**Exhibit 10.28****COMMERCIAL LOAN AGREEMENT**     This **COMMERCIAL LOAN AGREEMENT**(“**Agreement**”), dated as of this 31st day of December, 2008, byand between **BROOKE CAPITAL CORPORATION**, a Kansas corporation (“**Borrower**”), and **BROOKE CAPITALADVISORS, INC.**, a Kansas corporation, (“**Lender**”).     WHEREAS, the Borrower and Lender have ongoing business dealings and Lender is a Subsidiary ofBorrower;     WHEREAS, the Borrower has requested, and subject to the terms and conditions of thisAgreement, the Lender has agreed to make a loan to Borrower in the sum of Twelve Million, ThreeHundred and Eighty-Two Thousand Dollars ($12,382,000.00);     WHEREAS, the Loan shall be evidenced by a Promissory Note of even date herewith from Borrowerto Lender (the “**Note**”);     WHEREAS, the purpose of the loan is to restructure debt to increase Borrower’s long term debtand decrease its short term obligations as acquired in conjunction with Borrower’s merger withBrooke Franchise Corporation and for such other business purposes as the Borrower may engage insubject to Lender’s approval;     WHEREAS, Borrower has agreed and contracted to acquire (the “**Acquisition**”) one hundred percent(100%) of Delta Plus Holdings, Inc. (“**Delta Plus**”), the holding company that owns one hundredpercent (100%) of both Traders Insurance Company (“**TIC**”) and Traders Insurance Connection, theManaging General Agency associated with Traders Insurance Company (“**MGA-TIC**”);     WHEREAS, upon completion of said Acquisition, Delta Plus and MGA-TIC shall be added asCo-Borrowers (“**Co-Borrowers**”) to this Agreement, the Note, and all related Loan Documents, and onehundred percent (100%) of the stock of Delta Plus, TIC, and MGA-TIC shall be pledged as additionalsecurity for the Loan;     WHEREAS, Borrower shall also pledge as security for the Loan one hundred percent (100%) of itsright, title, and interest in First Life America Insurance Company (together with Delta Plus, TICand MGA-TIC, the “Pledged Companies);     WHEREAS, Borrower’s parent, **BROOKE CORPORATION**, a Kansas corporation, (“**Guarantor**”), shallfully guaranty Borrower’s prompt, punctual and full payment of Borrower’s Obligations to Lenderpursuant to this Agreement, the Note, and other Loan Documents;     NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which areacknowledged, it is agreed as follows:
 

 
**SECTION 1. DEFINITIONS.**     **1.1 Certain Defined Terms.**As used in this Agreement, and in any other Loan Document (unlessotherwise specified therein), the following terms shall have the following meanings:     “Acquisition” has the meaning assigned to such term in the preamble of this Agreement.     “Affiliate” means any Person: (a) who directly or indirectly controls, is controlled by, or isunder common control with, either Borrower or First Life America; (b) who directly or indirectlyowns or holds ten percent (10%) or more of any equity interest in Borrower; (c) who owns or holdsten percent (10%) or more of the stock or other equity interest having voting power for theelection of directors or the power to direct or cause the direction of management, and is directlyor indirectly owned or held by Borrower; or (d) who has a senior executive officer who is also asenior executive officer of either Borrower or First Life America. For purposes of thisdefinition, “control” (including with correlative meanings, the terms “controlling”, “controlledby” and “under common control with”) means the possession directly or indirectly of the power todirect or cause the direction of the management by selection of a director or directors or theappointment of officers and/or the policies of a Person, whether through the ownership of votingsecurities or other equity interest, or by contract or otherwise.     “Agreement” means this Commercial Loan Agreement as it may be amended, restated, supplementedor otherwise modified from time to time.     “Asset Disposition” means the disposition, whether by sale, lease, transfer, loss, damage,destruction, condemnation or otherwise, of any or all of the assets of Borrower or any Subsidiary.     “Borrower” has the meaning assigned to such term, and is the party designated, in the preambleof this Agreement. Upon completion of the Acquisition, the term Borrower as used in thisAgreement, the Note, and all Loan Documents shall also include Co-Borrowers.     “Capital Lease” means any lease of any property (whether real, personal or mixed) that, inconformity with GAAP, should be accounted for as a capital lease.     “Cash Equivalents” means: (a) marketable direct obligations issued or unconditionallyguaranteed by the United States Government or issued by any agency thereof and backed by the fullfaith and credit of the United States, in each case maturing within six (6) months from the date ofacquisition thereof; (b) commercial paper maturing no more than six (6) months from the date issuedand, at the time of acquisition, having a rating of at least A-1 from Standard & Poor’s Corporationor at least P-1 from Moody’s Investors Service, Inc.; and (c) certificates of deposit or bankers’acceptances maturing within six (6) months from the date of issuance thereof issued by, orovernight reverse repurchase agreements from, any commercial bank organized under the laws of theUnited States of America or any state thereof or the District of Columbia having combined capitaland surplus of not less than $250,000,000 and not subject to setoff rights in favor of such bank.     “Co-Borrower” has the meaning assigned to such term in the preamble of this Agreement. Uponcompletion of the Acquisition, the term Borrower as used in this Agreement, the Note, and all LoanDocuments shall also include Co-Borrower.     “Collateral” has the meaning as set forth in subsection 2.4.
2

 
     “Commitment” means the commitment of Lender to make the Loan pursuant to subsection 2.1(A), inthe aggregate amount of Twelve Million, Three Hundred and Eighty-Two Thousand Dollars($12,382,000.00).     “Delta Plus” has the meaning assigned to such term in the preamble of this Agreement.     “Employee Benefit Plan” means any employee benefit plan within the meaning of Section 3(3) ofERISA which (a) is maintained for employees of Borrower or First Life America or any ERISAAffiliate or (b) has at any time within the preceding six (6) years been maintained for theemployees of Borrower or First Life America or any current or former ERISA Affiliate.     “Environmental Laws” means any present or future federal, state or local law, rule, regulationor order relating to pollution, waste, disposal, or the protection of human health or safety, plantlife or animal life, natural resources or the environment.     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time totime, and any successor statute and all rules and regulations promulgated thereunder.     “ERISA Affiliate,” as applied to Borrower or First Life America Insurance Company, means anyPerson who is a member of a group that is under common control with Borrower or First Life AmericaInsurance Company or any Affiliate thereof, who together with Borrower or First Life AmericaInsurance Company is treated as a single employer within the meaning of Section 414(b) and (c) ofthe IRC.     “First Life America” means First Life America Insurance Company, a Kansas corporation.     “Guaranty” means Brooke Corporation’s guaranty of Borrower’s Obligations under this Agreement,the Note, and other Loan Documents.     “Indebtedness,” as applied to any Person, means without duplication: (a) all indebtedness forborrowed money; (b) all obligations under leases that in accordance with GAAP, constitute CapitalLeases; (c) all notes payable and drafts accepted representing extensions of credit whether or notrepresenting obligations for borrowed money; (d) any obligation owed for all or any part of thedeferred purchase price of property or services; (e) all indebtedness secured by any Lien on anyproperty or asset owned or held by that Person regardless of whether the indebtedness securedthereby shall have been assumed by that Person or is non-recourse to the credit of that person; (f)all obligations in respect of letters of credit or bankers’ acceptances; and (g) any advances underany factoring arrangement.     “Insurance Entity” means any insurance company, reinsurance company, managing general agency,broker or insurance supplier, whether or not an Affiliate of Borrower.     “IRC” means the Internal Revenue Code of 1986, as amended from time to time, and any successorstatute and all rules and regulations promulgated thereunder.     “Liabilities” shall have the meaning given that term in accordance with GAAP, and shallinclude Indebtedness.     “Lien” means any lien, mortgage, pledge, security interest, charge or encumbrance of any kind,whether voluntary or involuntary, (including any conditional sale or other title retentionagreement, any lease in the nature thereof, and any agreement to give any security interest) andany filing of UCC financing statements or similar instruments.     “Loan” refers to all advances made under the terms of this Agreement.
3

 
     “Loan Documents” means this Agreement, the Note, the Security Documents, the Guaranty, and allother instruments, documents and agreements executed by or on behalf of Borrower or an Affiliatethereof and delivered concurrently herewith or at any time hereafter to or for Lender in connectionwith the Loan and transactions contemplated by this Agreement, as such documents are amended,restated, supplement or modified from time to time.     “Managing Agreement” means any agency, producer, broker or managing general agency agreementor similar such contracts between Borrower or First Life America and any Insurance Entity.     “Material Adverse Effect” means as determined by Lender, in its sole, reasonable, commercialdiscretion, a material adverse effect upon (a) the business, operations, prospects, properties,assets or condition (financial or otherwise) of Borrower, or (b) the ability of Borrower to performits obligations under any Loan Documents or of Lender to enforce or collect any of the Obligations.     “Material Agency Agreement” means any one or more Managing Agreements with an Insurance Entityor Insurance Entities through which Borrower has received ten percent (10%) or more of their grossrevenues during the immediately preceding twelve (12) calendar months.     “MGA-TIC” has the meaning assigned to such term in the preamble of this Agreement.     “Note” means a promissory note of Borrower in a form acceptable to the Lender, issued pursuantto subsection 2.1(B).     “Obligations” means all obligations, liabilities and indebtedness of every nature or kind ofBorrower from time to time owed to Lender under the Loan Documents including the principal amountof the Loan, claims and indebtedness, accrued and unpaid interest and all fees, indemnities, costsand expenses, whether primary, secondary, direct, contingent, fixed or otherwise, heretofore, nowand/or from time to time hereafter owing, due or payable to Lender including, without limitation,all interest, fees, costs and expenses accrued or incurred after the filing of any petition underany bankruptcy or insolvency law.     “Permitted Encumbrances” means the following types of Liens: (a) Liens (other than Liensrelating to Environmental Claims or ERISA) for taxes, assessments or other governmental charges:(i) not yet due and payable; or (ii) due and payable that are being contested in good faith byappropriate proceedings, provided that, in the case of Liens under this clause (iii), a reserveshall have been established in the amount of the claims for any such taxes, assessments or othergovernmental charges to the extent required by GAAP; (b) statutory Liens of landlords, carriers,warehousemen, mechanics, materialmen and other similar liens imposed by law, which are incurred inthe ordinary course of business for sums not more than thirty (30) days delinquent; (c) Liens(other than any Lien imposed by ERISA) incurred or deposits made in the ordinary course of business inconnection with workers’ compensation, unemployment insurance and other types of social security,statutory obligations, surety and appeal bonds, bids, leases, government contracts, tradecontracts, performance bonds and other similar obligations (exclusive of obligations for thepayment of borrowed money); (d) easements, rights-of-way, restrictions, and other similar chargesor encumbrances not interfering in any material respect with the ordinary conduct of the businessof Borrower or its Subsidiaries; (e) Liens for purchase money obligations, provided that (i) theIndebtedness secured by any such Lien is permitted under subsection 6.1 and (ii) such
4

 
Lienencumbers only the asset so purchased; (f) Liens in favor of Lender; and (g) Liens set forth onSchedule 1.     “Person” means and includes natural persons, corporations, limited partnerships, generalpartnerships, limited liability companies, joint stock companies, joint ventures, associations,companies, trusts, banks, trust companies, land trusts, business trusts or other organizationswhether or not legal entities, and governments and agencies and political subdivisions thereof.     “Pledged Companies” has the meaning assigned to such term in the preamble of this Agreement.     “Security Agreements” means (i) the continuing Stock Pledge and Security Agreement dated as ofthe date hereof between Borrower and Lender and any amendments thereto, and (ii) the continuingStock Pledge and Security Agreement to be entered into upon completion of the Acquisition andpursuant to the Affirmative Covenant set forth in this Agreement at subsection 5.1(C).     “Security Documents” means the Security Agreements, the Guaranty, and any other document oragreement under which Borrower grants Liens from time to time on any of its assets or otherwisesecures its Obligations under this Agreement to Lender.     “Subsidiary” means, with respect to any Person, any corporation, association or other businessentity of which more than fifty percent (50%) of the total voting power of shares of stock (orequivalent ownership or controlling interest) entitled (without regard to the occurrence of anycontingency) to vote in the election of directors, managers or trustees thereof is at the timeowned or controlled, directly or indirectly, by that Person or one or more of the othersubsidiaries of the Person or a combination thereof.     “TIC” has the meaning assigned to such term in the preamble of this Agreement.     “UCC” means the Uniform Commercial Code as in effect on the date hereof in the State ofKansas, as amended from time to time, and any successor statute.     **1.2 Accounting Terms.**For purposes of this Agreement, all accounting terms not otherwisedefined herein shall have the meanings assigned to such terms in conformity with GAAP. Financialstatements and other information furnished to Lender pursuant to subsection 5.2 shall be preparedin accordance with GAAP (as in effect at the time of such preparation) on a consistent basis. Inthe event any “Accounting Changes” (as defined below) shall occur and such changes affect financialcovenants, standards or terms in this Agreement, then Borrower and Lender agree to enter intonegotiations in order to amend such provisions of this Agreement so as to equitably reflect suchAccounting Changes with the desired result that the criteria for evaluating the financial conditionof Borrower shall be the same after such Accounting Changes as if such Accounting Changes had notbeen made, and until such time as such an amendment shall have been executed and delivered byBorrower and Lender, (A) all financial covenants, standards and terms in this Agreement shall becalculated and/or construed as if such Accounting Changes had not been made, and (B) Borrowers shall preparefootnotes to each Compliance Certificate and the financial statements required to be deliveredhereunder that show the differences between the financial statements delivered (which reflect suchAccounting Changes) and the basis for calculating financial covenant compliance (without reflectingsuch Accounting Changes). “Accounting Changes” means: (a) changes in accounting principlesrequired by GAAP and implemented by Borrowers and their Subsidiaries; (b) changes in accountingprinciples recommended by Borrower’s certified public accountants; and (c) changes in
5

 
carryingvalue of Borrower’s assets, liabilities or equity accounts resulting from any adjustments in excessof $50,000 in the aggregate that, in each case, were applicable to, but not included in, the mostrecent financial statements of Borrower delivered to Lender on or prior to the date of thisAgreement.     **1.3 Other Definitional Provisions.**References to “Sections”, “subsections”, “Exhibits” and“Schedules” shall be to Sections, subsections, Exhibits and Schedules, respectively, of thisAgreement unless otherwise specifically provided. Any of the terms defined in subsection 1.1 may,unless the context otherwise requires, be used in the singular or the plural depending on thereference. In this Agreement, words importing any gender include the other genders; the words“including,” “includes” and “include” shall be deemed to be followed by the words “withoutlimitation”; references to agreements and other contractual instruments shall be deemed to includesubsequent amendments, assignments, and other modifications thereto, but only to the extent suchamendments, assignments and other modifications are not prohibited by the terms of this Agreementor any other Loan Document; references to Persons include their respective permitted successors andassigns or, in the case of governmental Persons, Persons succeeding to the relevant functions ofsuch Persons; and all references to statutes and related regulations shall include any amendmentsof same and any successor statutes and regulations.**SECTION 2. LOAN.**     **2.1 Loan Amount; Note.**          (A) Loan. Subject to the terms and conditions of this Agreement and in reliance upon therepresentations and warranties of Borrower set forth herein and in the other Loan Documents, Lenderagrees to loan Borrower as much as Twelve Million Three Hundred and Eighty-Two Thousand Dollars($12,382,000.00).          (B) Note. Borrower shall execute and deliver to Lender with appropriate insertions a Note toevidence the Loan. In the event of an assignment under subsection 8.1, Borrower shall, uponsurrender of the Note, issue a new Note to reflect the interest held by the assigning Lender andits assignee or assignees.          (C) Evidence of Loan Obligation. The Loan shall be evidenced by this Agreement, the Note, theLoan Documents, and notations made from time to time by Lender in its books and records, includingcomputer records. Lender shall record in its books and records, including computer records, theprinciple amount of the Loan owing to it from time to time. Lender’s books and records shallconstitute presumptive evidence, absent manifest error, of the accuracy of the informationcontained therein. Failure by the Lender to make any such notation or records shall not affect the obligations ofBorrower to Lender with respect to any Loan or the presumption as hereinabove set forth.
6

 
     **2.2 Interest.**          (A) Rate of Interest. The Loan and all other Obligations shall bear interest from the datesuch Loan is made or such other Obligations are incurred to the date paid at a rate equal to thedaily Prime Rate as published in the Wall Street Journal plus four and one-half percent (4.5%).This rate may change daily and any change in the interest rate will take effect on the followingday. Payments due Lender will change on the 15th day of the calendar month following the monthduring which the rate of interest changed.          (B) Interest Laws. Notwithstanding any provision to the contrary contained in this Agreementor any other Loan Document, Borrower shall not be required to pay, and Lender shall not bepermitted to collect, any amount of interest in excess of the maximum amount of interest permittedby applicable law (“Excess Interest”). If any Excess Interest is provided for or determined by acourt of competent jurisdiction to have been provided for in this Agreement or in any other LoanDocument, then in such event: (1) the provisions of this subsection shall govern and control; (2)Borrower shall not be obligated to pay any Excess Interest; (3) any Excess Interest that Lender mayhave received hereunder shall be, at Lender’s option, (a) applied as a credit against theoutstanding principal balance of the Obligations or accrued and unpaid interest (not to exceed themaximum amount permitted by law), (b) refunded to the payor thereof, or (c) any combination of theforegoing; (4) the interest rate(s) provided for herein shall be automatically reduced to themaximum lawful rate allowed from time to time under applicable law (the “Maximum Rate”), and thisAgreement and the other Loan Documents shall be deemed to have been and shall be, reformed andmodified to reflect such reduction; and (5) Borrower shall not have any action against Lender forany damages arising out of the payment or collection of any Excess Interest. Notwithstanding theforegoing, if for any period of time interest on any Obligations is calculated at the Maximum Raterather than the applicable rate under this Agreement, and thereafter such applicable rate becomesless than the Maximum Rate, the rate of interest payable on such Obligations shall remain at theMaximum Rate until Lender shall have received the amount of interest which Lender would havereceived during such period on such Obligations had the rate of interest not been limited to theMaximum Rate during such period.     **2.3 Payments and Prepayments.**          (A) Manner and Time of Payment. All payments made by Borrower with respect to theObligations, the Loan and the Note, shall be made in immediately available funds in Dollars withoutdeduction, defense, setoff or counterclaim. All payments to Lender hereunder shall be made nolater than 11:00 a.m., (Central Standard Time), on the date on which such payment shall become dueand shall be made by wire transfer to Lender’s account as follows:
7

 
                                        (B) Repayments. The Loan amount of Twelve Million Three-Hundred and Eighty-Two ThousandDollars ($12,382,000.00) shall be repaid based upon an eighty-four (84) month principal paymentamortization period, together with interest pursuant to this Agreement, and a balloon payment ofall accrued and unpaid interest and principal due and payable on the last day of the forty-eighth(48th) month from the date of the Note. Payments shall be made monthly, payable on the fifteenth(15th) day of every month (or the next business day if the 15th day of such month is not a businessday), commencing on the 15th day of the month next following the execution of this agreement.          (C) Voluntary Prepayments. Voluntary prepayments of the Loan, whether in whole or in part,may be made by Borrower at any time, subject to subsection 2.3(D).          (D) Terms Applicable to Prepayments. Any prepayment of the Loan during the first twelve (12)months from the date of the Note shall be subject to a prepayment premium equal to one and one-halfpercent (1.5%) of the outstanding balance of the Loan. This prepayment penalty shall not applyafter the last day of the twelfth (12th) month following the date of the Note. All prepayments ofthe Loan shall be made together with payment of all interest accrued on the amount repaid throughthe date of such prepayment.     **2.4 Collateral.**Borrower hereby pledges the following as security for its Obligations underthis Agreement, the Note, and other Loan Documents:     (A) one hundred percent (100%) of Borrower’s right title and interest in First Life AmericaInsurance Company, of any nature or kind including without limitation preferred or commonstock/ownership interest evidenced by a stock/membership interest pledge agreement,stock/membership assignments, voting proxies, and possession stock/member certificates which willbe held in safekeeping with Lender;     (B) upon completion of the Acquisition, one hundred percent (100%) of Borrower’s right titleand interest in Delta Plus, of any nature or kind including, without limitation, preferred orcommon stock/ownership interest evidenced by a stock/membership interest pledge agreement,stock/membership assignments, voting proxies, and possession stock/member certificates which willbe held in safekeeping with Lender;     (C) upon completion of the Acquisition, one hundred percent (100%) of Borrower’s right titleand interest in TIC, of any nature or kind including, without limitation, preferred or commonstock/ownership interest evidenced by a stock/membership interest pledge agreement,stock/membership assignments, voting
8

 
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 titleand interest in MGA-TIC, of any nature or kind including, without limitation, preferred or commonstock/ownership interest evidenced by a stock/membership interest pledge agreement,stock/membership assignments, voting proxies, and possession stock/member certificates which willbe held in safekeeping with Lender;     (E) all commissions, policy fees, service fees, underwriting fees, claims fees, administrativeand processing fees, fronting fees, risk management and loss/cost control fees, investment income,management fees (including without limitation, case and captive management fees), premium financerevenues, reinsurance brokerage commission and all other fees and revenue payable to First LifeAmerica, Delta Plus, TIC, and MGA-TIC (upon completion of the Acquisition);     **2.5 Capital Adequacy and Other Adjustments.**If, after the date of this Agreement, Lenderdetermines that the adoption of any law, treaty, governmental (or quasi-governmental) rule,regulation, guideline or order regarding capital adequacy, reserve requirements or similarrequirements or compliance by Lender or any corporation controlling Lender with any request ordirective regarding capital adequacy, reserve requirements or similar requirements (whether or nothaving the force of law and whether or not failure to comply therewith would be unlawful) from anygovernmental agency or body having jurisdiction does or shall have the effect of increasing theamount of capital, reserves or other funds required to be maintained by Lender or any corporationcontrolling Lender and thereby reducing the rate of return on Lender’s or such corporation’scapital as a consequence of its obligations hereunder or maintaining the Loans, then Borrower shallfrom time to time within fifteen (15) days after notice and demand from Lender (together with thecertificate referred to in the next sentence) pay to Lender additional amounts sufficient tocompensate Lender for such reduction. A certificate as to the amount of such cost and showing thebasis of the computation (including any averaging or attribution methods) thereof submitted byLender to Borrower shall, absent manifest error, be final, conclusive and binding for all purposes.     **2.6 Taxes, Changes in Laws.**     (A) No Deductions. Any and all payments made hereunder or under the Note shall be made freeand clear of and without deduction for any and all taxes, levies, imposts, deductions, stamp taxes,filing fees, charges or withholdings, and all liabilities with respect thereto; excluding, however,the following: taxes imposed on the net income of Lender by the United States of America, theState of Kansas, or any political subdivision thereof (all such taxes, levies, imposts, deductions,stamp taxes, filing fees, charges or withholdings and all liabilities with respect theretoexcluding such taxes imposed on net income, herein “Tax Liabilities”). If Borrower shall berequired by law to deduct any such Tax Liabilities from or in respect of any sum payable hereunderto Lender then the sum payable hereunder shall be increased as may be necessary (and
9

 
Borrower shallpay all Tax Liabilities and such net income taxes excluded from the definition of “Tax Liabilities” on such increased amount) so that, after making all requireddeductions, Lender receives an amount equal to the sum it would have received had no suchdeductions been made.     (B) Changes in Laws. In the event that, subsequent to the date of this Agreement, (i) anychanges in any existing law, regulation, treaty or directive or in the interpretation orapplication thereof, (ii) any new law, regulation, treaty or directive enacted or anyinterpretation or application thereof, or (iii) compliance by Lender or any corporation controllingLender with any request or directive (whether or not having the force of law) from any governmentalauthority, agency or instrumentality:          (1) does or shall subject Lender or any corporation controlling Lender to any tax of any kindwhatsoever with respect to this Agreement, the other Loan Documents or the Loans or any partthereof made hereunder, or change the basis of taxation of payments to Lender or any corporationcontrolling Lender of principal, fees, interest or any other amount payable hereunder (except fornet income taxes imposed by the United State of America, the State of Kansas or any politicalsubdivision thereof, with respect to interest or other amounts payable hereunder or changes in therate of tax on the overall net income of Lender or any corporation controlling Lender); or          (2) does or shall impose on Lender or any corporation controlling Lender any reserve, specialdeposit or other condition or increased cost in connection with the transactions contemplatedhereby;and the result of any of the foregoing is to increase the cost to Lender of making or continuing ormaintaining the Loan hereunder, as the case may be, or to reduce any amount receivable hereunder,then, in any such case, Borrower shall promptly pay to Lender upon its demand any additionalamounts necessary to compensate Lender on an after-tax basis, for such additional cost or reducedamount receivable, as determined by Lender with respect to this Agreement or the other LoanDocuments. If Lender becomes entitled to claim any additional amounts pursuant to this subsection2.6(B), it shall promptly notify Borrower of the event by reason of which Lender has become soentitled. A certificate as to any additional amounts payable pursuant to the foregoing sentencesubmitted by Lender to Borrower shall, absent manifest error, be final, conclusive and binding forall purposes.     **2.7 Grant of Lien.**Borrower hereby grants Lender a Lien on and security interest in theCollateral to secure the payment and performance of the Loan and all of Borrower’s otherObligations, liabilities and indebtedness to Lender, whether now incurred or at any time hereafterarising.**SECTION 3. CONDITIONS PRECEDENT**     **3.1 Conditions to Loan.**Notwithstanding any other terms of this Agreement, the Lender shallnot be required to make any advance on the Loan unless each of the following conditions precedentis fulfilled to the satisfaction of the Lender in its sole discretion:
10

 
          (A) Representations and Warranties. The representations and warranties contained herein andin the Loan Documents shall be true, correct and complete on and as of the date of this Agreement,and the date of the closing and funding of the Loan, except for any representation or warrantylimited by its terms to a specific date (which shall be true, correct and complete on and as ofsuch specific date).          (B) No Default. There shall not then be in existence an Event of Default or any event which,upon the lapse of time or service of notice or both would constitute an Event of Default.          (C) No Material Adverse Change. Borrower shall not have suffered any substantial or materialchange in the existing business operation or financial condition of Borrower which Lenderdetermines in good faith to have a Material Adverse Effect.          (E) No Litigation. There shall not be pending or, to the knowledge of Borrower, threatened,any material action, charge, claim, demand, suit, proceeding, petition, governmental investigationor arbitration by, against or affecting Borrower that has not been disclosed to Lender by Borrowerin writing, and there shall have occurred no development in any such action, charge, claim, demand,suit, proceeding, petition, governmental investigation or arbitration that has been disclosed toLender that, in the opinion of Lender, could have a Material Adverse Effect.          (F) Compliance with Laws.               (1) Borrower is neither (a) in violation of any law, ordinance, rule, regulation, order,policy, guideline or other requirement of any domestic or foreign government, regulators, or anyinstrumentality or agency thereof, having jurisdiction over the conduct of its business or theownership of its properties, including, without limitation, any violation relating to any use,release, storage, transport or disposal of any hazardous material, nor (b) has failed to obtain anyconsent, order, license, validation, approval or permit from any such government, regulator,instrumentality or agency, which violation or failure would subject such Borrower, or any of itsrespective officers to criminal, civil, or administrative liability or individually or in theaggregate with all such violations and failures have a Material Adverse Effect and no suchviolation or failure has been alleged, nor (c) in violation of any Securities and ExchangeCommission rule or regulation.               (2) First Life America (a) has a legitimate certificate of authority from the KansasDepartment of Insurance, (b) is not listed in the Kansas Department of Insurance Rehabilitation andLiquidation records or comparable records of any other State as having any outstanding issues, (c)is not subject to any investigation, complaint or corrective action, including, but not limited to,probation, rehabilitation or liquidation, by any division of the Kansas Department of Insurance orcomparable agency or department of any other State (except those complaints or actions resulting inthe ordinary course of business and which, if adversely determined, could not, individually or inthe aggregate, be reasonably expected to have a Material Adverse Effect), and (d) is current insubmitting necessary reports and fees.
11

 
               (3) TIC (a) has a legitimate certificate of authority from the Missouri Department ofInsurance, (b) is not listed in the Missouri Department of Insurance’s Rehabilitation andLiquidation records or comparable records of any other State as having any outstanding issues, (c)is not subject to any investigation, complaint or corrective action, including, but not limited to,probation, rehabilitation or liquidation, by any division of the Missouri Department of Insuranceor comparable agency or department of any other State (except those complaints or actions resultingin the ordinary course of business and which, if adversely determined, could not, individually orin the aggregate, be reasonably expected to have a Material Adverse Effect), and (d) is current insubmitting necessary reports and fees.**SECTION 4. REPRESENTATIONS AND WARRANTIES**. To induce Lender to enter into this Agreement, and tomake the Loan, Borrower represents and warrants to Lender that the following statements are andwill be true, correct and complete:     **4.1 Organization, Powers, Capitalization.**          (A) Organization and Powers. Borrower is a corporation duly organized, validly existing andin good standing under the laws of its jurisdiction of incorporation or organization and qualifiedto do business and in good standing in all states and countries where such qualification isrequired except where failures to be so qualified could not in the aggregate be reasonably expectedto have a Material Adverse Effect. Borrower has all requisite corporate or other applicable powerand authority to own and operate its properties, to carry on its business as now conducted andproposed to be conducted and to enter into and perform each Loan Document.          (B) Capitalization. Except as set forth on Schedule 2, all issued and outstanding shares ofcapital stock or other equity interests of Borrower are duly authorized and validly issued, fullypaid, nonassessable, and are free and clear of all Liens and all such share or other equityinterests were issued in compliance with all applicable state, federal and other laws concerningthe issuance of securities. The place of organization or incorporation of Borrower is listed inSchedule 2. The capital stock or other equity interests of Borrower is owned by the stockholdersor other Persons and in the amounts set forth in Schedule 2. No share of the capital stock orother equity interests of Borrower, other than those described above, are issued and outstanding.Except as set forth on Schedule 2, there are no preemptive or other outstanding rights, options,warrants, conversion rights or similar agreements or understandings for the purchase or acquisitionfrom Borrower of any shares of capital stock or other securities of any such entity.     **4.2 Authorization of Borrowing, No Conflict.**Borrower has the corporate or other applicablepower and authority to incur the Obligations. The execution, delivery and performance of thisAgreement and the Loan Documents are within the Borrower’s powers and have been duly authorized byall necessary corporate or other applicable action. The consummation of the transactionscontemplated by this Agreement and the other Loan Documents by the Borrower, and the enforcementthereof by Lender, (A) do not contravene and will not be in contravention of any applicable law,the corporate
12

 
charter or bylaws (or other constituent documents) of Borrower or any agreement ororder by which Borrower or Borrower’s property is bound, except any such agreementwherein non-compliance would not have a Material Adverse Effect and (B) do not and will not requireany consent, order, license, validation or approval of or filing or registration with anygovernment, governmental authority or agency, court or administrative body except such as have beenduly obtained, are in full force and effect and are listed in Schedule 3. This Agreement is, andthe other Loan Documents, including the Security Documents, the Note and the Guaranty when executedand delivered will be, the legally valid and binding obligations of Borrower, each enforceableagainst the Borrower in accordance with their respective terms.     **4.3 Financial Condition.**All financial statements concerning Borrower that have been or willhereafter be furnished to Lender pursuant to this Agreement have been or will be prepared inaccordance with GAAP, consistently applied throughout the periods involved (except as disclosedtherein) and do or will present fairly the financial condition of the corporation (or otherentities covered thereby) as of the dates thereof and the results of their operations for theperiods then ended.     **4.4 Indebtedness and Liabilities.**As of the date of this Agreement, Borrower does not have(A) any Indebtedness except as reflected on Schedule 4A or (B) any Liabilities other than asreflected on Schedule 4B or as incurred in the ordinary course of business following the date ofthe most recent financial statement for Borrower delivered to Lender.     **4.5 Litigation; Adverse Facts.**Except as set forth on Schedule 5, there are no final,non-appealable judgments outstanding against Borrower or affecting any property or assets ofBorrower, nor is there any material action, charge, claim, demand, suit, proceeding, petition,governmental investigation or arbitration now pending or, to the best knowledge of Borrower afterdue inquiry, threatened against or affecting Borrower or any property of Borrower that individuallyor in the aggregate could reasonably be expected to result in any Material Adverse Effect.Borrower does not have any notice to the effect that it is the subject or potential subject of anyliability that could reasonably be expected to result in any Material Adverse Effect.     **4.6 Payment of Taxes.**All tax returns and reports of Borrower required to be filed have beentimely filed, and all taxes, assessments, fees and other governmental charges upon Borrower andupon its properties, assets, income and franchises that are due and payable have been paid when dueand payable or are being contested in good faith by appropriate proceedings and appropriatereserves therefore have been established in accordance with GAAP. Except as set forth in Schedule6, as of the date this Agreement, no United States income tax return of Borrower is under audit.No tax liens have been filed and no claims (except as otherwise permitted by subsection 5.6) arebeing asserted with respect to any such taxes. The charges, accruals and reserves on the books ofBorrower in respect of any taxes or other governmental charges are in accordance with GAAP.     **4.7 Employee Benefit Plans.**Borrower is in compliance in all material respects with allapplicable provisions of ERISA, the IRC and all other applicable laws
13

 
and the regulations andinterpretations thereof with respect to all Employee Benefit Plans. No material liability has beenincurred by Borrower, which remains unsatisfied for any funding obligation, taxes or penalties withrespect to any Employee Benefit Plan.     **4.8 Intellectual Property.**Borrower is licensed to use or otherwise has the right to use, allIntellectual Property used in or necessary for the conduct of its business as currently conducted.     **4.9 Broker’s Fees.**No broker’s or finder’s fee or commission will be payable with respect toany of the transactions contemplated hereby and Borrower represents and warrants that it has notretained any brokers or agents that are due a commission or finder’s fee with respect to thistransaction with Lender.     **4.10 Environmental Compliance.**Borrower has been and is currently in compliance with allapplicable Environmental Laws, including obtaining and maintaining in effect all permits, licensesor other authorizations required by applicable Environmental Laws. There are no claims,liabilities, investigations, litigation, administrative proceedings, whether pending or threatened,or judgments or orders relating to any Hazardous Materials asserted or, to the best knowledge ofBorrower, threatened against Borrower or relating to any real property currently or formerly owned,leased or operated by Borrower.     **4.11 Disclosure.**No representation, warranty or statement contained in this Agreement, thefinancial statements, the other Loan Documents, or any other document, certificate or writtenstatement furnished to Lender by or on behalf of Borrower for use in connection with the LoanDocuments contains any untrue statement of a material fact or omitted, omits or will omit to statea material fact necessary in order to make the statements contained herein or therein notmisleading in light of the circumstances in which the same were made. The projections contained insuch materials are based upon good faith estimates and assumptions believed by such Persons to bereasonable at the time made. There is no material fact known to Borrower that has had or will havea Material Adverse Effect and that has not been disclosed herein or in such other documents,certificates and statements furnished to Lender for use in connection with the transactionscontemplated hereby.     **4.12 Insurance.**Borrower maintains adequate insurance policies for public liability, workerscompensation, employee benefit liability, fidelity liability, directors’ and officers’ liability,errors and omissions, property damage for its business and properties, product liability, andbusiness interruption in amounts customarily carried or maintained by Persons of establishedreputation engaged in similar businesses. Such policies are in full force and effect. No noticeof cancellation has been received with respect to such policies and Borrower is in compliance withall conditions contained in such policies.     **4.13 Compliance with Laws.**          (A) Borrower is neither (a) in violation of any law, ordinance, rule, regulation, order,policy, guideline or other requirement of any domestic or foreign government, regulator, or anyinstrumentality or agency thereof, having jurisdiction over
14

 
the conduct of its business or theownership of its properties, including, without limitation, any violation relating to any use,release, storage, transport or disposal of any hazardous material, nor (b) has failed to obtain anyconsent, order, license, validation, approval or permit from any such government, regulator,instrumentality or agency, which violation or failure would subject such Borrower, or any of its respective officers tocriminal, civil, or administrative liability or individually or in the aggregate with all suchviolations and failures have a Material Adverse Effect and no such violation or failure has beenalleged, nor (c) in violation of any Securities and Exchange Commission (SEC) rule or regulation.Borrower further represents and warrants that it is in full compliance with all SEC reportingrequirements and applicable regulations.          (B) First Life America (i) has a legitimate certificate of authority from the KansasDepartment of Insurance, (ii) is not listed in the Kansas Department of Insurance Rehabilitationand Liquidation records or comparable records of any other State as having any outstanding issues,(iii) is not subject to any investigation, complaint or corrective action, including, but notlimited to, probation, rehabilitation or liquidation, by any division of the Kansas Department ofInsurance or comparable agency or department of any other State (except those complaints or actionsresulting in the ordinary course of business and which, if adversely determined, could not,individually or in the aggregate, be reasonably expected to have a Material Adverse Effect), and(iv) is current in submitting necessary reports and fees.          (C) TIC (i) has a legitimate certificate of authority from the Missouri Department ofInsurance, (ii) is not listed in the Missouri Department of Insurance’s Rehabilitation andLiquidation records or comparable records of any other State as having any outstanding issues,(iii) is not subject to any investigation, complaint or corrective action, including, but notlimited to, probation, rehabilitation or liquidation, by any division of the Missouri Department ofInsurance or comparable agency or department of any other State (except those complaints or actionsresulting in the ordinary course of business and which, if adversely determined, could not,individually or in the aggregate, be reasonably expected to have a Material Adverse Effect), and(iv) is current in submitting necessary reports and fees.     **4.14 Subsidiaries. Deleted**     **4.15 Employee Matters.**          (A) General. Except as set forth on Schedule 7, there are no strikes, slowdowns, workstoppages or controversies pending or, to the best knowledge of each Borrower after due inquiry,threatened between either Borrower or any of its Subsidiaries, including, but not limited to FirstLife America, and their respective employees, other than employee grievances arising in theordinary course of business which could not reasonably be expected to have, either individually orin the aggregate, a Material Adverse Effect.          (B) Employment Agreements. Set forth on Schedule 8 is a complete and correct list of allemployment agreements of each Pledged Company (collectively, the “Employment Agreements”).
15

 
     **4.16 No Defualt.**No Default or Event of Default has occurred or is continuing.     **4.17 First Priority.**Borrower represents and warrants that it is the lawful owner of onehundred percent (100%) of all issued and outstanding shares of stock ofFirst Life America, and that upon completion of the Acquisition, Borrower will be the lawful ownerof one hundred percent (100%) of all issued and outstanding share of stock of Delta Plus, TIC, andMGA-TIC. Borrower further represents and warrants that Lender has a first priority securityinterest in the Collateral to secure Borrower’s Obligations pursuant to this Agreement and theNote. Borrower represents and warrants that it will execute any and all documents necessary, asrequested by Lender, to perfect Lender’s first priority security interest in the Collateral as setforth in the Security Agreements.     **4.18 Subsidiary and Affiliate Arrangements.**Other than as set forth on Schedule 9 and as aresult of this Agreement between parent Borrower and subsidiary Lender, no Pledged Company is aparty to any transaction with or for the benefit of or obligated to make any other payment ortransfer of assets to or for the benefit of (including, without limitation, to distribute by cash,assets, salary, consulting fees, dividends, loans, payment in kind, or other such distribution)directly or indirectly to Borrower or any of its Subsidiaries, including, but not limited to, FirstLife America, or any of such Subsidiary’s or First Life America’s owners, partners, principals,directors, officers, spouses, guarantors or affiliates.**SECTION 5. AFFIRMATIVE COVENANTS.**Borrower covenants and agrees that, so long as the Commitmentshall be in effect and until payment and satisfaction in full of all Obligations, unless Lendershall otherwise give its prior written consent, Borrower shall perform all covenants in thisSection 5.     **5.1 Completion of Acquisition; Addition of Co-Borrowers; Stock Pledge as Security.**          (A) Borrower shall complete the Acquisition through the execution of all relevant documents,the performance of any related conditions precedent, and securing any and all required regulatoryapprovals in a timely manner. In no instance shall said completion of Acquisition occur any laterthan 180 days from the date of this Agreement;          (B) Immediately upon completion of the Acquisition, Delta Plus and MGA-TIC shall be consideredCo-Borrowers for purposes of this Agreement, the Note, and all Loan Documents, and, no later than 5business days following completion of the Acquisition, Co-Borrowers shall execute the Note, andBorrower and Co-Borrowers shall execute any additional documents Lender may require to reflectCo-Borrowers’ status and obligations with respect to this Agreement, the Note, and Loan Documents;          (C) Immediately upon completion of the Acquisition, and in any event no later than 5 businessdays following completion of the Acquisition, Borrower and Co-Borrowers shall execute a StockPledge and Security Agreement wherein one hundred
16

 
percent (100%) of the stock of Delta Plus, one hundred percent (100%) of the stock of TIC, and onehundred percent (100%) of the stock of MGA-TIC shall be pledged as security for the Loan.     **5.2 Financial Statements and Other Reports.**Borrower will maintain, and cause each of thePledged Companies to maintain, a system of accounting established and administered in accordancewith sound business practices to permit preparation of financial statements in conformity withGAAP. Borrower will deliver or cause to be delivered to Lender the financial statements and otherreports described below.          (A) Year-End Financials. As soon as available, and in any event not later than ninety (90)days after the end of each Fiscal Year, Borrower will deliver or cause to be delivered to Lender:(1) the consolidated balance sheet of Borrower and its consolidated Subsidiaries, as at the end ofsuch year and the related consolidated statements of income, stockholders’ equity and cash flowsfor such Fiscal Year; (2) a report with respect to the consolidated financial statements from afirm of independent certified public accountants selected by Borrower and acceptable to Lender,which report shall be unqualified and shall state that (a) such consolidated financial statementspresent fairly the consolidated financial position of Borrower and its consolidated Subsidiaries asof the dates indicated and the results of their operations and cash flows for the periods indicatedin conformity with GAAP and (b) that the examination by such accountants in connection with suchconsolidated financial statements has been made in accordance with generally accepted auditingstandards; and (3) copies of the consolidating financial statements of (i) Borrower and itsconsolidated Subsidiaries, including (a) consolidating balance sheets as at the end of such FiscalYear showing intercompany eliminations and (b) related consolidating statements of income showingintercompany eliminations.          (B) Quarterly Financials. As soon as available, and in any event within thirty (30) daysafter the end of the first three quarters of each fiscal year, Borrower will deliver to LenderBorrower’s consolidated balance sheets and statements of income, stockholders equity and cash flowsas at the end of and for such quarter.          (C) Accountants’ Reports. Promptly upon receipt thereof, Borrower will deliver copies of allsignificant reports submitted to Borrower by independent public accountants in connection with eachannual, interim or special audit of the financial statements of the Pledged Companies made by suchaccountants, including the comment letter submitted by such accountants to management in connectionwith their annual audit.          (D) Compliance Certificate. Together with the delivery of each set of financial statementsreferenced in subpart (A) and (B) of this subsection 5.2, Borrower will deliver a ComplianceCertificate.          (E) Government Notices. Borrower shall (i) deliver to Lender promptly after receipt copies ofall notices, requests, subpoenas, inquiries or other writings received from any governmental,regulatory or judicial entity or agency concerning any matter including, but not limited to, anyEmployee Benefit Plan of Borrower or any
17

 
ERISA Affiliates thereof, the violation or alleged violation of any Environmental Laws by Borrower,the storage, use or disposal of any hazardous material by Borrower, the violation or allegedviolation of any law by Borrower, or Borrower’s payment or non-payment of any taxes including anytax audit and (ii) deliver to Lender promptly after receipt copies of all notices, requests,subpoenas, inquiries or other writings received from any governmental, regulatory or judicialentity or agency concerning any matter including, but not limited to, any Employee Benefit Plan byFirst Life America, Delta Plus, TIC, MGA-TIC, or any ERISA Affiliates thereof, the violation oralleged violation of any Environmental Laws by First Life America, Delta Plus, TIC, or MGA-TIC, thestorage, use or disposal of any hazardous material by First Life America, Delta Plus, TIC, orMGA-TIC, the violation or alleged violation of any law by First Life America, Delta Plus, TIC, orMGA-TIC, or First Life America’s, Delta Plus’, TIC’s or MGA-TIC’s payment or non-payment of anytaxes including any tax audit, to the extent any such notices, requests, subpoenas, inquiries orother writings received by First Life America, Delta Plus, TIC or MGA-TIC could reasonably beexpected to have a Material Adverse Effect.          (F) Notice of Default. Borrower agrees that it shall immediately provide notice to Lender ofany of the following events or conditions that it has knowledge of: (1) any condition or eventthat constitutes an Event of Default or Default; (2) any notice of default that any Person hasgiven to Borrower, First Life America, Delta Plus, TIC or MGA-TIC, or any other action taken withrespect to a claimed default; (3) any termination for any reason of a Material Agency Agreement or(4) any Material Adverse Effect. Said notice shall be given to Lender within five (5) businessdays after any officer of Borrower, First Life America, Delta Plus, TIC, or MGA-TIC obtainsknowledge of the aforesaid events or conditions, and shall include a certificate of its chiefexecutive officer specifying the nature and period of existence of such condition or event and whataction Borrower, First Life America, Delta Plus, TIC, or MGA-TIC has taken, is taking and proposesto take with respect thereto.          (G) Litigation. Promptly upon (but in any event within five (5) business days after) anyofficer of Borrower, First Life America, Delta Plus, TIC, or MGA-TIC, or any Subsidiary thereofobtaining knowledge of (1) the institution of any material action, suit, proceeding, governmentalor regulatory investigation or arbitration against or affecting Borrower, First Life America, DeltaPlus, TIC, or MGA-TIC, or any Subsidiary thereof or any property or assets of Borrower, First LifeAmerica, Delta Plus, TIC, or MGA-TIC, or any Subsidiary thereof not previously disclosed byBorrower to Lender or (2) any material development in any action, suit, proceeding, governmentalor regulatory investigation or arbitration at any time pending against or affecting Borrower, FirstLife America, Delta Plus, TIC, or MGA-TIC, or any Subsidiary thereof or any property or assets ofBorrower, First Life America, Delta Plus, TIC, or MGA-TIC, or any Subsidiary thereof which couldreasonably be expected to have a Material Adverse Effect, Borrower will promptly give noticethereof to Lender and provide such other information as may be reasonably available to it to enableLender and its counsel to evaluate such matter.          (H) Reports. Upon Lender’s written request, Borrower agrees promptly to furnish to Lender anynon-privileged documents and reports including, but not limited
18

 
to, a copy of Borrower’s, FirstLife America’s, Delta Plus’, TIC’s and MGA-TIC’sproduction reports, third party company commission statements, and other commission reports orsimilar information, records or data indicating First Life America’s, Delta Plus’, TIC’s andMGA-TIC’s current or past commission volume or revenues with respect to insurance policies producedby or through Borrower, First Life America, Delta Plus, TIC and MGA-TIC, and all commissions paidand to be paid by Insurance Entities to First Life America, Delta Plus, TIC and MGA-TIC with acertificate signed by an officer of Borrower, First Life America, Delta Plus, TIC, and MGA-TIC, asapplicable, dated the date of such report, verifying, warranting and attesting to Lender theaccuracy and veracity of such report. All of such information, reports and statements shall beprovided by Borrower to Lender within twenty-one (21) calendar days of Lender’s written request.          (I) Other Information. With reasonable promptness, Borrower will deliver (1) notice of anychange in the information set forth in Schedules 9 and 9, and (2) such other information, reports,contracts, invoices and data with respect to Borrower, First Life America, Delta Plus, TIC,MGA-TIC, or any Subsidiary as Lender may request from time to time.          (J) Public Filings. Within one (1) business day after the filing or release thereof, Borrowerwill deliver a copy of each registration statement (and amendment and supplement thereto), report,press release, prospectus, proxy statement or other filing or disclosure made with any securitiescommission, exchange or association or under the Securities Act of 1933, the Securities ExchangeAct of 1934, any related laws or regulations or any comparable state acts, laws or regulationsrelating to any of them or any of its Subsidiaries.     **5.3 Access to Accountants and Management.**Borrower authorizes Lender to discuss the financialcondition and financial statements of Borrower or any Pledged Company with such party’s independentpublic accountants upon reasonable notice to Borrower of its intention to do so, and authorizessuch accountants to respond to all of Lender’s inquiries. Lender may confer with the management ofBorrower directly regarding the foregoing.     **5.4 Inspection.**Borrower shall permit Lender and any authorized representatives designated byLender to visit and inspect any of the properties of any Pledged Company, including their financialand accounting records, and in conjunction with such inspection, to make copies and take extractstherefrom, and to discuss their affairs, finances and business with their officers and independentpublic accountants, at such reasonable times during normal business hours and as often as may bereasonably requested.     **5.5 Corporate Existence.**Borrower shall, and shall cause each Pledged Company to, at alltimes preserve and keep in full force and effect its corporate or other existence and all rightsand franchises material to its business. Borrower will promptly notify Lender of any change insuch Borrower’s or a Pledged Company’s ownership or corporate structure.
19

 
     **5.6 Payment of Taxes.**Borrower shall, and shall cause the Pledged Companies, to pay alltaxes, assessments and other governmental charges imposedupon it or any of its properties or assets or with respect to any of its franchises, business,income or property before any penalty accrues thereon; provided, however, that no such tax need bepaid if such Person is contesting same in good faith by appropriate proceedings promptly institutedand diligently conducted and if such Person has established appropriate reserves as shall berequired in conformity with GAAP.     **5.7 Maintenance of Properties; Intellectual Property; Insurance.**Borrower shall maintain orcause to be maintained (A) in good repair, working order and condition all material properties usedin the business of Borrower and will make or cause to be made all appropriate repairs, renewals andreplacements thereof, (B) in full force and effect all licenses and other rights to use allIntellectual Property used or necessary for the conduct of the Pledged Companies business, and (C)with financially sound and reputable insurers, public liability insurance, workers compensation,employee benefit liability insurance, fidelity insurance, business interruption insurance, errorsand omissions insurance, directors’ and officers’ liability insurance, and property damageinsurance with respect to the Pledged Companies business and properties against loss or damage ofthe kinds customarily carried or maintained by Persons of established reputation engaged in similarbusinesses and in amounts acceptable to Lender.     **5.8 Compliance with Laws.**          (A) General. Borrower shall, and shall cause the Pledged Companies, to comply with therequirements of all applicable laws, rules, regulations and orders of any governmental authority asnow in effect and which may be imposed in the future in all jurisdictions in which Borrower, or thePledged Companies now do business or may hereafter be doing business, other than noncompliance thatwould not have a Material Adverse Effect.          (B) First Life America. In addition to the foregoing, Borrower shall cause First Life America(i) to maintain in good standing a certificate of authority from the Kansas Department of Insuranceand comparable agency or department of any other State, (ii) to not be listed in the KansasDepartment of Insurance Rehabilitation and Liquidation records or comparable records of any otherState as having any outstanding issues, (iii) to not be subject to any investigation, complaint orcorrective action, including, but not limited to, probation, rehabilitation or liquidation, by anydivision of the Kansas Department of Insurance or comparable agency or department of any otherState (except those complaints or actions resulting in the ordinary course of business and which,if adversely determined, could not, individually or in the aggregate, be reasonably expected tohave a Material Adverse Effect), (iv) to remain current in submitting necessary reports and fees,except to the extent a failure to submit necessary reports and fees would not be reasonablyexpected to have a Material Adverse Effect, and (v) any assignments or other transactions shall besubject to the terms of this Agreement and in accordance with applicable law.          (C) TIC. In addition to the foregoing, and upon completion of the Acquisition, Borrower shallcause TIC (i) to maintain in good standing a certificate of
20

 
authority from the Missouri Departmentof Insurance and comparable agency or department of any other State, (ii) to not be listed in theMissouri Department of Insurance Rehabilitation and Liquidation records or comparable records ofany otherState as having any outstanding issues, (iii) to not be subject to any investigation, complaint orcorrective action, including, but not limited to, probation, rehabilitation or liquidation, by anydivision of the Missouri Department of Insurance or comparable agency or department of any otherState (except those complaints or actions resulting in the ordinary course of business and which,if adversely determined, could not, individually or in the aggregate, be reasonably expected tohave a Material Adverse Effect), and (iv) to remain current in submitting necessary reports andfees, except to the extent a failure to submit necessary reports and fees would not be reasonablyexpected to have a Material Adverse Effect, and (v) any assignments or other transactions shall besubject to the terms of this Agreement and in accordance with applicable law.     **5.9 Further Assurances.**Borrower shall, and shall cause First Life America and eachSubsidiary Pledged Company to, from time to time, execute such statements, documents, agreements,reports and other documents or deliver to Lender such other documents as Lender at any time mayreasonably request to implement the provisions of the Loan Documents.     **5.10 Use of Proceeds and Margin Security.**The proceeds of the Loan shall be used for properbusiness purposes consistent with all applicable laws, statutes, rules and regulations. No portionof the proceeds of the Loan shall be used by Borrower or First Life America or any Subsidiary forthe purpose of purchasing or carrying margin stock within the meaning of Regulation U, or in anymanner that might cause the borrowing, the application of such proceeds, or the transactionscontemplated hereby or by the other Loan Documents to violate Regulation T, Regulation U orRegulation X or any other regulation of the Board of Governors of the Federal Reserve System or toviolate the Securities Exchange Act of 1934 or the rules and regulations thereunder.     **5.11 First Priority.**Borrower shall take all action necessary to ensure that Lender maintainsa first priority security interest in the Collateral to secure Borrower’s Obligations pursuant tothis Agreement and the Note.     **5.12 Protection of Collateral.**In the event that the aggregate gross written premiums ofBorrower, First Life America, and TIC in any calendar month are less that [75%] of the meanaverage of the aggregate gross written premiums of Borrower and First Life America and TICrespectively, for the three preceding calendar months then, upon request by Lender, Borrower shallwithin ten (10) calendar days enter into an agreement with a consultant approved by Lender pursuantto which Borrower agrees to conduct specified corrective activities each month as directed by theconsultant. Borrower acknowledges that if any such agreement is required, neither Lender norLender’s approved consultant guarantees the efficacy of such arrangement in preserving orincreasing the value of Borrower’s or First Life America’s or TIC’s business or assets.Furthermore, any remedies exercised by Lender pursuant to this paragraph shall not be construed asa waiver by Lender of any other rights or remedies it may have pursuant to this Agreement or anyother Loan Document or under
21

 
applicable law or in equity. The cost of such consultant shall bepaid by Borrower from Borrowers’ revenues; provided, however, if Borrowers’ revenues areinsufficient to pay for such consultant, the cost shall initially be paid by Lender and shall bereimbursed by Borrower upon demand, with interest from the date of each payment by Lender untilreimbursed at the rate applicable to the Loans under subsection 2.2(A) hereof. In the eventBorrower are required to retain a consultant pursuant to this subsection 5.12, Lender shall deliverto Borrower a list of three prospective consultants. Borrower shall select one of such consultantsand such consultant shall be deemed approved by Lender.     **5.13 Board Observer.**Deleted**SECTION 6. NEGATIVE COVENANTS.**Borrower covenants and agrees as to the Pledged Companies only,that, so long as the Commitment shall be in effect and until payment in full of all Obligations,unless Borrower receives the prior written consent of Lender, Borrower shall not permit any PledgedCompany to:     **6.1 Indebtedness and Liabilities.**Directly or indirectly create, incur, assume, guaranty, orotherwise become or remain directly or indirectly liable, on a fixed or contingent basis, withrespect to any Indebtedness except: (a) Indebtedness (excluding Capital Leases) not to exceed$500,000 in the aggregate at any time outstanding secured by purchase money Liens; (b) Indebtednessunder Capital Leases not to exceed $500,000 outstanding at any time in the aggregate; and (c)Indebtedness existing as of the date of this Agreement and identified on Schedule 4A and 4B.Except for Indebtedness permitted in the preceding sentence, Borrower will not permit any of itsSubsidiaries to incur any Liabilities except for trade payables and normal accruals in the ordinarycourse of business not yet due and payable or with respect to which Borrower or its Subsidiariesare contesting in good faith the amount or validity thereof by appropriate proceedings and thenonly to the extent Borrower or its Subsidiary has established adequate reserves therefore, ifappropriate, under GAAP.     **6.2 Guaranties.**Except for endorsements of instruments or items of payment for collection inthe ordinary course of business, guaranty, endorse, or otherwise in any way become or beresponsible for any obligations of any other Person, whether directly or indirectly, including byagreement to purchase the indebtedness of any other Person or through the purchase of goods,supplies or services, or maintenance of working capital or other balance sheet covenants orconditions, or by way of stock purchase, capital contribution, advance or loan for the purpose ofpaying or discharging any indebtedness or obligation of such other Person or otherwise.     **6.3 Transfers, Liens and Related Matters.**          (A) Transfers. Sell, assign (by operation of law or otherwise) or otherwise dispose of, orgrant any option with respect to any of the assets of such Person, except that Borrower and itsSubsidiaries may make Asset Dispositions if all of the following conditions are met: (1) themarket value of assets sold or otherwise disposed of in any single transaction or series of relatedtransactions does not exceed $500,000 and the aggregate market value of assets sold or otherwisedisposed of in
22

 
any Fiscal Year does not exceed $1,000,000; (2) the consideration received is atleast equal to the fair market value of such assets, as determined in good faith by such Borrower’sor Subsidiary’s board of directors or other managing body; (3) the sole consideration received iscash; and (4) no Default or Event of Default shall then exist or result from such sale or otherdisposition.          (B) Liens. Except for Permitted Encumbrances, directly or indirectly create, incur, assume orpermit to exist any Lien on or with respect to any of the assets of such Person or any proceeds,income or profits therefrom, whether now owned or hereafter acquired, that has any material adverseaffect on operations.          (C) No Negative Pledges. Enter into or assume any agreement (other than the Loan Documents)prohibiting the creation or assumption of any Lien upon its properties or assets, whether now ownedor hereafter acquired.     **6.4 Investments and Loans.**Make or permit to exist investments of any type in or loans oradvances to any other Person or commit to do any of the foregoing, except: (a) Cash Equivalents;(b) capital contributions to First Life America; (c) loans and advances to employees for moving,entertainment, travel and other similar expenses; and investments and or loans required ordesirable that are done to maintain regulatory or statutory compliance and or are made in theordinary course of business.     **6.5 Restriction on Fundamental Changes.**Without the prior written consent of the Lender andother than as contemplated in this Agreement:          (A) (i) Enter into any transaction of merger or consolidation; (ii) liquidate, wind-up ordissolve itself (or suffer any liquidation or dissolution); (iii) convey, sell, lease, sublease,transfer or otherwise dispose of, in one transaction or a series of transactions, all or anysubstantial part of its business or assets, or the capital stock or other equity interests of anyof its Subsidiaries, whether now owned or hereafter acquired or (iv) issue any additional capitalstock or other equity interest or any warrants, options, rights or securities convertible into orexchangeable for any capital stock or other equity interest;          (B) Other than as contemplated under this Agreement, acquire by purchase or otherwise, all orany substantial part of the business or assets of, or stock or other evidence of beneficialownership of, any Person or a division of any Person;          (C) Modify or terminate (or intentionally give or provide cause for any Insurance Entity tomodify or terminate or take or omit any action or permit any circumstance to occur or exist which,with the giving of notice or passage of time, or both, would result in the modification,termination or cancellation of, or would give to any Insurance Entity the right to modify,terminate or cancel) one or more of its Material Agency Agreements, other than termination byBorrower or a Subsidiary based on a breach or default by an Insurance Entity.          (D) Terminate (or intentionally give or provide cause for any employee of either Borrower orFirst Life America to terminate or take or omit to take any action or
23

 
permit any circumstance tooccur or exist which, with the giving of notice or passage of time, or both, would result in thetermination or cancellation of, or would give to any such employee the right to terminate orcancel) one or more of the Employment Agreements, described in subsection 4.15(B), except any suchtermination by Borrower or a Subsidiary based on a breach or default by an employee.     **6.6 Transactions with Subsidiaries and Affiliates.**Directly or indirectly, enter into orpermit to exist any transaction, other than transactions arising in the normal and ordinary courseof business, (including the purchase, sale or exchange of property or the rendering of any service)with any Subsidiary or Affiliate or with any officer, director or employee of any Subsidiary orAffiliate, except for transactions (a) set forth on Schedule 9 or (b) previously approved inwriting by the Lender.     **6.7 Environmental Liabilities.**(a) Violate any applicable Environmental Law, except to theextent such violation could not be expected to have a Material Adverse Effect; (b) dispose of anyHazardous Materials (except in accordance with applicable law) into or onto or from, any realproperty owned, leased or operated by Borrower, First Life America or any Subsidiary; or (c) permitany Lien imposed pursuant to any Environmental Law to be imposed or to remain on any real propertyowned, leased or operated by Borrower, First Life America or any Subsidiary.     **6.8 Conduct of Business.**          (A) Enter into any contract, including but not limited to employment contracts, consultingcontracts, policy servicing and processing contracts, underwriting contracts or claims processingcontracts, which would involve payment of amounts on an annual basis in excess of five percent (5%)of the combined annual consolidated revenues for the preceding fiscal year (12 calendar months) oramend any such contracts in any material manner, without Lender’s prior written consent, whichconsent may be granted or withheld in the sole and absolute discretion of the Lender.          (B) Pay or make any dividend or distribution with respect to any of its capital stock orequity, now or hereafter outstanding, or redeem, retire or repurchase any thereof, or set aside anyreserve or funds for or declare any of the foregoing or enter into any transaction with or for thebenefit of or make any other payment or transfer of assets to or for the benefit of (including,without limitation, to distribute by cash, assets, salary, consulting fees, dividends, loans,payment in kind, or other such distribution) directly or indirectly Borrower, or any of Borrower’sowners, partners, principals, directors, officers, spouses, guarantors or Subsidiaries, with theexception of consulting fees and/or servicing-related fees, loans, salaries or bonus arrangementsset forth in Schedule 8 or 9 hereto.     **6.9 Compliance with ERISA.**Establish any new Employee Benefit Plan or amend any existingEmployee Benefit Plan if the liability or increased liability resulting from such establishment oramendment could be reasonably expected to have a Material Adverse Effect. Neither Borrower nor anyof its Subsidiaries shall fail to establish, maintain and operate each Employee Benefit Plan incompliance in all
24

 
material respects with the provisions of ERISA, the IRC and all other applicablelaws and the regulations and interpretations thereof.     **6.10 Employee Compensation.**Materially increase the cash and non-cash compensation, includingbonuses and other benefits, set forth in the Employment Agreements and new employment agreementsentered into after the date of this Agreement, without Lender’s prior written consent, whichconsent shall not be unreasonably withheld.     **6.11 Underwriting Guidelines.**Amend, modify or deviate in any material respect from theunderwriting guidelines attached hereto as Exhibit ___.Need FLAC and TIC Guidelines to attach.     **6.12 Principal Amount of Loans.**Permit the aggregate outstanding principal amount of theLoan, plus interest thereon, to exceed 65% of capital and policyholders’ surplus (determined on astatutory accounting basis) of First Life America at any time.     **6.13 Minimum Capital – First Life America.**At any time permit the statutory surplus,determined in accordance with statutory accounting practices consistently applied, of First LifeAmerica to be below the minimum level proscribed by regulation or statute in any state in which itis qualified and authorized to do business.     **6.14 Minimum Capital – TIC.**At any time permit the statutory surplus, determined inaccordance with statutory accounting practices consistently applied, of TIC to be below the minimumlevel proscribed by regulation or statute in any state in which it is qualified and authorized todo business..     **6.15 Equity Maintenance.**At any time permit Borrower’s the Pledged Companies’ consolidatedDebt/Equity ratio to fall below 101% <400% per credit policy or the Pledged Companies’consolidated Debt/EBITDA ratio to fall below 108% <400% per credit policy.     **6.16 Subsidiaries.**Deleted     **6.17 Fiscal Year.**deleted     **6.18 Amendments.**          (A) Amend the certificate of incorporation, bylaws or other organizational documents of anyPledged Company, except as provided in Schedule 10;          (B) Change the jurisdiction of domicile of any Pledged Company, its form of organization ororganizational identification number;          (C) Enter into any agreement restricting the right of any Pledged Company to make dividends,distributions or other payments to Borrower.
25

 
**SECTION 7. DEFAULT, RIGHTS AND REMEDIES**     **7.1 Event of Default.**“Event of Default” shall mean the occurrence or existence of any one ormore of the following:          (A) Payment. (1) Failure of Borrower to make any payment of principal of the Loan when due;or (2) failure to make any payment of interest or any payment of the other Obligations when due andsuch failure shall not be cured within five (5) business days following notice thereof; or          (B) Default in Other Agreements. Failure of Borrower, First Life America, or any Subsidiary topay when due any principal or interest on any Indebtedness (other than the Obligations) or breachor default of any such Person with respect to any Indebtedness (other than the Obligations); ifsuch failure to pay, breach or default entitles the holder (with the giving of notice or passage oftime, or both) to cause such Indebtedness to become or be declared due prior to its statedmaturity; or          (C) Breach of Certain Provisions. Failure of either Borrower to perform or comply with anyterm or condition contained in subsections 5.1 (A), (B), (C), 5.2(A), (B), (C), (D) or (F) or, 5.5,5.6, 5.7, 5.8, 5.10, 5.12, or contained in Section 6, and which failures are not cured to thesatisfaction of the Lender within five (5) days after notice duly given; or          (D) Breach of Warranty. Any material representation, warranty, certification or otherstatement made by Borrower or any Pledged Company in any Loan Document or in any statement orcertificate at any time given by such Person (or any officer) in writing pursuant to or inconnection with any Loan Document is false in any material respect on the date made or deemed made;or          (E) Other Defaults Under Loan Documents. Borrower or any Pledged Company defaults in theperformance of or compliance with any term contained in this Agreement or the other Loan Documents,and such default is not remedied or waived within twenty (20) days after receipt by Borrower ofnotice from Lender of such default (other than occurrences described in other provisions of thissubsection 7.1 for which a different grace or cure period is specified or which constituteimmediate Events of Default); or          (F) ERISA. Any of the following events shall occur:               (1) The termination of any Employee Benefit Plan or the institution by the Pension BenefitGuaranty Corporation (or any successor agency) of proceedings for the involuntary termination ofany Employee Benefit Plan, in either case, by reason of, or that results or could result in, a“material accumulated funding deficiency” under Section 412 of the IRC; or               (2) Failure by the Borrower to make required contributions, in accordance with the applicableprovisions of ERISA, to each of the Employee Benefit Plans hereafter established or assumed by it;or
26

 
          (G) Involuntary Bankruptcy; Appointment of Receiver, etc. (1) A court enters a decree ororder for relief with respect to Borrower or any Pledged Company in an involuntary case under anyapplicable bankruptcy, insolvency or other similar law now or hereafter in effect; or (2) thecontinuance of any of the following events for sixty (60) days unless dismissed or discharged: (a)an involuntary case is commenced against Borrower or any Pledged Company under any applicablebankruptcy, insolvency or other similar law now or hereafter in effect; or (b) a decree or order ofa court for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or otherofficer having similar powers over Borrower or any Pledged Company or over all or a substantialpart of their respective property, is entered; or (c) an interim receiver,trustee or other custodian is appointed without the consent of Borrower or any Pledged Company forall or a substantial part of the property of such Person; or          (H) Voluntary Bankruptcy; Appointment of Receiver, etc. (1) Borrower or any Pledged Companycommences a voluntary case under any applicable bankruptcy, insolvency or other similar law now orhereafter in effect, or consents to the entry of an order for relief in an involuntary case or tothe conversion of an involuntary case to a voluntary case under any such law or consents to theappointment of or taking possession by a receiver, trustee or other custodian for all or asubstantial part of its property; or (2) Borrower or any Pledged Company makes any assignment forthe benefit of creditors; or (3) the board of directors or similar managing Persons of Borrower orany Pledged Company adopts any resolution or otherwise authorizes action to approve any of theactions referred to in this subsection 7.1(H); and (4) any of the actions referred to in thissubsection 7.1(H) continue in existence for sixty (60) days after being commenced unless dismissedor discharged; or          (I) Liens. Deleted          (J) Judgment and Attachments. Any final non-appealable money judgment, writ or warrant ofattachment, or similar process involving (1) an amount in any individual case in excess of $500,000or (2) an amount in the aggregate at any time in excess of $750,000 (which, in either case,Borrower acknowledges is not adequately covered by insurance and as to which the insurance companyhas acknowledged coverage) is entered or filed against Borrower or any Pledged Company or any oftheir respective assets and remains undischarged, unvacated, unbonded or unstayed for a period ofthirty (30) days or in any event later than five (5) days prior to the date of any proposed salethereunder; or          (K) Dissolution. Any final non-appealable order, judgment or decree is entered againstBorrower or any Pledged Company decreeing the dissolution or split up of Borrower or any PledgedCompany and such order remains undischarged or unstayed for a period in excess of thirty (30) days;or          (L) Solvency. Borrower or any Pledged Company admits in writing its present or prospectiveinability to pay its debts as they become due; or          (M) Injunction. Borrower or any Pledged Company is enjoined, restrained or in any wayprevented by the order of any court or any administrative or
27

 
regulatory agency from conducting allor any material part of its business and such order continues for more than thirty (90) days, ifany such event or circumstance could reasonably be expected to have a Material Adverse Effect; or          (N) Invalidity of any Loan Documents. Any of the Loan Documents for any reason, other than apartial or full release in accordance with the terms thereof, ceases to be in full force and effector is declared to be null and void, or any Lien granted under any Security Document ceases to be avalid and perfected first priority Lien in favor of Lender or Borrower denies that it has anyfurther liability under any Loan Documents to which it is party, or gives notice to such effect; or          (O) Material Adverse Change. Since the date of this Agreement, any change in the business,assets, liabilities, financial condition, results of operations or business prospects of First LifeAmerica, TIC or MGA-TIC shall have been discovered or shall have occurred, or any event shall haveoccurred or failed to occur, that has had or might have, either alone or in conjunction with allother such changes, events and failures, a Material Adverse Effect; or          (P) Licenses and Permits. The loss, suspension or revocation of, or failure to renew, anylicense or permit now held or hereafter acquired by Borrower or any Pledged Company, if such loss,suspension, revocation or failure to renew could reasonably be expected to have a Material AdverseEffect; or          (Q) Forfeiture. There is filed against Borrower or any Pledged Company, any civil or criminalaction, suit or proceeding under any federal or state racketeering statute (including, withoutlimitation, the Racketeer Influenced and Corrupt Organization Act of 1970), which action, suit orproceeding (1) is not dismissed within one hundred twenty (120) days; and (2) could reasonably beexpected to have a Material Adverse Effect; or          [(R) Change of Control Deleted     **7.2 Acceleration.**Upon the occurrence of any Event of Default that is not cured pursuant tothe provisions contained in the foregoing subsection 7.1, all Obligations shall automaticallybecome immediately due and payable without notice (including notice of intent to accelerate),presentment, demand, protest or other requirements of any kind, all of which are hereby expresslywaived by Borrower, and the Commitment shall thereupon terminate. Upon the occurrence and duringthe continuance of any other Event of Default, Lender may, by written notice to Borrower, declareall or any portion of the Obligations to be, and the same shall forthwith become, immediately dueand payable without other notice (including notice of intent to accelerate), presentment, demand,protest or other requirements of any kind, all of which are hereby expressly waived by Borrower,and the Commitment shall thereupon terminate, and such amount shall become immediately due andpayable without presentment, demand, protest or other requirements of any kind, all of which arehereby expressly waived by Borrower.
28

 
**SECTION 8. ASSIGNMENT AND PARTICIPATION**     **8.1 Assignments and Participations in the Loan.**          (A) Lender may assign all or any portion of its rights and delegate all or any portion of itsobligations under this Agreement in whole or in part to another Person without the consent ofBorrower. In the case of an assignment authorized under this subsection 8.1, the assignee shallhave, to the extent of such assignment, the same rights, benefits and obligations as it would if itwere a Lender hereunder, including but not limited to the obligations of confidentiality set forthin subsection 9.20, and the assigning Lender shall be relieved of its obligations hereunder withrespect to its Commitment and the Loans or assigned portion thereof. Borrower hereby acknowledgesand agrees that any assignment will give rise to a direct obligation of Borrower to the assigneeand that the assignee shall be considered to be a “Lender”.          (B) Lender may sell participations in all or any part of the Loan and other Obligations toanother Person; provided, that any such participation shall be in a minimum amount of $500,000, andprovided, further, that all amounts payable by Borrower hereunder shall be determined as if Lenderhad not sold such participation. Borrower hereby acknowledges and agrees that any participationwill give rise to a direct obligation of Borrower to the participant, and the participant undereach participation shall for purposes of subsections 2.6, 8.2, 9.2 and 9.20 be considered to be a“Lender”.          (C) Lender may furnish any information concerning Borrower or any Pledged Company in thepossession of Lender from time to time to assignees and participants (including prospectiveassignees and participants), provided, that such assignees and participants (including prospectiveassignees and participants) agree to be bound by the confidentiality restrictions of subsection9.20.          (D) Notwithstanding any other provision set forth in this Agreement, Lender may at any timecreate a security interest in all or any portion of its rights under this Agreement (including,without limitation, the Loan owing to it and the Note held by it in favor of any Federal ReserveBank in accordance with Regulation A of the Board of Governors of the Federal Reserve System).     **8.2 Set Off and Sharing of Payments.**In addition to any rights now or hereafter granted underapplicable law and not by way of limitation of any such rights, upon the occurrence and during thecontinuance of any Event of Default, Lender is hereby authorized by Borrower at any time or fromtime to time, without notice to Borrower or to any other Person to set off and to appropriate andto apply any and all (A) balances held by Lender or any of its affiliates at any of their officesfor the account of Borrower (regardless of whether such balances are then due to Borrower), and (B)other property at any time held or owing by Lender or any of its affiliates to or for the credit orfor the account of Borrower against and on account of any of the Obligations which are not paidwhen due.**SECTION 9. MISCELLANEOUS**
29

 
     **9.1 Expenses and Attorneys’ Fees.**Whether or not the transactions contemplated hereby shallbe consummated, Borrower agrees to promptly pay all fees, costs and expenses incurred by Lender inconnection with any matters contemplated by or arising out of this Agreement or the other LoanDocuments including the following, and all such fees, costs and expenses shall be part of theObligations, payable on demand: (a) fees, costs and expenses (including reasonable attorneys’fees, allocated costs of internal counsel and fees of environmental consultants, accountants andother professionals retained by Lender) incurred in connection with the examination, review, duediligence investigation, documentation and closing of the financing arrangements evidenced by theLoan Documents; (b) fees, costs and expenses (including reasonable attorneys’ fees, allocated costsof internal counsel and fees of environmental consultants, accountants and other professionalsretained by Lender) incurred in connection with the review, negotiation, preparation,documentation, execution and administration of the Loan Documents, the Loans and any amendments,waivers,consents, forbearances and other modifications relating thereto; (c) fees, costs and expensesincurred by Lender in creating, perfecting and maintaining perfection of Liens in favor of Lender,to the extent any such Liens may from time to time be granted by Borrower, First Life America orany Subsidiary; (d) fees, costs and expenses incurred by Lender in connection with forwarding toBorrower the proceeds of the Loan including Lender’s wire transfer fees; and (e) fees, costs andexpenses (including reasonable attorneys’ fees and allocated costs of internal counsel) of Lenderand costs of settlement incurred in collecting upon or enforcing rights under this Agreement or theother Loan Documents or to collect any payments due from Borrower under this Agreement or any otherLoan Document or incurred in connection with any refinancing or restructuring of the creditarrangements provided under this Agreement, whether in the nature of a “workout” or in connectionwith any insolvency or bankruptcy proceedings or otherwise.     **9.2 Indemnity.**In addition to the payment of expenses pursuant to subsection 9.1, whether ornot the transactions contemplated hereby shall be consummated, Borrower agrees to indemnify, payand hold Lender and any holder of the Note and the officers, directors, employees, agents,consultants, auditors, affiliates and attorneys of, and Persons engaged by, Lender (collectivelycalled the “Indemnitees”) harmless from and against any and all liabilities, obligations, losses,damages, penalties, actions, judgments, suits, claims, costs, expenses and disbursements of anykind or nature whatsoever (including the fees and disbursements of counsel for such Indemnitees inconnection with any investigative, administrative or judicial proceeding commenced or threatened,whether or not such Indemnitee shall be designated a party thereto) that may be imposed on,incurred by, or asserted against that Indemnitee, in any manner relating to or arising out of thisAgreement or the other Loan Documents, the consummation of the transactions contemplated by thisAgreement, the statements contained in the commitment letters, if any, delivered by Lender,Lender’s agreement to make the Loans hereunder, the use or intended use of the proceeds of theLoans or the exercise of any right or remedy hereunder or under the other Loan Documents (the“Indemnified Liabilities”); provided that Borrower shall have no obligation to an Indemniteehereunder with respect to Indemnified Liabilities arising
30

 
from the gross negligence or willfulmisconduct of that Indemnitee as determined by a court of competent jurisdiction.     **9.3 Amendments and Waivers.**          (A) Except as otherwise provided herein, no amendment, modification, termination or waiver ofany provision of this Agreement or any other Loan Document, or consent to any departure by Borroweror any Pledged Company therefrom, shall in any event be effective unless the same shall be inwriting and signed by Lender.          (B) Each amendment, modification, termination or waiver shall be effective only in thespecific instance and for the specific purpose for which it was given.          (C) No notice to or demand on Borrower in any case shall entitle Borrower to any other orfurther notice or demand in similar or other circumstances.     **9.4 Notices.**Unless otherwise specifically provided herein, all notices shall be in writingaddressed to the respective party as set forth below and may be personally served, telecopied orsent by overnight courier service or United States mail and shall be deemed to have been given: (a)if delivered in person, when delivered; (b) if delivered by telecopy, on the date of transmissionif transmitted on a business day before 4:00 p.m. Kansas time (Central Time Zone) or, if not, onthe next succeeding business day; (c) if delivered by overnight courier, the next succeedingbusiness day after delivery to such courier properly addressed; or (d) if by U.S. mail, four (4)business days after depositing in the United States mail, with postage prepaid and properlyaddressed;       if to Borrower: Brooke Capital Corporation    10950 Grandview Drive    Overland Park, Kansas 66210    Attn: Kyle Garst, President & CEO    kyle.garst@brookeagent.com    Telephone No.: 913.661.0123, ext. 508    Telecopy No.:                            with a copy to:                                                                                                                                     Attn:                                     Telecopy No.                            if to Lender: Brooke Capital Advisors    8500 College Boulevard    Overland Park, Kansas 66210    Attn: Mike Hess, President & CEO    mikehess@brookecorp.com    Telephone No.: 913.383.9700, ext. 4566    Telecopy No.                     
31

 
       with a copy to: Colodny Fass Talenfeld    Karlinsky & Abate, PA    100 S.E. 3rd Ave., 23rd Floor    Fort Lauderdale, FL 33394    Attn: Mike Colodny, Esq.    mcolodny@cftlaw.com    Telephone No.: 954.492.4010    Telecopy No.: 954.492.1144or to such other address as the party addressed shall have previously designated by written noticeto the serving party, given in accordance with this subsection 9.4.     **9.5 Survival of Warranties and Certain Agreements.**All agreements, representations andwarranties made herein shall survive the execution and delivery of this Agreement and the making ofthe Loan hereunder. Notwithstanding anything in this Agreement or implied by law to the contrary,the agreements of Borrower set forth insubsections 2.5, 2.6, 9.1 and 9.2 shall survive the payment of the Obligations and the terminationof this Agreement.     **9.6 Indulgence Not Waiver.**No failure or delay on the part of Lender, or any holder of anyNote in the exercise of any power, right or privilege hereunder or under the Loan Documents shallimpair such power, right or privilege or be construed to be a waiver of any default or acquiescencetherein, nor shall any single or partial exercise of any such power, right or privilege precludeother or further exercise thereof or of any other right, power or privilege. The rights in thisAgreement and the other Loan Documents are cumulative and are not exclusive of any other remediesprovided by law.     **9.7 Marshaling; Payments Set Aside.**Lender shall not be under any obligation to marshal anyassets in favor of Borrower or any other party or against or in payment of any or all of theObligations. To the extent that Borrower makes a payment or payments to Lender or Lender exercisesits rights of setoff, and such payment or payments or the proceeds of such setoff or any partthereof are subsequently invalidated, declared to be fraudulent or preferential, set aside and/orrequired to be repaid to a trustee, receiver or any other party under any bankruptcy law, state orfederal law, common law or equitable cause, then to the extent of such recovery, the Obligations orpart thereof originally intended to be satisfied, and all rights and remedies therefore, shall berevived and continued in full force and effect as if such payment had not been made or such setoffhad not occurred.     **9.8 ENTIRE AGREEMENT.**THIS AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS REFERRED TOHEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIORCOMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TOTHE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR
32

 
DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NOORAL AGREEMENTS AMONG THE PARTIES HERETO.     **9.9 Independence of Covenants.**All covenants hereunder shall be given independent effect sothat if a particular action or condition is not permitted by any of such covenants, the fact thatit would be permitted by an exception to, or be otherwise within the limitations of, anothercovenant shall not avoid the occurrence of a Default or an Event of Default if such action is takenor condition exists.     **9.10 Severability.**The invalidity, illegality or unenforceability in any jurisdiction of anyprovision in or obligation under this Agreement or the other Loan Documents shall not affect orimpair the validity, legality or enforceability of the remaining provisions or obligations underthis Agreement or the other Loan Documents or of such provision or obligation in any otherjurisdiction.     **9.11 Headings.**Section and subsection headings and the table of contents in this Agreementare included herein for convenience of reference only and shall notconstitute a part of this Agreement for any other purpose or be given any substantive effect.     **9.12 APPLICABLE LAW.**THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCEDIN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF KANSAS, WITHOUT REGARD TO CONFLICTS OF LAWSPRINCIPLES.     **9.13 CONSENT TO JURISDICTION.**BORROWER HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE ORFEDERAL COURT LOCATED WITHIN THE STATE OF KANSAS AND IRREVOCABLY AGREES THAT, UNLESS WAIVED BYLENDER IN WRITING, ALL ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT, THENOTE OR THE OTHER LOAN DOCUMENTS, INCLUDING ALL CLAIMS AND ACTIONS AGAINST LENDER, SHALL BELITIGATED IN SUCH COURTS. BORROWER ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,GENERALLY AND UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND WAIVESANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDEREDTHEREBY IN CONNECTION WITH THIS AGREEMENT, THE NOTE, THE OTHER LOAN DOCUMENTS OR THE OBLIGATIONS.     **9.14 Successors and Assigns.**This Agreement shall be binding upon and inure to the benefit ofthe parties hereto and their respective successors and assigns except that Borrower shall notassign its rights or obligations hereunder without the prior written consent of Lender.
33

 
     **9.15 No Fiduciary Relationship; Limitation of Liabilities.**          (A) No provision in this Agreement or in any of the other Loan Documents and no course ofdealing between the parties shall be deemed to create any fiduciary duty by Lender to Borrower,First Life America or any Subsidiary.          (B) Lender is a wholly-owned subsidiary of Borrower. Notwithstanding Borrower’s and Lender’sparent-subsidiary relationship to each other, both agree and acknowledge that the transactioncontemplated by this Agreement, the Note, and all other Loan Documents was negotiated in good faithand at arm’s length, and is in both Borrower’s and Lender’s best interests. Further, Borrower andLender agree and acknowledge that they were separately represented by independent counsel in thenegotiation of this transaction.          (C) Neither Lender nor any affiliate, officer, director, shareholder, employee, attorney, oragent of Lender shall have any liability with respect to, and Borrower hereby waives, releases, andagrees not to sue any of them upon, any claim for any special, indirect, incidental, orconsequential damages suffered or incurred by Borrower in connection with, arising out of, or inany way related to, this Agreement or any of the other Loan Documents, or any of the transactionscontemplated by this Agreement or any of the other Loan Documents. Borrower hereby waives,releases, and agrees not to sue Lender or any of Lender’s affiliates, officers, directors,employees, attorneys, or agents for punitive damages in respect of any claim in connection with,arising out of, or in any way related to, this Agreement or any of the other Loan Documents, or anyof the transactions contemplated by this Agreement or any of the transactions contemplated by theother Loan Documents.     **9.16 WAIVER OF JURY TRIAL.**BORROWER AND LENDER HEREBY WAIVE THEIR RIGHTS TO A JURY TRIAL OFANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE NOTE OR THE OTHERLOAN DOCUMENTS. BORROWER AND LENDER ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTERINTO A BUSINESS RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THISAGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVERIN THEIR RELATED FUTURE DEALINGS. BORROWER AND LENDER FURTHER WARRANT AND REPRESENT THAT EACH HASREVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITSJURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.     **9.17 Construction.**Borrower and Lender acknowledge that they have had the benefit of legalcounsel of its own choice and have been afforded an opportunity to review this Agreement and theother Loan Documents with their legal counsel and that this Agreement and the other Loan Documentsshall be construed as if jointly drafted by Borrower and Lender.     **9.18 Counterparts; Effectiveness.**This Agreement and any amendments, waivers, consents, orsupplements may be executed in any number of counterparts and
34

 
by different parties hereto inseparate counterparts, each of which when so executed and delivered shall be deemed an original,but all of which counterparts together shall constitute but one and the same instrument. ThisAgreement shall become effective upon the execution of a counterpart hereof by each of the partieshereto. Delivery of an executed counterpart of a signature page to this Agreement, to anyamendments, waivers, consents or supplements, or to any other Loan Document by telecopier shall beas effective as delivery of a manually executed counterpart thereof.     **9.19 No Duty.**All attorneys, accountants, appraisers, and other professional Persons andconsultants retained by Lender shall have the right to act exclusively in the interest of Lenderand shall have no duty of disclosure, duty of loyalty, duty of care, or other duty or obligation ofany type or nature whatsoever to Borrowers, any of their Affiliates, any of their respectiveshareholders or any other Person.     **9.20 Confidentiality.**          (A) Each of the parties hereto (each, a “Receiving Party”) agrees to treat any non-publicinformation (“Confidential Information”) disclosed by one or more of the other parties hereto (the“Disclosing Party”) as confidential in accordance with the provisions of this subsection 9.20. Theterm “Confidential Information” does not include information which (i) was or becomes generallyavailable to the public other than as a result of a disclosure by a Receiving Party or itsSubsidiaries or affiliates in violation of this subsection 9.20, (ii) was or becomes available tothe Receiving Party on a non-confidential basis from a source other than the Disclosing Party, (iii) is independently developedby the Receiving Party or (iv) is disclosed by the Disclosing Party to a third party withoutconfidentiality restrictions similar to those set forth in this subsection 9.20.          (B) Each Receiving Party hereby agrees that the Confidential Information will be used solelyfor the purpose of the transactions contemplated by this Agreement and that such ConfidentialInformation will not be disclosed to anyone else; provided, however, that (i) any of suchinformation may be disclosed to the Receiving Party’s Subsidiaries or affiliates who need to knowsuch information for the purpose of effecting the transactions contemplated by this Agreement (itbeing understood that such Subsidiaries or affiliates shall be directed to treat such informationconfidentially), and (b) any disclosure of such Confidential Information may be made to which theDisclosing Party consents in writing. In addition, Confidential Information may, without breachhereof, be disclosed as required by law or pursuant to a request of a court of competentjurisdiction or government agency, provided that the Receiving Party, reasonably promptly after itgains knowledge thereof, gives the Disclosing Party written notice of such disclosure ofConfidential Information, and provided further that the Receiving Party does not oppose theDisclosing Party’s efforts to obtain an adequate protective order for such ConfidentialInformation.     **9.21 Patriot Act.**Lender hereby notifies Borrower that pursuant to the requirements of thePatriot Act, it is required to obtain, verify and record information that identifies Borrower,which information includes the name and address of Borrower and other information that will allowLender to identify Borrower in accordance with the terms of the Patriot Act. As used above,“Patriot Act” means the Uniting and Strengthening
35

 
America by Providing Appropriate Tools Requiredto Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as amended.     **9.22 OFAC.**Borrower shall (a) ensure, and cause its Subsidiaries to ensure, that neitherBorrower nor any Subsidiary or Affiliate is or shall be a Person with whom or which Lender isrestricted from doing business under (i) regulations of the Office of Foreign Assets Control of theUnited States Department of the Treasury (“OFAC”) including, without limitation, any Person listedon the Specifically Designated Nationals and Blocked Person List maintained by OFAC (or any similarlist maintained by OFAC, collectively, the “OFAC List”), or (ii) any similar regulations, statutes,laws, lists, or executive orders established or promulgated by the United States government or anyagency thereof (the regulations, statutes, laws, lists and executive orders referred to in clauses(i) and (ii) above are collectively referred to as the “Regulations”); (b) not use or permit theuse of the proceeds of the Loan in a manner that would violate any Regulations; and (c) not,directly or indirectly, conduct any business with or engage in any transaction with any Personnamed on the OFAC List, any Person included in, owned by, controlled by, acting for or on behalfof, providing assistance, support, sponsorship, or services of any kind to, or otherwise associatedwith, any Person named on the OFAC List, or any other Person with whom Borrower is restricted fromdoing business under any Regulations. If Borrower obtains any actual knowledge or receives anywritten notice that Borrower, any of its Affiliates or any of its Subsidiaries is named on the OFACList (an “OFAC Event”), Borrower shall (i) promptly give written notice to Lender of such OFACEvent and (ii) comply with all applicable laws with respect to such OFAC Event (regardless ofwhether the party included on the OFACList is located within the jurisdiction of the United States of America), including theRegulations, and Borrower hereby authorizes and consents to Lender taking any and all steps Lenderdeems necessary, in Lender’s sole discretion, to avoid violation of all applicable laws withrespect to any such OFAC Event, including the requirements of the Regulations (including thefreezing and/or blocking of assets and reporting such action to OFAC).     WITNESS the due execution of this Agreement by the respective duly authorized officers orother authorized Persons of the undersigned as of the date first written above.         **BORROWER**           **BROOKE CAPITAL CORPORATION**           By: