Exhibit 10.29
STOCK PLEDGE AND SECURITY AGREEMENT
     BROOKE CAPITAL CORPORATION, a Kansas corporation (“Debtor”), for valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
hereby grants to BROOKE CAPITAL ADVISORS, INC., a Kansas corporation, (“Secured
Party”), a lien upon and security interest in the property described in
Exhibit A attached hereto and by this reference made a part hereof
(“Collateral”), effective this 31st day of December, 2008.
     This Stock Pledge and Security Agreement (“Pledge Agreement”) is entered
into to secure payment of Debtor’s loan (“Loan”) in the amount of TWELVE MILLION
THREE HUNDRED EIGHTY-TWO THOUSAND DOLLARS ($12,382,000.00), with interest, as
evidenced by a Note of even date herewith and other Loan Documents including,
but not limited to, the Commercial Loan Agreement, the Note, this Pledge
Agreement, the Guaranty, and any other loan documents to secure performance by
Debtor of its obligations under the Note and other loan documents (hereinafter
referred to as the “Obligations”).
     Incident thereto, Debtor agrees with Secured Party as follows:
     1. DEBTOR’S COVENANTS, WARRANTIES AND REPRESENTATIONS. Debtor covenants,
warrants and represents that:
          (a) The security interest granted to Secured Party in the Collateral
shall constitute a first lien, and that Debtor is the lawful owner of such
Collateral and has good right to pledge, sell, assign, co-sign, transfer and
create a security interest in the same;
          (b) The Collateral shall continue to be free from any pledges, liens,
encumbrances and security interests or other claims in favor of others and that
Debtor will warrant and, at Secured Party’s request, defend the same from all
claims and demands of all persons;
          (c) Debtor shall pay all costs necessary to obtain, preserve, and
enforce this security interest and preserve the Collateral, including, but not
limited to, taxes, assessments, insurance premiums, reasonable attorneys’ fees
and legal expenses; and
          (d) Immediately upon Debtor’s completion of its acquisition of Delta
Plus Holdings, Inc., the holding company that owns one hundred percent (100%) of
Traders Insurance Company and one hundred percent (100%) of Traders Insurance
Connection, the Managing General Agency associated with Traders Insurance
Company, Debtor shall cause to have executed an amendment to Exhibit A to
include as Collateral one hundred percent (100%) of Debtor’s right, title and
interest in Delta Plus Holdings, Inc., Traders Insurance Company, and Traders
Insurance Connection.

 

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     2. COMPLIANCE WITH LAWS. Upon request and as instructed by Secured Party,
Debtor agrees to comply with the requirements of all applicable state and
federal laws in order to grant Secured Party a valid lien upon, and a security
interest in, the Collateral described herein, or which may be described in any
amendment supplementary hereto. Secured Party shall retain physical possession
of any certificates or documents evidencing Debtor’s ownership of the
Collateral.
     3. FINANCIAL CONDITION. Debtor shall furnish Secured Party with any
information on the Collateral, the Obligations, the financial condition of
Debtor any information relating to the Collateral or other assets reasonably
requested by Secured Party.
     4. RIGHT OF INSPECTION. Debtor shall allow Secured Party to inspect the
Collateral and inspect and copy all records relating to the Collateral and the
Obligations at all reasonable times upon reasonable notice.
     5. MAINTENANCE OF SECURITY INTEREST. Debtor shall sign any papers furnished
by Secured Party that are necessary to obtain and maintain this first priority
security interest.
     6. REQUIRED NOTIFICATION. Debtor shall promptly notify Secured Party of any
loss, damage, or other such change in or to the Collateral or in any fact or
circumstance warranted or represented by Debtor in this Pledge Agreement or any
loan document furnished to Secured Party, or if any Event of Default occurs.
     7. EVENT OF DEFAULT. The occurrence of any of the following shall
constitute an Event of Default under this Pledge Agreement: (a) any default
under the Note or the Loan Agreement, or any other Loan Documents; (b) any
default in the payment or performance of any obligation and the expiration,
waiver or termination of Debtor’s cure rights applicable thereto (if any), or
any defined event of default and expiration, waiver or termination of Debtor’s
cure rights applicable thereto (if any), under (i) any contract or instrument
evidencing any Obligations, or (ii) any other agreement between Debtor and
Secured Party, including without limitation the Loan Agreement and Note
referenced above, relating to or executed in connection with any Obligations;
(c) any representation or warranty made by Debtor herein shall prove to be
incorrect, false, or misleading in any material respect when made; (d) Debtor
shall fail to observe or perform any obligation or agreement contained herein;
(e) any impairment of the rights of Secured Party in any Collateral, or any
attachment or like levy on any property or assets of Debtor; and (f) Secured
Party, in good faith, believes any or all of the Collateral to be in danger of
misuse, dissipation, commingling, loss, theft, damage or destruction, or
otherwise in jeopardy or unsatisfactory in character or value.
     8. REMEDIES.
          (A) Upon the occurrence of any Event of Default, Secured Party shall
have the right to declare immediately due and payable any and all Obligations
secured hereby and to terminate any commitments of Secured Party to Debtor. Upon
the occurrence of any Event of Default, Secured Party shall have all other
rights, powers,

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privileges and remedies granted to a secured party upon default under the
Uniform Commercial Code or otherwise provided by law, including without
limitation, the right (a) to contact all persons obligated to Debtor on any
Collateral and to instruct such person to deliver all Collateral directly to
Secured Party, and (b) to sell, lease, license or otherwise dispose of any or
all Collateral in accordance with applicable law and regulations. All rights,
powers, privileges and remedies of the Secured Party shall be cumulative. No
delay, failure or discontinuance of Secured Party in exercising any right,
power, privilege or remedy; nor shall any single or partial exercise of any such
right, power, privilege or remedy preclude, waive or otherwise affect any other
or further exercise thereof or the exercise of any other right, power,
privilege, or remedy. Any waiver, permit, consent or approval of any kind by
Secured Party of any default hereunder, or any such waiver of any provisions or
conditions hereof, must be in writing and shall be effective only to the extent
set forth in writing. While an Event of Default exists: (a) Debtor will deliver
to Secured Party from time to time, as requested by Secured Party, current lists
of all Collateral; (b) Debtor will not dispose of any Collateral except on terms
approved by Secured Party; (c) Secured Party may, at any time and at Secured
Party’s sole option and in accordance with applicable laws and regulations,
liquidate at any time deposits pledged to Secured Party hereunder and apply the
proceeds thereof to payment of the Obligations, whether or not said time
deposits have matured and notwithstanding the fact that such liquidation may
give rise to penalties for early withdrawal of funds; and (d) at Secured Party’s
request, Debtor will assemble and deliver all Collateral and books and records
pertaining thereto, to Secured Party at a reasonably convenient place designated
by Secured Party. Debtor further agrees that Secured Party shall have no
obligation to process or prepare any Collateral for sale or other disposition.
          (B) Notwithstanding anything herein to the contrary, Secured Party
acknowledges and agrees that Secured Party shall not be entitled to vote the
pledged stock of First Life America Insurance Company or Traders Insurance
Company, or assert ownership or transfer ownership of First Life America or
Traders Insurance Company until Secured Party has complied with any and all
applicable laws of Kansas and Missouri and has obtained any required regulatory
approval of the Kansas Department of Insurance and/or the Missouri Department of
Insurance.
     9. DISPOSITION OF COLLATERAL AND PROCEEDS; TRANSFER OF OBLIGATIONS. In
disposing of Collateral hereunder, Secured Party may disclaim all warranties of
title, possession, quiet enjoyment and the like. Any proceeds of any disposition
of any Collateral, or any part thereof, may be applied by Secured Party to the
payment of expenses incurred by Secured Party in connection with the foregoing,
including reasonable attorneys’ fees, and the balance of such proceeds may be
applied by Secured Party toward the payment of the Obligations in such order of
application as Secured Party may from time to time elect. Upon the transfer of
all or any part of the Obligations, Secured Party may transfer all or any part
of the Collateral and shall be fully discharged thereafter from all liability
and responsibility with respect to any of the foregoing so transferred, and the
transferee shall be vested with all rights and powers of Secured Party hereunder
with respect to any of the foregoing so transferred; but with respect to any
Collateral not so transferred Secured Party shall retain all rights, powers,
privileges and remedies herein given.

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     10. TERMINATION. This Pledge Agreement shall terminate and Secured Party
shall release all of Secured Party’s security interest in the Collateral upon
full and indefeasible payment of all Debtor’s obligations under the Loan
Agreement, Note and Loan Documents to Secured Party’s reasonable satisfaction.
     11. STATUTE OF LIMITATIONS. Until all Obligations shall have been paid in
full and all commitments by Secured Party to loan money to Debtor have been
terminated, the power of sale or other disposition and all other rights, powers,
privileges and remedies granted to Secured Party hereunder shall continue to
exist and may be exercised by Secured Party at any time and from time to time
irrespective of the fact that the Obligations or any part thereof may have
become barred by any statute of limitations, or that the liability of Debtor may
have ceased, unless such liability shall have ceased due to the payment in full
of all Obligations secured hereunder.
     12. MISCELLANEOUS. Debtor hereby waives any right to require Secured Party
to (i) proceed against Debtor or any other person, (ii) marshal assets or
proceed against or exhaust any security from Debtor or any other person,
(iii) perform any obligation of Debtor with respect to any Collateral, and
(d) make any presentment or demand, or give any notice of nonpayment or
nonperformance, protest, notice of protest or notice of dishonor hereunder or in
connection with any Collateral. Debtor further waives any right to direct the
application of payments or security for any Obligations of Debtor.
     13. NOTICES. All notices, requests and demands required under this Pledge
Agreement must be in writing, addressed to Secured Party at the address
specified in any other loan documents entered into between Debtor and Secured
Party and to Debtor at the address of its chief executive office (or principal
residence, if applicable) specified below or to such other address as any party
may designate by written notice to each other party, and shall be deemed to have
been given or made as follows: (a) if personally delivered, upon delivery;
(b) if sent by mail, upon the earlier of the date of receipt or three (3) days
after deposit in the U.S. mail, first class and postage prepaid; and (c) if sent
by telecopy, upon receipt.
     14. COSTS, EXPENSES AND ATTORNEYS’ FEES. Debtor shall pay to Secured Party
immediately upon demand the full amount of all payments, advances, charges,
costs and expenses, including reasonable attorneys’ fees (to include outside
counsel fees and all allocated costs of Secured Party’s in-house counsel),
expended or incurred by Secured Party in connection with (a) the perfection and
preservation of the Collateral or Secured Party’s interest therein, and (b) the
realization, enforcement and exercise of any right, power, privilege or remedy
conferred by this Pledge Agreement, whether incurred at the trial or appellate
level, in an arbitration proceeding or otherwise, and including any of the
foregoing incurred in connection with any bankruptcy proceeding (including
without limitation, any adversary proceeding, contested matter or motion brought
by Secured Party or any other person) relating to Debtor or in any way affecting
any of the Collateral or Secured Party’s ability to exercise any of its rights
or remedies with respect thereto. All of the foregoing shall be paid by Debtor
with interest from the date of demand until paid in full at a rate per annum
equal to the greater of ten

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percent (10%) or Prime Rate as published in the Wall Street Journal in effect
from time to time.
     15. SUCCESSORS; ASSIGNS; AMENDMENT. This Pledge Agreement shall be binding
upon and inure to the benefit of the heirs, executors, administrators, legal
representatives, successors and assigns of the parties, and may be amended or
modified only in writing signed by Secured Party and Debtor.
     16. SEVERABILITY OF PROVISIONS. If any provision of this Pledge Agreement
shall be held to be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or any
remaining provisions of this Pledge Agreement.
     17. GOVERNING LAW. This Pledge Agreement shall be governed by and construed
in accordance with the laws of the State of Kansas.
     18. JURISDICTION; VENUE. In the event that any action, suit or other
proceeding is brought in connection with this Pledge Agreement, the parties
hereto hereby (a) irrevocably consent to the exercise of jurisdiction over them
and, to the extent permitted by applicable laws, their property, by the trial
courts (State or federal) seated in Phillips County, Kansas, or a U.S. District
Court having jurisdiction over Phillips County, Kansas, and (b) irrevocably
waive any objection they or any of them might now or hereafter have or assert to
the venue of any such proceeding in any court described in clause (a) above.
WITNESS the due execution of this Pledge Agreement by the respective duly
authorized officers or other authorized Persons of the undersigned as of the
date first written above.

                  DEBTOR    
 
                BROOKE CAPITAL CORPORATION    
 
           
 
  By:   KYLE GARST    
 
                Name: Kyle Garst         Title: President & CEO    

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EXHIBIT A
to the
STOCK PLEDGE AND SECURITY AGREEMENT
Collateral. Debtor hereby pledges the following as security for its Obligations
as set forth in the foregoing Stock Pledge and Security Agreement: [Note: Insert
is to match Commercial Loan Agreement]
          (A) one hundred percent (100%) of Borrower’s right title and interest
in First Life America Insurance Company, of any nature or kind including without
limitation preferred or common stock/ownership interest evidenced by a
stock/membership interest pledge agreement, stock/membership assignments, voting
proxies, and possession stock/member certificates which will be held in
safekeeping with Lender;
          (B) upon completion of the Acquisition, one hundred percent (100%) of
Borrower’s right title and interest in Delta Plus, of any nature or kind
including, without limitation, preferred or common stock/ownership interest
evidenced by a stock/membership interest pledge agreement, stock/membership
assignments, voting proxies, and possession stock/member certificates which will
be held in safekeeping with Lender;
          (C) upon completion of the Acquisition, one hundred percent (100%) of
Borrower’s right title and interest in TIC, of any nature or kind including,
without limitation, preferred or common stock/ownership interest evidenced by a
stock/membership interest pledge agreement, stock/membership assignments, voting
proxies, and possession stock/member certificates which will be held in
safekeeping with Lender;
          (D) upon completion of the Acquisition, one hundred percent (100%) of
Borrower’s right title and interest in MGA-TIC, of any nature or kind including,
without limitation, preferred or common stock/ownership interest evidenced by a
stock/membership interest pledge agreement, stock/membership assignments, voting
proxies, and possession stock/member certificates which will be held in
safekeeping with Lender;
          (E) all commissions, policy fees, service fees, underwriting fees,
claims fees, administrative and processing fees, fronting fees, risk management
and loss/cost control fees, investment income, management fees (including
without limitation, case and captive management fees), premium finance revenues,
reinsurance brokerage commission and all other fees and revenue payable to First
Life America, Delta Plus, TIC, and MGA-TIC (upon completion of the Acquisition);
     As noted above in the foregoing Stock Pledge and Security Agreement, Debtor
and Secured Party agree that immediately upon Debtor’s completion of its
acquisition of Delta Plus Holdings, Inc., the holding company that owns one
hundred percent (100%) of Traders Insurance Company and one hundred percent
(100%) of Traders Insurance Connection, the Managing General Agency associated
with Traders Insurance

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Company, Debtor and Secured Party shall amend this Exhibit A to include as
Collateral (1) one hundred percent (100%) of Debtor’s right, title and interest
in Delta Plus Holdings, Inc., Traders Insurance Company, and Traders Insurance
Connection, and (2) all commissions, policy fees, service fees, underwriting
fees, claims fees, administrative and processing fees, fronting fees, risk
management and loss/cost control fees, investment income, management fees
(including without limitation, case and captive management fees), premium
finance revenues, reinsurance brokerage commission and all other fees and
revenue payable to Debtor and Delta Plus Holdings, Traders Insurance Company,
and Traders Insurance Connection.

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