<PAGE> 1
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>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] 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):
[X] No fee required.
[ ] 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:
---------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------
(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):
---------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------
(5) Total fee paid:
---------------------------------------------------------------------
[ ] 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.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
(Insurance Management Solutions Group, Inc. Logo)
360 CENTRAL AVENUE
ST. PETERSBURG, FLORIDA 33701
---------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 25, 1999
---------------------
To the Shareholders of Insurance Management Solutions Group, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Annual
Meeting") of Insurance Management Solutions Group, Inc. (the "Company") will be
held at the Company's offices at 360 Central Avenue, St. Petersburg, Florida, on
Tuesday, May 25, 1999 at 5:30 p.m. Eastern Standard Time for the following
purposes:
1. To elect three directors to hold office until the 2002 Annual
Meeting of Shareholders and until each of their respective successors is
duly elected and qualified; and
2. To transact any other business as may properly come before the
Annual Meeting.
Shareholders of record as of the close of business on March 31, 1999 will
be entitled to vote at the Annual Meeting or any adjournment or postponement
thereof. Information relating to the matters to be considered and voted on at
the Annual Meeting is set forth in the proxy statement accompanying this Notice.
By Order of the Board of Directors,
KELLY K. KING
Secretary
April 9, 1999
YOUR VOTE IS IMPORTANT. TO ASSURE YOUR REPRESENTATION
AT THE ANNUAL MEETING, PLEASE VOTE ON THE MATTERS TO BE CONSIDERED
AT THE ANNUAL MEETING BY COMPLETING THE ENCLOSED PROXY AND MAILING IT
PROMPTLY IN THE ENCLOSED ENVELOPE.
<PAGE> 3
(INSURANCE MANAGEMENT SOLUTIONS GROUP, INC. LOGO)
360 CENTRAL AVENUE
ST. PETERSBURG, FLORIDA 33701
---------------------
PROXY STATEMENT
---------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies on behalf of the Board of Directors of Insurance Management Solutions
Group, Inc. (the "Company") for the Annual Meeting of Shareholders (the "Annual
Meeting") to be held on Tuesday, May 25, 1999 at 5:30 p.m. Eastern Standard
Time, or any adjournment thereof.
If the accompanying proxy form ("Proxy") is completed, signed and returned,
the shares represented thereby will be voted at the Annual Meeting. The giving
of the Proxy does not affect the right to vote in person should the shareholder
be able to attend the Annual Meeting. The shareholder may revoke the Proxy at
any time prior to the voting thereof.
The Company's Annual Report on Form 10-K for the year ended December 31,
1998 ("Fiscal 1998"), together with this Proxy Statement and the Proxy, are
first being mailed on or about April 12, 1999 to shareholders entitled to vote
at the Annual Meeting.
SHAREHOLDERS ENTITLED TO VOTE
Shareholders of record as of the close of business on March 31, 1999 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting. At
that date, there were 12,678,743 shares of Common Stock, $0.01 par value per
share ("Common Stock"), outstanding and entitled to vote. Each outstanding share
of 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 Annual Meeting will be tabulated by
the inspector of elections appointed for the Annual Meeting, who will also
determine whether a quorum is present for the transaction of business. The
Company's Amended and Restated Bylaws provide that a quorum is present if the
holders of a majority of the issued and outstanding shares of 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 of
the matters 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, if a quorum exists, directors are elected by a plurality
of the votes cast by the shares entitled to vote in the election.
Shareholders are requested to vote by completing the enclosed Proxy and
returning it signed and dated in the enclosed postage-paid envelope.
Shareholders are urged to indicate their votes in the spaces provided on the
Proxy. Proxies solicited by the Board of Directors of the Company will be voted
in accordance with the directions given therein. Where no instructions are
indicated, signed Proxies will be voted FOR each proposal listed in the Notice
of Annual Meeting of Shareholders which is set forth more completely herein.
Returning your completed Proxy will not prevent you from voting in person at the
Annual Meeting should you be present and wish to do so.
<PAGE> 4
Any shareholder giving a Proxy has the power to revoke it at any time
before it is exercised by: (i) filing with the Secretary of the Company written
notice thereof; (ii) submitting a duly executed Proxy bearing a later date; or
(iii) appearing at the Annual Meeting and giving the Secretary notice of his or
her intention to vote in person. Proxies solicited hereby may be exercised only
at the Annual Meeting and any adjournment 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 employed by the Company or any of its
affiliates.
The cost of solicitation of Proxies by mail on behalf of the Board of
Directors will be borne by the Company. 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 the Company without additional
compensation therefor. The Company also has made arrangements with brokerage
firms, banks, nominees and other fiduciaries to forward proxy solicitation
materials for shares of Common Stock held of record to the beneficial owners of
such shares. The Company will reimburse such record holders for their reasonable
out-of-pocket expenses.
ITEM 1. ELECTION OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS THE FOLLOWING NOMINEES FOR ELECTION AS
DIRECTORS AND URGES EACH SHAREHOLDER TO VOTE "FOR" THE NOMINEES. PROXIES IN THE
ACCOMPANYING FORM WILL BE VOTED AT THE ANNUAL MEETING, UNLESS AUTHORITY TO DO SO
IS WITHHELD, IN FAVOR OF THE ELECTION AS DIRECTORS OF THE NOMINEES NAMED BELOW.
The Company's Board of Directors consists of nine members divided into
three classes, with the members of each class serving three-year terms expiring
at the third annual meeting of shareholders after their elections. Three
directors are to be elected at the Annual Meeting to hold office for a term of
three years expiring at the 2002 Annual Meeting of Shareholders, and until each
of their respective successors shall have been duly elected and qualified. In
the event any of such nominees is unable to serve, the persons designated as
proxies will cast votes for such other person in their discretion as a
substitute nominee. The Board of Directors has no reason to believe that the
nominees named below will be unavailable, or if elected, will decline to serve.
Certain information is set forth below for the nominees for directors, as
well as for each director whose term of office will continue after the Annual
Meeting.
NOMINEES FOR DIRECTORS -- TERM TO EXPIRE 2002
DAVID K. MEEHAN
Mr. Meehan, age 52, has served as the Chairman of the Board, Chief
Executive Officer and a Director of the Company since December, 1996. Mr. Meehan
joined Bankers Insurance Group, Inc. ("BIG"), a holding company chartered in
Florida and the Company's principal shareholder, in 1976 as Corporate Secretary.
He was appointed President of BIG in 1979 and served in such capacity until
February, 1999. He is currently Vice Chairman of the Board of BIG and Bankers
Insurance Company, a subsidiary of BIG. Mr. Meehan has served on the Board of
Governors of each of the Florida Joint Underwriting Association, the Florida
Property and Casualty Joint Underwriting Association and the Florida Residential
Property and Casualty Joint Underwriting Association. Mr. Meehan is
Director/Vice Chairman of the Florida Insurance Council and past Chairman and
President of the Florida Association of Domestic Insurance Companies.
DANIEL J. WHITE
Mr. White, age 49, has served as a Director of the Company since May, 1998.
Mr. White founded the original predecessor to Geotrac of America, Inc., a
wholly-owned subsidiary of the Company ("Geotrac"), in 1987 and has served a
President of Geotrac (and its predecessors) since that time and as Chief
Executive Officer of Geotrac (and its predecessors) since September, 1994. Mr.
White also currently serves as a director of Independent Community Bank Corp.
2
<PAGE> 5
JOHN A. GRANT, JR.
Mr. Grant, age 55, has served as a Director of the Company since December,
1996. Mr. Grant has been a partner with the St. Petersburg, Florida-based law
firm of Harris, Barrett, Mann and Dew since 1989. Since 1986, he has also been a
member of the Florida State Senate, where he currently serves as Chairman of the
Judiciary Committee and where he previously served as the Chairman of the
Banking & Insurance, Commerce, Criminal Justice, Education, and Government
Reform committees. He was a former Advisory Board Member of the United States
Small Business Administration and served on the Graduate Fellows Board of the
United States Department of Education.
DIRECTORS CONTINUING IN OFFICE -- TERMS TO EXPIRE 2000
ROBERT M. MENKE
Mr. Menke, age 65, has served as a Director of the Company since December,
1996. Mr. Menke founded BIG in 1976 and has been its Chairman of the Board since
1979. He was honored as "Insurance Man Of The Year" in 1986 by the Florida
Association of Domestic Insurance Companies. Mr. Menke is also a member of the
Florida Insurance Council. Mr. Menke is currently Chairman of the Board of First
Community Insurance Company, Bankers Security Insurance Company, Bankers Life
Insurance Company and Bankers Insurance Company, all affiliates of BIG and the
Company. He is also a director of the Florida Windstorm Association and First
Community Bank of America.
WILLIAM D. HUSSEY
Mr. Hussey, age 65, has served as a Director of the Company since December,
1996. Mr. Hussey is a retired President and Chief Executive Officer of the
Florida League of Financial Institutions and is an advisor with the Florida
Bankers Association.
E. RAY SOLOMON, PH.D., CLU
Dr. Solomon, age 69, has served as a Director of the Company since
December, 1996. Dr. Solomon is a retired Professor and the former Dean of the
School of Business at Florida State University.
DIRECTORS CONTINUING IN OFFICE -- TERMS TO EXPIRE 2001
JEFFREY S. BRAGG
Mr. Bragg, age 50, has served as Executive Vice President and Chief
Operating Officer of the Company since November, 1997 and as a Director of the
Company since May, 1997. Mr. Bragg has 20 years experience in the insurance and
insurance-related information technology industries. He was with Policy
Management Systems Corporation from 1987 to 1995, most recently serving as
Senior Vice President and Group Manager. He was also appointed by President
Reagan in 1981 to head the Federal Insurance Administration, with responsibility
for administering the Flood Program, Federal Crime Insurance program, and
Federal Riot Reinsurance programs. Mr. Bragg has served on Legislating and
Advising Boards for the Alliance of American Insurance and the National
Association of Mutual Insurance Companies.
ROBERT G. MENKE
Mr. Menke, age 37, has served as a Director of the Company since December,
1996. Mr. Menke, the son of Robert M. Menke, joined BIG in 1985 and has held
positions as programmer, systems analyst, systems manager, manager of
information services, and Vice President and Senior Vice President of Corporate
Services. He is currently Executive Vice-President of BIG and has served in such
capacity since October, 1997. Mr. Menke also serves as President of each of
Bankers Insurance Company, First Community Insurance Company and Bankers
Security Insurance Company, all affiliates of BIG and the Company, and
3
<PAGE> 6
has served in such capacities since November, 1998. He previously served as
Executive Vice President of each of such entities.
ALEJANDRO M. SANCHEZ
Mr. Sanchez, age 41, has served as a Director of the Company since July,
1998. Mr. Sanchez is also Chief Executive Officer of the Florida Bankers
Association and has served in such capacity since February, 1998. From November,
1993 to January, 1998, he served as Vice President for Government Affairs of the
Florida Bankers Association. He previously served as Senior Corporate Attorney
for GTE Information Services in Tampa, Florida.
Messrs. Robert M. Menke, Meehan and Hussey are also members of the Board of
Directors of First Community Insurance Company (a company owned 72% by BIG and
28% by Bankers Life Insurance Company). Messrs. Robert M. Menke and Meehan are
on the Board of Directors of Bankers Security Insurance Company, which is
wholly-owned indirectly by BIG. Messrs. Robert M. Menke and Meehan are on the
Board of Directors of each of Bankers Insurance Company and Bankers Life
Insurance Company, which are owned directly or indirectly by BIG.
BOARD OF DIRECTORS
GENERAL
The Board of Directors held six meetings during the year ended December 31,
1998. The Board of Directors also took certain actions by unanimous written
consent in lieu of a meeting, as permitted by Florida law. All of the current
directors attended all meetings of the Board of Directors during the respective
periods that they served in such capacity during the year ended December 31,
1998.
DIRECTOR COMPENSATION
Directors who are executive officers of the Company receive no compensation
for service as members of either the Board of Directors or committees thereof.
Directors who are not executive officers of the Company receive $1,000 for each
Board meeting attended and $150 ($200 in the case of a committee chairperson)
per committee meeting attended, plus reimbursement of reasonable expenses. The
outside directors are also eligible to receive options to purchase Common Stock
under the Company's Non-Employee Directors' Stock Option Plan. See "Executive
Compensation -- Stock Option Plans."
COMMITTEES OF THE BOARD
The Board of Directors has established committees whose responsibilities
are summarized below. The Audit Committee and Executive Committee held four and
five meetings, respectively, during the year ended December 31, 1998. All of the
current directors serving as members of such committees attended all meetings of
such committees during the respective periods that they served in such
capacities during such year, except that Mr. Grant attended two of three
meetings of the Audit Committee and four of five meetings of the Executive
Committee. The Compensation Committee and the Marketing Committee were formed in
conjunction with the Company's initial public offering subsequent to the close
of Fiscal 1998 and, therefore, had no meetings during that year.
Audit Committee. The Audit Committee is comprised of Messrs. Solomon
(Chairman), Hussey (Vice Chairman) and Grant and is responsible for reviewing
the independence, qualifications and activities of the Company's independent
certified public accountants and the Company's financial policies, control
procedures and accounting staff. The Audit Committee recommends to the Board the
appointment of the independent certified public accountants and reviews and
approves the Company's financial statements. The Audit Committee is also
responsible for the review of transactions between the Company and any Company
officer, director or entity in which a Company officer or director has a
material interest.
4
<PAGE> 7
Compensation Committee. The Compensation Committee is comprised of Messrs.
Solomon (Chairman), Hussey (Vice Chairman) and Grant and is responsible for
establishing the compensation of the Company's directors, officers and other
managerial personnel, including salaries, bonuses, termination arrangements, and
other executive officer benefits. In addition, the Compensation Committee is
responsible for the administration of the Company's Long Term Incentive Plan,
including the recipients, amounts and terms of stock option grants thereunder,
and the Company's Non-Qualified Stock Option Plan.
Marketing Committee. The Marketing Committee is comprised of Messrs.
Meehan, Bragg, Robert, M. Menke, Robert G. Menke and Sanchez and is responsible
for establishing the marketing policy of the Company and providing overall
supervision of its marketing efforts.
Executive Committee. The Executive Committee is comprised of Messrs.
Meehan (Chairman), Robert M. Menke (Vice Chairman), Robert G. Menke, Bragg and
Grant. The Executive Committee, to the fullest extent allowed by the Florida
Business Corporation Act (the "FBCA"), and subject to the powers and authority
delegated to the Audit Committee, the Compensation Committee and the Marketing
Committee, has and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Company during
intervals between meetings of the Board of Directors. Pursuant to the FBCA, the
Executive Committee shall not have the authority to, among other things: approve
actions requiring shareholder approval, such as the sale of all or substantially
all of the Company's assets; fill vacancies on the Board or any committee
thereof; adopt, repeal or amend the Company's Bylaws; or, subject to certain
exceptions, reacquire or issue shares of the Company's capital stock.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires directors, certain officers and beneficial owners of
more than 10% of a class of securities registered under the Exchange Act to file
reports of ownership and changes in ownership on Forms 3, 4 and 5 with the
Securities and Exchange Commission (the "Commission"). The Company's Common
Stock was registered pursuant to Section 12 of the Exchange Act in February,
1999 in connection with the Company's initial public offering. Consequently, the
Company's directors, officers and beneficial owners of more than 10% of the
Common Stock were not subject to the reporting requirements under Section 16(a)
of the Exchange Act during the year ended December 31, 1998.
5
<PAGE> 8
PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of Common Stock as of the Record Date, with respect to: (i) each of
the Company's directors; (ii) each of the Company's executive officers named in
the Summary Compensation Table below; (iii) all directors and executive officers
of the Company as a group; and (iv) each person known by the Company to own
beneficially more than 5% of the Common Stock. Except as otherwise indicated,
each of the shareholders listed below has sole voting and investment power over
the shares beneficially owned.
<TABLE>
<CAPTION>
SHARES
BENEFICIALLY OWNED
--------------------
NAME SHARES PERCENT
---- --------- -------
<S> <C> <C>
Bankers Insurance Group, Inc.(1)............................ 7,950,000 62.7%
Venture Capital Corporation(2).............................. 700,000 5.5
David K. Meehan............................................. 2,200 *
Jeffrey S. Bragg............................................ 2,000 *
Kathleen M. Batson.......................................... 200 *
Kelly K. King............................................... 1,500(4) *
Daniel J. White............................................. 524,198(5) 4.1
Robert M. Menke(3).......................................... 7,000 *
Robert G. Menke............................................. 2,200 *
John A. Grant, Jr........................................... 2,500 *
William D. Hussey........................................... 2,000 *
E. Ray Solomon.............................................. 2,000 *
Alejandro M. Sanchez........................................ 1,000 *
All directors and executive officers as a group (11
persons)(3)(5)............................................ 546,798 4.3
</TABLE>
- ---------------
* Less than 1%.
(1) The business address of Bankers Insurance Group, Inc. is 360 Central Avenue,
St. Petersburg, Florida 33701. Bankers Insurance Group, Inc. is an indirect
subsidiary of Bankers International Financial Corporation, Ltd. ("BIFC"), a
Cayman Islands corporation wholly owned by Bankers International Financial
Corporation II Trust, a discretionary charitable trust. The sole trustee of
this trust is Ansbacher (Cayman) Limited, a Cayman Island corporation
unaffiliated with BIG, the Company or their respective officers or
directors. Pursuant to the trust's declaration of trust, Independent
Foundation for the Pursuit of Charitable Endeavors, Ltd., a not for profit
Cayman Islands corporation ("IFPCE"), possesses the discretionary power to
(i) direct the trustee to appoint the trust fund to another trust for the
benefit of one or more of the beneficiaries of the trust and (ii) remove the
trustee and appoint one or more new trustees outside the Cayman Islands. A
majority vote of the directors of IFPCE is required to take either of these
actions. The Articles of Association of IFPCE provide that the Board of
Directors shall consist of seven members, three of whom shall be the top
three executives of Bankers International Financial Corporation, a Florida
corporation and subsidiary of BIFC, three of whom shall be Mr. Robert M.
Menke and his lineal descendants, and one of whom shall be a director
elected by a majority vote of the remaining six directors (or, if they
cannot agree, appointed by a court of competent jurisdiction). Until his
death or adjudication of incompetency, Robert M. Menke shall have five votes
and all other directors shall have one vote, and Robert M. Menke's presence
at a meeting shall be required for a quorum. As of the Record Date, the
directors of IFPCE included David K. Meehan, Robert M. Menke and Robert G.
Menke.
(2) The business address of Venture Capital Corporation is Bank America
Building, Fort Street, Georgetown, Grand Cayman, British West Indies.
Venture Capital Corporation is a Cayman 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, the Company or their respective officers or directors. Pursuant to
the trust's declaration of trust, IFPCE possesses the same discretionary
powers as described in note (1) above.
(3) Excludes 7,950,000 shares held by Bankers Insurance Group, Inc. and 700,000
shares held by Venture Capital Corporation. See Notes (1) and (2) above.
(4) Held jointly with his spouse.
(5) Includes 262,099 shares held in trust by his spouse.
6
<PAGE> 9
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain information concerning compensation
paid to or earned by the Company's Chairman of the Board and Chief Executive
Officer and each of the Company's four other current executive officers for the
years ended December 31, 1998 and 1997.
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
------------------------------------------------------
OTHER
ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION(2) COMPENSATION(3)
- --------------------------- ---- -------- ------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
David K. Meehan................................... 1998 $239,092 $32,000 $ -- $8,978
Chairman of the Board and 1997 221,000 59,000 -- 9,000
Chief Executive Officer(4)
Jeffrey S. Bragg.................................. 1998 156,552 25,000 -- 5,714
Executive Vice President and 1997 84,806 10,000 -- --
Chief Operating Officer(5)
Kathleen M. Batson................................ 1998 124,010 15,000 -- 6,718
Senior Vice President(6) 1997 -- -- -- --
Kelly K. King..................................... 1998 117,390 15,000 -- 7,094
Senior Vice President, Treasurer, 1997 56,151 7,500 -- 3,909
Chief Financial Officer and
Secretary(7)
Daniel J. White................................... 1998 66,050 -- -- 1,044
President and Chief Executive Officer 1997 -- -- -- --
of Geotrac(8)
</TABLE>
- ---------------
(1) During the year ended December 31, 1997, certain of the executive officers
of the Company were also executive officers or employees of BIG, and, in
certain instances, BIG paid a portion of their respective compensation. The
amounts reflected in the table above for such year were all paid to the
respective executive officers by the Company. David K. Meehan was the only
executive officer of the Company who was paid in excess of $100,000 by the
Company in 1997. During the year ended December 31, 1998, all of the
executive officers of the Company spent substantially all of their time on
the Company's business and were compensated solely by the Company.
(2) Does not include the value of the perquisites provided to certain of the
named executive officers which in the aggregate did not exceed 10% of such
officer's salary and bonus. Also excludes benefits, if any, accruing to
Messrs. Meehan, Bragg and King and Mrs. Batson under the Executive Phantom
Stock Plan of Bankers Financial Corporation, the parent of BIG. No officers
or directors of the Company (with the exception of Robert M. Menke and
Robert G. Menke) are eligible to receive additional grants under such
Phantom Stock Plan. The Company did not grant any options, restricted stock
or other long-term incentive compensation to its executive officers during
either 1997 or 1998.
(3) Reflects matching amounts paid by the Company under its 401(k) plan for the
year indicated.
(4) Mr. Meehan did not receive any cash compensation from BIG during the year
ended December 31, 1997. During such year, Mr. Meehan spent a majority of
his time on the Company's business.
(5) Mr. Bragg joined the Company in May, 1997. He did not receive any cash
compensation from BIG during the year ended December 31, 1997.
(6) Excludes $111,000 in salary and $15,000 in bonus paid to Ms. Batson for her
service as an executive officer of BIG during the year ended December 31,
1997. During such year, Ms. Batson spent less than one-half of her time on
the Company's business.
(7) Excludes $56,151 in salary and $7,500 in bonus paid to Mr. King by BIG for
his service as an executive officer of BIG during the year ended December
31, 1997. During such year, Mr. King spent approximately one-half of his
time on the Company's business.
(8) Mr. White did not join the Company as an officer until the consummation of
the acquisition of Geotrac's predecessor in July, 1998.
7
<PAGE> 10
EMPLOYMENT AGREEMENTS
Effective as of the completion of its initial public offering in February,
1999, the Company entered into employment agreements with each of Messrs.
Meehan, Bragg and King, and Mrs. Batson. The current annual base salary payable
to these executive officers under their respective employment agreements are as
follows: David K. Meehan, $258,000; Jeffrey S. Bragg, $160,000; Kathleen M.
Baton, $130,000; and Kelly K. King, $140,000. The remaining terms of each of the
employment agreements are substantially the same. Each employment agreement
provides for an initial term of three years, subject to automatic continuation
until terminated by either party. Each agreement further provides that, if the
employee is terminated by the Company without cause (as defined therein), the
employee shall be entitled to severance payments, payable in accordance with the
Company's usual payroll practices, equal to the employee's then current annual
base salary. In the event the employee secures employment during the twelve
months following termination, then the Company shall be entitled to a credit
against its obligation to make severance payments in the amount of 75% of the
base salary paid to the employee by his or her new employer during the
twelve-month period following termination by the Company.
Each employment agreement provides that the employee shall be provided
benefits, such as health, life and disability insurance, on the same basis as
the Company's other employees. In addition, to the extent authorized by the
Board of Directors, the employee also shall be entitled to participate in the
Company's bonus, stock option and other plans, if any. Each agreement further
provides that, during the term of the agreement and for a period of two years
thereafter, the employee will not, directly or indirectly, compete with the
Company by engaging in certain proscribed activities.
In connection with the acquisition of Geotrac's predecessor, Geotrac
entered into an employment agreement with Daniel J. White pursuant to which Mr.
White will continue to serve as President and Chief Executive Officer of
Geotrac. This agreement provides for an initial term of four years and shall
continue in effect thereafter until terminated by either party upon 90 days
prior written notice. The agreement provides for an initial annual base salary
of $150,000, subject to annual review by Geotrac's board of directors. To the
extent authorized by Geotrac's board of directors, Mr. White shall be entitled
to participate in any bonus programs established by Geotrac. Mr. White shall
also be entitled 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 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.
STOCK OPTION PLANS
The Company currently maintains two stock option plans to attract, motivate
and retain key employees and members of the Board of Directors who are not
employees of the Company.
Long Term Incentive Plan. The Company currently maintains a Long Term
Incentive Plan (the "Incentive Plan") to attract, retain and motivate
participating employees of the Company and its subsidiaries through awards of
shares of Common Stock, options to purchase shares of Common Stock and stock
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appreciation rights ("SARs"). A total of 875,000 shares of Common Stock may be
issued pursuant to the Incentive Plan. The Incentive Plan has been approved by
the Company's Board of Directors and shareholders.
The Incentive Plan provides for the grant of incentive or nonqualified
stock options to purchase shares of Common Stock. In February, 1999, the
executive officers of the Company were granted options to purchase a total of
205,000 shares of Common stock at $11.00 per share as follows: David K. Meehan,
60,000 shares; Jeffrey S. Bragg, 50,000 shares; Kathleen M. Batson, 35,000
shares; Kelly K. King, 35,000 shares; and Daniel J. White, 25,000 shares. To
date, all employees of the Company as a group, including these executive
officers, have been granted options to purchase a total of 522,500 shares of
Common Stock at $11.00 per share. All of such options expire on the seventh
anniversary of the date of grant. Options shall become exercisable 60% after
three years, 20% after four years and 20% after five years. The Incentive Plan
is administered by the Compensation Committee of the Board of Directors.
Non-Employee Directors' Stock Option Plan. The Company also maintains a
Non-Employee Directors' Stock Option Plan (the "Non-Employee Director Plan") to
secure for the Company and its shareholders the benefits of the incentive
inherent in increased Common Stock ownership by the members of the Company's
Board of Directors who are not employees of the Company. The Non-Employee
Director Plan has been approved by the Company's Board of Directors and
shareholders.
The Non-Employee Director Plan provides for the grant of nonqualified stock
options to purchase up to 7,200 shares of Common Stock in any three-year period
to members of the Board of Directors who are not employees of the Company. A
total of 200,000 shares of Common Stock may be issued pursuant to this plan. In
February, 1999, each non-employee director was granted options to purchase 6,000
shares of Common Stock at $11.00 per share. Non-employee directors receiving
such options will become vested in options for the purchase of 800 shares of
Common Stock after the adjournment of each annual meeting of shareholders of the
Company, to the extent he or she has been granted options that have not yet
vested, and provided that he or she is then a non-employee director of the
Company. In addition, each non-employee director shall become vested in options
for the purchase of 400 shares of Common Stock upon the adjournment of each
regularly scheduled quarterly meeting of the Board of Directors (other than
following the annual meeting of shareholders), to the extent he or she has been
granted options that have not yet vested, and provided that he or she is then a
non-employee director of the Company. Notwithstanding the foregoing, neither
Robert M. Menke nor Robert G. Menke will be granted any option grants under the
Non-Employee Director Plan. All options granted will have an exercise price
equal to the fair market value of the Common Stock as of the date of grant, will
become exercisable upon vesting, and will expire on the sixth anniversary of the
date of grant. The Non-Employee Director Plan is a formula plan and accordingly
is intended to be self-governing. To the extent that questions of interpretation
arise, they will be resolved by the Board of Directors.
Non-Qualified Stock Option Grants. The Company's Board of Directors and
shareholders also have adopted a Non-Qualified Stock Option Plan (the
"Non-Qualified Plan"), pursuant to which non-qualified stock options to purchase
125,000 shares of Common stock at a price per share of $11.00 were granted in
conjunction with the February, 1999 initial public offering to certain executive
officers of BIG, including options to purchase 25,000 shares each to Messrs.
Robert M. Menke and Robert G. Menke, directors of the Company. All of such
options expire on February 10, 2006, the seventh anniversary of the date of
grant. Options shall become exercisable 60% after three years, 20% after four
years and 20% after five years. The Non-Qualified Plan is administered by the
Compensation Committee of the Board of Directors of the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee was established in connection with the
Company's initial public offering in February, 1999. The members of the
Compensation Committee are Messrs. Solomon (Chairman), Hussey (Vice Chairman)
and Grant. Except for David K. Meehan, no officer or employee of the Company
participated in deliberations of the Board of Directors concerning executive
officer compensation during the years ended December 31, 1998 and 1997.
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COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
INTRODUCTION
Under the rules of the Commission, the Company is required to provide
certain information concerning compensation provided to the Company's chief
executive officer and its executive officers reported for the year ended
December 31, 1998. The disclosure requirements for the executive officers
include the use of tables and a report of the Committee responsible for
compensation decisions for the named executive officers, explaining the
rationale and considerations that led to those compensation decisions. The
Compensation Committee of the Board of Directors was formed in connection with
the Company's initial public offering in February, 1999. Prior to such time, the
Board was responsible for these decisions.
COMPENSATION COMMITTEE ROLE
The Compensation Committee of the Board of Directors is currently
responsible for the Company's compensation program for its executive officers,
including the named executive officers. The Compensation Committee is
responsible for establishing the compensation of the Company's directors,
officers and other managerial personnel, including salaries, bonuses,
termination arrangements, and other executive officer benefits. The Compensation
Committee is responsible for the administration of both the Company's Long Term
Incentive Plan, including the recipients, amounts and terms of stock option
grants thereunder, and the Non-Qualified Stock Option Plan. Prior to the
formation of the Compensation Committee in connection with the Company's initial
public offering in February, 1999, the entire Board of Directors performed these
functions.
COMPENSATION PHILOSOPHY
The compensation philosophy for executive officers conforms generally to
the compensation philosophy followed for all of the Company's employees. The
Company's compensation is designed to maintain executive compensation programs
and policies that enable the Company to attract and retain the services of
highly qualified executives. In addition to base salaries, executive
compensation programs and policies consisting of discretionary cash bonuses and
periodic grants of stock options are designed to reward and provide incentives
for individual contributions as well as overall Company performance.
The Compensation Committee monitors the operation of the Company's
executive compensation policies. Key elements of the Company's compensation
program include base salary, discretionary annual cash bonuses and periodic
grants of stock options. The Company's policies with respect to these elements,
including the basis for the compensation awarded the Company's chief executive
officer, are discussed below. While the elements of compensation described below
are considered separately, the Compensation Committee takes into account the
full compensation package offered by the Company to the individual, including
healthcare and other insurance benefits.
Base Salaries. The Company has established competitive annual base
salaries for all executive officers, including the named executive officers.
Effective as of the initial public offering, the Company entered into employment
agreements with each of its executive officers. Each employment agreement
provides for an initial term of three years, subject to automatic continuation
until terminated by either party. See "Executive Compensation -- Employment
Agreements." The annual base salaries for each of the Company's executive
officers, including the Company's chief executive officer, reflect the
subjective judgment of the Board of Directors based on the consideration of the
executive officer's position and tenure with the Company, the Company's needs,
and the executive officer's individual performance, achievements and
contributions to the growth of the Company.
Mr. Meehan's annual base salary as the Company's chief executive officer is
currently $258,000. The Board of Directors and Compensation Committee believe
that this annual base salary is consistent with the salary range established for
this position based on the factors noted above and Mr. Meehan's prior experience
and managerial expertise, his knowledge of the Company's operations and the
industry in which it operates.
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Annual Bonus. Pursuant to their respective employment agreements, the
Company's executive officers are eligible for a discretionary annual cash bonus.
The amount of the cash bonus paid to Mr. Meehan as the Company's chief executive
officer was $32,000 for the year ended December 31, 1998. The amount of this
bonus was determined by the Compensation Committee based upon Mr. Meehan's
tenure with the Company, his individual performance and achievements, and his
contributions to the growth of the Company.
Stock Options. Under the Company's Long Term Incentive Plan, stock options
may be granted to key employees, including executive officers of the Company.
The Long Term Incentive Plan is administered by the Compensation Committee in
accordance with the requirements of Rule 16b-3. The Compensation Committee also
administers the Company's Non-Qualified Stock Option Plan. No options to
purchase shares of Common Stock were granted during the year ended December 31,
1998.
SECTION 162(M) LIMITATIONS
Under Section 162(m) of the Internal Revenue Code, a tax deduction by
corporate taxpayers, such as the Company, is limited with respect to the
compensation of certain executive officers unless such compensation is based
upon performance objectives meeting certain regulatory criteria or is otherwise
excluded from the limitation. Based upon the Compensation Committee's commitment
to link compensation with performance as described in this report, the
Compensation Committee currently intends to qualify compensation paid to the
Company's executive officers for deductibility by the Company under Section
162(m).
COMPENSATION COMMITTEE
E. RAY SOLOMON (CHAIRMAN)
WILLIAM D. HUSSEY (VICE CHAIRMAN)
JOHN A. GRANT, JR.
MARCH 31, 1999
The report of the Compensation Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933 or under the
Securities Exchange Act of 1934 (together, the "Acts"), except to the extent
that the Company specifically incorporates this information by reference, and
shall not otherwise be deemed filed under such Acts.
CERTAIN TRANSACTIONS
ADMINISTRATION SERVICES AGREEMENT
Effective as of January 1, 1998, the Company and BIG entered into an
Administration Services Agreement (the "Administration Agreement") pursuant to
which BIG (i) provides the Company with various administrative and support
services, including human resources and benefits administration, accounting,
legal, cash management and investment services, requested by the Company from
time to time and reasonably necessary in the conduct of its operations, and (ii)
makes available its facilities to the Company as requested by the Company from
time to time and as reasonably necessary to the conduct of its operations. The
Company reimburses BIG for all direct and directly allocable expenses determined
by BIG to be attributable to the provision of such services and facilities, plus
an agreed upon assessment for direct overhead. For the services and facilities
provided in 1998, the Company paid BIG a quarterly fee of $396,250. In addition,
the Company shall pay BIG an annual fee of $120,000 for routine legal services
provided. Legal services provided with respect to non-routine matters, such as
mergers and acquisitions and equity or debt offerings, will be billed to the
Company at negotiated prices. The current term of the Administration Agreement
expires on December 31, 1999, but may be renewed by the Company, at its sole
option, for an additional one-year period upon 30 days prior written notice.
Thereafter, the Administration Agreement may be terminated by either party upon
60 days prior written notice. The Administration Agreement may be terminated by
either party
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upon 60 days prior written notice. The Administration Agreement memorializes the
administrative service arrangements that existed between the Company and BIG
prior to such time.
Effective as of January 1, 1999, the Administration Agreement was amended
to eliminate certain accounting and internal audit service functions (which
functions are currently performed by the Company directly) and to reduce the
quarterly fee payable by the Company to BIG to $258,750, subject to
renegotiation by either party.
SERVICE AGREEMENTS
During 1996 and 1997, the Company provided information technology services
to BIG based generally on actual cost incurred (including selling, general and
administrative expenses), which amounted to $4,787,772 and $3,236,255 in
outsourcing revenue for 1996 and 1997, respectively. For the year ended December
31, 1998, these charges are included in the fee structure related to the
affiliated service agreement discussed below.
Under the terms of its service arrangements with BIG in 1997, the Company
charged a monthly fee for its policy and claims administration services based on
certain factors. For policy and claims administration, the Company charged a fee
based on a percentage of direct written premiums and a percentage of direct paid
losses for certain lines of business, respectively. The fee ranged from 8.5% to
9.0% for services rendered in connection with policy administration and 0.5% to
15.0% for claims administration services related to these policies. Also, in
1997, the Company processed claims for BIG and its other affiliates related to
those lines of business not covered under the service agreement and provided
other miscellaneous services on a cost reimbursement basis. Charges related to
this claims processing and other miscellaneous services amounted to $9,518,525
for 1997.
Effective as of January 1, 1998, the Company entered into a separate
Service Agreement (each a "Service Agreement") with each of Bankers Insurance
Company, First Community Insurance Company and Bankers Security Insurance
Company, all direct or indirect subsidiaries of BIG, pursuant to which the
Company continues to provide policy administration, claims administration and
data processing services to such entities in connection with their flood,
homeowners and automobile liens of business, and claims administration and data
processing services for all such entities' other P&C lines of business. Under
the Service Agreements, as amended, each entity pays the Company as follows: (1)
for its policy administration services a monthly fee based upon direct written
premiums for the flood, homeowners and automobile insurance programs; (2) for
its claims administration services a monthly fee based upon direct earned
premiums for the property, casualty, automobile property, automobile casualty,
flood, and workers' compensation insurance programs (In addition, a monthly fee
based upon direct incurred losses is charged for flood claims administration and
a reimbursement not to exceed 5% of direct incurred losses from a single event
in excess of $2 million is charged to property claims.); (3) for its data
processing services, a monthly fee based upon direct written premiums for all
insurance programs; and (4) for certain customer services such as mailroom,
policy assembly, records management and cash office a monthly fee based upon
direct written premiums (except, if provided in connection with their flood,
homeowner and automobile insurance lines, where no such fees are imposed).
Effective January 1, 1999, these fee arrangements were modified to provide for
tiered pricing based on the volume of business processed. These modifications
resulted in a reduction in the base fees charged for certain lines of business
and increases in base fees charged for other lines of business to better reflect
the services provided and competitive market rates for such services. The term
of each Service Agreement shall expire on June 1, 2001, provided that it shall
thereafter be automatically extended until terminated upon 90 days prior notice
by either party.
In addition, under the Service Agreement with BIC, the Company administers
an AYO Claims Agreement between BIG and Florida Windstorm Underwriting
Association, which agreement BIG assigned to BIC on December 15, 1998. The
Company processes and adjusts all claims made under the AYO Claims Agreement.
The administrative fee (equal to a percentage of each loss paid) is allocated
between BIC and the Company.
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Effective December 1, 1998, the Company, through its subsidiaries,
Insurance Management Solutions, Inc., entered into a service agreement with
Bankers Life Insurance Company ("BLIC"), an indirect subsidiary of BIG, pursuant
to which the Company provides certain administrative services and allows BLIC to
make use of certain of the Company's property, equipment and facilities in
connection with BLIC's day-to-day operations. Under the service agreement, as
amended, BLIC agrees to pay the Company predetermined fees on a quarterly basis.
To date, no services have been provided and no fees have been charged or paid
under this service agreement. The term of the service agreement with BLIC ends
on June 1, 2001, but may be terminated at any time by BLIC upon 90 days prior
written notice.
PROPERTY LEASES
The Company currently leases from BIC approximately 76,700 square feet of
office space in St. Petersburg, Florida at a monthly rate of approximately
$76,700. The initial term of this lease expires on December 31, 1999. The
Company has an option to renew this lease for an additional two-year term at a
monthly rate not to exceed approximately $83,200.
The Company currently leases from BIG approximately 7,400 square feet of
office space in St. Petersburg, Florida at a monthly rate of approximately
$7,400. The initial term of this lease also expires on December 31, 1999,
subject to the Company's right to renew the lease for an additional two-year
period at a monthly rate not to exceed approximately $8,000.
Effective January 1, 1998, BIG assigned to the Company a lease of
approximately 6,600 square feet of office space in St. Petersburg, Florida. This
lease expires on May 31, 1999, subject to the Company's right to renew the lease
for four successive one-year terms. The current monthly rental rate under this
lease is approximately $2,500. The Company is currently negotiating with BIG to
reassign this lease to BIG as of the summer of 1999. No assurances can be given
that such assignment will occur.
EMPLOYEE LEASING AGREEMENT
Effective as of January 1, 1998, the Company entered into an Employee
Leasing Agreement with BIC (the "Employee Leasing Agreement") pursuant to which
the Company continues to lease various personnel, including customer service
personnel, from BIC. The number of employees to be leased will vary depending on
the needs of the Company and the availability of employees from BIC. The Company
shall be responsible for all expenses associated with such leased employees,
including salaries, bonuses and benefits. The Company may terminate any leased
employee for disloyalty, misconduct or other similar cause. The Employee Leasing
Agreement is terminable by either the Company or BIC upon 60 days prior notice.
SALES AND ASSIGNMENT AGREEMENT
In May, 1998, the Company entered into a sales and assignment agreement
with BIG and certain affiliated companies whereby certain assets were
transferred and assigned to the Company, effective retroactively to April, 1998,
for use in its business. The assets, including, but not limited to, telephone
equipment, computer hardware and software, and service marks were transferred at
their net book value as of the date of transfer. The Company paid consideration
consisting of $325,075 in cash and entered into two promissory notes amounting
to $2,802,175. The notes were repaid in full in February, 1999 out of the net
proceeds to the Company from its initial public offering. In addition, the
Company assumed the existing leases with unaffiliated third parties relating to
various computer equipment.
SOFTWARE LICENSING AGREEMENT
Effective January 1, 1998, the Company entered into a non-exclusive license
agreement with BIG and BIC pursuant to which the Company licenses its primary
operating systems from BIG and BIC in exchange for a nominal fee. The term of
the license is perpetual. The license agreement provides that the Company shall
be solely responsible for maintaining and upgrading the systems and shall have
the authority to sell or license such systems to third parties.
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TAX INDEMNITY AGREEMENT
As of July 31, 1998, BIG had sold a sufficient number of shares in the
Company such that the Company will no longer file its tax return with Bankers
International Financial Corporation ("BIFC") on a consolidated basis. Effective
as of July 31, 1998, the Company and BIFC entered into a Tax Indemnity Agreement
pursuant to which (i) BIFC agrees to indemnify the Company in the event the
Company incurs a tax liability as a result of taxable income of BIFC or one of
its subsidiaries, and (ii) the Company agrees to indemnify BIFC in the event
BIFC incurs a tax liability as a result of taxable income of the Company or one
of its subsidiaries. Each party also agrees to reimburse the other for certain
tax credits arising on or before July 31, 1998. Under the Tax Indemnity
Agreement, the parties terminated a previous tax allocation agreement which had
been in effect since October 1, 1993.
GEOTRAC TRANSACTIONS
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 the Company in connection with
its acquisition of a 49% interest in YoSystems, as described below. The Company
has since assumed the loan from Huntington National Bank, which is payable in
quarterly installments of $312,500 plus interest, with the final installment due
on June 30, 2004.
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, the Company,
through a subsidiary, Bankers Hazard Determination Services, Inc. ("BHDS"),
purchased a 49% interest in YoSystems for $6,750,000 in cash. At that time, the
Company did not contemplate acquiring the remaining 51% of YoSystems, Inc.
In connection with the Company's purchase of a 49% interest in YoSystems,
BHDS issued 675,000 shares of non-cumulative 8% preferred stock to Heritage
Hotel Holding Company ("Heritage"), a corporation owned by Richard M. Brubaker,
the half brother of Robert M. Menke, a director of the Company. 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. 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, the Company purchased the outstanding preferred stock of BHDS in exchange
for
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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 the Company from its initial
public offering. After May 8, 1998, the preferred stock of BHDS held by the
Company was exchanged for 675,000 shares of 8.5% cumulative preferred stock of
BHDS. The shares of non-cumulative 8% preferred stock were then retired.
Dividends declared on the preferred stock for 1997 and 1998 were $229,315 and
$189,370, respectively.
In July, 1998, the Company 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." The Company acquired the remaining 51% interest from Mr. White and his
wife and certain minority shareholders in exchange for (i) 524,198 shares of
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,
the Company assumed the loan in the original principal amount of $8,750,000 from
Huntington National Bank made to YoSystems in July, 1997. In connection with
this transaction, Geotrac of America, Inc. entered into an employment agreement
with Mr. White pursuant to which Mr. White will serve as the President and Chief
Executive Officer of Geotrac of America, Inc.
In addition, the Company entered into a Corporate Governance Agreement with
Mr. White and Geotrac setting forth certain terms and conditions upon which
Geotrac will operate following the merger. The Corporate Governance Agreement
provides, in part, that, for so long as Mr. White owns stock in the Company or
Geotrac, or has an option to purchase stock in Geotrac, (i) the Company 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) the Company 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 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 the Company 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. 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 Company does not currently intend to sell or
otherwise dispose of all or part of the operations of Geotrac.
The board of directors of Geotrac of America, Inc. 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 appointed himself and Mr. Payne to such board. Mr. Howard
is an executive officer of various subsidiaries of BIG and the former President
of BHDS.
Geotrac currently leases a 12,400 square-foot facility in Norwalk, Ohio
from DanYo LLC, a limited liability company wholly owned by Daniel J. White and
his spouse. This lease is for a term of five years, expiring on August 31, 1999,
and provides for monthly rental payments of approximately $8,717, plus payment
of utilities, real estate taxes and assessments, insurance, repairs and similar
expenses.
MISCELLANEOUS
In February, 1999, a wholly-owned subsidiary of Venture Capital
Corporation, a shareholder of the Company, loaned $12.0 million to BIG in
exchange for a subordinated note. This loan was funded by using a portion of the
net proceeds received by Venture Capital Corporation in the Company's initial
public offering. BIG, in turn, used a portion of such loan proceeds to satisfy a
note payable (including accrued interest) to the Company which totaled
$5,322,455. The balance of the loan proceeds will provide BIG with additional
capital to repay other outstanding indebtedness and expand its operations. The
Company, in turn, used the funds received from BIG, together with a portion of
the net proceeds from its initial public offering, to satisfy $7,054,996 in
accounts, income taxes and notes payable (including accrued interest) payable to
BIG.
The Audit Committee of the Board of Directors is responsible for reviewing
all future transactions between the Company and any officer or director of the
Company or any entity in which an officer or director has a material interest.
Any such transactions must be on terms no less favorable than those that could
be obtained on an arm's-length basis from independent third parties.
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INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed Grant Thornton LLP as the Company's
independent auditors for the year ending December 31, 1999. A representative of
Grant Thornton LLP will be present at the Annual Meeting of Shareholders. Such
representative will be available to respond to appropriate questions and may
make a statement if he or she so desires.
SHAREHOLDER PROPOSALS
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 the Company's proxy statement for its 2000 Annual Meeting of
Shareholders is December 15, 2000. After February 28, 2000, notice to the
Company 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 the Company for the 2000 Annual Meeting of Shareholders
may exercise discretionary voting power with respect to any such proposal.
OTHER MATTERS
Management knows of no matter to be brought before the Annual Meeting which
is not referred to in the Notice of Annual Meeting. If any other matters
properly come before the Annual Meeting, it is intended that the shares
represented by Proxy will be voted with respect thereto in accordance with the
judgment of the persons voting them.
By Order of the Board of Directors,
KELLY K. KING
Secretary
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1999 ANNUAL MEETING OF SHAREHOLDERS OF
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
PROXY SOLICITATED ON BEHALF OF BOARD OF DIRECTORS
The undersigned hereby appoints David K. Meehan, Jeffrey S. Bragg and Kelly
K. King, and each of them, as proxies, each with full power of substitution, to
represent and to vote all shares of common stock of INSURANCE MANAGEMENT
SOLUTIONS GROUP, INC., a Florida corporation (the "Company"), at the Annual
Meeting of Shareholders of the Company to be held on Tuesday, May 25, 1999, at
5:30 p.m., EST, and at any adjournment thereof, hereby revoking any and all
proxies heretofore given:
1. Election of Directors:
[ ] FOR the election of DAVID K. MEEHAN, DANIEL J. WHITE and JOHN A.
GRANT, JR., for terms expiring in 2002 (collectively, the
"Nominees")
[ ] WITHHOLD AUTHORITY to vote for the Nominees
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE A
LINE THROUGH THE NOMINEE'S NAME IN THE LIST ABOVE.)
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting.
(continued and to be signed on reverse side)
(continued from other side)
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR THE NOMINEES.
Dated: ---------------- , 1999
------------------------------
Signature of Shareholder
------------------------------
Signature of Shareholder if
held jointly
Please sign exactly as your
name appears hereon. If shares
are owned by more than one
person, all owners should
sign. Persons signing as
executors, administrators,
trustees or in similar
capacities should so indicate.
If a corporation, please sign
full corporate name by the
president or other authorized
officer. If a partnership,
please sign in partnership
name by authorized person.
PLEASE COMPLETE, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE
ENCLOSED POSTAGE PAID ENVELOPE.
