Agreement are satisfied or waived, or
on another date mutually agreed by IMSG and Geotrac Holdings, if the Geotrac
Sale Agreement and the Geotrac Sale are approved by the shareholders of IMSG at
the Special Meeting.
THE GEOTRAC SHARES
The Geotrac Shares constitute all of the outstanding capital stock of
Geotrac.
REPRESENTATIONS AND WARRANTIES
In the Geotrac Sale Agreement each of the parties other than BIG makes
representations and warranties about certain matters, some of which are subject
to qualifications and disclosures.
The Geotrac Sale Agreement contains various representations and
warranties of IMSG, including, among others, representations and warranties
relating to IMSG's and Geotrac's corporate organization and similar corporate
matters; authorization and enforceability; Geotrac's capital structure and
IMSG's ownership of all outstanding shares of Geotrac's capital stock;
non-contravention of transactions contemplated by the Geotrac Sale, Geotrac's
articles of incorporation and bylaws, and non-violation of laws and binding
agreements; consents and approvals; compliance with laws, licenses and permits
pertaining to Geotrac's business; the accuracy of certain financial statements;
absence of legal proceedings; taxes and tax returns; contracts; and absence of
brokers other than Raymond James & Associates, Inc.
The Geotrac Sale Agreement contains various representations and
warranties of Geotrac Holdings including, among others, representations and
warranties relating to corporate organization and similar corporate matters;
authorization and enforceability; noncontravention of
-18-
transactions contemplated by the Geotrac Sale, Geotrac Holdings' certificate of
incorporation and bylaws, and non-violation of laws and binding agreements;
acquisition for investment; absence of brokers; and consents and approvals.
The Geotrac Sale Agreement contains various representations and
warranties of the Whites, including, among others, representations and
warranties relating to power and authority to enter into the Geotrac Sale
Agreement and consummate the transactions contemplated thereby; title to the
shares of IMSG to be delivered as part of the consideration for the Geotrac
Sale; non-violation of laws and binding agreements; and consents and approvals.
INDEMNIFICATION
IMSG has agreed to indemnify, defend and hold harmless Geotrac
Holdings, its directors, officers, employees and controlled and controlling
persons, and, after the closing of the Geotrac Sale, Geotrac, from and against
certain damages arising out of or resulting from the inaccuracy or breach of any
representation or warranty of IMSG contained in the Geotrac Sale Agreement, the
nonfulfillment or breach of any covenant or agreement of IMSG contained in the
Geotrac Sale Agreement, and any claim by any person for brokerage or finder's
fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such person with IMSG in connection
with the Geotrac Sale.
Geotrac Holdings has agreed to indemnify, defend and hold harmless IMSG
and its directors, officers, employees and controlled and controlling persons
from and against certain damages arising out of or resulting from the inaccuracy
or breach of any representation or warranty of Geotrac Holdings and/or any of
the Whites contained in the Geotrac Sale Agreement, the nonfulfillment or breach
of any covenant or agreement of Geotrac Holdings and/or any of the Whites
contained in the Geotrac Sale Agreement, and any claim by any person for
brokerage or finder's fees or commissions or similar payments based upon any
agreement or understanding alleged to have been made by such person with Geotrac
Holdings or any of the Whites in connection with the Geotrac Sale.
The indemnification obligations of both IMSG and Geotrac Holdings are
subject to certain limitations and procedural requirements, including an
aggregate cap on liability for each of IMSG and Geotrac Holdings of $2,000,000.
In addition, the indemnification provided for by the Geotrac Sale Agreement is
generally to be the sole and exclusive remedy of the parties for any breach or
inaccuracy of any representation or warranty or any breach, nonfulfillment or
default in the performance of any non-post-closing covenants or agreements
contained in the Geotrac Sale Agreement, other than with respect to claims for
fraud.
EXPENSES
Each party has agreed to bear its own fees and expenses in respect of
the Geotrac Sale.
CONDITIONS OF THE GEOTRAC SALE
The obligation of IMSG to effect the Geotrac Sale is subject to the
satisfaction or waiver of certain conditions, including, among others, that the
representations and warranties of Geotrac Holdings and the Whites in the Geotrac
Sale Agreement shall be true and accurate in all material respects; that the
shareholders of IMSG shall have approved the Geotrac Sale Agreement and the
Geotrac Sale; that Geotrac Holdings and the Whites shall have performed in all
material respects the obligations under the Geotrac Sale Agreement required to
be performed by them on or before the closing date; and that no injunction or
other law or order be in effect that permanently enjoins or otherwise prohibits
consummation of the Geotrac Sale.
-19-
The obligation of Geotrac Holdings and the Whites to effect the Geotrac
Sale is subject to the satisfaction or waiver of certain conditions, including,
among others, that the representations and warranties of IMSG in the Geotrac
Sale Agreement shall be true and accurate in all material respects; that the
shareholders of IMSG shall have approved the Geotrac Sale Agreement and the
Geotrac Sale; that IMSG shall have performed in all material respects the
obligations under the Geotrac Sale Agreement required to be performed by it on
or before the closing date; that no injunction or other law or order be in
effect that permanently enjoins or otherwise prohibits consummation of the
Geotrac Sale; and that, since September 20, 2001, there has been an absence of
certain material claims against Geotrac arising out of or relating to either (i)
the operations or activities of IMSG and its subsidiaries (other than Geotrac or
any entity controlled thereby) or (ii) any erroneous flood zone determinations
by IMSG's Bankers Hazard Determination Services, Inc. subsidiary prior to July
31, 1998.
COVENANTS
IMSG, Geotrac Holdings and the Whites have agreed to certain covenants
pursuant to the Geotrac Sale Agreement. These include, among others, the
termination of related party arrangements with Daniel J. White (including
satisfaction and payment in full of IMSG's obligations thereunder); an agreement
by IMSG not to solicit other acquisition proposals for Geotrac except as may be
required by the fiduciary duties of IMSG's Board of Directors; the filing of
this Proxy Statement by IMSG; continuing Geotrac's business in the ordinary
course prior to closing; access to certain properties, personnel and records;
and joint approval of public disclosures relating to the Geotrac Sale. Upon the
closing of the Geotrac Sale, Daniel J. White will resign as a director of IMSG.
NO COMPETITION OR SOLICITATION
Pursuant to the Geotrac Sale Agreement, IMSG and BIG have each agreed
that, for five years following the closing of the Geotrac Sale, they will not,
directly or indirectly (i) engage in the business of Geotrac or (ii) solicit,
employ, or retain as a consultant certain employees of Geotrac.
TERMINATION
The Geotrac Sale Agreement may be terminated and the transactions
contemplated thereby abandoned at any time prior to the closing of the Geotrac
Sale: (i) by written consent of IMSG and Geotrac Holdings; (ii) by either IMSG
or Geotrac Holdings, if any governmental body shall have issued an order or
taken any other action permanently restraining, enjoining or otherwise
prohibiting the Geotrac Sale, and such order, decree, ruling or other action
shall have become final and non-appealable; (iii) by either IMSG or Geotrac
Holdings, if IMSG shareholder approval of the Geotrac Sale Agreement and the
Geotrac Sale is not obtained; (iv) by IMSG if it determines that the failure to
terminate the Geotrac Sale Agreement because of the existence of an unsolicited
acquisition proposal for Geotrac would violate the fiduciary duties of IMSG's
Board of Directors and IMSG and Geotrac Holdings have been unable to agree on
adjusted terms and conditions that would enable IMSG to proceed with the Geotrac
Sale; (v) by IMSG if Geotrac Holdings or any of the Whites breaches or fails in
any material respect to perform or comply with material covenants and agreements
contained in the Geotrac Sale Agreement, or any representation or warranty of
any of them is not true and correct in all material respects and remains
uncured; (vi) by Geotrac Holdings if the Board of Directors of IMSG withdraws or
adversely modifies its adoption of the Geotrac Sale Agreement or its
recommendation that the shareholders of IMSG approve the Geotrac Sale Agreement,
or shall have adopted and approved an agreement relating to another proposal to
acquire Geotrac or submits another acquisition proposal to a vote of IMSG's
shareholders and either recommended that IMSG shareholders approve such
acquisition proposal or taken no position with respect thereto; (vii) by Geotrac
Holdings if IMSG breaches or fails in any material respect to perform or comply
with material covenants and agreements contained in the Geotrac Sale Agreement,
or any representation or warranty of IMSG is not true and correct in all
material respects and remains uncured.
-20-
CONSEQUENCES OF TERMINATION
If IMSG terminates the Geotrac Sale Agreement because it determines
that the failure to terminate the Geotrac Sale Agreement because of the
existence of another acquisition proposal for Geotrac could reasonably be
expected to result in a breach of the fiduciary duties of IMSG's Board of
Directors, or if Geotrac Holdings terminates the Geotrac Sale Agreement because
the Board of Directors of IMSG withdraws or adversely modifies its adoption of
the Geotrac Sale Agreement or its recommendation that the shareholders of IMSG
approve the Geotrac Sale Agreement, or approves an agreement relating to or
submits another acquisition proposal to a vote of IMSG's shareholders and either
recommends that IMSG shareholders approve such acquisition proposal or takes no
position with respect thereto IMSG will be required to pay Geotrac Holdings, as
liquidated damages, $500,000, so long as neither Geotrac Holdings nor any of the
Whites is in breach in any material respect of any of their representations,
warranties or material covenants under the Geotrac Sale Agreement.
If IMSG terminates the Geotrac Sale Agreement because Geotrac Holdings
or any of the Whites breaches or fails in any material respect to perform or
comply with any of their material covenants and agreements contained in the
Geotrac Sale Agreement, or any representation or warranty of any of them is not
true and correct in all material respects and remains uncured, or if certain
conditions have not been fulfilled by the closing date, or if Geotrac Holdings
or any of the Whites terminates the Geotrac Sale Agreement other than pursuant
to enumerated termination rights, or if Geotrac Holdings or any of the Whites
otherwise in violation of the Geotrac Sale Agreement fails or refuses to close
the transactions contemplated by the Geotrac Sale Agreement, or if Daniel J.
White has failed to use his reasonable best efforts to consummate the
transactions contemplated by the Geotrac Sale Agreement and as a result of such
failure either the transactions contemplated by the Geotrac Sale Agreement shall
not have been consummated at such time or the Geotrac Sale Agreement otherwise
shall have been terminated, and so long as IMSG is not in breach in any material
respect of its representations, warranties or material covenants under the
Geotrac Sale Agreement, then, in addition to any remedies IMSG may be entitled
to at law or in equity against Geotrac Holdings, the Whites, jointly and
severally, will be obligated to pay, as liquidated damages, $400,000 to IMSG and
the Corporate Governance Agreement will be automatically terminated.
If Geotrac Holdings or IMSG terminates the Geotrac Sale Agreement
because approval by IMSG shareholders of the Geotrac Sale Agreement and the
Geotrac Sale was not obtained at the Special Meeting, or if Geotrac Holdings
terminates the Geotrac Sale Agreement because IMSG breaches or fails in any
material respect to perform or comply with any of its material covenants and
agreements contained in the Geotrac Sale Agreement, or any representation or
warranty of IMSG is not true and correct in any material respect and remains
uncured (so long as Mr. White did not know of the facts constituting the breach
on or before the date of the Geotrac Sale Agreement and did not directly or
indirectly cause the breach), or because certain conditions have not been
fulfilled by the closing date, or if IMSG terminates the Geotrac Sale Agreement
other than pursuant to enumerated termination rights, or otherwise in violation
of the Geotrac Sale Agreement fails or refuses to close the transactions
contemplated by the Geotrac Sale Agreement, and so long as neither Geotrac
Holdings nor any of the Whites is in breach in any material respect of its
representations, warranties or material covenants under the Geotrac Sale
Agreement, then, as liquidated damages, IMSG will be obligated to pay $400,000
to Geotrac Holdings.
FLOOD ZONE DETERMINATION SERVICE AGREEMENT
Simultaneously with the closing of the Geotrac Sale, IMS, a subsidiary
of IMSG, and Geotrac will enter into a Flood Zone Determination Service
Agreement, a copy of which is attached as Exhibit A to the Geotrac Sale
Agreement. Pursuant to the Flood Zone Determination Service Agreement, for a
term of ten years IMS will purchase from Geotrac, and Geotrac will sell to IMS,
IMS's requirements for certain flood zone determination services, on the terms
and for the prices set forth in the Flood Zone Determination Service Agreement,
which pricing management of IMSG believes is materially below the pricing of
such services IMS could obtain from another third-party vendor. The level of
services to be provided to IMS is to be equal to that provided by Geotrac to IMS
during the two years prior to the Geotrac Sale. If at any time during the term
of the Flood Zone Determination Service Agreement Geotrac fails to provide the
required service level, and Geotrac does not cure the failure, IMS will be
permitted to acquire flood zone determination information that Geotrac cannot
provide from another vendor of its choice, and Geotrac will be obligated to make
certain payments to IMS.
INDEMNIFICATION AGREEMENT
Simultaneously with the closing of the Geotrac Sale, IMSG and Daniel J.
White will enter into an Indemnification Agreement, a copy of which is attached
as Exhibit B to the Geotrac Sale Agreement. The Indemnification Agreement will
provide, among other things, that after the closing of the Geotrac Sale, IMSG
will, to the fullest extent permitted under applicable law, indemnify and hold
harmless Mr. White from and against all damages, costs, losses, liabilities and
expenses (including, without limitation, reasonable attorneys' fees), judgments,
fines, and amounts paid in settlement, incurred by Mr. White in connection with
any claim, action, suit or proceeding arising out of or pertaining to matters
existing or occurring prior to the closing of the Geotrac Sale by reason of the
fact that Mr. White served as a director of IMSG. In addition, the
Indemnification Agreement will provide that IMSG will advance all expenses,
including, without limitation, reasonable attorneys' fees, incurred by Mr. White
with respect to which Mr. White is entitled to such indemnification. The
Indemnification Agreement will also provide that IMSG must generally maintain
its existing directors' and officers' liability insurance, or coverage on
materially similar terms thereof, for a period of six years following the
closing of the Geotrac Sale.
TERMINATION AND RELEASE AGREEMENT
Simultaneously with the closing of the Geotrac Sale, IMSG, Geotrac
Holdings and the Whites will enter into a Termination and Release Agreement, a
copy of which is attached as Exhibit C to the Geotrac Sale Agreement. The
Termination and Release Agreement will provide, among other things, that
effective as of the closing of the Geotrac Sale, the Corporate Governance
Agreement will be terminated and of no further force and effect, and Daniel J.
White will release IMSG, Geotrac and their respective officers, directors,
employees, subsidiaries, affiliates, shareholders, controlling persons,
successors and assigns from any and all claims, demands, proceedings, causes of
action, suits, judicial or administrative orders, obligations, contracts,
agreements, debts and liabilities whatsoever ("Claims"), arising out of or
related to the Corporate Governance Agreement.
Simultaneously, IMS, on the one hand, and Geotrac, Geotrac Holdings
and the Whites, on the other hand, will each release the other and its officers,
directors, employee, subsidiaries, affiliates, shareholders, controlling
persons, successors and assigns from any and all Claims arising
contemporaneously with or prior to the closing and whether or not relating to
Claims pending on, or asserted after, the closing of the Geotrac Sale, other
than certain enumerated Claims, such as those arising under the Geotrac Sale
Agreement and any Claims resulting from intentional or deliberate acts of bad
faith, fraud or self-dealing.
-21-
INFORMATION REGARDING OPINION OF RAYMOND JAMES
IMSG retained Raymond James & Associates, Inc. ("Raymond James") to
act as the sole external financial advisor to IMSG regarding the potential sale
of Geotrac. Raymond James was selected by IMSG based upon IMSG's prior
experience dealing with Raymond James and Raymond James' experience with
Geotrac, its business and the industry in which it operates. Raymond James is
actively engaged in the investment banking business and regularly undertakes the
valuation of investment securities in connection with public offerings, private
placements, business combinations and similar transactions. As described above
under "The Geotrac Sale -- Recent Developments of IMSG," both IMSG and Raymond
James are defendants in a class action lawsuit relating to IMSG's IPO in
February 1999.
At the meeting of the Board of Directors on September 20, 2001, Raymond
James delivered an oral presentation and written opinion to the Board to the
effect that, as of such date and based on and subject to the matters set forth
in the opinion and as described below, the consideration to be received by IMSG
in the Geotrac Sale pursuant to the Geotrac Sale Agreement was fair, from a
financial point of view, to the holders of IMSG Common Stock. No limitations
were imposed by the Board upon Raymond James with respect to the investigations
it made or procedures it followed in rendering its opinion.
The full text of the written opinion of Raymond James dated
September 20, 2001, which sets forth the assumptions made, matters considered
and limits on the review undertaken, is attached as Appendix B to this Proxy
Statement and is incorporated herein by reference. Shareholders of IMSG are
urged to read the opinion in its entirety. Raymond James' written opinion is
addressed to the Board of Directors, is directed only to the fairness, from a
financial point of view, of the consideration to be paid to IMSG pursuant to the
Geotrac Sale Agreement, and does not constitute a recommendation to any IMSG
shareholder as to how such shareholder should vote at the Special Meeting. The
opinion does not express any opinion with respect to any other reasons, legal,
business or otherwise, that may support the decision of the Board to approve or
consummate the Geotrac Sale. The terms of the Geotrac Sale Agreement were
determined pursuant to negotiations between the parties thereto, and not
pursuant to recommendations of Raymond James. Copies of the written opinion are
also available for inspection and copying at the principal executive offices of
IMSG during regular business hours by any shareholder of IMSG, or a
representative who has been so designated in writing, and may be inspected and
copied, or obtained by mail, by written request directed to Corporate Secretary,
Insurance Management Solutions Group, Inc., 360 Central Avenue, St. Petersburg,
Florida 33701.
In connection with Raymond James' review of the Geotrac Sale and the
preparation of the opinion, Raymond James has, among other things:
1. reviewed the financial terms and conditions of the Geotrac
Sale as stated in the Geotrac Sale Agreement;
2. reviewed certain audited and unaudited financial statements
of Geotrac;
3. reviewed other internal financial and operating analyses and
forecasts for Geotrac requested from and/or provided by IMSG and/or Geotrac;
- 22 -
4. discussed with members of the senior management of IMSG and Geotrac
certain information relating to the business plan and prospects for Geotrac and
any other matters which Raymond James deemed relevant to the opinion;
5. reviewed certain publicly available information regarding companies
deemed comparable to Geotrac, including valuations for such companies;
6. reviewed the proposed Flood Zone Determination Services Agreement
between Geotrac and IMSG; and
7. reviewed the Corporate Governance Agreement, dated July 31, 1998, by
and among IMSG, Geotrac and Daniel J. White.
In conducting its investigation and analyses and in arriving at its
opinion, Raymond James took into account such accepted financial and investment
banking procedures and considerations as it deemed relevant, including a review
of: (i) historical and projected revenues, operating earnings, net income and
capitalization of Geotrac and certain publicly held companies in businesses it
believed to be comparable to Geotrac; (ii) the current and projected financial
position and results of operations of Geotrac; (iii) the terms of certain recent
transactions deemed by us to be comparable to the proposed sale of Geotrac; and
(iv) the general condition of the securities markets.
As described in its opinion, Raymond James assumed and relied upon the
accuracy and completeness of all information supplied or otherwise made
available to Raymond James by IMSG, Geotrac or any other party and did not
attempt to verify independently any such information. In addition, Raymond James
did not make or rely upon any independent evaluation or appraisal of any of the
assets or liabilities (contingent or otherwise) of Geotrac in preparing and
delivering its opinion. Raymond James assumed that the financial forecasts and
other information with respect to Geotrac examined by Raymond James had been
reasonably prepared in good faith on bases reflecting the best currently
available estimates and judgments of the management of IMSG and Geotrac, and
Raymond James relied upon each party to advise it promptly if any such
information previously provided to or discussed with Raymond James had become
inaccurate or had been required to be updated during the period of its review.
In addition, Raymond James has assumed (i) that the Geotrac Sale will be
consummated substantially in accordance with the terms set forth in the Geotrac
Sale Agreement; (ii) that the proposed Flood Zone Determination Service
Agreement will be entered into substantially in accordance with the form of such
Agreement reviewed by us; and (iii) that the Corporate Governance Agreement was
binding upon IMSG. Raymond James did not obtain any appraisal from any outside
expert as to the value or effect on value of the Flood Zone Determination
Service Agreement or the Corporate Governance Agreement or any legal opinion as
to the enforceability of such agreements, and Raymond James did not express any
opinion as to the valuations or enforceability assumed for purposes of its
fairness opinion.
The opinion was based on market, economic, financial and other
circumstances and conditions as in effect on, and the information available to
it as of, September 20, 2001, the date of the opinion.
- 23 -
FAIRNESS OPINION ANALYSES
The following is a summary of the analyses performed by Raymond James
in connection with the preparation of the opinion. This summary is not a
complete description of the analyses underlying the opinion. Raymond James'
opinion regarding the fairness of the Geotrac Sale was not based on any one
analysis or any particular subset of these analyses but rather gave
consideration of all of the analyses taken as a whole.
Discounted Cash Flow Analysis. Raymond James performed a discounted
cash flow analysis based on the unlevered discounted cash flow of the projected
five-year financial performance of Geotrac as prepared by the management of
Geotrac and IMSG. Terminal values were calculated by applying an earnings before
interest, taxes, depreciation and amortization ("EBITDA") multiple ranging from
3.5x to 4.5x to the projected EBITDA of Geotrac in fiscal year 2006. Discount
rates ranging from 12% to 16% were selected to reflect the risk inherent in
Geotrac's business and its projections. Based on this analysis, Geotrac's
implied equity value ranged from $21.3 million to $28.4 million with a midpoint
of $24.8 million. Discounted cash flow analysis is a widely used valuation
methodology, but it relies on numerous assumptions, including assets and
earnings growth rates, terminal values, and discount rates. This analysis is not
necessarily reflective of the actual value of Geotrac.
Analysis of Publicly Traded Comparable Companies. Raymond James
analyzed selected historical financial, operating, and/or stock market data of
Geotrac and certain publicly traded companies that Raymond James deemed to be
comparable to Geotrac. The four companies deemed by Raymond James to be
reasonably comparable to Geotrac in terms of services offered, markets served,
and business prospects were Fidelity National Information Solutions, The First
American Corporation, Land America Financial and Stewart Information Services.
The comparable company analysis, as is typical, was based on market
data for companies deemed to be similar to Geotrac. Since no company is
precisely comparable to Geotrac or the Geotrac Sale, the analysis relied on data
from a group of companies. Accordingly, an analysis of the results of the
foregoing necessarily involves complex considerations and judgments concerning
the differences in financial and operating characteristics of Geotrac and other
factors that could affect the public trading value of the comparable companies
to which Geotrac is being compared. If single company comparisons were to be
used, the implied value for Geotrac would vary significantly depending on which
company is chosen. For this reason, the analysis presents the results for not
only the highest and lowest implied values for each analysis but also the
results for the median and mean values for the entire group of companies
analyzed.
Raymond James examined certain publicly available financial data of the
four comparable companies, including the ratio of enterprise value (equity value
plus total debt, including preferred stock, less cash and cash equivalents) to
trailing twelve months and 2001 projected revenue and EBITDA. In addition,
Raymond James examined the ratio of equity value to projected 2001 and 2002 net
income for each of the comparable companies. The following table summarizes the
results of this analysis.
COMPARABLE COMPANY ANALYSIS SUMMARY
MARKET MULTIPLES
------------------------------------------------
RANGE MEDIAN MEAN
-------- ------ -----
Enterprise Value/2001 Projected Revenue .2-.8x .4x .4x
Enterprise Value/Trailing Twelve Months Revenues .2-.9 .4 .5
Enterprise Value/Projected 2001 EBITDA 2.9-5.1 3.0 3.7
Enterprise Value/Trailing Twelve Months EBITDA 3.3-5.9 3.8 4.4
Equity Value/Projected 2001 Net Income 8.3-9.0 8.5 8.6
Equity Value/Projected 2002 Net Income 9.5-11.6 10.0 10.4
-24-
Raymond James then applied the ratios derived from its comparable
company analysis to Geotrac's unaudited operating results for the trailing
twelve months ended June 30, 2001 and projected operating results for the years
ended December 31, 2001 and 2002 to determine an implied Enterprise Value. The
following table summarizes the results of this analysis.
COMPARABLE COMPANY ANALYSIS SUMMARY
IMPLIED ENTERPRISE VALUE
------------------------------------------------
RANGE MEDIAN MEAN
----- ------ ----
Projected 2001 Revenue $3.2-$12.9 $ 6.4 $ 6.4
Trailing Twelve Months Revenue 3.8-17.0 7.5 9.4
Projected 2001 EBITDA 15.4-27.0 15.9 19.6
Trailing Twelve Months EBITDA 21.1-37.8 24.3 28.1
Projected 2001 Net Income 12.5-13.5 12.8 12.9
Projected 2002 Net Income 14.2-17.4 15.0 15.6
Analysis of Selected Merger and Acquisition Transactions. Raymond James
compared the proposed Geotrac Sale with selected comparable merger and
acquisition transactions. No transaction analyzed in Raymond James' comparable
transaction analysis was identical to the Geotrac Sale. Accordingly, this
analysis necessarily involves complex considerations and judgments concerning
differences in financial and operating characteristics and other factors between
Geotrac and the other transactions considered that could affect the acquisition
value of the companies to which Geotrac was being compared.
Raymond James performed an analysis of ten merger and acquisition
transactions of mortgage information services companies that occurred between
July 1998 and August 2001. The ten merger and acquisition transactions
considered were: the acquisitions of Credit Management Solutions by The First
American Corporation; International Data Management by Fidelity National;
Chicago Title by Fidelity National; National Information Group by The First
American Corporation; America's Flood Services by Siebels Bruce Group; Vista
Information Services by Fidelity National; and Data Management Services,
Ecosearch Environmental, Geoserve and E/Risk Information Services by Vista
Information Services.
The following table summarizes the results of this analysis:
SELECTED MERGER AND ACQUISITION TRANSACTIONS ANALYSIS SUMMARY
MARKET MULTIPLES
----------------
RANGE MEDIAN MEAN
----- ------ ----
Total Enterprise Value/Trailing Twelve Months Revenues .5-2.5x 1.0x 1.3x
Total Enterprise Value/Trailing Twelve Months EBITDA 4.5-8.8 4.7 6.0
Raymond James then applied the ratios derived from the comparable
transaction analysis to Geotrac's unaudited trailing twelve months operating
results for the period ended June 30, 2001 to determine an implied Enterprise
Value. The following table summarizes the results of this analysis:
-25-
SELECTED MERGER AND ACQUISITION TRANSACTIONS ANALYSIS SUMMARY
IMPLIED ENTERPRISE VALUE
-------------------------------------------------
RANGE MEDIAN MEAN
----- ------ ----
Total Enterprise Value/Trailing Twelve Months Revenue $9.4-$47.0 $19.0 $25.4
Total Enterprise Value/Trailing Twelve Months EBITDA 28.8-56.3 30.1 38.4
Opinion of Raymond James. The summary set forth above does not purport
to be a complete description of the analyses of data underlying Raymond James'
opinion or its presentation to the Board. The preparation of a fairness opinion
is a complex process and is not necessarily susceptible to a partial analysis or
summary description. Raymond James believes that its analyses must be considered
as a whole and that selecting portions of its analyses, without considering the
analyses taken as a whole, would create an incomplete view of the process
underlying the analyses set forth in its opinion. In addition, Raymond James
considered the results of all such analyses and did not assign relative weights
to any of the analyses, so the ranges of valuations resulting from any
particular analysis described above should not be taken to be Raymond James'
view of the actual value of Geotrac. In undertaking its analysis, Raymond James
considered, among the other aspects of its analyses discussed above, those which
indicated a potential value for Geotrac greater than the proposed consideration
to be received by IMSG pursuant to the Geotrac Sale.
In summary, while Raymond James based its opinion on the totality of
the analyses it conducted and not on any single analysis, Raymond James
nonetheless examined each of the cases where the implied value under a
particular analysis exceeded the proposed Geotrac Sale consideration and came to
the opinion that in each case there were circumstances which argued against
relying solely on the results of such analysis. For example in the case of the
comparable company analysis, data from a single company increased the mean and
medium implied value for Geotrac due to its high historical and projected growth
rate in earnings and EBITDA. Geotrac, conversely, has experienced declining
earnings and EBITDA since 1998 and is projected to experience relatively low
growth in earnings and EBITDA in the future. In the analyses of selected merger
and acquisition transactions, data from certain transactions increased the
implied value of Geotrac. IMSG is subject to a Corporate Governance Agreement,
dated
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July 31, 1998, by and among IMSG, Geotrac and Daniel J. White imposing
certain restrictions on IMSG and/or potential acquirers, which Raymond James
believes diminishes the value of Geotrac relative to other companies not subject
to such restrictions. See "Certain Transactions of Geotrac" on p. _____. These
restrictions reduce the value of Geotrac in comparison to multiples paid for
other companies without a corporate governance agreement. Additionally, Raymond
James considered the declining financial performance at Geotrac since 1998. In
considering these circumstances, as discussed above, and in considering the
results of the complete set of analyses using a variety of methodologies,
Raymond James formed its opinion described herein.
In performing its analyses, Raymond James made numerous assumptions
with respect to industry performance, general business, economic and regulatory
conditions and other matters, many of which are beyond the control of IMSG
and/or Geotrac. The analyses performed by Raymond James are not necessarily
indicative of actual values, trading values or actual future results which might
be achieved, all of which may be significantly more or less favorable than
suggested by such analyses. Such analyses were prepared solely as part of
Raymond James' analysis of the fairness of the financial terms and conditions of
the Geotrac Sale to holders of IMSG Common Stock from a financial point of view
and were provided to the Board. The analyses do not purport to be appraisals or
to reflect the prices at which businesses or securities might be sold. In
addition, as described above, the opinion of Raymond James was one of many
factors taken into consideration by the Board in making its determination to
approve the Geotrac Sale. Consequently, the analyses described above should not
be viewed as determinative of the Board's opinion with respect to the value of
Geotrac.
Geotrac has agreed to pay Raymond James a fee of approximately $330,000
upon the consummation of the Geotrac Sale. IMSG has also agreed to reimburse
Raymond James for its reasonable out-of-pocket expenses and to provide customary
indemnification protection to Raymond James. Raymond James has also received a
retainer of $150,000 for acting as financial advisor to BIG (which, together
with certain of its subsidiaries, owned approximately 65.2% of the outstanding
IMSG Common Stock as of the Record Date) in connection with a proposed private
placement of subordinated debt for BIG. In the ordinary course of business,
Raymond James may trade in the securities of IMSG for its own account and for
the accounts of its customers and, accordingly, may at any time hold a long or
short position in such securities.
Raymond James has consented to the descriptions of its opinion in, and
the inclusion of its opinion as an appendix to, this Proxy Statement.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of IMSG Common Stock, as of the Record Date for the Special
Meeting, with respect to: (i) each of IMSG's directors; (ii) each of IMSG's
executive officers named in the table below; (iii) all directors and executive
officers of IMSG as a group; and (iv) each person known by IMSG to own
beneficially more than 5% of the IMSG Common Stock. Except as otherwise
indicated, each of the shareholders listed below has sole voting and investment
power over the shares beneficially owned.
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SHARES BENEFICIALLY OWNED
-------------------------
NAME SHARES PERCENT
- - ---- ------ -------
Bankers Insurance Group, Inc.(1)..................................... 8,349,884 65.2%
Western International Insurance Company (2).......................... 700,000 5.5%
David M. Howard...................................................... 13,000 *
David K. Meehan...................................................... 2,200 *
Robert S. Gantley (3) ............................................... 1,700 *
Anthony R. Marando .................................................. --- *
Christopher P. Breakiron (4)......................................... 400 *
Daniel J. White (5).................................................. 524,198 4.1%
Robert M. Menke (6).................................................. 162,200 *
Robert G. Menke...................................................... 3,200 *
John A. Grant, Jr. (7).............................................. 38,500 *
William D. Hussey.................................................... 3,000 *
E. Ray Solomon...................................................... 5,500 *
Alejandro M. Sanchez................................................. 1,000 *
John S. McMullen (8)................................................. 354,300 2.8%
All directors and executive officers as a group (12 persons) (3)(5).. 1,108,798 8.7%
* Less than 1%
(1) Includes 147,084 shares held by Bankers Insurance Group, Inc. ("BIG"),
3,528,455 shares held by Bankers Insurance Corporation ("BIC") and
4,674,345 shares held by Bankers Security Insurance Company ("BSIC").
The business addresses of BIG, BIC and BSIC are all 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 Island corporation unaffiliated with BIG, IMSG 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 Record Date, the directors of IFPCE included David K. Meehan,
Robert M. Menke and Robert G. Menke.
(2) Western International Insurance Company ("WIIC") is a wholly-owned
subsidiary of Venture Capital Company ("VCC"). The business address of
VCC and WIIC is Bank America Building, Fort Street, Georgetown, Grand
Cayman, British West Indies. VCC is a Cayman Island corporation
wholly owned by Venture II Trust, a discretionary charitable trust. The
sole trustee of this trust is Cayman National Trust Company Limited, a
Cayman bank unaffiliated with BIG, IMSG 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.
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(3) Includes 700 shares held directly by Mr. Gantley and 1,000 shares held
jointly with his spouse.
(4) Represents shares held jointly with spouse. Mr. Breakiron resigned as
Vice President, Chief Financial Officer, Secretary and Treasurer of
IMSG effective April 17, 2001.
(5) Includes 262,099 shares held in trust by Mr. White and 262,099 shares
held in trust by his spouse.
(6) Excludes 147,084 shares held by BIG, 3,528,455 shares held by BIC,
4,674,345 shares held by BSIC and 700,000 shares held by WIIC. See
Notes (1) and (2) above. All shares are held by Robert M. Menke Trust
U/A dated 5/17/95, a revocable trust pursuant to which Robert M. Menke
is the sole trustee and lifetime beneficiary.
(7) Includes 12,500 shares held directly by Mr. Grant and 26,000 shares
held directly by his spouse.
(8) Includes 154,300 shares held directly by Mr. McMullen, 110,000 shares
held by Andros Associates, Inc., 45,000 shares held by the Kenneth S.
McMullen Family Trust and 45,000 shares held by the Gertrude B.
McMullen Family Trust. Mr. McMullen owns 99% of the outstanding equity
securities of Andros Associates, Inc., is the sole trustee and sole
beneficiary of the Kenneth S. McMullen Family Trust, and is the sole
trustee and sole beneficiary of the Gertrude B. McMullen Family Trust.
-29-
CERTAIN TRANSACTIONS OF GEOTRAC
DJWW Corp., an Ohio corporation, was formed in June, 1987 by Daniel J.
White ("Mr. White"), the corporation's President and sole shareholder. In May,
1991, the corporation changed its name to Geotrac, Inc. In August, 1994,
Geotrac, Inc. sold substantially all of its assets to SMS Geotrac, Inc., a
Delaware corporation ("SMS Geotrac"), for a purchase price of $1,000,000 in
cash, plus a contingent payment based on net profits after taxes for the fiscal
year ended June 30, 1995. SMS Geotrac was a wholly-owned subsidiary of Strategic
Holdings USA, Inc. ("Strategic"). During the year ended June 30, 1996 and on
July 30, 1997, SMS Geotrac made payments of $932,222 and $1,700,000,
respectively, to Mr. White in satisfaction of the contingent payment obligations
under the acquisition agreement. The amounts were recorded as an increase to
goodwill and an additional capital contribution to SMS Geotrac. In connection
with the sale of assets to SMS Geotrac, Mr. White became the President of SMS
Geotrac and received a four-year employment contract at a base salary of
$100,000 per year. In September, 1994, Geotrac, Inc. changed its name to
YoSystems, Inc. During the year ended June 30, 1997, SMS Geotrac and Strategic
agreed to treat all outstanding amounts owed to the parent, $1,611,140, as an
additional capital contribution. In addition, Strategic contributed $500,000 to
SMS Geotrac.
During the one month period ended July 31, 1997, SMS Geotrac advanced
$797,000 to YoSystems, Inc. In July, 1997, YoSystems acquired all of the issued
and outstanding shares of capital stock of SMS Geotrac from Strategic for
$15,000,000 in cash. The purchase price was funded through an $8.75 million loan
from Huntington National Bank to YoSystems ($8.25 million of which was used in
the purchase) plus $6.75 million in cash paid by IMSG in connection with its
acquisition of a 49% interest in YoSystems, as described below. Thereafter, IMSG
assumed the loan from Huntington National Bank, which loan has since been repaid
from proceeds received in IMSG's initial public offering.
Neither YoSystems nor Mr. White, its President and sole shareholder,
had a preexisting right to acquire SMS Geotrac pursuant to the August, 1994
transaction. The purchase price of the SMS Geotrac stock was determined by arm's
length negotiations. After the stock purchase transaction, SMS Geotrac merged
into YoSystems, with YoSystems being the surviving entity and changing its name
back to Geotrac, Inc.
Concurrent with the acquisition of SMS Geotrac by YoSystems, IMSG,
through a subsidiary, Bankers Hazard Determination Services, Inc. ("BHDS"),
purchased a 49% interest in YoSystems for $6,750,000 in cash. At that time, IMSG
did not contemplate acquiring the remaining 51% of YoSystems, Inc.
In connection with IMSG'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 Richard M. Brubaker, the
half brother of Robert M. Menke, a director of IMSG. The preferred stock of BHDS
issued to Heritage had a par value of $10 per share and was subject to
redemption at the option of the Board of Directors of BHDS.
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The preferred stock could be redeemed at any time at a price equal to 108% of
the original consideration paid for the stock by the shareholder plus the amount
of the dividends declared and unpaid on the redemption date. 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, IMSG purchased the outstanding preferred stock of BHDS in exchange for a
note to Heritage in the principal amount of $6,750,000. The note was repaid in
full in February, 1999 out of the net proceeds to IMSG from its initial public
offering. After May 8, 1998, the preferred stock of BHDS held by IMSG 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. Dividends
declared on the preferred stock for 1997 and 1998 were $229,315 and $189,370,
respectively.
In July, 1998, IMSG acquired the remaining 51% equity interest in
Geotrac, Inc. (formerly YoSystems) pursuant to the merger of Geotrac, Inc. with
and into BHDS, with the surviving entity being known as "Geotrac of America,
Inc." ("Geotrac"). IMSG acquired the remaining 51% interest from Mr. White and
his wife and certain minority shareholders in exchange for (i) 524,198 shares of
IMSG Common Stock, (ii) a promissory note in the principal amount of $1,500,000
bearing interest at a rate of 8.5%, and (iii) cash in the amount of $728,069
(paid in December, 1998), for a total purchase price of $7,994,000. In addition,
IMSG assumed the loan in the original principal amount of $8,750,000 from
Huntington National Bank made to YoSystems in July, 1997. As described above,
the loan from Huntington National Bank was repaid from proceeds received in
IMSG's initial public offering.
In connection with this transaction, Geotrac entered into an employment
agreement with Mr. White pursuant to which Mr. White serves as the 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. Mr. White's current annual base
salary is $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 to 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 one times 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
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.
In addition, IMSG entered into a Corporate Governance Agreement with
Mr. White and Geotrac setting forth certain terms and conditions upon which
Geotrac continues to operate following the merger. The Corporate Governance
Agreement provides, in part, that, for so long as Mr. White owns stock in IMSG
or Geotrac, or has an option to purchase stock in Geotrac, (i) IMSG will vote
all of its shares in Geotrac to fix and maintain the number of directors on the
Geotrac Board of Directors at five, (ii) IMSG will vote its shares in Geotrac to
elect as directors of Geotrac two persons designated by Mr. White, (iii) the
termination of Mr. White as an employee of Geotrac will require the vote of four
out of five members of the Geotrac Board of Directors, and (iv) certain actions
by Geotrac will require the unanimous approval of the Geotrac Board of
Directors, including any merger or consolidation, the payment of management or
similar fees to IMSG or its subsidiaries and affiliates, the sale or issuance of
Geotrac stock, and the sale of Geotrac assets outside the ordinary course of
business to anyone other than an affiliate of Geotrac. Among the actions
requiring such unanimous board approval under the Corporate Governance Agreement
is the making of cash distributions to IMSG, whether by dividends or otherwise.
Therefore, pursuant to the Corporate Governance Agreement, Mr. White may impede
IMSG's ability to access excess cash balances retained by its Geotrac
subsidiary, even if all of the other directors of Geotrac were to approve the
distribution thereof to IMSG. Mr. White is presently a director of IMSG and a
beneficial owner of 524,198 shares of IMSG Common Stock. Pursuant to the Geotrac
Sale Agreement, he will resign as a director of IMSG upon the closing of the
Geotrac Sale. Mr. White also has a right of first refusal to purchase the assets
of Geotrac in the event such assets are to be sold.
The Board of Directors of Geotrac currently consists of five members:
Robert M. Menke (Chairman), David K. Meehan, David M. Howard, Daniel J. White
and John Payne. Pursuant to his rights under the Corporate Governance Agreement,
Mr. White designated himself and Mr. Payne to such board. Mr. Howard is
currently an executive officer IMSG and the former President of BHDS. Pursuant
to the Geotrac Sale Agreement, Messrs. Menke, Meehan and Howard will resign as
directors of Geotrac upon the closing of the Geotrac Sale.
-31-
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, which was renewed effective September 1,
1999, is for a term of five years, expiring on August 31, 2004, and provides
for monthly rental payments of approximately $10,448, plus payment of
utilities, real estate taxes and assessments, insurance, repairs and similar
expenses.
Geotrac incurred $339,345 of consulting service provided by SLK
Software Services Private Limited ("SLK") during the year ended December 31,
2000. Mr. White had an equity interest of 49% in SLK at December 31, 2000.
Subsequent to year-end Mr. White's interest has been diluted to 46.26%. At no
time has Mr. White had a commitment to invest additional funds in SLK. Mr.
White is neither a director nor an officer of SLK and does not have the ability
to exercise control or make management decisions. Neither Mr. White nor Geotrac
has committed to fund SLK's operations. Geotrac owed SLK $15,240 at December
31, 2000 for consulting services.
During the year ended December 31, 2000 Geotrac incurred $396,200 and
$611,237 of flood zone determination costs and digitizing costs, respectively,
from JDI Software Services Private Limited ("JDI"). On January 9, 2001, Mr.
White purchased 100,550 shares of JDI, representing a 47.63% ownership interest
in JDL. Since Mr. White's initial investment on January 9, 2001, he has made no
commitment to invest additional funds in JDI. Mr. White is neither a director
nor an officer of JDI and does not have the ability to exercise control nor make
management decisions. Neither Mr. White nor Geotrac has committed to fund JDI's
operations. Geotrac owed JDI $85,254 at December 31, 2000 for flood zone
determination and digitizing services. Additionally, JDI owed Geotrac $100,000
for the sale of Geotrac's national GIS flood coverage.
The Audit Committee of the Board of Directors of IMSG is responsible
for reviewing all transactions between IMSG and any officer or director of IMSG
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 arm's-length basis from independent third parties.
SHAREHOLDER PROPOSALS
IMSG presently intends to hold its 2002 annual meeting of shareholders
on or before April 30, 2002, but has not yet set the date thereof. Consequently,
the deadline for submission of shareholder proposals pursuant to Rule 14a-8
under the Securities Exchange Act of 1934, as amended ("Rule 14a-8"), for
inclusion in IMSG's proxy statement for its 2002 annual meeting of shareholders
will be a reasonable time before IMSG begins to print and mail its proxy
materials, which deadline will be set forth in a quarterly report on Form 10-Q
or will otherwise be communicated to shareholders. Shareholder proposals must
also be otherwise eligible for inclusion.
If a shareholder wishes to have a proposal considered at the 2002
annual meeting but does not use the process set forth in Rule 14a-8, IMSG's
bylaws control the timely filing of such proposals. Under IMSG's bylaws, a
shareholder proposal is not timely unless the shareholder proposing the proposal
has given timely notice in writing to the Secretary of IMSG. To be timely, a
shareholder's notice must be received at the principal business office of IMSG
no later than the date designated for receipt of shareholders' proposals in a
prior public disclosure by IMSG. If there has been no such prior public
disclosure, then to be timely a shareholder's notice must be delivered or mailed
to and received at the principal business office of IMSG not less than 60 days
nor more than 90 days prior to the 2002 annual meeting; provided, however, that
in the event less than 70 days' notice of the date of the 2002 annual meeting is
given to shareholders by notice or prior public disclosure, notice, to be
timely, must be received by IMSG not later than the close of business on the
tenth day following the day on which IMSG gave notice of or made a public
disclosure of the date of the 2002 annual meeting. After the expiration of the
notice period, notice to IMSG of a shareholder proposal submitted other than
pursuant to Rule 14a-8 will be considered untimely, and the persons named in
proxies solicited by the Board of Directors of IMSG for the 2002 annual meeting
of shareholders may exercise discretionary voting power with respect to any such
proposal.
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VOTING PROCEDURES/REVOKING YOUR PROXY
VOTING
Approval of the Geotrac Sale Agreement and the Geotrac Sale requires
the affirmative vote of the holders of a majority of the issued and outstanding
shares of IMSG Common Stock. A quorum is present if at least a majority of the
outstanding shares of IMSG Common Stock (12,800,261 shares) on the Record Date
are present in person or by proxy.
Those who fail to return a proxy or attend the Special Meeting will not
count towards determining any required quorum. Shareholders and brokers
returning proxies or attending the Special Meeting who abstain from voting will
count towards determining a quorum.
The enclosed proxies will be voted in accordance with the instructions
you place on the proxy card. Unless otherwise stated, all shares represented by
your returned, signed proxy will be voted as noted on the first page of this
Proxy Statement.
REVOCABILITY OF PROXIES
Proxies may be revoked if you:
- Deliver a signed, written revocation letter, dated later than
your proxy, to the Secretary of IMSG at the address set forth
on the first page of this Proxy Statement;
- Deliver a signed proxy, dated later than the previous one, to
the Secretary of IMSG at the address set forth on the first
page of this Proxy Statement; or
- Attend the Special Meeting and vote in person or by proxy.
Attending the Special Meeting alone will not revoke your
proxy.
SOLICITATION
The cost of this solicitation will be borne by IMSG. In addition, IMSG
may reimburse brokerage firms and other persons representing beneficial owners
of shares for expenses incurred in forwarding solicitation materials to such
beneficial owners. Proxies also may be solicited by certain of IMSG's directors
and officers, personally or by telephone or telegram, without additional
compensation. IMSG will reimburse brokerage firms, banks and other custodians,
nominees and fiduciaries for their expenses reasonably incurred in forwarding
solicitation material to the beneficial owners of IMSG's common stock.
DISSENTERS' RIGHTS
Set forth below is a summary of dissenters' rights available to IMSG's
shareholders relating to the Geotrac Sale to be considered at the Special
Meeting. This summary is not intended to be a complete statement of applicable
Florida law and is qualified in its entirety by
-33-
reference to Sections 607.1301, 607.1302 and 607.1320 of the FBCA, set forth in
their entirety as Appendix C to this Proxy Statement.
RIGHTS TO DISSENT
Shareholders of IMSG are entitled to dissent from the Geotrac Sale
discussed in this Proxy Statement and obtain payment of the fair value of their
shares of IMSG Common Stock if and when the Geotrac Sale is effectuated. A
shareholder entitled to dissent and to obtain payment for the shareholder's
shares under Chapter 607 of the FBCA may not challenge the corporate action
(i.e., the Geotrac Sale) creating the right to dissent unless the action is
unlawful or fraudulent with respect to the shareholder or IMSG.
Under Section 607.1302 of the FBCA, a shareholder may assert
dissenters' rights as to fewer than all the shares registered in the
shareholder's name.
PROCEDURES FOR EXERCISE OF DISSENTERS' RIGHTS
The notice accompanying the Proxy Statement states that shareholders
are entitled to assert dissenters' rights under Chapter 607 of the FBCA. A IMSG
shareholder who wishes to assert dissenters' rights must: (a) cause IMSG to
receive, before the vote is taken on the Geotrac Sale Agreement and the Geotrac
Sale, written notice of the shareholder's intention to demand payment for the
shareholder's shares if the Geotrac Sale is effectuated; and (b) not vote his
or her shares in favor of the Geotrac Sale Agreement and the Geotrac Sale
(although a shareholder is not required to vote against the Geotrac Sale and
failure to vote does not constitute a waiver of any rights). Simply voting
against the Geotrac Sale Agreement and the Geotrac Sale will not constitute the
required notice. A SHAREHOLDER WHO DOES NOT SATISFY THE FOREGOING REQUIREMENTS
WILL NOT BE ENTITLED TO DEMAND PAYMENT FOR HIS OR HER SHARES UNDER CHAPTER 607
OF THE FBCA.
If the Geotrac Sale Agreement and the Geotrac Sale are approved by
IMSG's shareholders, IMSG must give a written notice to dissenters who are
entitled to demand payment for their shares. The notice required to be given by
IMSG must be given no later than 10 days after the date IMSG's shareholders
approve the Geotrac Sale Agreement and the Geotrac Sale. A shareholder who is
given a dissenters' notice to assert dissenters' rights and who wishes to
exercise dissenters' rights must, in accordance with the terms of the
dissenters' notice, within 20 days cause IMSG to receive a payment demand and
simultaneously deposit his share certificates with IMSG. Any shareholder that
fails to file such election to dissent within the 20 day period will be bound
by the terms of the Geotrac Sale. Upon filing a notice of election to dissent,
a shareholder shall only be entitled to payment as provided under Chapter 607
of the FBCA and shall not be entitled to vote or to exercise any other rights
of a shareholder. A notice of election may be withdrawn in writing by a
shareholder at any time before an offer is made by IMSG to pay for his shares.
After IMSG makes an offer to purchase, no notice of election may be withdrawn
unless IMSG consents thereto.
A SHAREHOLDER WHO DOES NOT DEMAND PAYMENT AS REQUIRED BY THE DATE OR
DATES SET IN THE DISSENTERS' NOTICE IS NOT ENTITLED TO PAYMENT FOR HIS OR HER
SHARES.
Within 10 days after the expiration of the period in which shareholders
may file their notices of election to dissent, or within 10 days after the
Geotrac Sale is effected, whichever is
-34-
later (but in no case later than 90 days from the shareholders' authorization
date), IMSG shall make a written offer to each dissenting shareholder who has
made demand as provided in Section 607.1320 of the FBCA to pay an amount the
corporation estimates to be the fair value for the shares. If the Geotrac Sale
has not been consummated before the expiration of the 90 day period after the
shareholders' authorization date, the offer may be made conditional upon
consummation of the Geotrac Sale. The notice and offer shall be accompanied by:
(1) A balance sheet of IMSG as of the latest available
date; and
(2) A profit and loss statement of IMSG for the
twelve-month period ended on the date of the balance
sheet.
If within 30 days after the making of such offer a shareholder accepts
the offer, payment for such shareholder's shares shall be made within 90 days
after the making of such offer or the consummation of the Geotrac Sale,
whichever is later. Upon payment of the agreed value for the shares, the
dissenting shareholder shall cease to have any interest in the shares of IMSG.
If IMSG fails to make an offer within the period specified above or if IMSG
makes an offer that any dissenting shareholder fails to accept, then IMSG,
within 30 days after receipt of written demand from any dissenting shareholder
given within 60 days of the Geotrac Sale, or at IMSG's election at any time
within 60 days of the Geotrac Sale, will file an action in any court of
competent jurisdiction in Pinellas County, Florida, requesting that the fair
value of such shares be determined.
A DISSENTER MAY LOSE THE RIGHT TO DEMAND PAYMENT UNLESS THE DISSENTER
CAUSES IMSG TO RECEIVE THE NOTICE REQUIRED WITHIN 30 DAYS AFTER IMSG MADE OR
OFFERED PAYMENT FOR THE SHARES OF THE DISSENTER.
JUDICIAL APPRAISAL OF SHARES
If a demand for payment made by a dissatisfied dissenter as set forth
above is unresolved, IMSG may, within 60 days after receiving the payment
demand, commence a proceeding and petition a court to determine the fair value
of the shares. IMSG must commence the proceeding described above in any court of
competent jurisdiction in Pinellas County, Florida. IMSG must make all
dissenters whose demands remain unresolved parties to the proceeding as in an
action against their shares, and all parties must be served with a copy of the
petition. The jurisdiction of the court in which the proceeding is commenced is
plenary and exclusive. One or more persons may be appointed by the court as
appraisers to receive evidence and recommend a decision on the question of fair
value. The proceeding will be entitled to the same discovery rights as parties
in other civil proceedings. IMSG will pay each shareholder the amount found to
be due such shareholder, if any, within 10 days after the final determination of
the proceedings.
The court in an appraisal proceeding will determine the costs and
expenses of the proceeding, including the reasonable compensation and expenses
of appraisers appointed by the court. The court will assess the costs against
IMSG, but all or any part of such costs and expenses may be apportioned and
assessed as the court deems equitable against any or all of the dissenting
shareholders who are parties to the proceeding, to whom IMSG has made an offer
to pay for the
-35-
shares, if the court finds that the action of such shareholders in failing to
accept such offer was arbitrary, vexatious, or not in good faith. Such expenses
shall include reasonable compensation for, and reasonable expenses of, the
appraisers, but shall exclude the fees and expenses of counsel for, and experts
employed by, any party. If the fair value of the shares, as determined,
materially exceeds the amount which IMSG offered to pay therefor or if no offer
was made the court in its discretion may award to any shareholder who is a party
to the proceeding such sum as the court determines to be reasonable compensation
to any attorney or expert employed by the shareholder in the proceeding.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Proxy Statement contains certain "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 with
respect to the financial condition, results of operations and business of IMSG
and Geotrac. These statements may be made directly in this document or may be
"incorporated by reference" from other documents filed with the Securities and
Exchange Commission ("SEC"). You can find many of these statements by looking
for words such as "believes," "expects," "anticipates," "estimates" or similar
expressions in this Proxy Statement or in documents incorporated by reference
herein.
These forward-looking statements are subject to numerous assumptions,
risks and uncertainties, and the Private Securities Litigation Reform Act
provides a "safe harbor" for these statements. Factors that may cause actual
results to differ from those contemplated by the forward-looking statements
include, among others, the following possibilities:
- Competitive pressures in IMSG's business process outsourcing line
of business may increase significantly, and changes in that
industry may affect IMSG's business, financial condition and
results of operations.
- Geotrac Holdings may be unable to obtain the financing necessary to
consummate the Geotrac Sale.
- General economic or business conditions may change.
Because such statements are subject to risks and uncertainties, actual
results may differ materially from those expressed or implied by such
forward-looking statements. Shareholders are cautioned not to place undue
reliance on such statements, which speak only as of the date of this Proxy
Statement or, in the case of documents incorporated by reference, the date of
such documents.
All subsequent written and oral forward-looking statements
attributable to IMSG or any person acting on its behalf are expressly qualified
in their entirety by the cautionary statements contained or referred to in this
section. All forward-looking statements included in this document are based on
information available to IMSG on the date hereof and IMSG assumes no obligation
to update any such forward-looking statement. Among the factors that could
cause actual results to differ materially are the risks discussed under the
caption "Risk Factors" included in IMSG's Registration Statement on Form S-1,
as amended (Reg. No. 333-57747). Prospective investors should also consult the
risks described from time to time in IMSG's Reports on Forms 10-Q, 8-K and 10-K
and Annual Reports to Shareholders.
WHERE YOU CAN FIND MORE INFORMATION
We file periodic reports, proxy statements, and other information with
the SEC. These SEC filings are available to the public over the Internet at the
SEC's web site (www.sec.gov). You may also read and copy any document that IMSG
files with the SEC at the SEC's public reference facilities at 450 Fifth Street,
N.W., Washington, D.C. 20549; and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661. You may obtain copies of the documents at
prescribed rates by writing to the Public Reference Section of the SEC at 450
Fifth Street, N.W., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of its public reference
facilities.
We "incorporate by reference" into this Proxy Statement the information
in documents we file with the SEC, which means that we can disclose important
information to you be referring you to those documents. The information
incorporated by reference is an important part of this Proxy Statement, and
information that we file subsequently with the SEC will automatically update
this Proxy Statement. We incorporate by reference the documents listed below and
any filings we make with the SEC under Sections 13(a), 13(c), 14, or 15(d) of
the Securities Exchange Act of 1934 after the filing of this Proxy Statement and
before the Special Meeting.
For IMSG:
Annual Report on Form 10-K for the year ended December 31,
2000.
Quarterly Reports on Form 10-Q for the quarters ended March
31, 2001 and June 30, 2001.
Form 12b-25 Notification of Late Filing of Form 10-K for the
year ended December 31, 2000, as amended on April 2, 2001.
Form 12b-25 Notification of Late Filing of Form 10-Q for the
quarter ended June 30, 2001, filed August 15, 2001.
Current Report on Form 8-K filed September 21, 2001.
-36-
You may request a copy of these filings, other than an exhibit to a
filing unless the exhibit is specifically incorporated by reference into the
filing, at no cost to you by contacting us at the following address and
telephone number:
Insurance Management Solutions Group, Inc.
Anthony R. Marando
Chief Financial Officer
360 Central Avenue
St. Petersburg, FL 33701
(727) 803-2040, ext. 4245
IN ORDER TO OBTAIN TIMELY DELIVERY, YOU SHOULD REQUEST COPIES OF OUR
SEC FILINGS NO LATER THAN DECEMBER 10, 2001.
You should rely only on the information delivered with, or stated or
incorporated by reference in, this Proxy Statement. IMSG has not authorized
anyone else to provide you with different information. You should not assume
that the information in this Proxy Statement is accurate as of any date other
than the date on the front of this document.
-37-
SELECTED FINANCIAL DATA
The following selected consolidated financial data of IMSG as of and
for the years ended December 31, 1996, 1997, 1998, 1999, and 2000 has been
derived from IMSG's audited consolidated financial statements. This table also
includes unaudited June 30 comparative data for the years 2000 and 2001. The
results of operations presented below are not necessarily indicative of the
results of operations that may be achieved in the future.
DECEMBER 31, JUNE 30,
-------------------------------------------------------- --------------------
1996 1997 1998 1999 2000 2000 2001
-------- -------- -------- -------- -------- -------- --------
(in thousands, except per share data)
STATEMENT OF OPERATIONS DATA:
Revenues
Outsourcing services .................... $ 5,125 $ 29,714 $ 38,058 $ 52,168 $ 45,917 $ 22,046 $ 26,115
Flood zone determination services ....... 7,705 8,792 25,734 19,161 17,067 8,637 10,380
-------- -------- -------- -------- -------- -------- --------
Total revenues ...................... 12,830 38,506 63,792 71,329 62,984 30,683 36,495
-------- -------- -------- -------- -------- -------- --------
Expenses
Cost of outsourcing services ............ 3,896 21,989 26,875 37,428 36,766 17,754 16,969
Cost of flood zone determination
services .............................. 5,362 4,764 11,131 8,102 7,664 3,861 4,561
Selling, general and administrative ..... 1,121 3,026 8,381 11,857 11,205 5,515 5,543
Management services from Parent ......... 1,054 2,344 3,260 2,256 1,885 979 688
Deferred Compensation
(non-recurring item)................... -- -- 728 -- -- -- --
Depreciation and amortization ........... 309 684 4,311 5,498 5,342 2,753 2,725
-------- -------- -------- -------- -------- -------- --------
Total expenses ...................... 11,742 32,807 54,686 65,141 62,862 30,862 30,486
-------- -------- -------- -------- -------- -------- --------
Operating income/(loss) ................... 1,088 5,699 9,106 6,188 122 (179) 6,009
Equity in earnings of Geotrac, Inc. (1) ... -- 201 -- -- -- -- --
Minority interest (1) ..................... -- -- (473) -- -- -- --
Interest income ........................... -- -- 456 350 288 130 120
Interest expense (2) ...................... (75) (378) (2,194) (809) (70) (42) (5)
Other ..................................... -- -- -- -- -- -- (31)
-------- -------- -------- -------- -------- -------- --------
Income before income taxes ................ 1,013 5,522 6,895 5,729 340 (91) 6,093
Provision for income taxes ................ 396 2,112 3,042 2,534 849 106 2,453
-------- -------- -------- -------- -------- -------- --------
Net income/(loss) ......................... $ 617 $ 3,410 $ 3,853 $ 3,195 $ (509) $ (197) $ 3,640
======== ======== ======== ======== ======== ======== ========
Net income/(loss) per common share ........ $ .06 $ .34 $ .38 $ .26 $ (.04) $ (.02) $ .28
======== ======== ======== ======== ======== ======== ========
Weighted average common shares
outstanding (3) ......................... 10,000 10,000 10,264 12,448 12,794 12,788 12,800
======== ======== ======== ======== ======== ======== ========
Dividends declared on common stock (4) ... $ 1,000 $ 3,500 $ 1,100 $ -- $ -- $ -- $ --
======== ======== ======== ======== ======== ======== ========
-38-
SELECTED FINANCIAL DATA
DECEMBER 31, JUNE 30,
---------------------------------------------------- -----------------
1996 1997 1998 1999 2000 2000 2001
------- -------- -------- ------- ------- ------- -------
(in thousands, except per share data)
BALANCE SHEET DATA:
Working capital (deficiency) ............. $ (425) $ (148) $ (4,295) $ 7,117 $ 6,319 $ 6,812 $10,339
Total assets ............................. 3,441 19,532 39,902 39,491 40,765 40,075 45,984
Long-term debt, less current portion ..... 894 2,187 7,471 220 -- 61 --
Notes payable-affiliates, less current
portion ........................... -- -- 5,528 -- -- -- --
Preferred stock of subsidiary ............ -- 6,750 -- -- -- -- --
Total shareholders' equity ............... 260 170 8,689 32,885 33,113 33,078 36,843
(1) In 1997, IMSG's investment in Geotrac was accounted for using the
equity method of accounting, since IMSG owned less than 50% and had a
significant but not controlling influence. In July, 1998, IMSG acquired
the remaining 51% of Geotrac. As a result, the operations of Geotrac
for the year ended December 31, 1998 are consolidated with that of
IMSG, with the portion of Geotrac's net income allocable to the 51%
interest held by the majority stockholders prior to June 30, 1998
reflected as a minority interest.
(2) Dividends declared on Preferred Stock for the years ended December 31,
1997 and 1998 were $229,315 and $189,370, respectively, and are
included in interest expense.
(3) In February, 1999, IMSG completed an initial public offering ("IPO") of
3,350,000 shares of IMSG Common Stock at a price of $11 per share. Of
the 3,350,000 shares sold in the IPO, 1,350,000 were sold by the
Venture Capital Corporation, a Cayman Islands company, and the
remaining 2,000,000 shares were sold by IMSG. The offering generated
net proceeds to IMSG of $19,164,000, after deducting offering expenses
of approximately $1,296,000 paid by IMSG.
(4) In December, 1996, December, 1997, and June, 1998, IMSG paid dividends
of $1.0 million, $3.5 million, and $1.1 million, respectively, to BIG.
-39-
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Introduction
The accompanying unaudited pro forma condensed consolidated balance sheet of
IMSG as of June 30, 2001, reflects the disposition of the net assets of Geotrac
of America, Inc. ("Geotrac") as if the transaction had occurred June 30, 2001.
The accompanying unaudited pro forma condensed consolidated statements of
operations of IMSG for the year ended December 31, 2000 and for the six months
ended June 30, 2001 reflect (i) the disposition of the net assets of Geotrac as
if the transaction had occurred December 31, 1999, (ii) the Flood Zone
Determination Service Agreement to be executed pursuant to the Geotrac Sale
Agreement as though the terms of such agreement were in effect since January 1,
2000.
The unaudited pro forma condensed consolidated statements of operations and
balance sheet are based on currently available information and do not purport to
represent what IMSG's results of operations would have been if the events
referred to occurred on the above dates, or to project IMSG'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", and the Consolidated Financial Statements in IMSG's
Annual Report on Form 10-K for the year ended December 31, 2000 and Quarterly
Report on Form 10-Q for the six months ended June 30, 2001, incorporated by
reference herein.
Index
Pro forma Condensed Consolidated Balance Sheet as of June 30, 2001 --
Pro forma Condensed Consolidated Statement of Operations
for the year ended December 31, 2000 --
Pro forma Condensed Consolidated Statement of Operations
for the six months ended June 30, 2001 --
Notes to Pro forma Condensed Consolidated Financial Information --
-40-
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
June 30, 2001
Insurance
Management Pro Forma Adjustments (1)(2)
Solutions ----------------------------
Group, Inc. Geotrac of Pro Forma (1)
and Subsidiaries America, Inc. Other Subtotal Adjustments (3) Pro Forma
---------------- ------------- ----------- ----------- --------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $ 7,997,181 $ 2,415,335 $ 5,581,846 $19,000,000 (f) $24,581,846
Accounts receivable, net 4,985,602 2,638,541 2,347,061 2,347,061
Due from affiliates 4,487,277 1,404,191 $ 1,404,191 (a) 4,487,277 4,487,277
Due from Geotrac -- -- 1,079,353 (b) 1,079,353 (1,079,353) (d) --
Prepaid expenses and
other assets 1,152,869 335,872 816,997 816,997
----------- ----------- ----------- -----------
Total current assets 18,622,929 6,793,939 14,312,534 32,233,181
Property and equipment, net 10,101,535 5,831,070 4,270,465 4,270,465
Other assets:
Supply contract -- -- 2,189,090 (f) 2,189,090
Investment in subsidiary -- -- 22,101,780 (c) 22,101,780 (22,101,780) (d) --
Goodwill, net 14,899,170 12,582,573 2,316,597 2,316,597
Customer contracts, net 816,667 816,667 -- --
Deferred tax assets 528,381 18,832 509,549 509,549
Capitalized software, net 820,325 -- 820,325 820,325
Other 194,538 169,738 24,800 24,800
----------- ----------- ----------- -----------
Total assets $45,983,545 $26,212,819 $44,356,050 $42,364,007
=========== =========== =========== ===========
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Current liabilities:
Current portion of long-
term debt $ 60,809 $ 5,471 $ $ 55,338 $ $ 55,338
Accounts payable, trade 1,926,861 497,937 1,428,924 1,428,924
Due to affiliates 44 1,079,353 1,079,353 (b) 44 44
Due to Geotrac -- -- 1,404,191 (a) 1,404,191 (1,404,191) (d) --
Employee related accrued
expenses 1,622,540 607,911 1,014,629 1,014,629
Other accrued expenses 2,403,403 319,211 2,084,192 553,600 (e) 2,637,792
Income taxes payable 2,270,202 936,679 1,333,523 1,000,000 (g) 2,333,523
----------- ----------- ----------- -----------
Total current 8,283,859 3,446,562 7,320,841 7,470,250
liabilities
Deferred revenue 857,095 664,477 192,618 192,618
Deferred taxes -- -- 1,041,960 (g) 1,041,960
Shareholders' equity:
Common stock 128,002 500 500 128,002 128,002
Additional paid-in capital 27,635,901 12,536,180 12,536,180 27,635,901 27,635,901
Retained earnings 9,078,688 9,565,100 9,565,100 9,078,688 (2,528,164) (h) 6,550,524
Treasury stock -- -- -- -- (655,248) (f) (655,248)
----------- ----------- ----------- -----------
Total shareholders'
equity 36,842,591 22,101,780 22,101,780 (c) 36,842,591 33,659,179
----------- ----------- ----------- ----------- -----------
Total liabilities and
shareholders' equity $45,983,545 $26,212,819 $44,356,050 $42,364,007
=========== =========== =========== ===========
-41-
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
For the year ended December 31, 2000
Insurance
Management Pro Forma Adjustments (1)(2)
Solutions ----------------------------
Group, Inc. Geotrac of Pro Forma (1)
and Subsidiaries America, Inc. Other Subtotal Adjustments (3) Pro Forma
---------------- ------------- ------------ ------------ --------------- ------------
REVENUES:
Outsourcing services $ 45,917,152 $ -- $ 938,002 (a) $ 46,855,154 $ 46,855,154
Flood zone determination
services 17,066,945 17,066,945 -- -- --
------------ ------------ ----------- ------------ ------------
Total revenues 62,984,097 17,066,945 938,002 46,855,154 46,855,154
EXPENSES
Cost of outsourcing
services 36,766,042 -- 929,002 (a) 37,695,044 (660,409) (c) 37,034,635
Cost of flood zone
determination services 7,664,052 7,673,052 9,000 (a) -- --
Selling, general and
administrative 11,205,336 3,766,623 -- 7,438,713 7,438,713
Management services
from Parent 1,885,022 24,263 -- 1,860,759 1,860,759
Depreciation and
amortization 5,342,099 2,317,526 -- 3,024,573 660,409 (d) 3,684,982
------------ ------------ ----------- ------------ ------------
Total expenses 62,862,551 13,781,464 938,002 50,019,089 50,019,089
------------ ------------ ----------- ------------ ------------
Operating income (loss) 121,546 3,285,481 (3,163,935) (3,163,935)
Interest income 288,715 244,630 262,822 (b) 306,907 306,907
Interest expense (70,244) (272,164) (262,822)(b) (60,902) (60,902)
------------ ------------ ----------- ------------ ------------
Income (loss) before taxes 340,017 3,257,947 -- (2,917,930) (2,917,930)
Provision (benefit) for
income taxes 849,383 1,580,371 -- (730,988) (730,938)
------------ ------------ ----------- ------------ ------------
Net income (loss) $ (509,366) $ 1,677,576 $ -- $ (2,186,942) $ (2,186,942)
============ ============ =========== ============ ============
Net loss per
common share:
Basic and diluted $ (.04) $ (.18)
============ ============
Weighted average
common shares
outstanding:
Basic and diluted 12,793,953 12,269,755
============ =============
-42-
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
For the six months ended June 30, 2001
Insurance
Management Pro Forma Adjustments (1)(2)
Solutions ----------------------------
Group, Inc. Geotrac of Pro Forma
and Subsidiaries America, Inc. Other Subtotal Adjustments (1)(3) Pro Forma
---------------- ------------- -------- ----------- ------------------- -----------
REVENUES:
Outsourcing services $26,115,184 $ -- $553,145 (a) $26,668,329 $26,668,329
Flood zone determination
services 10,380,113 10,380,113 -- -- --
----------- ----------- -------- ----------- -----------
Total revenues 36,495,297 10,380,113 553,145 26,668,329 26,668,329
EXPENSES
Cost of outsourcing
services 16,968,894 -- 553,145 (a) 17,522,039 (401,727) (c) 17,120,312
Cost of flood zone
determination services 4,560,695 4,560,695 -- -- --
Selling, general and
administrative 5,543,170 2,250,693 -- 3,292,477 3,292,477
Management services from
Parent 688,517 36,513 -- 652,004 652,004
Depreciation and
amortization 2,724,619 1,185,135 -- 1,539,484 401,727 (d) 1,941,211
----------- ----------- -------- ----------- -----------
Total expenses 30,485,895 8,033,036 553,145 23,006,004 23,006,004
----------- ----------- -------- ----------- -----------
Operating income 6,009,402 2,347,077 3,662,325 3,662,325
Interest income 120,034 41,883 3,942 (b) 82,093 82,093
Interest expense (5,246) (5,933) (3,942) (b) (3,255) (3,255)
Equity in earnings of Sub (31,387) (31,387) -- --
----------- ----------- ----------- -----------
Income before taxes 6,092,803 2,351,640 3,741,163 3,741,163
Provision for income taxes 2,452,800 1,008,400 -- 1,444,400 1,444,400
----------- ----------- -------- ----------- -----------
Net income $ 3,640,003 $ 1,343,240 $ -- $ 2,296,763 $ 2,296,763
=========== =========== ======== =========== ===========
Net income per common share:
Basic and diluted $ .28 $ .19
=========== ===========
Weighted average common
shares outstanding:
Basic and diluted 12,800,261 12,276,063
=========== ===========
-43-
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION
BALANCE SHEET - June 30, 2001
(1) See the introduction to the Pro Forma Condensed Consolidated Financial
Information
(2) The Geotrac of America, Inc. ("Geotrac") column amounts represent
Geotrac's separate historical balance sheet at June 30, 2001. For pro
forma purposes these amounts are first subtracted from IMSG's
consolidated amounts in the first column. Next, the "Other" column
amounts which represent the reversal of the intercompany elimination
entries (a), (b) and (c) made by IMSG to derive its consolidated
balance sheet (the first column) are added back. Such reversals or add
backs result in reflecting Geotrac on an unconsolidated basis in the
column labeled "Subtotal" to more easily show the disposition (see 3
below).
(3) Pro forma adjustments: (d) reflects the disposition (elimination) of
Geotrac net assets; (e) reflects the recording of transaction costs not
already recorded in the June 30, 2001 financial statements
(approximately $120,000 recorded in the historical balance sheet at
June 30, 2001); (f) reflects the consideration received totaling
approximately $21,845,000 comprised of $19,000,000 in cash, 524,198
shares of IMSG Common Stock valued at $1.25 a share (fair market quote
at June 30, 2001) or approximately $655,000, and a favorable long-term
Flood Zone Determination Service Agreement with Geotrac valued at
approximately $2,200,000 by management of ISMG and supported by an
independent third-party investment banking firm's valuation; (g)
reflects the estimated current and deferred income taxes recognized as
a result of the transaction. The transaction for financial statement
purposes results in a pre-tax loss of approximately $600,000. Because
of the existence of non-deductible goodwill of approximately
$5,500,000, at June 30, 2001 the total income tax expense for financial
statement purposes is approximately $2,040,000, using a combined
statutory federal and state rate of approximately 40%; and (h) reflects
the after-tax loss for financial statement purposes, exclusive of the
transaction expenses of $120,000 already included in the historical
balance sheet.
STATEMENT OF OPERATIONS - year ended December 31, 2000
(1) See the introduction to the Pro Forma Condensed Consolidated Financial
Information.
(2) The Geotrac of America, Inc. ("Geotrac") column amounts represent
Geotrac's separate historical statement of operations for the year
ended December 31, 2000. For pro forma purposes these amounts are first
subtracted from IMSG's consolidated amounts in the first column. Next,
the "Other" column amounts which represent the entries (a) and (b),
made by IMSG to derive its consolidated statement of operations (first
column) are added back. The resulting amounts are in the column labeled
"Subtotal" and reflect IMSG's operations exclusive of Geotrac.
(3) Pro forma adjustment (c) reflects the more favorable pricing terms for
flood zone determinations performed by Geotrac for IMSG customers
under the new Flood Zone Determination Service Agreement. Pro forma
adjustment (d) reflects the amortization of the asset supply contract
(the service agreement) totaling $2,189,090 recorded as a component of
consideration received when Geotrac was sold. The asset is to be
amortized over the 10-year contract period based on actual flood zone
determinations, i.e., a usage or units of production method, or on a
straight-line method, whichever method results in the greater amount
of amortization being recognized. The asset will be reviewed
periodically for impairment in value.
STATEMENT OF OPERATIONS - six months ended June 30, 2001
(1) See the introduction to the Pro Forma Condensed Consolidated Financial
Information.
(2) The Geotrac of America, Inc. ("Geotrac") column amounts represent
Geotrac's separate historical statement of operations for the six
months ended June 30, 2001. For pro forma purposes the amounts are
first subtracted form IMSG's consolidated amounts in the first column.
Next, the "Other" column amounts which represent the entries (a) and
(b), made by IMSG to derive its consolidated statement of operations
(first column) are added back. The resulting amounts are in the column
labeled "Subtotal" and reflect IMSG's operations exclusive Geotrac.
(3) Pro forma adjustment (c) reflects the more favorable pricing terms for
flood zone determinations performed by Geotrac for IMSG's customers
under the new Flood Zone Determination Service Agreement. Pro forma
adjustment (d) reflects the amortization of the asset supply contract
(the service agreement) totaling $2,189,090 recorded as a component of
consideration received when Geotrac was sold. The asset is to be
amortized over the 10-year contract period based on actual flood zone
determinations, i.e., a usage or units of production method, or on a
straight-line method, whichever method results in the greater amount
of amortization being recognized. The asset will be reviewed
periodically for impairment in value.
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OTHER MATTERS
Management of IMSG knows of no matter to be brought before the Special
Meeting which is not referred to in the Notice of Special Meeting. If any other
matters are properly brought before the meeting, the persons named in the
accompanying proxy will vote the shares of IMSG Common Stock represented by
proxy in accordance with their judgment on those matters.
By Order of the Board of Directors
Richard G. Torra
Secretary
St. Petersburg, Florida
November , 2001
---
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APPENDIX A
STOCK PURCHASE AGREEMENT
BY AND AMONG
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.,
AS SELLER,
BANKERS INSURANCE GROUP, INC.
(SOLELY WITH RESPECT TO SECTION 7.2),
GEOTRAC HOLDINGS, INC.,
AS BUYER,
DANIEL J. WHITE,
DANIEL J. WHITE TRUST,
SANDRA A. WHITE TRUST
AND
GEOTRAC OF AMERICA, INC.
FOR
ALL OF THE ISSUED AND OUTSTANDING
SHARES OF CAPITAL STOCK OF
GEOTRAC OF AMERICA, INC.
DATED SEPTEMBER 20, 2001
TABLE OF CONTENTS
1. THE TRANSACTION..........................................................................................1
1.1 Sale and Purchase of Shares.....................................................................1
1.2 Purchase Price..................................................................................1
1.3 Closing.........................................................................................2
1.4 Deliveries by Seller............................................................................2
1.5 Deliveries by Buyer.............................................................................2
1.6 Deliveries by Company...........................................................................3
1.7 Deliveries by the Whites........................................................................3
2. REPRESENTATIONS AND WARRANTIES OF SELLER.................................................................4
2.1 Organization and Good Standing..................................................................4
2.2 Authorization and Enforceability................................................................4
2.3 No Violation of Laws or Agreements..............................................................4
2.4 Capitalization and Ownership....................................................................4
2.5 Financial Statements............................................................................5
2.6 Undisclosed Liabilities.........................................................................5
2.7 Taxes and Tax Returns...........................................................................5
2.8 Litigation or Proceedings.......................................................................7
2.9 Consents........................................................................................7
2.10 Employee Benefits Representations and Warranties................................................7
2.11 Brokerage.......................................................................................8
2.12 Books and Records...............................................................................8
2.13 Contracts.......................................................................................8
2.14 No Other Representations or Warranties..........................................................8
3. REPRESENTATIONS AND WARRANTIES OF BUYER TO SELLER........................................................8
3.1 Organization and Good Standing..................................................................8
3.2 Authorization and Enforceability................................................................8
3.3 No Violation of Laws or Agreements..............................................................9
3.4 Litigation or Proceedings.......................................................................9
3.5 Consents........................................................................................9
3.6 Investment Representations......................................................................9
3.7 Solvency.......................................................................................10
3.8 Brokerage......................................................................................10
3.9 No Other Representations or Warranties.........................................................10
4. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF WHITES TO SELLER....................................10
4.1 Power..........................................................................................10
4.2 Validity.......................................................................................10
4.3 Title..........................................................................................10
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4.4 No Violation of Laws or Agreements.............................................................10
4.5 Litigation or Proceedings......................................................................11
4.6 Consents.......................................................................................11
4.7 No Other Representations or Warranties.........................................................11
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND WHITES.................................................11
5.1 Representations True...........................................................................11
5.2 Shareholder Approval...........................................................................11
5.3 Performance of Obligations.....................................................................12
5.4 Receipt of Documents by Buyer..................................................................12
5.5 No Litigation..................................................................................12
5.6 Delivery of Minute Book........................................................................12
5.7 Absence of Material Claims for Certain Erroneous Flood Zone Determinations.....................12
5.8 Undertakings to Vote Seller Stock..............................................................12
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER...........................................................12
6.1 Representations True...........................................................................12
6.2 Shareholder Approval...........................................................................13
6.3 Receipt of Documents by Seller.................................................................13
6.4 Performance of Obligations.....................................................................13
6.5 No Litigation..................................................................................13
6.6 Undertakings to Vote White Shares..............................................................13
7. COVENANTS...............................................................................................13
7.1 Termination of Related Party Agreements; Final Accounting......................................13
7.2 Covenant Not to Compete........................................................................14
7.3 Acquisition Proposals..........................................................................14
7.4 Shareholder Meeting............................................................................15
7.5 Management Continuity..........................................................................16
7.6 Operations of Business Prior to Closing........................................................16
7.7 Access to Properties and Records...............................................................17
7.8 Employee Benefit Plans.........................................................................18
7.9 Insurance Matters..............................................................................18
7.10 Expenses.......................................................................................18
7.11 Filings; Other Actions; Notification...........................................................18
7.12 Reasonable Efforts of Seller...................................................................19
7.13 Reasonable Efforts of Buyer and the Whites.....................................................19
7.14 Further Assurances; Cooperation................................................................19
7.15 Post-Closing Access; Preservation of Books and Records.........................................19
7.16 Consents, Approvals and Filings................................................................20
7.17 Disclosures and Announcements..................................................................20
8. TAX MATTERS.............................................................................................20
8.1 Termination of Tax Sharing Arrangements........................................................20
8.2 Seller's Tax Returns...........................................................................20
8.3 Buyer's and Company's Tax Returns..............................................................21
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8.4 Reimbursement of Taxes.........................................................................21
8.5 Indemnification................................................................................23
8.6 Notification of Proceedings; Control; Refunds..................................................24
8.7 Section 338(h)(10) Election....................................................................25
8.8 Allocation.....................................................................................25
8.9 Allocation of Tax Attributes...................................................................25
8.10 Cooperation on Tax Matters.....................................................................25
8.11 Tax Effect of Payments.........................................................................25
9. SURVIVAL AND INDEMNIFICATION............................................................................25
9.1 Nature and Survival of Representations; Right to Indemnification Not Affected by Knowledge.....25
9.2 Indemnification by Seller......................................................................26
9.3 Indemnification by Buyer.......................................................................26
9.4 Limitations on Indemnification.................................................................26
9.5 Exclusive Remedy...............................................................................27
9.6 Procedure for Indemnification -- Third Party Claims............................................28
9.7 Procedure for Indemnification -- Other Claims..................................................29
10. TERMINATION OF AGREEMENT................................................................................29
10.1 Termination....................................................................................29
10.2 Effects of Termination.........................................................................30
10.3 Termination Fees and Effects...................................................................31
11. MISCELLANEOUS...........................................................................................32
11.1 Notices........................................................................................32
11.2 Assignability..................................................................................33
11.3 Governing Law and Venue; Waiver of Jury Trial..................................................33
11.4 Headings.......................................................................................33
11.5 Amendment and Waiver...........................................................................34
11.6 Entire Agreement; NO OTHER REPRESENTATIONS.....................................................34
11.7 Counterparts...................................................................................34
11.8 No Third-Party Beneficiary Rights..............................................................34
11.9 Severability...................................................................................34
11.10 Definitions....................................................................................35
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EXHIBITS
Exhibit A Supply Agreement
Exhibit B Indemnification Agreement
Exhibit C Termination and Release Agreement
Exhibit D Undertakings to Vote Seller Common Stock
Exhibit E Undertakings to Vote White Shares
SCHEDULES
SCHEDULE TITLE
Schedules 2.1-2.13 Seller Disclosure Letter
Schedule 3.4 Buyer Litigation or Proceedings
Schedule 4.5 White Litigation or Proceedings
Schedule 7.1 Related Party Agreements
Schedule 7.9 Insurance Policies
Schedule 8.1 Tax Sharing Arrangements
Schedule 11.10(b) Business of Geotrac
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INDEX OF DEFINED TERMS
The following terms used herein are defined in the Sections indicated:
Term Section Defined
Accredited Investor 3.6(b)
Acquisition Proposal Notice 7.3
Acquisition Proposal 7.3
Affected Party 8.6
Affiliate 11.10(a)
Agreement Recitals
Bankruptcy and Equity Exception 2.2
BIG Recitals
Business Recitals
Buyer Recitals
Buyer Indemnified Parties 9.2(b)
Buyer Material Adverse Effect 11.10(c)
Buyer's Returns 8.3
Claim 9.6(a)
Closing Date 1.3
Closing 1.3
Code 11.10(c)
Company Recitals
Company Material Adverse Effect 11.10(e)
Confidentiality Agreement 11.6
Contract 11.10(f)
Control, Controlling, Controlled 11.10(a)
Controlling Party 8.6(b)
Covenant Not To Compete 7.2
Damages 9.2
Employees 11.10(h)
Encumbrance 11.10(i)
Exchange Act 7.3
Former Employee 11.10(h)
GAAP 11.10(j)
Governmental Body 11.10(k)
Group 7.3
IRS 11.10(l)
Knowledge 11.10(m)
Knowledge of Seller 11.10(m)
Law 11.10(n)
Lien 11.10(o)
NASD 7.17
Nasdaq 7.17
Ordinary Course of Business 11.10(p)
Permitted Action 7.3
Person 11.10(q)
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Pre-Closing Consolidated Returns 8.2
Proceeding 11.10(r)
Proxy Statement 7.4
Purchase Price 1.2
Purchased Shares 1.1
Related Party 11.10(h)
Related Party Agreements 7.1
Remedial Amendment Period 2.10(b)
Representatives 7.7
Savings Plan 2.10(b)
SEC 7.4
Section 338(h)(10) Election 8.7
Securities Act 11.10(t)
Seller Recitals
Seller Accrued Taxes 8.3
Seller Board Fiduciary Duties 8.2
Seller Common Stock 1.2
Seller Disclosure Letter 2
Seller Indemnified Parties 9.3
Seller Material Adverse Effect 11.10(u)
Seller Returns 8.2
Seller's Shareholder Meeting 7.4
Seller Taxes 8.2
Seller's Knowledge 11.10(m)
Services Agreement 1.4(f)
Straddle Return 8.3
Tax Attributes 8.9
Tax Return 2.7(k)
Tax Sharing Arrangements 8.1
Taxes 2.7(k)
Threshold Amount 9.4(a)
White Recitals
White Ancillary Instruments 4.1
White Material Adverse Effect 11.10(v)
White Shares 1.2
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STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT ("AGREEMENT"), dated as of September 20, 2001,
by and among INSURANCE MANAGEMENT SOLUTIONS GROUP, INC., a Florida corporation
("SELLER"); BANKERS INSURANCE GROUP, INC., a Florida corporation (but solely
with respect to Section 7.2) ("BIG"); GEOTRAC HOLDINGS, INC., a Delaware
corporation ("BUYER"); DANIEL J. WHITE, an individual resident of the State of
Ohio, and DANIEL J. WHITE TRUST (under Declaration of Trust dated May 7, 1998)
and SANDRA A. WHITE TRUST (under Declaration of Trust dated May 7, 1998) (each a
"White Trust" and, collectively with Daniel J. White, the "WHITES"); and GEOTRAC
OF AMERICA, INC., a Florida corporation (the "COMPANY").
BACKGROUND
Seller currently owns all of the outstanding capital stock of the
Company, which is engaged in the business of providing flood zone certifications
and certain related services (as specifically described on SCHEDULE 11.10(B),
the "BUSINESS"). Seller desires to sell and transfer to Buyer, and Buyer desires
to purchase from Seller, all of such outstanding capital stock of the Company,
upon the terms and subject to the conditions set forth in this Agreement. The
Whites desire to be parties to this Agreement as provided herein to induce
Seller to enter into this Agreement.
In consideration of the foregoing and of the respective
representations, warranties, covenants, agreements and conditions contained
herein, and intending to be legally bound hereby, the parties hereto agree as
follows:
1. THE TRANSACTION
1.1 Sale and Purchase of Shares. Subject to the terms and
conditions of this Agreement, at the Closing (as hereinafter defined), Seller
shall sell and transfer to Buyer, and Buyer shall purchase from Seller, all of
the outstanding shares of capital stock of Company (collectively, the "PURCHASED
SHARES") for the consideration specified in Section 1.2 of this Agreement.
1.2 Purchase Price. The aggregate purchase price payable for the
Purchased Shares (the "PURCHASE PRICE") shall be (i) the sum of Nineteen Million
Dollars (US$19,000,000), plus (ii) 524,198 shares (the "WHITE SHARES") of Common
Stock, $0.01 par value per share ("SELLER COMMON STOCK"), of Seller currently
owned by the White Trusts (collectively, the "PURCHASE PRICE"). At the Closing,
Buyer shall pay the Purchase Price as follows:
(a) Buyer shall deliver to Seller, by wire transfer of
immediately available US funds to an account designated in writing by
Seller not less than 24 hours prior to the time set for Closing, the
sum of Nineteen Million Dollars (US$19,000,000); and
(b) The Whites shall deliver, and Buyer shall cause the
Whites to deliver, to Seller the White Shares as provided in Sections
1.5(b) and 1.7(a) below.
1.3 Closing. For purposes of this Agreement, the term "CLOSING"
shall mean the consummation of the transactions contemplated by this Agreement.
The Closing shall take place (i) at the offices of Seller, 360 Central Avenue,
St. Petersburg, Florida 33701, at 10:00 a.m. on the second business day after
the last to be satisfied or waived of the conditions set forth in Articles 5 and
6 hereof shall be satisfied or waived in accordance with this Agreement, or (ii)
at such other place and time and/or on such other date as Buyer and Seller may
agree in writing (the "CLOSING DATE"); provided, however, that the Closing Date
shall occur no later than January 31, 2002. The transactions contemplated by
this Agreement shall be deemed to have been consummated effective at 12:01 a.m.,
Eastern Time, on the Closing Date.
1.4 Deliveries by Seller. At the Closing, Seller will deliver, or
will cause to be delivered, to Buyer:
(a) share certificates representing the Purchased Shares,
duly endorsed for transfer or accompanied by duly executed transfer powers;
(b) written resignations of David M. Howard, David K.
Meehan and Robert M. Menke as the directors of the Company;
(c) a certificate of status from the Department of State
of Florida for each of Seller and Company, dated as of a date not earlier than
ten days prior to the Closing Date;
(d) a certificate from the President, or a Vice
President, of Seller certifying that, as of the Closing Date, Seller has
performed in all material respects all of the covenants and complied in all
material respects with all of the provisions required by this Agreement to be
performed or complied with by it at or before the Closing;
(e) a certificate from the corporate secretary of Seller
certifying, as of the Closing Date, as to the incumbency of the corporate
officers of Seller, and to the resolutions adopted by the Board of Directors of
Seller authorizing the execution and delivery of this Agreement and the
performance of the transactions contemplated hereby;
(f) a Flood Zone Determination Service Agreement, dated
the Closing Date and effective immediately after the Closing, between Insurance
Management Solutions, Inc., a wholly-owned subsidiary of Seller ("IMS"), and the
Company, in the form attached hereto as EXHIBIT A (the "SUPPLY AGREEMENT"), duly
executed by IMS;
(g) an Indemnification Agreement, dated the Closing Date
and effective immediately after the Closing, between Seller and Daniel J. White
in the form attached hereto as EXHIBIT B (the "INDEMNIFICATION AGREEMENT"), duly
executed by Seller; and
(h) a Termination and Release Agreement, dated the
Closing Date and effective as of the Closing, by and among Seller, Buyer, the
Company, Daniel J. White, Sandra A. White and the White Trusts, in the form
attached hereto as EXHIBIT C (the "TERMINATION AND RELEASE AGREEMENT"), duly
executed by Seller.
1.5 Deliveries by Buyer. At the Closing Buyer will deliver, or
will cause to be delivered, to Seller:
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(a) the cash portion of the Purchase Price as required
by Section 1.2(b) of this Agreement;
(b) share certificates representing the White Shares,
duly endorsed for transfer or accompanied by duly executed transfer powers;
(c) certificates of existence and good standing from the
Secretary of State of Delaware for Buyer, dated as of a date not earlier than
ten days prior to the Closing Date;
(d) a certificate from the President, or a Vice
President, of Buyer certifying that, as of the Closing Date, Buyer has performed
in all material respects all of the covenants and complied in all material
respects with all of the provisions required by this Agreement to be performed
or complied with by it at or before the Closing;
(e) a certificate from the corporate secretary of Buyer
certifying, as of the Closing Date, as to the incumbency of the corporate
officers of Buyer and to the resolutions adopted by the Board of Directors and
shareholders, respectively, of Buyer, authorizing the execution and delivery of
this Agreement and performance of the transactions contemplated hereby;
(f) the written resignation of Daniel J. White as a
Director of Seller;
(g) the Indemnification Agreement, duly executed by
Daniel J. White; and
(h) the Termination and Release Agreement, duly executed
by Daniel J. White, Sandra A. White and each of the White Trusts.
1.6 Deliveries by Company. At the Closing the Company will
deliver to Seller and/or Daniel J. White, as the case may be:
(a) the Supply Agreement, duly executed by the Company;
and
(b) the Termination and Release Agreement, duly executed
by the Company.
1.7 Deliveries by the Whites. At the Closing the Whites will
deliver, or will cause to be delivered, to Seller:
(a) share certificates representing the White Shares,
duly endorsed for transfer or accompanied by duly executed stock powers;
(b) the written resignation of Daniel J. White as a
Director of Seller;
(c) the Indemnification Agreement, duly executed by
Daniel J. White; and
(d) the Termination and Release Agreement, duly executed
by Daniel J. White.
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2. REPRESENTATIONS AND WARRANTIES OF SELLER
Except as set forth in the disclosure letter delivered to Buyer by
Seller upon entering into this Agreement (the "SELLER DISCLOSURE LETTER"),
Seller hereby represents and warrants to Buyer that:
2.1 Organization and Good Standing. Each of Company and Seller is
a corporation duly organized, validly existing and of active status under the
laws of its jurisdiction of incorporation. Company has the corporate power and
authority to own or lease its properties and assets as now owned or leased and
to carry on its business as and where it is now being conducted. Seller has the
corporate power and authority to execute and deliver this Agreement and the
other agreements, documents and instruments to be executed and delivered by
Seller hereunder (the "SELLER ANCILLARY AGREEMENTS") and to perform its
obligations under this Agreement and under each of the Seller Ancillary
Agreements. Copies of Company's and Seller's articles of incorporation and
bylaws, as amended and/or restated to the date hereof, have been delivered to
Buyer and are correct and complete and in full force and effect on the date
hereof.
2.2 Authorization and Enforceability. The execution, delivery and
performance of this Agreement and each of the Seller Ancillary Agreements by
Seller have been duly authorized by all necessary corporate action on the part
of Seller and its Board of Directors, subject only to approval of this Agreement
and the transactions contemplated hereby by the holders of a majority of the
outstanding shares of Seller Common Stock. This Agreement has been duly executed
and delivered by Seller. Assuming the due authorization, execution and delivery
of this Agreement and the Seller Ancillary Instruments by the other parties
hereto and thereto, this Agreement constitutes, and when executed and delivered
each of the Seller Ancillary Instruments will constitute, a valid and legally
binding obligation of Seller enforceable against Seller in accordance with its
terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles (the "BANKRUPTCY AND EQUITY
EXCEPTION").
2.3 No Violation of Laws or Agreements. The execution and delivery
of this Agreement by Seller do not, and the consummation by Seller of the
transactions contemplated hereby and the compliance by Seller with the terms,
conditions and provisions of this Agreement will not, (a) conflict with, or
result in a violation of any provision of the respective articles of
incorporation or bylaws, as amended and/or restated, of Seller and Company, or
(b) with or without the giving of notice or the lapse of time, or both,
constitute a breach or violation of, or default under, any terms, conditions or
provisions of any indenture, mortgage, deed of trust, lease, instrument, order,
judgment, decree, Law, contract, agreement or any other restriction to which the
Seller is a party or by which Seller, or any of its assets (other than the
Company or any of its assets) may be bound or affected, except, in the case of
clause (b) above, for any breach, violation or default that, individually or in
the aggregate, would not have a Company Material Adverse Effect.
2.4 Capitalization and Ownership. The authorized capital stock of
Company consists of: 500 shares of Common Stock, $1.00 par value (all of which
shares have been validly issued and are presently outstanding and constitute all
of the Purchased Shares); 1,000,000 shares of
-4-
Class "A" Preferred Stock, $10.00 par value, none of which are currently
outstanding; and 1,000,000 shares of Class "B" Preferred Stock $10.00 par value,
none of which are currently outstanding. Company 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 Company or Seller are a party which restrict the transfer of the
Purchased Shares. All of the Purchased Shares are owned of record and
beneficially by Seller, free and clear of all Encumbrances. To Seller's
Knowledge, Company does not own, directly or indirectly, any capital stock of,
or any other equity interest in, any corporation or other business entity. At
the Closing, Seller will convey to Buyer and Buyer will acquire the Purchased
Shares free and clear of all Liens, other than those arising through Buyer or
White or as a result of federal or state securities laws.
2.5 Financial Statements. Included as SCHEDULE 2.5 hereto are
copies of financial statements of the Company consisting of a balance sheet of
Company as of December 31, 2000, and the related statement of income and cash
flows for the year ended December 31, 2000 (including the notes contained
therein or annexed thereto) (the "FINANCIAL STATEMENTS"), which Financial
Statements have been reported on, and are accompanied by, the signed,
unqualified opinion of Grant Thornton, LLP. The Financial Statements (a) fairly
present, in all material respects and in accordance with generally accepted
accounting principles, the financial position of the Company as of December 31,
2000, and for the year then ended, and (b) have been prepared in accordance with
GAAP.
2.6 Undisclosed Liabilities. To Seller's Knowledge, Company does
not have, as of the date hereof, any material liability or obligation of any
nature (whether due or to become due, absolute, contingent or otherwise), except
liabilities or obligations (a) reflected in the balance sheet for the year
ending December 31, 2000, or (b) incurred in the Ordinary Course of Business
since December 31, 2000.
2.7 Taxes and Tax Returns.
(a) Company has filed on a timely basis all income,
sales, franchise and other material Tax Returns required to be filed by it on or
before the Closing Date (including any consolidated, combined or unitary Tax
Return required to be filed by any affiliated person or entity) accurately
reflecting all income, sales, franchise and other material Taxes owing to the
United States or any other government or any government subdivision, state or
local, or any other taxing authority, and has paid in full all Taxes for which
it has or may have liability (whether or not shown on any Tax Return). All such
Tax Returns are accurate and complete in all material respects. To Seller's
Knowledge, there is no unassessed Tax deficiency proposed or threatened against
the Company as a result of the operation of its business and the Company is not
a party to any action or proceeding brought by an governmental authority for the
assessment or collection of Taxes. There are no liens on the assets of Company
as a result of any Tax liabilities except for Taxes not yet due and payable.
(b) Company has complied in all material respects with
all applicable laws, rules and regulations relating to the payment and
withholding of Taxes and has, within the time and the manner prescribed by law,
withheld and paid over to the proper governmental authorities, all amounts
required to be so withheld and paid over under applicable Laws.
-5-
(c) Company has not been a United States real property
holding corporation within the meaning of Section 897(c)(2) of the Code during
the applicable period specified in Section 897(c)(1)(A)(ii) of the Code.
(d) Neither Company nor any member of a consolidated,
combined or unitary group that includes Company is a party to any action or
proceeding brought by any governmental authority for the assessment or
collection of Taxes, nor, to the Knowledge of Seller, has any such event been
asserted or threatened against any of them. Company has not filed any consent of
the type described under Section 341(f) of the Code, nor is it subject to any
accumulated earnings penalties.
(e) There are no outstanding agreements or waivers
extending the statutory period of limitations applicable to any Tax Return of
Company for any period. No taxing authority has audited any Tax Return filed by
Company for any taxable period beginning after December 31, 1997. All Tax
deficiencies raised as a result of any past audits have been satisfied.
(f) Buyer has been furnished with complete and correct
copies of all consolidated, combined or unitary Tax Returns which include the
Company that have been filed by Seller for all taxable years beginning after
December 31, 1997.
(g) No adjustments have been made by Seller or the
Company under Section 481(a) of the Code, which will affect the Taxes of Buyer
or the Company for any taxable years that end on or after the Closing Date. All
Tax rulings or closing agreements to which the Company is a party are set forth
in SCHEDULE 2.7.
(h) There are no Tax sharing agreements or similar
arrangements in effect that include the Company.
(i) There are no Tax deficiencies of any kind assessed
against, relating to, or with respect to which liability could be imposed upon
the Company, including pursuant to Treasury Regulations Section 1.1502-6 or any
corresponding state, local or foreign provision, as a transferee or successor,
by contract or otherwise.
(j) All income or franchise Taxes owed by any
consolidated, combined or unity group of which the Company is, or was, a member,
with respect to each taxable period during which Company was a member of the
group, have been paid in full (regardless of what is shown on a Tax Return).
(k) For purposes of this Agreement, "TAXES" shall mean
any and all taxes, charges, fees, levies or other assessments, including,
without limitation, income, gross receipts, excise, real or personal property,
sales, withholding, social security, retirement, unemployment, use, net worth,
payroll and franchise, taxes, fees and charges, imposed by the IRS or any taxing
authority (whether domestic or foreign including, without limitation, any state,
county, local or foreign government or any subdivision or taxing agency thereof
(including a United States possession)), whether computed on a separate,
consolidated, unitary, combined or any other basis; and such term shall include
any interest whether paid or received, fines, penalties or additional amounts
attributable to, or imposed upon, or with respect to, any such taxes, charges,
fees, levies or other assessments. "TAX RETURN" shall mean any report, return,
document,
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declaration or other information or filing required to be supplied to any taxing
authority or jurisdiction (foreign or domestic) with respect to Taxes,
including, without limitation, information returns, any documents with respect
to or accompanying payments of estimated Taxes, or with respect to or
accompanying requests for the extension of time in which to file any such
report, return, document, declaration or other information.
Anything herein to the contrary notwithstanding, Seller's
representations and warranties pursuant to this Section 2.7 shall be limited as
follows. First, Seller's representations and warranties shall not apply to any
Tax periods, or portions thereof, which ended on or before July 31, 1998.
Second, Seller's representations and warranties shall not apply to any separate,
as opposed to consolidated, combined or unitary, Tax Returns filed by the
Company following July 31, 1998. Third, Seller's representations and warranties
shall not apply to the extent that they would be based, in whole or in part,
upon any inaccurate or incorrect information provided to the Seller by Daniel J.
White or by any other employee of the Company (other than an employee of the
Company who is also an employee of Seller).
2.8 Litigation or Proceedings. There are no actions, suits,
investigations or proceedings pending or, to Seller's Knowledge, threatened, at
law or in equity, by or before any Governmental Body against Seller or any of
its executive officers or directors (excluding Daniel J. White) in such
capacity, except for those that would not have a Company Material Adverse
Effect.
2.9 Consents. No consent, approval or authorization of, or
registration or filing with, any Person, including any Governmental Body, is
required to be made or obtained by Seller in connection with the execution and
delivery of this Agreement or the consummation of the transactions contemplated
hereby by Seller, except for those specifically contemplated by the terms of
this Agreement, those that have been made or obtained as of the date hereof, and
those that the failure to make or obtain would not have a Company Material
Adverse Effect or prevent, materially delay or materially impair the ability of
Seller to consummate the transactions contemplated by this Agreement.
2.10 Employee Benefits Representations and Warranties
(a) Except as set forth in subsection (b) below, no
Employee Benefit Plan, as defined in Section 11.10(g), for Former Employees or
present Employees of the Company is maintained by Seller or any other entity
(other than the Company) that is an Affiliate of Seller.
(b) Eligible employees of the Company participate in The
Associates Savings Plan ("SAVINGS PLAN"), which is sponsored by Bankers
Financial Corporation, a corporation that beneficially owns, indirectly through
one or more direct or indirect subsidiaries, a majority of the outstanding
Seller Common Stock. The Savings Plan and its associated trust substantially
comply in operation with the applicable requirements of Code Section 401(a), and
the Savings Plan and its associated trust substantially comply in form with the
requirements of Code Section 401(a) except to the extent that it will be amended
prior to the end of the "REMEDIAL AMENDMENT PERIOD" under Section 401(b) of the
Code to comply as to form with the requirements of Code Section 401(a).
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(c) The Company has no liability, whether actual or
contingent, under Title IV of ERISA with respect to any Employee Benefit Plan
maintained by Seller or any entity (other than Company) that is an Affiliate of
Seller.
2.11 Brokerage. Except for Raymond James & Associates, Inc., which
shall be paid solely by Seller, neither Seller nor any of its officers,
directors (excluding Daniel J. White) or employees has employed any broker or
finder or incurred any liability for any brokerage fees, commissions or finders'
fees in connection with the transactions contemplated by this Agreement.
2.12 Books and Records. The minute books and stock record books of
the Company, all of which have been made available to Buyer, are complete and
correct in all material respects.
2.13 Contracts. SCHEDULE 2.13 contains a true and correct list of
each Contract between Company and any Related Party other than Contracts which
have been either entered into in the Ordinary Course of Business of Company or
specifically approved by the Board of Directors of Company.
2.14 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article 2, Seller makes no
other express or implied representation or warranty to Buyer in connection with
the transactions contemplated by this Agreement.
3. REPRESENTATIONS AND WARRANTIES OF BUYER TO SELLER
Buyer hereby represents and warrants to Seller that:
3.1 Organization and Good Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has the corporate power and authority to own or lease its
properties and assets as now owned or leased and to carry on its business as and
where now being conducted. Buyer has the corporate power and authority to
execute and deliver this Agreement and each other agreement, document and
instrument contemplated hereunder to which it is a party (the "BUYER ANCILLARY
AGREEMENTS") and to perform its obligations under this Agreement and under each
of the Buyer Ancillary Agreements. Copies of Buyer's certificate of
incorporation and bylaws, as amended to date, have been delivered to Seller and
are correct and complete and in full force and effect on the date hereof.
3.2 Authorization and Enforceability. The execution, delivery and
performance of this Agreement and each of the Buyer Ancillary Agreements by
Buyer have been duly authorized by all necessary corporate action on the part of
Buyer, its Board of Directors and stockholders. This Agreement has been duly
executed and delivered by Buyer and each of the Whites. Assuming the due
authorization, execution and delivery of this Agreement and each of the Buyer
Ancillary Agreements and White Ancillary Agreements (as hereinafter defined) to
which it is a party by Seller, (a) this Agreement constitutes, and when executed
and delivered each of the Buyer Ancillary Agreements will constitute, a valid
and legally binding obligation of Buyer enforceable against Buyer in accordance
with its terms subject to the Bankruptcy and Equity Exception, and (b) this
Agreement constitutes, and when executed and delivered each of the White
Ancillary Agreements will constitute, a valid and legally binding obligation of
the Whites
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enforceable against the Whites in accordance with its terms subject to the
Bankruptcy and Equity Exception.
3.3 No Violation of Laws or Agreements. The execution and delivery
of this Agreement by Buyer and each of the Whites do not, and the consummation
by Buyer and the Whites of the transactions contemplated hereby and the
compliance by Buyer and the Whites with the terms, conditions and provisions of
this Agreement will not (a) conflict with, or result in a violation of any
provision of the certificate of incorporation or bylaws of Buyer, or (b) with or
without the giving of notice or the lapse of time, or both, constitute a breach
or violation of, or default under, any terms, conditions or provisions of any
indenture, mortgage, deed of trust, lease, instrument, order, judgment, decree,
Law, Contract, agreement or any other restriction to which Buyer and/or any of
the Whites is a party or by which Buyer and/or any of the Whites, or any of
their respective assets, may be bound or affected, except, in the case of clause
(b) above, for any breach, violation or default that, individually or in the
aggregate, would not have a Buyer Material Adverse Effect, a White Material
Adverse Effect or prevent, materially delay or materially impair the ability of
Buyer and/or any of the Whites to consummate the transaction contemplated by
this Agreement.
3.4 Litigation or Proceedings. Except as set forth on SCHEDULE 3.4
OR SCHEDULE 4.5, there are no actions, suits, investigations or proceedings
pending or, to Buyer's Knowledge, threatened, at law or in equity, by or before
any Governmental Body, agency or instrumentality, against Buyer, any of its
executive officers or directors in such capacity, or any of the Whites, except
for those that would not have a Buyer Material Adverse Effect or prevent,
materially delay or materially impair the ability of Buyer and/or any of the
Whites to consummate the transactions contemplated by this Agreement.
3.5 Consents. No consent, approval or authorization of, or
registration or filing with any Person, including any Governmental Body, is
required to be made or obtained by Buyer or any of the Whites in connection with
the execution and delivery of this Agreement or the consummation of the
transactions contemplated hereby by Buyer, except for those specifically
contemplated by the terms of this Agreement, those that have been made or
obtained as of the date hereof, and those that the failure to make or obtain
would not have a Buyer Material Adverse Effect or prevent, materially delay or
materially impair the ability of Buyer and/or any of the Whites to consummate
the transactions contemplated by this Agreement.
3.6 Investment Representations.
(a) Buyer will acquire the Purchased Shares hereunder for
its own account for investment only, and not with a view to or for sale in
connection with any public distribution thereof within the meaning of the
Securities Act. Buyer hereby acknowledges that the Purchased Shares to be
acquired by Buyer pursuant to this Agreement have not been, and will not be,
registered under the Securities Act or any state securities laws and cannot be
resold without registration thereunder or exemption therefrom. Buyer agrees not
to transfer all or any portion of the Purchased Shares to be acquired pursuant
to this Agreement unless such transfer has been registered or is exempt from
registration under the Securities Act and any applicable state securities laws.
-9-
(b) Buyer, either alone or with its advisers, has such
knowledge and experience in financial and business matters so as to be capable
of evaluating the merits and risks of acquiring the Purchased Shares, and has
the ability to bear the economic risk of acquiring the Purchased Shares. Buyer
is an "ACCREDITED INVESTOR," as such term is defined in Rule 501 of Regulation D
promulgated under the Securities Act.
3.7 Solvency. Immediately after the Closing, Buyer shall be able
to pay its debts as they become due, shall own assets having a fair market value
greater than the amounts required to pay its debts (including a reasonable
estimate of the amount of contingent liabilities) and shall not have an
unreasonably small amount of capital to conduct its business.
3.8 Brokerage. Except for NatCity Investments, Inc., which shall
be paid solely by Buyer, neither Buyer nor any of its officers, directors or
employees, including Daniel J. White, has employed any broker or finder or
incurred any liability for any brokerage fees, commissions or finders' fees in
connection with the transactions contemplated by this Agreement.
3.9 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article 3, Buyer makes no other
express or implied representation or warranty to Seller in connection with the
transactions contemplated by this Agreement.
4. JOINT AND SEVERAL REPRESENTATIONS AND WARRANTIES OF WHITES TO SELLER
Each of the Whites hereby jointly and severally represents and warrants
to Seller that:
4.1 Power. Each of the Whites has the full legal power, right and
authority to enter into, execute and deliver this Agreement and the other
instruments and documents contemplated hereunder (including, if applicable, the
respective stock powers) to be executed and delivered by any or all of them (the
"WHITE ANCILLARY INSTRUMENTS"), and to carry out their respective obligations
under the transactions contemplated hereby and thereby.
4.2 Validity. This Agreement has been duly and validly executed
and delivered by each of the Whites and is, and when executed and delivered each
White Ancillary Instrument will be, the legal, valid and binding obligation of
such White, enforceable in accordance with its terms, subject to the Bankruptcy
and Equity Exception.
4.3 Title. The Daniel J. White Trust (under Declaration of Trust
dated May 7, 1998) is the owner of record and beneficially of 262,099 of the
White Shares and the Sandra A. White Trust (under Declaration of Trust dated May
7, 1998) is the owner of record and beneficially of 262,099 of the White Shares,
free and clear of all Liens including, without limitation, voting trusts or
agreements, proxies, or marital or community property interests. At the Closing,
the Whites will convey to Seller and Seller will acquire all of the White Shares
free and clear of all Liens, other than those arising through Seller or as a
result of federal or state securities laws.
4.4 No Violation of Laws or Agreements. The execution and delivery
of this Agreement by each of the Whites does not, and the consummation by each
of the Whites of the transactions contemplated hereby and thereby and the
compliance by each of the Whites with the
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terms, conditions and provisions of this Agreement will not, with or without the
giving of notice or the lapse of time, or both, constitute a breach or violation
of, or default under, any terms, conditions or provisions of any indenture,
mortgage, deed of trust, lease, instrument, order, judgment, decree, Law,
Contract, agreement or any other restriction to which any of the Whites is a
party or by which any of the Whites or any of his or its assets may be bound or
affected, except for any breach, violation or default that, individual or in the
aggregate, would not have a White Material Adverse Effect or prevent, materially
delay or materially impair the ability of any of the Whites to consummate the
transactions contemplated by this Agreement.
4.5 Litigation or Proceedings. Except as set forth on SCHEDULE
4.5, there are no actions, suits, investigations or proceedings pending or, to
White's Knowledge, threatened, at law or in equity, by or before any
Governmental Body, agency or instrumentality, against any of the Whites except
for those that would not have a White Material Adverse Effect or prevent,
materially delay or materially impair the ability of any of the Whites to
consummate the transactions contemplated by this Agreement.
4.6 Consents. No consent, approval or authorization of, or
registration or filing with any Person, including any Governmental Body, is
required to be made or obtained by any of the Whites in connection with the
execution and delivery of this Agreement or the consummation of the transactions
contemplated hereby by the Whites, except for those specifically contemplated by
the terms of this Agreement, those that have been made or obtained as of the
date hereof, and those that the failure to make or obtain would not have a White
Material Adverse Effect or prevent, materially delay or materially impair the
ability of any of the Whites to consummate the transactions contemplated by this
Agreement.
4.7 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article 4, none of the Whites
makes any other express or implied representation or warranty to Seller in
connection with the transactions contemplated by this Agreement.
5. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER AND WHITES
The obligation of each of Buyer and the Whites to effect the
transactions contemplated by this Agreement is subject to the satisfaction or
waiver, at or prior to the Closing, of each of the following conditions:
5.1 Representations True. The representations and warranties of
Seller contained in Article 2 of this Agreement shall be true and accurate in
all material respects on and as of the Closing Date to the same extent and with
the same force and effect as if made on such date (other than those
representations and warranties that address matters only as of a particular date
or only with respect to a specific period of time, which need be true and
accurate only as of such date or with respect to such period, and except as
affected by the transactions contemplated under this Agreement).
5.2 Shareholder Approval. This Agreement and the transactions
contemplated hereby shall have been duly approved by holders of a majority of
the outstanding shares of Seller
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Common Stock in accordance with applicable law and the articles of incorporation
and bylaws of Seller, each as amended and/or restated to date.
5.3 Performance of Obligations. Seller shall have performed in all
material respects the obligations under this Agreement required to be performed
by it on or before the Closing Date.
5.4 Receipt of Documents by Buyer. Buyer shall have received:
(a) the deliveries required by Section 1.4 hereof to be
made, or caused to be made, by Seller at Closing; and
(b) a certificate executed by the President and Secretary
or Treasurer of Seller certifying, to their Knowledge, as to the fulfillment of
the matters contained in this Article 5.
5.5 No Litigation. No court or Governmental Body of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, Law, ordinance, judgment, decree, injunction or other order that is in
effect and permanently enjoins or otherwise prohibits consummation of the
transactions contemplated by this Agreement.
5.6 Delivery of Minute Book. Seller shall have delivered or made
available to Buyer the minute book of Company.
5.7 Absence of Material Claims for Certain Erroneous Flood Zone
Determinations. Since the date of this Agreement, there shall have been no
material claims against the Company arising out of or relating to either (i) the
operations or activities of the Seller and its subsidiaries (other than the
Company or any entity controlled thereby) or (ii) any erroneous flood zone
determinations issued by Bankers Hazard Determination Services, Inc. prior to
July 31, 1998, except, in each case, for those which are or are reasonably
expected to be covered by insurance maintained by the Company or Seller
(excluding any deductible amounts) and for those which would not have a Company
Material Adverse Effect.
5.8 Undertakings to Vote Seller Stock. Seller shall have
delivered to Buyer, concurrent with the execution and delivery of this
Agreement, a written undertaking (in substantially the form attached hereto as
EXHIBIT D) by each of David K. Meehan, David M. Howard, John A. Grant, Jr.,
William D. Hussey, E. Ray Solomon, Alejandro M. Sanchez and John S. McMullen to
vote the respective shares of Seller Common Stock owned thereby in favor of the
transactions contemplated by this Agreement.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER
The obligation of Seller to effect the transaction contemplated by this
Agreement is subject to the satisfaction or waiver, at or prior to the Closing,
of each of the following conditions:
6.1 Representations True. The representations and warranties of
Buyer and the Whites contained in this Agreement shall be true and accurate in
all material respects on and as
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of the Closing Date to the same extent and with the same force and effect as if
made on such date (other than those representations and warranties that address
matters only as of a particular date or only with respect to a specific period
of time, which need be true and accurate only as of such date or with respect to
such period, and except as affected by the transactions contemplated under this
Agreement).
6.2 Shareholder Approval. This Agreement and the transactions
contemplated hereby shall have been duly approved by holders of a majority of
the outstanding shares of Seller Common Stock in accordance with applicable law
and the articles of incorporation and bylaws of Seller, each as amended and/or
restated to date.
6.3 Receipt of Documents by Seller. Seller shall have received:
(a) the deliveries required by Sections 1.5 and 1.7
hereof to be made, or caused to be made, by Buyer and the Whites at Closing; and
(b) a certificate executed by the President and
Secretary or Treasurer of Buyer certifying, to their Knowledge, as to the
fulfillment of the matters contained in this Article 6.
6.4 Performance of Obligations. Buyer and the Whites shall have
performed in all material respects the obligations under this Agreement required
to be performed by them on or before the Closing Date.
6.5 No Litigation. No court or Governmental Body of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered any
statute, Law, ordinance, judgment, decree, injunction or other order that is in
effect and permanently enjoins or otherwise prohibits consummation of the
transactions contemplated by this Agreement.
6.6 Undertakings to Vote White Shares. Each of the White Trusts
shall have delivered to Seller, concurrent with the execution and delivery of
this Agreement, a written undertaking (in substantially the form attached hereto
as EXHIBIT E) to vote the White Shares in favor of the transactions contemplated
by this Agreement.
7. COVENANTS
7.1 Termination of Related Party Agreements; Final Accounting.
SCHEDULE 7.1 sets forth all Contracts and arrangements, whether written or oral,
existing as of the date hereof between the Company and/or Daniel J. White and
any Related Party ("RELATED PARTY AGREEMENTS"). On or before the Closing Date,
the Seller shall take or cause to be taken (and Daniel J. White shall cooperate
in taking) all necessary or appropriate actions so that, as of the Closing, (a)
the Company shall have satisfied and paid in full all accounts payable, debts or
obligations of the Company to Seller and/or any Related Party under the Related
Party Agreements through and including the Closing Date, and (b) Seller and the
Related Parties shall have satisfied and paid in full all accounts payable,
debts or obligations of Seller and/or the Related Parties to the Company under
the Related Party Agreements through and including the Closing Date. At Closing,
if any amounts are owing by the Company to Seller or any Related Party such
amounts will be offset against the amounts owing as of the Closing by Seller or
any
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Related Party to Company, then the Company shall pay the balance owing, if any,
in cash, at the Closing. If after offsetting the amounts owed by Seller or a
Related Party to the Company against the amounts owed by the Company to Seller
or any Related Party, there still remains an amount owing to the Company by
Seller or such Related Party, then Seller shall pay, or cause to be paid, such
additional amount to Company at Closing. Except as expressly provided in
SCHEDULE 7.1, the Related Party Agreements shall be terminated effective as of
the Closing, none of the Company, Daniel J. White or any Related Party will have
any further rights or obligations under any Related Party Agreement, and each of
Seller, Company and Daniel J. White shall execute and deliver to the others the
Termination and Release Agreement.
7.2 Covenant Not to Compete. For a period of five (5) years
commencing on the Closing Date, each of Seller and BIG agrees that neither it
nor any of its subsidiaries shall, directly or indirectly, without the prior
consent of Buyer, (a) engage in the Business, (b) solicit any individuals
employed by Company as of the date hereof (other than executive officers or
directors of the Company who are also executive officers and/or directors of
Seller and/or BIG as of the date hereof) to become employees of Seller, BIG or
any of their respective subsidiaries, or (c) employ or retain as a consultant
any such individual or any entity owned or controlled by any such individual
(together, the "COVENANT NOT TO COMPETE"); provided, however, that the foregoing
Covenant Not to Compete: (i) shall not prohibit the ownership of securities of
corporations or other business entities which are listed on a national
securities exchange or traded in the national over-the-counter market in an
amount which shall not exceed 5% of the outstanding shares or other securities
of any such corporation or other business entity; (ii) shall not prohibit the
general solicitation of employees or consultants in the ordinary course of
business; and (iii) shall be terminated and of no further force and effect in
the event that Buyer or the Company materially breaches the Supply Agreement.
The parties agree that the geographic scope of this Covenant Not to Compete
shall extend to the entire world. The parties agree that the covenants deemed
included in this Section are, taken as a whole, reasonable in their geographic
and temporal coverage, and no party shall raise any issue of geographic or
temporal reasonableness in any proceeding to enforce such covenant. The parties
intend that the covenant contained in the preceding sentence shall be construed
as a series of separate covenants, one for each jurisdiction located outside the
United States and one for each state, city and county included within the United
States and, except for geographic coverage, each such separate covenant shall be
deemed identical.
7.3 Acquisition Proposals. From the date hereof through the first
to occur of the termination of this Agreement and the Closing Date, Seller shall
not, nor shall Seller authorize or permit any of its officers, directors (other
than Daniel J. White), employees, representatives, investment bankers,
attorneys, accountants, subsidiaries (other than Company) or other agents to,
(a) solicit or initiate the submission of any Acquisition Proposal (as defined
below), (b) enter into any agreement with respect to any Acquisition Proposal,
or (c) participate in any material discussions or negotiations with, or furnish
written information or material oral information to, any person in connection
with any Acquisition Proposal. If an Acquisition Proposal is made to or received
by Seller after the date hereof, Seller will, within two (2) business days of
such receipt, notify Buyer of the principal terms thereof (an "ACQUISITION
PROPOSAL NOTICE"), but Seller shall not be required to disclose to Buyer the
identity of the person(s) making such offer. Notwithstanding the foregoing, the
provisions hereof shall not prohibit the board of directors of Seller from
taking, or causing to be taken, any action it reasonably believes, based as to
legal
-14-
matters on the advice of outside counsel, is required for the board of directors
of Seller to comply with its fiduciary duties imposed by law (the "SELLER BOARD
FIDUCIARY DUTIES") to respond to an unsolicited Acquisition Proposal, including
(without limitation) (i) furnishing information to, or entering into discussions
or negotiations with, any person or entity that makes an Acquisition Proposal,
and (ii) complying with applicable law, including the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), and the rules and regulations promulgated
thereunder. For purposes of this Agreement, the term "PERMITTED ACTION" shall
mean any action taken, or caused to be taken, by the Board of Directors of
Seller described by the preceding sentence. Before providing any written
information or material oral information about Company as permitted by the
immediately preceding sentence, Seller shall have received a written Acquisition
Proposal and shall have informed Buyer of that proposed action and of the
substance of the information to be provided; provided, however, that Buyer shall
not block or delay the provision of such information, and, at Seller's written
request, Buyer shall return to Seller, or forward to a third party, any such
information in Buyer's possession that Seller or Company shall have generated or
provided to Buyer. For purposes of this Agreement, "ACQUISITION PROPOSAL" shall
mean any proposal relating to a (A) merger, consolidation or similar transaction
to which Company is a party, (B) sale, lease or other disposition by merger,
consolidation, share exchange or otherwise of all or substantially all of the
assets of Company, or (C) issuance, sale or other disposition of (other than
pursuant to the pledge thereof to Seller's lenders, which pledge is in existence
on the date hereof) (including by way of merger, consolidation, share exchange
or any similar transaction) equity securities (or options, rights or warrants to
purchase, or securities convertible into, such equity securities) of Company;
provided, however, that the term Acquisition Proposal shall not include, among
other things, (i) any merger, consolidation, share exchange or similar
transaction involving Seller or (ii) any issuance, sale or other disposition of
(including by way of merger, consolidation, share exchange or any similar
transaction) equity securities (or options, rights or warrants to purchase, or
securities convertible into, such equity securities) of Seller.
7.4 Shareholder Meeting. Commencing not later than October 15,
2001, Seller shall take, consistent with applicable law and its Articles of
Incorporation and Bylaws, as amended and/or restated to date, all action
necessary to convene and hold a meeting of holders of Seller Common Stock as
promptly as practicable after October 15, 2001 for the purpose of considering
and voting upon the approval of this Agreement and the transactions contemplated
herein (the "SELLER'S SHAREHOLDER MEETING").
Without limiting the generality of the foregoing, Seller shall,
promptly following October 15, 2001 (but not later than November 5, 2001),
prepare a proxy statement (whether as part of a registration statement on Form
S-4 or otherwise) (the "PROXY STATEMENT"), file it with the Securities and
Exchange Commission ("SEC") under the Exchange Act, and use all reasonable
efforts to have it cleared or declared effective by the SEC. As promptly as
practicable after the Proxy Statement has been cleared or declared effective by
the SEC, Seller shall mail the Proxy Statement to the shareholders of Seller as
of the record date for the shareholders' meeting referred to above. Seller shall
use its reasonable best efforts to obtain and furnish the information required
to be included by it in the Proxy Statement and, after consultation with Buyer,
respond promptly to any comments of the SEC relating to the preliminary Proxy
Statement pertaining to the transactions contemplated by this Agreement and to
cause the definitive Proxy Statement relating to the transactions contemplated
by this Agreement to be mailed to its shareholders, all at the earliest
practicable time. Whenever an
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event occurs which should be set forth in an amendment or supplement to the
Proxy Statement or any other filing required to be made with the SEC, each party
hereto will promptly inform the others and cooperate in filing with the SEC
and/or mailing to shareholders such amendment or supplement. Other than as
required by Seller Board Fiduciary Duties, the Board of Directors of Seller
shall recommend such approval (referral to which shall be included in the Proxy
Statement) and Seller shall take all lawful action to solicit such approval. At
any such meeting of Seller's shareholders all of the White Shares shall be voted
for the approval of this Agreement and the transactions contemplated hereby.
Buyer and the Whites covenant and agree to cooperate with Seller in connection
with the preparation, filing and mailing of the Proxy Statement and any
amendment or supplement thereto, including (without limitation) providing, as
promptly as practicable and at their sole expense, such information as Seller
shall reasonably request for use in the Proxy Statement. Buyer and the Whites
agree that Seller may rely on any information furnished by Buyer or White in
preparing the Proxy Statement and any amendment or supplement thereto.
Nothing in this Section 7.4 is intended to preclude the Board of
Directors of Seller from taking, or causing to be taken, any action which the
Board of Directors determines, based on the advice of outside counsel as to
legal matters, is required by Seller Board Fiduciary Duties.
7.5 Management Continuity. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
or the Closing, Seller shall cause the Company to continue to employ Daniel J.
White in the same capacities and at the same compensation as of the date hereof;
provided, however, that Daniel J. White's employment with the Company may be
terminated for "CAUSE" as provided in Section 8.1 of the Employment Agreement,
dated July 31, 1998, between the Company and Daniel J. White.
7.6 Operations of Business Prior to Closing. During the period
from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Closing, except as expressly contemplated
by this Agreement or with the prior written consent of both Buyer and Seller,
which consent of Buyer shall not be unreasonably withheld or delayed by either
party:
(a) Conduct of Business / Ordinary Course. Seller and, to
the extent within Daniel J. White's control, Daniel J. White shall cause Company
to carry on its business in the usual, regular, and ordinary course in
substantially the same manner as heretofore conducted and, to the extent
consistent with such business, shall use their respective reasonable best
efforts, consistent with past practice and policies, to preserve intact
Company's present business organization and maintain its existing relations and
goodwill with customers, suppliers, distributors, employees, consultants and
others having business dealings with Company. Seller shall promptly notify
Buyer, and Buyer and Daniel J. White shall promptly notify Seller, of any event
or occurrence or emergency of which such party becomes aware, which is not in
the ordinary course of business of Company or which is material and adverse to
Company's business.
(b) Dividends, Issuance of or Changes in Securities.
Seller shall not cause or permit the Company to: (i) declare, set aside or pay
any dividend; (ii) issue, sell, pledge or dispose of or commit to the issuance,
sale, pledge or disposition of any capital stock of the
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Company, or any securities convertible into capital stock of the Company, or any
options, warrants, calls, commitments, or rights of any character obligating
Company to issue any such capital stock; (iii) split, combine or reclassify any
of its outstanding capital stock or issue or authorize the issuance of any other
securities in respect of, in lieu of or in substitution for outstanding capital
stock of the Company; or (iv) repurchase or otherwise acquire any shares of
capital stock of the Company, or any securities convertible into or exchangeable
or exercisable for any shares of its capital stock.
(c) Governing Documents. Neither Seller nor, to the
extent within Daniel J. White's control, Daniel J. White shall cause or permit
the Company to amend the Company's Articles of Incorporation or By-laws, as
amended and/or restated as of the date hereof.
(d) No Acquisitions. Neither Seller nor, to the extent
within Daniel J. White's control, Daniel J. White shall cause or permit the
Company to acquire or agree to acquire by merging or consolidating with, or by
purchasing a substantial portion of the assets of, or by any other manner, any
business or any corporation, partnership, association or other business
organization or division thereof.
(e) No Dispositions. Neither Seller nor, to the extent
within Daniel J. White's control, Daniel J. White shall cause or permit the
Company to sell, lease, license, transfer, mortgage, encumber or otherwise
dispose of any of Company's material assets or cancel, release, or assign any
material indebtedness or claim, except in the Ordinary Course of Business.
(f) Indebtedness. Neither Seller nor, to the extent
within Daniel J. White's control, Daniel J. White shall cause or permit the
Company to incur any material indebtedness for borrowed money by way of direct
loan, sale of debt securities, purchase money obligation, conditional sale,
guarantee, or otherwise, except in the Ordinary Course of Business.
(g) Claims. Neither Seller nor, to the extent within
Daniel J. White's control, Daniel J. White shall cause or permit the Company to
settle any material claim, action or proceeding, except in the Ordinary Course
of Business.
7.7 Access to Properties and Records. During the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Closing, Seller shall, upon reasonable notice (and except
as may otherwise be required by applicable Law), cause the Company to (i) afford
Buyer and its employees, counsel, accountants and other authorized
representatives ("REPRESENTATIVES") reasonable access, during normal business
hours (but in such a manner as not unduly to disrupt the business of the
Company), to the personnel, premises, properties, contracts, books and records
of the Company; provided, however, that no investigation pursuant to this
Section 7.7 shall affect or be deemed to modify any representation or warranty
made by Seller and, provided further, that the foregoing shall not require
Seller or the Company to permit any inspection, or to disclose any information,
that in the reasonable judgment of Seller would result in the disclosure of any
trade secrets of third parties or violate any of the Company's obligations with
respect to confidentiality if the Seller shall have caused the Company to use
reasonable efforts to obtain the consent of such third party to such inspection
or disclosure. Upon the written request of the President and Chief Executive
Officer of Seller, all requests for access or information made pursuant to this
Section shall be directed to the
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President and Chief Executive Officer of Seller or such other Person as he may
designate. All such information shall be governed by the terms of the
Confidentiality Agreement dated April 14, 2000, among Seller, Company, Buyer and
Daniel J. White, which Confidentiality Agreement shall survive the termination
of this Agreement. With Seller's prior written consent, which shall not be
unreasonably withheld, Buyer shall be entitled to make appropriate inquiries of
third parties in the course of its investigation.
7.8 Employee Benefit Plans.
(a) Except as set forth in subsection (b) below, the
Company shall be responsible for and shall discharge any and all liabilities or
obligations arising under any Employee Benefit Plan maintained by the Company
for Former Employees or present Employees of Company in accordance with the
terms of such Employee Benefit Plan.
(b) The Company shall promptly contribute to the Savings
Plan Employee elective deferral contributions and the corresponding matching
contribution with respect to compensation that is attributable to services
rendered through the day immediately prior to the Closing Date. Such
contributions shall be made as soon as practicable following the relevant
payroll date, but in no event later than the fifteenth day of the month
immediately following the month in which occurs the relevant payroll date. To
the extent permitted under applicable law, each Employee of the Company who
participates in the Savings Plan and who continues in employment with the
Company immediately following the Closing Date shall be eligible to receive a
lump sum distribution of his or her account balance, subject to applicable
withholding rules. Employees of the Company will not be eligible to share in the
year-end discretionary contribution, if one is made, except to the extent
required by the terms of the Savings Plan or applicable law.
7.9 Insurance Matters. SCHEDULE 7.9 sets forth a list of insurance
policies currently maintained by Seller and/or BIG, which name the Company as an
additional insured. The parties acknowledge that the Company shall be removed as
an additional insured from such policies effective as of the Closing, and Seller
agrees to take, or cause to be taken, any action necessary to cause such
removal; and, following the Closing, neither the Company nor Buyer shall have
any further liability for premiums payable to the insurance companies under such
insurance policies.
7.10 Expenses. Except as otherwise provided in this Agreement,
whether or not the transactions contemplated by this Agreement are consummated,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
expense.
7.11 Filings; Other Actions; Notification.
(a) Buyer, Daniel J. White and Seller shall cooperate
with each other and use their respective best efforts to take or cause to be
taken all actions, and do or cause to be done all things, necessary, proper or
advisable on its or his part under this Agreement and applicable Laws to
consummate the transactions contemplated by this Agreement as soon as
practicable, including preparing and filing as soon as practicable all
documentation to effect all necessary
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notices, reports and other filings and to obtain as soon as practicable all
consents, registrations, approvals, permits and authorizations necessary or
advisable to be obtained from any third party and/or any Governmental Body in
order to consummate the transactions contemplated by this Agreement. Subject to
applicable Laws relating to the exchange of information, Buyer and Seller shall
have the right to review in advance, and to the extent practicable each will
consult the other on, all the information relating to Buyer and Seller, as the
case may be, that appear in any filing made with, or written materials submitted
to, any third party and/or any Governmental Body in connection with the
transactions contemplated by this Agreement. In exercising the foregoing right,
each of Buyer and Seller shall act reasonably and as promptly as practicable.
(b) Buyer and Seller each shall, upon request by the
other, furnish the other with all information concerning itself, its directors,
officers and stockholders and such other matters as may be reasonably necessary
or advisable in connection with any statement, filing, notice or application
made by or on behalf of Buyer or Seller to any third party and/or any
Governmental Body in connection with the transactions contemplated by this
Agreement.
(c) Subject to any confidentiality obligations and the
preservation of any attorney-client privilege, Buyer and/or Daniel J. White and
Seller each shall keep the other apprised of the status of matters relating to
the completion of the transactions contemplated hereby, including promptly
furnishing the other with copies of notices or other communications received or
made by Buyer and/or Daniel J. White or Seller, as the case may be, in
connection therewith.
7.12 Reasonable Efforts of Seller. Seller shall use its reasonable
best efforts to effectuate the transactions contemplated hereby and to fulfill
and cause to be fulfilled the conditions to Closing under this Agreement and
shall promptly notify Buyer in writing of any event or fact that represents or
is likely to cause a breach of any of Seller's representations, warranties,
covenants or agreements contained in this Agreement.
7.13 Reasonable Efforts of Buyer and the Whites. Buyer and the
Whites shall use their reasonable best efforts to effectuate the transactions
contemplated hereby and to fulfill and cause to be fulfilled the conditions to
Closing under this Agreement and shall promptly notify Seller in writing of any
event or fact that represents or is likely to cause a breach of any of Buyer's
and/or any White's representations, warranties, covenants or agreements
contained in this Agreement.
7.14 Further Assurances; Cooperation. At and after the Closing,
each party hereto will execute and deliver such further instruments and
documents and perform such acts as may be reasonably necessary or appropriate to
cause the satisfactory completion and consummation of the transactions
contemplated by this Agreement.
7.15 Post-Closing Access; Preservation of Books and Records. Buyer
and the Company shall, following the Closing, give to Seller and its authorized
Representatives such reasonable access, during normal business hours and upon
prior notice, to books and records of Company (including without limitation all
such books of account and tax records) as Seller may reasonably request in
connection with (a) the preparation and filing of Returns and (b) the
verification of any claim of Buyer for indemnification under this Agreement, and
shall permit Seller to make extracts and copies of such books and records at the
expense of Seller. Buyer and
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the Company shall preserve all books and records of the Company for a period of
seven years after the Closing; provided, however, that Buyer shall have the
right at any time to return any of such books and records to Seller. Seller
shall afford Buyer similar rights of access to any books and records retained by
it.
7.16 Consents, Approvals and Filings. Subject to the terms and
conditions herein provided, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable under applicable
Laws to consummate and make effective the transactions contemplated by this
Agreement, including using all reasonable best efforts to obtain all necessary
waivers, consents and approvals, to effect all necessary registrations and
filings (including, but not limited to, filings with all applicable Governmental
Bodies) and to lift any injunction or other legal bar to the transactions
contemplated by this Agreement.
7.17 Disclosures and Announcements. Announcements concerning the
transactions provided for in this Agreement by any party to this Agreement shall
be subject to the prior review and approval of the other parties in all
essential respects, which approval shall not be unreasonably delayed or denied;
provided, however, that the approval of Buyer, the Whites or the Company shall
not be required as to any statements or other information which Seller is
required to make pursuant to any rule or regulation of the SEC, the Nasdaq Stock
Market, the National Association of Securities Dealers, Inc. ("NASD"), or
otherwise required by Law.
8. TAX MATTERS
8.1 Termination of Tax Sharing Arrangements. SCHEDULE 8.1 sets
forth a list of all Tax sharing agreements and arrangements existing as of the
date of this Agreement between the Company (or any direct or indirect subsidiary
of the Company) (collectively, the "BUYER GROUP") and Seller (or any direct or
indirect subsidiary of Seller (other than Company or any direct or indirect
subsidiary of the Company)) (collectively, the "SELLER GROUP"). The parties
hereto agree that, except as otherwise provided in this Article 8, all rights,
liabilities and obligations of the Buyer Group under any Tax sharing agreements
and arrangements in effect on the Closing Date between the Buyer Group (or any
member thereof) and the Seller Group (or any member thereof) shall terminate
immediately prior to the Closing as of the Closing Date (with the result that
the Buyer Group shall not be bound thereby or have any liability thereunder) and
such termination shall be effective at that time without the need of any further
action by the Buyer Group or the Seller Group.
8.2 Seller's Tax Returns. Company shall continue to be included
for any period ending on or before the Closing Date in the consolidated federal
income Tax Return of which Seller is the common parent and in any required state
or local consolidated, combined or unitary income or franchise Tax Returns of
which Seller or any member of the Seller Group is the common parent that include
Company for any period of Company ending prior to or on the Closing Date (all
such Tax Returns covering taxable periods of Company ending prior to or on the
Closing Date being hereinafter referred to as "PRE-CLOSING CONSOLIDATED
RETURNS"). Seller, in a manner consistent with past practices, shall timely
prepare and file or cause to be prepared and filed all Pre-Closing Consolidated
Returns ("SELLER RETURNS"). Seller shall timely pay or cause to be paid all
Taxes due and payable with respect to Seller Returns ("SELLER TAXES"). The
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Buyer Group shall reimburse the Seller Group for the Buyer Group's allocable
share (as determined pursuant to Section 8.4 hereof) of the Taxes due with
respect to any Seller Returns filed after the Closing Date in the manner and at
the times set forth in Section 8.4.
8.3 Buyer's and Company's Tax Returns. The Company shall timely
prepare and file, or cause to be prepared and filed, all Tax Returns required by
Law of the Buyer Group that are not required to be prepared and filed on a
consolidated, combined or unitary with Seller or any member of the Seller Group
("BUYER RETURNS"). Except as otherwise provided in Section 8.7 hereof, the Buyer
Group shall pay all Taxes ("Buyer Taxes") due and payable with respect to the
Buyer Returns. The Seller Group shall timely reimburse the Buyer Group in cash
for the portion of any Taxes due and payable with respect to any Ohio state or
local Buyer Returns for the 2000 taxable year and subsequent periods ending on,
before or including the Closing Date which are solely attributable to the Seller
Group's failure to treat the costs of the Company's map database additions as
current year expenses in any federal Pre-Closing Consolidated Return (which
reimbursement shall be treated as an adjustment to the purchase price). In the
event of a disagreement regarding the amount of the reimbursement, the
determination of the reimbursement amount shall be made by the Independent
Accounting Firm (as hereinafter defined) appointed in a manner similar to that
set forth in Section 8.4.
8.4 Reimbursement of Taxes. Not less than forty-five (45) days
prior to the date tentatively scheduled for Closing, Seller shall deliver to
Buyer a pro forma Return that reflects the tax items of the Buyer Group through
the most recently completed month for the taxable year of the Buyer Group that
will end on or will include the Closing Date for Buyer's review and comments.
Seller shall be required to make any changes to such pro forma Return reasonably
requested by Buyer (which requested changes shall be delivered to Seller within
fifteen (15) days after Buyer's receipt of such pro forma Return) to the extent
consistent with the past practices of Seller or the Company and any other
changes reasonably requested by Buyer. Thereafter, Seller shall deliver to Buyer
Seller's calculation of the amount of Tax attributable to the Buyer Group
pursuant to this Section 8.4 for the period covered by the pro forma Return (the
"INITIAL ESTIMATED TAX CALCULATION"). The Initial Estimated Tax Calculation
shall be computed on a separate return basis and based upon the separate tax
items of the Buyer Group as set forth on the pro forma Return as revised to
incorporate the changes reasonably requested by Buyer; provided, however, in the
case of Florida Corporate Income/Franchise Taxes, the Initial Estimated Tax
Calculation shall be computed on a separate return basis and based upon the
separate tax items of the Buyer Group, except that the Florida apportionment
factors and fraction of the entire consolidated group (and not the apportionment
factors and fraction of only the Buyer Group) shall be used. If Buyer and Seller
are able to agree in writing upon the Initial Estimated Tax Calculation within
ten (10) days following delivery thereof (the "INITIAL ESTIMATED TAX CALCULATION
PERIOD") by Seller to Buyer, then Seller and White shall cause the Company to
pay to Seller at Closing cash in the amount of the Initial Estimated Tax
Calculation (the "INITIAL ESTIMATED TAX AMOUNT"), less any amounts previously
paid by the Company to the Seller Group with respect to the Initial Tax
Calculation Period. In the event Buyer and Seller cannot agree on the Initial
Estimated Tax Calculation within the Initial Estimated Tax Calculation Period,
then the determination of the Initial Estimated Tax Calculation shall be
determined by an accounting firm of nationally recognized standing (the
"INDEPENDENT ACCOUNTING FIRM") to be mutually selected by Buyer and Seller or,
if no agreement is reached, by the accountants engaged by Seller and Buyer,
respectively. The Independent Accounting Firm shall make a calculation of
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the Initial Estimated Tax Calculation, which shall be final and binding. The
Independent Accounting Firm shall make its calculation of the Initial Estimated
Tax Calculation as promptly as possible, but in no event later than the day
immediately preceding the Closing Date. At the Closing, Seller and White shall
cause the Company to pay to Seller, the Initial Estimated Tax Amount as
determined by the Independent Accounting Firm. The fees and expenses of the
Independent Accounting Firm shall be paid one-half by Buyer and one-half by
Seller.
Within forty-five (45) days following the Closing, Seller shall deliver
to Buyer a pro forma Return that reflects the tax items of the Buyer Group
through the Closing Date. Seller shall be required to make any changes
reasonably requested by Buyer to the extent consistent with the past practices
of Seller or the Company and any other changes reasonably requested by Buyer.
Thereafter, Seller shall deliver to Buyer Seller's calculation of the Tax
payable by Company and Buyer pursuant to this Section 8.4 through and including
the Closing Date (the "REVISED ESTIMATED TAX CALCULATION"). The Revised
Estimated Tax Calculation shall be computed on a separate return basis and based
upon the separate tax items of the Buyer Group, as set forth on the pro forma
Return as revised to incorporate the changes reasonably requested by Buyer;
provided, however, in the case of Florida Corporate Income/Franchise Taxes, the
Revised Estimated Tax Calculation shall be computed on a separate return basis
and based upon the separate tax items of the Buyer Group, except that the
Florida apportionment factors and fraction of the entire consolidated group (and
not the apportionment factors and fraction of only the Buyer Group) shall be
used. If Buyer and Seller are able to agree in writing upon the Revised
Estimated Tax Calculation within fifteen (15) days following the delivery of the
Revised Estimated Tax Calculation to Buyer, then the Company shall pay, and the
Buyer shall cause the Company to pay, promptly to Seller an amount equal to (i)
the amount of the Revised Estimated Tax Calculation (the "REVISED ESTIMATED TAX
AMOUNT"), less (ii) the Initial Estimated Tax Amount. In the event Seller and
Buyer cannot agree on the Revised Estimated Tax Calculation within sixty (60)
days following the Closing, then the determination of the Revised Estimated Tax
Amount shall be determined by the Independent Accounting Firm selected as set
forth above, which shall be instructed to use every reasonable effort to make
such determination within fifteen (15) days of submission thereto and, in any
event, as soon as practicable after such submission. The determination of the
Revised Estimated Tax Amount by the Independent Accounting Firm shall be final
and binding. Promptly following such determination, the Company shall pay to
Seller, and Buyer shall cause the Company to pay to Seller, an amount equal to
the Revised Estimated Tax Amount, less the Initial Estimated Tax Amount. The
fees and expenses for the services of the Independent Accounting Firm shall be
paid one-half by the Seller and one-half by the Company and/or Buyer. If the
Initial Estimated Tax Amount exceeds the Revised Estimated Tax Amount, the
Seller shall promptly pay an amount in cash to Buyer equal to such excess.
At least 30 days prior to the filing of any Pre-Closing Consolidated
Return required to be filed more than 75 days following the Closing Date (or as
soon as practicable in the case of a Pre-Closing Consolidated Return required to
be filed within 75 days of the Closing Date), Seller shall deliver a copy of a
pro forma Return that reflects the separate tax items of the Buyer Group for the
period covered by such Pre-Closing Consolidated Return to Buyer, for Buyer's
review and comment. Seller shall be required to make any changes reasonably
requested by Buyer (which requested changes shall be delivered to Seller within
fifteen (15) days after Buyer's receipt of the pro forma Return) to the extent
consistent with the past practices of Seller or the
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Company and any other changes reasonably requested by Buyer. Within thirty (30)
days after the finalization of the pro forma Return (i.e., after all changes
requested by Buyer have been made as provided in the previous sentence), Buyer
or the Company shall pay to Seller an amount equal to the excess of (i) the Tax
(the "Final Tax Amount"), if any, that the Company would be required to pay for
the period covered by the pro forma Return computed as if the Buyer Group had
filed a separate Return for such period based on the pro forma Return, but
excluding any deferred income triggered into income pursuant to Treasury
Regulations Sections 1.1502-13 or 1.1502-14 (or any comparable state provision)
or any excess loss accounts taken into income under Treasury Regulations Section
1.1502-19 (or any comparable state provision) over (ii) the Revised Estimated
Tax Amount; provided, further, in the case of Florida Corporate Income/Franchise
Taxes, the Final Tax Amount shall be computed on a separate return basis and
based upon the separate tax items of the Buyer Group, except that the Florida
apportionment factors and fraction of the entire consolidated group (and not the
apportionment factors and fraction of only the Buyer Group) shall be used. If
the Final Tax Amount is less that the Revised Estimated Tax Amount, then Seller
shall pay Buyer, in cash, an amount equal to the excess of the Revised Estimated
Tax Amount over the Final Tax Amount within thirty (30) days of the finalization
of the pro forma Return.
Any payments due from the Buyer and Company pursuant to this Section
8.4 may, at Buyer's option, be alternatively paid in a manner which ensures that
the payments will be deposited with the United States Treasury (or State or
Local Revenue Department) as actual or estimated tax payments towards the tax
due on any Pre-Closing Consolidated Return.
For purposes of this Section 8.4, (i) the income of the Buyer Group
will be apportioned to the period up to and including the Closing Date by
closing the books of the Buyer Group as of the end of the Closing Date, (ii) if
the Buyer Group or the Seller Group is permitted under any applicable state or
local income tax law to treat the Closing Date as the last day of a taxable
period, Buyer and Seller shall treat (and cause their respective affiliates to
treat) the Closing Date as the last day of a taxable period, and (iii)
notwithstanding anything else herein, the pro forma Returns that reflect the
separate tax items of the Buyer Group delivered under this Section 8.4 shall be
prepared in a manner which treats the costs of the Company's map database
additions as current year expenses in accordance with the method reflected in
the monthly tax accruals supplied by Seller to the Company prior to August 8,
2001 and used in the Company's interim financial statements prior to August 8,
2001 and such treatment shall be considered consistent with the past practices
of the Seller and the Company.
8.5 Indemnification.
(a) After the Closing Date, the Seller Group shall,
jointly and severally, indemnify and hold harmless Buyer and the Company from
and against, and neither Buyer nor Company shall have any liability with respect
to, any Tax liability with respect to (i) any Seller Taxes, except to the extent
that the Buyer Group has failed to reimburse the Seller Group for its allocable
share (as determined pursuant to Section 8.4 hereof) of the Taxes due with
respect to any Seller Returns filed after the Closing Date, (ii) any Taxes
attributable to an election made pursuant to Section 8.7 of this Agreement,
(iii) any liability of the Company for Taxes of any person or entity other than
the Buyer Group under Treasury Regulations Section 1.1502-6 (or any similar
provision of state, local or foreign laws); and (iv) any liability of the
Company for
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Taxes to any direct or indirect parent of the Seller under any tax sharing
agreement. Notwithstanding the foregoing, no indemnification is provided by the
Seller Group under this Section 8.5(a) for any Taxes due in respect of the Buyer
Group or its operations or activities for any period, or portion thereof, ending
on or before July 31, 1998.
(b) After the Closing Date, Buyer and the Company shall,
jointly and severally, indemnify and hold harmless the Seller Group from and
against (i) any Buyer's Taxes (other than any Buyer's Taxes attributable to any
election made pursuant to Section 8.7 of this Agreement) and (ii) any Taxes
payable by the Seller Group with respect to the Buyer Group as a result, in
whole or in part, of any inaccurate or incorrect information provided to Seller
by Daniel J. White or by any other employee of the Company (other than an
employee of the Company who is also an employee of Seller), but only to the
extent attributable to such inaccurate or incomplete information.
8.6 Notification of Proceedings; Control; Refunds.
(a) If the Buyer or Company receives notice, whether
orally or in writing, of any pending or threatened federal, state, local,
municipal or foreign examinations, claims settlements, proposed adjustments,
assessments or reassessments or related matters with respect to Taxes that could
affect Seller or any Affiliate, or if Seller or any Affiliate receives notice of
such matters that could affect Buyer or Company, the party receiving notice
shall promptly notify in writing the potentially affected party. The failure of
any party to give the notice required by this paragraph shall not impair that
party's rights under this Agreement except to the extent that the other parties
demonstrate that they have been damaged thereby.
(b) Notwithstanding anything to the contrary in Section
9.6 of this Agreement, Seller or Buyer, as applicable (the "CONTROLLING PARTY"),
shall have the right, at its own expense, to control any audit or examination by
any taxing authority and/or contest, resolve and defend against any assessment,
notice of deficiency or other adjustment or proposed adjustment relating to or
with respect to any Taxes for which the Controlling Party is required to
indemnify any other party pursuant to Section 8.5; provided that, in the event
that any such adjustment could have an adverse effect on the Tax liability of
the other party (or affect Buyer by having an effect on the Tax liability of
Company) (the "AFFECTED PARTY"), the Controlling Party shall (i) give the
Affected Party written notice of any such adjustment, (ii) permit the Affected
Party to participate in the proceeding to the extent the adjustment may affect
the Tax liability of the Affected Party and (iii) not settle or otherwise
compromise such proceeding without the prior written consent of the Affected
Party, which consent shall not be unreasonably withheld or delayed. Any Tax
refunds or credits against Tax shall be for the benefit of the group which
directly or indirectly (by reimbursement or otherwise) paid the Tax refunded or
which resulted in the credit realized; provided, however, that any refund or
credit resulting from the deduction or amortization of the costs of map database
additions of the Company for 2000 shall be for the benefit of the Seller Group
and for periods prior to 2000 shall be shared fifty percent (50%) to the Seller
Group and fifty percent (50%) to the Buyer Group. Seller, Buyer and the Company
agree to reasonably cooperate in obtaining any refunds or credits for periods or
portions of periods ending prior to the Closing Date and to pay such refunds or
the Tax benefit of the credit to the party that is entitled to the benefit of
such credit or refund; provided, however, that it shall be wholly within
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the discretion of the Seller Group whether to file any amended returns or claims
for refund for any period.
8.7 Section 338(h)(10) Election. At Buyer's option, Seller will
join with Buyer in making an election under Section 338(h)(10) of the Code and
comparable provisions of the laws of any other state or local jurisdiction with
respect to the purchase and sale of the Purchased Shares hereunder (a "SECTION
338(H)(10) ELECTION")). Seller will pay any Tax attributable to the making of a
Section 338(h)(10) Election or any similar election under state or local law.
8.8 Allocation. For purposes of any allocation required by any
election pursuant to Section 8.7, it is agreed that the assets of Company have
the respective fair market values to be determined in good faith by Buyer for
financial accounting purposes. The parties hereto shall file returns for Taxes
and information reports based on such fair market values.
8.9 Allocation of Tax Attributes. Subsequent to the filing of
Seller's consolidated federal income tax return for the taxable period which
includes the Closing Date, if no Section 338(h)(10) Election is made, Seller
shall determine, under Seller's policy, consistently applied, and pursuant to
Treasury Regulations Section 1.1502-79, the portion of any net operating loss or
business and other credit carryovers ("TAX ATTRIBUTES"), not availed of in
Seller's consolidated federal income tax returns, that are available to the
Company when it ceases to be a member of the affiliated group of which Seller is
the common parent. Seller will not elect to retain any Tax Attributes of the
Company pursuant to Treasury Regulations Section 1.1502-20(g).
8.10 Cooperation on Tax Matters. Buyer, Company and Seller shall,
at their own cost and expense, cooperate fully, as and to the extent reasonably
requested by the other parties, in connection with the filing of Tax Returns
pursuant to this Section and any audit, litigation or other proceeding with
respect to Taxes. Buyer, Company, Seller and their respective Affiliates shall
preserve all information, returns, books, record and documents relating to any
liabilities for Taxes with respect to a taxable period until the later of the
expiration of all applicable statutes of limitation and extensions thereof, or
the conclusion of all litigation with respect to Taxes for such period.
8.11 Tax Effect of Payments. Any indemnification payments made
pursuant to this Article 8 shall be treated for tax purposes as an adjustment to
the Purchase Price unless otherwise required by applicable law.
9. SURVIVAL AND INDEMNIFICATION
9.1 Nature and Survival of Representations; Right to
Indemnification Not Affected by Knowledge. The representations and warranties
set forth in Articles 2, 3 and 4 shall survive the Closing hereunder for a
period of eighteen (18) months from the Closing Date, except that the
representations and warranties of Seller set forth in Section 2.7 shall survive
Closing hereunder for a period equal to the applicable statute of limitations
period during which a Governmental Body or other third party may assert a claim
with respect to the subject matter of such section. Neither Buyer's nor Seller's
right to indemnification hereunder based on breaches of another party's
representations, warranties, covenants, and obligations will be adversely
affected by any investigation conducted or any knowledge acquired (or capable of
being acquired) at any time,
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whether before or after the execution and delivery of this Agreement or the
Closing; provided, however, that to the extent Daniel J. White (a) has Knowledge
on or before the date hereof of facts constituting a breach of one or more of
Seller's representations and warranties hereunder, or (b) caused or causes,
directly or indirectly, any breach of any representations, warranties, covenants
or other obligations of Seller hereunder, no Buyer Indemnified Party shall be
entitled to indemnification arising out of the breach by Seller of such
representations, warranties, covenants or other obligations. The waiver of any
condition based on the accuracy of any representation and warranty, or on the
performance of or compliance with any covenant or obligation, will not affect
the right to indemnification hereunder based on such representations,
warranties, covenants, and obligations.
9.2 Indemnification by Seller. Subject to the terms and conditions
of this Article 9, Seller shall indemnify, defend and hold harmless Buyer, its
directors, officers, employees and controlled and controlling persons, and,
after the Closing, the Company (collectively, "BUYER INDEMNIFIED PARTIES") from
and against any loss, liability, claim, obligation, fine, penalty, damage,
deficiency, and any actions, judgments, costs and expenses (including reasonable
expenses, including attorneys' fees, incurred in investigating, preparing for or
defending any litigation, settlement or other proceeding) incident to any of the
foregoing (collectively, "DAMAGES") arising out of or resulting from:
(a) the inaccuracy or breach of any representation or
warranty of Seller contained in this Agreement or the nonfulfillment or breach
of any covenant or agreement on the part of Seller contained in this Agreement
or in any certificate furnished pursuant hereto; or
(b) any claim by any Person for brokerage or finder's
fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such Person with Seller (or any
Person (other than Company or any officer or director thereof in such capacity)
acting on its behalf) in connection with any of the transactions contemplated
hereby.
9.3 Indemnification by Buyer. Subject to the terms and conditions
of this Article 9, Buyer shall indemnify, defend and hold harmless Seller and
its directors, officers, employees and controlled and controlling persons
(collectively, "SELLER INDEMNIFIED PARTIES") from and against any Damages
arising out of or resulting from:
(a) the inaccuracy or breach of any representation or
warranty of Buyer and/or any of the Whites contained in this Agreement or the
nonfulfillment or breach of any covenant or agreement on the part of Buyer
and/or any of the Whites contained in this Agreement or in any certificate
furnished pursuant hereto; or
(b) any claim by any Person for brokerage or finder's
fees or commissions or similar payments based upon any agreement or
understanding alleged to have been made by such Person with Buyer or any White
(or any Person acting on Buyer's or any White's behalf) in connection with any
of the transactions contemplated hereby.
9.4 Limitations on Indemnification.
(a) Limitations on Buyer's Indemnification Obligations.
The Seller Indemnified Parties shall only be entitled to indemnification from
Buyer with respect to any
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Damages incurred by Seller Indemnified Parties if the aggregate Damages of all
Seller Indemnified Parties (with respect to all claims brought for
indemnification hereunder) exceeds $100,000 (the "THRESHOLD AMOUNT"); thereafter
Buyer shall indemnify Seller Indemnified Parties for all Damages (including
those used in calculating the Threshold Amount) incurred by Seller Indemnified
Parties up to, but not exceeding, the aggregate sum of Two Million Dollars
($2,000,000), plus any amounts payable by Buyer pursuant to Section 8.5(b). If
Buyer receives written notice from a Seller Indemnified Party of a Claim prior
to the expiration of the survival period, Buyer's obligation to indemnify Seller
Indemnified Parties with respect to such claim shall survive such expiration and
be enforceable as otherwise provided in this Article 9. Any such written notice,
to be effective, must specify with reasonable detail the nature and, to the
extent determinable at the time of notice, the amount of the indemnity claim.
(b) Limitations on Seller's Indemnification Obligations.
The Buyer Indemnified Parties shall only be entitled to indemnification from
Seller with respect to any Damages incurred by Buyer Indemnified Parties if the
aggregate Damages of all Buyer Indemnified Parties (with respect to all claims
brought for indemnification hereunder) exceeds the Threshold Amount; thereafter,
Seller shall indemnify Buyer Indemnified Parties for all Damages (including
those used in calculating the Threshold Amount) incurred by Buyer Indemnified
Parties up to, but not exceeding, the aggregate sum of Two Million Dollars
($2,000,000), plus any amounts payable by Seller under Section 8.5(a). If Seller
receives written notice from a Buyer Indemnified Party of a Claim prior to the
expiration of the survival period, Seller's obligation to indemnify Buyer
Indemnified Parties with respect to such claim shall survive such expiration and
be enforceable as otherwise provided in this Article 9. Any such written notice,
to be effective, must specify with reasonable detail the nature and, to the
extent determinable at the time of notice, the amount of the indemnity claim.
9.5 Exclusive Remedy. Following the Closing, the indemnification
provided for in this Article 9 shall be the sole and exclusive remedy of the
parties and their respective officers, directors, employees, controlled and
controlling persons, successors and assigns for any breach of or inaccuracy in
any representation or warranty or any breach, nonfulfillment or default in the
performance of any of the covenants or agreements contained in this Agreement
(but not any such covenants or agreements to the extent they are by their terms
to be performed after the Closing Date). The parties shall not be entitled to a
rescission of this Agreement or to any further indemnification rights or claims
of any nature whatsoever in respect thereof (whether by contract, common law,
statute, law, regulation or otherwise, including, without limitation, under the
Racketeer Influence and Corrupt Organizations Act of 1970, as amended), all of
which the parties hereby waive; PROVIDED, HOWEVER, nothing herein is intended to
waive any claims for fraud. Notwithstanding anything to the contrary contained
herein, none of the Whites shall have any liability to, or obligation to
indemnify, any Seller Indemnified Party under this Agreement other than as
provided in Section 10.3(b); provided, however, nothing herein is intended to
waive any claims against any of the Whites for fraud, pursuant to any other
agreement or for actions taken by Daniel J. White in his capacity as an
executive officer or director of the Company.
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9.6 Procedure for Indemnification -- Third Party Claims.
(a) Promptly after receipt by an Indemnified Party under
Section 9.2 or 9.3 of a notice of the commencement of any Proceeding against it,
such Indemnified Party will, if a claim for Damages ("CLAIM") is to be made
against any Indemnifying Party under such section, give notice to the
Indemnifying Party of the commencement of such Proceeding, but the failure to
notify the Indemnifying Party will not relieve the Indemnifying Party of any
liability that it may have to any Indemnified Party, except to the extent that
the Indemnifying Party is prejudiced by the Indemnifying Party's failure to give
such notice.
(b) If any proceeding referred to in Section 9.6(a) is
brought against an Indemnified Party and it gives notice to the Indemnifying
Party of the commencement of such Proceeding, the Indemnifying Party will be
entitled to participate in such Proceeding and, to the extent that it wishes
(unless (i) the Indemnifying Party is also a party to such Proceeding and the
Indemnified Party reasonably determines in good faith that joint representation
would be inappropriate, or (ii) the Indemnifying Party fails to provide
reasonable assurance to the Indemnified Party of its financial capacity to
defend such Proceeding and provide indemnification with respect to such
Proceeding), to assume the defense of such Proceeding with counsel reasonably
satisfactory to the Indemnified Party and, after notice from the Indemnifying
Party to the Indemnified Party of its election to assume the defense of such
Proceeding, the Indemnifying Party will not, as long as it diligently conducts
such defense, be liable to the Indemnified Party under this Section 9.6 for any
fees of other counsel or any other expenses with respect to the defense of such
Proceeding, in each case subsequently incurred by the Indemnified Party in
connection with the defense of such Proceeding. If the Indemnifying Party
assumes the defense of a Proceeding: (i) no compromise or settlement of such
Claims shall be effected by the Indemnifying Party without the Indemnified
Party's consent, which consent shall not be unreasonably withheld; and (ii) the
Indemnified Party will have no liability with respect to any compromise or
settlement of such Claims effected without its consent. If notice is given to an
Indemnifying Party of the commencement of any Proceeding and the Indemnifying
Party does not, within fifteen (15) days after the Indemnified Party's notice is
given, give notice to the Indemnified Party of its election to assume the
defense of such Proceeding, the Indemnifying Party will be bound by any
determination made in such Proceeding or any compromise or settlement effected
by the Indemnified Party. So long as the Indemnifying Party is defending any
such Proceeding actively and in good faith, the Indemnified Party shall not
settle or compromise any Claims made therein. The Indemnified Party shall make
available to the Indemnifying Party and its Representatives all records and
other materials required by them and in the possession or under the control of
the Indemnified Party, for the use of the Indemnifying Party and its
Representatives in defending any such Proceeding, and shall in all other
respects give reasonable cooperation in such defense.
(c) Notwithstanding the foregoing, if an Indemnified
Party determines in good faith that there is a reasonable probability that a
Proceeding may materially and adversely affect it other than as a result of
monetary damages for which it would be entitled to indemnification under this
Agreement, the Indemnified Party may, by notice to the Indemnifying Party,
assume the exclusive right to defend, compromise, or settle such Proceeding, but
the Indemnifying Party will not be bound by any determination of a Proceeding so
defended or any compromise or settlement effected without its consent (which may
not be unreasonably withheld).
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9.7 Procedure for Indemnification -- Other Claims. A Claim for
indemnification for any matter not involving a third-party Claim may be asserted
by written notice to the party from whom indemnification is sought.
10. TERMINATION OF AGREEMENT
10.1 Termination. This Agreement and the transactions contemplated
hereunder may be terminated and abandoned at any time prior to the Closing
(unless otherwise specified below), whether before or after any required
approval of Seller's shareholders has been obtained:
(a) by mutual consent in writing of Buyer and Seller;
(b) by either Buyer or Seller through the action of its
Board of Directors if any Governmental Body shall have issued an order, decree
or ruling, or taken any other action (which order, decree, ruling or other
action the parties hereto shall use their respective best efforts to lift,
remove, repeal or overturn), in each case permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement, and such
order, decree, ruling or other action shall have become final and
non-appealable;
(c) by either Buyer or Seller through the action of its
Board of Directors if, at a duly held shareholders' meeting of Seller (or any
adjournment thereof) at which the approval of this Agreement and the
transactions contemplated hereby is voted upon, the requisite shareholder
adoption and approval shall not have been obtained;
(d) by Seller through the action of its Board of
Directors:
(i) upon five (5) days' prior notice to Buyer if
Seller's Board of Directors, after consulting with outside
counsel, determines in good faith that a failure to terminate
this Agreement could reasonably be expected to result in a
breach of its fiduciary duties to shareholders imposed by law
by reason of an unsolicited Acquisition Proposal in connection
with which the Seller has complied in all material respects
with the provisions of Section 7.3 of this Agreement; provided
that prior to the expiration of the five-day notice period for
termination, the Seller shall, and shall have caused its
respective financial and legal advisors to, use reasonable
efforts to negotiate with Buyer and White to make such
adjustments to the terms and conditions of this Agreement as
would enable Seller to proceed with the transactions
contemplated herein on such adjusted terms;
(ii) if, prior to the consummation of the
transactions contemplated by this Agreement, Buyer breaches or
fails in any material respect to perform or comply with any of
its material covenants and agreements contained herein, or any
representation or warranty of Buyer set forth in this
Agreement shall not be true and correct in all material
respects; provided, however, that if any such breach or
inaccuracy is cured prior to termination, Seller may not
terminate this Agreement pursuant to this Section 10.1(d)(ii);
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(iii) if, prior to the consummation of the
transactions contemplated by this Agreement, any of the Whites
breaches or fails in any material respect to perform or comply
with any of his or its material covenants and agreements
contained herein, or any representation or warranty of any of
the Whites set forth in this Agreement shall not be true and
correct in all material respects; provided, however, that if
any such breach or inaccuracy is cured prior to termination,
Seller may not terminate this Agreement pursuant to this
Section 10.1(d)(iii); or
(iv) if any of the conditions contained in
Article 6 have not been fulfilled in all respects in each case
at or prior to the Closing Date, provided that neither Seller
nor the Company is then in breach in any material respect of
any of its representations or warranties or material covenants
or agreements under this Agreement.
(e) by Buyer through the action of its Board of
Directors;
(i) if, prior to the consummation of the
transactions contemplated by this Agreement, the Board of
Directors of Seller (A) withdraws or adversely modifies its
adoption of this Agreement or its recommendation that the
shareholders of Seller approve this Agreement, (B) shall have
adopted and approved an agreement relating to an Acquisition
Proposal other than pursuant to this Agreement, or (C) shall
have submitted an Acquisition Proposal other than pursuant to
this Agreement to a vote of the shareholders of Seller and
either recommended that the shareholders of Seller approve
such Acquisition Proposal or taken no position with respect
thereto;
(ii) if, prior to the consummation of the
transactions contemplated by this Agreement, Seller breaches
or fails in any material respect to perform or comply with any
of its material covenants and agreements contained herein, or
any representation or warranty of Seller set forth in this
Agreement shall not be true and correct in any material
respect; provided that Daniel J. White did not (a) have
Knowledge on or before the date hereof of facts constituting a
breach of any such representation or warranty or (b) cause,
directly or indirectly, such breach of any representation,
warranty, covenant or agreement of Seller; and provided,
further, that if any such breach or inaccuracy is cured prior
to termination, Buyer may not terminate this Agreement
pursuant to this Section 10.1(e)(ii); or
(iii) if any of the conditions contained in
Article 5 have not been fulfilled in all respects in each case
at or prior to the Closing Date, provided that neither Buyer
nor any of the Whites is then in breach in any material
respect of any of its, his or their representations or
warranties or material covenants or agreements under this
Agreement.
10.2 Effects of Termination. In the event of the termination of
this Agreement as provided in Section 10.1, written notice thereof shall
forthwith be given to the other parties specifying the provision hereof pursuant
to which such termination is made, and this Agreement
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shall forthwith become null and void and of no effect (except as otherwise
expressly provided herein), and there shall be no liability on the part of any
party hereto (or any of their respective directors, officers, employees, agents,
legal and financial advisers or other Representatives) except (a) for fraud, and
(b) as set forth in Section 10.3 hereof.
10.3 Termination Fees and Effects.
(a) If Seller shall terminate this Agreement pursuant to
Section 10.1(d)(i), or if Buyer shall terminate this Agreement pursuant to
Section 10.1(e)(i) hereof, and neither Buyer nor any of the Whites is in breach
in any material respect of its representations, warranties or material covenants
hereunder, then Seller shall pay promptly to Buyer (but in no event later than
three (3) business days after the date of termination of this Agreement) a
termination fee (as liquidated damages) of Five Hundred Thousand Dollars
($500,000) by wire transfer of same day funds to an account previously
designated in writing by Buyer to Seller.
(b) If (i) Seller shall terminate this Agreement pursuant
to Section 10.1(d)(ii), Section 10.1(d)(iii), or Section 10.1(d)(iv) (other than
as a result of a failure to satisfy the condition set forth in Section 6.2 or
Section 6.5 hereof), (ii) Buyer or any White terminates this Agreement other
than pursuant to Sections 10.1(a), 10.1(b), 10.1(c) or 10.1(e) above or
otherwise in violation of this Agreement fails or refuses to close the
transactions contemplated by this Agreement as provided in Section 1.3 hereof,
or (iii) Daniel J. White has failed to use his reasonable best efforts to
consummate the transactions contemplated hereby and as a result of such failure
either the transactions contemplated by this Agreement shall not have been
consummated at such time or this Agreement otherwise shall have been terminated,
and in any such case Seller is not in breach in any material respect of its
representations, warranties or material covenants hereunder, then, in addition
to any remedies the Seller may be entitled to at law or in equity against Buyer,
the following shall occur: (A) the Whites, jointly and severally, shall pay
promptly to Seller (but in no event later than three (3) business days after the
date of termination of this Agreement) a termination fee (as liquidated damages)
of Four Hundred Thousand Dollars ($400,000) by wire transfer of same day funds
to an account previously designated in writing by Seller to Daniel J. White, and
(B) the Corporate Governance Agreement, dated July 31, 1998, by and among the
Company, Daniel J. White and Seller (the "CORPORATE GOVERNANCE AGREEMENT") shall
be automatically terminated and of no further force and effect, and Daniel J.
White shall execute and deliver to Seller and Company any releases reasonably
requested by Seller relating thereto.
(c) If (i) either Buyer or Seller terminates this
Agreement pursuant to Section 10.1(c), or (ii) Seller terminates this Agreement
other than pursuant to Sections 10.1(a), 10.1(b) or 10.1(d) above or otherwise
in violation of this Agreement fails or refuses to close the transactions
contemplated by this Agreement as provided in Section 1.3 hereof, or (iii) Buyer
terminates this Agreement pursuant to Section 10.1(e)(ii) or Section
10.1(e)(iii) (other than as a result of the failure to satisfy the condition set
forth in Section 5.5 hereof), and in any such event neither Buyer nor any of the
Whites is in breach in any material respect of its representations, warranties
or material covenants hereunder, then Seller shall pay promptly to Buyer (but in
no event later than three (3) business days after the date of termination of
this Agreement) a termination fee (as liquidated damages) of Four Hundred
Thousand Dollars ($400,000) by wire transfer of same day funds to an account
previously designated in writing by Buyer to Seller.
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(d) The parties acknowledge that the agreements contained
in this Section 10.3 are an integral part of the transactions contemplated in
this Agreement, and that, without these agreements, none of the parties would
enter into this Agreement; accordingly if any party fails to pay promptly any
amount due pursuant to this Section 10.3, or otherwise fails to comply with its
obligations pursuant to this Section 10.3, and, in order to obtain such payment
or compliance, any other party commences a suit which results in a judgment
against such breaching party, the breaching party shall pay to the other party
its costs and expenses (including reasonable attorneys' fees) in connection with
such suit, together with interest on the amount of the applicable fee at the
annual rate of interest equal to 15% per annum.
11. MISCELLANEOUS
11.1 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be given (a) via
confirmed facsimile transmission (based upon the confirmation received by the
sending facsimile machine) to the facsimile number of the appropriate party set
forth below (with a copy of such notice forwarded by nationally recognized
overnight courier addressed as set forth below), which notice shall be deemed
effective upon the senders' receipt of such confirmation and such forwarding to
a nationally recognized overnight courier, (b) by forwarding such notice for
delivery by nationally recognized overnight courier addressed in the manner set
forth below, which notice is effective on the business day following such
forwarding, or (c) by actual delivery to the address set forth below), which
notice will be effective upon such delivery. All notices shall be addressed to
the other party at the following address (or at such other address as shall be
given in writing by any party to the other in accordance with these provisions):
(a) If to Buyer or any of the Whites, to:
Geotrac
3900 Laylin Road
Norwalk, Ohio 44857
Attention: Daniel J. White
Fax No.: (419) 668-9266
With a required copy to:
Benesch Friedlander Coplan & Aronoff LLP
2300 BP Tower 200 Public Square
Cleveland, OH 44114-2378
Attn: Ira Kaplan, Esq.
Fax No.: (216) 363-4588
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(b) If to Seller, to:
Insurance Management Solutions Group, Inc.
360 Central Avenue
St. Petersburg, FL 33701
Attention: David M. Howard, President and CEO
Fax No.: (727) 803-2099
With a required copy to:
Foley & Lardner
330 North Wabash Avenue
Suite 3300
Chicago, IL 60611
Attention: Todd B. Pfister, Esq.
Fax No.: (312) 755-1925
11.2 Assignability. Neither this Agreement nor any of the rights or
obligations of the parties hereunder may be assigned, by operation of law or
otherwise, without the prior written consent of all of the parties hereto.
Notwithstanding the foregoing sentence, Seller may, without the prior consent of
any other party hereto, assign its rights and obligations hereunder pursuant to
any transaction not constituting an Acquisition Proposal as defined in Section
7.3 of this Agreement; provided, however, that if Seller is the surviving party
in any such transaction, it shall not be discharged from its obligations
hereunder.
11.3 Governing Law and Venue; Waiver of Jury Trial. THIS AGREEMENT
SHALL BE DEEMED TO BE MADE AND IN ALL RESPECTS SHALL BE INTERPRETED, GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF FLORIDA WITHOUT REGARD
TO ITS CONFLICTS OF LAWS PROVISIONS. The parties hereby irrevocably submit to
the jurisdiction of the Federal courts of the United States of America located
in the State of Florida or in the State of Ohio or, if unavailable to the
parties, the courts of the State of Florida or of the State of Ohio solely in
respect of the interpretation and enforcement of the provisions of this
Agreement and of the documents referred to in this Agreement, and in respect of
the transactions contemplated hereby, and hereby waive, and agree not to assert,
as a defense in any action, suit or Proceeding for the interpretation or
enforcement hereof or of any such documents, that it is not subject thereto or
that such action, suit or Proceeding may not be brought or is not maintainable
in said courts or that the venue thereof may not be appropriate or that this
Agreement or any such document may not be enforced in or by such courts, and the
parties hereto irrevocably agree that all claims with respect to such action or
Proceeding shall be heard and determined in such a State of Florida, State of
Ohio or Federal court. The parties hereby consent to and grant any such court
jurisdiction over the person of such parties and over the subject matter of such
dispute and agree that mailing of process or other papers in connection with any
such action or Proceeding in such manner as may be permitted by law shall be
valid and sufficient service thereof.
11.4 Headings. The headings preceding the text of the sections and
subsections hereof are inserted solely for convenience of reference, and shall
not constitute a part of this Agreement,
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nor shall they affect its meaning, construction or effect. All words used in
this Agreement will be construed to be of such gender or number as the context
may require.
11.5 Amendment and Waiver. The parties may by mutual agreement
amend this Agreement in any respect, and any party, as to such party, may (a)
extend the time for the performance of any of the obligations of any other
party, and (b) waive (i) any inaccuracies in representations by any other party,
(ii) compliance by any other party with any of the agreements contained herein
and performance of any obligations by such other party, and (iii) the
fulfillment of any condition that is precedent to the performance by such party
of any of its obligations under this Agreement; provided, however, that after
the approval and adoption of this Agreement by the shareholders of Seller, no
amendment may be made which would (x) change the amount or type of consideration
to be received by Seller pursuant to Section 1.2 or (y) change any other term or
condition of the Agreement if such change would materially and adversely affect
Seller or the holders of shares of Seller Common Stock. To be effective, any
such amendment or waiver must be in writing and be signed by the party against
whom enforcement of the same is sought.
11.6 Entire Agreement; NO OTHER REPRESENTATIONS. This Agreement
(including any exhibits and schedules hereto), the Option, the Seller Disclosure
Letter and the Confidentiality Agreement, dated April 14, 2000, by and among
Seller, Buyer, Daniel J. White and the Company (the "CONFIDENTIALITY
AGREEMENT"), constitute the entire agreement, and supersede all other prior
agreements, understandings, representations and warranties both written and
oral, among the parties, with respect to the subject matter hereof. EACH PARTY
HERETO AGREES THAT, EXCEPT FOR THE REPRESENTATIONS AND WARRANTIES CONTAINED IN
THIS AGREEMENT, NONE OF SELLER, COMPANY, BUYER OR THE WHITES MAKES ANY OTHER
REPRESENTATIONS OR WARRANTIES, AND EACH HEREBY DISCLAIMS ANY OTHER
REPRESENTATIONS OR WARRANTIES MADE BY HIMSELF, ITSELF OR ANY OF THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, FINANCIAL AND LEGAL ADVISERS OR OTHER
REPRESENTATIVES, WITH RESPECT TO THE EXECUTION AND DELIVERY OF THIS AGREEMENT OR
THE TRANSACTIONS CONTEMPLATED HEREBY, NOTWITHSTANDING THE DELIVERY OR DISCLOSURE
TO THE OTHER OR THE OTHER'S REPRESENTATIVES OF ANY DOCUMENTATION OR OTHER
INFORMATION WITH RESPECT TO ANY ONE OR MORE OF THE FOREGOING.
11.7 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall, when taken together, constitute one instrument.
11.8 No Third-Party Beneficiary Rights. Except as provided in
Section 8.4, Article 8 or Section 10.3(c) hereof, this Agreement is not intended
to and shall not be construed to give any Person other than the parties
signatory hereto any rights (including, without limitation, any third party
beneficiary rights) or remedies with respect to or in connection with any
agreement or provision contained herein or contemplated hereby.
11.9 Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability or the
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other provisions hereof. If any provision of this Agreement, or the application
thereof to any Person or any circumstance, is invalid or unenforceable, (a) a
suitable and equitable provision shall be substituted therefor in order to carry
out, so far as may be valid and enforceable, the intent and purpose of such
invalid or unenforceable provision and (b) the remainder of this Agreement and
the application of such provision to other Persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of such provision, or the
application thereof, in any other jurisdiction.
11.10 Definitions.
(a) "AFFILIATE" means, with respect to any Person, any
other Person directly or indirectly controlling, controlled by or under common
control with the first Person. For the purposes of this definition, "CONTROL,"
when used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of such Person, whether through ownership of voting securities, by
contract or otherwise, and the terms "CONTROLLING" and "CONTROLLED" have
meanings correlative to the foregoing.
(b) "BUSINESS" means the business of the Company as
specifically described on SCHEDULE 11.10(B).
(c) "BUYER MATERIAL ADVERSE EFFECT" means a material
adverse effect on the business, properties, financial condition or results of
operations of Buyer considered as a whole; provided, however, that any such
effect resulting from any change (i) in Law or GAAP, (ii) in economic or
business conditions generally, or (iii) resulting from the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby shall not be considered when determining if a Buyer Material Adverse
Effect has occurred.
(d) "CODE" means the U.S. Internal Revenue Code of 1986,
as amended, and the rules and regulations promulgated thereunder.
(e) "COMPANY MATERIAL ADVERSE EFFECT" means a material
adverse effect on the business, properties, financial condition or results of
operations of Company considered as a whole; provided, however, that any such
effect resulting from any change (i) in Law or GAAP (ii) in economic or business
conditions generally, or (iii) resulting from the execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby shall not
be considered when determining if a Company Material Adverse Effect has
occurred.
(f) "CONTRACT" means any oral or written lease, pledge,
mortgage, instrument, note, license, commitment, agreement or other undertaking
to which any Person is or by which any of its assets are bound.
(g) "EMPLOYEE BENEFIT PLAN" means any "employee benefit
plan" as defined in Section 3(3) of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), any fringe benefit plan, any equity compensation
plan or arrangement, any plan, policy or arrangement for the provision of
executive compensation, incentive benefits, bonus or severance benefits,
collective bargaining agreements, deferred compensation agreements,
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cafeteria plan or split-dollar insurance arrangement or any other plan, policy
or arrangement for the provision of employee benefits.
(h) "EMPLOYEES" means all individuals engaged in the
conduct of the Business with whom Company maintains, on the Closing Date, a
current active employer-employee relationship, including any such individuals on
layoff, short-term disability or leave of absence, whether paid or unpaid. The
term "FORMER EMPLOYEE" means any individual as to whom an employer-employee
relationship has existed in the past with Company, but does not exist on the
Closing Date, including any such individual who remains entitled to benefits
under any benefit plan of the Company.
(i) "ENCUMBRANCE" means any charge, claim, marital or
community property interest, condition, equitable interest, lien, option,
pledge, security interest, right of first refusal, or restriction of any kind or
nature, including any restriction on use, voting, transfer, receipt of income,
or exercise of any other attribute of ownership.
(j) "GAAP" means U.S. generally accepted accounting
principles, consistently applied.
(k) "GOVERNMENTAL BODY" means any: (i) nation, state,
county, city, town, village, district or other jurisdiction of any nature; (ii)
federal, state, local, municipal, foreign, or other government; (iii)
governmental or quasi-governmental authority of any nature (including any
governmental agency, branch, department, official, or entity and any court or
other tribunal); (iv) multi-national organization or body; or (v) body
exercising, or entitled to exercise, any administrative, executive, judicial,
legislative, police, regulatory, or taxing authority or power of any nature.
(l) "IRS" means the U.S. Internal Revenue Service.
(m) "KNOWLEDGE" means, with respect to an individual,
that (i) such individual is actually aware of a particular fact or other matter
or (ii) a prudent individual could be expected to discover or otherwise become
aware of such fact or other matter in the course of conducting a reasonably
comprehensive investigation concerning the existence of such fact or other
matter. A Person (other than an individual) will be deemed to have "KNOWLEDGE"
of a particular fact or other matter if any individual who is serving as a
director or executive officer of such Person (or in any similar capacity) has
Knowledge of such fact or other matter. "BUYER'S KNOWLEDGE" or "KNOWLEDGE OF
BUYER" shall include (without limitation) the Knowledge of Daniel J. White.
Notwithstanding the foregoing, "SELLER'S KNOWLEDGE" or "KNOWLEDGE OF SELLER"
means the actual awareness of a particular fact or other matter by David M.
Howard, the President and Chief Executive Officer of Seller.
(n) "LAW" means any federal, state, local or foreign law,
statute, ordinance, rule, order or regulation of any Governmental Body.
(o) "LIEN" means, with respect to any property or asset,
any mortgage, lien, pledge, charge, security interest, Encumbrance or other
adverse claim of any kind in respect of such property or asset.
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(p) "ORDINARY COURSE OF BUSINESS" means, with respect to
Company, an action which is: (i) consistent with the past practices of Company
and is taken in the ordinary course of the normal day-to-day operations of
Company; or (ii) similar in nature and magnitude to actions customarily taken in
the ordinary course of the normal day-to-day operations of other Persons that
are in the same or a similar line of business as Company.
(q) "PERSON" means any individual, corporation (including
any non-profit corporation), general or limited partnership, limited liability
company, joint venture, estate, trust, association, organization, labor union,
or other entity or Governmental Body.
(r) "PROCEEDING" means any action, suit, arbitration,
proceeding, investigation or inquiry, whether civil, criminal or administrative.
(s) "RELATED PARTY" means Seller, or any officer,
director or other Affiliate of Seller, but specifically excluding Company, its
employees, Buyer, Daniel J. White and any Affiliates of Buyer or Daniel J.
White.
(t) "SECURITIES ACT" means the Securities Act of 1933 or
any successor law, and any regulations and rules issued pursuant to that Act or
any successor law.
(u) "SELLER MATERIAL ADVERSE EFFECT" means a material
adverse effect on the business, properties, financial condition or results of
operations of Seller considered as a whole; provided, however, that any such
effect resulting from any change (i) in Law or GAAP, (ii) in economic or
business conditions generally, or (iii) resulting from the execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby shall not be considered when determining if a Seller Material Adverse
Effect has occurred.
(v) "WHITE MATERIAL ADVERSE EFFECT" means a material
adverse effect on the financial condition of the Whites considered as a whole;
provided, however, that any such effect resulting from any change (i) in Law or
GAAP, (ii) in economic or business conditions generally, or (iii) resulting from
the execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby shall not be considered when determining if a
White Material Adverse Effect has occurred.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.
SELLER:
INSURANCE MANAGEMENT SOLUTIONS
GROUP, INC.
By: /s/ David M. Howard
-----------------------------------
Name: David M. Howard
Title: President/CEO
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BUYER:
GEOTRAC HOLDINGS, INC.
By: /s/ Daniel J. White
-----------------------------------
Name: Daniel J. White
Title:
--------------------------------
WHITES:
/s/ Daniel J. White
--------------------------------------
Daniel J. White, Individually
DANIEL J. WHITE TRUST
(under Declaration of Trust dated
May 7, 1998)
By: /s/ Daniel J. White
-----------------------------------
Daniel J. White, Sole Trustee
SANDRA A. WHITE TRUST
(under Declaration of Trust dated
May 7, 1998)
By: /s/ Sandra A. White
-----------------------------------
Sandra A. White, Sole Trustee
COMPANY:
GEOTRAC OF AMERICA, INC.
By: /s/ Daniel J. White
-----------------------------------
Name: Daniel J. White
Title:
--------------------------------
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Bankers Insurance Group, Inc. hereby executes this Agreement on the day
and year first above written solely with respect to the obligations set forth in
Section 7.2 hereof.
BANKERS INSURANCE GROUP, INC.
By: /s/ Robert M. Menke
-----------------------------------
Name: Robert M. Menke
Title: Chairman
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EXHIBIT A
FLOOD ZONE DETERMINATION SERVICE AGREEMENT
THIS AGREEMENT ("Agreement") is entered into effective __________, 200__, by and
between Geotrac of America, Inc. ("Company") and Insurance Management Solutions,
Inc. ("Client").
WHEREAS, Client desires a Federal Emergency Management Agency (FEMA) National
Flood Insurance Program (NFIP) Flood Zone Determination program to determine for
insurance purposes whether properties are or are not in a FEMA defined Special
Flood Hazard Area ("Flood Area"), and collectively, with the purposes set forth
in Section H (the "Authorized Uses"), and other 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. FLOOD ZONE DETERMINATIONS PURCHASE REQUIREMENTS
1. Purchase Requirements. Subject to the Level of Service set forth in
this Agreement, during the term of this Agreement, Client will purchase
from Company, and Company shall sell to Client, Client's requirements
for Flood Zone Determination Information (as defined below), on the
terms and for the prices provided herein and on the attached fee
schedule.
2. Level of Service. During the term of this Agreement, the Company shall
be obligated to provide Client with a level of service equal to that
provided by the Company to Client during the last two years (the
"Required Service Level"). If at any time during the term of this
Agreement Company fails to provide the Required Service Level, Company
shall have thirty (30) days after its receipt of written notice from
Client of such failure to cure such failure. If Company does not cure
such failure within that thirty (30) day period, Client may acquire
Flood Zone Determination Information that the Company cannot provide
from another vendor of its choice. As Client's sole and exclusive
remedy for Company's failure to provide the Required Service Level,
Company shall pay Client the amount by which the "Mitigation Payment
Amount" exceeds the amount that Client would have paid the Company for
service in excess of what the Company has supplied up to the Required
Service Level. For purposes of this Agreement "Mitigation Payment
Amount" shall mean an amount equal to the lesser of (a) the fair market
value of the services obtained by Client from another vendor for
services in excess of what the Company has supplied up to the Required
Service Level, and (b) the amount actually paid by Client to such other
vendor in excess of what the Company has supplied up to the Required
Service Level.
B. SUBMISSION OF VALID STREET ADDRESSES; PROVISION OF SERVICES
Client will submit Valid Street Addresses (as defined below) to Company for the
purpose of making Flood Zone Determinations commencing as of the date hereof.
Company will provide to Client on each Valid Street Address the following
information (such information being referred to herein as "Flood Zone
Determination 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 FEMA Flood Zone
Code of the property referred to by the Client supplied Valid Street
Address.
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 or in those cases where no FEMA
map is published, a Company derived community identifying number.
C. TRANSMISSIONS OF INFORMATION
Client will transmit requests to Company electronically one or more times a day.
It is Client's obligation to supply, at a minimum: application identification
number; property location-State, County, City/Place, full street address, and 5
digit zip code. Client shall also provide a Valid Street Address. A "Valid
Street Address" is defined as a street address found in the quarterly update of
the USPS Zip +4 data base, and does not include P.O. Box or Rural Route and box.
In those instances where Client does not supply a Valid Street Address, Company
will cancel the order, and electronically inform Client's ordering location of
the invalid address. It is Client's obligation to supply a new order to Company,
as soon as possible, with a Valid Street Address.
Company will transmit key data elements back to Client electronically. Each
party agrees to work in good faith to meet the data and turn around needs of the
other.
D. BILLING
Client will fully cooperate with Company's billing practices and Client shall
not act in any manner to circumvent Company's ability to charge for services.
Except as otherwise agreed in writing between parties, Client is solely
responsible for the billing of and collection from all its accounts, customers
or end users, and billing adjustments it grants its customers or end users.
E. TERM
This Agreement shall have an initial term of ten (10) years, commencing on the
date of this Agreement. The term shall be automatically renewed thereafter for
successive one (1) year
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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.
F. 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
thirty (30) days the other party may terminate this contract with ten (10) days
written notice to the non-performing company. In addition, and notwithstanding
any other provision of this Agreement, in the event of any (A) merger,
consolidation, share exchange or similar transaction to which either Client
and/or its parent, Insurance Management Solutions Group, Inc. ("IMSG"), is a
party, (B) sale, lease or other disposition, by merger, consolidation, share
exchange or otherwise, of all or substantially all of the assets of Client
and/or IMSG or (C) other transaction in which any person (or "group" (as such
term is defined under the Securities Exchange Act of 1934) of persons) shall
acquire beneficial ownership (as such term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of a controlling (i.e., 50% or greater) equity
interest in the Client and/or IMSG, then, for a period of sixty (60) days
following the date of such merger, consolidation, share exchange, sale,
acquisition or other transaction, the Client or the acquiring person, as the
case may be, shall have the right, but not the obligation, to terminate this
Agreement by delivering written notice to the Company and such termination, if
any, shall be effective thirty (30) days following delivery of such notice of
termination to the Company; provided, however, that if such acquiring person is,
at the time such transaction is consummated, a material customer of Company,
then this Agreement shall be automatically terminated as of the thirtieth day
following consummation of such merger, consolidation, share exchange, sale,
acquisition or other similar transaction.
G. CONFIDENTIAL INFORMATION
Company acknowledges that it may gain access to certain information regarding
customers 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
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Client to perform its obligations under this Agreement or for auditing or
regulatory purposes without the specific authorization of Company.
H. USE OF INFORMATION
Information supplied by Company to Client is to be used by Client for the
Authorized Uses within the context of Client's NFIP flood insurance business and
not for lender compliance with NFIP (the "Authorized Purpose") and for no other
purposes.
Company is providing Client with the services and information hereunder for use
in connection with Client's business as presently conducted. Client may not,
without Company's prior written consent, sell or otherwise distribute services
or information provided by Company under this Agreement, except in a manner and
at a price consistent with Client's present distribution of services or
information provided by Company prior to the date of this Agreement. It is
expressly agreed that the Information supplied by Company hereunder may not be
resold to any customer or prospective customer of the Company.
Company's principal obligation under this Agreement is to provide accurate Flood
Zone Determination Information for the Authorized Uses. Except for the remedy
specifically set forth in Section A-2 with respect to any Company failure to
provide the Required Service Level, Company will only be liable under this
Agreement for damages caused by inaccurate Flood Zone Determination Information
provided by Company and used by Client only for the Authorized Uses.
I. 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 will strictly maintain, and
will cause its officers, directors, employees, affiliates, agents, and
representatives to, strictly maintain the confidentiality of the Systems.
J. ARBITRATION
Any controversy or claim arising out of or related to this Agreement or the
breach thereof, shall be settled 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.
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K. 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.
L. 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.
M. 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.
N. 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 Road
Norwalk, OH 44857
Attention: Daniel J. White
If to Client: Insurance Management Solutions, Inc.
360 Central Avenue
St. Petersburg, FL 33701
Attention: David M. Howard
O. WAIVER/AMENDMENTS
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. This Agreement may not be modified or
amended except by an agreement in writing signed by both Client and Company.
P. ATTORNEY'S FEES
If 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
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be paid, to the extent permitted by law, all reasonable costs and attorney's
fees by the other party.
Q. TIME IS OF THE ESSENCE
Time is of the essence in performance under this Agreement.
R. GOVERNING LAW
This Agreement is made pursuant to and shall be construed and governed by the
laws of the State of Ohio.
S. HEADINGS/COUNTERPARTS
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. This Agreement may be executed in one or
more counterparts, each of which will be deemed to be an original but all of
which together constitutes one and the same instrument.
T. ASSIGNMENT
The Company may not assign any of its rights or obligations under this Agreement
without the prior written consent of Client. Client may assign its rights and
obligations under this Agreement to any acquiring party (other than a material
customer of the Company) in connection with any (A) merger, consolidation, share
exchange or similar transaction to which either Client and/or IMSG is a party,
(B) sale, lease or other disposition, by merger, consolidation, share exchange
or otherwise, of all or substantially all of the assets of Client and/or IMSG or
(C) other transaction in which any person (or group (as such term is defined
under the Securities Exchange Act of 1934 of persons) shall acquire beneficial
ownership (as such term is defined in Rule 13d-3 under the Securities Exchange
Acts of 1934) of a controlling (i.e., 50% or greater) equity interest in Client
and/or IMSG. Notwithstanding anything to the contrary contained herein, any
assignment of this Agreement shall not, without the Company's prior written
consent, materially increase the Company's obligations to provide Flood Zone
Determination Information above the level that it would have been required to
provide to Client and/or IMSG hereunder but for such assignment. The Company
understands and acknowledges, however, that any such assignment may result in
the Company providing a materially lesser number of flood zone determinations
than are being provided to Client prior to any such assignment. This Agreement
is binding on and will inure to the benefit of the parties and their respective
successors and permitted assigns. Any assignment of this Agreement shall not
release the assignor of its obligations hereunder, except that Client shall be
discharged from its obligations hereunder if it is not the surviving party in
any merger, consolidation or similar transaction.
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U. PRICING
AUTOMATED FLOOD ZONE DETERMINATIONS (THOSE DETERMINATIONS COMPLETED WITHOUT
MANUAL INTERVENTION FROM GEOTRAC'S AUTOMATED FLOOD ZONE DETERMINATION DATABASE)
$______ EACH
MANUAL FLOOD ZONE DETERMINATIONS (THOSE DETERMINATIONS THAT ARE NOT COMPLETED
THROUGH GEOTRAC'S AUTOMATED FLOOD
ZONE DETERMINATION DATABASE)
$______ EACH
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
COMPANY: GEOTRAC OF AMERICA, INC.
By
------------------------------------------------
Title
---------------------------------------------
Date
----------------------------------------------
CLIENT: INSURANCE MANAGEMENT SOLUTIONS, INC.
By
------------------------------------------------
Title
---------------------------------------------
Date
----------------------------------------------
Account Number(s):
---------------
Rep Code:
------------------------
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EXHIBIT B
INDEMNIFICATION AGREEMENT
THIS INDEMNIFICATION AGREEMENT (this "Agreement") is executed as of
__________, 200__, by and between Insurance Management Solutions Group, Inc., a
Florida corporation ("IMSG"), and Daniel J. White ("White").
WHEREAS, White served as a director of IMSG from July 31, 1998 until
the date hereof;
WHEREAS, IMSG, Bankers Insurance Group, Inc., Geotrac Holdings, Inc.
("GHI"), White, Daniel J. White Trust (under Declaration of Trust dated May 7,
1998), Sandra A. White Trust (under Declaration of Trust dated May 7, 1998) and
Geotrac of America, Inc. have entered into that certain Stock Purchase
Agreement, dated as of September 20, 2001 (the "Purchase Agreement"), pursuant
to which GHI is acquiring all of the outstanding capital stock of Geotrac of
America, Inc. a Delaware corporation and wholly-owned subsidiary of IMSG; and
WHEREAS, the conditions to the closing of the Purchase Agreement
include that (i) White resign as a member of the Board of Directors of IMSG and
(ii) IMSG and White enter into this Agreement.
NOW, THEREFORE, in consideration of the premises set forth above, the
parties hereto agree as follows:
1. Indemnification.
(a) Following the Closing (as defined in the Purchase
Agreement), IMSG shall, to the fullest extent permitted under
applicable law, indemnify and hold harmless White from and against all
damages, costs, losses, liabilities and expenses (including, without
limitation, reasonable attorneys' fees), judgments, fines, and amounts
paid in settlement, incurred by White in connection with any claim,
action, suit or proceeding arising out of or pertaining to matters
existing or occurring prior to the Closing by reason of the fact that
White served as a director of IMSG, including, but not limited to, any
obligations arising out of or from that certain litigation captioned
"In Re Insurance Management Solutions Group, Inc., Securities
Litigation," Case No. 8:00-CV-2013-T-26F filed in the United States
District Court, Middle District of Florida, Tampa Division by Muriel
Goodman and Thomas Schmidt.
(b) Following the Closing, to the fullest extent
permitted under applicable law, IMSG shall advance all expenses,
including, without limitation, reasonable attorneys' fees, incurred by
White with respect to which White is entitled to indemnification as set
forth in Section 1(a) hereof. Advances for such expenses shall be made
as they are incurred by White upon written notice thereof from White to
IMSG and upon receipt by IMSG of the appropriate undertakings from
White.
(c) Promptly after obtaining knowledge thereof, White
will notify IMSG of the existence of any claim, demand, loss,
liability, cause of action or other matter involving liability or
potential liability to which IMSG's indemnification obligations would
or might apply. Such notice must specify in reasonable detail the
representation, warranty, covenant, commitment or obligation with
respect to which the claim is made, the facts giving rise to the claim
and the alleged basis therefor, and the amount (to the extent then
determinable) of liability for which indemnity is asserted. The failure
of White to provide such notice shall not relieve IMSG of its
obligations under this Agreement, unless IMSG is adversely affected or
prejudiced by such failure. In the event of any claim, action, suit or
proceeding by a third party (each a "Third-Party Claim") with respect
to which White wishes to claim indemnification under this Section 1,
White will give IMSG twenty (20) business days (or such shorter period
as required by the exigencies of such Third-Party Claim, but in no
event less than ten (10) business days) in which to assume the defense
thereof at its own expense, and upon the assumption of such defense
within such period, IMSG shall not be liable to White for any costs or
expenses of other counsel incurred by White in connection with such
Third-Party Claim. If IMSG, within such period, fails to elect to
assume such defense, or if IMSG fails to commence or continue such
defense, White will have the right, but not the obligation, to retain
counsel satisfactory to him to assume such defense. White will not
compromise or settle a Third-Party Claim without the written consent of
IMSG, which consent may not be unreasonably withheld. If a Third-Party
Claim is one that cannot by its nature be defended solely by IMSG,
White will make available all information and assistance that IMSG may
reasonably request, provided that any reasonable expenses incurred by
White in providing such information and assistance shall be reimbursed
by IMSG.
(d) If the indemnification provided for in this Section 1
is unavailable to White hereunder in respect of any losses, claims,
damages, liabilities or expenses referred to subsections (a) or (b)
above, then IMSG, in lieu of indemnifying White, and White will
contribute to the amount paid or payable by White as a result of such
losses, claims, damages, liabilities or expenses in such proportion as
is appropriate to reflect the relative fault of IMSG and White in
connection with the actions which resulted in such losses, claims,
damages, liabilities or expense, as well as any other relevant
equitable considerations. The relative fault of IMSG and White will be
determined by reference to, among other things, whether any action in
question, including any untrue or alleged untrue statement of a
material fact, has been made by, or relates to information supplied by,
IMSG or White, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The
amount paid or payable by a party as a result of the losses, claims,
damages, liabilities and expenses referred to above are deemed to
include any reasonable legal or other fees or expenses reasonably
incurred by such party in connection with any investigation or
proceeding. The parties hereto agree that it would not be just and
equitable if contribution pursuant to this subparagraph (d) were
determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to
in this paragraph. Notwithstanding the foregoing, no person
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guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act of 1933, as amended) shall be entitled to
any contribution hereunder.
2. Liability Insurance. IMSG shall maintain its existing
directors' and officers' liability insurance ("D&O Insurance"), or coverage on
materially similar terms thereof, for a period of six (6) years following the
Closing (as defined in the Purchase Agreement) so long as the annual premium
therefor is not in excess of 250% of the last annual premium paid prior to the
date hereof (the "Current Premium"); provided, however, that if such D&O
Insurance is terminated or cancelled during such six-year period: (i) in the
event such D&O Insurance is terminated or cancelled (A) by the insurer other
than due to IMSG's failure to pay timely any required premium or (B) by IMSG
because the annual premium is in excess of 250% of the Current Premium, IMSG
shall use reasonable efforts to obtain as much D&O Insurance (but not in excess
of the current amounts of D&O Insurance coverage) as can be obtained for the
remainder of such period for a premium not in excess (on an annualized basis) of
250% of the Current Premium; and (ii) in the event such D&O Insurance is
terminated or cancelled by either IMSG or the Insurer for any reason other than
as set forth in clause (i) above, and such D&O Insurance is not replaced prior
to any lapse in coverage, IMSG shall obtain as much D&O Insurance (but not in
excess of the current amounts of D&O Insurance coverage) as can be obtained for
the remainder of such period for a premium not in excess (on an annualized
basis) of 250% of the Current Premium.
3. Miscellaneous.
(a) This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Florida
without regard to its conflicts of laws provisions.
(b) This Agreement may not be assigned by White without
the prior written consent of IMSG. If IMSG or any of its successors or
assigns (i) shall consolidate with or merge into any other corporation
or entity and shall not be the continuing or surviving entity of such
consolidation or merger or (ii) shall transfer all or substantially all
of its properties and assets to any individual, corporation or other
entity, then, and in each such case, proper provisions shall be made so
that the successors and assigns of IMSG shall assume all of the
obligations of IMSG set forth in this Agreement.
(c) This Agreement supersedes any prior agreement or
understanding, whether written or oral, between the parties with
respect to the subject matter of this Agreement. This Agreement shall
be binding upon and shall inure to the benefit of the parties and their
respective heirs, executors, legal representatives, and permitted
successors and assigns. This Agreement may be amended, modified,
superseded, cancelled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by
the parties or, in the case of a waiver, by the party waiving
compliance.
-3-
(d) This Agreement may be executed simultaneously in
separate counterparts, any one of which need not contain the signatures
of more than one party, but all such counterparts taken together shall
constitute one and the same agreement.
(e) Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is finally
determined by a court of competent jurisdiction to be unenforceable or
invalid under applicable law, such provision will be effective only to
the extent of its enforceability or validity, without affecting the
enforceability or validity of the remainder of this Agreement, and the
parties agree that such court shall have jurisdiction to reform this
Agreement to the maximum extent permitted by law, and the parties agree
to abide by the court"s determination. In the event that any such
provision of this Agreement cannot be reformed, such provision will be
deemed severed from this Agreement, but every other provision of this
Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement as of the day and year first written above.
INSURANCE MANAGEMENT
SOLUTIONS GROUP, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Its:
----------------------------------------
--------------------------------------------
Daniel J. White
-4-
EXHIBIT C
TERMINATION AND RELEASE AGREEMENT
THIS TERMINATION AND RELEASE AGREEMENT (this "Agreement") is executed
as of __________, 200_, by and among Insurance Management Solutions Group, Inc.,
a Florida corporation ("IMSG"); Geotrac Holdings, Inc., a Delaware corporation
("GHI"); Geotrac of America, Inc., a Florida corporation ("Geotrac"); and Daniel
J. White, an individual resident of the State of Ohio, Sandra A. White, an
individual resident of the State of Ohio, Daniel J. White Trust (under
Declaration of Trust dated May 7, 1998) and Sandra A. White Trust (under
Declaration of Trust dated May 7, 1998) (each a "White" and collectively the
"Whites").
WHEREAS, IMSG, Bankers Insurance Group, Inc., GHI, White, Daniel J.
White Trust, Sandra A. White Trust and Geotrac have entered into that certain
Stock Purchase Agreement, dated as of September 20, 2001 (the "Purchase
Agreement"), pursuant to which GHI is acquiring all of the outstanding capital
stock of Geotrac;
WHEREAS, the conditions to the closing of the Purchase Agreement
include IMSG, GHI, Geotrac and the Whites executing and delivering this
Termination and Release Agreement; and
WHEREAS, each party hereto desires to enter into this Agreement in
order to induce the other parties hereto to enter into the Purchase Agreement.
NOW, THEREFORE, in consideration of the premises set forth above, the
parties hereto agree as follows:
1. Termination of Corporate Governance Agreement. Effective as of
the date hereof, that certain Corporate Governance Agreement, dated July 31,
1998, by and among the Geotrac, Daniel J. White and IMSG (the "Corporate
Governance Agreement"), is hereby terminated and of no further force and effect,
and Daniel J. White hereby irrevocably releases and forever discharges IMSG,
Geotrac and their respective officers, directors, employees, subsidiaries,
affiliates, shareholders, controlling persons, successors and assigns from any
and all claims, demands, proceedings, causes of action, suits, judicial or
administrative orders, obligations, contracts, agreements, debts and
liabilities, whatsoever, whether known or unknown, suspected or unsuspected,
both at law and in equity (collectively, "Claims"), which Daniel J. White now
has, has ever had or may hereafter have arising out of or related to the
Corporate Governance Agreement.
2. Mutual Release.
(a) Effective immediately following the Closing (as
defined in the Purchase Agreement), IMSG hereby completely and
irrevocably releases and forever discharges Geotrac and its officers,
directors, employees, subsidiaries, affiliates, sole shareholder,
controlling persons, successors and assigns (individually a "Geotrac
Releasee" and collectively the "Geotrac Releasees") from any and all
Claims which IMSG now has,
has ever had or may hereafter have against any Geotrac Releasee arising
contemporaneously with or prior to the Closing and whether or not
relating to Claims pending on, or asserted after, the Closing;
provided, however, that nothing contained herein shall operate to
release: (i) any Claims against a Geotrac Releasee under the Purchase
Agreement or any documents entered into or delivered pursuant to the
Purchase Agreement; (ii) any Claims against Daniel J. White arising out
of or relating to the service of Daniel J. White as a director of IMSG
and/or a director, officer or employee of any subsidiary or affiliate
of IMSG and for which Daniel J. White is not entitled to
indemnification from IMSG under (A) the Indemnification Agreement of
even date herewith between IMSG and Daniel J. White, (B) IMSG's
articles of incorporation and bylaws, as amended and/or restated, or
(C) applicable Florida law; or (iii) any Claims against any officer,
director or employee (other than Daniel J. White) of Geotrac or any
subsidiary thereof arising out of or relating to a breach of his or her
fiduciary duties to IMSG as the sole shareholder of Geotrac.
(b) Effective immediately following the Closing, Geotrac
hereby completely and irrevocably releases and forever discharges IMSG
and its officers, directors, employees, subsidiaries, affiliates,
shareholders, controlling persons, successors and assigns (individually
an "IMSG Releasee" and collectively the "IMSG Releasees") from any and
all Claims which Geotrac now has, has ever had or may hereafter have
against any IMSG Releasee arising contemporaneously with or prior to
the Closing and whether or not relating to Claims pending on, or
asserted after, the Closing; provided, however, that nothing contained
herein shall operate to release any Claims against an IMSG Releasee
under the Purchase Agreement or any documents entered into or delivered
pursuant to the Purchase Agreement.
(c) Effective immediately following the Closing, each of
the Whites hereby completely and irrevocably releases and forever
discharges each of the IMSG Releasees from any and all Claims which
such White now has, has ever had or may hereafter have against any IMSG
Releasee arising contemporaneously with or prior to the Closing and
whether or not relating to Claims pending on, or asserted after, the
Closing; provided, however, that nothing contained herein shall operate
(i) to release any Claims against an IMSG Releasee under the Purchase
Agreement or any documents entered into or delivered pursuant to the
Purchase Agreement, or (ii) to preclude Daniel J. White from asserting
available cross-claims or counterclaims in any action brought by or on
behalf of IMSG against Daniel J. White that would be released pursuant
to this Agreement but for clause (ii) of the exception to the release
granted by IMSG in Section 2(a) above.
(d) Effective immediately following the Closing, GHI
hereby completely and irrevocably releases and forever discharges each
of the IMSG Releasees from any and all Claims which GHI now has, has
ever had or may hereafter have against any IMSG Releasee arising
contemporaneously with or prior to the Closing and whether or not
relating to Claims pending on, or asserted after, the Closing;
provided, however, that nothing contained herein shall operate to
release any Claims against an IMSG Releasee
-2-
under the Purchase Agreement or any documents entered into or delivered
pursuant to the Purchase Agreement.
(e) Notwithstanding the foregoing, the provisions of this
Section 2 shall not relieve any Geotrac Releasee or IMSG Releasee from
any Claims resulting from intentional or deliberate acts of bad faith,
fraud or self-dealing.
3. Review and Advice of Counsel. IMSG, Geotrac, GHI and the
Whites acknowledge that they have each read this Agreement and know its
contents; that their respective attorneys have explained the nature and effect
of this Agreement; and that they have each signed this Agreement voluntarily,
with a full understanding of its significance, and intending to be bound by its
terms.
4. No Institution of Litigation. IMSG, Geotrac, GHI and the
Whites hereby irrevocably covenant to refrain from, directly or indirectly,
asserting against any party purported to be released hereby, or commencing,
instituting or causing to be commenced, any proceeding of any kind against any
party purported to be released hereby, any Claim purported to be released
pursuant to this Agreement.
5. Indemnification.
(a) Without in any way limiting any of the rights and
remedies otherwise available to a Geotrac Releasee, IMSG shall defend,
indemnify and hold harmless each Geotrac Releasee from and against all
Claims or expenses (including reasonable costs of investigation and
attorneys' fees) arising directly or indirectly from or in connection
with the assertion by or on behalf of IMSG of any Claim purported to be
released pursuant to this Agreement.
(b) Without in any way limiting any of the rights and
remedies otherwise available to an IMSG Releasee, Geotrac shall defend,
indemnify and hold harmless each IMSG Releasee from and against all
Claims or expenses (including reasonable costs of investigation and
attorneys' fees) arising directly or indirectly from or in connection
with the assertion by or on behalf of Geotrac of any Claim purported to
be released pursuant to this Agreement.
(c) Without in any way limiting any of the rights and
remedies otherwise available to an IMSG Releasee, the Whites, jointly
and severally, shall defend, indemnify and hold harmless each IMSG
Releasee from and against all Claims or expenses (including reasonable
costs of investigation and attorneys' fees) arising directly or
indirectly from or in connection with the assertion by or on behalf of
the Whites, or any of them, of any Claims purported to be released
pursuant to this Agreement.
(d) Without in any way limiting any of the rights and
remedies otherwise available to an IMSG Releasee, GHI shall defend,
indemnify and hold harmless each IMSG Releasee from and against all
Claims or expenses (including reasonable costs of
-3-
investigation and attorneys' fees) arising directly or indirectly from
or in connection with the assertion by or on behalf of GHI of any
Claims purported to be released pursuant to this Agreement.
6. Miscellaneous.
(a) This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Florida
without regard to its conflicts of laws provisions.
(b) This Agreement may not be assigned by any party
hereto without the consent of the other parties hereto. Notwithstanding
the foregoing, in the event that IMSG or any of its successors or
assigns (i) shall consolidate with or merge into any other corporation
or entity and shall not be the continuing or surviving entity of such
consolidation or merger, or (ii) shall transfer all or substantially
all of its properties and assets to any individual, corporation or
other entity, then, and in each such case, the successor or assign of
IMSG shall be entitled to all the rights, and shall assume all of the
obligations, of IMSG set forth in this Agreement.
(c) This Agreement supersedes any prior agreement or
understanding, whether written or oral, among the parties with respect
to the subject matter of this Agreement. This Agreement shall be
binding upon and shall inure to the benefit of the parties and their
respective heirs, executors, legal representatives, successors and
permitted assigns. This Agreement may be amended, modified, superseded,
cancelled, renewed or extended, and the terms and conditions hereof may
be waived, only by a written instrument signed by the parties or, in
the case of a waiver, by the party waiving compliance.
(d) This Agreement may be executed simultaneously in two
or more counterparts, any one of which need not contain the signatures
of more than one party, but all such counterparts taken together shall
constitute one and the same agreement.
(e) Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is finally
determined by a court of competent jurisdiction to be unenforceable or
invalid under applicable law, such provision will be effective only to
the extent of its enforceability or validity, without affecting the
enforceability or validity of the remainder of this Agreement, and the
parties agree that such court shall have jurisdiction to reform this
Agreement to the maximum extent permitted by law, and the parties agree
to abide by the court"s determination. In the event that any such
provision of this Agreement cannot be reformed, such provision will be
deemed severed from this Agreement, but every other provision of this
Agreement shall remain in full force and effect.
-4-
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date first written above.
INSURANCE MANAGEMENT
SOLUTIONS GROUP, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Its:
----------------------------------------
GEOTRAC HOLDINGS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Its:
----------------------------------------
GEOTRAC OF AMERICA, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Its:
----------------------------------------
- - --------------------------------------------
Daniel J. White, individually
- - --------------------------------------------
Sandra A. White, individually
DANIEL J. WHITE TRUST
By:
-----------------------------------------
Daniel J. White, Sole Trustee
SANDRA A. WHITE TRUST
By:
-----------------------------------------
Sandra A. White, Sole Trustee
-5-
EXHIBIT D
AGREEMENT TO VOTE SHARES
THIS AGREEMENT TO VOTE SHARES ("Agreement") is executed as of September
___, 2001, by and among Insurance Management Solutions Group, Inc., a Florida
corporation ("IMSG"), Geotrac Holdings, Inc., a Delaware corporation ("GHI"),
and ______________, an individual resident of the State of Florida
("Shareholder").
[NOTE: SEPARATE AGREEMENT TO BE EXECUTED BY EACH OF DAVID K. MEEHAN,
DAVID M. HOWARD, JOHN A. GRANT, JR., WILLIAM D. HUSSEY, E. RAY SOLOMON,
ALEJANDRO M. SANCHEZ AND JOHN S. MCMULLEN.]
WHEREAS, IMSG, Bankers Insurance Group, Inc., GHI, Daniel J. White,
Daniel J. White Trust (under Declaration of Trust dated May 7, 1998), Sandra A.
White Trust (under Declaration of Trust dated May 7, 1998) and Geotrac of
America, Inc. have entered into that certain Stock Purchase Agreement, dated as
of September 20, 2001 (the "Purchase Agreement"), pursuant to which GHI will
acquire all of the outstanding capital stock of Geotrac of America, Inc., a
Delaware corporation and wholly-owned subsidiary of IMSG;
WHEREAS, the conditions to the closing of the Purchase Agreement
include that Shareholder deliver a written undertaking to vote the ______ shares
of Common Stock, par value $.01 per share, of IMSG owned of record and
beneficially thereby (the "Shareholder's Shares") in favor of the transactions
contemplated by the Purchase Agreement; and
WHEREAS, the Shareholder desires to enter into this Agreement in order
to induce GHI to enter into the Purchase Agreement.
NOW, THEREFORE, in consideration of the premises set forth above, the
parties hereto agree as follows:
1. Agreement To Vote Shares. Shareholder is the owner of record
and beneficially of the Shareholder's Shares. Shareholder agrees to vote, or
cause to be voted, all of said Shareholder's Shares, at any meeting of the
shareholders of IMSG and in any action by written consent of the shareholders of
IMSG, as follows: (a) in favor of the transactions contemplated by the Purchase
Agreement and (b) against any action or agreement (other than any merger,
consolidation, share exchange or similar transaction involving IMSG) that would
impede, interfere with or attempt to discourage any of the transactions
contemplated by the Purchase Agreement.
2. Review and Advice of Counsel. Shareholder acknowledges that he
has read this Agreement and knows its contents; that his attorney has explained
the nature and effect of this Agreement; and that he has signed this Agreement
voluntarily, with a full understanding of its significance, and intending to be
bound by its terms.
3. Miscellaneous.
(a) This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Florida
without regard to its conflicts of laws provisions.
(b) This Agreement may not be assigned by any party
hereto without the prior written consent of the other parties hereto.
(c) This Agreement supersedes any prior agreement or
understanding, whether written or oral, between the parties with
respect to the subject matter of this Agreement. This Agreement shall
be binding upon and shall inure to the benefit of the parties and their
respective heirs, executors, legal representatives, successors and
permitted assigns. This Agreement may be amended, modified, superseded,
cancelled, renewed or extended, and the terms and conditions hereof may
be waived, only by a written instrument signed by the parties or, in
the case of a waiver, by the party waiving compliance.
(d) This Agreement may be executed in separate
counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together shall
constitute one and the same agreement.
(e) Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is finally
determined by a court of competent jurisdiction to be unenforceable or
invalid under applicable law, such provision will be effective only to
the extent of its enforceability or validity, without affecting the
enforceability or validity of the remainder of this Agreement, and the
parties agree that such court shall have jurisdiction to reform this
Agreement to the maximum extent permitted by law, and the parties agree
to abide by the court"s determination. In the event that any such
provision of this Agreement cannot be reformed, such provision will be
deemed severed from this Agreement, but every other provision of this
Agreement shall remain in full force and effect.
(f) This Agreement shall terminate upon the earlier of
(1) the termination of the Purchase Agreement and (2) the Closing (as
defined in the Purchase Agreement) of the transactions contemplated by
the Purchase Agreement.
-2-
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
INSURANCE MANAGEMENT
SOLUTIONS GROUP, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Its:
----------------------------------------
GEOTRAC HOLDINGS, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Its:
----------------------------------------
SHAREHOLDER:
- - --------------------------------------------
, Individually
- - ------------------
-3-
EXHIBIT E
AGREEMENT TO VOTE SHARES
THIS AGREEMENT TO VOTE SHARES ("Agreement") is executed as of September
_____, 2001, by and among Insurance Management Solutions Group, Inc., a Florida
corporation ("IMSG"), Daniel J. White and Daniel J. White Trust (under
Declaration of Trust dated May 7, 1998) (together with Daniel J. White, the
"Whites").
[NOTE: SEPARATE AGREEMENT TO BE EXECUTED BY SANDRA A. WHITE AND THE
SANDRA A. WHITE TRUST.]
WHEREAS, IMSG, Bankers Insurance Group, Inc. ("BIG"), Geotrac Holdings,
Inc. ("GHI"), the Whites, Sandra A. White Trust (under Declaration of Trust
dated May 7, 1998) and Geotrac of America, Inc. have entered into that certain
Stock Purchase Agreement, dated as of September 20, 2001 (the "Purchase
Agreement"), pursuant to which GHI will acquire all of the outstanding capital
stock of Geotrac of America, Inc., a Delaware corporation and wholly-owned
subsidiary of IMSG;
WHEREAS, the conditions to the closing of the Purchase Agreement
include that the Whites deliver a written undertaking to vote the 262,099 White
Shares (as defined in the Purchase Agreement) owned of record and beneficially
thereby in favor of the transactions contemplated by the Purchase Agreement; and
WHEREAS, the Whites desire to enter into this Agreement in order to
induce IMSG to enter into the Purchase Agreement.
NOW, THEREFORE, in consideration of the premises set forth above, the
parties hereto agree as follows:
1. Agreement To Vote Shares. The Whites are the owners of record
and beneficially of 262,099 White Shares. The Whites, jointly and severally,
agree to vote, or cause to be voted, all of said 262,099 White Shares, at any
meeting of the shareholders of IMSG and in any action by written consent of the
shareholders of IMSG, as follows: (a) in favor of the transactions contemplated
by the Purchase Agreement; and (b) against any action or agreement (other than
any merger, consolidation, share exchange or similar transaction involving IMSG)
that would impede, interfere with or attempt to discourage any of the
transactions contemplated by the Purchase Agreement.
2. Review and Advice of Counsel. The Whites acknowledge that they
have read this Agreement and know its contents; that their attorneys have
explained the nature and effect of this Agreement; and that they have signed
this Agreement voluntarily, with a full understanding of its significance, and
intending to be bound by its terms.
3. Miscellaneous.
(a) This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Florida
without regard to its conflicts of laws provisions.
(b) This Agreement may not be assigned by any party
hereto without the prior written consent of the other parties hereto.
(c) This Agreement supersedes any prior agreement or
understanding, whether written or oral, between the parties with
respect to the subject matter of this Agreement. This Agreement shall
be binding upon and shall inure to the benefit of the parties and their
respective heirs, executors, legal representatives, successors and
permitted assigns. This Agreement may be amended, modified, superseded,
cancelled, renewed or extended, and the terms and conditions hereof may
be waived, only by a written instrument signed by the parties or, in
the case of a waiver, by the party waiving compliance.
(d) This Agreement may be executed in separate
counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together shall
constitute one and the same agreement.
(e) Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is finally
determined by a court of competent jurisdiction to be unenforceable or
invalid under applicable law, such provision will be effective only to
the extent of its enforceability or validity, without affecting the
enforceability or validity of the remainder of this Agreement, and the
parties agree that such court shall have jurisdiction to reform this
Agreement to the maximum extent permitted by law, and the parties agree
to abide by the court"s determination. In the event that any such
provision of this Agreement cannot be reformed, such provision will be
deemed severed from this Agreement, but every other provision of this
Agreement shall remain in full force and effect.
(f) This Agreement shall terminate upon the earlier of
(1) the termination of the Purchase Agreement and (2) the Closing (as
defined in the Purchase Agreement) of the transactions contemplated by
the Purchase Agreement.
-2-
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first written above.
INSURANCE MANAGEMENT
SOLUTIONS GROUP, INC.
By:
-----------------------------------------
Name:
---------------------------------------
Its:
----------------------------------------
DANIEL J. WHITE TRUST
(under Declaration of Trust dated May 7, 1998)
By:
-----------------------------------------
Daniel J. White, Sole Trustee
- - --------------------------------------------
Daniel J. White, Individually
-3-
APPENDIX B
CONFIDENTIAL
September 20, 2001
Board of Directors
Insurance Management Solutions Group, Inc.
360 Central Avenue
St. Petersburg, FL 33701
Members of the Board of Directors:
You have requested our opinion as to the fairness, from a financial point of
view, to the shareholders of the outstanding common stock of Insurance
Management Solutions Group, Inc. (the "Company" or "IMSG") of the consideration
to be paid to the Company in connection with the proposed sale (the
"Transaction") of all of the outstanding capital stock of Geotrac of America,
Inc. ("Geotrac"), a wholly-owned subsidiary of the Company, pursuant to that
certain Stock Purchase Agreement between the Company and Geotrac Holdings, Inc.
("Holdings") dated as of September 20, 2001 (the "Agreement"). The consideration
to be paid by Holdings to the Company for all of the outstanding capital stock
of Geotrac will be $19,000,000 in cash, 524,198 shares of IMSG common stock. In
addition, at the closing of the Transaction, Geotrac and the Company will enter
into that certain Flood Zone Determination Service Agreement (the "Flood Zone
Agreement") as more particularly set forth in the Agreement.
In connection with our review of the proposed Transaction and the preparation of
our opinion herein, we have, among other things:
1. reviewed the financial terms and conditions of the Transaction
as stated in the Agreement;
2. reviewed the audited financial statements of Geotrac as of and
for the years ended December 31, 1999 and December 31, 2000
and the unaudited financial statements of Geotrac for the
period ended June 30, 2001;
3. reviewed other internal financial and operating analyses and
forecasts for Geotrac, requested from and/or provided by the
Company and/or Geotrac;
4. discussed with members of the senior management of the Company
and Geotrac certain information relating to the business plan
and prospects for Geotrac and any other matters which we have
deemed relevant to our inquiry;
5. certain publicly available information regarding companies
deemed comparable to Geotrac, including valuations for such
companies; and
Board of Directors
Insurance Management Solutions Group, Inc.
September 20, 2001
Page 2
6. reviewed the proposed Flood Zone Agreement between Geotrac and
IMSG.
We have assumed and relied upon the accuracy and completeness of all information
supplied or otherwise made available to us by the Company, Geotrac or any other
party and we have undertaken no duty or responsibility to verify independently
any of such information. We have not made or obtained an independent appraisal
of the assets or liabilities (contingent or otherwise) of Geotrac. With respect
to financial forecasts and other information and data provided to or otherwise
reviewed by or discussed with us, we have assumed that such forecasts and other
information and data have been reasonably prepared in good faith on bases
reflecting the best currently available estimates and judgments of management,
and we have relied upon each party to advise us promptly if any information
previously provided became inaccurate or was required to be updated during the
period of our review.
Our opinion is based upon market, economic, financial and other circumstances
and conditions existing and disclosed to us as of September 20, 2001 and any
material change in such circumstances and conditions would require a
reevaluation of this opinion, which we are under no obligation to undertake.
We express no opinion as to the underlying business decision to effect the
Transaction, the structure or tax consequences of the Agreement or the
availability or advisability of any alternatives to the Transaction. We did not
structure the Transaction or negotiate the final terms of the Transaction. This
letter does not express an opinion as to the likely trading range of IMSG stock
following the transaction, which may vary depending on numerous factors that
generally impact the price of securities or on the financial condition of IMSG
at that time. Our opinion is limited to the fairness, from a financial point of
view, of the Transaction to the shareholders of the outstanding common stock of
the Company. We express no opinion with respect to any other reasons, legal,
business, or otherwise, that may support the decision of the Board of Directors
to approve or consummate the Transaction.
In conducting our investigation and analyses and in arriving at our opinion
expressed herein, we have taken into account such accepted financial and
investment banking procedures and considerations as we have deemed relevant,
including the review of (i) historical and projected revenues, operating
earnings, net income and capitalization of Geotrac and certain other publicly
held companies in businesses we believe to be comparable to Geotrac; (ii) the
current and projected financial position and results of operations of Geotrac;
(iii) financial and operating information concerning selected business
combinations which we deemed comparable in whole or in part; and (iv) the
general condition of the securities markets.
Board of Directors
Insurance Management Solutions Group, Inc.
September 20, 2001
Page 3
In arriving at this opinion, Raymond James & Associates, Inc. ("Raymond James")
did not attribute any particular weight to any analysis or factor considered by
it, but rather made qualitative judgments as to the significance and relevance
of each analysis and factor. Accordingly, Raymond James believes that its
analyses must be considered as a whole and that selecting portions of its
analyses, without considering all analyses, would create an incomplete view of
the process underlying this opinion.
Raymond James is actively engaged in the investment banking business and
regularly undertakes the valuation of investment securities in connection with
public offerings, private placements, business combinations and similar
transactions. Raymond James has been engaged to render financial advisory
services to the Company in connection with the proposed Transaction and will
receive a fee for such services, which fee is contingent upon consummation of
the Transaction. Raymond James will also receive a fee upon the delivery of this
opinion. In addition, the Company has agreed to indemnify us against certain
liabilities arising out of our engagement.
In the ordinary course of our business, Raymond James may trade in the
securities of the Company for our own account or for the accounts of our
customers and, accordingly, may at any time hold a long or short position in
such securities.
It is understood that this letter is for the information of the Board of
Directors of the Company in evaluating the proposed Transaction and does not
constitute a recommendation to any board member of the Company nor any other
party regarding any matter including, without limitation, how he, she or it
should vote on the proposed Transaction, nor is this letter intended to confer
rights or remedies upon the shareholders of the Company, Geotrac, Holdings or
the shareholders of Holdings or any other party. Furthermore, this letter should
not be construed as creating any fiduciary duty on the part of Raymond James to
any such party. This opinion is not to be quoted or referred to, in whole or in
part, without our prior written consent, which will not be unreasonably
withheld.
Based upon and subject to the foregoing, it is our opinion that, as of
September 20, 2001, the consideration to be received by the Company pursuant to
the Transaction is fair, from a financial point of view, to the shareholders of
the Company's outstanding common stock.
Very truly yours,
RAYMOND JAMES & ASSOCIATES, INC.
APPENDIX C
FLORIDA DISSENTERS' RIGHTS STATUTES
607.1301. DISSENTERS' RIGHTS; DEFINITIONS.
The following definitions apply to ss. 607.1302 and 607.1320:
(1) "Corporation" means the issuer of the shares held by a dissenting
shareholder before the corporate action or the surviving or acquiring
corporation by merger or share exchange of that issuer.
(2) "Fair value," with respect to a dissenter's shares, means the value
of the shares as of the close of business on the day prior to the
shareholders' authorization date, excluding any appreciation or
depreciation in anticipation of the corporate action unless exclusion
would be inequitable.
(3) "Shareholders' authorization date" means the date on which the
shareholders' vote authorizing the proposed action was taken, the date
on which the corporation received written consents without a meeting
from the requisite number of shareholders in order to authorize the
action, or, in the case of a merger pursuant to s. 607.1104, the day
prior to the date on which a copy of the plan of merger was mailed to
each shareholder of record of the subsidiary corporation.
607.1302. RIGHT OF SHAREHOLDERS TO DISSENT.
(1) Any shareholder of a corporation has the right to dissent from, and
obtain payment of the fair value of his or her shares in the event of,
any of the following corporate actions:
(a) Consummation of a plan of merger to which the corporation
is a party:
1. If the shareholder is entitled to vote on the
merger, or
2. If the corporation is a subsidiary that is merged
with its parent under s. 607.1104, and the
shareholders would have been entitled to vote on
action taken, except for the applicability of
s. 607.1104;
(b) Consummation of a sale or exchange of all, or
substantially all, of the property of the corporation, other
than in the usual and regular course of business, if the
shareholder is entitled to vote on the sale or exchange
pursuant to s. 607.1202, including a sale in dissolution but
not including a sale pursuant to court order or a sale for
cash pursuant to a plan by which all or substantially all of
the net proceeds of the sale will be distributed to the
shareholders within 1 year after the date of sale;
(c) As provided in s. 607.0902(11), the approval of a
control-share acquisition;
(d) Consummation of a plan of share exchange to which the
corporation is a party as the corporation the shares of which
will be acquired, if the shareholder is entitled to vote on
the plan;
(e) Any amendment of the articles of incorporation if the
shareholder is entitled to vote on the amendment and if such
amendment would adversely affect such shareholder by:
1. Altering or abolishing any preemptive rights
attached to any of his or her shares;
2. Altering or abolishing the voting rights
pertaining to any of his or her shares, except as
such rights may be affected by the voting rights of
new shares then being authorized of any existing or
new class or series of shares;
3. Effecting an exchange, cancellation, or
reclassification of any of his or her shares, when
such exchange, cancellation, or reclassification
would alter or abolish the shareholder's voting
rights or alter his or her percentage of equity in
the corporation, or effecting a reduction or
cancellation of accrued dividends or other arrearages
in respect to such shares;
4. Reducing the stated redemption price of any of the
shareholder's redeemable shares, altering or
abolishing any provision relating to any sinking fund
for the redemption or purchase of any of his or her
shares, or making any of his or her shares subject to
redemption when they are not otherwise redeemable;
5. Making noncumulative, in whole or in part,
dividends of any of the shareholder's preferred
shares which had theretofore been cumulative;
6. Reducing the stated dividend preference of any of
the shareholder's preferred shares; or
7. Reducing any stated preferential amount payable on
any of the shareholder's preferred shares upon
voluntary or involuntary liquidation; or
(f) Any corporate action taken, to the extent the articles of
incorporation provide that a voting or nonvoting shareholder
is entitled to dissent and obtain payment for his or her
shares.
(2) A shareholder dissenting from any amendment specified in paragraph
(1)(e) has the right to dissent only as to those of his or her shares
which are adversely affected by the amendment.
(3) A shareholder may dissent as to less than all the shares registered
in his or her name. In that event, the shareholder's rights shall be
determined as if the shares as to which he or she has dissented and his
or her other shares were registered in the names of different
shareholders.
(4) Unless the articles of incorporation otherwise provide, this
section does not apply with respect to a plan of merger or share
exchange or a proposed sale or exchange of property, to
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the holders of shares of any class or series which, on the record date
fixed to determine the shareholders entitled to vote at the meeting of
shareholders at which such action is to be acted upon or to consent to
any such action without a meeting, were either registered on a national
securities exchange or designated as a national market system security
on an interdealer quotation system by the National Association of
Securities Dealers, Inc., or held of record by not fewer than 2,000
shareholders.
(5) A shareholder entitled to dissent and obtain payment for his or her
shares under this section may not challenge the corporate action
creating his or her entitlement unless the action is unlawful or
fraudulent with respect to the shareholder or the corporation.
607.1320. PROCEDURE FOR EXERCISE OF DISSENTERS' RIGHTS.
(1)(a) If a proposed corporate action creating dissenters' rights under
s. 607.1302 is submitted to a vote at a shareholders' meeting, the
meeting notice shall state that shareholders are or may be entitled to
assert dissenters' rights and be accompanied by a copy of ss. 607.1301,
607.1302, and 607.1320. A shareholder who wishes to assert dissenters'
rights shall:
1. Deliver to the corporation before the vote is
taken written notice of the shareholder's intent to
demand payment for his or her shares if the proposed
action is effectuated, and
2. Not vote his or her shares in favor of the
proposed action. A proxy or vote against the proposed
action does not constitute such a notice of intent to
demand payment.
(b) If proposed corporate action creating dissenters' rights
under s. 607.1302 is effectuated by written consent without a
meeting, the corporation shall deliver a copy of ss. 607.1301,
607.1302, and 607.1320 to each shareholder simultaneously with
any request for the shareholder's written consent or, if such
a request is not made, within 10 days after the date the
corporation received written consents without a meeting from
the requisite number of shareholders necessary to authorize
the action.
(2) Within 10 days after the shareholders' authorization date, the
corporation shall give written notice of such authorization or consent
or adoption of the plan of merger, as the case may be, to each
shareholder who filed a notice of intent to demand payment for his or
her shares pursuant to paragraph (1)(a) or, in the case of action
authorized by written consent, to each shareholder, excepting any who
voted for, or consented in writing to, the proposed action.
(3) Within 20 days after the giving of notice to him or her, any
shareholder who elects to dissent shall file with the corporation a
notice of such election, stating the shareholder's name and address,
the number, classes, and series of shares as to which he or she
dissents, and a demand for payment of the fair value of his or her
shares. Any shareholder failing to file such election to dissent within
the period set forth shall be bound by the terms of the proposed
corporate action. Any shareholder filing an election to dissent shall
deposit his or
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her certificates for certificated shares with the corporation
simultaneously with the filing of the election to dissent. The
corporation may restrict the transfer of uncertificated shares from the
date the shareholder's election to dissent is filed with the
corporation.
(4) Upon filing a notice of election to dissent, the shareholder shall
thereafter be entitled only to payment as provided in this section and
shall not be entitled to vote or to exercise any other rights of a
shareholder. A notice of election may be withdrawn in writing by the
shareholder at any time before an offer is made by the corporation, as
provided in subsection (5), to pay for his or her shares. After such
offer, no such notice of election may be withdrawn unless the
corporation consents thereto. However, the right of such shareholder to
be paid the fair value of his or her shares shall cease, and the
shareholder shall be reinstated to have all his or her rights as a
shareholder as of the filing of his or her notice of election,
including any intervening preemptive rights and the right to payment of
any intervening dividend or other distribution or, if any such rights
have expired or any such dividend or distribution other than in cash
has been completed, in lieu thereof, at the election of the
corporation, the fair value thereof in cash as determined by the board
as of the time of such expiration or completion, but without prejudice
otherwise to any corporate proceedings that may have been taken in the
interim, if:
(a) Such demand is withdrawn as provided in this section;
(b) The proposed corporate action is abandoned or rescinded or
the shareholders revoke the authority to effect such action;
(c) No demand or petition for the determination of fair value
by a court has been made or filed within the time provided in
this section; or
(d) A court of competent jurisdiction determines that such
shareholder is not entitled to the relief provided by this
section.
(5) Within 10 days after the expiration of the period in which
shareholders may file their notices of election to dissent, or within
10 days after such corporate action is effected, whichever is later
(but in no case later than 90 days from the shareholders' authorization
date), the corporation shall make a written offer to each dissenting
shareholder who has made demand as provided in this section to pay an
amount the corporation estimates to be the fair value for such shares.
If the corporate action has not been consummated before the expiration
of the 90-day period after the shareholders' authorization date, the
offer may be made conditional upon the consummation of such action.
Such notice and offer shall be accompanied by:
(a) A balance sheet of the corporation, the shares of which
the dissenting shareholder holds, as of the latest available
date and not more than 12 months prior to the making of such
offer; and
(b) A profit and loss statement of such corporation for the
12-month period ended on the date of such balance sheet or, if
the corporation was not in existence throughout such 12-month
period, for the portion thereof during which it was in
existence.
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(6) If within 30 days after the making of such offer any shareholder
accepts the same, payment for his or her shares shall be made within 90
days after the making of such offer or the consummation of the proposed
action, whichever is later. Upon payment of the agreed value, the
dissenting shareholder shall cease to have any interest in such shares.
(7) If the corporation fails to make such offer within the period
specified therefor in subsection (5) or if it makes the offer and any
dissenting shareholder or shareholders fail to accept the same within
the period of 30 days thereafter, then the corporation, within 30 days
after receipt of written demand from any dissenting shareholder given
within 60 days after the date on which such corporate action was
effected, shall, or at its election at any time within such period of
60 days may, file an action in any court of competent jurisdiction in
the county in this state where the registered office of the corporation
is located requesting that the fair value of such shares be determined.
The court shall also determine whether each dissenting shareholder, as
to whom the corporation requests the court to make such determination,
is entitled to receive payment for his or her shares. If the
corporation fails to institute the proceeding as herein provided, any
dissenting shareholder may do so in the name of the corporation. All
dissenting shareholders (whether or not residents of this state), other
than shareholders who have agreed with the corporation as to the value
of their shares, shall be made parties to the proceeding as an action
against their shares. The corporation shall serve a copy of the initial
pleading in such proceeding upon each dissenting shareholder who is a
resident of this state in the manner provided by law for the service of
a summons and complaint and upon each nonresident dissenting
shareholder either by registered or certified mail and publication or
in such other manner as is permitted by law. The jurisdiction of the
court is plenary and exclusive. All shareholders who are proper parties
to the proceeding are entitled to judgment against the corporation for
the amount of the fair value of their shares. The court may, if it so
elects, appoint one or more persons as appraisers to receive evidence
and recommend a decision on the question of fair value. The appraisers
shall have such power and authority as is specified in the order of
their appointment or an amendment thereof. The corporation shall pay
each dissenting shareholder the amount found to be due him or her
within 10 days after final determination of the proceedings. Upon
payment of the judgment, the dissenting shareholder shall cease to have
any interest in such shares.
(8) The judgment may, at the discretion of the court, include a fair
rate of interest, to be determined by the court.
(9) The costs and expenses of any such proceeding shall be determined
by the court and shall be assessed against the corporation, but all or
any part of such costs and expenses may be apportioned and assessed as
the court deems equitable against any or all of the dissenting
shareholders who are parties to the proceeding, to whom the corporation
has made an offer to pay for the shares, if the court finds that the
action of such shareholders in failing to accept such offer was
arbitrary, vexatious, or not in good faith. Such expenses shall include
reasonable compensation for, and reasonable expenses of, the
appraisers, but shall exclude the fees and expenses of counsel for, and
experts employed by, any party. If the fair value of the shares, as
determined, materially exceeds the amount which the corporation offered
to pay therefor or if no offer was made, the court in its discretion
may award to any shareholder
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who is a party to the proceeding such sum as the court determines to be
reasonable compensation to any attorney or expert employed by the
shareholder in the proceeding.
(10) Shares acquired by a corporation pursuant to payment of the agreed
value thereof or pursuant to payment of the judgment entered therefor,
as provided in this section, may be held and disposed of by such
corporation as authorized but unissued shares of the corporation,
except that, in the case of a merger, they may be held and disposed of
as the plan of merger otherwise provides. The shares of the surviving
corporation into which the shares of such dissenting shareholders would
have been converted had they assented to the merger shall have the
status of authorized but unissued shares of the surviving corporation.
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PROXY
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS
FOR THE SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 26, 2001
The undersigned shareholder appoints DAVID K. MEEHAN and DAVID M.
HOWARD, and each of them, as proxy, with full power of substitution, to vote
the shares of voting securities of INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
(the "Company") which the undersigned is entitled to vote at the Special
Meeting of Shareholders to be held at the offices of IMSG, 360 Central Avenue,
St. Petersburg, Florida 33701, on Wednesday, December 26, 2001, at 10:00 a.m.,
local time, and at any adjournments thereof, upon matters properly coming before
the meeting, as set forth in the Notice of Special Meeting and proxy statement,
both of which have been received by the undersigned. Without otherwise limiting
the general authorization given hereby, such proxy is instructed to vote as
follows:
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO CONTRARY DIRECTION IS INDICATED,
WILL BE VOTED FOR THE APPROVAL OF THE GEOTRAC SALE AND AS SUCH PROXIES DEEM
ADVISABLE WITH DISCRETIONARY AUTHORITY ON SUCH OTHER BUSINESS AS MAY PROPERLY
COME BEFORE THE MEETING AND ANY ADJOURNMENT OR ADJOURNMENTS THEREOF.
PLEASE CHECK THE BOXES BELOW, SIGN, DATE AND RETURN THIS PROXY TO FIRSTAR BANK,
N.A., 1555 NORTH RIVERCENTER DRIVE, SUITE 301, MILWAUKEE, WISCONSIN 53212, IN
THE SELF-ADDRESSED ENVELOPE PROVIDED.
- DETACH BELOW AND RETURN USING THE ENVELOPE PROVIDED -
- - ------ ----
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| INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. SPECIAL MEETING |
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1. APPROVAL OF THE GEOTRAC SALE AGREEMENT AND THE GEOTRAC SALE: [ ] FOR the approval of [ ] AGAINST the
the Geotrac Sale approval of the
Agreement and the Geotrac Sale
Geotrac Sale. Agreement and
the Geotrac Sale.
In his discretion, the proxy is authorized to vote upon such other business
as may properly come before the meeting.
Date NO. OF
---------------------- SHARES -----------------------
Check appropriate box
Indicate changes below: [ ] Name Change? [ ] Address Change?
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SIGNATURE(S) IN BOX
Please sign exactly as your name appears
hereon. When signing as attorney,
executor, administrator, trustee or
guardian, please give your full title.
If shares are jointly held, each holder
must sign. If a corporation, please sign
in full corporate name by President or
other authorized officer. If a
partnership, please sign in partnership
name by an authorized person.