EXHIBIT 99.1
STRATEGY INTERNATIONAL INSURANCE GROUP, INC.
000 Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxxxx, X0X0X0 Xxxxxx
CONFIDENTIAL
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May 25, 2005
RS Group of Companies, Inc.
000 Xxxxxxxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxxxx, X0X0X0 Xxxxxx
Gentlemen:
In connection with a proposed transaction (the "Transaction") by and
between Strategy International Insurance Group, Inc., a Texas corporation
("Strategy"), and RS Group of Companies, Inc., a Florida corporation ("RS"), as
described herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:
(a) Pursuant to our discussions, this letter will serve to confirm that
Strategy is prepared to acquire all of the outstanding common stock and
outstanding options and all other outstanding equity of RS (subsequent to the
conversion of any outstanding shares of preferred stock of RS into common
stock), in a merger for an aggregate consideration of approximately U.S.$1.75
per share of common stock, no par value per share, of RS (net to shareholders of
option proceeds and transaction expenses), subject to adjustment as described
herein, upon the execution of a definitive merger agreement on customary terms
and conditions acceptable to Strategy and RS. Strategy's proposal is not subject
to Strategy's ability to obtain financing. Strategy and its management have
conducted their business due diligence, and our proposal remains subject to
limited confirmatory legal and accounting due diligence, which we anticipate can
be completed within a matter of days, and will not delay the execution of a
definitive merger agreement. Notwithstanding the foregoing, the price per RS
share is subject to adjustment (that may be material) as a result of the
completion of our valuation of RS and the receipt of a fairness opinion by
Strategy.
(b) Given the time and expense that will be required to reach a
definitive agreement, our interest in proceeding on the above terms is expressly
conditioned on RS's willingness to execute exclusivity as set forth herein. Our
offer is also expressly conditioned on its terms being kept strictly
confidential and any disclosure to third parties will result in its immediate
withdrawal without any further action on our part; provided that nothing herein
shall restrict your ability to disclose such terms if RS believes such
disclosure is required by applicable law or regulation.
RS Group
May 25, 2005
Page 2
(c) For the period beginning on the date this letter agreement (the
"Agreement") is executed by RS and ending sixty (60) days from the date of
execution (the "Exclusivity Period"), RS will not, directly or indirectly,
through any officer, director, employee, affiliate, advisor or agent of RS take
any action to solicit, initiate, seek, entertain, encourage or support any
inquiry, proposal or offer from, or, except as otherwise provided in paragraph
(b) hereto, furnish any information to, or participate in any discussions or
negotiations with, any third party regarding any acquisition of RS, any merger
or consolidation with or involving RS, any acquisition of any portion of the
stock or assets of RS (other than the disposition of assets in the ordinary
course of business consistent with past practices) ("Acquisition Proposal"). RS
agrees that any discussions or negotiations (other than discussions with
Strategy and its affiliates) in progress as of the date hereof relating to a
possible Acquisition Proposal will be suspended during the Exclusivity Period
and that, in no event, will RS accept or enter into an Acquisition Proposal
during the Exclusivity Period. Nothing in this letter will prevent RS or its
Board of Directors from complying with Rules 14d-9 and 14e-2 promulgated under
the Securities Exchange Act of 1934, as amended, with regard to any Acquisition
Proposal.
(d) RS will notify Strategy, in writing, promptly after receipt by RS
(or any of its officers, directors, or advisors) at any time during the
Exclusivity Period of any Acquisition Proposal made by any third party that the
Board of Directors of RS (the "Board") determines, in its sole discretion and in
a manner consistent with its fiduciary duties under applicable law, to be worthy
of consideration. Upon compliance with the foregoing notice requirement and
notwithstanding anything else contained in this Agreement to the contrary, RS
shall have the right to respond to such Acquisition Proposal, or any inquiry or
request for nonpublic information in connection with a possible Acquisition
Proposal that the Board considers appropriate.
This letter does not bind RS or Strategy to consummate any transaction.
All modifications of, waivers and amendments to this Agreement or any part
hereof must be in writing signed on behalf of each party hereto.
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns. It is further understood and agreed that no
failure or delay by either party in exercising any right, power or privilege
under this Agreement will operate as a waiver thereof nor will any single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege hereunder.
This Agreement shall be governed by, and construed and enforced in
accordance with the laws of the State of Florida (but not including the choice
of law rules thereof that would defer to or result in the application of, the
substantive laws of another jurisdiction).
RS Group
May 25, 2005
Page 3
If you are in agreement with the foregoing, please so indicate by
signing, dating and returning one copy of this Agreement.
Very truly yours,
STRATEGY INTERNATIONAL INSURANCE
GROUP, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: Chief Financial Officer
Date: May 25, 2005
AGREED AND ACCEPTED:
RS GROUP OF COMPANIES, INC.
By: /s/ Xxxxxxx Xxx
Name: Xxxxxxx Xxx
Title: President
Date: May 25, 2005
