EXHIBIT 10.25
AGREEMENT FOR ADVANCEMENT OF LOAN
THIS AGREEMENT FOR ADVANCEMENT OF LOAN (the "Agreement") is made and entered
into as of the 7th day of December, 2000, by and between Brooke Credit
Corporation ("Lender") and G.I. Agency, Inc. ("Borrower").
RECITALS
WHEREAS, Lender has agreed to loan to Borrower the amount of $90,000.00 for the
purpose of acquiring insurance agency assets; and
WHEREAS, this Agreement and the Loan Documents, as defined herein shall apply to
all existing and future loans or advances made by Lender to Borrower.
NOW, THEREFORE, in consideration of the terms and conditions set forth herein
and of any loans or advances now or hereafter made to or for the benefit of
Borrower by Lender, and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Lender and Borrower agree as
follows:
DEFINITIONS
For purposes of this Agreement, the following terms shall have the following
meanings unless the context clearly requires otherwise:
AGENCY'S ASSETS. All of Borrower's personal property, whether tangible or
intangible, and all of Borrower's interest in property and fixtures, now owned
or existing or hereafter acquired and wherever located, including without
limitation, the following: (a) all inventory, machinery, equipment, goods and
supplies; (b) all accounts, including without limitation, the Agent's Account
and Customer Accounts; (c) all instruments, documents (including, without
limitation, the Customer Files) policies and certificates of insurance, money,
chattel paper, investment property, deposits, warehouse receipts and things in
action; (d) all general intangibles and rights to payment or proceeds of any
kind, including without limitation, rights to insurance proceeds and letter of
credit proceeds; (e) all contract rights and interests of any kind, including
without limitation, the rights and interests set forth in the Agent Agreement
and any Subagent Agreement; and (f) any and all additions, attachments, parts,
repairs, accessories, accessions, replacements and substitutions to or for any
of the forgoing. The above description of property shall also include, but not
be limited to, any and all telephone numbers, rights to the lease of office
space, post office boxes or other mailing addresses, rights to trademarks and
use of trade names, rights to software licenses, and rents received by Borrower
for the lease of office space. Proceeds and products of the above property are
also covered.
AGENT ACCOUNT. An account on Master Agent's ledgers to which the Master Agent
records amounts due Master Agent from Borrower and amounts due Borrower from
Master Agent.
AGENT AGREEMENT. Agreement which has been or will be executed by and between
Borrower and Master Agent providing for Borrower to sell, renew, service or
deliver Policies exclusively through Master Agent which has been or will be
signed by Borrower and Master Agent.
AGENT OF RECORD. Person designated on Company's records as the agent or
representative regarding a specific Policy and the owner of all Sales
Commissions.
CLOSING DATE. The date upon which the Lender extends credit to Borrower.
COLLATERAL PRESERVATION AGREEMENT. Agreement, as amended from time to time,
between the Master Agent and Lender which requires the Master Agent to help
protect and preserve Lender's collateral interest in certain Agency Assets
including, without limitation, Agent's Account and Customer Files.
COMPANY. A company issuing, brokering, selling or making a market for Policies
and which has a contract with Master Agent.
CUSTOMER ACCOUNTS. A Person who has a Policy purchased from, serviced, renewed
or delivered through Borrower. Customer Accounts may be owned by Borrower or a
Subagent of Borrower.
CUSTOMER FILES. Documents, data and correspondence to or from Customer Accounts,
Borrower, Master Agent, Companies, or others regarding Policies.
INSURANCE, INVESTMENT, BANKING AND/OR CREDIT SERVICES. Insurance services
include but are not limited to the sale, renewal, service or delivery of
insurance policies, annuities, insurance brokering services, insurance customer
services, risk management services and insurance related consulting or advisory
services. Investment services include, but are not limited to, the sale,
renewal, service or delivery of mutual funds, stocks, bonds, notes, debentures,
real estate services, investment customer services, investment related
consulting, and financial, investment, or economic advisory services. Banking
services include any banking service Borrower is allowed to perform under
federal and/or state laws. Credit services include, but are not limited to,
origination or brokerage of loans or mortgages, credit customer services, and
credit related consulting or advisory services. At any point in time, Insurance,
Investment, Banking and Credit Services shall be limited to those services then
offered by Master Agent.
LENDER. The Lender named above, its successors, assigns or designees.
LOAN DOCUMENTS. This Agreement and all other agreements, instruments and
documents, including without limitation, any guaranties, mortgages, deeds of
trust, notes, pledges, powers of attorney, consents, assignments, contracts,
notices, security agreements, leases, subordination agreements, financing
statements and all other written documents heretofore, now and/or from time to
time hereafter executed by and/or on behalf of Borrower and delivered to Lender
in connection therewith, including, without limitation, the documents referenced
in paragraphs 1 through 11 herein.
MASTER AGENT. The party with whom Borrower enters an Agent Agreement. Pursuant
to the Agent Agreement, Master Agent is made the "agent of record" for all
Policies sold, renewed, serviced or delivered through Borrower. Master Agent is
Borrower's primary contact with Companies and other suppliers.
PERSON. Any individual, sole proprietorship, partnership, joint venture, trust,
unincorporated organization, association, corporation, limited liability
company, institution or other entity.
POLICIES. Any and all insurance services, policies, coverages or products sold,
renewed, serviced or delivered through Borrower to any Person. Policies include,
but are not limited to, any and all Insurance, Investment, Banking or Credit
Service, or policy, coverage or product associated therewith sold, renewed,
serviced or delivered through Borrower to any Person.
SALES COMMISSIONS. Commissions paid by Companies to Master Agent or assigned by
Borrower to Master Agent for the sale, renewal, service or delivery of a
specific Policy through Borrower. Sales Commissions are not normally contingent
upon factors such as Master Agent's loss ratio, premium volume, sales volume or
special concessions negotiated by the Master Agent. For the purposes of this
Agreement, Sales Commissions shall specifically exclude amounts received by the
Master Agent for advertising allowances, prizes, override commissions, profit
sharing commissions, supplier bonus commissions and other similar payments.
However, Sales Commissions shall specifically include amounts paid to Borrower
by the Master Agent pursuant to a bonus plan, the terms of which are defined by
the Master Agent in its sole discretion and for which the Master Agent makes no
representation regarding future payments or Borrower eligibility. Sales
Commissions shall also include any consulting fees, advisory fees, placement
fees, service fees, renewal fees or any similar payments paid on or related to
any Customer Account by any Person.
SUBAGENT. A Person who has entered or may enter into a Subagent Agreement with
Borrower.
SUBAGENT AGREEMENT. An agreement entered into by and between Borrower and
Subagent and approved by Master Agent pursuant to which Subagent is allowed
vested ownership rights in Customer Accounts coded to Subagent and Borrower
performs certain accounting and processing services for Subagent.
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TRUST AGREEMENT. Trust Agreement dated February 1, 2000, as such may be amended
from time to time, executed by Master Agent and a trustee pursuant to which
Master Agent, among other things, transfers control of Sales Commissions to a
trustee for such trustee's distribution pursuant to the terms thereof.
TERMS AND CONDITIONS
This Agreement is subject to the following terms and conditions.
1. PROMISSORY NOTE. Borrower shall execute a promissory note (substantially in
the form attached hereto as Exhibit A) in the amount of $90,000.00 (the "Note").
The Note shall provide for monthly payments, payable on the first day of every
month, and shall mature 123 months after the date of said Note. The Note shall
also provide for an interest rate that begins at 13.00% and varies annually on
December 31st of each year to a rate that is the New York Prime Rate, as
published in the Wall Street Journal on December 31 of each year or on the next
banking business day nearest to that date, plus three and one half percent
(3.50%).
2. SECURITY AGREEMENT. Borrower shall execute a security agreement
(substantially in the form attached hereto as Exhibit B) and security agreement
addendum (substantially in the form attached hereto as Exhibit C) which provides
for, among other terms, a purchase money security interest in the acquired
Agency Assets.
3. FINANCING STATEMENT. Borrower shall execute a UCC-1 financing statement form
(substantially in the form attached hereto as Exhibit D) which shall be filed to
perfect Lender's security interest in the Agency Assets and such other assets
Lender may require.
4. GUARANTY. Upon Lender's request, Borrower shall provide to Lender a duly
executed continuing and unlimited guaranty agreement of Borrower's principals,
officers, directors, spouse, or other Person Lender may require or Borrower may
offer, substantially in the form attached hereto as Exhibit E (the "Guaranty").
The Guaranty shall unconditionally guaranty the payment and performance of each
and every existing and future debt, liability and obligation of Borrower to
Lender.
5. OPINIONS OF COUNSEL. a) Borrower shall provide to Lender, upon Lender's
request and substantially in the form attached hereto as Exhibit F, the
opinion(s) of Borrower's counsel.
b) Borrower shall also provide to Lender, upon Lender's request, the opinion of
Borrower's counsel as to these same or substantially similar points with regard
to Borrower's purchase of Agency Assets.
6. AFFIDAVIT REGARDING FINANCIAL STATUS AND OTHER MATERIAL FACTS. Borrower shall
execute on the Closing Date an affidavit substantially in the form attached
hereto as Exhibit G (the Affidavit") which Affidavit shall certify, under
penalty of perjury that there have been no material adverse changes in
Borrower's financial status or any other circumstances which Lender deems
material to its decision to extend credit.
7. AUTHORIZATION TO RELEASE INFORMATION. Borrower hereby authorizes any Person
that may have agency, loan, financial, credit, valuation or other confidential
or non-confidential information to release to Lender such information as Lender,
in its sole discretion, deems necessary to respond to regulatory inquires; for
the performance of audits, quality control or other reviews or to market the
Loan Documents; or for any other legitimate purpose. Furthermore, upon Lender's
request, Borrower shall sign a release substantially in the form attached hereto
as Exhibit H authorizing the release to Lender of any financial, credit,
valuation or other confidential or non-confidential information which Lender, in
its sole discretion, deems necessary to respond to regulatory inquires; to
perform audits, quality control or other reviews, or to market the Loan
Documents; or for any other legitimate purpose.
8. LENDER'S PROTECTION ADDENDUM. Borrower and Master Agent shall execute a
Lender's Protection Addendum substantially in the form attached hereto as
Exhibit I, which shall be made a part of and attached to the Agent Agreement.
The Lender's Protection Addendum sets forth terms and conditions applicable to
Borrower and Master Agent and their rights and obligations pertaining to Lender,
Lender's security interest and the loan. By executing the
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Lender's Protection Addendum, among other things, Borrower agrees to and
acknowledges the existence of the Collateral Preservation Agreement and certain
obligations and duties of Master Agent to Lender set forth therein which may
have a material effect on Borrower.
9. SETTLEMENT OR CLOSING STATEMENT. Upon Lender's request, Borrower shall sign a
settlement or closing statement substantially in the form attached hereto as
Exhibit J, which pertains to and authorizes the distribution of loan proceeds
and delineates, among other items, certain transaction fees and costs.
10. FINANCIAL REPORTS AND ADDITIONAL DOCUMENTS. a) Borrower will provide to
Lender annually and, as soon as is practicable at any other time following
Lender's request, any financial statement or financial, credit, valuation,
organizational or other such confidential or non-confidential information Lender
may deem necessary in its discretion. Upon Lender's request, Borrower shall
certify such statements, valuations or other information. Upon Lender's request,
Borrower shall provide statements, valuations or other information audited by a
qualified third party and/or prepared in accordance with generally accepted
accounting practices or GAAP standards. In addition, upon Lender's request,
Borrower agrees to obtain and provide to Lender any statements, valuations or
other information (confidential or non-confidential) Lender may deem necessary
in its discretion pertaining to any or all guarantors, and which shall, at
Lender's discretion, be certified, audited, and/or prepared in accordance with
generally accepted accounting practices or GAAP standards. Borrower authorizes
Lender to provide any such information to trustees a party of the Trust
Agreement, auditors, regulators, attorneys, consultants, rating agencies,
analysts, prospective purchasers of Borrower's loan or other Person needing such
information for legitimate purposes. Borrower holds Lender, its owners,
officers, directors, partners, independent contractors and employees harmless
from any and all claims, damages or liability resulting from any further and
improper disclosure of such information by such third parties.
b) Borrower agrees to sign, acknowledge, deliver, and file any additional
documents, statements or certifications that Lender may consider necessary to
carry out the intent of this Agreement; to perfect, continue and preserve
Borrower's obligations under any Loan Document; to perfect, continue or preserve
Lender's lienholder status; to replace or correct lost, misplaced, incorrectly
filed, misstated or incorrect Loan Documents; to correct or adjust for clerical
errors; to complete incomplete or deficient Loan Documents; to assure that the
executed Loan Documents will conform to and be acceptable in the market place in
the instance of transfer, sale or conveyance by Lender of its interest in and to
said Loan Documents; to assure that the Loan Documents are in compliance with
all laws, rules, regulations or the requirements of any prospective purchaser to
whom Lender seeks to market the Loan Documents; to enable Lender to sell,
convey, seek guaranty, insure or market the Loan Document to any Person. Upon
Lender's request, Borrower shall execute a limited power of attorney which
grants to Lender the power and authority to sign, acknowledge, deliver and file
as Borrower's attorney in fact any such additional documents, statements, or
certifications. Any written request for additional documentation made by Lender
shall be prima facie evidence of the necessity for same.
11. ACKNOWLEDGMENT. Upon Lender's request, Borrower shall deliver to Lender on
or before the Closing Date, an acknowledgment of a third party in substantially
the form attached hereto as Exhibit K. Pursuant to such acknowledgment, said
third party shall swear and attest under penalty of perjury that he/she
witnessed Borrower or Borrower's authorized representative sign the Loan
Documents described in paragraphs 1 through 10 herein, and that Borrower or
Borrower's authorized representative is the signatory whom he/she represents to
be.
12. ASSIGNMENT OF AGENCY ASSETS. (a) Borrower grants, conveys and assigns to
Lender as additional security all the right, title and interest in and to
Borrower's Agency Assets, including without limitation, Borrower's rights, title
and interest in and to the Agent Agreement, Subagent Agreements, Agent's Account
and Customer Accounts. Borrower shall defend the rights of Lender in and to
Agency Assets against all claims and demands of all Persons at any time claiming
the same or any interest therein adverse to Lender and shall keep the Agency
Assets free from liens, assignments, and other security interests except for the
assignment of security interest granted pursuant to the Loans Documents.
(b) Borrower may collect, receive, enjoy and use the Agency Assets so long as
Borrower is not in default under the terms of any of the Loan Documents.
Borrower agrees that the assignment of Agency Assets shall be immediately
effective between the parties to this Agreement and that it shall be effective
as to third parties when Lender or its
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agent notifies Borrower of default, Borrower fails to cure such default within
the time allowed hereunder, and Lender demands that the Agency Assets be
transferred and paid directly to Lender.
(c) Borrower agrees that Lender, without liability to Borrower, may take actual
possession of the Agency Assets without the necessity of commencing legal action
and that actual possession is deemed to occur when Lender or its agent notifies
Borrower of default, Borrower fails to cure such default within the time allowed
hereunder, and demands that the Agency Assets be transferred and paid directly
to Lender. Borrower agrees that, upon Borrower's default and failure to cure
default within the time allowed hereunder, Lender may, without liability to
Borrower, transfer any of the Agency Assets or evidence thereof into its own
name or that of its designee and/or demand, collect, convert, redeem, receipt
for, settle, compromise, adjust, xxx for, foreclose or realize upon its
collateral in its own name, its designee's name or in the name of Borrower.
(d) On payment in full of the obligations and all other charges owed by Borrower
to Lender under the Loan Documents, Lender shall execute and deliver to Borrower
a release of this assignment.
13. DEFAULT. (a) Lender may upon written notice to Borrower, declare Borrower to
be in default if: Borrower fails to fulfill or perform any term, condition or
obligation set forth in any Loan Document, including without limitations
Borrower's failure to make payments when due in accordance with the terms of the
Note; or, if any representation or warranty set forth in any Loan Document is
not as represented or warranted by Borrower.
(b) In addition, Lender may upon written notice to Borrower, declare Borrower to
be in default upon the occurrence of any of the following events:
i. Borrower's failure to fulfill, perform or enforce any term, condition or
obligation set forth in any agreement by Borrower to purchase Agency Assets
that are related to or the subject of the Loan Documents;
ii. Borrower's failure to fulfill, perform or enforce any term, condition
or obligation set forth in the Agent Agreement;
iii. any representation or warranty set forth in the Agent Agreement is not
as represented or warranted by Borrower;
iv. the Agent Agreement is terminated by Borrower or Master Agent;
v. the total annual Sales Commissions for the most recent calendar year (or
the immediately preceding twelve month period if selected by Lender)
decrease to fifty percent or less of the principal balance of the Note;
vi. a significant impairment of Lender's prospect of any payment,
performance, or ability to realize upon assets in which it has a security
interest arises;
vii. an individual Borrower's insolvency, death or legal incapacitation; a
guarantor's insolvency, death or legal incapacitation; or, the insolvency,
death or legal incapacitation of a principal, officer or owner of Borrower;
viii. the refusal by any guarantor to guaranty the payment and performance
of any future debt, liability and obligation of Borrower to Lender;
ix. if at any time the total of all outstanding obligations of Borrower
(and/or any guarantor of Borrower's obligations, at Lender's sole
discretion) to Lender and/or any other Person exceeds N/A (Note: Lender may
select market value net worth requirement or in other manner limit
increases in Borrower's or a Guarantor's debt load; no such limitations
indicated by "N/A");
x. if, without Lender's prior written consent, N/A's ownership interest in
N/A is transferred, diluted or further encumbered in any manner, including
but not limited to, the issuance of new shares, assignment or gift of
shares, the substitution of shares, the hypothecation or pledge of shares
(Note: Applies at Lender's discretion, if
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Borrower is a corporation, or if individual Borrower pledges shares of a
corporation as collateral; inapplicability indicated by "N/A");
xi. if, without Lender's prior written consent, N/A distributes in any
successive 12 month period by cash, assets, salary, consulting fees,
dividends, loans, payment in kind, or other such distribution directly or
indirectly to Borrower; Borrower's owners, partners, principals, directors,
officers, spouse; or guarantors, any amount in excess of the greater of (i)
or (ii): (i) N/A; or (ii) annual earnings of N/A before interest, taxes,
depreciation and amortization, less any applicable debt payments of N/A
(Note: At Lender's discretion; inapplicability indicated by "N/A");
x. if, Borrower does not pay obligations associated with the Agency Assets
or the operation of Borrower's agency in a timely manner and Lender, in its
sole discretion, determines Borrower's delinquency will materially impair
Lender's security interest.
(c) A default by Borrower in performing under the terms of one Loan Document
shall constitute a default under the terms of all other Loan Documents.
(d) A default by Borrower in performing the obligations and duties of any
contract relating to Borrower's business shall constitute a default under the
terms of this Agreement.
14. REMEDIES UPON AND EFFECT OF DEFAULT. In addition to any remedy or right
Lender has under any Loan Document, the Uniform Commercial Code or other law,
and in addition to any effect of default set forth in any other Loan Document,
the Uniform Commercial Code or other law, in the event Borrower fails to cure
any monetary default within five (5) calendar days or any non monetary default
within fifteen (15) calendar days:
(a) Borrower shall cooperate fully with Lender or a receiver and promptly
endorse, set over, transfer and deliver to Lender or a receiver any Agency
Assets in Borrower's possession or held by a third party. Borrower
expressly agrees and acknowledges Lender's or a receiver's right to Agency
Assets, right to possession of Agency Assets and right to operate
Borrower's business without the necessity of commencing legal action and
without Borrower's further action or authorization.
(b) Borrower shall deposit any receipts received by Borrower in the
Receipts Trust Account described in the Lender's Protection Addendum or in
such other deposit account designated by Lender.
(c) For a period of three (3) years after Borrower's default, Borrower
shall not directly or indirectly solicit or write Policies for any of
Borrower's customers and shall not directly or indirectly attempt to divert
any of Borrower's customers from continuing to do business with Master
Agent, its successors, assigns or designees. Borrower agrees that this
prohibition is reasonable and necessary and that the credit extended to
Borrower is ample consideration for this restriction. Borrower understands
that Borrower is not prohibited from working for any other company or in
any particular line of work, but that this covenant not to compete only
restricts the Borrower from writing insurance for or contacting in person,
by telephone, by mail, or by any other means, those customers or potential
customers he/she worked with while an agent of Master Agent.
(d) Borrower shall enforce, for the continued benefit of Lender, all non
solicitation agreements or non compete agreements currently in force
between Borrower and its owners, officers, directors, partners, independent
contractors and employees.
(e) Borrower shall cause, Borrower's owners, officers, directors, partners,
independent contractors and employees to cooperate with Lender in
transferring ownership of all property to Lender.
(f) Lender, without appointing a receiver, shall be entitled, but is not
required, to take possession and control of the Agency Assets and collect
the rents, issues, and profits thereof. However,
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Lender shall be entitled, but is not required, to have a receiver appointed
by a court of competent jurisdiction to take possession and control of the
Agency Assets and collect the rents, issues, and profits thereof. In the
event a receiver is appointed, the amount so collected by the receiver
shall be applied under the direction of the court to the payment of any
judgment rendered or amount found due under the Loan Documents. However,
under no circumstances whatsoever shall the appointment of the receiver be
considered to create a control of Borrower's business by Lender and at all
times the receiver shall be an agent apart from Lender and responsible only
to the appointing court.
(g) All rights and remedies of Lender under this Agreement and the Loan
Documents shall be cumulative, and the exercise of one or more rights or
remedies shall not preclude the exercise of any other right or remedy
available under this Agreement or applicable law.
15. CONTINGENCIES; CLOSING DATE. Lender's extension of credit to Borrower shall
be contingent upon: (i) Lender's receipt of all duly executed, original (and
recorded as required by Lender) Loan Documents; (ii) Lender's receipt of the
duly executed, original Agent Agreement satisfactory to Lender with duly
executed, original Lender's Protection Addendum attached thereto; (iii) Lender's
satisfaction with the due diligence inspection conducted with respect to
Borrower; (iv) Lender's satisfaction with Borrower's interview; (v) Borrower's
purchase of Agency Assets and evidence satisfactory to Lender that Borrower has
exclusive, good and marketable title to such assets; (vi) if requested by
Lender, Lender's receipt of copies of the agreements described in paragraphs 17
and 28 herein; and, (vii) Lender's receipt of duly executed, original Trust
Agreement and Collateral Preservation Agreement; (viii) Borrower's compliance
with all other terms and conditions set forth in the Loan Documents, Agent
Agreement and Lender's Protection Addendum. The Closing Date shall be no later
than 60 days from the date hereof, unless otherwise agreed to in writing by the
parties. In the event the Closing Date does not occur within 60 days from the
date hereof and the parties do not agree upon an extension of the Closing Date,
Lender shall have no further duties under any Loan Document and Borrower shall
reimburse Lender for any out-of-pocket expenses incurred by Lender in connection
with the loan or in preparation for the extension of credit under the Loan
Documents.
16. PAYMENT OF COSTS AND FEES; SET-OFF. Borrower shall pay at closing all costs,
expenses (including without limitation attorney's fees and other professional
fees), and taxes incurred by Lender in connection with the negotiation,
preparation, execution, delivery and recording of the Loan Documents. In
addition, BORROWER SHALL PAY IMMEDIATELY UPON DEMAND BY LENDER ALL COSTS AND
EXPENSES (INCLUDING WITHOUT LIMITATION ATTORNEY'S FEES AND OTHER PROFESSIONAL
FEES) INCURRED BY LENDER IN CONNECTION WITH THE ADMINISTRATION OR ENFORCEMENT OF
THE LOAN DOCUMENTS RELATING TO A BREACH BY BORROWER OF ANY LOAN DOCUMENTS OR
OTHERWISE. Any such amount may be added to the principal balance of the loan or
offset by Lender from any funds held by Lender or held in trust or by a third
party, for Borrower's benefit or otherwise, before or after loan payoff.
17. AGREEMENTS WITH EMPLOYEES, INDEPENDENT CONTRACTORS, OWNERS, DIRECTORS,
OFFICERS AND PRODUCERS. (a) Without Lender's prior written consent, Borrower
shall not enter into any employment, producer or other agreement which purports
to vest or transfer ownership of Agency Assets. Unless otherwise agreed by
Lender in writing, Borrower further agrees that all owners, directors, officers,
as well as all employees, independent contractors, producers or other such
persons having insurance or other financial services licenses or authority,
shall enter into written agreements with Borrower containing an acknowledgment
of Lender's priority position in Agency Assets, and containing a covenant that
such person, for a period of at least three (3) years following termination of
such agreement, will not directly or indirectly solicit or write Policies for
any of Borrower's customers and will not directly or indirectly attempt to
divert any of Borrower's customers from continuing to do business with Borrower,
its successors, assigns or designees. Borrower agrees that it shall enforce such
provisions for its benefit and for the benefit of Lender. Borrower agrees to
provide to Lender upon Lender's written request: copies of employment, producer
or other such agreements pertaining to Borrower's business or operations; and,
any employees', independent contractors', owners', directors', officers' and
producers' acknowledgment of Lender's priority position in the Agency Assets and
other property which are the subject of the Loan Documents or which secure the
loan.
(b) Notwithstanding the restrictions set forth in paragraph 17(a), Lender
authorizes Borrower to enter into Subagent Agreements so long as same are in
compliance with the terms and conditions of the Agent Agreement. Lender
acknowledges that pursuant to the Subagent Agreement a Subagent shall have
vested ownership rights in Customer
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Accounts coded to Subagent as indicated on the Agent Account and that Lender's
security interest in Customer Accounts owned by Subagent shall be subject to
Subagent's vested interest. Lender acknowledges that Borrower does not purport
to grant a security interest in the ownership rights Subagent has in Customer
Accounts coded to Subagent. Instead, Borrower security interest is limited to
Borrower's interest in and relating to Customer Accounts owned by Subagents.
Such rights include, without limitation, contract rights and interests of any
kind set forth in the Subagent Agreement, rights to payment pursuant to the
Subagent Agreement, and rights to any accounts created or described in such
Subagent Agreement.
18. RIGHT TO ASSIGN OR DELEGATE. (a) Lender may assign or delegate all or any
part of its rights, title, interest or obligations in and to this Agreement or
under any Loan Document to one or more Persons without the consent of Borrower.
Lender may also assign or delegate all or any part of its rights, interest or
obligations to service the loan which is the subject of the Loan Documents to
one or more Persons without the consent of Borrower. Any such assignment by
Lender shall be without further recourse to Lender.
(b) Borrower shall not assign or delegate all or any part of its rights, title,
interest or obligations under any Loan Document, Agent Agreement or agreement to
purchase agency assets without the prior written consent of Lender.
19. INDEMNIFICATION AND HOLD HARMLESS. Borrower hereby agrees to and
acknowledges the existence of the Trust Agreement. Borrower agrees to hold
Lender, the trust, trustees under the Trust Agreement, and their owners,
officers, directors, partners, employees, and independent contractors thereof
(collectively the "indemnified parties") harmless from any and all liability for
the distribution of amounts in accordance with the terms and priorities of the
Trust Agreement and for incorrect or improper distribution of such amounts
except to the extent such incorrect or improper distribution was caused by such
indemnified party's willful or gross misconduct.
20. CHANGE IN STATUS. Borrower agrees to notify Lender immediately upon any
change in Borrower's status which may result in the material impairment of
Borrower's ability to perform any or all terms of any Loan Documents or which
may materially impair Lender's security interest. Such material change in status
includes but is not limited to: (i) a significant loss of business, or a loss of
a large Customer Account; (ii) a significant change in Borrower's health,
financial circumstances, or family status; or (iii) an adverse claim,
proceeding, demand or action against Borrower, or Borrower's business. In the
event of such change in Borrower's status, Borrower agrees to cooperate fully
with Lender to protect Lender's security interest.
21. INSURANCE. Borrower agrees to obtain insurance which insures Borrower's
person or business, and which is of the type and in the amount which Lender
deems necessary to protect its interest. Borrower agrees to obtain insurance
coverage on Borrower's owners, key employees, producers, independent
contractors, officers or directors of the types and in the amounts which Lender
deems necessary to protect its interest. Any such insurance policies shall, at
Lender's discretion, name Lender as irrevocable beneficiary or as an additional
insured. In addition, Lender may, in its sole discretion, require that it be
assigned the cash value of any insurance policy as additional security.
22. AGREEMENT TO PURCHASE AGENCY ASSETS. Borrower shall not amend or waive any
material term of any agreement to purchase agency assets without the prior
written consent of Lender. Further, Borrower shall enforce all material terms of
such agreement, including but not limited to any agreement or covenant not to
solicit or compete, for its benefit and for the benefit of Lender.
23. PROTECTION OF PROPERTY. Borrower will use its best efforts to preserve the
value of Borrower's Agency Assets and the property in which Lender has a
security interest. Borrower shall not directly or indirectly commit or allow any
impairment, deterioration, diversion, or transfer of such property not in the
ordinary course of business without Lender's prior written consent. Borrower
will not permit any substantial change in the operation of its business without
Lender's prior written consent. Borrower will pay before or as they become due
all taxes, assessments, liens, encumbrances, lease payments, and other
obligations relating to its business.
24. AUTHORITY TO PERFORM. If Borrower fails to perform any duty or any of the
covenants contained in any Loan Document, Agent Agreement, a Subagent Agreement
or other agreement related to Borrower's business, Lender may without notice
perform or cause such duty or covenant to be performed. Borrower appoints Lender
as attorney in fact to sign Borrower's name or pay any amount necessary for
performance. Lender's right to perform for Borrower shall
8
not create an obligation to perform, and Lender's failure to perform will not
preclude Lender from exercising any of Lender's other rights under the law or
any Loan Document. Any amount paid by or incurred by Lender may be added to the
principal balance of the loan or offset by Lender from any funds held by Lender
or held in trust or by a third party, for Borrower's benefit or otherwise,
before or after loan payoff.
25. PRIOR SECURITY INTEREST. With regard to any other security agreement or
other lien document purporting to create a prior or subordinate security
interest or encumbrance on any Agency Asset, Borrower hereby agrees: (i) to make
all payments when due and to perform or comply with all covenants contained
therein; (ii) to promptly deliver to Lender any notices that Borrower receives
from the holder of such security interest; and (iii) not to allow any
modification or extension of nor to request any future advances under any note
or agreement secured by the lien document without Lender's prior written
consent. Borrower warrants that it has disclosed in writing any such prior or
subordinate security interest to Lender and that nothing in this paragraph is to
be interpreted to allow Borrower to grant a prior or subordinate security
interest in the Agency Assets without Lender's prior written consent.
26. PURCHASE MONEY SECURITY INTEREST. The security interest granted in the Loan
Documents secures this loan (including all extensions, renewals, refinancings
and modifications thereof) and any other debt Borrower has with Lender now or in
the future and, if used to purchase Agency Assets, grants Lender a purchase
money security interest. Borrower and Lender agree that the security interest of
any future loan or advances by Lender not to purchase additional Agency Assets
shall be subordinate to the security on any amounts loaned to Borrower by Lender
for the purchase of Agency Assets, now or in the future.
27. ALLOCATION OF LOAN PAYMENTS, PREPAYMENTS, AND PAYMENTS ON DEFAULT TO REDUCE
DEBT. Borrower hereby agrees that Lender may allocate the payments it receives
in any manner which Lender deems necessary. This allocation may include but is
not limited to current loan amounts, any prepayments, and any past due payments
which may otherwise place Borrower in default. This discretion also allows
Lender to determine whether to apply the loan payment proceeds to interest or
principal. BORROWER HEREBY FURTHER AGREES THAT THE ALLOCATION OF THE LOAN
PAYMENT PROCEEDS IS ABSOLUTELY WITHIN THE DISCRETION OF LENDER AND THEREFORE
WAIVES ANY OBJECTIONS THAT BORROWER MIGHT OTHERWISE EXPRESS WITH THE ALLOCATION
AMOUNTS.
REPRESENTATIONS AND WARRANTIES
28. AGREEMENT TO PURCHASE AGENCY ASSETS. Borrower represents and warrants that
it has provided a true and accurate copy of the agreement to purchase Agency
Assets which are related to or the subject of the Loan Documents. Borrower also
warrants that such agreement contains a covenant that the seller, for a period
of at least three (3) years following closing of such agreement, will not
directly or indirectly solicit or write Policies for any of Borrower's customers
and will not directly or indirectly attempt to divert any of Borrower's
customers from continuing to do business with Borrower, its successors, assigns
or designees.
29. OTHER REPRESENTATIONS AND WARRANTIES. Borrower warrants and represents to
and covenants with Lender that: (a) Borrower has the right, power and capacity
and is duly authorized and empowered to enter into, execute, deliver and perform
this Agreement and the Loan Documents; (b) the execution, delivery and/or
performance by Borrower of this Agreement and the Loan Documents shall not, by
the lapse of time, the giving of notice or otherwise, constitute a violation of
any applicable law or a breach of any provision contained in Borrower's Articles
of Incorporation, Bylaws or similar document, or contained in any agreement,
instrument or document to which Borrower is now or hereafter a party or by which
it is or may be bound; (c) Borrower is now, and at all times hereafter shall be
solvent, and generally paying its debts as they mature and Borrower now owns (or
has an interest acceptable to Lender in) and shall at all time hereafter own (or
have an interest acceptable to Lender in) property which, at a fair valuation,
is greater than the sum of its debts; (d) Borrower is not and will not be,
during the term hereof, in violation of any applicable federal, state or local
statute, regulation or ordinance that in any respect materially and adversely
affects its business, property, assets, operations or condition, financial or
otherwise; (e) Borrower is not in default with respect to any indenture, loan
agreement, mortgage, deed or other similar agreement relating to the borrowing
of monies to which it is a party or by which it is bound; (f) since December 1,
2000, there has been no material adverse change in the financial condition or
other circumstances of Borrower and no change to the financial or other
information provided to Lender pursuant to this Agreement; and, (g) Borrower has
obtained all federal, state and local licenses necessary to conduct its business
as contemplated by the Loan Documents.
9
MISCELLANEOUS TERMS AND CONDITIONS
30. AMENDMENTS. This agreement may not be modified, revised, altered, added to,
or extended in any manner, or superseded other than by an instrument in writing
signed by all the parties hereto. No waiver of any provision hereof shall be
effective unless agreed to in writing by all parties hereto. Any modification or
waiver shall only be effective for the specific instance and for the specific
purpose for which given. Borrower agrees and acknowledges that Lender may also
be required to obtain the approval of other persons or entities before entering
into an amendment or granting a waiver.
31. FAILURE TO ENFORCE, NOT WAIVER. The failure by Lender to enforce any
provision of this Agreement shall not be in any way construed as a waiver of any
such provision nor prevent Lender thereafter from enforcing each and every other
provision of this Agreement.
32. EXECUTION IN DUPLICATE. The Agreement may be executed in duplicate, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument which shall represent the agreement of the parties
hereto.
33. INVALIDITY OR NON-ENFORCEABILITY. The invalidity or non-enforceability of
any particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such invalid
or unenforceable provisions were omitted.
34. BINDING EFFECT. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their heirs, administrators, successors,
assigns and legal representatives but the rights and property interest hereunder
shall not be assignable by any party except as set forth herein. The use of the
masculine shall include the feminine, and the use of the singular shall include
the plural.
35. SURVIVAL. This Agreement shall create and constitute the continuing
obligation of the parties hereto in accordance with its terms, and shall remain
in full force and effect until the loan is paid in full. The indemnification and
hold harmless provisions and the provisions of paragraph 7 hereof shall be
continuing and shall survive any termination of this Agreement.
36. INTEGRATION. THIS AGREEMENT (INCLUDING ALL EXHIBITS AND ADDENDA HERETO)
TOGETHER WITH THE OTHER LOAN DOCUMENTS CONTAINS THE ENTIRE AGREEMENT BETWEEN THE
PARTIES HERETO AND SHALL SUPERSEDE AND TAKE PRECEDENCE OVER ANY AND ALL PRIOR
AGREEMENTS, ARRANGEMENTS OR UNDERSTANDINGS BETWEEN THE PARTIES RELATING TO THE
SUBJECT MATTER HEREOF. NO ORAL UNDERSTANDINGS, ORAL STATEMENTS, ORAL PROMISES OR
ORAL INDUCEMENTS EXIST. NO REPRESENTATIONS, WARRANTIES, COVENANTS OR CONDITIONS,
EXPRESS OR IMPLIED, WHETHER BY STATUTE OR OTHERWISE, OTHER THAN AS SET FORTH
HEREIN, HAVE BEEN MADE BY THE PARTIES HERETO. BY SIGNING BELOW, BORROWER AND
LENDER AFFIRM THAT NO ORAL AGREEMENT BETWEEN THEM EXISTS.
37. INTERPRETATION. Provisions in the Loan Documents are intended to be
cumulative. To the extent that the provisions of this Agreement conflict with
those of any other Loan Document, the provision which provides Lender most
protection and grants Lender the greatest rights shall control. Likewise, if the
provisions of any Loan Document conflict with those of any other Loan Document,
the provision which provides Lender most protection and grants Lender the
greatest rights shall control.
38. GOVERNING LAW. This Agreement shall be construed and governed by the laws of
the State of Kansas except to the extent that the perfection of the interests in
the Agency Assets is governed by the laws of a jurisdiction other than the State
of Kansas. At the option of Lender, jurisdiction and venue for any dispute
arising under or in relation to this Agreement will lie only in Kansas with the
Xxxxxxxx County District Court, Phillipsburg, Kansas, or the U.S. District Court
having jurisdiction over Xxxxxxxx County Kansas. In the event that a lawsuit,
administrative proceeding or litigation is brought with respect to this
Agreement, the prevailing party shall be entitled to be reimbursed for, and/or
have judgment entered with respect to, all of its costs and expenses, including
reasonable attorney's fees' and legal expenses.
10
39. WAIVER OF JURY TRIAL. BORROWER HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL
BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS
AGREEMENT, ANY OTHER LOAN DOCUMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH
MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH. BORROWER AGREES THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT A JURY.
40. WAIVER OF MARSHALING OF ASSETS. Borrower waives any and all rights to
require any marshaling of Borrower's assets.
41. COMMERCIAL LOAN. Borrower and Lender agree that the credit extended
hereunder represents a commercial loan and is not a consumer loan subject to the
UCCC.
42. NOTICES. Notices which may be required to be sent by Lender or Borrower in
accordance with this Agreement shall be sent to the address set forth below or
such other address as may be designated by such party provided notice of such
change in address has been given to the other party. Notices shall be deemed
effective if in writing, and delivered by hand or mailed by United States Mail,
postage prepaid, mailed by certified mail, with return receipt requested, or
mailed by express courier with date of receipt confirmed. The effective date of
notice shall be the day of delivery by hand; if mailed by regular mail, four
business days following the mailing thereof; and, if by certified mail or
express courier, the date of receipt thereof :
Lender's Address: Borrower's Address:
Brooke Credit Corporation G.I. Agency, Inc.
00000 Xxxxxxxxx Xxxxx 000 X Xxxxxx
Xxxxxxxx 00, Xxxxx 000 Xxxxxxxxxxxx, XX 00000
Xxxxxxxx Xxxx, XX 00000
43. TIMELINESS. Timeliness and punctuality are essential elements of this
Agreement.
The undersigned agree to the foregoing and acknowledge receipt of a copy of this
Agreement on this the 11th day of December, 2000.
LENDER: BORROWER:
by: /s/ Xxxxx X. Sump by: /s/ Xxxxxx X. Xxx
------------------------ --------------------------
Xxxxx X. Sump Xxxxxx X. Xxx
title: Loan Officer title: Vice President
11
Addendum to Agreement for Advancement of Loan
This Addendum is made to and a part of the Agreement for Advancement of Loan
dated December 7, 2000, by and between Brooke Credit Corporation and G.I.
Agency, Inc., "Borrower."
For good and valuable consideration it is agreed that the following provisions
shall be added to and made a part of the Agreement:
AGREEMENT NOT TO SOLICIT OR COMPETE
The undersigned individuals agree to and are bound by the covenants not
to solicit and not to compete set forth in paragraph 14(C) herein and
specifically acknowledge that the covenants contained in said paragraph
are reasonable and necessary and that the undersigned has received
ample consideration for same.
INTEREST RATE
The loan interest rate shall not exceed the maximum amount of
nonusurious interest that may be contracted for, taken, reserved,
charged, or received under law; any interest in excess of that maximum
amount shall be credited to the principal of the loan or, if that has
been paid, refunded. This provision overrides other provisions in this
and all other loan documents.
This addendum is executed as of December 7, 2000.
Brooke Credit Corporation Borrower:
by: /s/ Xxxxx X. Sump by: /s/ Xxxxxx X. Xxx
------------------------ --------------------------
Xxxxx X. Sump Xxxxxx X. Xxx
Its: Loan Officer Its: Vice President
