Document:

exv10w11

Exhibit 10.11

REVOLVING LINE OF CREDIT NOTE

			
	$15,000,000.00
	 	April 6, 2009

     FOR VALUE RECEIVED, FORTEGRA FINANCIAL CORPORATION, a Georgia corporation, as maker, having
an address of 100 West Bay Street, Jacksonville, Florida 32231 (“Borrower”), hereby
unconditionally promises to pay to the order of COLUMBUS BANK AND TRUST COMPANY, a Georgia banking
corporation, having its principal place of business at 1148 Broadway, Columbus, Georgia 31901
(“Lender”), or at such other place as the holder hereof may from time to time designate in writing,
the principal sum of FIFTEEN MILLION AND 00/100THS DOLLARS ($15,000,000.00), or such sums as may be
advanced and outstanding from time to time pursuant to the Loan Agreement (defined below), in
lawful money of the United States of America, with interest thereon as herein provided, to be paid
as provided herein.

     This Revolving Line of Credit Note (the “Note”) represents a loan made on a revolving credit
basis pursuant to that certain Line of Credit Agreement dated of even date herewith by and among
Borrower, LOTS Intermediate Co., as guarantor, and Lender(such Line of Credit Agreement as
originally executed and as same may be amended and modified from time to time being herein referred
to as the “Loan Agreement”). Advances of principal made hereunder shall be made by Lender to
Borrower in such amounts and at such times as Borrower from time to time may request in accordance
with and subject to the terms of and conditions and limitations set forth in the Loan Agreement,
but in no event shall the aggregate amount of all advances (including, without limitation, the
initial advance made on the date hereof) of principal made and outstanding at any one time
hereunder ever exceed $15,000,000.00. Notwithstanding anything herein or in the Loan Agreement to
the contrary, Lender shall have no obligation to advance any funds hereunder if (a) an Event of
Default (as hereinafter defined) has occurred and is continuing or (b) on or after the Maturity
Date (as hereinafter defined).

1. CERTAIN DEFINED TERMS

     As used herein the following terms shall have the meanings set forth below (terms utilized
herein which are not defined herein but which are defined in the Loan Agreement shall have the
meanings ascribed to such terms in the Loan Agreement):

     (a) “Applicable Interest Rate” shall mean a per annum rate of simple interest equal at all
times to the greater of (i) 1.0% plus the Floating Prime Rate (as hereinafter defined) and (ii)
5.0%. Each time the Floating Prime Rate increases or decreases, the Applicable Interest Rate will
be re-calculated by Lender effective on the date when any increase or decrease in the Floating
Prime Rate becomes effective so that the Applicable Interest Rate will equal the greater of (i)
1.0% plus the Floating Prime Rate, in effect following such increase or decrease and (ii) 5.0%.
As of the date hereof, the Floating Prime Rate is 3.25% per annum and accordingly the initial
Applicable Interest Rate is 5.0% per annum.

 

 

     (b) “Floating Prime Rate” shall mean the rate announced or otherwise designated from time to
time by Lender as its “Prime Rate” and changing automatically with changes in such Prime Rate.
Borrower acknowledges that the Prime Rate announced or otherwise established by Lender from time to
time merely serves as a basis upon which effective rates of interest are calculated for loans
making reference thereto and that such Prime Rate may not be the lowest rate at which interest is
calculated or credit extended. If Lender ceases to announce its Prime Rate, Lender shall
determine the Floating Prime Rate as the Prime Rate designated in such other nationally recognized
publication, statistical guide or information service as Lender may reasonably select.

     (c) “Loan” shall mean the loan evidenced by this Note.

     (d) “Loan Agreement” shall have the meaning assigned to said term on the first page of this
Note.

     (e) “Loan Documents” shall mean this Note, the Loan Agreement, the Loan Documents (as defined
in the Loan Agreement), and any other documents or instruments which now or shall hereafter wholly
or partially secure or guarantee payment of this Note or which have otherwise been executed by
Borrower and/or any other person in connection with the Loan, and all amendments, modifications and
extensions of any such agreements, documents or instruments.

     (f) “Maturity Date” shall mean March 31, 2010.

     (g) “Monthly Payment Date” shall mean May 10, 2009, and the tenth (10th)
day of each successive month thereafter through and including the Maturity Date.

2. PAYMENT TERMS

     Principal and interest on this Note shall be due and payable as follows:

     (c) The principal amount of this Note from time to time advanced and outstanding shall bear
interest at the Applicable Interest Rate in effect from time to time.

     Accrued interest shall be due and payable from Borrower to Lender on each Monthly Payment
Date through and including the Maturity Date.

     (b) Each payment from Borrower shall be applied when received by Lender as follows: (i) first,
to any amounts due hereunder that are neither principal nor interest, (ii) second, to the payment
of interest which has accrued but has not been paid hereunder, and (iii) the balance toward the
reduction of the principal sum in such order of application as is determined by Lender.

     (c) The entire outstanding balance of the principal sum and all accrued but unpaid interest
thereon and the entire Debt (as hereinafter defined) shall be due and payable from Borrower
hereunder in full on the Maturity Date.

 

 

     (d) Interest shall be computed for each day during the term of this Note by multiplying the
outstanding principal balance hereunder at the close of business on that day by a daily interest
factor which daily interest factor shall be calculated by dividing the interest rate per annum in
effect under this Note on that day by 360 days. Interest so computed shall accrue for each and
every day on which any principal amount remains outstanding hereunder.

     (e) Unless payments are made in the required amount in immediately available funds at the
place where this Note is payable, remittances in payment of all or any part of the Debt (defined
below) shall not, regardless of any receipt or credit issued therefor, constitute payment until the
required amount is actually received by Lender in funds immediately available at the place where
this Note is payable (or any other place as Lender, in Lender’s sole discretion, may have
established by delivery of written notice thereof to Borrower) and shall be made and accepted
subject to the condition that any check or draft may be handled for collection in accordance with
the practice of the collecting bank or banks.

3. DEFAULT AND ACCELERATION

     (a) The whole of the principal sum of this Note from time to time outstanding, (b) interest,
default interest, late charges and any and all such other sums, as provided in this Note or the
other Loan Documents, (c) all other monies agreed or provided to be paid by Borrower in this Note
or the other Loan Documents, (d) all sums advanced pursuant to and in accordance with any of the
Loan Documents to protect and preserve the Collateral securing the Loan, and (e) all sums advanced
and costs and expenses incurred by Lender in connection with the Debt (defined below) or any part
thereof, any renewal, extension, or change of or substitution for the Debt or any part thereof, or
the acquisition or perfection of the security therefor, whether made or incurred at the request of
Borrower or Lender [all the sums referred to in (a) through (e) above shall collectively be
referred to as the “Debt"] shall without notice become immediately due and payable at the option of
Lender (i) if any payment required in this Note is not paid on the date when due, (ii) if Borrower
fails to observe any other term or agreement herein contained, or (iii) on the occurrence and
continuation of any Event of Default under, and as defined in, the Loan Agreement or any of the
Loan Documents (each such nonpayment, failure or occurrence of an Event of Default under the Loan
Agreement or any of the Loan Documents being referred to as an “Event of Default”).

4. DEFAULT INTEREST

     Borrower hereby agrees that upon the occurrence and during the continuance of an Event of
Default, Lender shall be entitled to receive and Borrower shall pay interest on the entire unpaid
principal sum at a rate (the “Default Rate”) equal to the lesser of (i) 4.0% more than the
Applicable Interest Rate or (ii) the maximum interest rate that Borrower may by law pay. The
Default Rate shall be computed from the occurrence of the Event of Default until the earlier of the
date upon which the Event of Default is cured or waived in writing by Lender or the date upon which
the Debt is paid in full. Interest calculated at the Default Rate shall be added to the Debt.
This clause, however, shall not be construed as an agreement or privilege to extend the

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date of the payment of the Debt, or as a waiver of any other right or remedy accruing to Lender by
reason of the occurrence of any Event of Default.

5. PREPAYMENT

     The indebtedness evidenced by this Note may be prepaid, in whole or in part, at any time and
from time to time, without penalty or premium.

6. SECURITY.

     This Note is secured by the Collateral. Payment of this Note is also guaranteed by LOTS
Intermediate Co. pursuant to the Guaranty.

7. SAVINGS CLAUSE

     No provisions of this Note are intended to result in Lender being entitled to or Borrower
being required to pay any interest in excess of the highest lawful Contract Rate (meaning the
maximum non-usurious interest rate that at any time or from time to time may be contracted for,
taken, reserved, charged or received on amounts due to Lender under laws applicable with regard to
this Note presently in effect, or to the extent permitted by law, under such applicable laws as
they are in effect from time to time which may allow a higher maximum non-usurious rate than
applicable laws now allow). To the extent the interest provided for herein shall exceed said
highest lawful Contract Rate, Borrower shall be obligated only to pay said highest lawful Contract
Rate and shall not be obligated to pay such excess, but if such excess shall be paid by Borrower,
then such excess shall, at the option of Lender, either be credited by Lender against the unpaid
principal balance hereof or refunded by Lender to Borrower.

8. LATE CHARGE

     Time is of the essence of all provisions of this Note. If any sum payable under this Note is
not paid prior to the tenth (10th) day after the date on which it is due, Borrower shall pay to
Lender upon demand an amount equal to the lesser of five percent (5%) of the unpaid sum or the
maximum amount permitted by applicable law to defray the expenses incurred by Lender in handling
and processing the delinquent payment and to compensate Lender for the loss of the use of the
delinquent payment and the amount shall be secured by the Pledge Agreement (as defined in the Loan
Agreement) and other instruments securing this Note. This provision shall not be deemed to create
a grace period for making payments under this Note and shall not preclude Lender from exercising
Lender’s rights under Section 3 of this Note.

9. NO ORAL CHANGE

     This Note may not be modified, amended, waived, extended, changed, discharged or

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terminated orally or by any act or failure to act on the part of Borrower or Lender, but only by
an agreement in writing signed by the party against whom enforcement of any modification,
amendment, waiver, extension, change, discharge or termination is sought.

10. WAIVERS

     Borrower and each of its successors and assigns do hereby severally waive presentment and
demand for payment, notice of dishonor, protest and notice of protest and non-payment and all other
notices of any kind, except for notices specifically provided for in the Loan Documents, and no
release of any security for the Debt or extension of time for payment of this Note or any
installment hereof, and no alteration, amendment or waiver of any provision of this Note or the
other Loan Documents agreed to by Lender or its successors or assigns, with any Person other than
Borrower (or its successors and/or assigns) shall release, modify, amend, waive, extend, change,
discharge, terminate or affect the liability of Borrower or any of its successors or assigns. No
notice to or demand on Borrower shall be deemed to be a waiver of the obligation of Borrower or of
the right of Lender to take further action without further notice or demand as provided for in this
Note or the other Loan Documents. In addition, acceptance by Lender of any payment in an amount
less than the amount then due shall be deemed an acceptance on account only, and shall not
constitute a waiver of any Event of Default that would otherwise arise as a result of such
nonpayment. If Borrower is a corporation, limited liability company or partnership, the agreements
contained herein shall remain in full force and effect and applicable notwithstanding any changes
in the shareholders or members or partners comprising, or the officers and directors or managers or
general partners relating to, the corporation, limited liability company or limited partnership,
and the term “Borrower” as used herein, shall include any successor corporation, limited
partnership or limited liability company, but no predecessor corporation or limited liability
company or limited partnership shall be relieved of liability hereunder. (Nothing in the foregoing
sentence shall be construed as consent to, or a waiver of, any prohibition or restriction on
transfers of interests in any limited partnership, corporation or limited liability company which
may be set forth in any of the Loan Documents).

11. TRANSFER

     Lender shall have the absolute right to sell, assign and transfer this Note and all of
Lender’s rights hereunder and under any or all of the Loan Documents. Upon the transfer of this
Note, Borrower hereby waiving notice of any such transfer, Lender may deliver all the collateral
mortgaged, granted, pledged or assigned pursuant to the Loan Documents, or any part thereof, to the
transferee who shall thereupon become vested with all the rights herein or under applicable law
given to Lender with respect thereto, and Lender shall thereafter forever be relieved and fully
discharged from any liability or responsibility in the matter; but Lender shall retain all rights
hereby given to it with respect to any liabilities and the collateral not so transferred.

12. WAIVER OF TRIAL BY JURY

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     BORROWER AND LENDER HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, THE RIGHT TO TRIAL
BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER IN CONTRACT, TORT OR OTHERWISE, RELATING
DIRECTLY OR INDIRECTLY TO THE LOAN, THE APPLICATION FOR THE LOAN, THIS NOTE OR THE OTHER LOAN
DOCUMENTS OR ANY ACTS OR OMISSIONS OF LENDER, ITS OFFICERS, EMPLOYEES, DIRECTORS, MEMBERS, MANAGERS
OR AGENTS IN CONNECTION THEREWITH.

13. AUTHORITY

     Borrower (and the undersigned representative of Borrower, if any) represents that it has full
power, authority and legal right to execute and deliver this Note and the Loan Documents to which
Borrower is a party and that this Note and the Loan Documents to which Borrower is a party
constitute valid and binding obligations of Borrower, enforceable against Borrower in accordance
with their respective terms.

14. APPLICABLE LAW

     This Note shall be governed, construed, applied and enforced in accordance with the laws of
the state of Georgia and the applicable laws of the United States of America.

15. COUNSEL FEES

     In the event that it should become necessary to employ counsel to collect the Debt or to
protect or foreclose the security therefor, hereunder or under any of the other Loan Documents,
Borrower also agrees to pay all reasonable fees and expenses of Lender, including, without
limitation, reasonable attorney’s fees actually incurred for the services of such counsel, whether
or not suit be brought.

16. NOTICES

     Any and all notices, elections or demands permitted or required to be made under this Note
shall be in writing, signed by the party giving such notice, election or demand and shall be
delivered personally, by electronic email, or sent by certified United States Mail, postage
prepaid, or sent by a nationally recognized overnight courier provided a receipt for delivery is
obtained from the recipient, to the other party at the address set forth below, or at such other
address within the continental United States of America as may have theretofore been designated in
writing to the other party. Any such notice or other document shall be deemed delivered (i) if
personally delivered, when actually received by the party to whom directed at the address specified
pursuant to this Section, or (ii) if sent by electronic mail, upon sender’s receipt of an
acknowledgment from the intended recipient (such as by the “return receipt requested” function, as
available, return email or written acknowledgment), or (iii) if sent by U.S. Mail, three (3) days
after such notice or document is deposited in the United States Mail, addressed as provided

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above, or (iv) if sent by overnight courier, addressed, as provided below, on the date of receipt
or refusal to accept delivery, as evidenced on the return receipt or other shipping invoice. For
the purposes of this Note:

If to Borrower:

Fortegra Financial Corporation

Attn: John Short

100 West Bay Street

P. O. Box 44130

Jacksonville, Florida 32231

jshort@fortegra.com

If to Lender:

Columbus Bank and Trust Company

Attn: Corporate Lending (Neill Hatcher)

1148 Broadway (31901)

Post Office Box 120

Columbus, Georgia 31902

neillhatcher@columbusbankandtrust.com

17. MISCELLANEOUS

     (a) Wherever pursuant to this Note (i) Lender exercises any right given to it to approve or
disapprove, (ii) any arrangement or term is to be satisfactory to Lender, or (iii) any other
decision or determination is to be made by Lender, the decision of Lender to approve or disapprove,
all decisions that arrangements or terms are satisfactory or not satisfactory and all other
decisions and determinations made by Lender, shall be in the discretion of Lender reasonably
exercised and shall be final and conclusive, except as may be otherwise expressly and specifically
provided herein.

     (b) Whenever used, the singular shall include the plural, the plural shall include the
singular, and the words “Lender“and “Borrower” shall include their respective successors, assigns
and legal representatives. This Note is not assignable by Borrower without the express prior
written consent of Lender, which consent may be withheld in sole and absolute discretion of Lender.

     (c) If any provision in this Note shall be found to be invalid, illegal or unenforceable by a
court of competent jurisdiction, it is the intention of the Borrower and Lender that to the

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extent permitted by law, the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby.

[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF, Borrower has duly executed and delivered this Note, under seal, as of
the day and year first above written.

	 	 	 	 	 
	 	BORROWER:

FORTEGRA FINANCIAL CORPORATION, a

Georgia corporation

 	 
	 	By:  	/s/ Richard S. Kahlbaugh
 	 
	 	 	Name:  	Richard S. Kahlbaugh 	 
	 	 	Title:  	Chief Executive Officer and 

President 	 
	 

(CORPORATE SEAL)

9exv10w12

Exhibit 10.12

STOCK PLEDGE AND SECURITY AGREEMENT

     This STOCK PLEDGE AND SECURITY AGREEMENT (“Agreement”) is made and entered into as of the 6th
day of April, 2009, by and between FORTEGRA FINANCIAL CORPORATION, a Georgia corporation
(hereinafter referred to as “Pledgor”), and COLUMBUS BANK AND TRUST COMPANY, a Georgia banking
corporation (hereinafter referred to as “Secured Party”). Capitalized words used and not otherwise
defined herein shall, to the extent defined in the Loan Agreement, (as hereinafter defined) have
the meanings ascribed to such words in the Loan Agreement (defined below).

WITNESSETH THAT:

     WHEREAS, Secured Party is this day extending a revolving line of credit to Pledgor in the
stated principal amount of $15,000,000.00 (the “Loan”) and to evidence said Loan Pledgor is
executing and delivering to Secured Party that certain Revolving Line of Credit Note dated of even
date herewith in the stated principal amount of Fifteen Million and No/100ths Dollars
($15,000,000.00) (such Revolving Line of Credit Note as originally executed and as same may be
amended, restated, amended and restated, modified, extended and/or renewed from time to time being
herein referred to as the “Note”); and

     WHEREAS, the Loan is being made pursuant to that certain Line of Credit Agreement by and among
Pledgor, LOTS Intermediate Co., a Delaware corporation (“LOTS”) and Secured Party dated of even
date herewith (such Line of Credit Agreement as originally executed and as same may be amended,
restated, amended and restated, modified extended and/or renewed from time to time being herein
referred to as the “Loan Agreement”); and

     WHEREAS, Pledgor owns all of the issued and outstanding stock of LOTS; and

     WHEREAS, as a condition to making the Loan, Secured Party has required Pledgor to enter into
this Agreement and to pledge to Secured Party all of the issued and outstanding stock in LOTS, as
more fully described herein, to secure the payment of the Loan and other secured obligations herein
described;

     NOW, THEREFORE, for and in consideration of the aforesaid and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, and to induce Secured
Party to accept the Note and to make the Loan to Pledgor, Pledgor hereby covenants and agrees with
Secured Party as follows:

     1. Secured Obligations. This Agreement is given to secure the due and punctual payment and
performance of (i) all indebtedness and obligations of Pledgor to Secured Party evidenced by or
arising under the Note or any other Loan Documents, whether now existing or

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hereafter arising,
including any extensions and renewals of said Note or other Loan Documents,

(ii) all costs of collection incurred by Secured Party in enforcing this Agreement or any of the
Loan Documents, (iii) all obligations of Pledgor under this Agreement, and (iv) any and all other
indebtedness, liabilities and obligations which may now or hereafter be owing by Pledgor to Secured
Party, whether direct, indirect or by way of assignment, whether joint or several, absolute or
contingent, due or to become due, and whether as principal, maker, endorser, surety, guarantor, or
otherwise under the Loan Documents (all of said debts, obligations and liabilities are hereinafter
collectively referred to as the “Secured Obligations”).

     2. Pledge and Security Interest.

     (a) Contemporaneously with the execution hereof or previously, Pledgor has delivered to
Secured Party stock certificates representing the following specified shares of common stock of
LOTS, as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	NAME OF SHAREHOLDER	 	NO. OF SHARES	 	PAR VALUE	 	CERT. NO.
	Fortegra Financial Corporation
	 	 	1,000	 	 	$0.01 per share	 	 	2	 

     Pledgor hereby pledges and grants to Secured Party a security interest in all of the above
listed shares of common stock of LOTS evidenced by the aforesaid stock certificates (constituting
all of the issued and outstanding stock of said corporation on the date hereof), together with all
dividends, stock dividends, stock splits, warrants, options, stock purchase rights, and all other
property at any time and from time to time distributed by said corporation in respect of, or in
exchange for, or in substitution of any and all such stock, and all proceeds thereof, whether now
existing or at any time hereafter acquired or issued (collectively the “Stock Collateral”). The
delivery to Secured Party of any securities now or hereafter included in the Stock Collateral shall
be accompanied by stock powers executed in blank and by such other documents or instruments as
Secured Party may reasonably request. Each subsequent delivery of certificates for such Stock
Collateral shall be accompanied by a schedule showing the number of shares and the number of each
certificate representing such shares and then being pledged hereunder, which schedule shall be
attached hereto and made a part hereof.

     Should any other property of any nature whatsoever of Pledgor be conveyed to Secured Party or
otherwise come into the possession of Secured Party as security for the Secured Obligations, unless
such property shall be covered by and subject to the terms of a separate security agreement
executed and delivered by Pledgor to Secured Party as security for any of the Secured Obligations,
such shall automatically become subject to the terms of this Agreement, and all such property
shall, along with the Stock Collateral, be sometimes referred to hereinafter as the “Collateral.”

     (b) Upon the request of Secured Party, Pledgor will execute such financing statements

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and other documents, pay the cost of filing or recording the same in all public offices deemed
necessary or appropriate by Secured Party, and do such other acts and things as Secured Party may
from time to time reasonably request, to establish and maintain a valid security interest in the
Collateral, free of all other liens and claims of every nature whatsoever other than those in favor
of Secured Party. Pledgor hereby authorizes Secured Party to prepare and file, without Pledgor’s
execution thereof, such financing statements as Secured Party deems appropriate to perfect, protect
and/or preserve its security interest in any of the Collateral.

     3. Representations and Warranties. Pledgor hereby represents and warrants to Secured Party as
follows:

          a. The stock certificate(s) identified in Section 2 hereof and delivered to the Bank are
genuine and in all respects what they purport to be.

          b. Pledgor is the legal owner of the Stock Collateral and holds full and absolute beneficial
title to the Stock Collateral, free and clear of all liens, charges, encumbrances, security
interest, and voting trust restrictions, shareholder agreements and similar agreements of every
kind and nature except for those in favor of Secured Party.

          c. That no consent or approval of any person, entity, or government or regulatory authority is
necessary to the validity of the pledge contained in this Agreement, except such as have been
obtained, and it is not necessary in connection with the execution and delivery of this Agreement
to register the Stock Collateral under the Securities Act of 1933, as amended.

          d. That Pledgor has full power and authority to pledge the Stock Collateral to Secured Party
as security for the Secured Obligations, and will defend its title thereto against the claims of
all persons whomsoever.

          e. That Pledgor has granted to Secured Party a security interest in the Stock Collateral which
is at the time hereof valid, perfected and of first priority under applicable law subject to no
other liens and no financing statement, security interest, or other lien or encumbrance covering
the Stock Collateral or its proceeds is outstanding or on file in any public office, except any, if
any, that may have been filed in favor of the Bank.

          f. That Pledgor has revoked all proxies heretofore given (except those in favor of Secured
Party) and covenants not to extend further proxies or powers of attorney with respect to the Stock
Collateral so long as this Agreement remains in full force and effect.

          g. That Pledgor has the full power and authority to enter into this Agreement and to perform
its obligations hereunder, and this Agreement constitutes the valid, binding, and enforceable
agreement of Pledgor, enforceable against Pledgor in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, or other similar laws affecting the rights of
creditors generally, and except with respect to the applicability of general equitable principles
which may limit the availability of specific performance or other equitable remedies.

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     4. Registration in Nominee Name; Denominations. Secured Party shall have the right (in its
reasonable and absolute discretion) to have the stock certificate(s) representing the Stock
Collateral assigned in blank in favor of Secured Party. Upon the occurrence and during the
continuance of an Event of Default under this Agreement, Secured Party may have such Stock
Collateral registered in the name of Secured Party or any nominee or nominees of Secured Party upon
notice to Pledgor. Secured Party shall at all times have the right to exchange the stock
certificate(s) representing the Stock Collateral for stock certificate(s) of smaller or larger
denominations for any purpose consistent with its performance of this Agreement.

     5. Covenants. Until such time as all of the Secured Obligations are paid in full with Secured
Party having no further commitment to advance funds under the Note, Pledgor covenants and agrees
with Secured Party as follows:

     (a) Pledgor shall keep the Stock Collateral free from all security interests, liens, levies,
attachments, voting restrictions, and all other encumbrances, except for the interest of Secured
Party herein granted;

     (b) Pledgor shall not assign, sell, transfer, deliver, or otherwise dispose of any of the
Collateral or any interest therein other than as permitted by Section 4(q) of the Loan Agreement
without the express prior written consent of Secured Party, which may be withheld by Secured Party
in its reasonable discretion; provided, however, notwithstanding anything contained herein or in
the Loan Agreement to the contrary, Pledgor may not sell or transfer any of the Stock Collateral
without the prior written consent of Secured Party, which consent may be withheld in the reasonable
discretion of Secured Party;

     (c) Pledgor shall pay all taxes, assessments, and all other charges of any nature which may be
levied on or assessed against the Collateral or distributions in respect of the Collateral owed by
Pledgor, except for taxes, assessments or charges which are in good faith being timely contested by
Pledgor and are properly reserved against by Pledgor;

     (d) Pledgor now owns and shall continue to own 100% of the issued and outstanding capital and
common stock of LOTS, all of which stock shall be included in the Stock Collateral; and

     (e) Pledgor will not vote any of the stock represented by the Stock Collateral to permit, and
will vote such stock to prohibit, any purchase, redemption, retirement or other acquisition of any
of the Stock Collateral by LOTS.

     6. Voting Rights; Dividends, etc.

     (a) Unless and until an Event of Default hereunder shall have occurred and be continuing and
until receipt of notice from Secured Party as provided below:

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          (i) Pledgor shall be entitled to exercise any and all voting and consensual rights and powers
accruing to an owner of the Stock Collateral or any part thereof for any purpose not inconsistent
with the terms of this Agreement or the Loan Agreement;

          (ii) Pledgor shall be entitled to receive and retain any and all cash dividends payable on the
Stock Collateral. Notwithstanding the foregoing, any and all stock or liquidating dividends, other
distribution in property, return of capital or distribution made on or in respect of the Stock
Collateral, whether resulting from a subdivision, combination or reclassification of common stock
or received in exchange for the Stock Collateral or any part thereof or as a result of any merger,
consolidation, acquisition or other exchange of assets shall be and become part of the Stock
Collateral pledged hereunder and, if received by Pledgor, shall promptly be delivered to Secured
Party to be held subject to the terms of this Agreement.

     (b) Upon the occurrence and during the continuance of any Event of Default, after Secured
Party shall have notified Pledgor in writing of the suspension of its rights in Section 6(a)
hereof:

          (i) All rights of Pledgor to receive and retain cash dividends payable on the Stock Collateral
pursuant to Section 6(a)(ii) hereof shall cease and all such dividends shall be paid to Secured
Party for application to the Secured Obligations. After the occurrence and during the continuance
of said Event of Default, Pledgor agrees to promptly deliver to Secured Party any and all cash,
checks, drafts, or other instruments for the payment of money which may be received by Pledgor as
dividends or otherwise with respect to the Stock Collateral, duly endorsed and assigned to Secured
Party, and same shall be held in a non-interest bearing account to be established by Secured Party
upon receipt of such money or property as part of the Collateral subject to the terms of this
Agreement (which account shall be under the exclusive control of Secured Party) or at Secured
Party’s option, applied to the Secured Obligations (whether or not same is then due) in such order
of application as is determined by Secured Party in its discretion; and

          (ii) All rights of Pledgor to exercise the voting and consensual rights and powers which
Pledgor is entitled to exercise pursuant to Section 6(a) (i) hereof shall cease, and all such
rights shall thereupon become vested in Secured Party, which shall have the sole and exclusive
right and authority to exercise such voting and consensual rights and powers.

     7. Performance of Pledgor’s Obligations. At Secured Party’s option, Secured Party may (but
shall not be obligated to) from time to time perform any agreement of Pledgor hereunder which
Pledgor shall fail to perform, and may take any other reasonable action which Secured Party deems
necessary for the maintenance or preservation of the value of the Collateral or Secured Party’s
interest therein; and any such cost so incurred shall be due and payable by Pledgor as provided in
Section 7(o) of the Loan Agreement.

     8. Attorney-in-Fact. Pledgor hereby irrevocably constitutes and appoints Secured Party as
Pledgor’s agent and attorney-in-fact for the purposes of carrying out the provisions of this
Agreement and taking any action and executing any interest which Secured Party may deem

5

 

necessary or advisable to accomplish the purposes hereof; provided, however, that such appointment of Secured
Party shall not become effective until an Event of Default shall have occurred and be continuing.
Without limiting the generality of the foregoing, upon the occurrence and during the continuance of
an Event of Default, Secured Party shall have the right and power to receive, endorse and collect
all checks and other orders for the payment of money made payable to Pledgor representing any
interest or dividend or other distribution payable in respect of the Stock Collateral or any part
thereof and give full discharge for the same. As Pledgor’s attorney-in-fact, Secured Party shall
have full power and authority to execute and deliver, in Pledgor’s name or in Pledgor’s behalf, any
and all applications, certificates, endorsements, instruments and other documents of every nature
which Secured Party at any time and from time to time shall reasonably deem necessary for the
establishment and continuation of its perfected security interest in the Collateral or for the
exercise of any of its rights and remedies herein provided with respect to the Collateral,
including, but not limited to, any disposition of Collateral in the event of foreclosure. In
exercising the power of attorney herein granted, Secured Party may act by and through its
authorized loan officers or any other designee. The foregoing power of attorney is coupled with an
interest, is irrevocable, and shall be terminated only upon payment in full of the Secured
Obligations.

     9. Events of Default. Pledgor shall be in default under this Agreement upon the occurrence of
any one or more of the following events (hereinafter referred to as “Events of Default” with each
being an “Event of Default”): (i) any default shall occur in the payment of any sum when due under
the Note or any of the other Secured Obligations; (ii) an Event of Default shall occur under, and
as defined in, the Loan Agreement or any of the other Loan Documents; (iii) the breach by Pledgor
of any of the covenants or terms set forth in Section 5 of this Agreement or elsewhere in this
Agreement and such failure is not cured by Pledgor within five (5) days after written notice of
such failure is given by Secured Party to Pledgor; (iv) failure of Pledgor to observe any term,
covenant or provision set forth in this Agreement and such failure is not cured by Pledgor within
five (5) days after written notice of such failure is given by Secured Party to Pledgor; or (v) any
of the representations or warranties herein made by Pledgor shall prove to have been false or
misleading in any material respect as of the date made.

     10. Rights and Remedies on Default. Upon the occurrence and during the continuance of an Event
of Default under this Agreement and in addition to the rights set forth elsewhere herein, in the
Note, in the other Loan Documents (as defined in the Loan Agreement) or available under applicable
law, Secured Party may, in Secured Party’s sole discretion and without further notice or demand (i)
declare all the Secured Obligations to be immediately due and payable, (ii) proceed immediately to
exercise any and all of Pledgor’s rights, powers and privileges with respect to the Stock
Collateral or any other Collateral, including without limitation, the right to sell or otherwise
dispose of the Stock Collateral or any other Collateral, or any part thereof, at private or public
sale in such manner as Secured Party shall deem reasonable, and (iii) exercise any other right or
remedy available to Secured Party under the Georgia Uniform Commercial Code or otherwise available
by any agreement with Pledgor or under applicable federal or state law. All rights and remedies
herein specified are cumulative and are in addition to such other rights and remedies as may be
available to Secured Party.

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     Secured Party shall act as the authorized agent and attorney-in-fact of Pledgor in disposing
of the Stock Collateral, and in that capacity is authorized to take such action on behalf of
Pledgor as will further such a disposition, including without limitation, any necessary endorsement
or signature in Secured Party’s own or Pledgor’s name. Pledgor expressly acknowledges that
compliance with federal or state securities and other laws may limit the disposition of the Stock
Collateral by Secured Party. No disposition of the Stock Collateral by Secured Party following the
occurrence and during the continuance of an Event of Default shall be deemed to be a breach of any
duty to Pledgor to be commercially reasonable because a better sales price might have been attained
through an alternative disposition if Secured Party has acted reasonably and in good faith, or if
Secured Party in good faith has determined that the alternative disposition might constitute a
violation of state or federal laws. Without limiting the generality of the foregoing, Secured Party
may at any sale of the Stock Collateral restrict the prospective bidders or purchasers of the Stock
Collateral to Persons who will represent and agree that they are purchasing the Stock Collateral
for their own account for investment and not with a view to distribution or sale, to Persons who
represent and agree that they are all residents of one particular state, or to Persons who
represent and agree that they are sophisticated investors having such net worth that they could
withstand the loss of any investment made in purchasing any part or all of the Stock Collateral, or
other similar restrictions, along with restricting the number of purchasers or prospective
purchasers of said Stock Collateral. Any purchaser at a sale conducted pursuant to the terms of
this Agreement shall hold the property sold absolutely, free from any claim or right on the part of
Pledgor, and Pledgor hereby waives any right of redemption, stay or appraisal under present or
future law. Each and every purchaser of any of the Stock Collateral shall be vested with all
shareholder’s rights provided by the stock purchased, including without limitation, all voting and
dividend rights. Pledgor agrees that Secured Party may purchase the Stock Collateral or any part
thereof at any such sale. Any requirement imposed by law regarding the giving to Pledgor of prior
notice of any sale or other disposition of the Stock Collateral shall be deemed reasonable if given
by Secured Party in writing at least ten days prior to such sale or other disposition specifying
the time and place thereof.

     11. Application of Proceeds. No disposition of any of the Collateral shall extinguish
any of the Secured Obligations, except to the extent that the net proceeds are applied thereto,
such proceeds to be applied first to the payment of all costs and expenses of collection and
disposition of the Collateral (including, without limitation, reasonable attorneys’ fees and
out-of-pocket expenses), and then toward payment of the Secured Obligations, in such order of
application as Secured Party may from time to time elect, and such, if any, remaining balance paid
to Pledgor or other party lawfully entitled thereto.

     12. Term of Agreement. This Agreement shall terminate only upon final payment in full
of the Secured Obligations with Secured Party having no obligation to fund further advances under
the Note, at which time Secured Party shall (as long as the Stock Collateral or other Collateral is
not subject to any other pledge in favor of Secured Party that remains outstanding) reassign and
deliver to Pledgor any Stock Collateral and any other Collateral then held by Secured Party,
together with appropriate instruments of reassignment and release, including all Uniform Commercial
Code termination statements or similar documents that Pledgor shall reasonably request to evidence
such termination and release. Such reassignment shall be without recourse upon or warranty by
Secured Party.

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     13. Securities. In view of the position of Pledgor in relation to the Stock
Collateral, or because of other present or future circumstances, a question may arise under the
Securities Act of 1933, as amended, as now or hereafter in effect, or any similar statute hereafter
enacted analogous in purpose or effect (such Act and any such similar statute as from time to time
in effect being hereinafter called the “Federal Securities Laws”) with respect to any disposition
of the Stock Collateral permitted hereunder. Similarly, there may be other legal restrictions or
limitations affecting Secured Party in any attempt to dispose of all or any part of the Stock
Collateral under applicable Blue Sky or other state securities laws or similar laws analogous in
purpose or effect. Pledgor understands and acknowledges that compliance with the Federal Securities
Laws and state securities laws may limit the course of conduct of Secured Party if Secured Party
were to attempt to dispose of all or any part of the Stock Collateral and may also limit the extent
to which or the manner in which any subsequent transferee of any Stock Collateral may dispose of
the same, and such compliance by Secured Party shall not be deemed to constitute a breach of any
duty or obligation to Pledgor.

     14. Miscellaneous.

          (a) Notices. Any and all notices, elections or demands permitted or required to be
made under this Agreement shall be made in accordance with Section 7(b) of the Loan Agreement.

          (b) Survival. All representations, warranties, covenants and agreements herein
contained shall survive the execution and delivery of this Agreement.

          (c) No Waiver. No failure on the part of Secured Party to exercise, and no delay in
exercising, any right, power or remedy granted hereunder, or available at law, in equity or
otherwise, shall operate as a waiver thereof, nor shall any single or partial exercise of any such
rights, power or remedy by Secured Party preclude any other or further exercise thereof, or the
exercise of any other right, power or remedy.

          (d) Incorporation by Reference. The Loan Agreement, the Note and all other documents
and instruments executed in connection with the making by Secured Party of the Loan to Pledgor are
incorporated herein and made a part hereof by this reference.

          (e) Amendments. This Agreement may be amended only by written agreement among the
parties hereto.

          (f) Time of Essence. Time is of the essence under this Agreement.

          (g) Governing Law. This Agreement and the construction and enforcement hereof shall be
governed in all respects by the laws of the State of Georgia.

          (h) Heirs, Personal Representative, Successors and Assigns. This Agreement shall
be binding upon, and shall inure to the benefit of, the parties hereto and their respective
successors and assigns, except that Pledgor shall not be permitted to assign its obligations under
this Agreement or any interest herein or in the Collateral, or any part thereof,

8

 

or otherwise
pledge, encumber or grant any options with respect to all or any of the cash, securities,
certificates, instruments or other property held as Collateral under this Agreement.

          (i) Severability. If any provision of this Agreement or any portion thereof shall be
invalid or unenforceable under applicable law, such part shall be ineffective to the extent of such
invalidity or unenforceability only, without in any way affecting the remaining parts of such
provision or other remaining provisions.

          (j) Further Assurances. Pledgor agrees to do such further acts, and to execute and
deliver such additional conveyances, assignments, agreements and instruments as Secured Party may
at any time reasonably request in connection with the administration and enforcement of this
Agreement or relative to the Collateral or any part thereof, or in order better to assure and
confirm to Secured Party its rights, powers and remedies hereunder.

          (k) Execution in Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which, taken together,
shall constitute one and the same instrument.

          (l) Headings. The descriptive headings of the several paragraphs are for convenience
only and are not to affect the construction of or to be taken into consideration in interpreting
this Agreement.

          (m) Cumulative Rights. Each and every right granted to Secured Party under this
Agreement or under any other document delivered hereunder or in connection herewith or allowed it
by law or in equity shall be cumulative and may be exercised from time to time. No failure on the
part of Secured Party to exercise, and no delay in exercising, any right shall operate as a waiver
thereof, nor shall any single or partial exercise by Secured Party of any right preclude any other
or further exercise of the same or any other right. No waiver by Secured Party of any Event of
Default shall constitute a waiver of any subsequent Event of Default.

          (n) Indemnity. Pledgor agrees to and shall indemnify Secured Party from and against
any and all claims, losses and liabilities (including, without limitation, reasonable attorney
fees) arising by reason of the execution hereof or the consummation of the transactions
contemplated hereby (including, without limitation, enforcement of this Agreement), except claims,
losses or liabilities resulting from Secured Party’s gross negligence or willful misconduct.

     15. Consideration. Pledgor hereby confirms that Pledgor has received adequate and
sufficient consideration for its execution and delivery of this Agreement.

[SIGNATURE PAGE FOLLOWS]

9

 

     IN WITNESS WHEREOF, Pledgor has duly executed and delivered this Agreement to Secured Party,
under seal, as of the date first above written

	 	 	 	 	 
	 	FORTEGRA FINANCIAL CORPORATION, a

Georgia corporation

 	 
	 	By:  	/s/ Richard S. Kahlbaugh
 	 
	 	 	Name:  	Richard S. Kahlbaugh 	 
	 	 	Title:  	Chief Executive Officer and President

      (CORPORATE SEAL) 	 
	 

10

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