Exhibit 10.1

 

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RECEIVABLES FINANCING AGREEMENT

among

BROOKE WAREHOUSE FUNDING, LLC,

as Borrower,

BROOKE CREDIT CORPORATION,

as Seller and Subservicer,

and

FIFTH THIRD BANK,

as Lender

Dated as of September 15, 2006

 

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LOGO [g91510img1.jpg]

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TABLE OF CONTENTS

 

     Page

ARTICLE I DEFINITIONS

   1

Section 1.1 Defined Terms

   1

Section 1.2 Other Definitional Provisions

   34

ARTICLE II THE FACILITY, ADVANCE PROCEDURES AND NOTES

   35

Section 2.1 Facility

   35

Section 2.2 Advance Procedures

   35

Section 2.3 Funding

   35

Section 2.4 Lender Determination of LIBO Rate Binding

   36

Section 2.5 Voluntary Termination of Facility; Reduction of Facility Limit

   36

Section 2.6 Extension of Revolving Period

   36

Section 2.7 Use of Proceeds

   36

Section 2.8 Note

   36

Section 2.9 Interest on Note

   37

Section 2.10 Fees

   37

Section 2.11 Breakage Costs

   37

Section 2.12 Interest Rate Hedges

   38

Section 2.13 Payments

   39

Section 2.14 Application of Certain Payments

   40

Section 2.15 Increased Costs; Capital Adequacy; Eurocurrency Disruption Event

   41

Section 2.16 Taxes

   42

Section 2.17 Optional Prepayments

   43

 

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Section 2.18 Mandatory Prepayments

   43

Section 2.19 Lender’s Termination Option

   43

ARTICLE III ORDER OF DISTRIBUTION OF COLLECTIONS

   44

Section 3.1. Order of Distribution of Collections Prior to an Event of Default
or Upon Maturity

   44

Section 3.2. Order of Distribution of Collections After an Event of Default or
Upon Maturity

   45

ARTICLE IV CONDITIONS PRECEDENT

   46

Section 4.1 Conditions Precedent to Closing

   46

Section 4.2 Conditions Precedent to All Advances

   48

ARTICLE V GRANT OF SECURITY INTERESTS

   49

Section 5.1 Borrower’s Grant of Security Interest

   49

Section 5.2 Application of Collections to Loans

   51

Section 5.3 Collection Account

   51

Section 5.4 Periodic Purchases of Loans

   52

Section 5.5 Access to Certain Documentation and Information Regarding Loans

   52

Section 5.6 Borrower Remains Liable

   52

Section 5.7 Assignment of the Purchase and Sale Agreement

   53

Section 5.8 Right of Substitution

   53

Section 5.9 Releases of Collateral

   53

ARTICLE VI REPRESENTATIONS AND WARRANTIES

   54

Section 6.1 Organization and Good Standing

   54

Section 6.2 Due Qualification

   54

Section 6.3 Power and Authority

   54

 

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Section 6.4 Binding Obligations

   55

Section 6.5 No Violation

   55

Section 6.6 Each Advance

   55

Section 6.7 No Proceedings

   55

Section 6.8 No Consents

   56

Section 6.9 Approvals

   56

Section 6.10 Chief Executive Office

   56

Section 6.11 Solvency

   56

Section 6.12 Compliance with Laws

   56

Section 6.13 Taxes

   56

Section 6.14 Security Interest; No Liens, Etc

   57

Section 6.15 Title to Loans Purchased from the Seller

   57

Section 6.16 Information True and Correct

   57

Section 6.17 ERISA Compliance

   57

Section 6.18 Financial or Other Condition

   58

Section 6.19 Investment Company Status

   58

Section 6.20 No Shared Obligations

   58

Section 6.21 Representations and Warranties True and Accurate

   58

Section 6.22 Eligible Loans

   58

Section 6.23 Trust Accounts

   58

Section 6.24 Material Adverse Effect

   59

Section 6.25 Legal Name

   59

 

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ARTICLE VII COVENANTS

   59

Section 7.1 Protection of Security Interest of the Lender

   59

Section 7.2 Records

   60

Section 7.3 Other Liens or Interests

   61

Section 7.4 Costs and Expenses

   61

Section 7.5 Compliance with Laws, Etc

   61

Section 7.6 Offices, Records and Books of Account

   61

Section 7.7 Performance and Compliance with Contracts and Credit and Collection
Policy

   61

Section 7.8 Change in Business or Credit and Collection Policy

   61

Section 7.9 Further Assurances

   62

Section 7.10 Notice of Adverse Claim

   62

Section 7.11 Reporting Requirements

   62

Section 7.12 Separateness of Borrower

   64

Section 7.13 Purchase and Sale Agreement

   66

Section 7.14 Title to Loans Purchased from the Seller

   67

Section 7.15 Nature of Business

   67

Section 7.16 Mergers, Etc

   67

Section 7.17 Distributions, Etc

   67

Section 7.18 Indebtedness

   68

Section 7.19 Articles of Organization and Operating Agreement

   68

Section 7.20 Audits By Lender

   68

Section 7.21 Collections

   68

Section 7.22 Required Amendments

   70

 

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Section 7.23 Ownership

   70

Section 7.24 Compliance with FAS 140

   70

Section 7.25 Financial Covenants

   70

Section 7.26 Transaction Documents

   71

ARTICLE VIII EVENTS OF DEFAULT; THEIR EFFECT

   71

Section 8.1 Events of Default

   71

Section 8.2 Master Agent Servicer Default

   73

Section 8.3 Rights Upon the Occurrence of an Event of Default

   73

ARTICLE IX ASSIGNMENTS

   74

Section 9.1 Restrictions on Assignments

   74

Section 9.2 Documentation

   75

Section 9.3 Rights of Obligations of Assignee

   75

Section 9.4 Notice of Assignment

   75

Section 9.5 Mutilated, Destroyed, Lost or Stolen Note

   75

Section 9.6 Persons Deemed Owners

   76

ARTICLE X INDEMNIFICATION

   76

Section 10.1 General Indemnity of the Borrower

   76

Section 10.2 Contribution

   77

ARTICLE XI MISCELLANEOUS

   78

Section 11.1 No Waiver; Remedies

   78

Section 11.2 Amendments, Waivers

   78

Section 11.3 Notices, Etc

   79

Section 11.4 Costs, Expenses and Taxes

   79

 

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Section 11.5 Binding Effect Survival

   79

Section 11.6 Captions and Cross References

   80

Section 11.7 Severability

   80

Section 11.8 Governing Law; Venue

   80

Section 11.9 Counterparts

   80

Section 11.10 WAIVER OF JURY TRIAL

   81

Section 11.11 Third Party Beneficiary

   81

Section 11.12 No Proceedings

   81

Section 11.13 ENTIRE AGREEMENT

   81

Section 11.14 Confidentiality

   82

Section 11.15 Consents Regarding Loans

   83

 

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RECEIVABLES FINANCING AGREEMENT

This RECEIVABLES FINANCING AGREEMENT (this “Agreement”) is entered into as of
September 15, 2006, between BROOKE WAREHOUSE FUNDING, LLC, a Delaware limited
liability company (together with its successors and permitted assigns, the
“Borrower”), BROOKE CREDIT CORPORATION, a Kansas corporation (“BCC”), as seller
(together with its successors and permitted assigns, the “Seller”), and as
subservicer (in such capacity, the “Subservicer”), and FIFTH THIRD BANK, an Ohio
banking corporation (together with its successors and permitted assigns, “Fifth
Third”) (in such capacity, whether on its own behalf or for the benefit of
Fountain Square (defined below), together with its successors and permitted
assigns, the “Lender”).

PRELIMINARY STATEMENTS

WHEREAS, concurrently herewith, the Borrower is entering into the Purchase and
Sale Agreement (as defined herein) pursuant to which the Seller will sell loans
to the Borrower from time to time; and

WHEREAS, the Borrower desires to borrow, on a revolving basis, funds from
Lender, upon the terms and subject to the conditions of this Agreement, and has
agreed to pledge such loans under the Purchase and Sale Agreement as collateral
security therefor.

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:

ARTICLE I

DEFINITIONS

Section 1.1 Defined Terms. As used in this Agreement, the following terms have
the following meanings:

“Actual Annualized Net Loss Rate” means a percentage determined as of the last
day of the calendar month preceding each Determination Date equal to (i) the
product of (a) the aggregate Unpaid Principal Balance of all Loans that became
Defaulted Loans during the third preceding Settlement Period (such Unpaid
Principal Balance being determined as of the last day of such third preceding
Settlement Period without giving effect to any charge-off of such Loans), less
the amount of recoveries on such Defaulted Loans actually received by the
Borrower from the last day of the third preceding Settlement Period through the
Determination Date and (b) 12, divided by (ii) the Eligible Loan Balance as of
the first day of such third preceding Settlement Period.

“Additional Loan” means any Loan originated by the Seller after September 15,
2006.

 

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“Advance” has the meaning set forth in Section 2.1.

“Advance Date” means any date on which one or more Advances is made under this
Agreement.

“Advance Rate” means, as of any date of determination, the percentage equal to
the lesser of (i) 83.0% or (ii) if the Lender elects, in its sole discretion,
the percentage that is the initial “Noteholders’ Percentage” (or other advance
rate equivalent) in the Seller’s last Securitization transaction.

“Adverse Claim” means any claim of ownership or any Lien, title retention,
trust, or other type of preferential arrangement having the effect or purpose of
creating a Lien, other than the Lien created under this Agreement and the
Purchase and Sale Agreement.

“Affected Party” has the meaning set forth in Section 2.15.

“Affiliate” of any Person means any other Person that directly or indirectly
controls, is controlled by or is under common control with such Person
(excluding any trustee under, or any committee with responsibility for
administering, any employee benefit plan). A Person shall be deemed to be
“controlled by” any other Person if such other Person possesses, directly or
indirectly, power

(A) to vote greater than 50% or more of the securities (on a fully diluted
basis) having ordinary voting power for the election of directors or managing
partners; or

(B) to direct or cause the direction of the management and policies of such
Person whether by contract or otherwise.

“Agreement” means this Receivables Financing Agreement, as it may be amended,
supplemented or otherwise modified from time to time.

“Allstate Agency Agreement” means an Allstate R3001 or R3001C Exclusive Agency
Agreement between Allstate Insurance Company and a duly licensed insurance agent
or insurance agency.

“Allstate Agent” means any duly licensed insurance agent or insurance agency
that has entered into an Allstate Agency Agreement with Allstate Insurance
Company.

“Allstate CPA Fee” means, with respect to any Settlement Period, the fee payable
to the Servicer (or to the Subservicer) for services rendered with respect to
the Allstate Loans during such Settlement Period pursuant to the related
Collateral Preservation Agreements, which fee shall be equal to the product of
one-twelfth of 0.50% (50 basis points) multiplied by the aggregate Unpaid
Principal Balance of the Allstate Loans on the first day of such Settlement
Period.

 

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“Allstate Commission Payment Agreement” means, with respect to each Allstate
Loan, the commission payment agreement among Master Agent (as designee of Brooke
Credit Corporation), the related Allstate Agent, and Allstate Insurance Company,
pursuant to which Allstate Insurance Company has agreed to remit to Master Agent
a portion of the Sales Commissions due to the Allstate Agent.

“Allstate Insurance Company” means Allstate Insurance Company, an Illinois
corporation, or any of its Affiliates.

“Allstate Loan” means any Loan made to an Allstate Agent.

“Allstate Receipts Trust Account” means that certain segregated trust account
numbered 718359 maintained with The Bank of New York and owned by Master Agent
(as the Seller’s designee) to which Allstate Insurance Company deposits Sales
Commissions with respect to the Allstate Loans that are payable to Master Agent
pursuant to the Allstate Commission Payment Agreements.

“Allstate Subservicing Agreement” means the Subservicing Agreement of even date
herewith between Brooke Franchise Corporation and the Servicer, as amended,
restated, supplemented or otherwise modified from time to time in accordance
with the terms hereof and thereof.

“Alternate Rate” means, for any Advance not funded at the CP Rate and with
respect to any Settlement Period (or portion thereof), (a) an interest rate per
annum equal to (i) one and one half of one percent (1.50%) plus (ii) the Program
Fee plus (iii) the LIBO Rate for such Settlement Period; provided, however, that
if (x) Eurocurrency Disruption Event occurs, or (y) there shall not be at least
two (2) Business Days prior to the commencement of an applicable Settlement
Period to determine a LIBO Rate in accordance with its terms, then the
“Alternate Rate” shall be equal to the Base Rate in effect for each day during
the remainder of such Settlement Period plus the Program Fee or (b) if requested
by the Borrower, an interest rate per annum equal to the Base Rate for such
Settlement Period plus the Program Fee.

“Alternate Rate Advance” has the meaning set forth in Section 2.3.

“Amortization Commencement Date” means the earlier to occur of (i) the Maturity
Date or (ii) the occurrence of an Event of Default.

“Amortization Period” means the time period beginning on the Amortization
Commencement Date and ending on the earlier to occur of (i) the date on which
the Unpaid Principal Balance and all other Obligations (other than contingent
Obligations not then due and payable) have been indefeasibly paid in full and
(ii) the Maturity Date.

“Annualized Default Rate” means a percentage determined as of the last day of
each Settlement Period equal to (i) the product of (a) the aggregate Unpaid
Principal Balance of all Loans that became Defaulted Loans during such
Settlement Period (such

 

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Unpaid Principal Balance being determined without giving effect to any
charge-off of such Loans) and (b) 12, divided by (ii) the Eligible Loan Balance
as of the first day of such Settlement Period.

“Assignment and Acceptance” means an assignment and acceptance agreement entered
into by Lender and an assignee of Lender, and, if required, acknowledged and
agreed to by the Borrower, substantially in the form of Exhibit C.

“Backup Master Agent Servicer” means TBS Insurance Agency Services, Inc., in its
capacity as backup master agent servicer under the Backup Master Agent Servicing
Agreement, and any successor thereto in such capacity.

“Backup Master Agent Servicing Agreement” means that certain Backup Master Agent
Servicing Agreement of even date herewith between the Backup Master Agent
Servicer and the Master Agent, as the same may be amended, restated,
supplemented or otherwise modified from time to time.

“Backup Servicer” means Portfolio Financial Servicing Company, in its capacity
as backup servicer under the Backup Servicing Agreement, and any successor
fulfilling the duties of the Servicer and approved by the Lender in writing.

“Backup Servicing Agreement” means the Backup Servicing Agreement of even date
herewith between the Backup Servicer, the Lender, the Servicer and the Borrower,
as the same may be amended, supplemented or restated from time to time.

“Backup Servicing Fees” means the fees due and payable to the Backup Servicer
pursuant to the Backup Servicing Agreement.

“Base Rate” means, with respect to any Advance, for any day, a fluctuating
interest rate per annum as shall be in effect from time to time, which rate
shall be at all times equal to the higher of:

(a) the rate of interest in effect for such day as publicly announced from time
to time by Fifth Third in Cincinnati, Ohio as its “prime rate”. Such “prime
rate” is set by Fifth Third based upon various factors, including Fifth Third’s
costs and desired return, general economic conditions and other factors, and is
used as a reference point for pricing some loans, which may be priced at, above
or below such announced rate, and

(b) 0.50% per annum above the latest Federal Funds Rate.

“Borrower” has the meaning set forth in the Preamble.

“Borrower Assigned Agreements” has the meaning set forth in Section 5.1(d).

 

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“Borrowing Base” means, as of any date of determination, an amount equal to the
sum of (a) the product of (i) the Advance Rate times (ii) (x) the aggregate
Eligible Loan Balance of all Eligible Loans owned by the Borrower on such date
of determination minus (y) the Concentration Limit on such date of determination
plus (b) the amounts on deposit in the Collection Account constituting principal
and interest Collections on Loans on such date of determination, all as computed
in accordance with the then most recent Borrowing Base Certificate submitted to,
and accepted by, the Lender.

“Borrowing Base Certificate” means a certificate in substantially the form of
Exhibit D, duly completed and certified by one officer of the Borrower, pursuant
to which the Borrower sets forth the Unpaid Principal Balance and the Borrowing
Base, including calculations thereof as of a particular date. The Borrowing Base
Certificate may be delivered electronically via email.

“Brooke Corporation” means Brooke Corporation, a Kansas corporation.

“Brooke Credit Corporation” has the meaning set forth in the Preamble.

“Brooke Franchise Corporation” means Brooke Franchise Corporation, a Missouri
corporation.

“Brooke Insurance Agent” means any duly licensed insurance agent or insurance
agency party to a Brooke Insurance Franchise Agreement.

“Brooke Insurance CPA Fee” means, with respect to any Settlement Period, the fee
payable to the Master Agent (or to the Master Agent Servicer) for services
rendered with respect to the Brooke Insurance Loans during such Settlement
Period pursuant to the related Collateral Preservation Agreements, which fee
shall be equal to the product of one-twelfth of 0.50% (50 basis points)
multiplied by the aggregate Unpaid Principal Balance of the Brooke Insurance
Loans on the first day of such Settlement Period.

“Brooke Insurance Franchise Agreement” means a franchise agreement between
Master Agent (as assignee of Brooke Franchise Corporation) and a Brooke
Insurance Agent in substantially the form attached hereto as Exhibit G (with
appropriate state law modifications) or in such other form that (i) provides
substantially the same or better protections to the Master Agent and does not
adversely impact the collectibility of or the interest of the Lender in the
subject Loans (a copy of which revised form will be delivered to the Lender by
the Seller and with respect to which the Lender shall not have objected within
sixty (60) days of receipt of a copy of such revised form) or (ii) the Lender
may approve in writing, which approval will not be unreasonably withheld or
delayed, pursuant to which Master Agent is obligated to perform various services
and the related Brooke Insurance Agent is obligated, among other things, to
provide competent and qualified personnel for the sale, renewal, service and
delivery of insurance policies.

 

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“Brooke Insurance Loan” means any Loan made to a Brooke Insurance Agent that has
entered into a Brooke Insurance Franchise Agreement with Master Agent (as
assignee of the Brooke Franchise Corporation).

“Brooke Party” means the Borrower, the Seller and the Master Agent Servicer (in
each case acting in any capacity in connection with the Transaction Documents).

“Business Day” means any day on which (a) commercial banks in Cincinnati, Ohio
or Kansas are not authorized or required to be closed, and (b) in the case of a
Business Day which relates to a Alternate Rate Advance based on the LIBO Rate,
dealings are carried on in the London interbank eurodollar market.

“Change of Control” means, as of any date, a transaction or series of
transactions whereby (i) less than 100% of the equity interests in the Borrower
(voting or otherwise) are directly owned by the Seller or an Affiliate approved
by the Lender in writing in its sole discretion or (ii) Brooke Corporation
ceases to own, free and clear of all Adverse Claims, all of the outstanding
membership interests of Master Agent.

“Closing Date” means September 15, 2006.

“Collateral” has the meaning set forth in Section 5.1.

“Collateral Account” has the meaning specified in Section 5.3.

“Collateral Preservation Agreement” means, with respect to each Loan, the
related collateral preservation agreement in substantially the form attached
hereto as Exhibits F-1, F-2 and F-3 pursuant to which Brooke Franchise
Corporation or CJD & Associates, LLC d/b/a Brooke Brokerage, as applicable, has
agreed to preserve the collateral interest of the Seller (and its assigns) in
certain assets of the related Obligor in the event of such Obligor’s default on
its obligations in respect of such Loan.

“Collateral Receipt” has the meaning set forth in the Custodial Agreement.

“Collection Account” has the meaning set forth in Section 5.3.

“Collection Account Agreement” means the Collection Account Agreement dated as
of September 15, 2006, by and among the Collection Account Bank, the Borrower
and the Lender, as the same may be amended, restated, supplemented or otherwise
modified from time to time.

“Collection Account Bank” means The Bank of New York or any successor bank that
administers the Collection Account and is party to the Collection Account
Agreement.

“Collection Account Bank Fees” means the fees due and payable to the Lockbox
Bank pursuant to the Collection Account Agreement.

 

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“Collection Period” means (i) the period commencing on the opening of business
on the Closing Date and ending on the Record Date for October 2006, and
(ii) otherwise, the period commencing on the day after the last day of the
preceding Collection Period and ending on the next Record Date.

“Collection Records” means all manually prepared or computer generated records
relating to collection efforts, payment histories or all other matters related
thereto with respect to the Loans.

“Collections” means, with respect to any Loan: (a) all funds that are received
by the Seller, the Borrower, the Master Agent Servicer, the Subservicer, or the
Servicer in payment of any amounts owed in respect of such Loan, including,
without limitation, in all principal, interest, fees and all other charges with
respect to such Loan and all Sales Commissions, prepayments, recoveries,
investment earnings, insurance proceeds, fees, Liquidation Proceeds and other
cash proceeds of such Loan or applied to amounts owed in respect of such Loan
(including insurance payments and proceeds of the sale or other disposition of
repossessed goods or other collateral or property of the related Obligor or any
other Person directly or indirectly liable for the payment of such Loan and
available to be applied thereon), (b) any amounts paid to or for the account of
the Borrower or the Seller pursuant to the terms of any Related Security,
(c) all other cash collections and other cash proceeds of the Collateral
including any Related Security and (d) any net payments due to the Borrower,
under the Hedge Agreements.

“Commitment Amount” of the Lender means the Facility Limit; or with respect to
an Assignment and Acceptance, the amount set forth therein as the Eligible
Assignee’s commitment amount or such amount as reduced or increased by an
Assignment and Acceptance entered into between Lender and an Eligible Assignee,
and, in each case, as such amount may be further ratably reduced or increased
(or terminated) by any termination or reduction of the Facility Limit pursuant
to this Agreement. The Commitment Amount shall be zero upon the occurrence of an
Event of Default.

“Computer Tape” means the computer tape, list, electronic record or other
compilation generated on behalf of the Borrower which provides information
relating to the Loans and which is used by the Borrower and the Servicer to
identify the Loans conveyed by the Seller to the Borrower under the Purchase and
Sale Agreement.

“Concentration Limit” means:

(a) at any time (other than an Exception Period), the sum (without duplication)
of:

(i) the aggregate, for all Obligors, of the amount (if any) by which (x) the
aggregate Unpaid Principal Balance of the Eligible Loans owing by such Obligor
(treating each Obligor and its Affiliates as a single Obligor) exceeds (y) the
lesser of (x) 5% of the Eligible Loan Balance and (y) $4,000,000;

 

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(ii) the amount (if any) by which (x) the five largest Obligor Concentrations
exceeds (y) 20% of the Eligible Loan Balance;

(iii) the sum of (x) the amount, if any, by which the largest Individual State
Concentration exceeds 25% of the Eligible Loan Balance, (y) the amount, if any,
by which the second largest Individual State Concentration exceeds 20% of the
Eligible Loan Balance and (z) the aggregate, for all other Individual State
Concentrations, of the amount, if any, by which such Individual State
Concentration exceeds 15% of the Eligible Loan Balance;

(iv) the amount (if any) by which (x) the aggregate Unpaid Principal Balance of
the Allstate Loans exceeds (y) 40% of the Eligible Loan Balance;

(v) the amount (if any) by which (x) the aggregate Unpaid Principal Balance of
the Funeral Service Loans exceeds (y) 35% of the Eligible Loan Balance; and

(vi) the amount (if any) by which (x) the aggregate Unpaid Principal Balance of
the Eligible Loans that have been placed on “watch” pursuant to the Credit and
Collection Policy, exceeds (y) 10% of the Eligible Loan Balance; and

(b) during any Exception Period, the aggregate, for all Obligors, of the amount
(if any) by which (x) the aggregate Unpaid Principal Balance of the Eligible
Loans owing by such Obligor (treating each Obligor and its Affiliates as a
single Obligor) exceeds (y) $4,000,000.

“Consolidated Net Income” means, with reference to any period and any Person,
the net income (or loss) of such Person and its Subsidiaries calculated on a
consolidated basis for such period in accordance with GAAP.

“Consolidation Receipts Trust Account” means that certain bank account numbered
144789 maintained with First National Bank & Trust and owned by Master Agent to
which each Brooke Insurance Agent’s Sales Commissions deposited to each Receipts
Trust Account are deposited.

“Contingent Liabilities” means, (a) with respect to the Borrower, any agreement,
undertaking or arrangement by which the Borrower guarantees, endorses or
otherwise becomes or is contingently liable upon (by direct or indirect
agreement, contingent or otherwise, to provide funds for payment, to supply
funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor
against loss) the indebtedness, obligation or any other liability of any other
Person (other than by endorsements of instruments in the course of collection),
or guarantees the payment of dividends or other distributions upon the shares of
any other Person (the amount of the Borrower’s obligation under any

 

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Contingent Liabilities shall be deemed to be the maximum outstanding amount of
the debt, obligation or other liability guaranteed thereby) and, (b) with
respect to the Seller, liabilities that are contingent in nature which would be
included as liabilities on the face of the balance sheet of the Seller in
accordance with GAAP.

“CP Lender” means Fountain Square.

“CP Rate” means, with respect to Advances funded directly or indirectly by the
issuance of commercial paper, an interest rate per annum equal to (a) the
Program Fee plus (b) the per annum rate equivalent to the “weighted average
cost” (as defined below) related to the issuance of Fountain Square’s notes that
are allocated, in whole or in part, by Fountain Square (or by the Lender) to
fund or maintain such Advances (and which may also be allocated in part to the
funding of other Advances hereunder or of other assets of Fountain Square);
provided, however, that if any component of such rate is a discount rate, in
calculating the “CP Rate” for such Advances, Fountain Square shall, for such
component, use the rate resulting from converting such discount rate to an
interest bearing equivalent rate per annum. As used in this definition, Fountain
Square’s “weighted average cost” shall consist of (x) the actual interest rate
(or discount) paid to purchasers of Fountain Square’s notes, together with the
commissions of placement agents and dealers in respect of such notes, to the
extent such commissions are allocated, in whole or in part, to such notes by
Fountain Square (or by the Lender) and (y) any incremental carrying costs
incurred with respect to Fountain Square’s notes maturing on dates other than
those on which corresponding funds are received by Fountain Square.

“CP Rate Advance” has the meaning set forth in Section 2.3.

“Credit and Collection Policy” means (i) with respect to the Allstate Loans, the
Brooke Credit Corporation Credit Policy for Allstate Captive Agency Lending,
dated as of April 1, 2005, (ii) with respect to the Brooke Insurance Loans, the
Brooke Credit Corporation Credit Policy Loan Program: Independent Insurance
Agencies, dated as of December 1, 2003 and (iii) with respect to the Funeral
Service Loans, the Brooke Credit Corporation Credit Policy for Funeral Home
Financing, dated as of August 1, 2006, each as set forth in Exhibits N-1, N-2
and N-3 respectively, and as the same has been approved in writing by the
Lender.

“Custodial Agreement” means the Custodial Agreement dated as of September 15,
2006, between the Custodian, the Lender, the Borrower and the Servicer, as it
may be amended, supplemented or otherwise modified from time to time.

“Custodian” means Textron, and any successors and assigns in its capacity as
custodian under the Custodial Agreement.

“Custodian Fees” has the meaning specified in the Custodial Agreement.

“Custodian File” has the meaning specified in the Custodial Agreement.

 

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“Customer Files” means, with respect to each Loan, all of the documents,
information, data, correspondence and other books and records relating to
customers of the related Obligor or policies or other products sold by or
through such Obligor.

“Default” means an event which, with the passage of time or the giving of
notice, or both, would constitute an Event of Default.

“Default Rate” has the meaning specified in Section 2.9(b).

“Defaulted Loan” means any Loan as to which one or more of the following has
occurred:

(a) the related Obligor failed to make when due the first payment due
thereunder;

(b) ten percent (10%) or more of the payments due thereunder remain unpaid 90 or
more days past the original due date for such payment;

(c) the payment terms of such Loan have been restructured or modified in any way
for credit reasons after the date on which such Loan was transferred to the
Borrower (it being understood that Permitted Loan Modifications of the type
described in clauses (a) through (e) of the definition thereof are not done for
“credit reasons”);

(d) such Loan has become a Liquidated Loan; or

(e) such Loan has been assigned a rating of “fail” pursuant to the Credit and
Collection Policy.

As used in this definition, the term “Loan” shall include any loan that has been
repurchased by the Seller, or for which the Seller has made a substitution,
pursuant to the Purchase and Sale Agreement if, within 60 days of such
repurchase or substitution, such Loan becomes a Defaulted Loan or Delinquent
Loan.

“Delinquency Rate” means a percentage determined as of the last day of any
Settlement Period, equal to (i) the aggregate Unpaid Principal Balance of all
Eligible Loans that are Delinquent Loans as of such last day, divided by
(ii) the aggregate Unpaid Principal Balance of all Eligible Loans as of such
last day.

“Delinquent Loan” means a Loan as to which any payment due under such Loan
remains unpaid 30 or more days, but less than 90 days, past the original due
date for such payment.

“Determination Date” means the 12th day of each calendar month or, if such 12th
day is not a Business Day, the preceding Business Day.

“Dollar(s)” and the sign “$” mean lawful money of the United States of America.

 

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“Electronic Ledger” means the electronic master record of the Seller and the
Servicer with respect to all of their loans and receivables.

“Eligible Assignee” has the meaning set forth in Section 9.1.

“Eligible Hedge Counterparty” means a Hedge Counterparty that (i) has a
long-term unsecured, non-credit enhanced debt rating of not less than “A” by
Fitch and “A2” by Moody’s (or has its obligations under the relevant Hedge
Agreement guaranteed by another Person that has such ratings pursuant to a
guaranty in form and substance reasonably satisfactory to the Lender) and
(ii) has been approved by the Lender in its reasonable discretion as an Eligible
Hedge Counterparty under this Agreement.

“Eligible Lender” means any Person that (i) extends to the Seller a loan or
other credit facility secured by the Seller’s membership interest in the
Borrower and (ii) with respect to such security interest, agrees to be bound, in
accordance with this agreement, by the same or more restrictive covenants than
those set forth in Exhibit O.

“Eligible Loan” means, at any time, a Loan that satisfies each of the following
criteria:

(i) such Loan, and each related Loan Document, constitutes the legal, valid and
binding obligation of each related Obligor, enforceable against each such
Obligor in accordance with its terms, except as such enforcement may be limited
by (A) bankruptcy, insolvency, fraudulent transfer, reorganization or other
similar laws affecting the enforcement of creditors’ rights generally and
(B) general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law), and except that certain
provisions in the Loan Documents may be further limited or rendered
unenforceable by applicable law, but (subject to the limitations set forth in
the foregoing clauses (A) and (B)) such limitations or unenforceability will not
render such Loan Documents invalid as a whole or materially and adversely
interfere with the Borrower’s realization of the principal benefits and/or
security provided thereby. All parties to such Loan, and each related Loan
Document, had full legal capacity to execute and deliver such Loan and such Loan
Documents and to grant the security interest purported to be granted thereby;

(ii) such Loan was originated in the ordinary course of the Seller’s business in
accordance with and through the application of the Credit and Collection Policy
and the Seller’s standard credit underwriting procedures;

(iii) such Loan accrues interest at a floating rate per annum equal to or
greater than:

(A) the sum of the “prime rate” most recently published in the “Money Rates”
section of The Wall Street Journal (or, if such rate ceases to be published, by
The Wall Street Journal, the “prime rate” most recently publicly announced by
Fifth Third in Cincinnati, Ohio) plus:

(1) in the case of any Allstate Loan, 3.00%;

 

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(2) in the case of any Brooke Insurance Loan, 3.00%; or

(3) in the case of any Funeral Service Loan, 3.00%; or

(B) the one-month LIBO Rate plus a spread acceptable to the Lender; or

(C) an equivalent monthly adjustable interest rate acceptable to the Lender;

(iv) such Loan (A) has not had any of its terms, conditions or provisions
amended, modified, waived or rescinded other than in compliance with the Credit
and Collection Policy, (B) has not been restructured for credit reasons at any
time, (C) has not been satisfied, subordinated or rescinded and (D) has not had
any material collateral securing such Loan released from the lien granted by the
related Loan Documents, other than, in the case of (B) and (D) of this
clause (iv), Permitted Loan Modifications described in clauses (b) and (d) of
the definition thereof;

(v) such Loan does not provide for substitution, exchange or addition of the
related Loan Collateral, and none have been made;

(vi) such Loan is payable in monthly installments if such Loan is a Brooke
Insurance Loan or a Funeral Service Loan, with all accrued interest being due
and payable in full each month, which monthly installments will fully amortize
such Loan over its term;

(vii) none of such Loan, any related Loan Document, the sale of the related Loan
Collateral, the sale of any related insurance products or funeral home products
or any related service contract, contravenes in any material respect any law,
rule or regulation applicable thereto (including, without limitation, any law,
rule and regulation relating to truth in lending, fair credit billing, fair
credit reporting, equal credit opportunity, fair debt collection practices,
privacy or usury) and none of the related Loan Documents were created, solicited
or entered into in violation of any such law, rule or regulation in any material
respect;

(viii) such Loan and the related Loan Documents are not subject to, nor has
there been asserted or, to the best of the Borrower’s or the Seller’s knowledge,
threatened, any litigation or any right of rescission, set off, counterclaim or
other defense of the related Obligor;

(ix) such Loan is not a Defaulted Loan and, as of the date such Loan is first
included in the Collateral, such Loan is not a Delinquent Loan and is not a Loan
that has been or should have been placed on “watch” pursuant to the Credit and
Collection Policy;

 

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(x) such Loan has an original term to maturity of not more than 180 months;

(xi) as of the date such Loan is first included in the Collateral, and after
giving effect to such inclusion, the Weighted Average Life of all Eligible Loans
does not exceed seven (7) years;

(xii) such Loan has an original principal balance less than or equal to
$7,500,000;

(xiii) the Unpaid Principal Balance of such Loan does not exceed 90% of the Loan
Collateral Market Value of the related Loan Collateral;

(xiv) no Obligor on such Loan (A) is a Governmental Authority, (B) is an
Affiliate of any Brooke Party or (C) is the subject of any Event of Bankruptcy;

(xv) such Loan is denominated and payable only in United States dollars in the
United States by an Obligor located in the United States and is governed by the
law of a jurisdiction within the United States;

(xvi) such Loan constitutes “tangible chattel paper,” an “instrument” or a
“payment intangible” within the meaning of Article 9 of the UCC of all
applicable jurisdictions, there is only one original of any such chattel paper
or instrument and such original is in the possession of the Custodian;

(xvii) (a) such Loan is secured by a valid and perfected security interest in
substantially all the assets of the related Obligor (including, without
limitation, (i) in the case of Brooke Insurance Agent or Allstate Agent, such
Obligor’s rights under the related Brooke Insurance Franchise Agreement or
Allstate Agency Agreement, as applicable, and all rights of such Obligor in and
to Sales Commissions, and (ii) in the case of a Funeral Home, substantially all
real property owned by such Obligor), which security interest or lien is a first
priority security interest or lien with respect to any such assets in which a
security interest can be created under Article 9 of the UCC of the applicable
jurisdiction and, if such Loan is a Funeral Service Loan, with respect to the
related Mortgaged Property, (b) no further action is required (and all
continuation statements have been filed) under the UCC or other applicable law
to continue the perfected status of such security interest or lien against
creditors of and transferees from the original Obligor and (c) other than as
described in clause (xxxvi) below, there are no Adverse Claims prior or
subordinate to, or equal with, the security interest or lien of the Seller and
its assigns in the collateral securing such Loan except for Permitted Liens and,
solely in the case of any Mortgaged Property securing a Funeral Service Loan,
any of the following (collectively, “Permitted Real Estate Encumbrances”);
(x) liens for current real property taxes and assessments not yet due and
payable; (y) covenants, conditions and restrictions, rights of way, easements
and other matters of the public record as of the date of recording being
acceptable to lending institutions generally and specifically referred to in the
lender’s title insurance policy delivered to the Seller at the time of the
origination of the related Funeral Service Loan and which do not materially
adversely affect the

 

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Loan Collateral Market Value attributable to the Mortgaged Property; and
(z) other matters to which similar properties are commonly subject that do not
materially interfere with the benefits of the security intended to be provided
by the Mortgage or the use, enjoyment, value or marketability of the related
Mortgaged Property;

(xviii) the related Obligor has paid in full all expenses in connection with the
maintenance and operation of the related insurance agency or funeral home
business, as applicable (including, without limitation, property insurance and
taxes);

(xix) the Loan Documents relating to such Loan include a Collateral Preservation
Agreement, a Loan Agreement and, in the case of a Brooke Insurance Loan, a
Brooke Insurance Franchise Agreement and a Lender Protection Addendum,
substantially in the forms attached hereto as Exhibits F, G, H and I, as
applicable, or in such other form that (i) provides substantially the same or
better protections to the Seller or the Master Agent, as applicable, and does
not adversely impact the collectibility of or the interest of the Lender in the
subject Loans (a copy of which revised forms will be delivered to the Lender by
the Seller and with respect to which the Lender shall not have objected within
sixty (60) days of receipt of a copy of such revised form) or (ii) the Lender
may approve in writing (which approval will not be unreasonably withheld);

(xx) the Loan Documents relating to such Loan (A) require the related Obligor to
continue to make all scheduled payments originally due under such Loan
notwithstanding the occurrence of any casualty loss with respect to the assets
of such Obligor and (B) incorporate customary and enforceable provisions
permitting the holder of such Loan to accelerate the maturity date thereof and
to enforce its security interest in the collateral securing such Loan upon the
occurrence of an event of default thereunder (after giving effect to any
applicable grace period), and the Borrower, and its respective successors and
assigns, shall be entitled to enforce all such rights under the related Loan
Documents;

(xxi) except in the case of an Allstate Loan, none of the Loan Agreement under
which such Loan arises, any other Loan Document related to such Loan or any
applicable law, rule or regulation applicable to such Loan or such Loan
Documents (A) requires the consent of any party to the transfer, sale or
assignment of such Loan or the rights of the Seller (or its assignees) under any
Loan Document (unless such consent shall have been obtained) or (B) contains a
confidentiality provision that purports to restrict the ability of the Borrower
or the Lender to exercise its rights under any Transaction Document, including,
without limitation, its right to review all Loan Documents;

(xxii) if such Loan is a Brooke Insurance Loan, Master Agent is the “agent of
record” for all insurance policies issued by or through the related Brooke
Insurance Agent and has the right to receive all Sales Commissions arising in
connection with the sale or renewal of insurance products through such Brooke
Insurance Agent;

(xxiii) such Loan is a “closed-end loan” and the related Loan Documents do not
provide for any further extensions of credit;

 

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(xxiv) the Seller and each other Affiliate of the Seller at any time owning an
interest in, or servicing, such Loan had all licenses and permits necessary to
originate, own and/or service, as applicable, such Loan;

(xxv) a complete Custodian File for such Loan has been delivered to the
Custodian and the Lender has received a Collateral Receipt certifying such
receipt;

(xxvi) the information with respect to such Loan set forth in the Schedule of
Loans has been produced from the Electronic Ledger and is true and correct in
all material respects as of the close of business on the date such Loan is first
included in the Collateral;

(xxvii) no selection procedures having an adverse effect on the Borrower or the
Lender have been utilized in selecting such Loans from the loans owned by the
Seller and such Loan does not differ substantially from the loans previously
sold to the Borrower by the Seller in each case, which meet the eligibility
criteria specified herein;

(xxviii) such Loan was originated by the Seller without fraud or material
misrepresentation on the part of any Obligor or the Seller or any Affiliate
thereof;

(xxix) such Loan is not assumable by any other Person unless such party meets
the Credit and Collection Policy requirements for borrowers;

(xxx) neither the Seller nor any Affiliate thereof has done anything to convey,
or has refrained from taking action to prevent the conveyance of, any right to
any Person (other than the Borrower or the Lender) that would result in such
Person having a right to payments due under such Loan or otherwise to impair the
rights of the Borrower or the Lender in such Loan or the proceeds thereof, and
prior to the sale by the Seller of its interest in such Loan and Related
Security with respect thereto to the Borrower, neither the Seller nor the
Borrower has any constructive or actual knowledge that its interest in such Loan
was subject to the actual or claimed interest of any Person (which interest was
not released or subordinate to the Seller’s or the Borrower’s interest) other
than the ownership interest of the related Obligor, Permitted Liens and
Permitted Real Estate Encumbrances;

(xxxi) as of the date such Loan is first included in the Collateral, (a) except
for payment delinquencies continuing for a period of not more than 15 days as of
such date, no default, breach, violation or event permitting acceleration under
the terms of such Loan has occurred, (b) to the Seller’s knowledge no continuing
condition that with notice or the lapse of time would constitute a default,
breach, violation, or event permitting acceleration under the terms of such Loan
has arisen, (c) neither the Seller nor any Affiliate thereof has waived any of
the foregoing events or conditions, and (d) no collateral securing such Loan has
been repossessed;

(xxxii) (a) the Seller has caused the portions of its Electronic Ledger relating
to such Loan to be clearly and unambiguously marked to show that such Loan has
been sold

 

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to the Borrower in accordance with the terms of the Purchase and Sale Agreement
and (b) a first-priority perfected ownership or security interest in such Loan
has been granted by the Seller to the Borrower and by the Borrower to the
Lender, as applicable, in accordance with the terms of this Agreement;

(xxxiii) in the case of a Brooke Insurance Loan, the related Obligor is enrolled
in the Brooke Franchise Corporation “master agent program;”

(xxxiv) such Loan (a) was entered into with and executed by an authorized
officer or director of the Obligor and (b) is either a full recourse loan to
such officer or director or the payment in full of such Loan is guaranteed by
such officer or director; and

(xxxv) the Seller has not made and will not make any other loans to the related
Obligor (or to any Person that is an Affiliate of such Obligor, or in which such
Obligor otherwise has a direct or indirect interest) unless (A) such other loan
is subordinated to such Loan included in the Collateral pursuant to the
Subordination Agreement or (B) in the case of a Brooke Insurance Loan, the
Lender shall have received evidence reasonably satisfactory to it that (1) each
such other loan is either subject to the Intercreditor Agreement or is an
Eligible Loan and (2) the loan-to-value ratio of each such other loan is equal
to or lower than the loan-to-value ratio of such Loan included in the Collateral
(with such loan-to-value ratio being determined, in each case, based on the
ratio that the outstanding principal balance of such loan bears to the Loan
Collateral Market Value of the collateral securing such loan).

“Eligible Loan Balance” means, at any time, the aggregate Unpaid Principal
Balance of the Eligible Loans at such time.

“Eligible Servicer” means the Seller, the Backup Servicer, the Subservicer, the
Master Agent Servicer, the Backup Master Agent Servicer or another Person
approved by the Lender in its sole discretion in writing which, at the time of
its appointment as Servicer, (i) is servicing a portfolio of loans, (ii) is
legally qualified and has the capacity to service the Loans, (iii) has
demonstrated the ability professionally and competently to service a portfolio
of loans similar to the Loans with reasonable skill and care, (iv) maintains
investment grade ratings from each Rating Agency and (v) is qualified and
entitled to use, pursuant to a license or other written agreement, and agrees to
maintain the confidentiality of, the software which the Servicer uses in
connection with performing its duties and responsibilities under this Agreement
or otherwise has available software which is adequate in the judgment of the
Lender to perform its duties and responsibilities under this Agreement.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended
from time to time.

“Estimated Annualized Net Loss Rate” means a percentage determined as of the
last day of each Settlement Period equal to (i) the product of (a) the aggregate
Unpaid Principal Balance of all Loans that became Defaulted Loans during such
Settlement

 

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Period (such Unpaid Principal Balance being determined without giving effect to
any charge-off of such Loans), less the amount of recoveries on such Defaulted
Loans reasonably expected to be received by the Borrower from the sale of the
related Loan Collateral as determined by the Subservicer in good faith in
accordance with its customary practices and (b) 12, divided by (ii) the Eligible
Loan Balance as of the first day of such Settlement Period.

“Eurocurrency Disruption Event” means, at any time, that it shall be contrary to
law or to the directive of any central bank or other Governmental Authority, as
determined by the Lender in its sole discretion, for the Lender to obtain United
States dollars in the London interbank market to make, fund or maintain any
Advance for such Settlement Period or the occurrence of any other event which
would, in the sole determination of the Lender, make it inadvisable for the
Lender to obtain funds in the London interbank market.

“Event of Bankruptcy” shall be deemed to have occurred with respect to a Person
if either:

(i) a case or other proceeding shall be commenced, without the application or
consent of such Person, in any court, seeking the liquidation, reorganization,
debt arrangement, dissolution, winding up, or composition or readjustment of
debts of such Person, the appointment of a trustee, receiver, conservator,
custodian, liquidator, assignee, sequestrator or the like for such Person or all
or substantially all of its assets, or any similar action with respect to such
Person under any law relating to bankruptcy, insolvency, reorganization, winding
up or composition or adjustment of debts; or an order for relief in respect of
such Person shall be entered in an involuntary case under the federal bankruptcy
laws or other similar laws now or hereafter in effect; or

(ii) such Person shall commence a voluntary case or other proceeding under any
applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution
or other similar law now or hereafter in effect, or shall consent to the
appointment of or taking possession by a receiver, conservator, liquidator,
assignee, trustee, custodian, sequestrator (or other similar official) for such
Person or for any substantial part of its property, or shall make any general
assignment for the benefit of creditors, or shall fail to, or admit in writing
its inability to, pay its debts generally as they become due, or, if a
corporation or similar entity, its board of directors shall vote to implement
any of the foregoing.

“Event of Default” has the meaning set forth if Section 8.1.

“Exception Period” means, if the Seller closes a Securitization transaction that
results in a reduction of at least 75% of the aggregate outstanding principal
balance of the Advances under this Agreement that were outstanding immediately
prior to such closing the period from and including the date of such closing to
but excluding the earlier of (i) the date falling three months after the date of
such closing, and (ii) the first date on which the aggregate principal balance
of the Advances made under this Agreement since the date of such closing equals
or exceeds $25,000,000.

 

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“Existing Loan” means any Loan originated by the Seller on or before
September 15, 2006.

“Facility” has the meaning set forth in Section 2.1.

“Facility Limit” means $80,000,000, as such amount may be increased or decreased
pursuant to Section 2.5.

“Facility Outstanding Amount” means, as of the date of determination, the
aggregate Unpaid Principal Balances of all outstanding Advances on such date of
determination.

“Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the weighted average of the rates
on overnight Federal funds transactions with members of the Federal Reserve
System arranged by Federal funds brokers, as published for such day (or, if such
day is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day which
is a Business Day, the average of the quotations for such day on such
transactions received by the Lender from three Federal funds brokers of
recognized standing selected by it.

“Fee Letter” has the meaning set forth in Section 2.10.

“Fees” means all fees and other amounts payable by the Borrower to the Lender
pursuant to the Fee Letter.

“Fifth Third” has the meaning set forth in the Preamble.

“Finance Charges” means, with respect to any Loan, any interest, late charges,
fees and other amounts owing by an Obligor pursuant to the related Loan
Documents (excluding the Unpaid Principal Balance of such Loan).

“Fitch” means Fitch, Inc. and its successors and assigns.

“Fountain Square” means Fountain Square Commercial Funding Corp., a Delaware
corporation.

“Funding Agreement” means this Agreement and any liquidity agreement, credit
support agreement, purchase agreement or other agreement or instrument executed
by any Funding Source with or for the benefit of the Lender.

 

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“Funding Source” means (i) Fifth Third and (ii) any other insurance company,
bank or other financial institution providing liquidity, credit enhancement or
back-up purchase support or facilities to the Lender.

“Funeral Home” means any Obligor under a Funeral Service Loan that is not a
party to a franchise agreement with Brooke Franchise Corporation or any of its
Affiliates.

“Funeral Home CPA Fee” means, with respect to any Settlement Period, the fee
payable to CJD & Associates, LLC d/b/a Brooke Brokerage (or to Johnson
Consulting Group, Inc.) for services rendered with respect to the Funeral
Service Loans during such Settlement Period pursuant to the related Collateral
Preservation Agreements, which fee shall be equal to the product of one-twelfth
of 1.00% (100 basis points) multiplied by the aggregate Unpaid Principal Balance
of the Funeral Service Loans on the first day of such Settlement Period.

“Funeral Service Loan” means any Loan made to an Obligor that is a Funeral Home.

“GAAP” means generally accepted accounting principles in the United States of
America in effect from time to time.

“Governmental Authority” means the United States of America, any state or other
political subdivision thereof, any agency, department or instrumentality
thereof, and any entity exercising executive, legislative, judicial, regulatory
or administrative functions of or pertaining to the foregoing.

“Hedge Agreement” means an agreement between the Borrower and a Hedge
Counterparty that governs one or more Hedge Transactions entered into pursuant
to Section 2.12, which agreement shall consist of a “Master Agreement” in a form
published by the International Swaps and Derivatives Association, Inc., together
with a “Schedule” thereto and one or more “Confirmations” thereunder confirming
the specific terms of each such Hedge Transaction. Each Hedge Agreement shall be
consistent with customary rating agency criteria for “swap-dependent”
transactions and shall otherwise be in form and substance satisfactory to the
Lender.

“Hedge Breakage Costs” means, for any Hedge Transaction, any amount payable by
the Borrower upon the early termination (in whole or in part) of that Hedge
Transaction.

“Hedge Counterparty” means a counterparty that enters into a Hedge Transaction
with the Borrower. Each Hedge Counterparty must be an Eligible Hedge
Counterparty at the time the relevant Hedge Transaction is entered into.

“Hedge Notional Amount Requirement” means (i) with respect to the Existing
Loans, for any date following the occurrence of a Hedge Trigger Event relating
to the Existing Loans, a scheduled amortizing notional amount for such date and
each

 

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Settlement Date thereafter specified by the Lender in consultation with the
Subservicer and (ii) with respect to the Additional Loans, for any date
following the occurrence of a Hedge Trigger Event relating to the Additional
Loans, a scheduled amortizing notional amount for such date and each Settlement
Date thereafter, such schedule to match the estimated aggregate outstanding
principal balance of the Advances as of such date and each such subsequent
Settlement Date (based on the scheduled amortization of the Additional Loans and
assuming no further Advances are made hereunder after such date), as determined
by the Lender in consultation with the Subservicer; provided that so long as any
Existing Loans are included in the Collateral, the Hedge Notional Amount
Requirement for the Additional Loans shall be reduced as appropriate (in the
sole judgment of the Lender) to take into account the hedging requirements for
the Existing Loans hereunder.

“Hedge Transaction” means each interest rate hedge transaction (including,
without limitation, any interest rate swap, interest rate cap or other hedge
transaction acceptable to the Lender) between the Borrower and a Hedge
Counterparty that is entered into pursuant to Section 2.12 and is governed by a
Hedge Agreement.

“Hedge Trigger Event” shall be deemed to exist at any time that the Prime Rate
is less than the one-month LIBO Rate, as determined by the Lender. Any such
Hedge Trigger Event shall be deemed to be continuing unless and until the
circumstance described in this definition, cease to exist as of any subsequent
Advance Date or Settlement Date, as determined by the Lender.

“Indebtedness” of any Person means, without duplication:

(i) all obligations of such Person for borrowed money and all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments;

(ii) all obligations, contingent or otherwise, relative to the face amount of
all letters of credit, whether or not drawn, and banker’s acceptances issued for
the account of such Person;

(iii) all obligations of such Person as lessee under leases that have been or
should be, in accordance with GAAP, recorded as capitalized lease liabilities;

(iv) all obligations of such Person to pay the deferred purchase price of
property;

(v) all obligations secured by an Adverse Claim (other than Permitted Liens or
Permitted Real Estate Encumbrances) upon property or assets owned by such
Person, even though such Person has not assumed or become liable for the payment
of such obligations; and

 

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(vi) all Contingent Liabilities of such Person in respect of any of the
foregoing.

“Indemnified Amounts” has the meaning set forth in Section 10.1.

“Indemnified Party” has the meaning set forth in Section 10.1.

“Independent Accountants” means, Summers, Spencer & Callison or another firm of
independent certified public accountants selected by the Seller and approved by
the Lender (which approval may not be unreasonably withheld by the Lender).

“Individual State Concentration” means, with respect to any state, the aggregate
Unpaid Principal Balance of the Eligible Loans owing by Obligors located in such
state (determined by reference to the location of the chief executive office of
such Obligor).

“Insurance Agreement” means any related insurance agreement that serves to
secure the payment of a Loan or as collateral for such Loan other than, (i) with
respect to each Brooke Insurance Loan, the Brooke Insurance Franchise Agreement
between Master Agent (as assignee of Brooke Franchise Corporation) and the
related Brooke Insurance Agent, and (ii) with respect to each Allstate Loan, the
related Allstate Agency Agreement.

“Insurance Company Concentration” means, at any time with respect to any
insurance company, the percentage of the total monthly commissions paid to
Master Agent in respect of the Loans during the preceding six calendar month
period (or in, the case of the first six months following the Closing Date,
since the Closing Date) represented by commissions payable in respect of
policies issued by such insurance company. For purposes of the foregoing, each
insurance company and its Affiliates shall be treated as a single insurance
company.

“Insurance Company Concentration Limit” means (i) with respect to any insurance
company that has a long-term senior unsecured debt rating of at least “A2” from
Moody’s, 30% and (ii) with respect to any other insurance company, 5%; provided
that in the case of Bristol West Casualty Insurance Company, the Insurance
Company Concentration Limit specified in clause (ii) shall be 7% rather than 5%
for so long as Bristol West Casualty Insurance Company maintains a long-term
senior unsecured debt rating of not less than “Baa1” from Moody’s.

“Insurance Company Trigger” means, with respect to any insurance company, that
the Insurance Company Concentration for such insurance company exceeds the
applicable Insurance Company Concentration Limit and such circumstance shall
have remained unremedied for more than eight (8) months.

“Intercreditor Agreement” means the Intercreditor Agreement of even date
herewith among the Seller, the Master Agent, the Master Agent Servicer, the
Borrower and the Lender, as amended, restated, supplemented or otherwise
modified from time to time.

 

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“Interest Period” means (a) before the occurrence of the Amortization
Commencement Date, (i) initially the period commencing on the date of the
initial Advance (or in the case of any fees payable hereunder, commencing on the
Closing Date) and ending on (but not including) the next Settlement Date, and
(ii) thereafter, each period commencing on such Settlement Date and ending on
(but not including) the next Settlement Date, and (b) on and after the
occurrence of the Amortization Commencement Date, such period (including a
period of one day) as shall be selected from time to time by the Lender or, in
the absence of any such selection, each period of 30 days from the last day of
the preceding Interest Period.

“Lender” has the meaning set forth in the Preamble.

“Lender Protection Addendum” means a “Lender Agreement Addendum Regarding Lender
Protection” entered into by Master Agent (or Brooke Franchise Corporation as its
predecessor) and a Brooke Insurance Agent in substantially the form attached
hereto as Exhibit H or such other form as the Lender may approve in writing
(such approval not to be unreasonably withheld or delayed).

“Letter Agreement” means that certain Letter Agreement among the Lender, the
Borrower and the Seller dated as of September 15, 2006 (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the
“Letter Agreement”).

“Lien” means any security interest, lien, charge, pledge, preference, ownership
interest for purposes of security, equity or encumbrance of any kind, whether
senior or subordinate, including tax liens, mechanics’ liens and any liens that
attach by operation of law.

“LIBO Rate” means, for any Interest Period, the interest rate per annum
determined by the Lender by dividing (the resulting quotient rounded upwards ,
if necessary, to the nearest 1/100th of 1% per annum) (i) the rate of interest
determined by the Lender in accordance with its usual procedures (which
determination shall be conclusive absent manifest error) to be the average of
the London interbank market offered rates for U.S. dollars quoted by the BBA as
set forth on Dow Jones Markets Service (formerly known as Telerate) (or
appropriate successor or, if the BBA successor ceases to provide display page
3750, such other display page on the Dow Jones Markets Service system as may
replace display page 3750) at or about 11:00 a.m. (London time) on the Business
Day which is two (2) Business Days prior to the first day of the applicable
Interest Period by (ii) a number equal to 1.00 minus the LIBO Rate Reserve
Percentage. The LIBO Rate may also be expressed by the following formula:

 

LIBO Rate =

 

Average of London interbank offered rates quoted by BBA as shown on

Dow Jones Markets Service display page 3750 or appropriate successor  

1.00 - LIBO Rate Reserve Percentage

 

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where “LIBO Rate Reserve Percentage” means, the maximum effective percentage in
effect on such day as prescribed by the Board of Governors of the Federal
Reserve System (or any successor) for determining the reserve requirements
(including without limitation, supplemental, marginal, and emergency reserve
requirements) with respect to eurocurrency funding (currently referred to as
“Eurocurrency Liabilities”) in Regulation D of the Federal Reserve Board. The
LIBO Rate shall be adjusted with respect to any Advance funded at the Alternate
Rate and based upon the LIBO Rate that is outstanding on the effective date of
any change in the LIBO Rate Reserve Percentage as of such effective date. The
Lender shall give prompt notice to the Servicer and the Borrower of the LIBO
Rate as determined or adjusted in accordance herewith (which determination shall
be conclusive absent manifest error).

“Liquidated Loan” means any Loan that (i) the Servicer has determined to
charge-off in accordance with the Servicing Policy and Procedures or that should
have been so charged-off in accordance therewith or (ii) has been liquidated
through the sale of the related Loan Collateral.

“Liquidation Proceeds” means, with respect to a Liquidated Loan, all amounts
realized with respect to such Liquidated Loan net of (i) reasonable
out-of-pocket expenses incurred by the Servicer in connection with the
collection thereof and the repossession and disposition of the related Loan
Collateral and (ii) amounts that are required to be refunded to the Obligor on
such Liquidated Loan; provided, however that the Liquidation Proceeds with
respect to any Liquidated Loan shall in no event be less than zero.

“Liquidation Fee” means for (i) any Advance for which Interest is computed by
reference to the CP Rate and a reduction of the outstanding principal balance
thereof is made for any reason or (ii) any Advance for which Interest is
computed by reference to LIBO Rate and a reduction of the outstanding principal
balance of such Advance is made for any reason on any day other than a Payment
Date, the amount, if any, by which (A) the additional Interest (calculated
without taking into account any Liquidation Fee) which would have accrued during
the Interest Period in which such reduction occurs (or, in the case of clause
(i) above, during the period until the maturity of the underlying commercial
paper tranches) on such Advance had such reduction not occurred, exceeds (B) the
income, if any, received by the Lender from the investment of the proceeds of
such reduction of principal. A certificate as to the amount of any Liquidation
Fee (including the computation of such amount) shall be submitted by the Lender
to the Borrower and shall be conclusive and binding for all purposes, absent
manifest error.

 

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“Liquidity Provider” means Fifth Third, its successors and assigns, and any
other Person that from time to time provides liquidity or credit support to
Fountain Square whether under a liquidity asset purchase agreement or other
liquidity or credit enhancement arrangement.

“Loan” means, every Loan included in the Schedule of Loans, including without
limitation, all Allstate Loans, Existing Loans, Brooke Insurance Loans, Funeral
Service Loans, and all rights and obligations under such Loan, whether
constituting an account, chattel paper, instrument, investment property or
general intangible, and including, without limitation, the obligation of any
related Obligor to pay any Finance Charges with respect thereto; provided that,
except as otherwise expressly provided herein, the term “Loan” shall exclude any
Loan that has been released from the Collateral pursuant to Section 5.9 hereof.

“Loan Agreement” means a loan agreement entered into by and between the Seller
and an Obligor in substantially the form attached hereto as Exhibits I-1, I-2
and I-3 or in such other form that (i) provides substantially the same or better
protections to the Seller and does not adversely impact the collectibility of or
the interest of the Lender in the subject Loans (a copy of which revised form
will be delivered to the Lender by the Seller and with respect to which the
Lender shall not have objected within sixty (60) days of receipt of a copy of
such revised form) or (ii) the Lender may approve in writing (which approval
will not be unreasonably withheld).

“Loan Collateral” means, with respect to any Loan, all of the property of the
related Obligor in which a security interest has been granted to secure such
Loan.

“Loan Collateral Market Value” means, at any time with respect to any Loan, the
value of the related Loan Collateral, as most recently determined by the
Subservicer in accordance with the Credit and Collection Policy based on (i) in
the case of a Brooke Insurance Loan, the Seller’s analysis of weighted Sales
Commissions and account durability; (ii) in the case of an Allstate Loan, the
historical EBITDA of the relevant agency business (with the Loan Collateral
Market Value not exceeding five (5) times such historical EBITDA) and (iii) in
the case of a Funeral Service Loan, the lesser of (x) five (5) times the
historical EBITDA of the related Funeral Home or (y) the market value of such
Funeral Home as determined by an independent third-party appraiser; provided,
that if the Lender shall reasonably determine that such valuation was not made
in accordance with the Credit and Collection Policy, then the Loan Collateral
Market Value with respect to such Loan shall be determined by the Lender acting
in its good faith discretion, which determination shall be conclusive and
binding absent manifest error.

“Loan Documents” means, with respect to any Loan, collectively, (i) the executed
original counterpart of the Loan that constitutes “tangible chattel paper” or an
“instrument” for purposes of Article 9 of the UCC and, with respect to each
instrument, an allonge duly endorsing such instrument in blank or to the Lender,
(ii) the related Loan Agreement, (iii) if such Loan is a Brooke Insurance Loan,
the related Brooke Insurance Franchise Agreement, (iv) if such Loan is a Brooke
Insurance Loan, the related Lender

 

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Protection Addendum, (v) the related Customer Files, if any, (vi) if such Loan
is an Allstate Loan, the related Allstate Commission Payment Agreement,
(vii) the related Collateral Preservation Agreement, (viii) the related Security
Agreement and the related financing statement in substantially the form attached
to Exhibit J, (ix) if such Loan is a Funeral Servicer Loan, the related Mortgage
(if any), (x) any related Insurance Agreements (to the extent that such
Insurance Agreements apply to such Loan) and all other insurance policies
maintained by Master Agent or any Affiliate thereof or any Brooke Insurance
Agent, including without limitation all professional errors and omissions
policies, (xi) all guarantees relating to such Loan and (xii) all other
instruments, documents and agreements executed and/or delivered under or in
connection with any of the foregoing, in each case as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof and thereof.

“Lockbox” has the meaning set forth in Section 5.3(a).

“Master Agent” means Brooke Agency Services Company LLC, a Delaware limited
liability company.

“Master Agent Security Agreement” means the Master Agent Security Agreement of
even date herewith between Master Agent and the Master Agent Trustee, as
amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms hereof and thereof.

“Master Agent Servicer” means Brooke Franchise Corporation, in its capacity as
master agent servicer under the Master Agent Servicing Agreement, and any
successor thereto in such capacity.

“Master Agent Servicer Default” has the meaning specified in Section 8.2.

“Master Agent Servicing Agreement” means the Master Agent Servicing Agreement of
even date herewith, by and between Master Agent and the Master Agent Servicer,
as amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms hereof and thereof.

“Master Agent Trustee” means The Bank of New York its capacity as master agent
trustee under the Master Agent Security Agreement, and any successor thereto in
such capacity.

“Master Receipts Trust Account” means that certain trust account numbered 718354
maintained with The Bank of New York and owned by Master Agent to which all
Sales Commissions deposited to the Receipts Trust Accounts and the Consolidation
Receipts Trust Account are deposited.

“Material Adverse Effect” means, with respect to any event or circumstance, a
material adverse effect on:

(a) the business, financial condition, operations or prospects of the Borrower,
the Seller or the Master Agent Servicer (as the context requires);

 

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(b) the ability of the Borrower, the Subservicer, Servicer, the Seller or the
Master Agent Servicer (as the context requires) to perform its obligations under
any Transaction Document to which it is a party;

(c) the validity, enforceability, or collectibility of any Transaction Document;

(d) the status, existence, perfection, priority, or enforceability of any lien
or security interest granted to the Lender pursuant to the Transaction
Documents; or

(e) the validity, enforceability or collectibility of any Loan with an Unpaid
Principal Balance in excess of $100,000 (or the Loan Documents relating to such
Loan).

“Maturity Date” means the Settlement Date following the third (3rd) anniversary
of the Closing Date.

“Maximum Note Principal Amount” means, as of any date of determination, the
lesser of the Borrowing Base (as set forth on the most recently delivered
Servicer’s Certificate or Borrowing Base Certificate) and the Facility Limit.

“Moody’s” means Moody’s Investors Service, Inc., and its successors and assigns.

“Mortgage” means a mortgage, deed of trust or other instrument creating a lien
on any real property securing a Loan.

“Mortgaged Property” means the underlying real property or properties securing a
Mortgage Loan.

“Note” means any promissory note, substantially in the form of Exhibit B, made
payable to the order of the Lender or any extension, renewal or replacement of
or for such a note.

“Obligations” means all obligations of the Borrower to the Lender arising under
or in connection with this Agreement, the Note and each other Transaction
Document to which the Borrower is a party.

“Obligor” means a Person obligated to make payments with respect to a Loan.

 

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“Obligor Concentration” means, at any time with respect to any Obligor, the
aggregate Unpaid Principal Balance of the Eligible Loans owing by such Obligor
or any Affiliate of such Obligor.

“Performance Guaranty” means the Performance Guaranty of even date herewith
executed by Brooke Corporation in favor of the Lender and acknowledged by the
Borrower, as the same may be amended, restated, supplemented or otherwise
modified from time to time.

“Permitted Liens” means such Liens that (a) are subordinate to the Liens granted
to the Lender, (b) arise from any Adverse Claim for taxes, assessments or
similar governmental charges or levies incurred in the ordinary course of
business that (i) are not yet due and payable or as to which any applicable
grace period has not expired or (ii) are being contested in good faith by proper
proceedings and for which adequate reserves have been established, (c) in the
case of a Loan, are subordinate to the Lien of the Seller or the Borrower or are
subject to an intercreditor agreement, or (d) are otherwise not material and
have been approved by the Servicer in accordance with the Credit and Collection
Policy.

“Permitted Investments” means one or more of the following types of financial
assets: (a) direct obligations of the United States of America, (b) or any
agency or instrumentality thereof whose obligations constitute the full faith
and credit obligations of the United States of America having a maturity of one
(1) year or less, (c) agency mortgage backed securities or agency collateralized
mortgage obligations, (d) commercial paper rated “A-1” or better by Standard &
Poor’s Ratings Services or “P-1” by Moody’s Investors Service, (e) money market
mutual funds the underlying assets of which consist exclusively of financial
assets which would otherwise be “Permitted Investments” under this definition,
or (f) purchase and sale agreements covering financial assets that would
otherwise be “Permitted Investments” hereunder and which subject such assets to
a first priority perfected security interest granted by the seller, and
certificates of deposit or bankers’ acceptances, in each case having a maturity
of one (1) year or less and issued by Persons having the short-term ratings
described in clause (d) above.

“Permitted Loan Modification” means, with respect to any Loan other than a
Defaulted Loan:

(a) the assignment and delegation by an Obligor who is a natural Person to, and
the assumption by, a Person that is an entity formed for the purpose of becoming
the obligor under such Loan (which entity is owned by such assigning Obligor) of
all of such assigning Obligor’s right, title, interest and obligations under
such Loan and all related Loan Documents, provided that such natural Person
executes a personal guaranty of all of the obligations of such assignee under
such Loan Documents; or

(b) (i) the release of a guarantor from its obligations under its guaranty of
such Loan in connection with the sale of all of its right, title and interest in
the related Obligor

 

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to a co-guarantor of such Loan, provided that such co-guarantor is a Qualified
Replacement Guarantor and has entered into a personal guaranty of such Loan or
(ii) the release of a guarantor from its obligations under its guaranty of such
Loan in connection with the sale of all of such its right, title and interest in
the related Obligor to a Person that is not a guarantor of such Loan, provided
that such Person is a Qualified Replacement Guarantor and has entered into a
personal guaranty of such Loan; or

(c) (i) an increase in the scheduled monthly payment amount for such Loan as
result of an increase in the interest rate on such Loan or (ii) a decrease in
the scheduled monthly payment amount for such Loan as result of a decrease in
the interest rate on such Loan; or

(d) the authorization of a change in the office location of the Obligor of such
Loan provided that such change in such office location will not result in such
Loan not being an Eligible Loan; or

(e) (i) the release of all or substantially all of the Loan Collateral for such
Loan in connection with the sale of all or substantially all of such Loan
Collateral if, and only if, the proceeds of such sale are concurrently applied
to the payment in full of the Unpaid Principal Balance of such Loan and all
other amounts outstanding under the Loan Documents or (ii) the release of a
portion of the Loan Collateral for such Loan in connection with the sale thereof
if, and only if, the proceeds of such sale are concurrently applied to reduce
the Unpaid Principal Balance of such Loan; but (x) after giving effect to such
release, the ratio of the remaining Unpaid Principal Balance of such Loan to the
Sales Commissions with respect to such Loan is at least equal to such ratio
immediately prior to such release and (y) the aggregate Unpaid Balance of all
Loans (calculated as of the dates of the related releases) being repaid in
connection with all releases of the type referred to in clause (ii) above shall
not exceed 7.5% of the aggregate Unpaid Principal Balance of all Loans as of the
date of such release; or

(f) following the application of a principal prepayment in excess of five
percent (5%) of the Unpaid Principal Balance of such Loan, calculating and
effecting a new monthly payment schedule reflecting such principal application
and the re-amortization of the remaining principal balance over the remaining
amortization period;

but, except to the extent specifically authorized in clauses (a) through
(f) above, with respect to any Loan other than a Defaulted Loan:

 

(A) In no event may a Loan be extended for more than 30 days during any calendar
year;

 

(B) In no event may a Loan be extended more than 3 months over the life of such
Loan;

 

(C) In no event may the Unpaid Principal Balance of a Loan be reduced; and

 

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(D) The Servicer shall not amend or modify a Loan (except as provided in
Section 2.2 of the Servicing Agreement ) without the consent of the Borrower and
the Lender.

“Permitted Real Estate Encumbrance” has the meaning set forth in clause
(xvii) of the definition of “Eligible Loan” in this Agreement.

“Permitted Sale Transaction” has the meaning set forth in Section 5.9(b).

“Person” means an individual, partnership, corporation (including a business
trust), limited liability company, joint stock company, trust, unincorporated
association, joint venture, government or any agency or political subdivision
thereof or any other entity.

“Portfolio Financial Servicing Company” means Portfolio Financial Servicing
Company, a Delaware corporation.

“Power of Attorney” means the power of attorney dated as of the date hereof and
substantially in the form attached hereto as Exhibit M.

“Prime Rate” means, as of any date of determination, the rate of interest most
recently published in the “Money Rates” section of The Wall Street Journal as
the “prime rate” on such date of determination (or, if such rate ceases to be
published by The Wall Street Journal, the “prime rate” most recently publicly
announced by Fifth Third in Cincinnati, Ohio).

“Principal Balance” means, with respect to any Loan, as of any date, the sum of
(i) aggregate amount advanced to or on behalf of the Obligor by the Seller under
the applicable Loan Document before transfer to the Borrower, plus (ii) any
accrued but unpaid fees and interest under any Loan Document on or prior to such
date, minus (iii) that portion of all amounts received by the Servicer with
respect to such Loan on or prior to such date and allocable to principal in
accordance with the terms of such Loan, and minus (iv) any amount set off,
reduced or cancelled in respect of such Loan due to any claim by the related
Obligor against the Seller, the Borrower or any other Person (whether such claim
arises out of the same or a related transaction or an unrelated transaction).

“Program Fee” has the meaning specified in the Fee Letter.

“Purchase and Sale Agreement” means the Purchase and Sale Agreement, dated as of
even date herewith, between the Seller and the Borrower, as such agreement may
be amended, restated, supplemented or otherwise modified from time to time.

“Qualified Replacement Guarantor” means a Person seeking to assume all
obligations pursuant to a personal guaranty of a Loan and whom: (a) with respect
to any Brooke Insurance Loan or Allstate Loan, (i) has a valid current insurance
agent’s license, (ii) has three or more years of insurance experience, and
(iii) has not been subject to

 

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disciplinary action by any state or federal regulator which resulted in a
material monetary fine or suspension of a professional license; and (b) with
respect to any Loan, (i) has a net worth equal to or in excess of the net worth
of the guarantor such Person seeks to replace, and (ii) otherwise generally
meets the Subservicer’s underwriting guidelines.

“Rating Agency” means Moody’s, Fitch or Standard and Poor’s.

“Receipts Trust Account” has the meaning specified in the Master Agent Security
Agreement.

“Receipts Trust Agreement” means that certain Receipts Trust Agreement dated
November 1, 2003 between the Master Agent and First National Bank and Trust of
Phillipsburg, Kansas, as trustee, in substantially the form attached hereto as
Exhibit K (or such other form as the Lender may approve in writing (such
approval not to be unreasonably withheld or delayed)).

“Record Date” means the last day of each calendar month.

“Records” means all Loan Documents, Brooke Insurance Franchise Agreements and
other documents, books, records and other information (including computer
programs, tapes, disks, punch cards, data processing software (to the extent
permitted by any applicable licenses) and related property and rights) directly
related to the Loans or the servicing thereof.

“Related Security” means with respect to any Loan:

(i) the Custodian Files and other Records relating to such Loan;

(ii) the Loan Collateral securing such Loan;

(iii) any and all other security interests or Liens and property subject thereto
from time to time purporting to secure payment of such Loan;

(iv) all guarantees, indemnities, warranties, letters of credit, escrow
accounts, insurance policies and proceeds and premium refunds thereof and other
agreements or arrangements of whatever character from time to time supporting or
securing payment of the such Loan;

(v) all insurance proceeds or Liquidation Proceeds from such Loan; and

(vi) all proceeds of the foregoing.

“Revolving Period” means the period commencing on the Closing Date and ending at
the end of the Business Day preceding the Amortization Commencement Date.

 

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“Sales Commissions” means (i) with respect to any Brooke Insurance Loan, all of
the related Franchise Agent’s right, title and interest in the “Sales
Commissions” as such term is defined in the related Brooke Insurance Franchise
Agreement, (ii) with respect to any Allstate Loan, all commissions to which the
related Allstate Agent is entitled pursuant to the applicable Allstate Agency
Agreement and (iii) with respect to any Funeral Service Loan, all of the related
Funeral Home’s right, title and interest in the “Insurance Sales Commissions” as
such term is defined in the related Loan Agreement.

“Schedule of Loans” has the meaning specified in the Purchase and Sale
Agreement.

“Security Agreement” means a security agreement entered into by and between the
Seller and an Obligor in substantially the form attached to Exhibit J or in such
other form that (i) provides substantially the same or better protections to the
Seller and does not adversely impact the collectibility of or the interest of
the Lender in the subject Loans (a copy of which revised form will be delivered
to the Lender by the Seller and with respect to which the Lender shall not have
objected within sixty (60) days of receipt of a copy of such revised form) or
(ii) the Lender may approve in writing, which approval will not be unreasonably
withheld.

“Secured Parties” means, collectively, the Lender, the Servicer, the Backup
Servicer, the Affected Parties, the Hedge Counterparties, the Indemnified
Parties and their respective successors and assigns.

“Securitization” means a transaction undertaken by the Seller or any of its
Affiliates involving the direct or indirect sale or other conveyance of loans
originated by the Seller to a Person that shall privately or publicly sell
securities (including, without limitation, notes and pass-through certificates)
backed by such loans to third-party investors.

“Seller” has the meaning set forth in the Preamble.

“Servicer” means Textron, in its capacity as servicer pursuant to the Servicing
Agreement, and any successor thereto in such capacity.

“Servicer Termination Event” has the meaning set forth in the Servicing
Agreement.

“Servicer’s Certificate” means a certificate, substantially in the form attached
hereto as Exhibit E, completed by and executed on behalf of the Servicer,
furnished to the Lender by the Servicer on the Business Day immediately
preceding each Settlement Date (i) summarizing the activity of the Facility and
the status of the outstanding Loans as of the end of the immediately preceding
Settlement Period, (ii) reflecting, among other items, Collections,
delinquencies, defaults, losses, adjustments, and disbursements, payments, and
the remaining term of the Loans during the immediately preceding Settlement
Period, and (iii) containing a properly completed and executed Borrowing Base
Certificate calculated as of the end of the immediately preceding Settlement
Period.

 

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“Servicing Agreement” means the Servicing Agreement, dated as of the date
hereof, by and among the Borrower, the Servicer, the Subservicer and the Lender,
as the same may be amended, restated, modified or supplemented from time to
time.

“Servicing Fee” means, as of any Settlement Date, an amount equal to the product
of (i) the Servicing Fee Rate and (ii) the Unpaid Principal Balance of the Loans
as of the Record Date for the Collection Period immediately preceding such
Settlement Date.

“Servicing Fee Rate” means 0.355% per annum.

“Servicing Policy and Procedures” has the meaning set forth in the Servicing
Agreement.

“Settlement Date” means with respect to any Advance for any Settlement Period,
(i) prior to the Maturity Date, the 15th day of each calendar month (or the next
succeeding Business Day if such day is not a Business Day) beginning with
August 15, 2006 and (ii) on and after the Maturity Date, each day selected from
time to time by the Lender (it being understood that the Lender may select such
Settlement Date to occur as frequently as daily), or, in the absence of such
selection, the date specified in clause (i) above.

“Settlement Period” means, (a) initially, the period commencing on the Closing
Date and ending on the last day of the calendar month, and (b) thereafter,
(i) prior to the Maturity Date, each successive period commencing on the first
day of the calendar month and ending on the last day of such calendar month and
(ii) on and after the occurrence of the Amortization Commencement Date, such
period (including a period of one day) as shall be selected from time to time by
the Lender or, in the absence of any such selection, each period of 30 days from
the last day of the preceding Settlement Period.

“Standard & Poor’s” means Standard & Poor’s Ratings Services, a division of The
McGraw-Hill Companies, Inc., and its successors and assigns.

“Subservicer” means the Seller, in its capacity as subservicer under the
Subservicing Agreement, and any successor thereto in such capacity.

“Subservicing Agreement” means the Subservicing Agreement of even date herewith
between the Subservicer and the Servicer, as amended, restated, supplemented or
otherwise modified from time to time in accordance with the terms hereof and
thereof.

“Subsidiary” means, with respect to a corporation, limited liability company or
other similar business entity, another corporation, limited liability company or
similar business entity of which it owns at least a majority of all shares,
options, warrants, general or limited partnership interests or other equivalent
interests (regardless of how

 

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designated) of or in the corporation, partnership, limited liability company or
equivalent entity, whether voting or nonvoting, including common stock,
preferred stock or any other “equity security” (as such term is defined under
the Securities Exchange Act of 1934, as amended).

“Summers, Spencer & Callison” means Summers, Spencer & Callison CPAs, Chartered,
a certified public accounting firm.

“Swap Rate” means, on any date, the fixed rate that would be payable under an
interest rate swap transaction in exchange for a floating one-month LIBOR
payment from the counterparty thereunder through the end of the current calendar
year, as determined by the Lender in consultation with the Subservicer.

“Textron” means Textron Business Services, Inc., a Delaware corporation.

“The Bank of New York”, means The Bank of New York, a New York banking
corporation

“Transaction Documents” means, collectively, this Agreement, the Note, the Fee
Letter, the Purchase and Sale Agreement, the Servicing Agreement, the Master
Agent Servicing Agreement, the Master Agent Security Agreement, the
Subordination Agreement, the Intercreditor Agreement, the Performance Guaranty,
the Letter Agreement, the Subservicing Agreement, the Backup Servicing
Agreement, the Backup Master Agent Servicing Agreement, the Allstate
Subservicing Agreement, each Trust Account Control Agreement, each Trust Account
Intercreditor Agreement, each Assignment, the Collection Account Agreement, each
Hedge Agreement and all other instruments, documents and agreements executed in
connection with any of the foregoing. The Transaction documents executed by any
party are referred to herein as “such party’s Transaction documents,” “its
Transaction documents” or by a similar expression.

“Trust Accounts” means, collectively, the Consolidation Receipts Trust Account,
the Allstate Receipts Trust Account and the Master Receipts Trust Account.

“Trust Account Control Agreement” means, with respect to any Trust Account, an
agreement in substantially the form attached hereto as Exhibits L-1, L-2 and
L-3, respectively, covering such Trust Account duly executed by Master Agent,
the Master Agent Trustee and the bank at which such account is maintained.

“Trust Account Intercreditor Agreement” means (i) the Amended & Restated Account
Intercreditor Agreement dated as of March 1, 2005, among the Master Agent, The
Bank of New York and the other parties thereto, regarding the Consolidated
Receipts Trust Account and the Master Receipts Trust Account, as amended by
various amendments and the Fifth Third Amendment dated as of September 15, 2006,
as the same may be further amended, restated, supplemented or otherwise modified
from time to time, and the (ii) the Amended & Restated Account Intercreditor
Agreement dated as of

 

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December 1, 2005, among the Master Agent, The Bank of New York and the other
parties thereto, regarding the Allstate Receipts Trust Account, as amended by
various amendments and the Fifth Third Amendment dated as of September 15, 2006,
as the same may be further amended, restated, supplemented or otherwise modified
from time to time.

“UCC” means the Uniform Commercial Code as from time to time in effect in the
applicable jurisdiction or jurisdictions.

“Undercollateralization Event” means, on any date of determination, that the
aggregate Unpaid Principal Balance of the Advances exceeds the Borrowing Base,
provided that if such excess results from a reduction in the Advance Rate, such
event shall not be deemed to occur within three (3) months after the date of
such reduction in the Advance Rate.

“Unpaid Principal Balance” means, at any time, with respect to (a) any Loan, the
unpaid principal balance thereof, (b) the Note, the unpaid principal balance
thereof and (c) any Advance, the unpaid principal balance thereof.

“Weighted Average Life” means, with respect to all Eligible Loans, the weighted
average maturity of the Eligible Loans determined pursuant to a methodology
agreed to by the Seller and the Lender prior to the Closing Date.

Section 1.2 Other Definitional Provisions.

(a) Unless otherwise specified therein, all terms defined in this Agreement have
the meanings as so defined herein when used in the Note or any other Transaction
Document, certificate, report or other document made or delivered pursuant
hereto.

(b) Each term defined in the singular form in Section 1.1 or elsewhere in this
Agreement shall mean the plural thereof when the plural form of such term is
used in this Agreement, the Note or any other Transaction Document, certificate,
report or other document made or delivered pursuant hereto, and each term
defined in the plural form in Section 1.1 shall mean the singular thereof when
the singular form of such term is used herein or therein.

(c) The words “hereof,” “herein,” “hereunder” and similar terms when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and article, section, subsection,
schedule and exhibit references herein are references to articles, sections,
subsections, schedules and exhibits to this Agreement unless otherwise
specified. The words “including” and “includes” and words of similar import when
used in this Agreement shall not be limiting and shall mean “including, without
limitation,” or “includes without limitation”, as the case may be.

(d) All accounting terms not specifically defined herein shall be construed in
accordance with GAAP. All terms used in Article 9 of the UCC in the State of
Ohio, and not specifically defined herein, are used herein as defined in such
Article 9 or any other article of the UCC in the State of Ohio.

 

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ARTICLE II

THE FACILITY, ADVANCE PROCEDURES AND NOTES

Section 2.1 Facility.

(a) General Terms. On the terms and subject to the conditions set forth in this
Agreement, on the Closing Date and thereafter and prior to the Amortization
Commencement Date, the Lender shall make advances to the Borrower on a revolving
basis (each, an “Advance”) in such amounts as may be requested by the Borrower
pursuant to Section 2.2 (the “Facility”). Within the limits of the Facility, the
Borrower may borrow, prepay and reborrow under this Section 2.1.

(b) Limits on Advances. Section 2.1(a) notwithstanding, under no circumstances
shall (i) the Facility Outstanding Amount exceed the Maximum Note Principal
Amount, or shall the Lender be obligated to make any Advance if after giving
effect to such Advance the Facility Outstanding Amount would exceed the Maximum
Note Principal Amount; (ii) the Facility Outstanding Amount exceeds the Facility
Limit or the Borrowing Base; (iii) Lender be obligated to make any Advance if,
after giving effect to such Advance, the Facility Outstanding Amount would
exceed its Commitment Amount; and (iv) the Lender be obligated to make any
Advance after the occurrence and during the continuation of Default or an Event
of Default.

Section 2.2 Advance Procedures. Subject to the satisfaction of the conditions
precedent set forth in Article IV and the limitations set forth in Section 2.1,
the initial Advance and each subsequent Advance shall be made on not less than
two (2) Business Days’ notice from the Borrower to the Lender. Each notice shall
specify (A) the aggregate amount of such Advance, which shall be in an amount
equal to or greater than $250,000 and (B) the date of such Advance. Each such
notice shall be: (i) in the form of Exhibit A hereto, (ii) irrevocable,
notwithstanding the failure of the Lender to provide any written request
therefor or written confirmation thereof, (iii) effective upon receipt by the
Lender and (iv) delivered in writing to the Lender by facsimile or email
transmission. For purposes hereof, a notice delivered by telephone is deemed
received by the Lender if such notice is confirmed in writing by the Borrower in
the form of Exhibit A hereto. Any such notice received by the Lender after 12:00
p.m. Cincinnati time will be deemed to have been delivered on the following
Business Day. Only four (4) such notices may be delivered by the Borrower during
any calendar month. On the date specified for such Advance in such notice, the
Lender shall, upon satisfaction of the applicable conditions set forth in
Article IV, make available to the Borrower in same day funds, the amount of such
Advance by payment to the account which the Borrower has designated in writing.

Section 2.3 Funding. Each Advance shall be funded by the Lender at the CP Rate
(each such Advance, a “CP Rate Advance”), unless the Lender determines in its
sole discretion that the CP Rate is unavailable as to all or a portion of such
requested Advance

 

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or that it is not advisable to fund such Advance at the CP Rate, in which case
such Advance (or a portion thereof) shall be funded at the Alternate Rate (each
such Advance, an “Alternate Rate Advance”). Alternate Rate Advances and CP Rate
Advances may be outstanding at the same time.

Section 2.4 Lender Determination of LIBO Rate Binding. Each determination of the
applicable LIBO Rate shall be conclusive and binding upon the parties hereto, in
the absence of demonstrable error. The Lender, upon written request of the
Borrower, shall deliver to the Borrower a statement showing the computations
used by the Lender in determining the applicable LIBO Rate hereunder.

Section 2.5 Voluntary Termination of Facility; Reduction of Facility Limit.

(a) Subject to the terms of the Fee Letter, the Borrower may, from time to time
on any Settlement Date occurring after the time of the initial Advance
hereunder, upon at least thirty (30) Business Days’ written notice to the
Lender, terminate in whole or reduce in part the portion of the Facility Limit
that exceeds the Facility Outstanding Amount; provided, however, that each
partial reduction of the Facility Limit shall be in an aggregate amount equal to
$5,000,000 or an integral multiple thereof.

(b) Subject to the terms and conditions of the Fee Letter, the Borrower may from
time to time, in its discretion, request an increase in the Facility Limit and
the Lender may, in its sole and absolute discretion, agree to any such increase.

Section 2.6 Extension of Revolving Period. Not earlier than one (1) year prior
to, nor later than ninety (90) days prior to, the Maturity Date, the Borrower
may, in its sole discretion, upon notice to the Lender, request an extension of
the Revolving Period. If the Lender determines in its sole discretion that it is
willing to extend the Revolving Period, it shall notify the Borrower of the
proposed duration of such extension. Not later than sixty (60) days after its
receipt of the Borrower’s extension request, the Lender shall make a final
determination of whether or not to extend the Revolving Period and so inform the
Borrower of such decision, and if it elects to extend the Revolving Period, the
date to which it will be extended.

Section 2.7 Use of Proceeds. The Borrower will use the proceeds of Advances
hereunder solely to purchase Eligible Loans from the Seller in accordance with
the terms of the Purchase and Sale Agreement.

Section 2.8 Note. All Advances made by the Lender hereunder shall be evidenced
by and repayable in accordance with the Note issued by the Borrower to the
Lender in the stated principal amount equal to the Facility Limit. The aggregate
Unpaid Principal Balance of the Note shall bear interest as set forth in
Section 2.9, and shall be payable on the Maturity Date or earlier in accordance
with Section 2.5.

 

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Section 2.9 Interest on Note. The Borrower hereby agrees to pay interest on the
Unpaid Principal Balance of the Note for the period commencing on the date of
this Agreement until the Unpaid Principal Balance of the Note is paid in full,
as follows:

(a) Advances. With respect to all Advances, subject to Section 2.9(b), (i) while
any outstanding principal of an Advance constitutes a CP Rate Advance, the
Unpaid Principal Balance thereof shall bear interest at an annual rate equal to
the CP Rate, and (ii) while any outstanding principal of an Advance constitutes
an Alternate Rate Advance, (x) if such Alternate Rate Advance is made at the
Base Rate, the Unpaid Principal Balance thereof shall bear interest at an annual
rate at all times equal to the Base Rate as applicable to such Alternate Rate
Advance and (y) if such Alternate Rate Advance is made at the LIBO Rate, the
Unpaid Principal Balance thereof shall bear interest at a rate equal to the LIBO
Rate applicable to such Alternate Rate Advance.

(b) Default Rate. From and after the occurrence of a Default or Event of Default
and continuing thereafter, until such Event of Default shall have been remedied
to the written satisfaction of the Lender, the Unpaid Principal Balance of each
Advance shall bear interest, until paid in full, at a rate of interest two
percent (2%) per annum higher than the interest rate that otherwise would have
applied to such Advance. In addition, any and all fees, indemnification
obligations and other obligations not paid when due shall bear interest, until
paid in full, at an annual rate equal to the sum of (i) the Base Rate and
(ii) two percent (2%) per annum (each interest rate described in this
subsection (b), a “Default Rate”).

Section 2.10 Fees. The Borrower shall pay to the Lender certain Fees in the
amounts and on the dates set forth in the letter agreement between the Lender
and the Borrower dated as of September 15, 2006 (as the same may be amended,
restated, supplemented or otherwise modified, the “Fee Letter”).

Section 2.11 Breakage Costs.

(a) The Borrower shall indemnify the Lender and any Liquidity Provider against
any loss, reasonable cost or reasonable expense incurred by the Lender and such
Liquidity Provider, as a direct result of the Borrower’s failure to perform its
obligations under this Agreement causing the failure of any Advance to be made
on the date specified by the Borrower pursuant to Section 2.2 (and, for the
avoidance of doubt, other than by reason of (x) the Lender failing to make the
funds available to the Borrower in accordance with its obligations hereunder or
(y) any declaration, termination, and reallocation made by the Lender pursuant
to Section 2.15(b), including any loss, reasonable cost or reasonable expense
incurred by the Lender or such Liquidity Provider by reason of the liquidation
or reemployment of funds acquired by the Lender or such Liquidity Provider
(including funds obtained by issuing commercial paper, obtaining deposits as
loans from third parties and reemployment of funds) to fund such Advance).

(b) The Borrower further agrees to pay all Liquidation Fees associated with a
reduction of the Facility Outstanding Amount, if any.

 

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(c) A certificate as to any loss, expense or Liquidation Fees payable pursuant
to this Section 2.11, including a calculation of such amount, submitted by the
Lender or any Liquidity Provider to the Borrower shall be conclusive in the
absence of demonstrable error. The Borrower shall pay such amount within three
(3) Business Days of receiving the Lender’s or any Liquidity Provider’s written
demand therefor.

Section 2.12 Interest Rate Hedges.

(a) The Subservicer shall, at the expense of the Borrower, take such actions on
behalf of the Borrower as are necessary in order to hedge the Loans owned by the
Borrower against any interest rate risk, such that the interest payable to the
Borrower on the Loans (after taking into account all hedging arrangements
implemented by the Subservicer) will be sufficient to make complete and timely
payments of interest and Program Fees. The Subservicer shall have no obligation
to arrange for the Borrower to enter into any Hedge Transaction unless a Hedge
Trigger Event has occurred and is continuing, but the Subservicer will be liable
to the Indemnified Parties hereunder in the event it is determined at any time
that (i) a Hedge Trigger Event has occurred, (ii) the Subservicer has neglected
to arrange for the Borrower to enter into a Hedge Transaction and (iii) the
interest payable to the Borrower on the Loans is not sufficient to make complete
and timely payments of interest, Program Fees and other Obligations of the
Borrower under the Transaction Documents (except to the extent such
insufficiency is due to a failure to pay by, or an Event of Bankruptcy to occur
with respect to, any Obligor). The Lender shall determine whether any such
insufficiency exists and shall deliver to the Borrower and the Subservicer
notice of such insufficiency together with such documents and other information
that support its calculation thereof; and (I) the Lender’s determination shall,
absent manifest error, be conclusive and binding and (II) the Subservicer shall
deposit into the Collection Account the amount of such insufficiency within two
(2) Business Days after the Lender’s demand therefor.

(b) Within five (5) Business Days following the occurrence of a Hedge Trigger
Event relating to either the Existing Loans or the Additional Loans, and on each
Advance Date thereafter so long as such Hedge Trigger Event is continuing, the
Subservicer will, at the expense of the Borrower, arrange for the Borrower to
enter into one or more Hedge Transactions satisfying the requirements of this
Section 2.12(b). Each Hedge Transaction shall (i) have a scheduled amortizing
notional amount which, when combined with all other Hedge Transactions then in
effect relating to the Existing Loans or the Additional Loans (as applicable),
satisfies the related Hedge Notional Amount Requirement for such Loans,
(ii) provide that the payments to be made by the Hedge Counterparty thereunder
will be based on a one-month London interbank offered rate selected by the
Subservicer and approved in writing by the Lender (or such other rate as the
Subservicer may select with the prior written consent of the Lender),
(iii) provide that the payments required to be made by the Borrower thereunder
(if any) will be based on either (A) in the case of a Hedge Transaction relating
to the Existing Loans, a Swap Rate, as selected by the Lender in consultation
with the Subservicer and (B) in the case of a Hedge Transaction relating to the
Additional Loans, a bank “prime rate” selected by the Subservicer and approved
in writing by the Lender (or such other rate as the Subservicer may select with
the prior written consent of the Lender) and (iv) incorporate such other terms
as the Lender may reasonably direct in consultation with the Subservicer.

 

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(c) If on any Settlement Date following the occurrence and during the
continuation of a Hedge Trigger Event the actual aggregate notional amount of
all Hedge Transactions relating to the Existing Loans or the Additional Loans,
as applicable, is not equal to the applicable Hedge Notional Amount Requirement,
the Subservicer shall, at the request of the Lender, arrange for the Borrower to
enter into an additional Hedge Transaction or terminate an existing Hedge
Transaction in whole or in part, as necessary in order to ensure that the actual
aggregate notional amount of all Hedge Transactions relating to such Loans after
giving effect to such addition or termination is equal to the Hedge Notional
Amount Requirement for such Loans as re-calculated by the Lender on such date.
Each additional Hedge Transaction entered into by the Borrower pursuant to this
Section 2.12(c) must satisfy the conditions set forth in Section 2.12(b) above.

(d) On each date that a repayment of the principal amount of the Advances is
made hereunder (other than with regularly scheduled payments of principal on the
Loans), the aggregate notional amounts of the Hedge Transactions shall, at the
request of the Lender, be reduced such that, after giving effect to such
reduction, the aggregate notional amount of all Hedge Transactions relating to
the Existing Loans and the Additional Loans, respectively, after giving effect
to such addition or termination is equal to the Hedge Notional Amount
Requirement for such Loans as re-calculated by the Lender on such date.

(e) In the event that a termination payment is paid by the Hedge Counterparty to
the Borrower, that termination payment shall either be paid directly to the
replacement counterparty who is entering into the replacement Hedge Transaction
or deposited into the Collection Account and applied as Available Funds on the
next Settlement Date.

(f) The Borrower shall not enter into any Hedge Transaction, and the Subservicer
will not arrange for the Borrower to enter into any Hedge Transaction unless
(i) the Hedge Counterparty thereunder is, at the time such Hedge Transaction is
entered into by the Borrower, an Eligible Hedge Counterparty and (ii) the Lender
has reviewed and approved the form and content of the Hedge Agreement governing
such Hedge Transaction.

Section 2.13 Payments.

(a) Making of Payments.

(i) All payments of principal and interest due under the Facility shall be made
by the Borrower or the relevant Brooke Party to the Lender pursuant to
Article III. All payments of fees pursuant to Section 2.10 shall be made by the
Borrower or the Servicer pursuant to Article III for the exclusive account of
the Lender. All such payments shall be made to the Lender at its office in
Cincinnati, not later than 12:00 noon, Cincinnati time, on the date due, in
immediately available funds, and funds received after that hour shall be deemed
to have been received by the Lender on the next Business Day.

 

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(ii) If the Borrower or any other Brooke Party fails to make any payment or
deposit required to be made by such Borrower or such other Brooke Party
hereunder when due (taking into account any required notices and cure periods),
such Borrower or any such Brooke Party shall, to the extent permitted by law,
pay to the Lender interest on such amount at the Default Rate, payable on
demand; provided, however, that such interest rate shall not at any time exceed
the maximum rate permitted by applicable law. Any Obligation hereunder shall not
be reduced by the amount of any Collections if such Collections are rescinded or
required to be returned to the related Obligor or any Brooke Party or any other
Person for any reason. Interest accruing on all Advances, the fees described in
Section 2.10 , and all other fees, indemnification obligations, and other
obligations shall be computed on the basis of actual number of days elapsed in a
year of three hundred sixty (360) days.

(b) Effect of Payments. Each payment by the Subservicer, the Master Agent
Servicer or any other Person to the account of the Lender pursuant to
Section 2.13(a), shall be deemed to constitute payment by the Borrower directly
to the Lender, provided, however, that in the event any such payment by the
Borrower or such other Person is required to be returned to the Borrower or such
other Person for any reason whatsoever, then the Borrower’s obligation to the
Lender with respect to such payment shall be deemed to be automatically
reinstated.

(c) Setoff. The Borrower agrees that the Lender shall have all rights of setoff
and bankers’ lien provided by applicable law, and in addition thereto, the
Borrower agrees that if at any time any amount is due and owing by the Borrower
or the Subservicer, as applicable, under this Agreement to the Lender at a time
when an Event of Default has occurred and is continuing hereunder, the Lender
may apply any and all balances, credits, and deposits, accounts, or moneys of
the Borrower or the Subservicer, respectively, then or thereafter in the
possession of the Lender (excluding, however, any trust or escrow accounts held
by the Borrower for the benefit of any third party) to the payment thereof.

(d) Due Date Extension. If any payment of principal or interest on any Advance
or any fees payable hereunder falls due on a day which is not a Business Day,
then such due date shall be extended to the next following Business Day, and (in
the case of principal) additional interest shall accrue and be payable for the
period of such extension.

Section 2.14 Application of Certain Payments.

(a) During the Revolving Period, each payment of principal of the Advances shall
be applied to such Advances allocated to such Interest Periods as the Borrower
shall direct.

 

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(b) During the Amortization Period and after the occurrence and during the
continuation of an Event of Default, each payment of principal of the Advances
shall be applied as the Lender shall determine in its sole discretion.

Section 2.15 Increased Costs; Capital Adequacy; Eurocurrency Disruption Event.

(a) If after the date hereof, the Lender or any of its Affiliates (each an
“Affected Party”) shall be charged any fee, expense or increased cost on account
of the adoption of any applicable law, rule or regulation or any accounting
principle (including, without limitation, any applicable law, rule or regulation
or accounting principle regarding or affecting capital adequacy) or any change
therein, or any change in the interpretation or administration thereof by any
Governmental Authority or accounting body charged with the interpretation or
administration thereof, or compliance with any request or directive (whether or
not having the force of law) of any such Governmental Authority or accounting
body (a “Regulatory Change”): (i) which subjects any Affected Party to any
charge or withholding on or with respect to any Funding Agreement or an Affected
Party’s obligations under a Funding Agreement, or on or with respect to the
Loans, or changes the basis of taxation of payments to any Affected Party of any
amounts payable under any Funding Agreement (except for changes in the rate of
tax on the overall net income of an Affected Party) or (ii) which imposes,
modifies or deems applicable any reserve, assessment, insurance charge, special
deposit or similar requirement against assets of, deposits with or for the
account of an Affected Party, or credit extended by an Affected Party pursuant
to a Funding Agreement or (iii) which imposes any other condition the result of
which is to increase the cost to an Affected Party of performing its obligations
under a Funding Agreement, reduce the rate of return on an Affected Party’s
capital as a consequence of its obligations under a Funding Agreement, reduce
the amount of any sum received or receivable by a Affected Party under a Funding
Agreement, or require any payment calculated by reference to the amount of
interests or loans held or interest received by it, then, upon demand by the
Lender by the submission of the certificate described below, the Borrower shall
pay to the Lender, for the benefit of the relevant Affected Party, such amounts
as are necessary to compensate such Affected Party for such increased cost,
reduction or payment. Any such Affected Party shall deliver to the Borrower a
certificate setting forth in reasonable detail the amounts so required to
compensate such Affected Party, which certificate shall be conclusive and
binding for all purposes, absent manifest error.

(b) If the Lender determines that a Eurocurrency Disruption Event has occurred,
the Lender shall so notify the Borrower, whereupon all Advances in respect of
which interest accrues at the Alternate Rate determined by reference to the LIBO
Rate for the then-current Settlement Period shall immediately be converted into
Advances in respect of which interest accrues at the Alternate Rate determined
by reference to the Base Rate for the remainder of such Settlement Period.

 

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Section 2.16 Taxes.

(a) Any and all payments and deposits required to be made hereunder or under any
other Transaction Document by any Brooke Party shall be made free and clear of
and without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
excluding net income taxes that are imposed by the United States and franchise
taxes and net income taxes that are imposed on any Affected Party by the state
or foreign jurisdiction under the laws of which such Affected Party is organized
or any political subdivision thereof (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities being hereinafter
referred to as “Taxes”). If any Brooke Party or the Lender is required by law to
deduct any Taxes from or in respect of any sum payable hereunder to any Affected
Party, (i) the Borrower shall make an additional payment to such Affected Party,
in an amount sufficient so that, after making all required deductions (including
deductions applicable to additional sums payable under this Section 2.16), such
Affected Party receives an amount equal to the sum it would have received had no
such deductions been made, (ii) such Brooke Party or the Lender, as the case may
be, shall make such deductions and (iii) such Brooke Party or the Lender, as the
case may be, shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.

(b) In addition, the Borrower agrees to pay any present or future stamp or other
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under any other
Transaction Document or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Transaction Document
(hereinafter referred to as “Other Taxes”).

(c) The Borrower will indemnify each Affected Party for the full amount of Taxes
or Other Taxes (including, without limitation, any Taxes or Other Taxes imposed
by any jurisdiction on amounts payable under this Section 2.16) paid by such
Affected Party and any liability (including, without limitation, penalties,
interest and expenses) arising therefrom or with respect thereto whether or not
such Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within thirty (30) days after the date the
Affected Party delivers to the Borrower (with a copy to be delivered to the
Lender) a written demand therefor together with a certificate as to the amount
of such indemnification setting forth, in reasonable detail, the basis for and
the calculation thereof, which certificate shall, absent manifest error, be
conclusive and binding.

(d) Each Funding Source who is organized outside the United States shall, prior
to the date hereof (or, in the case of any Person who becomes a Funding Source
after the date hereof, prior to the date on which it so becomes a Funding
Source), deliver to the Borrower and the Lender such certificates, documents or
other evidence, as required by the IRC or Treasury Regulations issued pursuant
thereto, including Internal Revenue Service Form W-8BEN or Form W-8ECI and any
other certificate or statement of exemption required by Treasury Regulation
Section 1.1441-1(a) or Section 1.1441-6(c) or any subsequent version thereof,
properly completed and duly executed by such

 

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Funding Source establishing that such payment is (i) not subject to withholding
under the IRC because such payment is effectively connected with the conduct by
such Funding Source of a trade or business in the United States or (ii) totally
exempt from United States tax under a provision of an applicable tax treaty.
Each such Funding Source that changes its funding office shall promptly notify
the Borrower and the Lender of such change and, upon written request from the
Borrower or the Lender, shall deliver any new certificates, documents or other
evidence required pursuant to the preceding sentence prior to the immediately
following due date of any payment by the Borrower hereunder. Unless the Borrower
and the Lender have received forms or other documents satisfactory to them
indicating that payments hereunder are not subject to United States withholding
tax, notwithstanding paragraph (a), the Borrower or the Lender shall withhold
taxes from such payments at the applicable statutory rate in the case of
payments to or for any Funding Source organized under the laws of a jurisdiction
outside the United States.

(e) The Borrower shall not be required to pay any amounts to any Affected Party
in respect of Taxes and Other Taxes pursuant to paragraphs (a), (b) and
(c) above if the obligation to pay such amounts would not have arisen but for a
failure by such Affected Party to comply with the provisions of paragraph
(d) above unless such Affected Party is unable to comply with paragraph
(d) because of (i) a change in applicable law, regulation or official
interpretation thereof or (ii) an amendment, modification or revocation of any
applicable tax treaty or a change in official position regarding the application
or interpretation thereof, in each case after the date hereof (or, in the case
of any Person who became an Affected Party after the date hereof, after the date
on which it so became an Affected Party).

Section 2.17 Optional Prepayments. On any Settlement Date, upon two days notice
to the Lender, the Borrower may direct the Servicer to make a principal payment
to the Lender. Any such optional prepayment made during the Revolving Period
will be in a minimum amount of $1,000,000 and shall not reduce the Facility
Limit. Any such optional prepayment made during the Amortization Period will be
in a minimum amount of $100,000 and shall reduce the Facility Limit by the
amount of such prepayment.

Section 2.18 Mandatory Prepayments. The Borrower shall, on each date when any
reduction in the Facility Limit shall become effective pursuant to Section 2.5,
make a prepayment of the Advances in an amount equal to the excess, if any, of
the Unpaid Principal Balance over the Maximum Note Principal Amount after giving
effect to the reduction in the Facility Limit.

Section 2.19 Lender’s Termination Option. If the institution providing liquidity
to Lender’s commercial paper program terminates its commitment and Lender is
unable to find a suitable replacement facility, Lender may terminate its
obligations under this Agreement on each anniversary of the Closing Date,
provided that the Lender notifies the Borrower in writing at least sixty
(60) days before the anniversary of the Closing Date when such termination would
become effective.

 

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ARTICLE III

ORDER OF DISTRIBUTION OF COLLECTIONS

Section 3.1. Order of Distribution of Collections Prior to an Event of Default
or Upon Maturity. On each Settlement Date prior to the Maturity Date, so long as
no Event of Default shall have occurred and be continuing, the Collection
Account Bank will, based on the Servicer’s Certificate, and if such Servicer’s
Certificate is not provided, upon the written instruction of the Lender,
distribute all Collections and any other amounts received by the Borrower or any
other Brooke Party or the Servicer under or in connection with the Loans in the
following order:

(a) First, on a pari passu basis, to pay the accrued and theretofore unpaid
(i) Backup Servicing Fees, or if the Backup Servicer is acting as the Servicer,
to pay the accrued and theretofore unpaid Servicing Fee to the Backup Servicer
in accordance with the Backup Servicing Agreement, (ii) to the Custodian, the
Custodian Fees and (iii) to the Collection Account Bank, the Collection Account
Bank Fees;

(b) Second, if none of the Brooke Parties nor any of their respective Affiliates
nor the Backup Servicer is the Servicer, to pay to the Servicer an amount equal
to the accrued and unpaid Servicing Fee and any accrued and theretofore unpaid
Servicer’s expenses;

(c) Third, to pay to, on a pari passu basis, (i) the Servicer, any accrued and
unpaid Allstate CPA Fee for services rendered with respect to each Allstate Loan
pursuant to the related Collateral Preservation Agreements, (ii) Master Agent
(or to the Master Agent Servicer on behalf of Master Agent), any accrued and
unpaid Brooke Insurance CPA Fee for services rendered with respect to each
Brooke Insurance Loan pursuant to the related Collateral Preservation Agreement,
and (iii) CJD & Associates, LLC d/b/a Brooke Brokerage, any accrued and unpaid
Funeral Home CPA Fee for services rendered with respect to each Funeral Service
Loan pursuant to the related Collateral Preservation Agreement;

(d) Fourth, to pay to each Hedge Counterparty, on a pari passu basis, an amount
equal to any net payments (other than fees, expenses and Hedge Breakage Costs)
which are then due and payable under the Hedge Agreements (if any);

(e) Fifth, to pay the accrued and theretofore unpaid fees, expenses and
indemnity obligations owed by any Brooke Party to the Lender;

(f) Sixth, to pay accrued interest on the Advances to the Lender;

(g) Seventh, to make any mandatory prepayment of the principal of the Advances
to comply with the Borrowing Base requirements or other requirements set forth
in this Agreement;

 

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(h) Eighth, to pay the Unpaid Principal Balance of the Advances that became due
and payable during the related Settlement Period to the Lender;

(i) Ninth, to pay to each Hedge Counterparty, on a pari passu basis, an amount
equal to any fees, expenses and Hedge Breakage Costs which are then due and
payable under the Hedge Agreements (if any);

(j) Tenth, to pay to the Servicer (if the Servicer is a Brooke Party or any of
their respective Affiliates) an amount equal to the accrued and theretofore
unpaid Servicing Fee and any accrued and unpaid Servicer’s expenses; and

(k) Eleventh, thereafter, to pay any remaining amounts to the Borrower (if so
directed, to one or more accounts designated by the Borrower).

Section 3.2. Order of Distribution of Collections After an Event of Default or
Upon Maturity. On each Settlement Date, after the Maturity Date or if an Event
of Default shall have occurred and be continuing, the Collection Account Bank
will, based on the Servicer’s Certificate, and if such Servicer’s Certificate is
not provided, upon the written instruction of the Lender, distribute all
Collections and any other amounts received by the Borrower or any other Brooke
Party or the Servicer under or in connection with the Loans in the following
order:

(a) First, on a pari passu basis, to pay the accrued and theretofore unpaid
(i) Backup Servicing Fees, or if the Backup Servicer is acting as the Servicer,
to pay the accrued and theretofore unpaid Servicing Fee to the Backup Servicer
in accordance with the Backup Servicing Agreement, (ii) to the Custodian, the
Custodian Fees and (iii) to the Collection Account Bank, the Collection Account
Bank Fees;

(b) Second, if none of the Brooke Parties nor any of their respective Affiliates
is the Servicer, to pay to the Servicer an amount equal to the accrued and
theretofore unpaid Servicing Fee and Servicer’s expenses;

(c) Third, to pay to, on a pari passu basis, (i) the Servicer, any accrued and
unpaid Allstate CPA Fee for services rendered with respect to each Allstate Loan
pursuant to the related Collateral Preservation Agreements, (ii) Master Agent
(or to the Master Agent Servicer on behalf of Master Agent), any accrued and
unpaid Brooke Insurance CPA Fee for services rendered with respect to each
Brooke Insurance Loan pursuant to the related Collateral Preservation Agreement,
and (iii) CJD & Associates, LLC d/b/a Brooke Brokerage, any accrued and unpaid
Funeral Home CPA Fee for services rendered with respect to each Funeral Service
Loan pursuant to the related Collateral Preservation Agreement;

(d) Fourth, to pay to each Hedge Counterparty, on a pari passu basis, an amount
equal to any net payments (other than fees, expenses and Hedge Breakage Costs)
which are then due and payable under the Hedge Agreements (if any);

 

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(e) Fifth, to pay the accrued and theretofore unpaid fees, expenses and
indemnity obligations owed by any Brooke Party to the Lender;

(f) Sixth, to pay accrued and theretofore unpaid interest on the Advances to the
Lender;

(g) Seventh, to pay to each Hedge Counterparty, on a pari passu basis, an amount
equal to any fees, expenses and Hedge Breakage Costs which are then due and
payable under the Hedge Agreements (if any);

(h) Eighth, to pay the Servicer (if the Servicer is a Brooke Party or any of
their respective Affiliates) an amount equal to the accrued and unpaid Servicing
Fee and any accrued and unpaid Servicer’s expenses;

(i) Ninth, to pay the Unpaid Principal Balance of the Advances to the Lender;
and

(j) Tenth, thereafter, to pay any remaining amounts to the Borrower (if so
directed, to one or more accounts designated by the Borrower).

ARTICLE IV

CONDITIONS PRECEDENT

Section 4.1 Conditions Precedent to Closing. The obligations of the Lender under
this Agreement required to be fulfilled on or before the Closing Date is subject
to its receipt, on or before the Closing Date, of each of the following, each
(unless otherwise expressly stated) in form and substance satisfactory to the
Lender:

(a) the Note, properly executed on behalf of the Borrower;

(b) the fully executed Fee Letter;

(c) the Performance Guaranty, properly executed on behalf of Brooke Corporation
for the benefit of the Lender;

(d) the Custodial Agreement, properly executed on behalf of the Custodian, the
Borrower and the Lender;

(e) the Purchase and Sale Agreement, properly executed on behalf of the Borrower
and the Seller;

(f) the Servicing Agreement, properly executed on behalf of the Lender, the
Borrower, the Subservicer and the Servicer;

 

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(g) the Backup Servicing Agreement, properly executed by the Borrower, the
Servicer, the Lender and the Backup Servicer;

(h) the Collection Account Agreement, properly executed by the Borrower, the
Collection Account Bank and the Lender and the account number assigned by the
Collection Account Bank to the Collection Account pursuant to such Collection
Account Agreement;

(i) financial statements or documents, satisfactory to the Lender, which
evidence the initial capitalization of the Borrower at levels acceptable to the
Lender;

(j) financing statements sufficient when filed (in the judgment of the Lender)
to perfect the Security Interest granted to the Lender hereunder;

(k) current searches of appropriate filing offices showing that no state or
federal tax liens have been filed and remain in effect against the Borrower or
the Seller, and that no financing statements or other notifications or filings
have been filed and remain in effect against the Borrower or the Seller with
respect to any Collateral, other than those for which the Lender has received an
appropriate release, termination or satisfaction or those permitted in
accordance with Section 8.1;

(l) a certified copy of the resolutions of the board of directors of each Brooke
Party, the Servicer and the Backup Servicer evidencing approval of all
Transaction Documents and the other matters contemplated hereby;

(m) copies of the organizational documents of each Brooke Party, the Servicer
and the Backup Servicer certified by the Secretary or Assistant Secretary of
such Brooke Party, the Servicer and the Backup Servicer (respectively) as being
true and correct copies thereof;

(n) a certificate of good standing with respect to each Brooke Party, the
Servicer and the Backup Servicer dated not more than thirty (30) days prior to
the date hereof, and evidence satisfactory to the Lender that such Brooke Party,
the Servicer and the Backup Servicer are qualified to conduct its business in
each state where it presently conducts such business if failure to obtain any
such qualification or licensing could have a Material Adverse Effect;

(o) a certificate of the Secretary or an Assistant Secretary of each Brooke
Party, the Servicer and the Backup Servicer, which shall certify the names of
the officers of the relevant Person authorized to sign the Transaction Documents
and the other documents or certificates to be delivered pursuant to this
Agreement, including requests for Advances, together with the true signatures of
such officers. The Lender may conclusively rely upon such certificates until
they shall receive a further certificate of the Secretary or an Assistant
Secretary of each Brooke Party, the Servicer and the Backup Servicer (as the
case may be) canceling or amending the prior certificate and submitting the
signatures of the officers named in such further certificate;

 

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(p) payment of all fees owed as of the Closing Date to the Lender under this
Agreement, the Fee Letter, or otherwise;

(q) audited financial statements for the period ended December 31, 2005, for
Brooke Corporation (as of such date) and unaudited financial statements for
quarter ended June 30, 2006 for the Borrower (as of such date);

(r) a signed copy of one or more opinions of counsel for the Borrower, including
a true sale opinion, a non-substantive consolidation opinion, a perfection
opinion, tax opinion, standard corporate, authority and enforceability opinions,
all in form and substance satisfactory to the Lender and addressed to the
Lender;

(s) a signed copy of one or more opinions of counsel for the Custodian and the
Servicer including standard corporate, authority and enforceability opinions,
all in form and substance satisfactory to the Lender and addressed to the
Lender;

(t) a Borrowing Base Certificate as of a date not more than one (1) Business Day
prior to the Closing Date, together with evidence satisfactory to the Lender of
delivery to the Custodian of Custodian File for all Eligible Loans therein
described, and of compliance with the Borrowing Base;

(u) the account number assigned by the Collection Account Bank to the Collection
Account pursuant to the Collection Account Agreement;

(v) each Trust Account Intercreditor Agreement, as amended, properly executed by
each of the parties thereto;

(w) all powers of attorney that are required under this Agreement;

(x) evidence satisfactory to the Lender that all waivers, consents, approvals
and authorizations required for the Borrower, the Seller and the Servicer to
execute, deliver, and perform its obligations under the Transaction Documents
have been obtained; and

(y) such other documents as the Lender may reasonably request.

Section 4.2 Conditions Precedent to All Advances. Each Advance (including the
initial Advance) shall be subject to the further conditions precedent that:

(a) no later than the Business Day prior to the date of such Advance, the
Borrower shall have delivered to the Lender, in form and substance reasonably
satisfactory to the Lender, a completed Borrowing Base Certificate containing
information accurate as of a date no more than two (2) Business Days prior to
the date of such Advance

 

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(b) on the date of such Advance, the following statements shall be true and
correct as of the date of such Advance (and the Borrower shall be deemed to have
represented and warranted that the following statements are true and correct as
of the date of such Advance):

(i) the representations and warranties contained in Article VI and the
representations and warranties of the other Brooke Parties contained in the
other Transaction Documents are true and correct on and as of such date as
though made on and as of such date;

(ii) no Material Adverse Effect has occurred or is expected to occur;

(iii) no event has occurred and is continuing, or would result from such
Advance, which constitutes a Default or Event of Default

(iv) the Amortization Commencement Date has not occurred; and

(v) no Insurance Company Trigger has occurred and is continuing;

(c) if a Hedge Trigger Event has occurred, any Hedge Transaction required to be
entered into pursuant to Section 2.12 with respect to the Advance has been
entered into by the Borrower and an Eligible Hedge Counterparty; and

(d) after giving effect to such Advance, all Loans included in the Borrowing
Base shall be Eligible Loans.

The acceptance of any Advance by the Borrower shall be deemed to be a
representation and warranty by the Borrower that all conditions precedent set
forth in this Article IV applicable to such Advance shall have been fulfilled or
waived in writing by the Lender.

ARTICLE V

GRANT OF SECURITY INTERESTS

Section 5.1 Borrower’s Grant of Security Interest. As security for the prompt
payment or performance in full when due, whether at stated maturity, by
acceleration or otherwise, of all Obligations pursuant to this Agreement and
each other Transaction Document, the Borrower hereby assigns and pledges to the
Lender and grants to the Lender a first priority security interest in and lien
upon, all of the Borrower’s right, title and interest in, to and under the
following, in each case whether tangible or intangible now or hereafter existing
or in which Borrower now has or hereafter acquires an interest and wherever the
same may be located (collectively, the “Collateral”):

(a) all Loans purchased by or otherwise transferred to the Borrower pursuant to
the terms of the Purchase and Sale Agreement;

 

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(b) all of the Borrower’s right and title to, and interest (i) in the Purchase
and Sale Agreement and any UCC financing statements filed by the Borrower
against the Seller under or in connection with such Purchase and Sale Agreement,
(ii) under all other Loan Documents and Related Security and (iii) including,
without limitation all other moneys due and to become due under or in connection
with any of the foregoing (whether in respect of principal, interest, fees,
expenses, indemnities, or otherwise);

(c) the Servicing Agreement and all other Transaction Documents (other than this
Agreement) now or hereafter in effect relating to the acquiring, servicing or
processing of the Loans (collectively, the “Borrower Assigned Agreements”),
including (i) all rights of the Borrower to receive moneys due and to become due
under or pursuant to the Borrower Assigned Agreements, (ii) all rights of the
Borrower to receive proceeds of any insurance, indemnity, warranty or guaranty
with respect to the Borrower Assigned Agreements, (iii) the Borrower’s right of
foreclosure as lienholder of the property underlying the Loans, (iv) all claims
of the Borrower for damages arising out of or for breach of or default under the
Borrower Assigned Agreements, and (v) the right of the Borrower to amend, waive
or terminate the Borrower Assigned Agreements, to perform under the Borrower
Assigned Agreements and to compel performance and otherwise exercise all
remedies and rights under the Borrower Assigned Agreements;

(d) all right, title and interest of the Borrower in, to and under the
Collection Account, each Trust Account and all other bank and similar accounts
and lock-boxes relating to the collection of the Loans and the Related Security
and all funds held therein or in such other accounts relating to the Loans and
Related Security, and all investments made with funds relating to the Loans and
the Related Security in the Collection Account, the Trust Accounts and such
other accounts and lock-boxes;

(e) all equipment, inventory, accounts, general intangibles, payment
intangibles, instruments, investment property, documents, chattel paper, goods,
moneys, letters of credit, letter of credit rights, certificates of deposit,
deposit accounts and all other property and interests in property of the
Borrower, whether tangible or intangible and whether now owned or existing or
hereafter arising or acquired and wheresoever located;

(f) all proceeds of the foregoing property described in clauses (a) through
(d) above, including, without limitation, proceeds which constitute property of
the type described in clauses (a) through (d) above and, to the extent not
otherwise included, all (i) payments under any insurance policy (whether or not
the Lender is the loss payee thereof), indemnity, warranty or guaranty payable
by reason of loss or damage to or otherwise with respect to any of the foregoing
and (ii) interest, dividends, cash, instruments and other property from time to
time received, receivable or otherwise distributed in respect of or in exchange
for or on account of the sale or other disposition of any or all of the then
existing Collateral; and

 

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(g) all additional property that may from time to time hereafter be granted and
pledged by the Borrower or by anyone on its behalf under this Agreement,
including the deposit with the Lender or the Custodian of additional moneys by
the Borrower; and

(h) all proceeds, accessions, substitutions, rents and profits of any and all of
the foregoing Collateral (including proceeds that constitute property of the
types described in Sections 5.1(d) through (g) above) and, to the extent not
otherwise included, all payments under insurance (whether or not the Lender or
any assignee or agent on behalf of the Lender is the loss payee thereof) or any
indemnity, warranty or guaranty payable by reason of loss or damage to or
otherwise with respect to any of the foregoing Collateral.

Section 5.2 Application of Collections to Loans. For the purposes of this
Agreement, all Collections for a Collection Period shall be applied by the
Servicer with respect to each Loan in accordance with the related Loan Documents
and, to the extent permitted by the terms of the related Loan Documents, any
prepayment of principal during each Collection Period shall be immediately
applied to reduce the principal balance of such Loan during such Collection
Period.

Section 5.3 Collection Account.

(a) On or prior to the date hereof, the Borrower will enter into a Collection
Account Agreement with the Collection Account Bank. Pursuant to the Collection
Account Agreement, the Borrower will establish, on or prior to the date of the
initial Advance, a collection account, the number of which shall be provided to
the Lender pursuant to Section 4.1(h) hereof, and which is (i) identified
substantially as the “Brooke/Fifth Third Collection Account”, (ii) in the
Borrower’s name, and (iii) pledged, on a first-priority basis, to the Lender
pursuant to Section 5.1 of this Agreement (such account hereinafter referred to
as the “Collection Account”). The Borrower hereby agrees to establish the
Collection Account on or before the date hereof. No funds other than Collections
shall be deposited or transferred into the Collection Account. Until delivered
to the Lender or deposited in the Collection Account, all proceeds or
collections of Collateral shall be held in trust by the Borrower or the
Subservicer for the Lender and shall not (except to the extent permitted by the
Transaction Documents) be commingled with any funds or property of the Borrower
or the Subservicer. Amounts deposited in the Collection Account shall be
invested in Permitted Investments at the direction of the Borrower, and all
income received on such investments shall be treated in the same way as
Collections. The Lender shall not be responsible for any losses in the
Collection Account. Amounts on deposit in the Collection Account shall (i) be
subject to withdrawal only by the Servicer, the Subservicer or the Collection
Account Bank and not by the Borrower, (ii) constitute proceeds of Collateral and
(iii) not constitute payment of any Obligation until applied in accordance with
Article III. Finally collected funds from the Collection Account shall be
applied by the Lender to payment of the Note in accordance with Section 2.14.

 

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(b) From and after receipt of written notice from the Lender directing it to do
so and given the occurrence and continuance of a Default or Event of Default the
Borrower or the Subservicer will deposit to the Collection Account or, at the
Lender’s option, deliver to the Lender, all Collections and other rights to
payment constituting Collateral, and all other cash proceeds of Collateral,
which the Borrower or the Subservicer may receive directly, immediately upon
receipt thereof, in the form received, except for the Borrower’s endorsement
when deemed necessary. All items delivered to the Lender or deposited in a
Collection Account shall be subject to final payment. The Borrower shall be
liable as an endorser on all items deposited in the Collection Account, whether
or not in fact indorsed by the Borrower or by any other Brooke Party.

Section 5.4 Periodic Purchases of Loans. Provided (i) no Event of Default or
Default has occurred and is continuing, and (ii) that the balance of the
Collection Account is sufficient to cover interest and expense on the next
Settlement Date, the Borrower, to the extent of funds in the Collection Account,
may request the Servicer to direct the Collection Account Bank to pay to the
Seller the purchase price of such Loans under the Purchase and Sale Agreement as
the Seller shall offer for sale under such Purchase and Sale Agreement,
provided, that all conditions precedent set forth in Section 4.2 shall have been
fulfilled with respect to such Loans.

Section 5.5 Access to Certain Documentation and Information Regarding Loans. The
Borrower shall provide to representatives of the Lender reasonable access upon
at least one (1) Business Day’s notice to the documentation regarding the Loans
including copies of the Credit and Collection Policy. At any time after the
occurrence of an Event of Default, the Borrower shall reimburse the Lender for
any reasonable expenses (including reasonable travel and lodging expenses)
incurred in connection with any examination by representatives of the Lender of
any documentation regarding the Loans.

Section 5.6 Borrower Remains Liable. Notwithstanding anything in this Agreement,
(a) the Borrower shall remain liable under the Loans and any agreements included
in the Loans, Borrower Assigned Agreements and other agreements included in the
Collateral to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the
Lender of any of its rights under this Agreement shall not release the Borrower
or the Subservicer from any of their respective duties or obligations under the
Loans or any agreements included in the Loans, Borrower Assigned Agreements or
other agreements included in the Collateral, (c) the Lender and the Custodian
shall not have any obligation or liability under the Loans or any agreements
included in the Loans, Borrower Assigned Agreements or other agreements included
in the Collateral by reason of this Agreement, and (d) neither the Lender nor
the Custodian shall be obligated to perform any of the obligations or duties of
the Borrower or the Subservicer under the Loans or any agreements included in
the Loans, Borrower Assigned Agreements or other agreements included in the
Collateral or to take any action to collect or enforce any claim for payment
assigned under this Agreement.

 

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Section 5.7 Assignment of the Purchase and Sale Agreement. The Borrower has
assigned and pledged to the Lender all of the Borrower’s right and title to and
interest in the Purchase and Sale Agreement. The Borrower and the Lender confirm
and agree that the Lender shall have, during the Amortization Period, or
following an Event of Default, the sole right to enforce the Borrower’s rights
and remedies under the Purchase and Sale Agreement with respect to the Loans and
the Related Security for the benefit of the Lender, but without any obligation
on the part of the Lender or any of its respective Affiliates, to perform any of
the obligations of the Borrower under the Purchase and Sale Agreement. In
addition, the Borrower confirms and agrees that the Borrower will send to the
Seller any notice requested by the Lender of any breach of any representation,
warranty or covenant under the Purchase and Sale Agreement or any event or
occurrence that would, upon notice to the Seller or upon the passage of time or
both, would be such a breach. The Borrower further confirms and agrees that such
assignment to the Lender shall terminate upon the date on which all Obligations
(other than contingent Obligations not then due and payable) have been
indefeasibly paid in full.

Section 5.8 Right of Substitution. With respect to any Loan that has become a
Defaulted Loan, the Seller may, in its sole discretion, elect to either
(i) repurchase such Loan from the Issuer for a price equal to the amount
otherwise required under Section 6(c)(i) of the Purchase and Sale Agreement with
respect to a Repurchased Loan or (ii) substitute one or more Eligible Loans for
such Loan. The aggregate Unpaid Principal Balance of the Loans for which a
repurchase or substitution has been made under this Section 5.8 (determined as
of the respective dates of repurchase or substitution) may not exceed 10% of the
aggregate Unpaid Principal Balance of all Transferred Loans (as defined in the
Purchase and Sale Agreement) as of their respective Transfer Dates (as defined
in the Purchase and Sale Agreement).

Section 5.9 Releases of Collateral.

(a) Upon the indefeasible payment in full of all Obligations and the termination
of the Facility, the Lender shall, at the expense of the Borrower, promptly
release its security interest in the Collateral and take all reasonable steps to
effect such release (including the execution and delivery of UCC-3 financing
statement terminations and the delivery to the Custodian of the notice described
in the Custodial Agreement).

(b) The Borrower may from time to time request the Lender to release its
security interest in one or more Loans and the Collateral related thereto in
connection with (i) any repurchase of such Loans pursuant to and in accordance
with the Purchase and Sale Agreement, (ii) any sale of such Loans at fair market
value on a “whole-loan” basis or (iii) any sale of such Loans to a
bankruptcy-remote subsidiary pursuant to a Securitization; any such sale or
repurchase shall be made pursuant to documentation reasonably satisfactory to
the Lender, which documentation (x) shall specify that such sale or repurchase
is being made without recourse to the Borrower and without representation or
warranty of any kind on the part of the Borrower (other than representation and
warranty that such sale or repurchase is being made free and clear of any
Adverse Claim created by the Borrower) and (y) shall not impose any liabilities
or

 

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obligations on the Borrower other than customary obligations necessary to
effectuate the transfer of title of the relevant Loans, which obligations the
Borrower is then capable of performing. Any sale or repurchase satisfying the
requirements specified in the preceding sentence is hereinafter referred to as a
“Permitted Sale Transaction”. In connection with any Permitted Sale Transaction,
(I) all proceeds arising from such Permitted Sale Transaction shall be deposited
into the Collection Account and (II) at the cost and expense of Borrower, the
Lender shall deliver and, if necessary, execute such instruments and documents
as the Borrower may reasonably request for purposes of effectuating the Lender’s
release of its security interest in the applicable Loans and other related
Collateral.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

Each Brooke Party severally represents and warrants to the Lender as follows:

Section 6.1 Organization and Good Standing. Such Brooke Party has been duly
organized and is validly existing as a corporation or limited liability company
in good standing under the laws of the State of Kansas, the State of Missouri or
the State of Delaware, as applicable, with power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is currently conducted, and had at all relevant times and now
has, power, authority and legal right to acquire and own the Loans and the
Related Security, and to grant to the Lender, a first priority security interest
in the Collateral and to enter into and perform its obligations under this
Agreement.

Section 6.2 Due Qualification. Each Brooke Party is duly qualified to do
business as a foreign corporation or limited liability company, as applicable,
in good standing, and has obtained all necessary licenses and approvals, in all
jurisdictions where the conduct of business (including its ownership of the
Loans), requires such qualification and where the failure to be so qualified
would have a Material Adverse Effect on its business and assets or in its
ability to enforce any Loan.

Section 6.3 Power and Authority. Each Brooke Party has the power and authority
to execute and deliver this Agreement and the other Transaction Documents to
which it is a party and to carry out its terms and their terms, respectively; in
the case of the Borrower, such Brooke Party has full power and authority to
grant to the Lender, a valid first-priority security interest in the Collateral
which is to be perfected under this Agreement and has duly authorized such grant
by all necessary corporate or limited liability company action, and such Brooke
Party’s execution, delivery and performance of this Agreement and the other
Transaction Documents to which it is a party have been duly authorized by such
Brooke Party by all necessary corporate or limited liability action. This
Agreement and the Transaction Documents to which it is a party have been duly
executed and delivered by such Brooke Party.

 

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Section 6.4 Binding Obligations. This Agreement and the Transaction Documents to
which it is a party have been duly executed and delivered by each Brooke Party
and shall constitute legal, valid and binding obligations of such Brooke Party
enforceable in accordance with their respective terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors’ rights generally and by equitable
limitations on the availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.

Section 6.5 No Violation. The consummation of the transactions contemplated by
this Agreement and the other Transaction Documents and the fulfillment of the
terms of this Agreement and the other Transaction Documents shall not conflict
with, result in any breach of any of the terms and provisions of or constitute
(with or without notice, lapse of time or both) a default under the
organizational documents of such Brooke Party, or any material indenture,
agreement, mortgage, deed of trust or other instrument to which such Brooke
Party is a party or by which it or its properties are bound, or result in the
creation or imposition of any Adverse Claim (other than Permitted Liens or
Permitted Real Estate Encumbrances) upon any of its properties pursuant to the
terms of any such indenture, agreement, mortgage, deed of trust or other
instrument (other than this Agreement, the Purchase and Sale Agreement and the
Master Agent Security Agreement), or violate in any material respect any law,
order, rule or regulation applicable to any Brooke Party of any court or of any
federal or state regulatory body, administrative agency or other Governmental
Authority having jurisdiction over such Brooke Party or any of its properties.
Such Brooke Party is not in default with respect to any order of any court,
arbitrator or Governmental Authority.

Section 6.6 Each Advance. The Borrower hereby represents and warrants to the
Lender as of the date of each Advance and, if there has not been an Advance
during the Collection Period preceding any Determination Date, as of the Record
Date for any such Collection Period, that (a) the representations and warranties
contained in this Article VI will be true and correct as of such date as though
made on such date (except to the extent that such representation or warranty
expressly relates solely to an earlier date, in which case it shall have been
true and correct at and as of such earlier date) and (b) no Default or Event of
Default has occurred and is continuing and none will result from the making of
such Advance. Each request for an Advance pursuant to Section 2.2 shall
automatically constitute a representation and warranty by the Borrower to the
Lender that, on the requested date of such Advance, and after giving effect to
such Advance, the Facility Outstanding Amount will not exceed the Maximum Note
Principal Amount.

Section 6.7 No Proceedings. There are no proceedings or investigations pending
or, to the best of such Brooke Party’s knowledge, threatened against it before
any court, regulatory body, administrative agency or other tribunal or
Governmental Authority having jurisdiction over such Brooke Party or its
properties (A) asserting the invalidity of this Agreement or any of the
Transaction Documents, (B) seeking to prevent the making of any Advance or the
consummation of any of the transactions contemplated by this Agreement or any of
the Transaction Documents, (C) seeking any judgment or other legal

 

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or equitable relief from the Borrower or, the case of each other Brooke Party,
any judgment or other legal or equitable relief that would be reasonably likely
to have a Material Adverse Effect on its business and assets or in its ability
to enforce any Loan, (D) seeking any other determination or ruling that would be
reasonably likely to have a Material Adverse Effect or, in the case of each
other Brooke Party, a Material Adverse Effect on its business and assets or in
its ability to enforce any Loan, or (E) seeking to materially and adversely
affect the federal income tax or other federal, state or local tax attributes of
the Advances.

Section 6.8 No Consents. The Borrower is not required to obtain the consent of
any other party or any consent, license, approval or authorization, or
registration or declaration with, any Governmental Authority in connection with
the execution, delivery, performance, validity or enforceability of this
Agreement or the other Transaction Documents to which it is a party (except such
as have been duly made, effected or obtained).

Section 6.9 Approvals. All approvals, authorizations, consents, orders or other
actions of any Person, corporation or other organization, or of any court,
governmental agency or body or official, required in connection with the
execution and delivery by the Borrower of this Agreement and the other
Transaction Documents and the consummation of the transactions contemplated
hereby have been or will be taken or obtained on or prior to the Closing Date.

Section 6.10 Chief Executive Office. The chief executive office of the Borrower
is located at 10950 Grandview Drive, Overland Park, Kansas 66210.

Section 6.11 Solvency. The Borrower is solvent and will not become insolvent
after giving effect to the transactions contemplated by this Agreement and the
other Transaction Documents. The Borrower has no Indebtedness to any Person
other than pursuant to this Agreement and the other Transaction Documents. The
Borrower, after giving effect to the transactions contemplated by this Agreement
and the other Transaction Documents, will be able to pay its debts as they come
due and will have an adequate amount of capital to conduct its business in the
foreseeable future.

Section 6.12 Compliance with Laws. The Borrower has complied with all applicable
laws, rules, regulations, judgments (unless such judgment has been properly
appealed and such appeal is being diligently prosecuted by the Borrower),
decrees and orders with respect to its business and properties and all Loans
except to the extent that the failure so to comply would not materially
adversely affect the collectibility of the Loans or the ability of the Borrower
to perform its obligations under the Transaction Documents.

Section 6.13 Taxes. The Borrower has filed (on a timely basis consolidated with
Brooke Corporation) all tax returns (including foreign, federal, state, local
and otherwise) required to be filed, is not liable for taxes payable by any
other Person and has paid or made adequate provisions for the payment of all
taxes, assessments and other

 

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governmental charges due from the Borrower. No tax lien or similar Adverse Claim
has been filed, and no claim is being asserted, with respect to any such tax,
assessment or other governmental charge. Any taxes, fees and other governmental
charges payable by the Borrower in connection with the execution and delivery of
this Agreement and the other Transaction Documents and the transactions
contemplated hereby or thereby including the transfer of each Loan and Related
Security to the Borrower have been paid or shall have been paid if and when due
at or prior to the Closing Date, as the case may be.

Section 6.14 Security Interest; No Liens, Etc. This Agreement is effective to
create a valid first-priority security interest in the Collateral in favor of
the Lender. The Collateral is owned by the Borrower free and clear of any
Adverse Claim (other than Permitted Liens or Permitted Real Estate Encumbrances)
or restrictions on transferability and the Borrower has the full right,
corporate power and lawful authority to assign, transfer and pledge the
Collateral and interests therein. This Agreement (together with the financing
statements filed on or prior to the Closing Date) is effective to create a valid
and perfected first priority security interest in the Collateral now existing or
hereafter arising, free and clear of any Adverse Claim (other than Permitted
Liens or Permitted Real Estate Encumbrances) or restrictions on transferability.
No effective financing statement or other instrument similar in effect covering
all or any part of the Collateral is on file in any recording office, except
such as may have been filed in favor of the Lender pursuant to Article VII or,
with respect to the Loans or Related Security, in favor of the Borrower pursuant
to the Purchase and Sale Agreement.

Section 6.15 Title to Loans Purchased from the Seller. Each Loan has been
purchased by the Borrower from the Seller in accordance with the terms of the
Purchase and Sale Agreement, and the Borrower has thereby irrevocably acquired
all legal and equitable title to such Loan and the Related Security free and
clear of any Adverse Claims other than Permitted Liens or Permitted Real Estate
Encumbrances and in accordance with the Purchase and Sale Agreement. Without
limiting the foregoing, all actions (including, without limitation, the filing
of all financing statements or other similar instruments or documents under the
UCC of all applicable jurisdictions and the giving of all notices that may be
required under the laws of any applicable jurisdiction) required in order to
perfect and protect the Borrower’s interest in the Loans and Related Security
with respect thereto as against any purchasers from, or creditors of, the Seller
have been duly taken.

Section 6.16 Information True and Correct. Each Servicer’s Certificate, each
Borrowing Base Certificate and all other written information heretofore
furnished by or on behalf of the Borrower to Lender in connection with this
Agreement or any transaction contemplated hereby is true and complete in all
material respects and does not omit to state a material fact necessary to make
the statements contained therein (taken as a whole) not misleading.

Section 6.17 ERISA Compliance. The Borrower is in compliance with ERISA and has
not incurred and does not expect to incur any liabilities (except for premium
payments arising in the ordinary course of business) to the Pension Benefit
Guaranty Corporation (or any successor thereto) under ERISA.

 

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Section 6.18 Financial or Other Condition. There has been no material adverse
change in the condition (financial or otherwise), business, operations, results
of operations, or properties of the Borrower.

Section 6.19 Investment Company Status. Neither the Borrower nor the Seller is
an “investment company,” or a company “controlled” by an “investment company”
within the meaning of the Investment Company Act of 1940, as amended.

Section 6.20 No Shared Obligations. There is not now, nor will there be at any
time in the future, any agreement or understanding between the Seller and the
Borrower (other than as expressly set forth herein) providing for the allocation
or sharing of obligations to make payments or otherwise in respect of any taxes,
fees, assessments or other governmental charges.

Section 6.21 Representations and Warranties True and Accurate. Each of the
representations and warranties of the Borrower contained in the other
Transaction Documents was true and correct as and when made and the Borrower
hereby makes each such representation and warranty (as of such date) to, and for
the benefit of, the Lender as if the same were set forth in full herein (except
to the extent that such representation or warranty expressly relates solely to
an earlier date, in which case it was true and correct at and as of such earlier
date).

Section 6.22 Eligible Loans. All Loans included in the Borrowing Base as of the
most recently delivered Servicer’s Certificate or Borrowing Base Certification
are Eligible Loans.

Section 6.23 Trust Accounts.

(a) Each Brooke Insurance Agent has been instructed to deposit all Collections
received by it to the related Receipts Trust Account. Each Funeral Home has been
instructed to deposit all Collections received by it to its designated operating
account. The names, addresses and account numbers of all Trust Accounts are as
set forth on Schedule I. Neither Master Agent nor any Brooke Party has, other
than as contemplated by the Master Agent Security Agreement, the Trust Account
Control Agreements and the Trust Account Intercreditor Agreements, granted any
Person dominion and control of any Trust Account, or the right to take dominion
and control of any Trust Account at a future time or upon the occurrence of a
future event. All available funds on deposit in each Receipts Trust Account are
swept to the Consolidation Receipts Trust Account on a daily basis, and all
available funds on deposit in the Consolidation Receipts Trust Account are swept
to the Master Receipts Trust Account on a daily basis. All Collections remitted
to the Master Receipts Trust Account have been and will continue to be
transferred to the Collection Account within two Business Days of receipt in
accordance with the Master Agent Security Agreement.

 

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(b) To the extent that the Borrower’s invoices, account statements, and other
written or oral communications provide for payment instruction, all such
Borrower’s invoices, account statements, and other written or oral communication
shall conspicuously direct that all payments be made to the applicable Receipts
Trust Account or designated operating account, as applicable, and shall include
the address of such account.

(c) Each Trust Account is a “deposit account” within the meaning of
Section 9-102(a)(29) of the UCC.

(d) No Trust Account Control Agreement or related document shall be amended,
supplemented, restated or otherwise modified without the prior written consent
of the Lender, which consent shall not be unreasonably withheld or delayed.

Section 6.24 Material Adverse Effect. Since June 30, 2006, no event has occurred
which would have a Material Adverse Effect.

Section 6.25 Legal Name.

(a) The legal name of each of the Borrower, the Seller, Brooke Corporation and
the Master Agent is as set forth in this Agreement and each such party has not
changed its name in the five (5) years prior to this Agreement.

(b) The legal name of Brooke Franchise Corporation, formerly known as Interstate
Insurance Group, Ltd., is as set forth in this Agreement and such party has not
changed its name in the three (3) years prior to this Agreement.

ARTICLE VII

COVENANTS

From the date hereof until the first day following the date on which all
Obligations shall have been finally and fully paid and performed, each of the
Borrower, the Seller and the Master Agent Servicer agrees on behalf of itself
that it will (and, in the case of the Master Agent Servicer, that it will cause
Master Agent to) perform and observe the covenants and agreements set forth in
this Article VII.

Section 7.1 Protection of Security Interest of the Lender.

(a) Financing Statements. At or prior to the Closing Date, the Borrower shall
have filed or caused to be filed UCC-1 financing statements and amendments
thereto, naming the Borrower as debtor, naming the Lender as secured party and
describing the Collateral, with the office of the Secretary of State of the
State of Delaware and in such other jurisdictions and locations as may be
required to perfect the Lender’s security interest in the Collateral and/or as
the Lender shall request. From time to time thereafter, the Borrower shall
execute and file such financing statements and cause to be executed

 

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and filed such continuation statements, all in such manner and in such places as
may be required by law fully to preserve, maintain and protect the interest of
the Lender under this Agreement in the Collateral and in the proceeds thereof.
The Borrower shall deliver (or cause to be delivered) to the Lender file-stamped
copies of, or filing receipts for, any document filed as provided above, as soon
as available following such filing. If the Borrower fails to perform its
obligations under this subsection, the Lender may do so at the expense of the
Borrower.

(b) Name Change. The Borrower shall not change its name, identity, or corporate
structure in any manner that would, could or might make any financing statement
or continuation statement filed by the Borrower (or by the Lender on behalf of
the Borrower) in accordance with Section 7.1(a) above seriously misleading
within the meaning of § 9-402(7) of the UCC, unless the Borrower shall have
given the Lender at least sixty (60) days prior written notice thereof, and
shall promptly file appropriate amendments to all previously filed financing
statements and continuation statements.

(c) Change of Jurisdiction. The Borrower shall give the Lender at least sixty
(60) days’ prior written notice of any change of its jurisdiction of
incorporation or organization. The Borrower shall at all times maintain its
principal executive office within the United States of America.

Section 7.2 Records.

(a) Records to Show Security Interest. The Borrower shall maintain its computer
systems, if any, so that, from and after the time of the first Advance under
this Agreement, the Borrower’s Records indicate clearly that such Loans and all
Related Security are subject to the security interest granted hereunder.

(b) Transaction Records. The Borrower and the Subservicer shall, at their own
cost and expense, maintain satisfactory and complete records of the Loans,
including a record of all payments received and all credits granted with respect
to the Loans and all other dealings with the Loans for such period as may be
required by law, from the date on which any Loan arose. Each of the Borrower and
the Subservicer will mark conspicuously with appropriate legends, in form and
substance satisfactory to the Lender, its Records, Computer Tapes and computer
disks pertaining to the Loans to evidence the interests of the Lender therein
and the assignment and security interest granted by Section 5.1.

(c) Access to Records. Upon the occurrence and during the continuation of an
Event of Default, the Borrower and Subservicer shall deliver to the Lender or to
its representatives (or at the option of the Lender, during ordinary business
hours, upon reasonable notice by the Lender, at the Borrower’s and Subservicer’s
relevant facilities make available) its respective Records pertaining to the
Loans. If a Default or Event of Default shall have occurred and be continuing,
promptly upon request therefor, the Borrower or the Servicer shall provide
access to the Lender to Records reflecting activity relating to the Loans
through the close of business on the immediately preceding Business Day.

 

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Section 7.3 Other Liens or Interests. Except for the security interest granted
hereunder, the Borrower will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on the
Collateral or any interest therein, and the Borrower shall defend the right,
title, and interest of the Lender in and to the Collateral against all claims of
third parties claiming through or under the Borrower.

Section 7.4 Costs and Expenses. The Borrower shall pay all of its reasonable
costs and disbursements in connection with the performance of its obligations
hereunder and under the Transaction Documents.

Section 7.5 Compliance with Laws, Etc. Each of the Borrower and the Subservicer
will comply with all applicable laws, rules, regulations and orders and preserve
and maintain its corporate existence, rights, franchises, qualifications, and
privileges except to the extent that the failure so to comply with such laws,
rules and regulations or the failure so to preserve and maintain such existence,
rights, franchises, qualifications, and privileges would not materially
adversely affect the collectibility of the Loans or the ability of the Borrower
or the Subservicer to perform its obligations under the Transaction Documents.

Section 7.6 Offices, Records and Books of Account. The Borrower will keep its
principal place of business and chief executive office and the office where it
keeps its records at 10950 Grandview Drive, Overland Park, Kansas 66210 or, upon
sixty (60) days’ prior written notice to the Lender, at any other locations in
jurisdictions where all actions reasonably requested by the Lender to protect
and perfect the interest in the Loans have been taken and completed. The
Borrower will maintain and implement administrative and operating procedures
(including an ability to recreate Records evidencing Loans and Related Security
in the event of the destruction of the originals thereof).

Section 7.7 Performance and Compliance with Contracts and Credit and Collection
Policy. Such Brooke Party will, at its expense, timely and fully perform and
comply with all provisions, covenants and other promises required to be observed
by it under the Credit and Collection Policy.

Section 7.8 Change in Business or Credit and Collection Policy. The Seller will
not make any material change to the Credit and Collection Policy except for any
such material change that (i) provides substantially the same or better
protections to the Seller and does not adversely impact the collectibility of or
the interest of the Lender in the Loans (a copy of which revised Credit and
Collection Policy will be delivered to the Lender by the Seller and with respect
to which the Lender shall not have objected within sixty (60) days of receipt of
a copy of such revised Credit and Collection Policy) or (ii) the Lender approves
in writing, which approval will not be unreasonably withheld.

 

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Section 7.9 Further Assurances.

(a) By Brooke Party. Each Brooke Party severally agrees from time to time, at
its respective expense, promptly to execute and deliver such further instruments
and documents, and to take such further actions, as may be reasonably necessary
or appropriate, or that the Lender may reasonably request, to perfect, protect
or more fully evidence the assignments and security interests granted under this
Agreement or to enable the Lender to exercise and enforce its respective rights
and remedies under this Agreement. Without limiting the foregoing, each of the
Borrower, the Servicer and the Seller will, upon the request of the Lender,
execute and file such financing or continuation statements, or amendments
thereto, and such other instruments, notices and documents, that may be
necessary or desirable, or that the Lender may reasonably request, to perfect,
protect, preserve or evidence the assignments and security interest granted
under this Agreement.

(b) By Lender. If any Brooke Party fails to comply with subsection (a) above,
such Brooke Party authorizes the Lender to file financing or continuation
statements, and amendments thereto and assignments thereof, relating to all or
any part of the Collateral without the signature of the Borrower, the Servicer
or the Seller where permitted by law in order to enable the Lender to exercise
its respective rights and remedies under this Agreement. A photocopy or other
reproduction of this Agreement shall be sufficient as a financing statement
where permitted by law. The Lender will promptly send to the Borrower any
financing or continuation statements thereto which it files without the
signature of the Borrower (but a failure to do so shall not affect the
effectiveness of such statements).

(c) Description of Collateral. The Seller shall furnish to the Lender from time
to time such statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as the
Lender may reasonably request, all in reasonable detail.

Section 7.10 Notice of Adverse Claim. Each Brooke Party shall advise the Lender
promptly, in reasonable detail, (a) of any Adverse Claim (other than Permitted
Liens or Permitted Real Estate Encumbrances) known to it made or asserted
against any of the Collateral, and (b) of the occurrence of any event which
would have a Material Adverse Effect on the aggregate value of the Collateral or
on the assignments and security interests granted by the Borrower in this
Agreement.

Section 7.11 Reporting Requirements.

(a) Reports for Lender. The Borrower shall furnish, or cause to be furnished, to
the Lender (electronically, if requested by the Lender):

(i) on each Determination Date, (A) a Servicer’s Certificate as of the last
Business Day of the preceding Settlement Period and (B) a completed and executed
Borrowing Base Certificate calculated as of the end of the immediately preceding
Settlement Period.

 

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(ii) as soon as available, and in any event within 120 days after the end of
each fiscal year of Brooke Corporation, audited annual consolidated financial
statements of Brooke Corporation with the “unqualified opinion” (as that term is
used and generally understood in the accounting profession) of Independent
Accountants, which annual financial statements shall include the consolidated
balance sheets of Brooke Corporation as at the end of such fiscal year and the
related consolidated statements of income, retained earnings and cash flows of
Brooke Corporation as for the fiscal year then ended, all in reasonable detail
and prepared in accordance with GAAP, together with a certificate of the chief
financial officer of Brooke Corporation, stating that such consolidated
financial statements have been prepared in accordance with GAAP and stating
whether such officer has knowledge of the occurrence of any Default or Event of
Default, and, if so, stating in detail the facts with respect thereto;

(iii) as soon as available and in any event within 45 days (or the next
succeeding Business Day if the last day of such period is not a Business Day)
after the end of each of the first three quarters of each fiscal year of Brooke
Corporation, a consolidated balance sheet of Brooke Corporation as of the end of
such quarter and including the prior comparable period, and consolidated
statements of income of Brooke Corporation for such quarter and for the period
commencing at the end of the previous fiscal year and ending with the end of
such quarter prepared in accordance with GAAP, certified by the chief financial
officer or chief accounting officer of Brooke Corporation identifying such
balance sheets or statements as being the balance sheets or statements described
in this paragraph (iii) and stating that the information set forth therein
fairly presents the financial condition of Brooke Corporation and its
consolidated Subsidiaries as of and for the periods then ended, subject to
year-end adjustments consisting only of normal, recurring accruals and subject
to the auditors’ year end report and confirming that Brooke Corporation is in
compliance with all financial covenants in this Agreement;

(iv) as soon as reasonably possible after, and in any event within three
(3) Business Days after any Brooke Party’s or any of their respective officers’
knowledge of the occurrence of a Default or Event of Default (including a
material adverse change in the financial condition of the Borrower as determined
by the Lender and notified in writing to the Borrower), the statement of the
chief financial officer or treasurer of the Borrower setting forth complete
details of such Default or Event of Default or such material adverse change and
the action which the Borrower has taken, is taking and proposes to take with
respect thereto;

(v) at least 60 days prior to any change in the name of any Brooke Party, a
notice setting forth the new name and the effective date thereof;

 

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(vi) promptly after the Borrower obtains knowledge thereof, notice of any
default under the Servicing Agreement;

(vii) during the Revolving Period, as soon as reasonably possible after (and in
any event no later than two (2) Business Days after receipt of) notice that the
Seller has permanently stopped selling Loans to the Borrower pursuant to the
Purchase and Sale Agreement;

(viii) promptly after receipt thereof, copies of all notices received by the
Borrower from the Servicer under the Servicing Agreement;

(ix) promptly, from time to time, such other information, documents, Records or
reports respecting the Loans, the Related Security or the condition or
operations, financial or otherwise, of the Borrower, or the Seller or any of its
Subsidiaries which the Lender may, from time to time, reasonably request; and

(x) prompt written notice of the issuance by any court or governmental agency or
authority of any injunction, order, decision or other restraint prohibiting, or
having the effect of prohibiting, the making of the Advances hereunder, or
invalidating, or having the effect of invalidating, any provision of this
Agreement, or any other Transaction Document, or the initiation of any
litigation or similar proceeding seeking any such injunction, order, decision or
other restraint;

(b) The Borrower shall provide the Servicer (if the Servicer is not the Seller
or an Affiliate of the Seller or the Borrower) with any and all information
reasonably necessary or appropriate for the Servicer in connection with the
administration and collection of the Loans.

Section 7.12 Separateness of Borrower.

(a) Independent Director. The Borrower shall at all times maintain at least one
independent director who (i) does not have any direct financial interest or any
material indirect financial interest in the Borrower, or in any Affiliate of the
Borrower, (ii) is not, and has not been, connected with the Borrower or any
Affiliate of the Borrower as an officer, employee, promoter, underwriter,
trustee, partner or Person performing similar functions and is not a member of
the immediate family of any such officer or employee and (iii) is not, and has
not been, a director (other than as an independent director for an Affiliate of
the Borrower which is a limited special purpose corporation) or stockholder of
any Affiliate of the Borrower and is not a member of the immediate family of any
such director or stockholder.

(b) No Participation in Management of Other Persons. The Borrower shall not
direct or participate in the management of any other Person’s operations, and no
other Person, other than the officers and directors of the Borrower, shall be
permitted to direct or participate in the management of the Borrower.

 

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(c) Allocation of Overhead. The Borrower shall maintain a principal executive
and administrative office through which its business is conducted, and, to the
extent that the Borrower and any other Persons have offices in contiguous space,
there shall be fair and appropriate allocation of overhead costs between them,
and each such entity shall bear its fair share of such expenses.

(d) Restrictions on Transactions. The Borrower shall engage only in those
transactions described in its certificate of organization and operating
agreement and matters necessarily incident thereto.

(e) Allocation of Costs. The Borrower shall ensure that, (i) to the extent that
it jointly contracts with any of its members or Affiliates to do business with
vendors or service providers or to share overhead expenses, the costs incurred
in so doing shall be allocated fairly between such entities and that each such
entity shall bear its fair share of such costs and (ii) to the extent that the
Borrower contracts or does business with vendors or service providers where the
goods and services provided are partially for the benefit of any other Person,
the costs incurred in so doing shall be fairly allocated to or between such
entities for whose benefit the goods and services are provided and that each
such entity shall bear its fair share of such costs.

(f) Use Own Funds; No Commingling. The Borrower shall at all times provide for
its own operating expenses and liabilities from its own funds, shall not allow
its funds to be diverted to any other Person or for other than the corporate use
of the Borrower, and shall not, except as may be expressly permitted by
agreements of the Borrower, allow its funds to be commingled with those of any
Affiliate of the Borrower.

(g) Separate Assets. The Borrower shall maintain its assets and transactions
separately from those of any other Person, reflect such assets and transactions
in financial statements separate and distinct from those of any other Person and
evidence such assets and transactions by appropriate entries in books and
records separate and distinct from those of any other Person.

(h) Transactions with Affiliates. The Borrower shall ensure that all
transactions between the Borrower and any of its Affiliates shall be only on an
arm’s-length basis.

(i) Borrower to Use Own Name. The Borrower shall hold itself out to the public
under its own name as a legal entity separate and distinct from any other
Person, shall act solely in its own corporate name and through its own
authorized officers and agents, and no Affiliate of the Borrower shall be
appointed to act as agent by the Borrower, except as may be expressly permitted
by any agreements of the Borrower.

(j) No Appearance of Being a Guarantor. The Borrower shall not hold itself out
as having agreed to pay, or as being liable, primarily or secondarily, for any
obligations of any other Person, except as may be expressly permitted in any
agreements of the Borrower.

 

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(k) No Joint Accounts. Except as provided herein or in any other Transaction
Document, the Borrower shall not maintain any joint account with any other
Person or become liable as a guarantor or otherwise with respect to any debt or
contractual obligation of any other Person.

(l) No Liens to Secure Other Person’s Obligations. The Borrower shall not make
any payment or distribution of assets with respect to any obligation of any
other Person or grant any Lien on any of its assets to secure any obligation of
any other Person.

(m) Lending and Borrowing. The Borrower shall not make loans, advances or
otherwise extend credit to any other Person, except on an arm’s-length basis,
and shall not permit any Affiliate of the Borrower to advance funds to the
Borrower or otherwise supply funds to, or guaranty debts of, the Borrower.

(n) Meetings. The Borrower shall hold regular meetings of its members and
directors/managers as set forth in its organizational documents and shall make
and retain minutes of such meetings.

(o) Independent Business Decisions. The Borrower shall ensure that decisions
with respect to its business and daily operations shall be independently made by
the Borrower (although the officer making any particular decision may also be an
officer or director of any Affiliate of the Borrower) and shall not be dictated
by an Affiliate of the Borrower.

(p) Tax Returns. The Borrower shall file its own tax returns or, if it is a
member of a consolidated group, will join in the consolidated return of such
group as a separate member thereof and shall ensure that any financial reports
required of the Borrower shall comply with GAAP and shall be issued separately
from, but may be consolidated with, any reports prepared for any of its
Affiliates.

(q) Segregation of Assets. The Borrower shall maintain its assets in such a
manner that it will not be costly or difficult to segregate, ascertain or
identify its individual assets from those of any other Person.

(r) Organizational Documents. The Borrower shall comply with all provisions of
its certificate of organization and operating agreement.

(s) Non-substantive Consolidation Opinion. The Borrower shall comply with all
assumptions set forth in the Non-substantive Consolidation Opinion delivered to
the Lender pursuant to Section 4.1(r) hereof.

Section 7.13 Purchase and Sale Agreement. The Borrower will not amend, waive or
modify any provision of the Purchase and Sale Agreement in any respect or waive
the occurrence of any default under such Purchase and Sale Agreement, without in
each case the prior written consent of the Lender. Each of the Borrower and the
Seller will perform all of its obligations under the Purchase and Sale Agreement
and will enforce the Purchase and Sale Agreement in accordance with its terms.

 

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Section 7.14 Title to Loans Purchased from the Seller. The Borrower will
purchase each Loan from the Seller in accordance with the terms of the Purchase
and Sale Agreement, and the Borrower will acquire all legal and equitable title
to such Loan and the Related Security free and clear of any Adverse Claims other
than Permitted Liens or Permitted Real Estate Encumbrances. Without limiting the
foregoing, the Borrower will take all actions (including, without limitation,
the filing of all financing statements or other similar instruments or documents
under the UCC of all applicable jurisdictions and the giving of all notices that
may be required under the laws of any applicable jurisdiction) required in order
to perfect and protect the Borrower’s interest in the Loans and Related Security
with respect thereto as against any purchasers from, or creditors of, the
Seller.

Section 7.15 Nature of Business. The Borrower will not engage in any business
other than as permitted under its certificate of organization. The Borrower will
not create or form any Subsidiary.

Section 7.16 Mergers, Etc.

(a) Borrower Will Not Merge, Etc. The Borrower will not merge with or into or
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions), all or
substantially all of its assets (whether now owned or hereafter acquired) to, or
acquire all or substantially all of the assets or capital stock or other
ownership interest of, or enter into any joint venture or partnership agreement
with, any Person, without the prior consent of the Lender.

(b) Seller Will Not Merge, Etc. Seller will not merge with or into or
consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions, it being understood
that one or more securitization transactions on market terms shall not
constitute a prohibited disposition), all or substantially all of its assets
(whether now owned or hereafter acquired) to, or acquire all or substantially
all of the assets or capital stock or other ownership interest of, or enter into
any joint venture or partnership agreement with, any Person, or permit any other
Person to become the successor to the Seller’s business unless the Seller shall
(i) be the surviving entity (unless the Lender shall otherwise agree in writing
it is reasonable discretion), (ii) such Person shall conduct substantially
similar business activities and (iii) be acceptable to the Lender in its
reasonable discretion.

(c) No Permitted Sale Transaction shall be deemed a violation or breach of this
Section 7.16.

Section 7.17 Distributions, Etc. The Borrower will not declare or make any
dividend payment or other distribution of assets, properties, cash, rights,
obligations or securities on account of any membership interest of the Borrower,
or return any capital to

 

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its members as such, or purchase, retire, defease, redeem or otherwise acquire
for value or make any payment in respect of any membership interests of the
Borrower or any warrants, rights or options to acquire any such membership
interests, now or hereafter outstanding; provided, however, that the Borrower
may declare and pay cash distributions on its equity to its members so long as
(a) no Default or Event of Default shall then exist or would occur as a result
thereof, (b) such distributions are in compliance with all applicable law
including the limited liability company law of the state of Borrower’s
organization, and (c) such distributions have been approved by all necessary and
appropriate company action of the Borrower.

Section 7.18 Indebtedness. The Borrower will not incur any Indebtedness, other
than any Indebtedness incurred pursuant to any Transaction Document or any fee
letter relating to an increase of a Commitment Amount and/or a Facility Limit.

Section 7.19 Articles of Organization and Operating Agreement. The Borrower will
not, without the Lender’s prior written consent, amend or otherwise modify its
Articles of Organization or Operating Agreement.

Section 7.20 Audits By Lender. Right to Audit. At any time and from time to time
during regular business hours and upon at least five Business Days’ prior notice
so long as no Event of Default, or Servicer Termination Event shall have
occurred and be continuing, the Lender or its agents or representatives may
(i) examine and make copies of and abstracts from all books, records and
documents (including, without limitation, computer tapes and disks) in
possession or under the control of Borrower or the Subservicer relating to the
Loans and the other Collateral, and (ii) may visit the offices and properties of
Borrower or the Subservicer for the purpose of examining such materials, and
discuss matters relating to the Loans or the performance hereunder with any of
the officers or employees of the Borrower or the Subservicer having knowledge of
such matters. The Borrower will, in connection with two (2) such audits
conducted each year by the Lender pursuant to this Section 7.20, reimburse the
Lender for its reasonable out-of-pocket expenses incurred in conducting such
audits within 30 days after its receipt of a request and itemized invoice (and
supporting receipts and other documentation) for such expenses. After the
occurrence and during the continuation of any Event of Default, the Borrower
shall reimburse the Lender for all reasonable out-of-pocket expenses in
connection with such audits.

Section 7.21 Collections.

(a) Each Brooke Party shall, to the extent such Borrower has the right or
obligation to do so pursuant to the Transaction Documents:

(i) instruct (A) each Brooke Insurance Agent to deposit all Collections received
by it to the related Receipts Trust Account and (B) each Funeral Home to deposit
all Collections received by it to its designated operating account;

 

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(ii) cause all Collections deposited in each Receipts Trust Account to be
remitted to the Consolidation Receipts Trust Account within one Business Day
after such deposit;

(iii) cause all Collections deposited in the Consolidation Receipts Trust
Account to be remitted to the Master Receipts Trust Account within two Business
Days after such deposit;

(iv) cause all Collections deposited in the Master Receipts Trust Account to be
remitted to the Collection Account within two Business Days after such deposit
pursuant to, and in accordance with, the Master Agent Security Agreement;

(v) cause each Receipts Trust Account to be maintained solely in the name of
Master Agent; and

(vi) cause the Master Receipts Trust Account and the Consolidation Receipts
Trust Account to be subject at all times to a Trust Account Control Agreement.

(b) If any Collections with respect to the Loans are received by any Brooke
Party or any of their respective Affiliates, then at all times prior to
remittance thereof to the appropriate Trust Account or the Collection Account,
as the case may be, such Brooke Party or such Affiliate shall hold such
Collections in trust, for the exclusive benefit of the Lender on behalf of the
Secured Parties.

(c) The Subservicer and the Master Agent Servicer each agrees that it will use
its best efforts (and will cause each of its Affiliates to use their best
efforts) not to permit any check or other funds to be deposited into any Trust
Account or the Collection Account other than:

(i) Collections on the Collateral; and

(ii) collections on other loans remitted to a Trust Account, but only to the
extent such collections are subject to a Trust Account Intercreditor Agreement.

To the extent any such “Other Receipts” or other funds that are not Collections
are deposited into any Trust Account, the Master Agent Servicer shall promptly
(and in any event within two Business Days) identify such funds and cause such
funds to be segregated from the Collections on the Collateral in accordance with
the Master Agent Security Agreement. To the extent any funds other than
Collections are deposited into the Collection Account, the Subservicer shall
promptly (and in any event within two Business Days) identify such funds and
notify the Borrower, the Servicer, the Collection Account Bank and the Lender of
the same and the Servicer shall direct the Collection Account Bank to remit such

 

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funds the Person entitled thereto. The Lender may at any time following the
occurrence of an Event of Default (other than an Event of Default that has been
waived in writing by the Lender) request each Brooke Party to, and each Brooke
Party thereupon promptly shall, direct all Obligors to remit all payments with
respect to Loans with respect thereto to a new depository account or lock-box
specified by the Lender (which new account shall, if so directed by the Lender,
be established in the Lender’s own name).

(d) No Brooke Party will add or terminate any Trust Account relating to the
Loans from those listed in Schedule I, or make any change in its instructions to
Obligors or insurance companies regarding payments to be made to any Brooke
Party or payments to be made to any Trust Account], unless (i) the Lender shall
have received written notice of such addition, termination or change together
with an amended Schedule I and (ii) with respect to any change relating to the
Consolidation Receipts Trust Account or the Master Receipts Trust Account, such
change shall have been approved in writing by the Lender.

Section 7.22 Required Amendments. At the request and sole expense of the Lender,
the Borrower and the Seller shall enter into such reasonable amendments to the
Transaction Documents as may be required by the Rating Agencies in order for
Fountain Square to maintain the A-1 /P-1 rating on its commercial paper. If the
Borrower is unwilling or unable to enter into and consent to such an amendment,
the applicable interest rate for Advances shall thereafter, until such
amendment, be at the Alternate Rate.

Section 7.23 Ownership. The Seller will at all times own 100% of the membership
interests of the Borrower. If the Seller desires to divest a portion of its
ownership interest in the Borrower, it shall so notify the Lender in writing
with all applicable details of such proposed divestment. Notwithstanding
anything in this Agreement or any other Transaction Document to the contrary,
the Seller may pledge or assign, or otherwise grant one or more security
interests in, its membership interest in the Borrower to an Eligible Lender,
which pledge, assignment or grant shall be in form and substance reasonably
satisfactory to the Lender.

Section 7.24 Compliance with FAS 140. Notwithstanding any provision of this
Agreement to the contrary, the Seller and the Borrower agree that the Seller
shall not make, and Borrower shall not accept, any capital contribution the
effect of which would be to cause the Borrower to lose its treatment as a QSPE
under Financial Accounting Standard (FAS) 140.

Section 7.25 Financial Covenants. Until the Amortization Commencement Date:

(a) The Seller agrees that it will maintain, at all times, a minimum
stockholders equity (determined in accordance with GAAP) of not less than
$40,000,000.

 

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(b) The Seller agrees that it will maintain, as at the end of each fiscal
quarter, a positive Consolidated Net Income for the four fiscal quarter period
then ending.

Section 7.26 Transaction Documents. No amendment or modification can be made to
any Transaction Document without the prior written consent of the Lender;
provided, however, that the Trust Account Intercreditor Agreements may be
amended to add additional creditors provided no other material changes are made
to such agreements.

ARTICLE VIII

EVENTS OF DEFAULT; THEIR EFFECT

Section 8.1 Events of Default. Each of the following shall constitute an event
of default (“Event of Default”):

(a) Payment Default. Default by the Borrower or the Servicer in the payment when
due of any principal of any Advance, any interest on any Advance, any Fees or
any other amount payable hereunder, which default shall continue unremedied for
two (2) Business Days.

(b) Annualized Default Rates. As of the end of any Settlement Period, the
average of the Annualized Default Rates for such Settlement Period and the two
immediately preceding Settlement Periods shall exceed 3.5%.

(c) Delinquency Rates. As of the end of any Settlement Period, the average of
the Delinquency Rates for such Settlement Period and the two immediately
preceding Settlement Periods shall exceed 6.0%.

(d) Estimated Annualized Net Loss Rates. As of the end of any Settlement Period,
the average of the Estimated Annualized Net Loss Rates for such Settlement
Period and the two immediately preceding Settlement Periods shall exceed 1.0%.

(e) Actual Annualized Net Loss Rates. As of the end of any Settlement Period,
the average of the Actual Annualized Net Loss Rates for such Settlement Period
and the two immediately preceding Settlement Periods shall exceed 1.0%;

(f) Breach of Other Representation, Warranty or Covenant. The Borrower shall
fail to perform or observe any other term, covenant or agreement contained in
this Agreement, or any other Transaction Document on its part to be performed or
observed and any such failure shall remain unremedied for thirty (30) days after
knowledge thereof by a senior officer of the Borrower or any Brooke Party knew
or should have known or the date on which the Lender notifies the Borrower
thereof.

(g) Undercollateralization Event. An Undercollateralization Event shall occur as
of any Record Date and not be cured on or before the related Settlement Date.

 

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(h) Notice of Tax Lien. The Internal Revenue Service shall file notice of a lien
pursuant to Section 6323 of the Internal Revenue Code with regard to any of the
assets of the Borrower and such lien shall not have been released within thirty
(30) days, or the Pension Benefit Guaranty Corporation shall file notice of a
lien pursuant to Section 4068 of ERISA with regard to any of the assets of the
Borrower and such lien shall not have been released within thirty (30) days.

(i) Ineffectiveness of Transaction Documents. (i) Any Transaction Document or
any lien or security interest granted thereunder by the Seller, shall (except in
accordance with its terms), in whole or in part, terminate, cease to be
effective or cease to be the legally valid, binding and enforceable obligation
of the Seller; (ii) any Transaction Document or any lien or security interest
granted thereunder by the Borrower, shall (except in accordance with its terms),
in whole or in part, terminate, cease to be effective or cease to be the legally
valid, binding and enforceable obligation of the Borrower; (iii) the Borrower or
the Seller shall, directly or indirectly, contest in any manner such
effectiveness, validity, binding nature or enforceability; (iv) any assignment
or security interest granted by the Seller to the Borrower under or in
connection with the Purchase and Sale Agreement and the transactions
contemplated thereby shall, in whole or in part, cease to be a perfected, first
priority assignment or security interest, as the case may be, against the Seller
and in favor of the Borrower; (v) any assignment or security interest securing
any Obligations shall, in whole or in part, cease to be a perfected first
priority security interest against the Borrower and in favor of the Lender; or
(vi) any assignment or security interest securing any Obligations shall, in
whole or in part, cease to be a first priority security interest against the
Borrower and in favor of the Lender.

(j) Change of Control. A Change of Control shall occur.

(k) Other Indebtedness. A default shall occur (after the expiration of
applicable cure periods) with respect to any Indebtedness of the Borrower or the
Seller (excluding Indebtedness outstanding hereunder) which either individually
or taken together with other such Indebtedness as to which a default has
occurred shall exceed $1,000,000, if the effect of any such default shall be to
accelerate the maturity of such Indebtedness.

(l) Failure to Pay at Maturity. The Borrower fails to pay in full all
Obligations on the Maturity Date or earlier as permitted under this Agreement.

(m) Key Personnel. Any two Key Persons shall cease to be actively employed by
the Seller, the Master Agent Servicer, the Master Agent or Brooke Corporation
and shall not have been replaced by qualified successors within 150 days. For
purposes of this Section 8.1(n), (i) a “Key Person” means any of Michael Lowry,
Anita Larson and Shawn Lowry (but if any such Person is replaced by a qualified
successor, then such successor shall be deemed to be a Key Person and the
replaced Person shall cease to be a Key Person) and (ii) a “qualified successor”
means an individual that (A) has served for another entity in a capacity or
position similar to that of the subject Key Person or (B) is reasonably
acceptable to the Lender.

 

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(n) Bankruptcy. An Event of Bankruptcy shall occur with respect to the Borrower
or the Seller.

(o) Investment Company. The Borrower becomes an Investment Company under the
Securities Act of 1940.

(p) Security Interest. The Lender shall no longer have a first priority
perfected security interest in the Collateral.

(q) Interest Insufficient. Interest earned on Eligible Loans, determined in each
case for the three Collection Periods ending on any Record Date, is less than
zero during such Collection Periods.

(r) Master Agent Servicer Default. A Master Agent Servicer Default shall occur.

Section 8.2 Master Agent Servicer Default. Each of the following events shall
constitute a “Master Agent Servicer Default” hereunder:

(a) the Master Agent Servicer shall fail to make any payment, transfer or
deposit (or, if applicable, to give instructions or notice to any other Person
to make any payment, transfer or deposit) required under this Agreement or any
other Transaction Document and such failure shall remain unremedied for two
(2) Business Days; or

(b) the Master Agent Servicer shall fail to perform or observe any material
term, covenant or agreement hereunder or under any other Transaction Document
(other than as referred to in Section 8.2(a)) and such failure shall remain
unremedied for five (5) Business Days after the earlier to occur of (x) the date
on which the Master Agent Servicer knows of such failure and (y) the date on
which the Lender notifies the Master Agent Servicer of such failure; or

(c) any representation, warranty, certification or statement made by the Master
Agent Servicer pursuant to or in connection with this Agreement or any other
Transaction Document shall prove to have been incorrect in any material respect
when made or deemed made; provided that if such breach is capable of being
cured, then such breach will not constitute a Master Agent Servicer Default
hereunder unless such breach remains unremedied for thirty (30) days after the
earlier to occur of (x) the date on which the Master Agent Servicer knows of
such breach and (y) the date on which the Lender notifies the Master Agent
Servicer of such breach; or

(d) any Event of Default.

Section 8.3 Rights Upon the Occurrence of an Event of Default. Upon the
occurrence of an Event of Default, (a) all outstanding Advances under this
Agreement, together with accrued interest, and all other Obligations under this
Agreement shall become immediately due and payable, without presentment, demand,
protest, or notice of

 

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any kind, (b) interest shall accrue at the Default Rate, and (c) if the Borrower
fails to pay in full all such accrued interest, and all other Obligations, the
Lender shall have the right to exercise any of the following remedies in respect
of the Loans:

(i) Immediately sell in a commercially reasonable manner, in a recognized market
(if one exists) at such price or prices as the Lender may reasonably deem
satisfactory, any or all Loans and apply the proceeds thereof to the
Obligations; and in connection therewith the parties recognize that it may not
be possible to purchase or sell all of the Loans on a particular Business Day,
or in a transaction with the same purchaser, or in the same manner because the
market for such Loans may not be liquid. Accordingly, the Lender may elect, in
its sole discretion, the time and manner of liquidating any Loans and nothing
contained herein shall (A) obligate the Lender to liquidate any Loans on the
occurrence of the Maturity Date or to liquidate all Loans in the same manner or
on the same Business Day or (B) constitute a waiver of any right or remedy of
the Lender.

(ii) The Lender may terminate the Seller as Subservicer and appoint an Eligible
Servicer as successor Subservicer.

(iii) The Lender shall have, in addition to all the rights and remedies provided
herein and provided by applicable federal, state, foreign, and local laws
(including the rights and remedies of a secured party under the Uniform
Commercial Code of any applicable state, to the extent that the Uniform
Commercial Code is applicable, and the right to offset any mutual debt and
claim), all rights and remedies available to the Lender in law, in equity, or
under any other agreement between the Lender and the Borrower.

Any amounts received from any sale or liquidation of the Loans pursuant to this
Section 8.3 and any amounts remaining in the Collection Account in excess of the
Obligations will be returned to the Borrower, its successors or assigns, or to
whosoever may be lawfully entitled to receive the same or as a court of
competent jurisdiction may otherwise direct.

ARTICLE IX

ASSIGNMENTS

Section 9.1 Restrictions on Assignments. The Borrower may not assign its rights
or obligations hereunder or any interest herein without the prior written
consent of the Lender. Lender may assign or grant participations in its rights
and obligations hereunder to any Person in the ordinary course of business with
the prior written consent of the Borrower whose consent shall not be
unreasonably withheld (each an “Eligible Assignee”). Notwithstanding anything
herein to the contrary, Lender or any of its Affiliates may pledge or assign any
of its rights (including rights to payment of any Advance and any accrued
interest thereon) under this Agreement to any Affiliate, any Federal Reserve
Bank, any Liquidity Provider (if such Liquidity Provider is other than

 

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Fifth Third or an Affiliate thereof, such assignment may only be effected with
the prior written consent of the Borrower) or any commercial paper conduit
collateral trustee without notice to or consent of the Borrower or any other
Person. Each Brooke Party shall, at the Lender’s expense, reasonably cooperate
with the Lender in effecting any assignment or participation hereunder,
including the execution and delivery of any necessary or appropriate
documentation and opinions) and shall make management personnel available as
shall be necessary or appropriate to effect the assignment or participation.

Section 9.2 Documentation. The assignor and the assignee involved in an
assignment referred to in Section 9.1 shall execute and deliver to the Lender an
Assignment and Acceptance, duly executed by each such party and otherwise
acceptable to the Borrower and the Lender, shall promptly execute and deliver
all further instruments and documents, and take all further action, that the
assignee may reasonably request, in order to perfect, protect or more fully
evidence the assignee’s right, title and interest in, and to enable the assignee
to exercise or enforce any rights hereunder or under the Note.

Section 9.3 Rights of Obligations of Assignee. The respective assignee receiving
such assignment shall have such rights and obligations of the Lender as the
Lender shall transfer hereunder and all references to the Lender ins Section 9.1
shall be deemed to apply to such assignee.

Section 9.4 Notice of Assignment. Lender shall provide prior notice to the
Borrower of any assignment hereunder by Lender to any Eligible Assignee.

Section 9.5 Mutilated, Destroyed, Lost or Stolen Note.

(a) If there shall be delivered to the Borrower and the Lender prior to the
payment of the Note (i) evidence to its satisfaction of the destruction, loss or
theft of the Note and (ii) such security or indemnity as may be required by them
to save and hold each of them (and any agent or other Affiliate of either of
them) harmless, then, in the absence of notice to the Borrower or the Lender
that such Note has been acquired by a bona fide purchaser, the Borrower shall,
at the sole expense of the Lender, execute and the Lender shall authenticate and
deliver, in lieu of any such destroyed, lost or stolen Note, a new Note of like
class, tenor and principal amount and bearing a number not contemporaneously
outstanding.

(b) Upon the issuance of any new Note under this Section 9.5, the Borrower may
require the payment from the transferor holder of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Lender) connected
therewith.

(c) Every new Note issued pursuant to this Section 9.5 and in accordance with
the provisions of this Agreement, in lieu of any destroyed, lost or stolen Note
shall constitute an original additional contractual obligation of the Borrower,
whether or not

 

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the destroyed, lost or stolen Note shall be at any time enforceable by anyone,
and shall be entitled to all the benefits of this Agreement equally and
proportionately with any other Note duly issued hereunder.

(d) The provisions of this Section 9.5 are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of the mutilated, destroyed, lost or stolen Note.

Section 9.6 Persons Deemed Owners. The Borrower, the Servicer, the Subservicer,
the Lender and any agent of the Borrower, the Servicer, the Subservicer or the
Lender may treat the holder of the Note as the owner of such Note for all
purposes whatsoever, whether or not such Note may be overdue, and none of the
Borrower, the Servicer, the Subservicer, the Lender and any agent of the
Borrower, the Servicer, the Subservicer or the Lender shall be affected by
notice to the contrary; provided that payment on the Maturity Date shall be
made, in each case, to the holder of the Note as of the preceding Record Date.

ARTICLE X

INDEMNIFICATION

Section 10.1 General Indemnity of the Borrower. Without limiting any other
rights which any such Person may have hereunder or under applicable law, the
Borrower shall indemnify the Lender, each Liquidity Provider and each Eligible
Assignee and each of their respective Affiliates, and each of their respective
successors, transferees, participants and assigns and all officers, directors,
shareholders, controlling Persons, employees and agents of any of the foregoing
(each of the foregoing Persons being individually called an “Indemnified
Party”), forthwith on demand, from and against any and all damages, losses,
claims, liabilities and related costs and expenses, including reasonable
attorneys’ fees and disbursements (all of the foregoing being collectively
called “Indemnified Amounts”) awarded against or incurred by any of them arising
out of or relating to any Transaction Document or the transactions contemplated
thereby or the use of proceeds therefrom by the Borrower, including in respect
of the funding of any Advance or in respect of any Loan, excluding, however,
(a) Indemnified Amounts to the extent determined by a final unappealable
decision of a court of competent jurisdiction to have resulted primarily from
the gross negligence or willful misconduct on the part of any Indemnified Party
or its Affiliate, (b) non-payment by any Obligor of an amount due and payable
with respect to a Loan, (c) any loss in value of any Permitted Investment due to
changes in market conditions or for other reasons beyond the control of the
Borrower or (d) any tax upon or measured by net income on any Indemnified Party.
Without limiting the foregoing, but subject to the exclusions (a) through
(d) above, the Borrower shall indemnify each Indemnified Party for Indemnified
Amounts arising out of or relating to:

(i) the grant of a security interest to the Lender;

 

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(ii) the breach of any representation or warranty made by the Borrower (or any
of its officers) under or in connection with this Agreement or the other
Transaction Documents, any Servicer’s Certificate, Borrowing Base Certificate or
any other information, report or certificate delivered by the Borrower pursuant
hereto or thereto, which shall have been false in any material respect or
incorrect in any material respect, when made or deemed made;

(iii) the failure by the Borrower to comply in any material way with any
applicable law, rule or regulation with respect to any Loan, or the
nonconformity of any Loan with any such applicable law, rule or regulation;

(iv) the failure to vest and maintain vested in the Lender a first-priority
security interest in all the Collateral, free and clear of any Lien, other than
a Permitted Lien or Lien arising solely as a result of an act of the Lender, or
any assignee of Lender;

(v) the failure to file, or any delay in filing, financing statements or other
similar instruments or documents under the UCC of any applicable jurisdiction or
other applicable laws with respect to any Collateral;

(vi) any dispute, claim, offset or defense (other than discharge in bankruptcy)
of an Obligor to the payment of any Loan (including a defense based on such Loan
not being a legal, valid and binding obligation of such Obligor enforceable
against it in accordance with its terms);

(vii) any tax or governmental fee or charge (but not including taxes upon or
measured by net income), all interest and penalties thereon or with respect
thereto, and all out-of-pocket costs and expenses, including the reasonable fees
and expenses of counsel in defending against the same, which may arise by reason
of the making, maintenance or funding, directly or indirectly, of any Advance,
or any other interest in the Loans; or

(viii) except as permitted by this Agreement or any other Transaction Document,
the commingling of the proceeds of Loans at any time with other funds.

Section 10.2 Contribution.

(a) If for any reason (other than the exclusions (a) through (d) set forth in
Section 10.1) the indemnification provided above in Section 10.1 is unavailable
to an Indemnified Party or is insufficient to hold an Indemnified Party
harmless, then the Borrower shall contribute to the amount paid or payable by
such Indemnified Party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect not only the relative benefits
received by such Indemnified Party, on the one hand, and the Borrower, on the
other hand, but also the relative fault of such Indemnified Party, on the one
hand, and the Borrower, on the other hand, as well as any other relevant
equitable considerations.

 

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(b) If for any reason (other than the exclusions (a) through (d) set forth in
Section 10.1) the indemnification provided above in Section 10.1 is unavailable
to an Indemnified Party or is insufficient to hold an Indemnified Party
harmless, then the Servicer shall contribute to the amount paid or payable by
such Indemnified Party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect not only the relative benefits
received by such Indemnified Party, on the one hand, and the Servicer, on the
other hand, but also the relative fault of such Indemnified Party, on the one
hand, and the Servicer, on the other hand, as well as any other relevant
equitable considerations.

ARTICLE XI

MISCELLANEOUS

Section 11.1 No Waiver; Remedies. Neither the execution and delivery of this
Agreement nor any failure on the part of Lender, any Indemnified Party or any
Affected Party to exercise, nor any delay by any such Person in exercising, any
right, power or remedy hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise by any such Person of any right, power or remedy
hereunder preclude any other or further exercise thereof, or the exercise of any
other right, power or remedy. The remedies herein provided are cumulative and
not exclusive of any remedies provided by law. Without limiting the foregoing,
Lender is hereby authorized by the Borrower at any time and from time to time,
to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other Indebtedness at any time owing by Lender to or for the credit or
the account of the Borrower against any and all obligations of the Borrower, now
or hereafter existing under this Agreement, to any Liquidity Provider, any
Affected Party, or any Indemnified Party or their respective successors and
assigns.

Section 11.2 Amendments, Waivers. No amendment, modification or waiver of, or
consent with respect to, any provision of this Agreement and any Schedules
hereto, or the Note shall in any event be effective unless (a) the same shall be
in writing and signed and delivered by (i) the Borrower, the Seller, the Master
Agent Servicer and the Lender, or (ii) the Lender (with respect to a waiver or
consent requested by the Borrower, the Seller or the Master Agent Servicer) or
the Borrower, the Seller and the Master Agent Servicer (with respect to a waiver
or consent requested by any other party hereto), as the case may be, and (b) the
Lender shall have received, if required by Standard & Poor’s and Moody’s, rating
letters confirming Fountain Square’s A-1/P-1 commercial paper rating after
giving effect to such amendment. Any such amendment, modification, waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given.

 

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Section 11.3 Notices, Etc. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by certified
mail, postage prepaid, by a nationally recognized overnight courier, or by
facsimile, to the intended party at the address or facsimile number of such
party set forth under its name on the signature pages hereof or at such other
address or facsimile number as shall be designated by such party in a written
notice to the other parties hereto. All such notices and communications shall be
effective, (a) if personally delivered, when received, (b) if sent by certified
mail, three (3) Business Days after having been deposited in the mail, postage
prepaid, (c) if sent by overnight courier, one (1) Business Day after having
been given to such courier, and (d) if transmitted by facsimile, when sent,
receipt confirmed by telephone or electronic means, except that notices and
communications pursuant to Section 2.2 shall not be effective until received.

Section 11.4 Costs, Expenses and Taxes. In addition to the rights of
indemnification granted under Section 10.1, the Borrower shall pay on demand
(promptly following its receipt of an itemized invoice and reasonable supporting
documentation therefor) all reasonable costs and expenses (including due
diligence expenses) in connection with the preparation, execution, delivery and
administration of this Agreement, the other Transaction Documents or any other
liquidity support facility and the other documents and agreements to be
delivered hereunder, and any amendments, waivers or consents executed in
connection with this Agreement, the other Transaction Documents, any liquidity
asset purchase agreement or any other liquidity support facility, including any
fees or expenses payable to Moody’s related to the execution of this Agreement
and any amendments, waivers, consents, joinders and assignments executed in
connection with this Agreement, the reasonable fees accrued at customary hourly
rates and reasonable expenses of counsel (which shall be invoiced in reasonable
detail) for the Lender and its Affiliates with respect thereto and with respect
to advising the Lender and its respective Affiliates as to their rights and
remedies under this Agreement, the other Transaction Documents and any liquidity
asset purchase agreement or any other liquidity support facility, and all costs
and expenses, if any (including reasonable counsel fees and expenses), of the
Lender and its respective Affiliates, in connection with the enforcement of this
Agreement, the other Transaction Documents and the liquidity asset purchase
agreement or any other liquidity support facility and the other documents and
agreements to be delivered hereunder. The foregoing shall be subject to any
limitations on the payments of legal fees and expenses set forth in any Fee
Letter.

Section 11.5 Binding Effect Survival. This Agreement shall be binding upon and
inure to the benefit of the Borrower, the Seller, the Master Agent Servicer and
the Lender and their respective successors and assigns, and the provisions of
Article X shall inure to the benefit of the Indemnified Parties, respectively,
and their respective successors and assigns; provided, however, nothing in the
foregoing shall be deemed to authorize any assignment not permitted by Article
IX. This Agreement shall create and constitute the continuing obligations of the
parties hereto in accordance with its terms, and shall remain in full force and
effect until such time, after the Facility Termination Date when all Obligations
have been finally and fully paid and performed. The rights and remedies with

 

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respect to any breach of any representation and warranty made by the Borrower
pursuant to Article VI and the indemnification and payment provisions of Article
X, shall be continuing and shall survive any termination of this Agreement and
any termination of the Seller’s rights to act as Subservicer hereunder or under
any other Transaction Document.

Section 11.6 Captions and Cross References. The various captions (including the
table of contents) in this Agreement are provided solely for convenience of
reference and shall not affect the meaning or interpretation of any provision of
this Agreement. Unless otherwise indicated, references in this Agreement to any
Section, Schedule or Exhibit are to such Section of or Schedule or Exhibit to
this Agreement, as the case may be, and references in any Section, subsection,
or clause to any subsection, clause or subclause are to such subsection, clause
or subclause of such Section, subsection or clause.

Section 11.7 Severability. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.

Section 11.8 Governing Law; Venue.

(a) THIS AGREEMENT SHALL BE CONSTRUED AND GOVERNED IN ACCORDANCE WITH LAWS OF
THE STATE OF NEW YORK, WITHOUT REGARD TO ANY CONFLICTS OF LAW PRINCIPLES THEREOF
THAT WOULD CALL FOR THE APPLICATION OF THE LAWS OF ANY OTHER JURISDICTION,
EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE INTERESTS OF THE LENDER IN THE
COLLATERAL, OR REMEDIES HEREUNDER, IN RESPECT THEREOF, ARE GOVERNED BY THE LAWS
OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK. THE PARTIES HERETO INTEND
THAT THE PROVISIONS OF SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS
LAW APPLY TO THIS AGREEMENT.

(b) EACH PARTY TO THIS AGREEMENT HEREBY WAIVES ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUIT, LEGAL ACTION OR PROCEEDING
ARISING DIRECTLY OR INDIRECTLY UNDER OR RELATING TO THIS AGREEMENT IN ANY COURT
LOCATED IN THE CITY OF NEW YORK AND STATE OF NEW YORK AND HEREBY FURTHER WAIVES
ANY CLAIM THAT A COURT LOCATED IN THE CITY OF NEW YORK AND STATE OF NEW YORK IS
NOT A CONVENIENT FORUM FOR ANY SUCH SUIT, LEGAL ACTION OR PROCEEDING.

Section 11.9 Counterparts. This Agreement may be executed by the parties hereto
in any number of counterparts, each of which when so executed shall be deemed to
be an original and all of which when taken together shall constitute one and the
same agreement.

 

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Section 11.10 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS
OF THE BORROWER, THE AGENT, THE LENDER OR ANY OTHER AFFECTED PARTY OR
INDEMNIFIED PARTY. THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED
FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION
OF EACH OTHER TRANSACTION DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENT AND THE LENDER ENTERING INTO
THIS AGREEMENT AND EACH SUCH OTHER TRANSACTION DOCUMENT.

Section 11.11 Third Party Beneficiary. This Agreement shall only inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns and no third party is entitled to benefit from
this Agreement or the terms hereof.

Section 11.12 No Proceedings. Each of the Seller, the Lender, and any assignee
or other holder of the Note hereby agrees that it will not institute against
Fountain Square or the Borrower, or join any other Person in instituting against
Fountain Square or the Borrower, any insolvency proceeding (namely, any
proceeding of the type referred to in the definition of “Event of Bankruptcy”)
so long as any commercial paper or other senior indebtedness issued by Fountain
Square shall be outstanding or there shall not have elapsed one year plus one
day since the last day on which any such commercial paper or other senior
indebtedness shall be outstanding and, in the case of the Borrower, any Advances
or other amounts due from the Borrower hereunder shall be outstanding or there
shall not have elapsed one year plus one day since the last day on which any
such Advances or other amounts shall be outstanding. The Borrower will not
institute against Fountain Square or join any other Person in instituting
against Fountain Square any insolvency proceeding (namely, any proceeding of the
type referred to in the definition of “Event of Bankruptcy”) so long as any
commercial paper or other senior indebtedness issued by Fountain Square shall be
outstanding or there shall not have elapsed one year plus one day since the last
day on which any such commercial paper or other senior indebtedness shall be
outstanding. The foregoing shall not limit such Person’s right to file any claim
in or otherwise take any action with respect to any insolvency proceeding that
was instituted by any Person other than such Person.

Section 11.13 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER TRANSACTION
DOCUMENTS EXECUTED AND DELIVERED

 

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HEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES HERETO AND THERETO
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.

Section 11.14 Confidentiality.

(a) Each of the Borrower, BCC and the Servicer shall maintain and shall cause
each of its Affiliates, employees and officers and agents to maintain the
confidentiality of this Agreement and the other Transaction Documents and the
other proprietary information with respect to the Lender and its respective
businesses obtained by it in connection with the, structuring, negotiating and
execution of the transactions contemplated herein and therein, except that the
Borrower, BCC and the Servicer and their respective Affiliates, officers and
employees may disclose such information (i) to any Rating Agency or to such
Brooke Party’s external accountants and attorneys, (ii) to any Person that is
proposed to be an investor in or lender to any Brooke Party or a party to any
prospective merger or consolidation, securitization or asset purchase with a
Brooke Party who agrees to hold such information confidential in accordance with
the terms of this Section 11.14, (iii) as required by any applicable law or
order of any judicial or administrative proceeding and (iv) to any officers,
directors, employees, outside accountants and attorneys of any of the foregoing;
provided that each such Person described in clause (ii) is informed of the
confidential nature of such information in a manner consistent with the practice
of the Borrower, BCC and the Servicer for making such disclosure generally to
Persons of such type and has agreed to hold such information confidential on
terms substantially similar in substance to those set forth in this
Section 11.14. In addition, each Brooke Party may disclose any such nonpublic
information pursuant to any law, rule, regulation, direction, request or order
of any judicial, administrative or regulatory authority or proceedings (whether
or not having the force or effect of law).

(b) The Lender shall maintain and shall cause each of its Affiliates, employees
and officers and agents to maintain the confidentiality of all proprietary
information with respect to the Brooke Parties in connection with the
transactions contemplated herein and therein to the extent such information has
been identified as being confidential; provided that any such information may be
disclosed (i) to any prospective or actual assignee or participant of any of the
Lender who agrees to hold such information confidential in accordance with the
terms of this Section 11.14, (ii) by the Lender to any Rating Agency, (iii) by
the Lender to any commercial paper dealer or provider of a surety, guaranty or
credit or liquidity enhancement to the Lender or any entity organized for the
purpose of purchasing, or making loans secured by, financial assets for which
Fifth Third acts as the administrative agent and (iv) to any officers,
directors, employees, outside accountants and attorneys of any of the foregoing;
provided that each such Person described in clause (iii) above is informed of
the confidential nature of such information in a manner consistent with the
practice of the Lender for making such disclosure generally to Persons of such
type and has agreed to hold such information confidential on terms substantially

 

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similar in substance to those set forth in this Section 11.14. In addition, the
Lender may disclose any such nonpublic information pursuant to any law, rule,
regulation, direction, request or order of any judicial, administrative or
regulatory authority or proceedings.

Section 11.15 Consents Regarding Loans. Each of the Borrower and the Seller
(severally as to itself alone) hereby (a) represents and warrants, as of the
Closing Date, each Determination Date and the date of each Advance that all
consents, authorizations and approvals required from any Person have been
obtained in order for the Borrower to pledge to the Lender (i) any presently
existing or hereafter arising Loans, (ii) all of the Seller’s right, title and
interest in all Related Security related thereto, (iii) all proceeds with
respect to the foregoing and (iv) all rights of the Seller in, to and under each
of the documents contained in the related Custodial Collateral File otherwise
evidencing, securing or related to such Loans and (b) agrees that the Lender may
rely on the representations and warranties set forth in clause (a) above
notwithstanding any actual or constructive knowledge with respect to such
representations and warranties obtained thereby.

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective officers thereunto duly authorized as of the day and year first
above written.

 

Brooke Warehouse Funding, LLC   BROOKE WAREHOUSE FUNDING, LLC, as Borrower 10950
Grandview Drive, Suite 600   Overland Park, Kansas 66210   By:  

/s/ Michael S. Lowry

Attention: President   Name:   Michael S. Lowry Facsimile: 913-339-6328   Title:
  President     Brooke Credit Corporation   BROOKE CREDIT CORPORATION, as Seller
10950 Grandview Drive, Suite 600   Overland Park, Kansas 66210   By:  

/s/ Michael S. Lowry

Attention: President   Name:   Michael S. Lowry Facsimile: 913-339-6328   Title:
  President and Chief Executive Officer Fifth Third Bank   FIFTH THIRD BANK, as
Lender 38 Fountain Square Plaza   MD 109046   By:  

/s/ Robert O. Finley

Cincinnati, Ohio 45263   Name:   Robert O. Finley Attention: Brian Gardner  
Title:   Vice President Facsimile: 513-534-0319    

 

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