INSURANCE MANAGEMENT SOLUTIONS GROUP INC
AUGUST 14, 2001 CREDIT AND SECURITY AGREEMENT
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>3
<FILENAME>g70960ex10-1.txt
<DESCRIPTION>AUGUST 14, 2001 CREDIT AND SECURITY AGREEMENT
<TEXT>
<PAGE>   1
EXHIBIT 10.1

                          CREDIT AND SECURITY AGREEMENT

THIS CREDIT AND SECURITY AGREEMENT (herein, "Agreement") is made effective this
14_day of August, 2001 between INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.
(herein, "Lender") and BANKERS INSURANCE GROUP, INC. (herein, "Borrower")
(herein Lender and Borrower collectively, "Parties" or individually "Party").

RECITALS:

WHEREAS, Lender is a corporation duly organized under the laws of the State of
Florida.; and

WHEREAS, Borrower is a corporation duly organized under the laws of the State of
Florida; and

WHEREAS, in order to provide Borrower with funds to advance to Bankers
Underwriters, Inc., a wholly owned subsidiary of Borrower (herein, "BUI") as
well as working capital for Borrower, Borrower wishes to borrow the aggregate
sum of up to Five Million and 00/100 ($5,000,000.00) U.S. dollars from Lender
and secured by the Collateral; and

WHEREAS, Lender wishes to lend to Borrower an amount equal to the amount
required for an advance to BUI as well as Borrower's working capital needs; and

         IN CONSIDERATION OF Lender's agreement to loan to Borrower the sum of
up to Five Million and 00/100 ($5,000,000.00) U.S. dollars, all in accordance
with the terms and conditions of this Agreement, as well as for other good and
valuable consideration, the Parties hereto do covenant and agree as follows:

SECTION 1. RECITALS.

         The statements contained in the recitals of fact set forth above (the
         "Recitals") are true and correct, and the Recitals by this reference
         are made a part of this Agreement.

SECTION 2. EXHIBITS.

         The exhibits attached to this Agreement are by this reference made a
         part of this Agreement.

SECTION 3. DEFINITIONS.

         For the purpose of this Agreement, the following terms shall have the
following meanings:

a)      "Affiliate" shall mean any corporation, partnership, association, trust
        or Person which or who directly or indirectly controls or is controlled
        by, or is under common control with the Borrower.

b)      "BUI" shall mean Bankers Underwriters, Inc., a Florida corporation and
        wholly owned subsidiary of Borrower.

c)      "Collateral" shall refer collectively to the following being delivered
        as part of the Loan Documents (i) the 10,898 shares of the common
        capital stock of First Community Insurance Company, $318.00 par value
        being pledged by Borrower to Lender pursuant to the Stock Option
        Agreement, and (ii)


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                     CREDIT AND SECURITY AGREEMENT (cont.)



        the Flood Book being assigned by Bankers Underwriters, Inc. to Lender
        pursuant to the Collateral Assignment of Flood Book.

d)      "Corporate Principal" shall mean any shareholder, director, or officer
        of Borrower.

e)      "Event Of Default" shall mean any of the events or conditions described
        in the subsequent paragraph hereof captioned, "Event Of Default" and
        "Events-Of-Default" shall refer collectively thereto.

f)      "Flood Book" shall have the definition assigned to such term in the
        Collateral Assignment of Flood Book.

g)      "Indebtedness" shall mean and include:

        (i) all obligations which in accordance with generally accepted
        accounting principles would be included in determining total
        liabilities as shown on the liability side of a balance sheet as of the
        date of which Indebtedness is to be determined,
        (ii) obligations secured by any deed of trust, pledge or lien, whether
        or not the Obligation secured thereby shall have been assumed; and
        (iii) guarantees, endorsements (other than endorsements for collection
        in the ordinary course of business) and other contingent obligations in
        respect of, or to purchase or otherwise acquire, Indebtedness of others.

h)      "Loan" shall mean the line of credit established pursuant to Section 4.
        hereof.

i)      "Loan Documents" shall mean each of the following documents all dated of
        even date herewith to establish the Loan - Promissory Note, Collateral
        Assignment of Flood Book, Absolute Assignment of Flood Book, Stock
        Option Agreement, Further Assurance and Compliance Agreement and the
        within Credit and Security Agreement.

j)      "Obligation" or Obligations" shall mean any and all Indebtedness,
        liabilities and obligations of Borrower whatsoever under the Loan
        Documents.

k)      "Permitted Encumbrances" shall mean the first lien security interests on
        the Collateral and which are disclosed in Exhibit A attached hereto.

l)      "Payment Date" shall have the definition assigned thereto in Section
        4 c) hereof.

m)      "Person" shall mean and include any individual, partnership,
        corporation, trust, unincorporated organization or a government or any
        department or agency thereof.

n)      "Promissory Note" shall mean the Master Promissory Note required and
        described in Section 4 c).

o)      "Subsidiary" shall mean any corporation of which a majority, in vote or
        value, of every class of stock, at the time as of which any
        determination is being made, is owned by the Borrower either directly or
        through Subsidiaries.


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                     CREDIT AND SECURITY AGREEMENT (cont.)


SECTION 4. LOAN.

a)      Amount. Upon the execution of this Agreement and in compliance with its
        terms and conditions, Lender agrees to a loan to Borrower a maximum
        principal amount equal to Five Million and 00/100 ($5,000,000.00) U.S.
        dollars.

b)      Purpose. Funds received under the Promissory Note shall be used
        exclusively to advance funds to BUI as well as for various working
        capital requirements related to Borrower's ongoing operation.

c)      Promissory Note. Proceeds to Borrower under the Loan shall be evidenced
        by a master promissory note (herein, "Promissory Note") which shall be
        executed and delivered and which shall be of even date herewith, the
        stated principal amount of which shall be Five Million and 00/100
        ($5,000,000.00) U.S. dollars and for which no more than a collective
        aggregate maximum principal amount outstanding of Five Million and
        00/100 ($5,000,000.00) U.S. dollars may be advanced at any time, which
        Promissory Note shall bear interest from the date hereof at a per annum
        rate of the Prime Rate (as such term is defined in the Promissory Note)
        plus 1.5% until paid in full; provided, however, that in no event shall
        interest accrue at a rate in excess of the maximum rate allowed by law;
        and such Promissory Note shall contain the following payment provisions:

                  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 (herein, " Payment
                  Date"); and all unpaid principal and interest shall be due and
                  payable in full on or before February 28th, 2002 (herein,
                  "Promissory Note").

d)      Grant of Security Interest. BUI joins in the execution of this Agreement
        for the purpose of granting and does hereby grant to Lender a first lien
        security interest in and to the Flood Book as security for the repayment
        of all sums advanced on the Loan and for the performance by Borrower and
        BUI of all covenants and agreements under the Loan Documents in
        accordance with their following terms and conditions.

SECTION 5. TERM OF AGREEMENT.

This Agreement shall be effective upon the execution hereof and shall continue
in full force and effect until February 28th, 2002 unless terminated as
hereafter provided or upon satisfaction of the Promissory Note in full.

SECTION 6. CONDITIONS PRECEDENT.

        Prior to the first advance by Lender to Borrower pursuant to this
        Agreement and as a condition precedent to any of Lender's other
        Obligations under this Agreement, Borrower shall execute and deliver to
        Lender or shall cause to be executed and delivered to Lender each of the
        following:

a)      Promissory Note. Promissory Note which shall include a Waiver of Jury
        Trial provision;

b)      The Loan Documents;

c)      Perfection. Such financing statement(s), security agreements, and other
        documents and instruments as Lender may reasonably require from time to
        time to perfect any and all security interests granted by Borrower to
        Lender pursuant to this Agreement or pursuant to any other security
        agreement(s) executed by Borrower to induce Lender to make the Loan
        herein described;


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                     CREDIT AND SECURITY AGREEMENT (cont.)


d)      Resolutions. The good and sufficient Resolution of the Board of
        Directors of the Borrower authorizing Borrower to enter into the
        transaction contemplated by this Agreement;

e)      Opinion. The opinion of counsel for Borrower including but not limited
        to the following - (i) that Borrower is a corporation in good standing,
        duly qualified under the laws of the State of Florida, (ii) Borrower is
        authorized to enter into the Loan Documents, (iii) the transaction has
        been duly authorized by Borrower, and (iv) the Loan Documents have been
        duly authorized, executed and delivered by the Borrower, (v) the
        execution and delivery of the documents do not contravene nor are
        prohibited by the Charter, By-Laws or outstanding resolutions of
        Borrower or any agreements to which Borrower is a Party and (vi) such
        other matters reasonably requested; and

f)      Board Approval. Lenders Board of Directors and its Audit Committee shall
        have authorized Lender's management to enter into the transaction
        contemplated hereby.

SECTION 7. AFFIRMATIVE COVENANTS.

        Borrower hereby covenants with Lender that for so long as any
        Obligations remain outstanding Borrower shall:

a)      Corporate Existence. Do or cause to be done all things necessary to keep
        in full force and effect its corporate existence and all rights,
        franchises, licenses, authorizations, permits and qualifications to
        carry on business in all jurisdictions where such qualifications may be
        necessary;

b)      Compliance with Law. Remain in compliance with all applicable laws of
        the jurisdictions within which Borrower conducts its business.

c)      Payment of Taxes. Pay all federal, state and local taxes as the same
        become due.

d)      Financial Statements. Deliver to Lender, specifically upon request by
        Lender, the following:

                (i)     Unaudited Financials - Monthly. As soon as practicable,
                        and in any event within fifteen (15) days after the end
                        of each calendar month, furnish to Lender a monthly
                        unaudited financial statement of Borrower, including
                        balance sheets and income statements, for the calendar
                        month just ended, and for the calendar year to date,
                        certified by a duly authorized officer of Borrower;

                (ii)    Unaudited Financials - Annual. As soon as practicable,
                        and in any event within sixty (60) days after the end of
                        each fiscal year, furnish to Lender, the unaudited
                        financial statement for the Borrower, including balance
                        sheets and income statements, prepared in accordance
                        with generally accepted accounting principles and
                        practices applied on a basis consistently maintained
                        throughout the period involved and certified by an
                        authorized officer of Borrower; and

                (iii)   Data. Such financial statements, reports, certificates,
                        lists of customers (showing names, addresses and amounts
                        owing) and other data concerning Accounts, contracts,
                        collections, inventory and other matters as Lender may
                        from time to time request.

e)      Notice. Give prompt written notice to Lender upon becoming aware of the
        occurrence of any Event Of Default or event which, by passage of time or
        the giving of notice or both would constitute an Event Of Default;



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                     CREDIT AND SECURITY AGREEMENT (cont.)


f)      Free Collateral. Except for Permitted Encumbrances, keep Collateral free
        from all liens, encumbrances and security interests and pay and
        discharge when due all taxes, levies and other charges upon it and upon
        the goods evidenced by any documents constituting Collateral and defend
        it against all claims of any kind;

g)      Access. Provide access to accounting and business records of Borrower
        which will include, but not be limited to, access and substantive
        dialogue with Borrower's accountants, attorneys, bank or other financial
        institution and any other party or parties with which the Borrower has
        had or may have any dealings. Said dialogue may encompass the affairs,
        finances and accounts of Borrower including but not limited to any
        matter or aspect pertaining to any and all business transactions that
        have taken place or that may be contemplated at some future date.
        Borrower shall hold harmless, indemnify, release and authorize any and
        all such parties that may care to express an opinion regarding the
        business of the Borrower and the transactions engaged therein;

h)      Financial Condition. Notify Lender immediately, but in any event within
        five (5) days after obtaining knowledge of any fact or facts which might
        materially and adversely affect the assets, business operations,
        properties, income or condition (financial or otherwise) of the Borrower
        or the Obligations or authority of Borrower to perform its Obligations
        under any Loan Document;

i)      Notify of Action or Suit. Notify Lender immediately, but in any event
        within five (5) days after obtaining knowledge that Borrower is a party,
        or may be threatened to be made a party, to any threatened, pending or
        completed action, suit or proceeding, whether civil, criminal,
        administrative or investigative;

j)      Pay Debts - Indemnity. Pay when due (or within applicable grace periods)
        all Indebtedness due third Persons, except when the amount thereof is
        being contested in good faith by appropriate proceedings and with
        adequate reserves therefore set aside on the books of Borrower for the
        payment of such indebtedness. If Borrower shall default in the payment
        of any principal (or installment thereof) of, or interest on, any such
        Indebtedness, Lender shall have the right, in its sole discretion, to
        pay such interest or principal on behalf of Borrower; provided, however,
        Borrower shall indemnify Lender in full for any such amount;

k)      New Location. Notify Lender thirty (30) days in advance of any change in
        the jurisdiction of its organization, the location of any of its
        businesses or the establishment of any new, or the discontinuance of any
        existing, place of business; and

l)      Books of Account - Inspections. Maintain books of account in accordance
        with general accounting practices, and for purposes of determining
        Borrower's compliance with this Agreement. If no Event of Default exists
        or is continuing, Lender shall have the right, at Lender's expense, to
        inspect any of the corporate books and financial records at such
        reasonable times as Lender may request. If an Event of Default exists,
        Lender may, at the expense of the Borrower, inspect the corporate books
        and financial records at all such reasonable times and as often as may
        be requested by the Lender.

SECTION 8. NEGATIVE COVENANTS.

        Borrower hereby covenants with Lender that for so long as any
        Obligations remain outstanding and unless Lender notifies Borrower in
        writing it dispenses with any one or more of the following requirements,
        Borrower will not:

a)      Character of Business. Engage in any business substantially apart from
        the services currently being provided by Borrower;


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                     CREDIT AND SECURITY AGREEMENT (cont.)


b)      Mergers, Consolidations, Sales. Consolidate with or merge into any other
        Person or permit any other Person other than a Subsidiary to consolidate
        with, or merge into, the Borrower, or to sell, transfer or otherwise
        dispose of all, or substantially all, of its assets to any other Person;

c)      Business Practices. Materially alter or change the principal business in
        which Borrower is engaged or the manner in which Borrower conducts its
        business affairs; and

d)      Untrue Statements. Furnish Lender any certificate or other document that
        will contain any untrue statement of material fact or that will omit to
        state a material fact necessary to make it not misleading in the light
        of circumstances under which it was furnished.

SECTION 9. REPRESENTATIONS AND WARRANTIES.

        Borrower represents and warrants to Lender that:

a)      Absence of Defaults. All agreements to which Borrower and Lender are
        parties are valid and binding agreements enforceable against Borrower in
        accordance with their terms, and no event has occurred and is continuing
        which constitutes an Event of Default by Borrower or a default by
        Borrower or any of its Affiliates under any such agreements;

b)      Ownership. Bankers Financial Corporation owns all of the issued and
        outstanding shares of common stock of Borrower and there are not now nor
        will there be during the term of this Agreement any other shareholders
        of Borrower nor will any one be granted nor has any one been granted any
        options or warrants to acquire any shares of Borrower; provided that
        there is first lien security interest on all of the issued and
        outstanding shares of Borrower to SouthTrust Bank N.A. as otherwise
        disclosed in Exhibit A attached;

c)      Proceeds. Proceeds under this Loan will be used exclusively to advance
        funds to BUI as well as for various working capital requirements related
        to Borrower's ongoing operation;

d)      Correct Financials. Any financial statements heretofore delivered to
        Lender are true and correct in all respects, have been prepared in
        accordance with generally accepted accounting practices and fairly
        represent the financial conditions of the Borrower as of the respective
        dates thereof. No material adverse change has occurred in the financial
        condition of the Borrower reflected in such financial statements since
        the respective dates thereof and no additional borrowings have been made
        by Borrower since the date thereof other than the borrowing contemplated
        hereby.;

e)      No Breach or Violation. The consummation of the transactions
        contemplated hereby or the performance by Borrower of any Obligation
        will not result in any breach of or constitute a default under any
        mortgage, deed of trust, lien, bank loan, or credit agreement, corporate
        charter, by-law, or other instrument to which Borrower is a party, or by
        which it is bound or affected;

f)      Corporate Existence - Good Standing.

                (i)     Borrower is a corporation duly organized, validly
                        existing, and in good standing under the laws of the
                        State of Florida;

                (ii)    Borrower has all lawful corporate power to own its
                        properties and to engage in the business it now
                        conducts, and Borrower is duly qualified and in good
                        standing as a foreign corporation in the jurisdictions
                        wherein the nature of the business transacted by it or
                        property owned by it make such qualification necessary;



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                     CREDIT AND SECURITY AGREEMENT (cont.)


                (iii)   Borrower has not changed its name, been the surviving
                        corporation in a merger, acquired any business, or
                        changed its principal executive office since 1994; and

g)      Representations and Warranties Survive. All of the representations and
        warranties set forth in Section 9. hereof encaptioned, "Representations
        and Warranties" shall survive the execution and delivery of this
        Agreement and the other Loan Documents until all Obligations are
        satisfied in full and all outstanding amounts due under the Credit Line
        are paid in full.

SECTION 10. FINANCING STATEMENTS.

a)      At Lender's discretion, Borrower will join with Lender in executing such
        financing statements (including amendments thereto and continuation
        statements thereof) in form satisfactory to Lender; pay or reimburse
        Lender for all costs and taxes of filing and recording the same in such
        public offices as Lender may designate; and take such other steps as
        Lender may direct, including the noticing of Lender's lien on the
        Collateral and on any certificates of title therefore all to perfect
        Lender's interest in the Collateral; and

b)      To the extent lawful, Borrower hereby appoints Lender with full power of
        substitution and revocation, as its Attorney-in-Fact (without requiring
        Lender to act as such) to execute any financing statement in the name of
        Borrower, and to perform all other acts that Lender deem appropriate to
        perfect and continue its security interest in, and to preserve, the
        Collateral.

SECTION 11. EVENTS OF DEFAULT.

        The following occurrences shall constitute Events Of Default hereunder:

a)      Non-Payment. Borrower fails to pay when and as required to be paid
        herein, any principal or interest amount within 10 days after the same
        becomes due;

b)      Breach of Warranty. Any warranty, representation, or statement made or
        furnished to Lender by or on behalf of Borrower proves to have been
        false in any material respect on or as of the date when made or
        furnished or deemed made or furnished;

c)      Breach of Covenant. Any affirmative covenant or negative covenant is
        breached, violated or not complied with if such affirmative covenant or
        negative covenant continues to be breached, violated or not complied
        with after Lender has given notice thereof to Borrower and a 30 day
        opportunity to cure;

d)      Dissolution/Bankruptcy. Dissolution, termination of existence,
        insolvency (failure to pay its debts as they mature or the failure to
        maintain the fair market value of its assets in an amount greater than
        its liabilities on a consolidated basis for purposes herein, whichever
        shall first occur), a business failure, appointment of a receiver,
        assignment for the benefit of creditors or the commencement of any
        proceedings under any bankruptcy or insolvency law by or against
        Borrower or any guarantor or the making by either Borrower or any
        guarantor of any offer or settlement, exchange or composition to their
        respective unsecured creditors generally ;

e)      Attach Liens. The issuance or filing against Borrower of a tax lien or
        the issuance or filing of any attachment, injunction, execution or
        judgment which is not removed within fifteen (15) days after issuance of
        filing;


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                     CREDIT AND SECURITY AGREEMENT (cont.)


f)      Waste. Lender shall, upon reasonable basis, at any time deem itself
        insecure or unsafe because of diminution, removal, or waste of
        Collateral;

g)      Third Party Debt. Borrower shall fail to pay any Indebtedness due any
        third persons and such failure shall continue beyond any applicable
        grace period, or Borrower shall suffer to exist any other event of
        default under any agreement binding the Borrower;

h)      Judgment. Borrower shall suffer final judgments for payment of any sums
        due to third parties and shall not discharge the same within a period of
        thirty (30) days (unless, pending further proceedings, execution has not
        been commenced, or if commenced has been effectively stayed) or a
        judgment creditor of Borrower shall obtain possession of any of the
        Collateral by any means, including, without limitation, levy, distraint,
        replevin, or self help; and

i)      Impairment of Security. Any condition or situation, which, in the sole
        determination of the Lender, upon reasonable basis, constitutes a danger
        of impairment of the security of the Loan, and such condition or
        situation is not remedied within two (2) business day's after receipt of
        written notice to the Borrower to remedy such condition or situation.

SECTION 12. DEFAULT REMEDIES.

a)      Upon any Event Of Default:

                (i)     Lender shall retain the right to terminate making any
                        further advances of the Loan at any time thereafter,
                        without notice, and until all Obligations are satisfied
                        in full, such termination shall not affect the duties,
                        covenants and liabilities of Borrower hereunder and all
                        the terms, conditions and provisions hereof relating
                        thereto shall continue to be fully operative until all
                        transactions entered into and Obligations have been
                        fully satisfied;

                (ii)    All or any portion of Obligations due or to become due
                        whether under this Agreement or otherwise, shall, at the
                        option of Lender, without notice, demand, presentment or
                        dishonor, all of which Borrower hereby waives, become at
                        once due and payable, and Lender shall thereupon have
                        all the rights and remedies of a secured party under the
                        Uniform Commercial Code as adopted by the State of
                        Florida;

                (iii)   Lender may also, with or without proceeding with sale or
                        foreclosure or demanding payment of a debt owing by
                        Borrower to Lender, without notice, terminate further
                        performance under this Agreement and may declare all
                        outstanding amounts under the Loan Documents due and
                        payable and proceed against the Collateral whether or
                        not in the possession of Lender.; and

                (iv)    To the extent either Borrower or any guarantor makes a
                        payment or payments to Lender which payment or payments
                        or any part thereof are subsequently invalidated,
                        declared to be fraudulent or preferential, set aside or
                        required to be repaid to a trustee, receiver or any
                        other party under any bankruptcy act, state or federal
                        law, common law or equitable cause, then, to the extent
                        of such payment or repayment, the Obligation(s) or part
                        thereof intended to be satisfied shall be revived and
                        continued in full force and effect as if such payment
                        had not been made.


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                     CREDIT AND SECURITY AGREEMENT (cont.)


b)      Any failure or delay of Lender to exercise or enforce any rights, liens,
        powers or remedies hereunder or under any of the aforesaid agreements or
        other documents or security or Collateral shall not operate as a waiver
        of such liens, rights, powers and remedies, but all such liens, rights,
        powers and remedies shall continue in full force and effect until all
        loans and advances and all Obligations owing or to become owing from
        Borrower to Lender shall have been fully satisfied and all liens,
        rights, powers and remedies herein provided are cumulative and none is
        exclusive.

c)      Lender may exercise any right or remedy it has under the Promissory Note
        which rights and remedies thereunder are not limited hereby.

SECTION 13. MISCELLANEOUS

a)      Further Assurances. From time to time, Borrower will execute and deliver
        to Lender such additional documents and will provide such additional
        information as Lender may reasonably require to carry out the terms of
        this Agreement and be informed of Borrower's status and affairs.

b)      Payment. The Borrower agrees that as long as the Loan Documents are in
        full force and effect, it will make all payments on each Payment Date,
        when due, by check duly mailed or delivered to Lender at the address
        indicated in the Notice section of this Agreement, or at such other
        place as Lender may designate to the Borrower in writing.

c)      Successors and Assigns. This Agreement shall bind and inure to the
        benefit of the respective successors and assigns of the parties hereto.

d)      Waiver by Lender. Lender shall have the right at all times to enforce
        the provisions of this Agreement and any other Loan Document executed
        pursuant hereto in accordance with the terms hereof and thereof,
        notwithstanding any conduct or custom on the part of Lender in
        refraining from so doing at any time. The failure of Lender at any time
        to enforce its rights under such provisions, in accordance with the same
        shall not be construed as having created a custom in any way or manner
        contrary to specific provisions of this Agreement or as having in any
        way or manner modified or waived the same. All rights and remedies of
        Lender are cumulative and concurrent and the exercise of one right or
        remedy shall not be deemed a waiver or release of any other right or
        remedy.

e)      Costs/Expenses. Pay all reasonable costs and expenses related to the
        transactions contemplated hereby including but not limited to,
        out-of-pocket expenses for payment of documentary stamp taxes,
        intangible taxes, recording and filing fees, surveys, title insurance
        premium, legal fees and expenses of counsel appointed by the Lender, any
        applicable sales tax together with any interest and penalties for the
        late payment thereof, all of which amounts shall be payable at the time
        of the execution of this Agreement or upon demand in the event they are
        hereafter incurred.

f)      Attorney's Fees. If either of the Parties hereto should bring a Court
        action alleging breach of this Agreement or seeking to enforce, rescind,
        renounce, declare void or terminate this Agreement or any provisions
        thereof, the prevailing party shall be entitled to recover all of its
        legal expenses, including reasonable attorney's fees and costs
        (including legal expenses for any appeals taken), and to have the same
        awarded as part of the judgment in the proceeding in which such legal
        expenses and attorney's fees were incurred.



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<PAGE>   10

g)      Captions. The Agreement contains captions as to contents of the
        particular paragraphs. The captions set forth herein are inserted only
        for convenience and are in no way to be construed as part of this
        Agreement or as a limitation of the scope of the particular paragraph in
        which they are referred.

h)      Construction of Agreement. Words of a gender used in this Agreement
        shall be held to include any other gender, the words in a singular
        number held to include the plural, when the sentence so requires.

i)      Counterparts. This Agreement may be executed in several counterparts,
        each of which so executed shall be deemed to be an original, and said
        counterparts shall together constitute and be one and the same
        instrument.

j)      Entire Agreement. This Agreement contains all of the oral and/or
        previously written agreements, representations, and arrangements between
        the Parties hereto with respect to the subject matter of this Agreement,
        and all right which the respective Parties may have had under any
        written agreements and/or oral agreements with respect to the subject
        matter of this Agreement are hereby canceled and terminated, and all
        Parties agree that there are no representations or warranties other than
        those set forth herein.

k)      Invalidation. Should any part of this Agreement for any reason be
        declared invalid, such decision shall not effect the validity of any
        remaining portion, which remaining portion shall remain in full force
        and effect as if this Agreement had been executed with the invalid
        portion thereof eliminated. It is, therefore, declared the intention of
        the Parties hereto that each of them will have executed the remaining
        portion of this Agreement without including therein any such part, parts
        or portion which may, for any reason, be hereafter declared void.

l)      Modification. No change or modification of this Agreement shall be valid
        unless the same shall be in writing and signed by each of the Parties
        hereto.

m)      Notices. Any and all notices, designations, consents, offers,
        acceptances, or any other communication provided for herein shall be
        given in writing by hand delivery, by overnight carrier, by registered
        or certified mail or by facsimile transmission and shall be addressed as
        follows:

               As to Borrower:    Bankers Insurance Group, Inc.
                                      360 Central Avenue, 17th Floor
                                      St. Petersburg, Florida 33701
                                      Att: G. Kristin Delano
                                      Telephone: (727) 823-4000
                                      Telefax: (727) 803-4198

               As to Lender:          Insurance Management Solutions Group, Inc.
                                      360 Central Avenue, 16th Floor
                                      St. Petersburg, Florida 33701
                                      Att: David Howard, President
                                      Tel#: (877) 711-4674
                                      Fax: (727) 803-2099


                                    10 of 10
<PAGE>   11
                     CREDIT AND SECURITY AGREEMENT (cont.)


        Notices sent by hand delivery shall be deemed effective on the date of
        hand delivery. Notices being sent by overnight carrier shall be deemed
        effective on the next business day after being placed into the hands of
        the overnight carrier. Notices sent by registered or certified mail
        shall be deemed effective on the third business day after being
        deposited into the post office. Notices sent by facsimile transmission
        shall be deemed to be effective on day when sent if sent prior to 5:00
        p.m. (the time being determined by the time zone of the recipient)
        otherwise they shall be deemed effective on the next business day.

n)      Representation Acknowledged. The Parties acknowledge that each Party and
        its counsel have reviewed and revised this Agreement and that the normal
        rules of construction to the effect that any ambiguities are to be
        resolved against the drafting party shall not be employed in the
        interpretation of this Agreement or any amendments or exhibits hereto.

o)      Applicable Law/ Venue. This Agreement shall be construed in accordance
        with and governed by the laws of the State of Florida, without regard to
        choice of law provisions. Further, the venue for any action brought to
        enforce any of the provisions hereof shall be in a state court of
        competent jurisdiction in Pinellas County, Florida and any action
        commenced in any other forum may be removed to a state court of
        competent jurisdiction in Pinellas County, Florida.






                                    11 of 11
<PAGE>   12

                     CREDIT AND SECURITY AGREEMENT (cont.)


IN WITNESS WHEREOF, the Parties hereto have set their hands and seals, the day
and year first above written.

"Borrower"
BANKERS INSURANCE GROUP, INC.

By:      s/s G. Kristin Delano
    --------------------------------

Name:    G. Kristin Delano
      ------------------------------
Its:     Secretary
     -------------------------------


"Lender"
INSURANCE MANAGEMENT SOLUTIONS GROUP, INC.

By:      s/s Richard G. Torra
    --------------------------------

Name:    Richard Torra
      ------------------------------
Its:     Corporate Secretary
     -------------------------------


                                     JOINDER

Bankers Underwriters, Inc. does hereby ratify and affirm the grant of a security
interest in the Flood Book in Section 4 d) hereof.

Executed this   14 day of  August              ,  2001
              -----        --------------------  ------

BANKERS UNDERWRITERS, INC.

By:      s/s G. Kristin Delano
    --------------------------------

Name:    G. Kristin Delano
      ------------------------------
Its:     Secretary
     -------------------------------




                                    12 of 12
<PAGE>   13

                     CREDIT AND SECURITY AGREEMENT (cont.)


EXHIBIT A
PERMITTED ENCUMBRANCES

Bankers Insurance Group - Western International Insurance Company -
Bonded Builders

                Loan:                $9,000,000.00 / Advanced $8,600,000.00
                Current Balance:     $8,426,940.65
                Lender:              Western International Insurance Company
                Borrower:            Bankers Insurance Group, Inc.
                Re:                  Financing for Bonded Builders acquisition
                Issue Date           April 16, 2000
                Maturity Date:       May 1, 2008
                Collateral
                Stock Pledged:       FCIC 3,023 shares owned by BIG
                                     BSIC 75,000 shares owned by BIG
                                     BHWA 1,000 shares owned by BIG

SouthTrust - Bankers Insurance Group, Inc.

                Loan:                $6,000,000.00
                Current Balance:     $3,372,305.40
                Lender:              SouthTrust
                Borrower:            BIG
                Issue Date           October 1, 1993
                Amended              December 20, 1997
                Maturity Date:       December 30, 2002
                                                  Stock Pledged:   2,008,667
                                     shares of BIG stock owned by BFC
                                                                   7,875 shares
                                     of FCIC shares owned by BIG


BFC means Bankers Financial Corporation, a Florida corporation
BIG means Bankers Insurance Group, Inc.
BHWA means Bankers Home Warranty Association, a Florida corporation
BSIC means Bankers Security Insurance Company, a Florida insurance company
FCIC means First Community Insurance Company, a New York insurance company




                                    13 of 13

</TEXT>
</DOCUMENT>
