Exhibit 6.18
PURCHASE AGREEMENT
THIS AGREEMENT is made and entered into this 13th day of June, 2000, by and
between XXXXXX XXXXX and XXXXXXX Xxxx, hereinafter collectively referred to as
"SELLER" and BROOKE CORPORATION, hereinafter referred to as the "BUYER":
WITNESSETH THAT:
WHEREAS, Xxxxxx Xxxxx owns 450 shares of Common Stock of Interstate Insurance
Group LTD., hereinafter referred to as the Company;
WHEREAS, Xxxxxxx Xxxx owns 450 shares of Common Stock of Interstate Insurance
Group LTD., hereinafter referred to as the Company;
WHEREAS, the 900 shares owned by Seller represent all of the outstanding and
issued shares of the Company;
WHEREAS, Buyer desires to purchase from Seller, on certain specified terms and
conditions, all of their shares of common stock in the Company;
WHEREAS, Buyer and Seller desire to enter into an agreement setting forth the
terms and conditions pursuant to which such purchase of the Shares shall be
consummated.
NOW THEREFORE, in consideration of the mutual promises and conditions herein set
forth, and in order to induce each other to enter into and perform the
undertakings herein set forth, Buyer and Seller, do, by these presents, hereby
agree as follows:
ARTICLE I
PURCHASE OF THE SHARES
1. PURCHASE OF SHARES. Buyer agrees to purchase 900 shares of the common stock
of the Company's stock which represents 100% of the issued and outstanding
common stock of the Company.
2. PURCHASE PRICE. The total purchase price for such common stock shall be the
sum of One Million Two Hundred Thousand and No/100 Dollars ($1,200,000.00) and
the Company's net tangible book value, which shall be defined as the difference
between the book value of all tangible assets and all liabilities as shown on
the closing balance sheet attached as Exhibit E. Tangible assets excludes all
assets that are intangible in nature such as non compete covenants, goodwill,
software licenses and insurance agency expirations because it is agreed that any
such intangible assets are included in the unadjusted purchase price
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3. PAYMENT OF PURCHASE PRICE. a) Buyer will, upon execution of this agreement,
pay Seller Ten Thousand and no/100 Dollars ($10,000.00), which amount shall
constitute an xxxxxxx money deposit. The Buyer shall pay to Seller the purchase
price calculated in accordance with paragraph 2 of this Article as follows: A
cash payment at the time of closing in an amount equal to the purchase price
less xxxxxxx money deposit less Nine Hundred Thousand and No/100 Dollars
($900,000); and the remaining balance of the purchase price, with simple
interest at the rate of five percent (5%), shall be paid to Seller in five
annual installments comprised of four equal annual payments of principal and
interest of Two Hundred Seven Thousand Eight Hundred Seventy-seven and 32/100
Dollars ($207,877.32) with the first such payment due one year after the closing
of this agreement. The fifth and final payment of the remaining interest and
principal shall be due five years after the closing of this agreement.
b) Seller agrees that for a period of five years following the closing, the
purchase price set forth in paragraph 2 hereof shall be adjusted as of each
anniversary of the closing date as follows: i) if net commissions exceed Eight
Hundred Thousand and No/100 Dollars ($800,000.00) during the twelve (12) month
period ending on the anniversary of the closing date, then the purchase price
shall be increased by thirty (30) percent of any such excess commissions amount.
ii) if net commissions are less than Eight Hundred Thousand and No/100 Dollars
($800,000.00) during the twelve (12) month period ending on the anniversary of
the closing date, then the purchase price shall be decreased by thirty (30%) of
any such deficit commissions amount iii) Net Commissions shall be defined as the
total sales commissions income received from insurance companies less any sales
commissions expense paid to producers. Net Commissions shall be calculated,
without further adjustment, from monthly account statements prepared by the
Buyer in accordance with the rules and procedures typically used by Buyer for
compiling monthly account statements for its agents.
(c) Seller and Buyer agree that any purchase price adjustment provided for in
paragraph 3(b) shall increase or decrease the purchase price balance referenced
in paragraph 3(a) of the agreement as of the date of the corresponding
anniversary and the final installment payment shall be adjusted accordingly. If
the final installment is insufficient to cover a net purchase price reduction or
if the Buyer has reasonable expectations that the final installment will be
insufficient to cover the purchase price reductions, then Seller shall pay Buyer
the total amount of purchase price reductions, net of any prior purchase price
increases, upon Buyer's request for payment
(d) Buyer agrees that during the five year period following the closing of the
agreement or until Buyer pays Seller amounts due pursuant hereto (whichever
occurs first), the Company shall not sell or otherwise transfer any services,
policies, coverages, or products (or commissions associated therewith) related
to any insurance program developed by either or both Sellers or the limousine or
car rental insurance program currently sold, renewed, serviced or delivered
through the Company (unless otherwise stated, for the purposes of this
paragraph, the "programs").
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Furthermore, Buyer agrees that during the period, the Company's current or
future contracts relating to the programs will not be transferred to any other
person or entity; the Company's commissions from the programs will not be
transferred to any other person or entity; nor will Buyer, an affiliated company
of Buyer, or the Company contract with any other person or entity to develop,
sponsor or otherwise transact a limousine or car rental insurance program
business for distribution through Buyer's franchise agents or unaffiliated
agents. However, nothing set forth in this paragraph shall be interpreted to
restrict Buyer's franchise agents from selling, renewing, servicing or
delivering the programs' services, policies, coverages or products through other
suppliers and for Buyer to receive compensation as a result of such
transactions. Furthermore, nothing in this paragraph shall be interpreted to
guaranty the continued contractual relationship with any company with which the
Company is currently contracted or with which the Company contracts in the
future. For the purpose of this paragraph, services, policies, coverages or
products shall be considered related to the programs if such are classified as
such services, policies, coverages or products by the companies the Company
represents.
6. CLOSING DATE. As used herein, the term "Closing Date" refers to July 1, 2000,
unless another date is agreed upon in writing by the parties.
7. FINANCIAL STATEMENTS.
a) End of Fiscal Year Financial Statements. The financial statements of the
Company as of its most recent fiscal year end (Exhibit D) fairly present and
correctly state the financial condition of the Company as of that date according
to Generally Accepted Accounting Practices, and Seller has not learned of any
facts indicating that such financial statements are not substantially correct
and accurate as of that date. Seller shall provide to Buyer financial statements
and/or accounting reports, if any, regarding the financial condition of the
Company as of the end of the most recent fiscal year which have been prepared by
Seller's or the Company's accountants.
b) Closing Balance Sheet. Attached hereto and incorporated herein by reference
as Exhibit E is a April 30, 2000, balance sheet, prepared in accordance with
Generally Accepted Accounting Practices, showing the value of all assets and
liabilities. Seller represents that accrued expenses include all anticipated
expenditures which should be accrued according to Generally Accepted Accounting
Practices, including salaries, benefits, etc.
c) A depreciation schedule that corresponds to the Company's net asset account
balances on the fiscal year end balance sheet will be provided prior to closing.
d) In the event that Buyer discovers, within twelve (12) months of the closing
date, that the book value of the Company's tangible assets has been materially
overstated, or the book value of the Company's liabilities materially
understated or undisclosed, on Exhibit E, then the Buyer may adjust the purchase
price and the final installment accordingly. If there is no purchase price
balance or the balance is insufficient to cover the reduction, Seller shall pay
Buyer any
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adjustment owed upon Buyer's request for payment. If within twelve (12) months
of the closing date it is determined that the book value of the company's
tangible assets has been materially understated or the book value of the
Company's liabilities has been materially overstated, on Exhibit E, then the
purchase price and the final installment will be adjusted accordingly. If Buyer
and Seller dispute the book value of the Company's tangible assets or
liabilities, then an independent accounting firm mutually agreed upon by the
parties shall be retained to conduct an audit of the closing balance sheet to
resolve such dispute.
e) All material fixed liabilities and all material contingent liabilities that
are not incurred in the ordinary course of business shall be disclosed as
Exhibit H which Seller represents as accurate pursuant to Article II paragraph
11 of this agreement. In the event that any such liabilities are understated,
improperly disclosed or undisclosed, then the Buyer may adjust the purchase
price and the final installment accordingly. If there is no purchase price
balance or the balance is insufficient to cover the reduction, Seller shall pay
Buyer any adjustment owned upon Buyer's request for payment.
f) Pursuant to Article II paragraph 15, Seller guarantees payment of insurance
premium accounts receivables that are over thirty (30) days delinquent at the
time of closing and guarantees payment of all other accounts and notes
receivables without limitation. In the event Seller has to perform on any such
guarantee, then the Buyer may adjust the purchase price and the final
installment accordingly. If there is no purchase price balance or the balance is
insufficient to cover the reduction, Seller shall pay Buyer any adjustment owned
upon Buyer's request for payment.
8. PLACE AND TIME OF CLOSING. Closing shall take place at the offices of the
Buyer at 10:00 a.m., Kansas City time on the Closing Date as provided herein.
9. PERFORMANCE PRIOR TO CLOSING. Buyer and Seller each will satisfy and perform
all obligations, requirements and undertakings to be satisfied or performed by
them, respectively, under this Agreement prior to the Closing Date.
10. ADDITIONAL ACTIONS AT CLOSING. On the Closing Date, the following
transactions will take place and be accomplished:
a) Seller will deliver to Buyer stock certificates with assignment and stock
powers evidencing Seller's ownership of 900 shares of the Company, with full
warranties of title, free and clear of all encumbrances.
b) The Seller will deliver to the Buyer all minute books, corporate records,
stock transfer books and other corporate records of the Company brought current
to the Closing Date.
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c) At the closing, Xxxxxx Xxxxx and Xxxxxxx Xxxx shall elect Xxxxxx X. Xxx, as
Director and Chairman, and Xxxxxxx Xxxx and Xxxxxx Xxx as Directors. Xxxxxx
Xxxxx and Xxxxxxx Xxxx shall remain Directors of the Company, without
compensation, if one or both so elects and may continue to serve as a Director
for a period of five (5) years following the closing of this agreement or until
Buyer pays Seller amounts due pursuant hereto (whichever occurs first).
d) Seller shall discontinue using the name Interstate Insurance Group except to
the extent such use is pursuant to Seller's employment with the Company.
e) Seller shall provide a detailed listing and aging of all the Company's
accounts or notes receivable outstanding as of the closing date.
f) Seller shall execute and deliver to Buyer the employment contract in
substantially the form and content attached hereto as Exhibit I.
G) Buyer shall pay Xxxx X. Mouse legal fees reasonably incurred by Sellers or
the Company associated with this stock transfer transaction not to exceed
$5,000.
11. CONTINGENCIES. a) The closing of this agreement is subject to Buyer's
satisfaction with the due diligence inspection conducted with respect to the
Company, the Company's assets and liabilities, and the valuation of same. The
inspection of the Company's assets shall include without limitation, an
inspection to determine that the current market value of tangible assets is
approximately the same as their book value.
b) In the event of unsatisfactory due diligence inspection then, this agreement
may, at the option of the Buyer, become null and void and Buyer shall not be
entitled to the return of its xxxxxxx money payments and all parties shall
thereupon be released from any further liability under this agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby covenants, represents and warrants as follows:
1. SELLER. Seller has the power to execute, deliver and perform all obligations
hereunder, and has taken all actions required by law or otherwise to authorize
such execution, delivery and performance.
2. EXTRAORDINARY EXPENDITURES. During the 30 days preceding this agreement,
Seller represents that the Company has not paid bonuses, declared or paid
dividends, entered into any employment contract; made any substantial sales or
changes in assets; engaged in any extraordinary sales of assets; paid any
obligations or liabilities other than current liabilities incurred in the
ordinary and
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usual course of business; mortgaged, pledged or subjected to lien any of the
Company's respective property or assets, or entering into any management,
consulting or purchase agreements other than in the ordinary course of business.
3. THE COMPANY. Interstate Insurance Group, LTD is a Missouri corporation which
is duly organized, validly existing and in good standing under the laws of the
State of Missouri. Such corporation is licensed to sell property/casualty and/or
life/health insurance in the states in which it conducts business where
licensing of the Company is required. There is no proceeding currently pending
or any action threatened (including, without limitation, action to revoke any
licenses or authorities issued) by any entity regulating the sale of insurance
in any state in which the Company is licensed or elsewhere. Furthermore, Seller
is not aware of the existence of any facts that may constitute the grounds for
the suspension or revocation of any licenses or authorities issued by any entity
regulating the sale of insurance.
4. MINUTE BOOKS, STOCK RECORDS. Seller shall make available to Buyer or its
representatives the minute books and stock books of the Company for inspection.
Such minute books are, with respect to all corporate transactions and
proceedings, accurate and complete in all respects and reflect all resolutions
adopted and all actions authorized or ratified by the shareholders or directors
of the Company, including those required to carry out the duties and obligations
of the Company hereunder. Copies of all corporate minutes of meetings held or
actions taken by the Company will be made available to Buyer for inspection
prior to the Closing Date. The stock transfer books and stock ledgers of the
Company are, with respect to all stock transfers and transactions, in good
order, complete, accurate and current and contain all necessary signatures and
set forth all stock and securities issued, transferred and surrendered.
5. COMMON STOCK OF COMPANY. As of the date hereof, the authorized common stock
of the Company consists of 1000 shares, 900 of which are issued and outstanding.
As of the Closing Date, Seller is the owner and holder, beneficially and of
record of 900 shares or 100% of the common stock of the Company. There are no
liens, claims or encumbrances against such stock and that Seller has full and
unlimited authority to dispose of such stock.
6. FINANCIAL STATEMENTS. Seller represents that the Closing Balance Sheet and
corresponding notes attached as Exhibit E accurately and fairly represents the
assets and liabilities of the Company as of April 30, 2000 in accordance with
General Accepted Accounting Principals, and that the end of fiscal year
financial statements and corresponding notes attached as Exhibit D accurately
and fairly represent the assets and liabilities of the Company as of the
Company's most recent fiscal year end in accordance with General Accepted
Accounting Principals.
7. ASSETS. The Company has good and merchantable title to all assets shown on
its books, free and clear of all liens, encumbrances and charges except for
current personal property taxes and assessments not delinquent and except as
fully disclosed in writing to Buyer.
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8. TAX RETURNS AND AUDITS. The company has duly filed on a timely basis with the
appropriate governmental agencies all tax returns and tax reports which are or
were due or are required to be filed by the Company with respect to all periods
of time, and all taxes, interest, penalties, and charges due or to become due
for all periods of time prior to closing have been paid in full. There are no
ongoing or pending examinations or investigations pertaining to taxes or
assessments asserted against the Company by any taxing authority, and no
agreement for the extensions of the time for the assessment of any amount of tax
has been or shall prior to the Closing Date be entered into or requested by or
on behalf of the Company.
9. LITIGATION. A claim is pending against the Company in a Michigan small claims
court and of which the maximum exposure is $1,800 plus costs and interest. Such
suit is disclosed on Exhibit H. Otherwise, there are no judgments, actions,
arbitration or decrees pending against the Company, nor is there any litigation,
action or proceeding threatening or pending against the Company.
10. NO DEFAULT OR VIOLATIONS. The execution and delivery of this Agreement and
compliance with and performance of the terms hereof by Seller will not conflict
with or result in a breach of the provisions of, or constitute a default under,
any indenture, agreement or other instrument to which the Seller is bound and
such execution, delivery, compliance and performance will not violate any law or
regulation of the United States, of the State of Missouri, or any regulatory or
administrative body or agency.
11. OTHER LIABILITIES AND CLAIMS. There are no material liabilities, debts,
leases, charges, claims, contracts or assessments against the Company, fixed or
contingent other than the liabilities and claims specifically disclosed on
Exhibit H and those fixed liabilities incurred in the ordinary course of
business. Accordingly, all material contingent liabilities have been disclosed
on Exhibit H and all material fixed liabilities that are not incurred in the
ordinary course of business have been disclosed in Exhibit H. Fixed liabilities
that are incurred in the ordinary course of business have not been disclosed on
Exhibit H but are included on the Seller's Financial Statements and Closing
Balance Sheet. The terms, conditions and/or circumstances of all liabilities
listed on Exhibit H shall be briefly summarized as part of said exhibit. For the
purposes of this paragraph, a liability, debt, lease, charge, claim, contract or
assessment shall be deemed material if it results in an annual payments by the
Company of One Thousand Dollars ($1000) or more per year or could result in
liability to the Company of One Thousand Dollars ($1000) or more. For the
purposes of this paragraph, a liability shall be deemed incurred in the ordinary
course of business if such liability is incurred directly in relation to
insurance premium or net premium xxxxxxxx.
12. PAYMENT OF CLAIMS. If prior to the Closing Date, any claim covered by any
provision, warranty, covenant, representation, obligation, statement, or
agreement of the Seller shall arise, the Buyer will give notice of such claim to
Seller and the Seller, at their own expense, shall employ counsel, accountants,
or other experts to handle the matter on behalf of the Company If
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such claim results in a deficiency, judgment, payment, cost, claim or demand,
including penalty, interest, fees and all expenses, Seller will reimburse the
company from the proceeds of this transaction, net of recoverable insurance
proceeds.
13. ADMINISTRATIVE ORDERS. There are no administrative orders or supervisory
actions by state or federal regulatory authorities now in force or pending as of
the date hereof which affect the Company.
14. GUARANTY OF RECEIVABLES. All accounts receivables for insurance premiums
over thirty (30) days delinquent at the time of closing are hereby personally
guaranteed by Seller, and if unpaid within sixty (60) days of closing shall be
paid by Seller. All other accounts and notes receivables included on the
Company's closing balance sheet are hereby personally guaranteed by Seller.
15. NAME. Buyer shall have the unrestricted use of the name Interstate Insurance
Group, LTD and Seller has not authorized and will not authorize anyone else to
use the name.
ARTICLE III
REPRESENTATION, WARRANTEES AND COVENANTS OF BUYER
Buyer hereby covenants, represents and warrants as follows:
1. STATUS. Buyer has the requisite power to execute, deliver and perform this
agreement and all transactions contemplated herein. Further, Buyer warrants that
it is a corporation in good standing under and by virtue of the laws of the
State of Kansas and that the actions contemplated herein have been approved by
resolutions duly adopted by the Board of Directors of Brooke Corporation.
2. NO DEFAULT OR VIOLATIONS. The execution and delivery of this Agreement and
compliance with and performance of the terms hereof by Buyer will not conflict
with or result in a breach of the provisions of, or constitute a default under
any indenture, agreement or other instrument to which Buyer is bound; such
execution, delivery, compliance and performance will not violate any law or
regulation of the United States or the State of Kansas or any regulatory or
administrative body or agency.
3. CONFIDENTIAL INFORMATION. Buyer and its agents, prospective agents,
employees, attorneys, accountants and representatives will hold in strict
confidence all data and information, classified or unclassified, obtained from
the Seller, pertaining to the financial condition, business or methods of
operation of the Company and any of Company's customers. If for any reason the
transaction contemplated by this agreement is not consummated, Buyer will return
to Seller all copies, compilations and abstracts of all data, information and
other written material regarding Company, or any of Company's customers,
obtained pursuant to or in connection with this
Page 8 of 27
Agreement, and will not attempt to sell, transfer, use or profit from any such
data, information or materials.
ARTICLE IV
COVENANTS AND AGREEMENTS OF SELLER
1. CONDUCT OF BUSINESS IN REGULAR COURSE. From the date hereof and continuing
through the Closing Date, described as the "Interim Period", Seller shall not
permit the business and operations of the Company to be conducted in an unsafe
and unsound manner, nor permit any significant changes to be instituted in
policy or operations. During the Interim Period, Seller shall prevent the
Company from paying bonuses, declaring or paying dividends, entering into any
employment contract; making any substantial sales or changes in assets; engage
in any extraordinary sales of assets; paying any obligations or liabilities
other than current liabilities incurred in the ordinary and usual course of
business; mortgaging, pledging or subjecting to lien any of their respective
property or assets, or entering into any management, consulting or purchase
agreements other than in the ordinary course of business. Seller shall also
direct the Company, in accordance with applicable laws and regulations. Seller
shall also permit officers of Buyer to be present at all formal meetings of the
Board of Directors of the Company and at all formal meetings of the officers,
and shall provide full access to all books and records of the Company. During
the Interim Period, Seller shall notify Buyer of any significant change in the
operation and management of the Company which might adversely affect the
financial condition or operations of the Company.
2. ACCESS TO COMPANY RECORDS, COOPERATION IN OBTAINING COMPANY CONTRACTS. Seller
will cause the Company to give Buyer full and free access at all reasonable time
to the financial statements, offices, properties, personnel (president and chief
operating officer only), auditors, books, records, stock books, minute books,
company statements, customer lists, expirations, renewals, files and
correspondence of the Company up until the Closing Date. Such access to the
Company records shall be conducted in such a manner that does not interfere with
the normal operations of the Company and does not alert employees of the pending
transaction. Seller shall cause the Company to provide Buyer and its agents all
information and documents reasonably requested by Buyer.
3. INDEMNIFICATION. Seller agrees to indemnify Buyer for any damage (net of any
insurance proceeds, if applicable) resulting from any litigation or actions
against the Company from any claims that might arise due to events occurring
prior to Closing Date and of which Buyer or Seller receives notice within three
(3) years of the closing of this agreement. Claims shall include, but not be
limited to, claims of customers alleging failure to renew, issue or otherwise
service any policy prior to the date of closing, it being agreed that any
liability (net of any insurance proceeds, if applicable) for such errors and
omissions in the transaction of business shall vest solely with Seller
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Seller warrants and represents that the Company currently has a directors and
officers liability insurance policy in force and that a "tail" policy will be or
has been purchased which provides for continuing directors and officers
liability insurance coverage and will provide Buyer with proof of such coverage
upon request. Further, Buyer agrees to add Seller as an additional insured to
its errors and omissions coverage, subject to the errors and omissions carrier's
approval, including coverage for prior acts.
4. CORPORATE ACTS. The Seller will cause the Company to perform, with corporate
proceedings and actions, all acts, deeds and things to be done that are
necessary to perform and to carry out the terms and conditions of this
Agreement, and, the Seller will execute all documents which are necessary under
this Agreement.
ARTICLE V
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
Buyer shall be obligated to pay the Purchase Price to Seller on the Closing Date
only after all of the following actions and conditions have been taken or
satisfied:
1. CORPORATE ACTS. Seller shall cause a meeting of shareholder and/or Board of
Directors of the Company to authorize execution of this Agreement, authorize the
sale of the common stock of the Company to Buyer, and authorize adoption of a
resolution to the Officers and Board of Directors of the Company directing them
to comply, in accordance with applicable laws, with the terms and conditions of
this Agreement.
2. WARRANTIES AND REPRESENTATIONS. All provisions, warranties, covenants,
representations obligations, statements and agreements of the Seller set forth
in this Agreement shall be true in all respects as of the Closing Date, and
Seller have so certified in writing as of the Closing Date.
3. PERFORMANCE OF OBLIGATIONS. Seller have performed and complied with all
provisions, warranties, covenants, representations, obligations, statements and
agreements which are to be performed or complied with by them under this
Agreement prior to or on the Closing Date, and all contingencies have been met.
4. NO MATERIAL ADVERSE CHANGES IN FINANCIAL CONDITION. Between the date hereof
and the Closing Date there will not be:
a) Any materially adverse change in the financial condition, articles of
incorporation, by-laws, assets, liabilities, or personnel of the Company other
than changes occurring in the ordinary course of business;
b) Any disposition, giving or encumbrance by the Seller of any stock, or of any
option or right to acquire any of the stock of the Company or any acquisition,
distribution or retirement of any stock, except as provided herein;
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c) Any materially adverse sale, encumbrance or other disposition of any asset
owned by the Company, other than transaction in the ordinary course of business;
d) Any expenditures or commitment by the Company for the lease or purchase of
assets or services of any kind, other than supplies in small quantities or other
assets acquired in the ordinary course of business;
e) Any damage, destruction or loss, whether or not insured which materially
affects the property, assets, business or prospects of the Company; or
f) Any increase in compensation, fees or benefits payable by the Company to
officers, directors, employees or both.
ARTICLE VI
CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
The Closing shall take place only after all of the following actions and
conditions have been taken or satisfied:
1. PAYMENT OF PURCHASE PRICE. Buyer shall have tendered to Seller the Purchase
Price provided for in this Agreement.
2. PERFORMANCE OF OBLIGATIONS. Buyer shall have performed and complied with all
obligations which are to be performed or complied with it under this Agreement
prior to or on the Closing Date.
ARTICLE VII
TERMINATION & DEFAULT
1. TERMINATION RIGHTS. This Agreement may be terminated, whereupon it shall be
null and void, at any time prior to the Closing Date by:
a) The Buyer or Seller upon written mutual consent;
b) Buyer, if assets of the Company are damaged or destroyed during the Interim
Period;
c) Seller, if Buyer has materially breached its obligations hereunder;
d) Buyer, if it is determined that Seller is in material violation of any
condition precedent to closing, provision, warranty, covenant, obligation,
representation, agreement or statement hereunder or that it will not be in full
force and effect or true on the Closing Date.
2. DEFAULT. If Buyer shall fail to pay any amount due at closing, this agreement
may be declared in default by Seller and Seller shall be entitled to retain the
xxxxxxx money heretofore paid in full satisfaction and liquidation of all
damages sustained by Seller. To secure the payment of the annual installments
described in paragraph 3(a) hereof, Buyer hereby grants to Seller a security
interest in and to the Company stock and assets. Buyer agrees to execute and
deliver to the Sellers a UCC-1 financing statement evidencing said security
interest in form suitable for filing if requested by Seller.
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ARTICLE VIII
MISCELLANEOUS
1. ENTIRE AGREEMENT; LAW GOVERNING. This Agreement embodies the entire agreement
between the parties. There have been no agreements, representations or
warranties between the parties hereto other than those set forth and provided
for herein. This Agreement may be modified and amended only upon written
agreement of the parties. This Agreement was entered into, and shall be
construed and interpreted according to the laws of the State of Kansas. In the
event that this or any other provision may declared invalid, it shall not
nullify the remaining terms of this agreement.
2. BINDING ON SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon, and
be enforceable by, the parties hereto and their respective successors and
assigns. This Agreement and any rights hereunder may be assigned by Buyer upon
written notice of such assignment to the Seller.
3. NOTICES. All notices and other communications hereunder shall be deemed to
have been given when delivered by hand or when deposited in the mail, by
certified or registered mail, postage prepaid, as follows:
If to Buyer: Brooke Corporation
00000 Xxxxxxxxx Xx.
Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
If to Seller: Xxxxxx Xxxxx
Xxxxxxx Xxxx
c/o G. M. Mouse
00000 X. 00xx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000-0000
4. COUNTERPARTS. This Agreement may be execute simultaneously in two or more
counterparts, each of which shall be deemed an original, and all of which when
taken together shall constitute one and the same agreement.
5. WAIVERS AND AMENDMENTS. No failure or delay by any party hereto to exercise
any right, power or privilege hereunder (and no course of dealing between any of
the parties or failure to insist upon strict compliance with each obligation,
covenant agreement or condition hereof) shall operate as a waiver or estopped
with respect to, any right, power or privilege. No waiver of any default on any
one occasion shall constitute a waiver of a subsequent or other default. No
single
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or partial exercise of any right, power or privilege shall preclude the further
or complete exercise thereof at any time thereafter.
6. BROKERS. Seller and Buyer covenant and agree that neither has used the
services of a Broker in negotiating this agreement and, in the event that any
claim or demand is made by a Broker, claiming by or through an Agreement with
either party hereto, said party shall hold the other party harmless against such
claim or demand and all expenses related thereto. Nothing in this paragraph
shall preclude any party to this Agreement from seeking, at their own expense,
competent professional counsel (attorney, accountant, business advisor, etc.) to
review this Agreement, assist with regulatory filing, or other actions necessary
for each party to perform this Agreement.
7. HEADINGS. The headings contained in the articles and paragraphs hereof are
inserted for convenience only and shall not constitute part of the agreement of
the parties or affect in any way the meaning or interpretation of this
Agreement.
8. WAIVER OF JURY TRIAL. The parties hereby waive trial by jury in any action,
proceeding or counterclaim brought by any party against any other on any matter
arising out of or in any way connected with this Agreement. Any documents or
instruments executed and delivered pursuant hereto, the transactions
contemplated hereby, or relationship of the parties created under this
agreement.
9. EXHIBITS. The parties agree that the following listed exhibits are an
integral part of this agreement.
Exhibit A - (Reserved)
Exhibit B - (Reserved)
Exhibit C - (Reserved)
Exhibit D - End of Fiscal Year Financial Statements (and corresponding notes)
Exhibit E - Closing Balance Sheet (and corresponding notes)
Exhibit F - (Reserved)
Exhibit G - (Reserved)
Exhibit H - Disclosure of Liabilities, Debts, Charges, Claims, Contracts and
Assessments
Exhibit I - Employment Contract
Page 13 of 27
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date and year first above written.
Seller: Buyer:
Brooke Corporation
/s/ Xxxxxx Xxxxx By /s/ Xxxxxx X. Xxx
-------------------------- --------------------------
Xxxxxx Xxxxx Xxxxxx X. Xxx, CEO
/s/ Xxxxxxx Xxxx
--------------------------
Xxxxxxx Xxxx
Page 14 of 27
Exhibit D to Purchase Agreement
End of Fiscal Year Financial Statements
and corresponding notes
Page 15 of 27
INTERSTATE INSURANCE GROUP, LTD.
FINANCIAL STATEMENTS
AND
ACCOUNTANT'S COMPILATION REPORT
DECEMBER 31, 1998
INTERSTATE INSURANCE GROUP, LTD.
INDEPENDENCE, MISSOURI
I have compiled the accompanying balance sheets of Interstate Insurance Group,
Ltd. as of December 31, 1998 and the related statements of income, retained
earnings, and supplementary information for the twelve months then ended, in
accordance with Statements on Standards for Accounting and Review Services
issued by the American Institute of Certified Public Accountants.
A compilation is limited to presenting in the form of financial statements
information that is the representation of management. I have not audited or
reviewed the accompanying financial statements and supplementary information
and, accordingly, do not express an opinion or any other form of assurance on
them.
Management has elected to omit substantially all of the disclosures and the
statement of cash flows required by generally accepted accounting principles. If
the omitted disclosures and statement of cash flows were included in the
financial statements, they might influence the user's conclusions about the
Company's financial position, results of operations and cash flows. Accordingly,
these financial statements are not designed for those who are not informed about
such matters.
June 28, 1999
Xxxxxxx X. Xxxxxxxx, CPA
00000 X. 000Xx Xxxxxx
Xxxxxx, Xxxxxx 00000
INTERSTATE INSURANCE GROUP, LTD.
BALANCE SHEET
DECEMBER 31, 1998
ASSETS
1998
----
CURRENT ASSETS
XXXXX CASH $49.20
CASH IN BANK-PREMIUM TRUST ACCOUNT 1,310,298.88
CASH IN BANK-COMMERCE PREMIUM TRUST ACCOUNT 0.00
CASH IN BANK-INTERSTATE OPERATING ACCOUNT 24,297.64
CASH IN BANK-COMMISSION INCOME ACCOUNT 85,634.67
INSURANCE ACCOUNTS RECEIVABLE 30,809.72
BROKERAGE ACCOUNTS RECEIVABLE 23,102.62
ACCOUNTS RECEIVABLE-OTHER 1,370,930.30
DUE FROM AFFILIATE-INTERCO 4,855.13
LOAN TO STOCKHOLDERS 12,588.87
EMPLOYEE LOAN RECEIVABLE 4,000.00
REFUNDABLE INCOME TAXES 7,300.00
RENTAL DEPOSITS ADVANCED 3,750.00
PREPAID INSURANCE - E & O 0.00
-------------
TOTAL CURRENT ASSETS 2,877,617.05
OTHER ASSETS
DEPOSITS 1,500.00
GOODWILL 3,695.75
-------------
TOTAL OTHER ASSETS 5,195.75
PROPERTY AND EQUIPMENT
FURNITURE & FIXTURES 58,386.08
LEASEHOLD IMPROVEMENTS 0.00
EQUIPMENT 160,954.49
-------------
219,340.57
LESS ACCUMULATED DEPRECIATION (200,724.40)
-------------
18,616.17
-------------
TOTAL ASSETS $2,901,428.97
=============
SEE ACCOUNTANT'S COMPILATION REPORT
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES 1998
-------------
ACCOUNTS PAYABLE-INS COS $1,339,269.52
COMMISSIONS PAYABLE 48,412.59
ACCOUNTS PAYABLE-OTHER 1,371,454.00
ACCOUNT PAYABLE-USA PHOENIX 16,300.00
ACCOUNT PAYABLE-MAJOR RAC 870.00
PAYROLL TAXES PAYABLE 339.49
SURPLUS LINES TAX PAYABLE 0.00
PENALTY FUND - PAYABLE 0.00
RENTAL SELLING FUND - PAYABLE 0.00
EMPLOYEE BENEFIT WITHHOLDINGS 4,263.99
OTHER ACCRUED LIABILITIES 0.00
ACCRUED INCOME TAXES 0.00
ACCRUED PROFIT SHARING 0.00
CURRENT PORTION NOTES PAYABLE 0.00
-------------
TOTAL CURRENT LIABILITIES 2,780,909.59
L0NG-TERM DEBT
NOTE PAYABLE-STOCK 0.00
NOTE PAYABLE-EQUIPMENT 0.00
LEASE PAYABLE-EQUIPMENT 0.00
-------------
0.00
STOCKHOLDERS' EQUITY
COMMON STOCK 8,552.00
RETAINED EARNINGS 211,967.38
LESS TREASURY STOCK-AT COST (100,000.00)
TOTAL STOCKHOLDERS' EQUITY 120,519.38
-------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,901,428.97
=============
INTERSTATE INSURANCE GROUP, LTD.
STATEMENT OF INCOME
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
1998 1998
---- ----
INCOME
INSURANCE COMMISSIONS $ 1,271,805.54 98.12%
INTEREST INCOME 26,986.19 2.08
LOSS ON DISPOSAL OF ASSETS (2,577.74) (0.20)
---------------- -----
TOTAL INCOME 1,296,213.99 100.00
SELLING EXPENSES 411,911.10 31.78
ADMINISTRATIVE EXPENSES 711,586.66 54.90
---------------- -----
TOTAL EXPENSES 1,123,497.76 86.68
---------------- -----
NET INCOME BEFORE INCOME TAXES 172,716.23 13.32
PROVISION FOR INCOME TAXES
FEDERAL 0.00 0.00
STATE 0.00 0.00
---- ----
0.00 0.00
NET INCOME $ 172,716.23 13.32%
================ =====
SEE ACCOUNTANT'S COMPILATION REPORT
INTERSTATE INSURANCE GROUP, LTD.
STATEMENT OF RETAINED EARNINGS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
1998
----
RETAINED EARNINGS,
BEGINNING OF PERIOD $ 39,251.15
NET INCOME 172,716.23
--------------
RETAINED EARNINGS,
END OF PERIOD $ 211,967.38
==============
SEE ACCOUNTANT'S COMPILATION REPORT
SUPPLEMENTARY INFORMATION
INTERSTATE INSURANCE GROUP, LTD.
SCHEDULE OF INSURANCE COMMISSIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
1998 1998
---- ----
INSURANCE COMMISSIONS
PROPERTY & CASUALTY COMMISSION $991,203.90 76.47%
LIFE INSURANCE COMMISSION 248.47 0.02
BROKERAGE COMMISSION 73,034.20 5.63
A & H COMMISSION 0.00 0.00
ASSIGNED XXXX COMMISSION 0.00 0.00
CONTINGENCY COMMISSIONS 0.00 0.00
XXX XXXXX COMMISSIONS 0.00 0.00
RETAIL AGENCY SALES 7,493.42 0.58
AGENCY POLICY FEES 0.00 0.00
MISCELLANEOUS 199,825.55 15.42
---------- -----
$1,271,805.54 98.12%
============= =======
SEE ACCOUNTANT'S COMPILATION REPORT
INTERSTATE INSURANCE GROUP, LTD.
SCHEDULE OF SELLING EXPENSES
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
1998 1998
---- ----
SELLING EXPENSES
AUTOMOBILE EXPENSE $2,420.00 0.19%
AGENCY XXXX COMMISSION 339,979.82 26.23
DIRECT XXXX COMMISSION 1,036.66 0.08
BROKERAGE COMMISSION EXPENSE 32,101.91 2.48
ENTERTAINMENT 7,662.93 0.59
ADVERTISING 0.00 0.00
TRAVEL EXPENSE 5,637.98 0.43
CONSULTING FEES 22,000.00 1.70
MISCELLANEOUS SALES EXP 0.00 0.00
AUTOMOBILE MAINTENANCE 0.00 0.00
AUTO LEASE 0.00 0.00
POLICY FEES 1,071.80 0.08
POLICY WRITING FEE 0.00 0.00
---- ----
$411,911.10 31.78
=========== =====
SEE ACCOUNTANT'S COMPILATION REPORT
INTERSTATE INSURANCE GROUP, LTD
SCHEDULE OF ADMINISTRATIVE EXPENSES
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 1998
1998 1998
---- ----
ADMINISTRATIVE EXPENSES
EXECUTIVE SALARIES $239,063.28 18.44%
OFFICE SALARIES 219,317.27 16.92
GROUP INSURANCE 0.00 0.00
DEFERRED COMPENSATION 0.00 0.00
RENT 47,789.32 3.69
TELEPHONE 26,949.98 2.08
UTILITIES 4,270.48 0.33
REPAIRS & MAINTENANCE 920.74 0.07
PROPERTY INSURANCE EXPENSE 3,279.49 0.25
CONTRACT LABOR 0.00 0.00
INSURANCE EXPENSE 5,844.78 0.45
OFFICERS LIFE INSURANCE 7,532.00 0.58
INSURANCE SPECIAL GROUP 25,806.98 1.99
POSTAGE 13,874.18 1.07
PRINTING & SUPPLIES 12,350.98 0.95
COMPUTER SUPPLIES & SERVICE 9,083.45 0.70
EDUCATION 0.00 0.00
P/L POLICY INCENTIVE 1,902.40 0.15
EMPLOYEE ADVANCES 624.33 0.05
LEGAL & ACCOUNTING 3,542.69 0.27
LICENSES & FEES 3,618.37 0.28
INTEREST EXPENSE 0.00 0.00
BANK SERVICE CHARGES 27.14 0.00
BAD DEBT EXPENSE (1,635.49) (0.13)
AWARDS PROGRAM 0.00 0.00
MOTOR VEHICLE RECORDS 16,378.45 1.26
DUES AND SUBSCRIPTIONS 3,414.50 0.26
CONTRIBUTIONS 0.00 0.00
INTERACTION FEE (AM STATES) 0.00 0.00
PROPERTY TAXES 2,454.44 0.19
PAYROLL TAXES 37,218.96 2.87
FRANCHISE TAXES 1,463.00 0.11
CLEANING AND MAINTENANCE 1,707.37 0.13
PAYROLL SERVICE 2,133.26 0.16
CAFETERIA PLAN 0.00 0.00
DEPRECIATION AND AMORTIZATION 6,003.61 0.46
MISCELLANEOUS 5,628.11 0.43
EQUIPMENT LEASE 8,710.09 0.67
ADMINISTRATIVE EXPENSE 2,312.50 0.18
PROFIT SHARING CONTRIBUTION 0.00 0.00
FINES AND PENALTIES 0.00 0.00
---- ------
$711,586.66 54.90
SEE ACCOUNTANT'S COMPILATION REPORT
Exhibit E to Purchase Agreement
Closing Balance Sheet
and corresponding notes
Page 16 of 27
--------------------------------------------------------------------------------
Interstate Insurance Group LTD
Date: 06/07/2000
Time: 10:28:26
BALACNE SHEET
For the month ending 04/30/2000
--------------------------------------------------------------------------------
CURRENT YEAR
------------------------------------------
GL Acct No. Title MTD YTD
--------------------------------------------------------------------------------------------------
1000 Xxxxx Cash 0.00 49.20
1010 Premium Trust Account 116,335.24 967,121.83
1015 Interco Purchasing Premium 0.00 2,066.54
1020 Commerce Bank 0.00 0.00
1030 First National Checking (18,977.42) 53,662.71
1040 Commission Income Account (123,218.71) (54,899.13)
1050 Accounts Receivable (27,691.71) 297,149.93
1051 A/R Clearing 0.00 (27.00)
1053 Broker Receivable 0.00 (75,799.78)
1055 Accts. Rec. in Suspense 0.00 0.00
1057 Held Installment A/R 1,005,490.00 1,216,128.00
1070 XXX XXXXX RECEIVABLES 0.00 (523.70)
1200 Refundable Income Tax - Fed 0.00 8,558.00
1210 Refundable Income Tax-State 0.00 3,770.00
1260 Rental Deposits Advanced 0.00 2,746.00
1280 Loan to Stockholders 0.00 12,588.87
1290 Loan to Interco 0.00 4,855.15
1450 Furniture & Fbdure 0.00 58,386.08
1460 Leasehold Improvements 0.00 15,362.15
1470 Equipment 0.00 137,999.09
1490 Telephone System 0.00 19,083.09
1750 Accum- Depr. - Furn. & Fix. 0.00 (58,196.94)
1760 Accum. Depr. - Leashold Impr 0.00 (12,496.96)
1770 Accum. Depr. - Equipment 0.00 (136,811.30)
1810 Accum. Depr.-Telephone Equip 0.00 (11,676.69)
1830 Goodwill Purchase-R.S. 0.00 3,695.75
1840 Deposits 0.00 1,500.00
1850 FRA525 REFUND PMT-NEW 0.00 797.00
1870 FARALLON INSURANCE 0.00 2,800.00
0000 XXXXXXXX XXX000 CXL NEW 0.00 1,086.00
------------------------------------------
TOTAL ASSETS 953,937.40 2,458,973.89
------------------------------------------
2010 Insurance Companies Payable (305,961.61) (3,125,761.84)
2020 Deposit Holding 0.00 (2,541.89)
2030 Producer Commissions Payable 5,892.76 201,753.03
2040 Accts. Pay. in Suspense 0.00 0.00
2045 Potential Payable 249,044.03 4,031,748.19
2050 Held Installment A/P 1,005,490.00 1,216,128.00
--------------------------------------------------------------------------------
Page 1
CURRENT YEAR
------------------------------------------
GL Acct No. Title MTD YTD
--------------------------------------------------------------------------------------------------
2070 Federal Tax W/Hld Payable 0.00 (2,982.73)
2080 FICA Taxes W/Hld Payable 0.00 2,399.11
2090 State Tax W/Hld Payable 0.00 3,322.22
2120 Notes Payable 0.00 0.00
2170 Employees Disability Ins. W 100.81 (620.58)
2180 Employees Health Ins. W/H (5,086.97) (19,561.51)
2190 Employees Dental Ins. W/H 0.00 (849.61)
2200 Child Care W/H 0.00 229.14
2210 Notes Payable-E&O Ins. 0.00 (12,549.59)
2220 LEASE PAYABLES (508.65) (17,437.67)
2230 401-K Employees Contribution (645.29) (744.29)
2285 EMPLOYEE CD 401K LOAN 0.00 (123.86)
2290 EMPLOYEE PM 401K LOAN 10.48 231.52
2570 Note Payable/USA Phoenix 0.00 16,300.00
2580 NOTE PAYABLE-MAJOR RAC 0.00 870.00
------------------------------------------
TOTAL LIABILITY 949,336.36 2,289,907.94
------------------------------------------
3020 Retained Earnings 0.00 253,005.99
3120 Common Stock 0.00 8,552.00
3130 Treasury Stock 0.00 (100,000.00)
3300 Undistributed Profit or Loss 0.00 0.00
3400 Transfer Account 0.00 0.00
3999 Current Year Earning (Loss) 5,601.04 7,608.26
------------------------------------------
TOTAL EQUITIES 5,601.04 169,166.25
==========================================
------------------------------------------
TOTAL LIABILITIES EQUITIES 953,937.40 2,459,973.89
==========================================
------------------------------------------
TOTAL ASSETS, LIABILITIES & 1,907,874.80 4,917,947.78
EQUITIES
------------------------------------------
--------------------------------------------------------------------------------
Page 2
Exhibit H to Purchase Agreement
Disclosure of Liabilities, Debts, Charges, Claims, Contracts and Assessments
Page 17 of 27
Exhibit H
---------
1. Lease Agreement entered into with LTC Management, a Missouri general
partnership, for the term of May, 1998 through April 30, 2001 plus
option, for rent of $3,950.00 per month ("upstairs").
2. Lease Agreement entered into with LTC Management, a Missouri general
partnership, for the term of May, 1998 through April 30, 2001 plus
option, for rent of $400.00 per month ("downstairs").
3. Action filed in the 59th Judicial District of Michigan, Case No.
00SC00-0030, seeking damages of $1,800.00 plus costs. The deductible
amount is $500.00 from the claimed damages, leaving an actual
contingent liability of $1,300.00 plus costs.
Exhibit I to Purchase Agreement
Employment Contract
Page 18 of 27
EMPLOYMENT AGREEMENT
THIS AGREEMENT MADE AND ENTERED INTO THIS first day of July, 2000, by and
between Brooke Corporation ("Brooke"), and Xxxxxx Xxxxx ("Employee"), is as
follows:
SUBJECT MATTER OF EMPLOYMENT
Brooke has and does, hereby employ Employee, commencing on first day of July,
2000, to carry out such duties and to perform such acts relating to sales and
service of programs ("programs") through Interstate Insurance Group, LTD.
Employees responsibilities shall include: Recruitment of franchise agents,
independent producers and employed agents to sell the programs, assistance to
franchise agents, independent producers and employed agents in the sale of
programs, development and marketing of new programs, liaison with program
companies, and other functions assigned to Employee from time to time.
Employee's title shall be President and employee shall report to Xxxxxx Xxx or
such other person designated by Brooke's Board of Directors. The Employee's
responsibilities and job description may be periodically revised by Brooke.
BENEFITS AND COMPENSATION
Brooke agrees to pay to Employee a monthly salary of $9,167.
Brooke further agrees to reimburse Employee for reasonable expenses incurred
while carrying out the duties assigned by Brooke to Employee.
Brooke further agrees to grant Employee benefits as specified in the personnel
policies established from time to time by Brooke's Board of Directors. Brooke's
personnel policies may be changed from time to time by Brooke's Board of
Directors.
ADDITIONAL OBLIGATIONS OF MANAGER
Employee shall comply with the policies (including Brooke's interpretations and
clarifications thereof) established from time to time by Brooke's Board of
Directors.
Employee shall respect the confidentiality of client file information owned or
controlled by Brooke, Brooke's affiliates, Brooke's sister companies, Brooke's
subsidiaries or Brooke's broker
Page 19 of 27
agents or Brooke's franchise agents (collectively referred to as "Brooke
Companies"). Employee shall not remove any listing of clients or listing of
policy expiration information from premises owned or rented by Brooke or Brooke
Companies without the express written consent of Brooke. Employee shall not sell
or trade any client information obtained as a result of access to Brooke or
Brooke Companies' client file or policy expiration information. Employee agrees
that all client file and policy expiration information remains the exclusive
property of Brooke or Brooke Companies.
Except as Brooke otherwise consents in writing, Employee shall not disclose or
make any use of, except for the benefit of Brooke, at any time either during or
subsequent to Employee's employment any trade secrets, confidential information,
knowledge, data, or other information of Brooke or Brooke Companies relating to
products, processes, know-how, designs, customer lists, business plans,
marketing plans and strategies, and pricing strategies or any matter pertaining
to any business of Brooke, Brooke Companies or any of their clients, which
Employee produces, obtains or otherwise acquires during the course of Employee's
employment, except as herein provided. Employee agrees not to deliver, reproduce
or in any way allow any such trade secrets, confidential information, knowledge,
data or other information, or any documentation relating thereto, to be
delivered or used by any third parties without specific direction and consent of
Brooke's Board of Directors.
Employee agrees that during his/her employment with Brooke, he/she will not
engage in any other employment, occupation, consulting or other activity
relating to the business in which Brooke is now or shall become engaged, or
which would otherwise conflict with Employee's obligation to Brooke. In the
event of Employee's termination of employment with Brooke for any reason
whatsoever, Employee agrees to promptly surrender and deliver to Brooke all
records, materials, equipment, and data of any nature pertaining to any program
or confidential information of Brooke, Brooke Companies or any of their clients,
which Employee produces or obtains during the course of his/her employment. In
the event of termination of employment, Employee agrees to sign and deliver the
Termination Certification included in the employee handbook.
TERMINATION OF EMPLOYMENT
This employment agreement shall be for a two (2) year term but may be extended
by mutual agreement of the parties. During the two year term, Brooke agrees that
it shall terminate this agreement only upon good and sufficient cause which
shall be defined as Employee's breach of the terms of this agreement, Employee's
failure to perform the duties or responsibilities assigned pursuant hereto or a
violation of or failure to abide by the personnel policies established from time
to time by Brooke's Board of Directors. During the first six (6) months of the
term of this agreement, Employee agrees that it shall terminate this agreement
only upon good and sufficient cause which shall be defined as: a breach by
Employer of the terms of this agreement; the advice of Employee's physician to
terminate; hazardous working conditions or harassment in the
Page 20 of 27
workplace; or, instructions by Employer to Employee to violate the law. After
six (6) months from the date of this agreement, Employee may terminate this
agreement at any time for any reason. If this agreement is extended beyond the
two (2) year initial term, the relationship between Brooke and Employee shall be
employment at will and either party will have the right to terminate the
employment relationship at any time for any reason. Furthermore, if this
agreement is terminated by Employee after the first six (6) months for any
reason (e.g. the desire to reduce Employee's work hours), Brooke will offer
Employee employment pursuant to Brooke's standard employment contract at the
time of termination consistent with other Brooke employees with comparable
positions and/or job descriptions. Nothing set forth in this paragraph shall be
interpreted to guaranty Employee any particular position, title or compensation.
Any professional errors or omissions coverage provided by Brooke for Employee
shall cease upon termination of this agreement.
COVENANT NOT TO SOLICIT
In the event that Employee's employment is terminated for any reason, Employee
does hereby agree and covenant not to solicit insurance or financial services
from any clients of Brooke or Brooke Companies for a period of two (2) years
from and after the effective date of termination of employment. Furthermore,
Employee agrees that so long as he/she is working for Brooke, he/she will not
undertake the planning or organization of any business activity competitive with
the work he/she performs or the business in which Brooke or Brooke Companies is
engaged. Employee agrees that he/she will not, for a period of two years
following termination of employment with Brooke, directly or indirectly, solicit
any of Brooke's or an Brooke Company's franchise agents or employees to work for
or contract with Employee or any other competitive company. If Employee breaches
this paragraph, Brooke shall be entitled to all damages that result from each
and every breach.
Employee agrees that these prohibitions are reasonable and necessary and his/her
association with Brooke and/or the opportunities which are afforded to him/her
is ample consideration for this restriction. Employee and Brooke understand that
Employee is not prohibited from working for any other company or in any
particular line of work, but that this post-employment covenant not to compete
only restricts the employee from directly or indirectly contacting in person, by
telephone, by mail or by any other means, those customers or potential customers
he/she worked with while employed by Brooke and Brooke franchise agents Employee
worked with or within Employee's territory.
Page 21 of 27
MISCELLANEOUS
This agreement shall supersede and take precedence over any and all prior
agreements, arrangements or understandings between Brooke or Brooke Companies
and the Employee relating to the subject matter hereof.
Employee shall not obligate Brooke or Brooke Companies for the payment of
(amount to be set by Brooke's Board of Directors from time to time) dollars or
more annually without the prior authorization of Brooke's Board of Directors by
a duly authorized board resolution. Employee shall not change, amend or
otherwise modify the terms of any agreement to which Brooke is a party without
the prior authorization of Brooke's Board of Directors by a duly authorized
board resolution.
No oral understanding, oral statement, or oral promises or oral inducements
exist.
The waiver by Brooke of any breach of any provision of this agreement by
Employee shall not operate or be construed as a waiver of any subsequent breach
by the Employee.
Any notice required or permitted to be given under this agreement shall be
sufficient if in writing, and if hand delivered or sent by registered mail to
Employee's residence or to Brooke's principal office.
The rights and obligations of Brooke under this agreement shall inure to the
benefit of and shall be binding upon the successors and assigns of Brooke.
This agreement may not be modified, revised, altered, added to, or extended in
any manner, superseded other than by an instrument in writing signed by all of
the parties hereto.
IT IS SO AGREED. BROOKE:
by:
------------------- ----------------------------
Witness
EMPLOYEE:
------------------- ------------------------------
Witness Xxxxxx Xxxxx
Page 22 of 27
Page 23 of 27
EMPLOYMENT AGREEMENT
THIS AGREEMENT MADE AND ENTERED INTO THIS first day of July, 2000, by and
between Brooke Corporation ("Brooke"), and Xxxxxxx Xxxx ("Employee"), is as
follows:
SUBJECT MATTER OF EMPLOYMENT
Brooke has and does, hereby employ Employee, commencing on first day of July,
2000, to carry out such duties and to perform such acts relating to sales and
service of programs ("programs") through Interstate Insurance Group, LTD.
Employees responsibilities shall include: General management and administrative
functions performed prior to the date of this agreement including without
limitation supervision of operations, underwriting, claims, personnel, and
accounting systems/functions; assistance to franchise agents, independent
producers and employed agents in the sale of programs; development of new
programs; other responsibilities assigned to Employee from time and time.
Employee's title shall be CHIEF OPERATING OFFICER and employee shall report to
Xxxxxx Xxx or such other person designated by Brooke's Board of Directors. The
Employee's responsibilities and job description may be periodically revised by
Brooke.
BENEFITS AND COMPENSATION
Brooke agrees to pay to Employee a monthly salary of $9,167.
Brooke further agrees to reimburse Employee for reasonable expenses incurred
while carrying out the duties assigned by Brooke to Employee.
Brooke further agrees to grant Employee benefits as specified in the personnel
policies established from time to time by Brooke's Board of Directors. Brooke's
personnel policies may be changed from time to time by Brooke's Board of
Directors.
ADDITIONAL OBLIGATIONS OF MANAGER
Employee shall comply with the policies (including Brooke's interpretations and
clarifications thereof) established from time to time by Brooke's Board of
Directors.
Employee shall respect the confidentiality of client file information owned or
controlled by Brooke, Brooke's affiliates, Brooke's sister companies, Brooke's
subsidiaries or Brooke's broker agents or Brooke's franchise agents
(collectively referred to as "Brooke Companies"). Employee shall not remove any
listing of clients or listing of policy expiration information from premises
Page 24 of 27
owned or rented by Brooke or Brooke Companies without the express written
consent of Brooke. Employee shall not sell or trade any client information
obtained as a result of access to Brooke or Brooke Companies' client file or
policy expiration information. Employee agrees that all client file and policy
expiration information remains the exclusive property of Brooke or Brooke
Companies.
Except as Brooke otherwise consents in writing, Employee shall not disclose or
make any use of, except for the benefit of Brooke, at any time either during or
subsequent to Employee's employment any trade secrets, confidential information,
knowledge, data, or other information of Brooke or Brooke Companies relating to
products, processes, know-how, designs, customer lists, business plans,
marketing plans and strategies, and pricing strategies or any matter pertaining
to any business of Brooke, Brooke Companies or any of their clients, which
Employee produces, obtains or otherwise acquires during the course of Employee's
employment, except as herein provided. Employee agrees not to deliver, reproduce
or in any way allow any such trade secrets, confidential information, knowledge,
data or other information, or any documentation relating thereto, to be
delivered or used by any third parties without specific direction and consent of
Brooke's Board of Directors.
Employee agrees that during his/her employment with Brooke, he/she will not
engage in any other employment, occupation, consulting or other activity
relating to the business in which Brooke is now or shall become engaged, or
which would otherwise conflict with Employee's obligation to Brooke. In the
event of Employee's termination of employment with Brooke for any reason
whatsoever, Employee agrees to promptly surrender and deliver to Brooke all
records, materials, equipment, and data of any nature pertaining to any program
or confidential information of Brooke, Brooke Companies or any of their clients,
which Employee produces or obtains during the course of his/her employment. In
the event of termination of employment, Employee agrees to sign and deliver the
Termination Certification included in the employee handbook.
TERMINATION OF EMPLOYMENT
This employment agreement shall be for a five (5) year term but may be extended
by mutual agreement of the parties. During the five year term, Brooke agrees
that it shall terminate this agreement only upon good and sufficient cause which
shall be defined as Employee's breach of the terms of this agreement, Employee's
failure to perform the duties or responsibilities assigned pursuant hereto or a
violation of or failure to abide by the personnel policies established from time
to time by Brooke's Board of Directors. During the first six (6) months of the
term of this agreement, Employee agrees that it shall terminate this agreement
only upon good and sufficient cause which shall be defined as: a breach by
Employer of the terms of this agreement; the advice of Employee's physician to
terminate; hazardous working conditions or harassment in the workplace; or,
instructions by Employer to Employee to violate the law. After six (6) months
from the date of this agreement, Employee may terminate this agreement at any
time for any
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reason. If this agreement is extended beyond the five (5) year initial term, the
relationship between Brooke and Employee shall be employment at will and either
party will have the right to terminate the employment relationship at any time
for any reason.
Any professional errors or omissions coverage provided by Brooke for Employee
shall cease upon termination of this agreement.
COVENANT NOT TO SOLICIT
In the event that Employee's employment is terminated for any reason, Employee
does hereby agree and covenant not to solicit insurance or financial services
from any clients of Brooke or Brooke Companies for a period of two (2) years
from and after the effective date of termination of employment. Furthermore,
Employee agrees that so long as he/she is working for Brooke, he/she will not
undertake the planning or organization of any business activity competitive with
the work he/she performs or the business in which Brooke or Brooke Companies is
engaged. Employee agrees that he/she will not, for a period of two years
following termination of employment with Brooke, directly or indirectly, solicit
any of Brooke's or an Brooke Company's franchise agents or employees to work for
or contract with Employee or any other competitive company. If Employee breaches
this paragraph, Brooke shall be entitled to all damages that result from each
and every breach.
Employee agrees that these prohibitions are reasonable and necessary and his/her
association with Brooke and/or the opportunities which are afforded to him/her
is ample consideration for this restriction. Employee and Brooke understand that
Employee is not prohibited from working for any other company or in any
particular line of work, but that this post-employment covenant not to compete
only restricts the employee from directly or indirectly contacting in person, by
telephone, by mail or by any other means, those customers or potential customers
he/she worked with while employed by Brooke and Brooke franchise agents Employee
worked with or within Employee's territory.
MISCELLANEOUS
This agreement shall supersede and take precedence over any and all prior
agreements, arrangements or understandings between Brooke or Brooke Companies
and the Employee relating to the subject matter hereof.
Employee shall not obligate Brooke or Brooke Companies for the payment of(amount
to be set by the Brooke's Board of Directors from time to time) dollars or more
annually without the prior authorization of Brooke's Board of Directors by a
duly authorized board resolution. Employee shall not change, amend or otherwise
modify the terms of any agreement to which Brooke is a party without the prior
authorization of Brooke's Board of Directors by a duly authorized board
resolution.
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No oral understanding, oral statement, or oral promises or oral inducements
exist.
The waiver by Brooke of any breach of any provision of this agreement by
Employee shall not operate or be construed as a waiver of any subsequent breach
by the Employee.
Any notice required or permitted to be given under this agreement shall be
sufficient if in writing, and if hand delivered or sent by registered mail to
Employee's residence or to Brooke's principal office.
The rights and obligations of Brooke under this agreement shall inure to the
benefit of and shall be binding upon the successors and assigns of Brooke.
This agreement may not be modified, revised, altered, added to, or extended in
any manner, superseded other than by an instrument in writing signed by all of
the parties hereto.
IT IS SO AGREED. BROOKE:
by:
------------------- ---------------------------
Witness
EMPLOYEE:
------------------- ------------------------------
Witness Xxxxxxx Xxxx
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