Document:

ex10-2

 

Exhibit 10.2

MASTER PROMISSORY NOTE

	 	 	 
	$5,000,000.00	 	
August 14, 2001

         FOR VALUE RECEIVED, the undersigned, BANKERS INSURANCE GROUP, INC., a
Florida corporation (herein “Debtor”), promises to pay to the order of
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC., a Florida corporation, together
with any other holder hereof (herein “Holder”), the principal sum of Five
Million and 00/100 ($5,000,000) U.S. Dollars, together with interest thereon
from the date hereon at a rate equal to the “Prime Rate” (as hereinafter
defined) plus 1.5% per annum, both principal and interest being payable at
Holder’s place of business, 360 Central Avenue, St. Petersburg, Florida 33701
or at such other place as Holder may designate from time to time, in the
following manner:

	 	 	 	Commencing on the first day of September, 2001, all
accrued and unpaid interest shall be due and payable
on the first day of each calendar month of each and
every year (a “Payment Date”). All unpaid principal
and interest shall be due and payable in full on May
31, 2002.

         Credit and Security Agreement.  Unless the context shall otherwise
require, capitalized terms not defined herein shall have the meanings assigned
thereto in the Credit and Security Agreement dated of even date herewith, being
executed and delivered by and between Debtor and Holder.

         Rate.  For the purpose of this Note, the “Prime Rate” shall mean the base
rate on corporate loans posted by at least seventy-five percent (75%) of the
nation’s 30 largest banks, as quoted in the “Money Rates” section of the Wall
Street Journal, or if such rate is discontinued, then the Holder shall
substitute an index, as determined by Holder, to be comparable, in its sole
discretion.

         Proceeds.  It is contemplated that all proceeds extended to Debtor under
this Note shall be used exclusively for advances to Bankers Underwriters, Inc.,
a Florida corporation and wholly-owned subsidiary of Debtor as well as for
various working capital requirements related to Debtor’s on-going operation.

         Master Note.  This Note is a master note, and it is contemplated that any
amounts and liability incurred in the on-going operation thereof on behalf of
Debtor and as evidenced hereby will be advanced from time to time to the Debtor
by Holder in installments, as requested by the Debtor and agreed to by Holder,
under the Credit and Security Agreement of even date hereof between Debtor and
Holder.

         Advances.  It is further contemplated that any amounts advanced under this
Note may be prepaid from time to time by the Debtor. Debtor may borrow, repay
and reborrow hereunder at any time, up to a maximum aggregate amount
outstanding at any one time equal to the principal amount of this Note, any
other documents executed in connection with this Note, or any other note or
other loan documents now or hereafter executed in connection with any other
obligation of Debtor to Holder, and provided that the borrowings hereunder do
not exceed any borrowing base or other limitation on borrowings by Debtor. By
reason of such prepayments hereon there may be times when no indebtedness is
owing hereunder, and notwithstanding any such occurrence, this Note shall
remain valid and shall be in full force and effect as to each subsequent
principal advance made hereunder. Each principal advance and each payment made
pursuant to this Note shall be reflected by notations made by Holder on the
grid attached hereto and Holder is hereby authorized to record on such grid all
such principal advances and payments. The aggregate unpaid amounts reflected
by the notations made by Holder on the attached grid shall be deemed rebuttably
presumptive evidence of the principal amount remaining outstanding and unpaid
on this Note.

 

 

No failure of Holder so to record any advance or payment shall limit or
otherwise affect the obligation of the Debtor hereunder with respect to any
advance, and no payment of principal by the Debtor shall be affected by the
failure of Holder so to record the same.

         Advance Obligations.  Nothing herein contained shall obligate or require
Holder to make any advances hereunder and all advances shall be made at the
option of Holder. Holder shall incur no liability for its refusal to advance
funds based upon its determination that any conditions of further advances have
not been met by Debtor. This Note shall be valid and enforceable as to the
aggregate amount advanced at any time hereunder, whether or not the full-face
amount hereof is advanced.

         Application of Payments.  Each payment on the indebtedness evidenced
hereby will first reduce charges related to this Note owed by the Debtor that
are neither principal nor interest. The remainder of each such payment will be
applied first to the interest then accrued on said principal sum remaining
unpaid, and then to the reduction of such unpaid principal. Any partial
prepayments of principal will be applied to installments due in the inverse
order of their maturity and no such prepayment of principal will have the
effect of postponing, satisfying, reducing, or otherwise affecting any
scheduled installment before the principal of and interest on this Note is,
and all other charges due hereunder are, paid in full. Principal and interest
shall be payable in lawful money of the United States of America.

         Prepayment.  The Holder hereof shall not incur any penalty upon the
prepayment of all or any part of the indebtedness evidenced hereby.

         Interest Calculation.  Interest shall be calculated on all amounts
advanced based on the actual number of days said amounts are outstanding.
Interest shall be computed on the basis of a year of actual number of days per
year [i.e., three hundred sixty-five (365) days] and charged for the actual
number of days in the payment period.

         Maximum Rate.  Debtor shall have no obligation to pay interest or payments
in the nature of interest in excess of the maximum rate of interest allowed to
be contracted for by law, as changed from time to time, applicable to this Note
(herein “Maximum Rate”). Any interest in excess of the Maximum Rate paid by
Debtor (herein “Excess Sum “) shall be credited as a payment of principal or,
if Debtor so requests in writing, returned to Debtor; or, if the indebtedness
and other obligations evidenced by this Note have been paid in full, returned
to Debtor together with any interest at the same rate as was paid by Debtor
during such period. Any Excess Sum credited to principal shall be credited as
of the date paid to Holder. Holder may, without such action constituting a
breach of any obligations to Debtor, seek judicial determination of the
applicable rate of interest, and its obligation to pay or credit any proposed
Excess Sum to Debtor.

         Collateral.  The obligations under this Note are secured by and subject to
the terms and conditions of the Credit and Security Agreement and various other
loan documents of even date hereof, executed by and between Debtor and Holder,
respectively.

         Past Due.  Time is of the essence hereunder. If any payment of principal
or interest hereby required is overdue for more than ten (10) days, the Holder
of this Note may, at its option, and without notice, declare the entire balance
of principal then remaining unpaid to be immediately due and payable, and any
failure to exercise said option shall not constitute a waiver of the right to
exercise the same at any other time. Further, Holder of this Note may, at its
option, and without notice, adjust the interest due on the aggregate principal
amount remaining due and unpaid, together with accrued interest, upward, to the
rate of eighteen percent (18%) per annum, or the Maximum Rate of interest
permitted by law, whichever rate shall be the lesser, which rate of interest,
as adjusted upward, shall be paid on all sums due hereunder until the said sums
have been paid in full, regardless of any payments made by the maker hereof,
and accepted by the Holder, after said option has been exercised. Upon default
in making any payment hereby required, Debtor promises to pay all costs and
expenses, including reasonable attorneys’ fees

2

 

 (including the cost of any appeals), of not less than ten percent (10%),
incurred in collecting this Note by legal proceedings or through an attorney.

         Remedies.  The remedies of Holder herein and in the Credit and Security
Agreement shall be cumulative and concurrent, and may be pursued singularly,
successively, or together, at the sole discretion of Holder, and may be
exercised as often as occasion therefor shall arise. No action or omission of
Holder, including specifically any failure to exercise or forbearance in the
exercise of any remedy, shall be deemed to be a waiver or release of the same,
such waiver or release to be effected only through a written document executed
by Holder and then only to the extent specifically recited therein. A waiver
or release with reference to any one event shall not be construed as continuing
or as constituting a course of dealing, nor shall it be construed as a bar to,
or as a waiver or release of, any subsequent remedy as to a subsequent event.

         Set-Off.  In addition to all liens upon, and rights of sets-off against,
any monies, securities, or other property of the Debtor given to Holder by law,
Holder shall have a lien upon and a right of set-off against all monies,
securities and other property of the Debtor now or hereafter in the possession
of, or on deposit with, Holder, whether held in a general or special account or
deposit for safekeeping, in trust or otherwise, and every such lien and right
of set-off as may be exercised without demand upon or notice to the Debtor, and
the Holder shall have no liability with respect to any of Debtor’s checks or
other items which may be returned or other fund transfers which may not be made
due to insufficient funds thereafter.

         Exercise/Modification.  Neither any failure nor any delay on the part of
Holder in exercising any right, power or privilege under this Note shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise or the exercise of any other right,
power or privilege. No modification, amendment or waiver of any provision of
this Note shall be effective unless in writing and signed by a duly authorized
officer of Holder, and then the same shall be effective only in the specific
instance and for the purposes for which given. No notice to, or demand on, the
Debtor in any case shall entitle the Debtor to any other or further notice or
demand in the same, similar or other circumstances.

         Severability.  Any provision of this Note which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

         Waiver.  Debtor and any other person liable for the payment hereof
respectively, hereby expressly waives any valuation and appraisal, presentment,
demand for payment, notice of dishonor, protest, notice of non-payment or
protest, all other forms of notice whatsoever, and diligence in collection.

         No Waiver.  Acceptance of payments marked “payment in full” or “in
satisfaction” or words to similar effect, shall not affect the duty of Debtor
to pay all obligations due hereunder, and shall not affect the right of Holder
to pursue all remedies available to it hereunder or under any other agreement
between the Debtor hereof and the Holder, including but not limited to the
Credit and Security Agreement and Stock Option Agreement each dated of even
date herewith.

         Jury Trial.  DEBTOR AND ANY OTHER PERSON LIABLE FOR PAYMENT HEREOF, BY
EXECUTING THIS NOTE OR ANY OTHER DOCUMENT CREATING SUCH LIABILITY, WAIVE THEIR
RIGHT TO A TRIAL BY JURY IN ANY ACTION, WHETHER ARISING IN CONTRACT OR TORT, BY
STATUTE OR OTHERWISE, IN ANY WAY RELATED TO THIS NOTE. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR HOLDER’S EXTENDING CREDIT TO DEBTOR AND NO WAIVER OR
LIMITATION OF HOLDER’S RIGHTS UNDER THIS

3

 

 PARAGRAPH SHALL BE EFFECTIVE UNLESS IN WRITING AND MANUALLY SIGNED ON
HOLDER’S BEHALF.

         Jury Trial Consideration.  Debtor acknowledges that the above paragraph
has been expressly bargained for by Holder as part of the loan evidenced hereby
and that, but for Debtor’s agreement and the agreement of any other person
liable for payment hereof thereto, Holder would not have extended the loan for
the term and with the interest rate provided herein.

         Binding.  The provisions of this Note shall be binding upon the heirs,
successors and assigns of Debtor, except that Debtor may not assign or transfer
its obligation hereunder without the written consent of Holder, and shall inure
to the benefit of Holder, its successors and assigns.

         Governing Law.  This Note is to be governed by and construed under the
laws of the State of Florida, without regard to choice of law provisions as
amended, except as modified by the laws and regulations of the United States of
America.

         Venue.  Debtor hereby consents and submits to the jurisdiction of the
courts of the State of Florida and, notwithstanding his, her, their or its
place of residence or organization or the place of execution of this Note, any
litigation relating hereto, whether arising in contract or tort, by statute or
otherwise, shall be brought in (and, if brought elsewhere, may be transferred
to) a State Court of competent jurisdiction in Pinellas County, Florida.

         Paragraph Headings; Gender and Number.  The headings inserted at the
beginning of each paragraph are for convenience of reference only and shall not
limit or otherwise affect or be used in the construction of any of the terms or
provisions hereof. The plural shall include the singular and the singular, the
plural, wherever the context so admits. The masculine shall include the
feminine and the neuter; the feminine, the masculine and the neuter; and the
neuter, the masculine and the feminine.

         Replacement Note.  This Note constitutes a replacement and substitute for
the Master Promissory Note dated August 14, 2001, of Borrower payable to the
order of Holder in the principal amount of Five Million and 00/100 ($5,000,000)
Dollars and with a stated maturity date of February 28, 2002 (the “Original
Note”). The indebtedness evidenced by the Original Note is continuing
indebtedness of Borrower, and nothing herein shall be deemed to constitute a
payment, settlement or novation of the Original Note, or to release or
otherwise adversely affect any lien, mortgage or security interest securing
such indebtedness or any rights of Holder against any party primarily or
secondarily liable for such indebtedness.

	 	 	 	 	 
	 	 	DEBTOR:

         

BANKERS INSURANCE GROUP, INC.
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:
	 	Robert G. Southey
	 	 	 	 	

	 	 	
Title:
	 	Secretary
	 	 	 	 	

4

 

GRID REFLECTING PAYMENTS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	OUTSTANDING
	 	 	AMOUNT	 	INTEREST	 	PRINCIPAL	 	PRINCIPAL
	DATE	 	ADVANCED	 	PAYMENT	 	PAYMENT	 	BALANCE
	
	 	
	 	
	 	
	 	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

5ex10-5

 

EXHIBIT 10.5

AMENDMENT NO. 1 TO

CREDIT AND SECURITY AGREEMENT

         THIS AMENDMENT NO. 1 dated as of March 14, 2002 (this “Amendment”), to the
Credit and Security Agreement between Borrower and Lender dated as of August
14, 2001 (as amended or modified and in effect on the date hereof, the “Credit
Agreement”) and the amendment and restatement of the $5,000,000 Master
Promissory Note due February 28, 2001 (as amended or modified and in effect on
the date hereof, the “Promissory Note”) dated August 14, 2001, are each made
between BANKERS INSURANCE GROUP, INC., a Florida corporation (“Borrower”), and
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC., a Florida corporation (“Lender”).
Capitalized terms defined in the Credit Agreement shall have the same
respective meanings herein, unless herein otherwise defined.

W I T N E S S E T H:

         WHEREAS, Borrower has requested certain modifications to the Credit
Agreement and the Promissory Note as provided herein;

         WHEREAS, Lender is willing to modify the Credit Agreement and the
Promissory Note as set forth herein, subject to the terms and conditions set
forth herein;

         NOW, THEREFORE, in consideration of the premises and mutual agreements
herein contained, the parties hereto agree as follows:

         1.  AMENDMENTS TO THE CREDIT AGREEMENT.  The Credit Agreement shall be and
is hereby amended, effective on the Amendment Effective Date (as defined in
Section 3 below), as follows:

		
	 	         a.  Section 4(c) of the Credit Agreement shall be and is
hereby amended by deleting the date “February 28, 2002” and
substituting the date “May 31, 2002” therefor.

		
	 	         b.  Section 5 of the Credit Agreement shall be and is hereby
amended by deleting the date “February 28, 2002” therefrom and
substituting the date “May 31, 2002” therefor.

         2.  AMENDMENT AND RESTATEMENT OF THE PROMISSORY NOTE.  The Promissory Note
shall be and is hereby amended by deleting it in its entirety and substituting
therefor the form of Master Promissory Note attached as Exhibit A hereto.

         3.  EFFECTIVENESS.  The amendments to the Credit Agreement and the
Promissory Note set forth in Sections 1 and 2 above shall become effective on
the date hereof (the “Amendment Effective Date”) if, and only until, each of
the following conditions precedent hereto shall be satisfied:

 

 

		
	 	         a.  Lender shall have received all of the following, each duly
executed and dated the date hereof, in form and substance
satisfactory to Lender: (i) counterparts hereof, duly executed by
and authorized by Borrower and Lender and (ii) a replacement
Master Promissory Note in the principal amount of Five Million and
00/100 Dollars ($5,000,000) and with a stated maturity date of May
31, 2002, duly executed and authorized by Borrower, substantially
in the form of Exhibit A attached hereto.

		
	 	         b.  Each of the following statements shall be true and correct
as of the Amendment Effective Date and after giving effect to this
Amendment:

	 	i.	 	no Event of Default or Default has
occurred and is continuing or would occur as a result
of the effectiveness of this Amendment, and Borrower is
not in violation of any law or governmental regulation
or court order or decree; and
	 
	 	ii.	 	the representations and warranties set
forth in Section 9 of the Credit Agreement, in the
Promissory Note and in each Loan Document are true and
correct on and as of the Amendment Effective Date as if
made on and as of such date.

         4.  GOVERNING LAW.  This Amendment shall be construed in accordance with
and governed by the laws of the State of Florida, without regard to any choice
of law provisions. Further, the venue for any action brought to enforce any of
the provisions hereof shall be in a state court of competent jurisdiction in
Pinellas County, Florida, and any action commenced in any other forum may be
removed to a state court of competent jurisdiction in Pinellas County, Florida.

         5.  COUNTERPARTS.  This Amendment may be executed in any number of
counterparts, and by the parties hereto on the same or separate counterparts,
and each counterpart, when executed and delivered, shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same document.

         6.  REFERENCE TO CREDIT AGREEMENT AND LOAN DOCUMENTS.  Except as herein
amended, the Credit Agreement shall remain in full force and effect. As
amended hereby, the Credit Agreement is hereby ratified, approved and confirmed
in all respects. On and after the Amendment Effective Date, each reference to
the Credit Agreement in the Loan Documents, in the Promissory Note and in any
other agreement, document or instrument executed and delivered pursuant to the
Credit Agreement shall mean and be a reference to the Credit Agreement, as
amended by this Amendment.

         7.  SUCCESSORS.  This Amendment shall be binding upon Borrower, Lender and
their respective successors and assigns, and shall inure to the benefit of
Borrower, Lender and their respective successors and assigns.

         8.  NOTICES.  Any and all notices, requests, certificates and other
instruments executed and delivered after the execution and delivery of this
Amendment may refer to the Credit Agreement and the Promissory Note without
making specific reference to this

2

 

 Amendment but nevertheless all references shall include this Amendment
unless the context otherwise requires.

         IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized and delivered
at Chicago, Illinois, as of the date first written above.

	 	 	 	 	 
	 	 	BANKERS INSURANCE GROUP, INC.

(“Borrower”)
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:
	 	Robert G. Southey
	 	 	 	 	

	 	 	
Title:
	 	Secretary
	 	 	 	 	

	
	
	
	

	
	
	
	

	
	
	
	

	 	 	INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.

(“Lender”)
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:
	 	David M. Howard
	 	 	 	 	

	 	 	
Title:
	 	Chief Executive Officer
	 	 	 	 	

3

 

Exhibit A

MASTER PROMISSORY NOTE

	 	 	 
	$5,000,000.00	 	
August 14, 2001

         FOR VALUE RECEIVED, the undersigned, BANKERS INSURANCE GROUP, INC., a
Florida corporation (herein “Debtor”), promises to pay to the order of
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC., a Florida corporation, together
with any other holder hereof (herein “Holder”), the principal sum of Five
Million and 00/100 ($5,000,000) U.S. Dollars, together with interest thereon
from the date hereon at a rate equal to the “Prime Rate” (as hereinafter
defined) plus 1.5% per annum, both principal and interest being payable at
Holder’s place of business, 360 Central Avenue, St. Petersburg, Florida 33701
or at such other place as Holder may designate from time to time, in the
following manner:

	 	 	 	Commencing on the first day of September, 2001, all
accrued and unpaid interest shall be due and payable
on the first day of each calendar month of each and
every year (a “Payment Date”). All unpaid principal
and interest shall be due and payable in full on May
31, 2002.

         Credit and Security Agreement.  Unless the context shall otherwise
require, capitalized terms not defined herein shall have the meanings assigned
thereto in the Credit and Security Agreement dated of even date herewith, being
executed and delivered by and between Debtor and Holder.

         Rate.  For the purpose of this Note, the “Prime Rate” shall mean the base
rate on corporate loans posted by at least seventy-five percent (75%) of the
nation’s 30 largest banks, as quoted in the “Money Rates” section of the Wall
Street Journal, or if such rate is discontinued, then the Holder shall
substitute an index, as determined by Holder, to be comparable, in its sole
discretion.

         Proceeds.  It is contemplated that all proceeds extended to Debtor under
this Note shall be used exclusively for advances to Bankers Underwriters, Inc.,
a Florida corporation and wholly-owned subsidiary of Debtor as well as for
various working capital requirements related to Debtor’s on-going operation.

         Master Note.  This Note is a master note, and it is contemplated that any
amounts and liability incurred in the on-going operation thereof on behalf of
Debtor and as evidenced hereby will be advanced from time to time to the Debtor
by Holder in installments, as requested by the Debtor and agreed to by Holder,
under the Credit and Security Agreement of even date hereof between Debtor and
Holder.

         Advances.  It is further contemplated that any amounts advanced under this
Note may be prepaid from time to time by the Debtor. Debtor may borrow, repay
and reborrow hereunder at any time, up to a maximum aggregate amount
outstanding at any one time equal to the principal amount of this Note, any
other documents executed in connection with this Note, or any other note or
other loan documents now or hereafter executed in connection with any other
obligation

 

 

of Debtor to Holder, and provided that the borrowings hereunder do not
exceed any borrowing base or other limitation on borrowings by Debtor. By
reason of such prepayments hereon there may be times when no indebtedness is
owing hereunder, and notwithstanding any such occurrence, this Note shall
remain valid and shall be in full force and effect as to each subsequent
principal advance made hereunder. Each principal advance and each payment made
pursuant to this Note shall be reflected by notations made by Holder on the
grid attached hereto and Holder is hereby authorized to record on such grid all
such principal advances and payments. The aggregate unpaid amounts reflected
by the notations made by Holder on the attached grid shall be deemed rebuttably
presumptive evidence of the principal amount remaining outstanding and unpaid
on this Note. No failure of Holder so to record any advance or payment shall
limit or otherwise affect the obligation of the Debtor hereunder with respect
to any advance, and no payment of principal by the Debtor shall be affected by
the failure of Holder so to record the same.

         Advance Obligations.  Nothing herein contained shall obligate or require
Holder to make any advances hereunder and all advances shall be made at the
option of Holder. Holder shall incur no liability for its refusal to advance
funds based upon its determination that any conditions of further advances have
not been met by Debtor. This Note shall be valid and enforceable as to the
aggregate amount advanced at any time hereunder, whether or not the full-face
amount hereof is advanced.

         Application of Payments.  Each payment on the indebtedness evidenced
hereby will first reduce charges related to this Note owed by the Debtor that
are neither principal nor interest. The remainder of each such payment will be
applied first to the interest then accrued on said principal sum remaining
unpaid, and then to the reduction of such unpaid principal. Any partial
prepayments of principal will be applied to installments due in the inverse
order of their maturity and no such prepayment of principal will have the
effect of postponing, satisfying, reducing, or otherwise affecting any
scheduled installment before the principal of and interest on this Note is,
and all other charges due hereunder are, paid in full. Principal and interest
shall be payable in lawful money of the United States of America.

         Prepayment.  The Holder hereof shall not incur any penalty upon the
prepayment of all or any part of the indebtedness evidenced hereby.

         Interest Calculation.  Interest shall be calculated on all amounts
advanced based on the actual number of days said amounts are outstanding.
Interest shall be computed on the basis of a year of actual number of days per
year [i.e., three hundred sixty-five (365) days] and charged for the actual
number of days in the payment period.

         Maximum Rate.  Debtor shall have no obligation to pay interest or payments
in the nature of interest in excess of the maximum rate of interest allowed to
be contracted for by law, as changed from time to time, applicable to this Note
(herein “Maximum Rate”). Any interest in excess of the Maximum Rate paid by
Debtor (herein “Excess Sum “) shall be credited as a payment of principal or,
if Debtor so requests in writing, returned to Debtor; or, if the indebtedness
and other obligations evidenced by this Note have been paid in full, returned
to Debtor together with any interest at the same rate as was paid by Debtor
during such period. Any Excess Sum credited to principal shall be credited as
of the date paid to Holder. Holder

A-2

 

 may, without such action constituting a breach of any obligations to
Debtor, seek judicial determination of the applicable rate of interest, and its
obligation to pay or credit any proposed Excess Sum to Debtor.

         Collateral.  The obligations under this Note are secured by and subject to
the terms and conditions of the Credit and Security Agreement and various other
loan documents of even date hereof, executed by and between Debtor and Holder,
respectively.

         Past Due.  Time is of the essence hereunder. If any payment of principal
or interest hereby required is overdue for more than ten (10) days, the Holder
of this Note may, at its option, and without notice, declare the entire balance
of principal then remaining unpaid to be immediately due and payable, and any
failure to exercise said option shall not constitute a waiver of the right to
exercise the same at any other time. Further, Holder of this Note may, at its
option, and without notice, adjust the interest due on the aggregate principal
amount remaining due and unpaid, together with accrued interest, upward, to the
rate of eighteen percent (18%) per annum, or the Maximum Rate of interest
permitted by law, whichever rate shall be the lesser, which rate of interest,
as adjusted upward, shall be paid on all sums due hereunder until the said sums
have been paid in full, regardless of any payments made by the maker hereof,
and accepted by the Holder, after said option has been exercised. Upon default
in making any payment hereby required, Debtor promises to pay all costs and
expenses, including reasonable attorneys’ fees (including the cost of any
appeals), of not less than ten percent (10%), incurred in collecting this Note
by legal proceedings or through an attorney.

         Remedies.  The remedies of Holder herein and in the Credit and Security
Agreement shall be cumulative and concurrent, and may be pursued singularly,
successively, or together, at the sole discretion of Holder, and may be
exercised as often as occasion therefor shall arise. No action or omission of
Holder, including specifically any failure to exercise or forbearance in the
exercise of any remedy, shall be deemed to be a waiver or release of the same,
such waiver or release to be effected only through a written document executed
by Holder and then only to the extent specifically recited therein. A waiver
or release with reference to any one event shall not be construed as continuing
or as constituting a course of dealing, nor shall it be construed as a bar to,
or as a waiver or release of, any subsequent remedy as to a subsequent event.

         Set-Off.  In addition to all liens upon, and rights of sets-off against,
any monies, securities, or other property of the Debtor given to Holder by law,
Holder shall have a lien upon and a right of set-off against all monies,
securities and other property of the Debtor now or hereafter in the possession
of, or on deposit with, Holder, whether held in a general or special account or
deposit for safekeeping, in trust or otherwise, and every such lien and right
of set-off as may be exercised without demand upon or notice to the Debtor, and
the Holder shall have no liability with respect to any of Debtor’s checks or
other items which may be returned or other fund transfers which may not be made
due to insufficient funds thereafter.

         Exercise/Modification.  Neither any failure nor any delay on the part of
Holder in exercising any right, power or privilege under this Note shall
operate as a waiver thereof, nor shall a single or partial exercise thereof
preclude any other or further exercise or the exercise of any other right,
power or privilege. No modification, amendment or waiver of any provision of
this Note shall be effective unless in writing and signed by a duly authorized
officer of Holder,

A-3

 

 and then the same shall be effective only in the specific instance and for
the purposes for which given. No notice to, or demand on, the Debtor in any
case shall entitle the Debtor to any other or further notice or demand in the
same, similar or other circumstances.

         Severability.  Any provision of this Note which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

         Waiver.  Debtor and any other person liable for the payment hereof
respectively, hereby expressly waives any valuation and appraisal, presentment,
demand for payment, notice of dishonor, protest, notice of non-payment or
protest, all other forms of notice whatsoever, and diligence in collection.

         No Waiver.  Acceptance of payments marked “payment in full” or “in
satisfaction” or words to similar effect, shall not affect the duty of Debtor
to pay all obligations due hereunder, and shall not affect the right of Holder
to pursue all remedies available to it hereunder or under any other agreement
between the Debtor hereof and the Holder, including but not limited to the
Credit and Security Agreement and Stock Option Agreement each dated of even
date herewith.

         Jury Trial.  DEBTOR AND ANY OTHER PERSON LIABLE FOR PAYMENT HEREOF, BY
EXECUTING THIS NOTE OR ANY OTHER DOCUMENT CREATING SUCH LIABILITY, WAIVE THEIR
RIGHT TO A TRIAL BY JURY IN ANY ACTION, WHETHER ARISING IN CONTRACT OR TORT, BY
STATUTE OR OTHERWISE, IN ANY WAY RELATED TO THIS NOTE. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR HOLDER’S EXTENDING CREDIT TO DEBTOR AND NO WAIVER OR
LIMITATION OF HOLDER’S RIGHTS UNDER THIS PARAGRAPH SHALL BE EFFECTIVE UNLESS IN
WRITING AND MANUALLY SIGNED ON HOLDER’S BEHALF.

         Jury Trial Consideration.  Debtor acknowledges that the above paragraph
has been expressly bargained for by Holder as part of the loan evidenced hereby
and that, but for Debtor’s agreement and the agreement of any other person
liable for payment hereof thereto, Holder would not have extended the loan for
the term and with the interest rate provided herein.

         Binding.  The provisions of this Note shall be binding upon the heirs,
successors and assigns of Debtor, except that Debtor may not assign or transfer
its obligation hereunder without the written consent of Holder, and shall inure
to the benefit of Holder, its successors and assigns.

         Governing Law.  This Note is to be governed by and construed under the
laws of the State of Florida, without regard to choice of law provisions as
amended, except as modified by the laws and regulations of the United States of
America.

         Venue.  Debtor hereby consents and submits to the jurisdiction of the
courts of the State of Florida and, notwithstanding his, her, their or its
place of residence or organization or the place of execution of this Note, any
litigation relating hereto, whether arising in contract or tort, by statute or
otherwise, shall be brought in (and, if brought elsewhere, may be transferred
to) a State Court of competent jurisdiction in Pinellas County, Florida.

A-4

 

         Paragraph Headings; Gender and Number.  The headings inserted at the
beginning of each paragraph are for convenience of reference only and shall not
limit or otherwise affect or be used in the construction of any of the terms or
provisions hereof. The plural shall include the singular and the singular, the
plural, wherever the context so admits. The masculine shall include the
feminine and the neuter; the feminine, the masculine and the neuter; and the
neuter, the masculine and the feminine.

         Replacement Note.  This Note constitutes a replacement and substitute for
the Master Promissory Note dated August 14, 2001, of Borrower payable to the
order of Holder in the principal amount of Five Million and 00/100 ($5,000,000)
Dollars and with a stated maturity date of February 28, 2002 (the “Original
Note”). The indebtedness evidenced by the Original Note is continuing
indebtedness of Borrower, and nothing herein shall be deemed to constitute a
payment, settlement or novation of the Original Note, or to release or
otherwise adversely affect any lien, mortgage or security interest securing
such indebtedness or any rights of Holder against any party primarily or
secondarily liable for such indebtedness.

	 	 	 	 	 
	 	 	DEBTOR:
	
	
	
	

	 	 	BANKERS INSURANCE GROUP, INC.
	
	
	
	

	 	 	 	 	 
	
	
	
	

	 	 	
By:	 	 
	 	 	 	 	

	 	 	
Name:	 	 
	 	 	 	 	

	 	 	
Title:	 	 
	 	 	 	 	

A-5

 

GRID REFLECTING PAYMENTS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	OUTSTANDING
	 	 	AMOUNT	 	INTEREST	 	PRINCIPAL	 	PRINCIPAL
	DATE	 	ADVANCED	 	PAYMENT	 	PAYMENT	 	BALANCE
	
	 	
	 	
	 	
	 	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	
	
	
	

	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

A-6

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