Document:

Exhibit 10.19

PROMISSORY NOTE

	
Principal

$8,000,000.00

	
Loan Date

11-20-2017

	
Maturity

11-20-2018

	
Loan No.

40000

	
Call / Coll

C / 3

	
Account

72957158

	
Officer

MRD

	
Initials

	 	
References in the boxes above are for Lender's use only and do not limit the applicability of this document to any particular loan or item.

Any item above containing "***" has been omitted due to text length limitations.

	 

	
Borrower:

	
UTG, INC.

	 	
Lender:

	
ILLINOIS NATIONAL BANK

	 	
5250 SOUTH SIXTH STREET

	 	 	
MAIN BRANCH

	 	
SPRINGFIELD, IL 62703

	 	 	
322 E. CAPITOL

	 	 	 	 	
SPRINGFIELD, IL 62701

	 	 	 	 	 
	
 

Principal Amount:  $8,000,000.00

	
 

Interest Rate:  4.000%

	
 

Date of Note:  November 20, 2017

PROMISE TO PAY.  UTG, INC. ("Borrower") promises to pay to ILLINOIS NATIONAL BANK ("Lender"), or order, in lawful money of the United States of America, the principal amount of Eight Million & 00/100 Dollars ($8,000,000.00) or so much as may be outstanding, together with interest on the unpaid outstanding principal balance of each advance, calculated as described in the "INTEREST CALCULATION METHOD" paragraph using an interest rate of 4.000%.  Interest shall be calculated from the date of each advance until repayment of each advance.  The interest rate may change under the terms and conditions of the "INTEREST AFTER DEFAULT" section.

PAYMENT.  Borrower will pay this loan in one payment of all outstanding principal plus all accrued unpaid interest on November 20, 2018.  In addition, Borrower will pay regular monthly payments of all accrued unpaid interest due as of each payment date, beginning December 20, 2017, with all subsequent interest payments to be due on the same day of each month after that.  Unless otherwise agreed or required by applicable law, payments will be applied first to any accrued unpaid interest; then to principal; then to any unpaid collection costs; and then to any late charges.  Borrower will pay Lender at Lender's address shown above or at such other place as Lender may designate in writing.

INTEREST CALCULATION METHOD.  Interest on this Note is computed on a 365/365 simple interest basis; that is, by applying the ratio of the interest rate over the number of days in a year (366 during leap years), multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding.  All interest payable under this Note is computed using this method.

PREPAYMENT; MINIMUM INTEREST CHARGE.  In any event, even upon full prepayment of this Note, Borrower understands that Lender is entitled to a minimum interest charge of $50.00.  Other than Borrower's obligation to pay any minimum interest charge, Borrower may pay without penalty all or a portion of the amount owed earlier than it is due.  Early payments will not, unless agreed to by Lender in writing, relieve Borrower of Borrower's obligation to continue to make payments of accrued unpaid interest.  Rather, early payments will reduce the principal balance due.  Borrower agrees not to send Lender payments marked "paid in full", "without recourse", or similar language.  If Borrower sends such a payment, Lender may accept it without losing any of Lender's rights under this Note, and Borrower will remain obligated to pay any further amount owed to Lender.  All written communications concerning disputed amounts, including any check or other payment instrument that indicates that the payment constitutes "payment in full" of the amount owed or that is tendered with other conditions or limitations or as full satisfaction of a disputed amount must be mailed or delivered to:  Illinois National Bank, 322 E. Capitol Springfield, IL  62701.

LATE CHARGE.  If a payment is 10 days or more late, Borrower will be charged 5.000% of the unpaid portion of the regularly scheduled payment or $25.00, whichever is greater.

INTEREST AFTER DEFAULT.  Upon default, including failure to pay upon final maturity, the interest rate on this Note shall be increased by 4.000 percentage points.  However, in no event will the interest rate exceed the maximum interest rate limitations under applicable law.

DEFAULT.  Each of the following shall constitute an event of default ("Event of Default") under this Note:

Payment Default.  Borrower fails to make any payment when due under this Note.

Other Defaults.  Borrower fails to comply with or to perform any other term, obligation, covenant or condition contained in this Note or in any of the related documents or to comply with or to perform any term, obligation, covenant or condition contained in any other agreement between Lender and Borrower.

Default in Favor of Third Parties.  Borrower or any Grantor defaults under any loan, extension of credit, security agreement, purchase or sales agreement, or any other agreement, in favor of any other creditor or person that may materially affect any of Borrower's property or Borrower's ability to repay this Note or perform Borrower's obligations under this Note or any of the related documents.

False Statements.  Any warranty, representation or statement made or furnished to Lender by Borrower or on Borrower's behalf under this Note or the related documents is false or misleading in any material respect, either now or at the time made or furnished or becomes false or misleading at any time thereafter.

Insolvency.  The dissolution or termination of Borrower's existence as a going business, the insolvency of Borrower, the appointment of a receiver for any part of Borrower's property, any assignment for the benefit of creditors, any type of creditor workout, or the commencement of any proceeding under any bankruptcy or insolvency laws by or against Borrower.

Creditor or Forfeiture Proceedings.  Commencement of foreclosure or forfeiture proceedings, whether by judicial proceeding, self-help, repossession or any other method, by any creditor of Borrower or by any governmental agency against any collateral securing the loan.  This includes a garnishment of any of Borrower's accounts, including deposit accounts, with Lender.  However, this Event of Default shall not apply if there is a good faith dispute by Borrower as to the validity or reasonableness of the claim which is the basis of the creditor or forfeiture proceeding and if Borrower gives Lender written notice of the creditor or forfeiture proceeding and deposits with Lender monies or a surety bond for the creditor or forfeiture proceeding, in an amount determined by Lender, in its sole discretion, as being an adequate reserve or bond for the dispute.

Events Affecting Guarantor.  Any of the preceding events occurs with respect to any guarantor, endorser, surety, or accommodation party of any of the indebtedness or any guarantor, endorser, surety, or accommodation party dies or becomes incompetent, or revokes or disputes the validity of, or liability under, any guaranty of the indebtedness evidenced by this Note.

Change In Ownership.  Any change in ownership of twenty-five percent (25%) or more of the common stock of Borrower.

Adverse Change.  A material adverse change occurs in Borrower's financial condition, or Lender believes the prospect of payment or performance of this Note is impaired.

Insecurity.  Lender in good faith believes itself insecure.

Cure Provisions.  If any default, other than a default in payment, is curable and if Borrower has not been given a notice of a breach of the same provision of this Note within the preceding twelve (12) months, it may be cured if Borrower, after Lender sends written notice to Borrower demanding cure of such default:  (1)  cures the default within ten (10) days; or  (2)  if the cure requires more than ten (10) days, immediately initiates steps which Lender deems in Lender's sole discretion to be sufficient to cure the default and thereafter continues and completes all reasonable and necessary steps sufficient to produce compliance as soon as reasonably practical.

LENDER'S RIGHTS.  Upon default, Lender may declare the entire unpaid principal balance under this Note and all accrued unpaid interest immediately due, and then Borrower will pay that amount.

ATTORNEYS' FEES; EXPENSES.  Lender may hire or pay someone else to help collect this Note if Borrower does not pay.  Borrower will pay Lender that amount.  This includes, subject to any limits under applicable law, Lender's attorneys' fees and Lender's legal expenses, whether or not there is a lawsuit, including attorneys' fees, expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), and appeals.  If not prohibited by applicable law, Borrower also will pay any court costs, in addition to all other sums provided by law.

JURY WAIVER.  Lender and Borrower hereby waive the right to any jury trial in any action, proceeding, or counterclaim brought by either Lender or Borrower against the other.

GOVERNING LAW.  This Note will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of Illinois without regard to its conflicts of law provisions.  This Note has been accepted by Lender in the State of Illinois.

CHOICE OF VENUE.  If there is a lawsuit, Borrower agrees upon Lender's request to submit to the jurisdiction of the courts of SANGAMON County, State of Illinois.

CONFESSION OF JUDGMENT.  Borrower hereby irrevocably authorizes and empowers any attorney-at-law to appear in any court of record and to confess judgment against Borrower for the unpaid amount of this Note as evidenced by an affidavit signed by an officer of Lender setting forth the amount then due, attorneys' fees plus costs of suit, and to release all errors, and waive all rights of appeal.  If a copy of this Note, verified by an affidavit, shall have been filed in the proceeding, it will not be necessary to file the original as a warrant of attorney.  Borrower waives the right to any stay of execution and the benefit of all exemption laws now or hereafter in effect.  No single exercise of the foregoing warrant and power to confess judgment will be deemed to exhaust the power, whether or not any such exercise shall be held by any court to be invalid, voidable, or void; but the power will continue undiminished and may be exercised from time to time as Lender may elect until all amounts owing on this Note have been paid in full.  Borrower hereby waives and releases any and all claims or causes of action which Borrower might have against any attorney acting under the terms of authority which Borrower has granted herein arising out of or connected with the confession of judgment hereunder.

RIGHT OF SETOFF.  To the extent permitted by applicable law, Lender reserves a right of setoff in all Borrower's accounts with Lender (whether checking, savings, or some other account).  This includes all accounts Borrower holds jointly with someone else and all accounts Borrower may open in the future.  However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law.  Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the indebtedness against any and all such accounts, and, at Lender's option, to administratively freeze all such accounts to allow Lender to protect Lender's charge and setoff rights provided in this paragraph.

COLLATERAL.  Borrower acknowledges this Note is secured by a Commercial Pledge Agreement dated November 20, 2013.

LINE OF CREDIT.  This Note evidences a revolving line of credit.  Advances under this Note, as well as directions for payment from Borrower's accounts, may be requested orally or in writing by Borrower or by an authorized person.  Lender may, but need not, require that all oral requests be confirmed in writing.  Borrower agrees to be liable for all sums either:  (A)  advanced in accordance with the instructions of an authorized person or  (B)  credited to any of Borrower's accounts with Lender.  The unpaid principal balance owing on this Note at any time may be evidenced by endorsements on this Note or by Lender's internal records, including daily computer print-outs.

SECURITY INTEREST IN DEPOSIT ACCOUNTS. Borrower grants to Lender a contractual security interest in, and hereby assigns, conveys, delivers, pledges, and transfers to Lender all Borrower's right, title and interest in and to, Borrower's deposit accounts with Lender (whether checking, savings, or some other account), including without limitation all deposit accounts held jointly with someone else and all deposit accounts Borrower may open in the future, excluding however all IRA and Keogh accounts, and all trust accounts for which the grant of a security interest would be prohibited by law.  Borrower authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on this Note against any and all such deposit accounts.

DISHONORED ITEM FEE. Borrower will pay a fee to Lender of $25.00 if Borrower makes a payment on Borrower's loan and the check or preauthorized charge with which Borrower pays is later dishonored.  If your payment is returned unpaid, you authorize Illinois National Bank to make a one-time electronic fund transfer from your account to collect a fee of $25.00. .

LOAN AGREEMENT. This Note is issued in connection with a Business Loan Agreement dated November 2017 between Borrower and Lender and the terms and conditions of said Business Loan Agreement are expressly incorporated herein and made a part of this Note by reference.

UNCONDITIONAL CANCELABLE COMMITMENT. The line of credit feature provided for in this Note and the Related Documents, including the Business Loan Agreement (Asset Based), may be unconditionally cancelable, without cause, at any time by the Lender, to the extent permitted by applicable law.

PRIOR NOTE.  This Promissory Note is a renewal of, extension of, refinancing of, modification of and substitution for Promissory Note from Borrower to Lender dated November 20, 2016 in the original principal amount of $8,000,000.00, which was a renewal of, extension of, refinancing of, modification of and substitution for the original Promissory Note dated November 20, 2012 in the original principal amount of $8,000,000.00.

SUCCESSOR INTERESTS.  The terms of this Note shall be binding upon Borrower, and upon Borrower's heirs, personal representatives, successors and assigns, and shall inure to the benefit of Lender and its successors and assigns.

GENERAL PROVISIONS.  If any part of this Note cannot be enforced, this fact will not affect the rest of the Note.  Lender may delay or forgo enforcing any of its rights or remedies under this Note without losing them.  Borrower and any other person who signs, guarantees or endorses this Note, to the extent allowed by law, waive presentment, demand for payment, and notice of dishonor.  Upon any change in the terms of this Note, and unless otherwise expressly stated in writing, no party who signs this Note, whether as maker, guarantor, accommodation maker or endorser, shall be released from liability.  All such parties agree that Lender may renew or extend (repeatedly and for any length of time) this loan or release any party or guarantor or collateral; or impair, fail to realize upon or perfect Lender's security interest in the collateral; and take any other action deemed necessary by Lender without the consent of or notice to anyone.  All such parties also agree that Lender may modify this loan without the consent of or notice to anyone other than the party with whom the modification is made.  The obligations under this Note are joint and several.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS NOTE.  BORROWER AGREES TO THE TERMS OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

	
BORROWER:

 

 

UTG, INC.

	 	 	 	 	 
	
 

By:

	
 

/s/ James P. Rousey

	 	
 

By:

	
 

/s/ Theodore C. Miller

	 
	 	
JAMES P. ROUSEY, President of UTG, INC.

	 	 	
THEODORE C. MILLER, CFO/Secretary of UTG, INC.SHARED SERVICES AGREEMENT

This Agreement made and entered into this 1st day of January, 2017 by UTG, INC., a Delaware corporation ("UTG") and FIRST SOUTHERN NATIONAL BANK, a national banking association ("FSNB").

WHEREAS, UTG is an insurance holding company engaged in the general life insurance business;

WHEREAS, FSNB is a national banking association.

WHEREAS, UTG and FSNB each has as one of its primary objectives to operate in the most efficient and profitable manner;

WHEREAS, each of UTG and FSNB, through its officers, agents and employees, has extensive experience and expertise in acquiring, managing and operating corporations and other business entities engaged in the financial services business as well as other financial and investment activities; and has been successful in reducing the general expenses of such businesses;

WHEREAS, each of UTG and FSNB desires that the experience, expertise, sources of information, advice, counseling and assistance of the other and its officers and employees be available to them in the future, and to have each entity undertake certain duties and responsibilities and perform certain services on behalf of the other entity as provided herein; and,

WHEREAS, UTG and FSNB are each willing to render such shared services for the other on the terms and conditions herein set forth;

WHEREAS, UTG and FSNB are members of the same holding company structure.

NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, it is mutually agreed between the parties as follows:

	
1.

	
Services. During the term of this Agreement, the parties hereby agree to share personnel and the employee costs of certain groups of employees of both entities.  The initial Shared Services of the two entities shall be as follows:

	 	
UTG percentage

	
FSNB percentage

	
Accounting

	
50%

	
50%

	
Information Technology

	
50%

	
50%

	
Human Resources

	
*

	
*

	
Investments

	
50%

	
50%

*Human Resources shall be allocated based on the percentage of the number of individuals on the payroll system for each entity to the total of both entities.

The Shared Services of each entity shall include the base pay, bonuses paid, payroll related taxes and costs of employee benefits provided for each individual covered.

Allocated costs shall first be reduced for reimbursements, if any, received from other entities or third parties.

Additional employees or groups of employees may be added as shared services upon mutual agreement of both parties and attached hereto as an addendum to this Agreement.

Corporate performance based bonuses or awards are specifically excluded from this formula and sharing arrangement.  Such bonuses or awards shall be borne entirely by the individual entity and determined exclusively by the management of each entity.  Individuals covered under this agreement may receive such corporate performance based bonuses from either or both entities.

	
2.

	
Officers and Employees. Officers and employees of UTG or FSNB shall serve, if elected, as directors, officers and members of committees of the other entity.

	
3.

	
Fees.

	
a.

	
Fees.  As consideration for providing these shared services under this Agreement each party agrees to pay the other party, a fee equal to it's pro rata share of the costs incurred by both parties to provide such services including but not limited to all shared personnel costs and taxes.

	
b.

	
Accountings.  Periodically, but not less than quarterly, an accounting of the actual expenses allocable to each party shall be provided.  Said accounting shall be in such detail and be accompanied by substantive documentation satisfactory to both parties.  Any balance due to or from the other party as a result of the actual accounting shall be settled within 30 (thirty) days.

	
c.

	
Allocation.  Each party shall be responsible for the reimbursement of its pro rata share of the above described services to the other party based on the allocation percentages established above.  This pro-rata share of allocations shall be reviewed and updated as both parties deem reasonable but in no event not less than annually.

	
4.

	
Facilities and Staff. Each entity shall provide its officers and employees with adequate office space and adequate office equipment and other furniture, and clerical and secretarial personnel for the performance of the services provided for hereunder, and assume the expenses of same.

	
5.

	
Responsibility. Each party shall be responsible to render the services provided for herein in good faith and in a reasonably competent manner.  Each party shall use its best efforts to maintain the confidentiality of all matters relating to the business of the other party.  It is expressly understood and agreed that UTG and FSNB are not partners or joint venturers and nothing herein shall be construed so as to make them partners or joint venturers or impose any liability as such on either of them. The relationship between UTG and FSNB shall be that of independent contractors.

	
6.

	
Freedom of Activity. Nothing in this Agreement shall otherwise limit or restrict the right of either entity or any officer or employee of either entity to engage in any other business or to render services of any kind to any other corporation, firm, individual or association.

	
7.

	
Term. This agreement shall remain in full force and effect for a period of 12 months from the date hereof and may not be terminated by any party during said term except as otherwise provided herein. Upon the expiration of the term of this Agreement, it shall remain in full force and effect from month to month unless terminated by any party, upon ninety (90) days' prior written notice.

	
8.

	
No Assignability. This agreement shall terminate automatically in the event of any assignment hereof by UTG or FSNB. An assignment by either party to a corporation or other entity that is a successor to it shall not be deemed an assignment for purposes hereof.

	
9.

	
Termination. This Agreement shall be and become terminated immediately upon written notice of termination from either party to the other if any of the following events shall occur.

	
a.

	
Either party shall violate any provisions of this Agreement and shall fail to cure such default within thirty (30) days after receipt of written notice of such violation; or

	
b.

	
A party shall be adjudged bankrupt or insolvent by a court of competent jurisdiction, or an order shall be made by a court of competent jurisdiction for the appointment of a receiver, liquidator or trustee of the entity, or of all or substantially all of its property by reason of the foregoing, or approving any petition filed against the entity for its reorganization, and such adjudication or order shall remain in force or unstayed for a period of ninety (90) days; or

	
c.

	
Either party shall institute proceedings of voluntary bankruptcy, or shall file a petition seeking reorganization under the federal bankruptcy laws, or for relief under any law for the relief of debtor, or shall consent to the appointment of a receiver of the entity or of all or substantially all of its property, or shall make a general assignment for the benefits of its creditor, or shall admit in writing its inability to pay its debts generally as they become due.

If any of the events specified in subparagraphs (b) and (c) of this Section 9 shall occur, the affected entity shall give written notice thereof to the other within fifteen (15) days after the happening of such event.

	
10.

	
Disclosure of Information.  Each party agrees all information communicated to it by or on behalf of the other party while this Agreement is in force shall be used by it only for the purposes of this Agreement and during the term of this Agreement, and thereafter.  Each party will not disclose such information to any person who is not a Director, Officer, employee or agent of the other party or of any of its affiliated companies, except to the extent such disclosure is directly or indirectly related to the performance of this Agreement or is otherwise required by any applicable law, rule or regulation.

	
11.

	
Safeguarding Customer Information. Both parties acknowledge that through services provided to the other, the servicing party providing the service may have access to non-public customer information.  Both parties agree to comply with the privacy and safeguarding requirements of the federal Gramm-Leach-Bliley Act (GLBA, 15 U.S.C. section 6801) and the applicable regulations and guidelines thereunder.  Each party agrees to promptly notify the other party of any unauthorized disclosure of confidential information of the party's customers serviced under this Agreement and to keep the other party advised of all remedial actions taken in connection therewith, unless law enforcement deems that such notification would impede an ongoing investigation or that such notification is otherwise prohibited by law or regulation.

	
12.

	
Reports to Board of Directors.  Services provided to each party, as well as, the cost of services and allocations used shall be reported to the respective Board of Directors on at least an annual basis.

	
13.

	
Records and Reports.  Except as provided herein, all forms, records, statements, reports, files and other data and information prepared, maintained or collected by one party in the performance of this Agreement shall become the sole property of each party and shall be furnished to the other upon request.

	
14.

	
Inspection of Books and Records.  Each party shall keep proper books of account and records relating to the services performed hereunder in which full and correct entries will be made.  Both parties shall have the right to inspect the books and records of the other party at the offices in which said books and records are maintained during normal business hours for any purpose related to administration performance of this Agreement.

	
15.

	
Performance. The failure of either party to insist upon strict performance of any provision of this Agreement shall not constitute a waiver of the right to insist upon strict performance or the obligation to strictly perform thereafter.

	
16.

	
Notices. Any notice, report or other communication required or permitted to be given hereunder shall be in writing and shall, unless some other method of giving such notice, report or other communication is accepted by the party to whom it is given, be given by being mailed by certified mail, postage prepaid, to the following address of the parties thereto:

If to UTG:               UTG, Inc

Attn:  James P. Rousey, President

205 North Depot Street

Stanford, Kentucky  40484

If to FSNB:            First Southern National Bank

Attn:  Tommy Roberts, CEO

99 Lancaster Street

Stanford, Kentucky  40484

Any party may, at any time, give written notice to the other parties, changing its address for the purposes of this Section 14.

	
17.

	
Entire Agreement. This Agreement contains the entire understanding of the parties hereto and supersedes all prior agreements of the parties with respect to the subject matter contained herein.

	
18.

	
Modification. This Agreement shall not be amended, changed, modified, terminated or discharged, in whole or in part, except by an instrument, in writing, duly executed by all parties hereto or their respective successors or assigns.

	
19.

	
Binding Effect.  This Agreement shall be binding upon and inure to the benefit of the parties hereto and any successors of the parties hereto.

	
20.

	
Applicable Law. The provisions of this Agreement shall be construed and interpreted in accordance with the laws of the State of Kentucky as at the time in effect.

	
21.

	
Severability. If any provisions of this Agreement shall be found to be invalid by any court or competent jurisdiction, such findings shall not affect the remaining provisions of this Agreement and all other provisions herein shall remain in full force and effect.

	
22.

	
Titles Not to Affect Interpretation. The titles of paragraphs and subparagraphs contained in this Agreement are inserted for convenience of reference only and neither form a part of this Agreement nor are they to be used in the construction or interpretation hereof.

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

UTG, INC. FIRST SOUTHERN NATIONAL BANK

By:  /s/James P. Rousey______________              By: /s/Tommy Roberts________________

       James P. Rousey                         Tommy Roberts

        President                   CEO

Attest: Attest:

 /s/Theodore C. Miller_____________________________                           /s/Theodore C. Miller_________________

Theodore C. Miller                         Theodore C. Miller

Secretary  Secretary

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