|
Exhibit
10.4
GUARANTY AND SECURITY
AGREEMENT
This GUARANTY AND SECURITY
AGREEMENT (this “ Guaranty ”) is made as of the
19th day of June, 2008, by Brooke Investments, Inc., a Kansas
corporation (the “ Guarantor ”), in favor of
Autobahn Funding Company LLC, as Lender (the “ Lender
”), and DZ Bank AG Deutsche Zentral-Genossenschaftsbank, as
Agent (the “ Agent ”), in connection with that
certain Amended and Restated Credit and Security Agreement, dated
as of August 29, 2006, by and among Brooke Credit Funding,
LLC, a Delaware limited liability company, as Borrower (the “
Borrower ”), Aleritas Capital Corp., a Delaware
corporation (f/k/a Brooke Credit Corporation) (“ Brooke
Credit ”), as Seller and Subservicer, Brooke Corporation,
a Kansas corporation, as Master Agent Servicer and Performance
Guarantor (the “ Parent ”), the Lender and the
Agent. Such Amended and Restated Credit and Security Agreement, as
it may be amended, restated, supplemented or otherwise modified
from time to time, is hereinafter referred to as the “
Credit and Security Agreement ”.
1. Definitions .
Unless otherwise defined herein, capitalized terms used herein
shall have the meanings ascribed to them in the Credit and Security
Agreement. All terms defined in Article 9 of the UCC in the State
of New York as in effect on the date hereof, and not specifically
defined herein or in the Credit and Security Agreement, are used
herein as defined in such Article 9. In addition, the following
terms have the following meanings (such meanings to be equally
applicable to both the singular and the plural forms of the terms
defined):
“ Brooke
Obligations ” means all present and future indebtedness
and other liabilities and obligations (howsoever created, arising
or evidenced, whether direct or indirect, absolute or contingent,
or due or to become due) of Brooke Credit and/or the Parent to the
Lender, the Agent and/or any other Secured Party, arising under or
in connection with the Performance Guaranty, the Sale and Servicing
Agreement, the Credit and Security Agreement or any other Related
Document or the transactions contemplated hereby or thereby and
shall include, without limitation, all liability for costs,
expenses, indemnifications, repurchase obligations and all other
amounts due or to become due from Brooke Credit or the Parent under
the Related Documents, including, without limitation, interest,
fees and other obligations that accrue after the commencement of a
bankruptcy, insolvency or similar proceeding (in each case whether
or not allowed as a claim in such proceeding).
“ Collateral
” has the meaning specified in Section 2(ii).
2. Guaranty . (i) For
value received, and in consideration of the waivers granted by the
Agent and the Lender pursuant to the amendment to the Credit
Agreement of even date herewith (from which the Guarantor will
derive substantial direct and indirect benefit), the Guarantor
unconditionally guarantees for the benefit of the Secured Parties
the full and prompt payment when due, whether at maturity or
earlier, by reason of acceleration or otherwise, and at all times
thereafter, of all the Brooke Obligations now or hereafter existing
under the Performance Guaranty, the Sale and Servicing Agreement,
the Credit and Security Agreement or
Signature Page to
Guaranty and Security
Agreement
any other Related Document;
provided that the aggregate amount of payments made by the
Guarantor hereunder in respect of the Brooke Obligations at the
request of the Agent or the Lender shall not exceed $25,000,000. In
addition, the Guarantor shall pay to the Agent and the Lender on
demand and in immediately available funds an amount equal to all
reasonable fees, costs and expenses (including, without limitation,
all court costs and attorneys’ and paralegals’ fees,
costs and expenses) paid or incurred by the Agent or the Lender in:
(1) endeavoring to collect all or any part of the Brooke
Obligations from, or in prosecuting any action against, the
Guarantor relating to this Guaranty or any other Related Document
or the transactions contemplated hereby or thereby; (2) taking
any action with respect to any security or collateral securing the
Brooke Obligations or the Guarantor’s obligations hereunder;
or (3) preserving, protecting or defending the enforceability
of, or enforcing, this Guaranty or its rights hereunder. In
addition, the Guarantor further agrees to pay to the Agent and the
Lender, on demand and in immediately available funds, interest on
any amount due hereunder, from the date of demand under this
Guaranty until paid in full at the Base Rate plus 2% (the “
Interest Rate ”). The Guarantor hereby agrees that
this Guaranty is an absolute guaranty of payment and is not a
guaranty of collection.
(ii) To secure the payment
and performance by the Guarantor of all of the covenants and
obligations to be paid or performed by it pursuant to this Guaranty
and each other Related Document, the Guarantor hereby grants to the
Agent, on behalf of the Secured Parties (and their respective
successors and assigns), a security interest in all of the
Guarantor’s right, title and interest in and to all of the
following property and interests in property (collectively, the
“ Collateral ”), in each case whether tangible
or intangible and whether now owned or existing or hereafter
arising or acquired and wheresoever located:
(a) all right, title and
interest of the Guarantor in, to and under all Brooke Franchise
Agreements now or hereafter existing, including, without
limitation, all moneys due and to become due under or in connection
with any such Brooke Franchise Agreement (whether in respect of
Sales Commissions, fees, expenses, indemnities or
otherwise);
(b) all other accounts,
equipment, inventory, general intangibles, payment intangibles,
instruments, investment property, documents, chattel paper, goods,
moneys, letters of credit, letter of credit rights, certificates of
deposit, deposit accounts and all other property and interests in
property of the Guarantor, whether tangible or intangible, whether
real property or personal property and whether now owned or
existing or hereafter arising or acquired and wheresoever located;
and
(c) all proceeds of the
foregoing property described in clauses (a) and
(b) above, including, without limitation, proceeds which
constitute property of the type described in clauses (a) and
(b) above and, to the extent not otherwise included, all
(i) payments under any insurance policy (whether or not the
Agent or the Lender is the loss payee thereof), indemnity, warranty
or guaranty payable by reason of loss or damage to or otherwise
with respect to any of the foregoing and (ii) interest,
dividends, cash, instruments and other property from time to time
received, receivable or otherwise distributed in respect of or in
exchange for or on account of the sale or other disposition of any
or all of the then existing Collateral.
(iii) Upon the occurrence of
an Event of Default or a default in respect of any obligation of
the Guarantor to be performed by it pursuant to this Guaranty or
any other Related Document, the Agent shall have, in addition to
all other rights and remedies under this Guaranty or otherwise, all
other rights and remedies provided to a secured party under the UCC
of the applicable jurisdiction and other applicable laws, which
rights shall be cumulative. The rights and remedies of a secured
party which may be exercised by the Agent shall include, without
limitation, the right, without notice except as specified below, to
solicit and accept bids for and sell the Collateral or any part
thereof in one or more parcels at a public or private sale, at any
exchange, broker’s board or at any of the Agent’s
offices or elsewhere, for cash, on credit or for future delivery,
and upon such other terms as the Agent may deem commercially
reasonable. The Guarantor agrees that, to the extent notice of sale
shall be required by law, 10 days’ notice to the Guarantor of
the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification
and that it shall be commercially reasonable for the Agent to sell
the Collateral on an “as is” basis, without
representation or warranty of any kind. The Agent shall not be
obligated to make any sale of Collateral regardless of notice of
sale having been given and may adjourn any public or private sale
from time to time by announcement at the time and place fixed
therefore, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
3. Obligations
Unconditional . The Guarantor hereby agrees that its
obligations under this Guaranty shall be unconditional,
irrespective of:
(i) the validity,
enforceability, avoidance or subordination of any of the Brooke
Obligations or any of the Related Documents;
(ii) the absence of any
attempt by, or on behalf of, the Lender or the Agent to collect, or
to take any other action to enforce, all or any part of the Brooke
Obligations whether from or against Brooke Credit or the Parent,
any other guarantor of the Brooke Obligations or any other
party;
(iii) the election of any
remedy by, or on behalf of, the Lender or the Agent with respect to
all or any part of the Brooke Obligations;
(iv) the waiver, amendment,
consent, extension, forbearance or granting of any indulgence by,
or on behalf of, the Lender or the Agent with respect to any
provision of any of the Related Documents;
(v) the failure of the Lender
or the Agent to take any steps to perfect and maintain its security
interest in, or to preserve its rights to, any security or
collateral for the Brooke Obligations or any rights as against any
other guarantor of the Brooke Obligations or any release of any
collateral security for or release of any other guarantor in
respect of the Brooke Obligations;
(vi) the election by, or on
behalf of, the Lender or the Agent, in any proceeding
instituted under Chapter 11 of Title 11 of the United
States Code (11 U.S.C. 101 et seq.) (the “ Bankruptcy
Code ”), of the application of Section 1111(b)(2) of
the Bankruptcy Code;
(vii) any borrowing or grant
of a security interest by Brooke Credit or the Parent, as a
debtor-in-possession, under Section 364 of the Bankruptcy
Code;
(viii) the disallowance,
under Section 502 of the Bankruptcy Code, of all or any
portion of the claims of the Lender or the Agent for repayment of
all or any part of the Brooke Obligations, including any amount due
hereunder; or
(ix) any actual or alleged
fraud by any party (other than the Lender or the Agent);
or
(x) any other circumstance
which might otherwise constitute a legal or equitable discharge or
defense of Brooke Credit, the Parent or a guarantor (other than the
defense of payment or performance).
4. Guarantor
Representations and Warranties . The Guarantor represents and
warrants as follows:
(i) Corporate Existence
and Power . The Guarantor is a corporation duly incorporated,
validly existing and in good standing under the laws of the State
of Kansas, and has all necessary powers and all governmental
licenses, authorizations, consents and approvals required to carry
on its business in each jurisdiction in which the nature of its
business requires such authorization, except for any such
governmental license, authorization, consent or approval the
absence of which would not be reasonably likely to have a Material
Adverse Effect.
(ii) No Conflict . The
execution, delivery and performance by the Guarantor of this
Guaranty and each other Related Document to which it is a party are
within the powers granted by the Guarantor’s organizational
documents, have been duly authorized by all necessary action, do
not contravene or violate (i) its organizational documents,
(ii) any law, rule or regulation applicable to it in any
material respect, (iii) any restrictions under any material
agreement, contract or instrument to which it is a party or by
which it or any of its property is bound, or (iv) any order,
writ, judgment, award, injunction or decree binding on or affecting
it or its property, and do not result in the creation or imposition
of any Adverse Claim on assets of the Guarantor. This Guaranty and
each other Related Document to which the Guarantor is named as a
party has been duly authorized, executed and delivered by the
Guarantor.
(iii) Governmental
Authorization . Other than the filing of the financing
statements required hereunder, no authorization or approval or
other action by, and no notice to or filing with, any Governmental
Authority is required for the due execution, delivery and
performance by the Guarantor of the Related Documents to which it
is a party. No injunction, writ, restraining order or other order
of any nature adversely affects the Guarantor’s performance
of its obligations under this Guaranty or any other Related
Document to which it is a party.
(iv) Binding Effect .
The Related Documents to which the Guarantor is a party constitute
its legal, valid and binding obligations enforceable against the
Guarantor in accordance with their respective terms, except as such
enforcement may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to or limiting
creditors’ rights generally.
(v) Accuracy of
Information . All information heretofore furnished by the
Guarantor or any of its Affiliates to the Agent in writing for
purposes of or in connection with this Guaranty, any of the other
Related Documents or any transaction contemplated hereby or thereby
is, and all such information hereafter furnished by the Guarantor
or any of its Affiliates to the Agent in writing will be, true and
accurate in all material respects, on the date as of which such
information is stated or certified and does not and will not
contain any material misstatement of fact or omit to state a
material fact or any fact necessary to make the statements
contained therein, taken as a whole and in context, not
misleading.
(vi) Actions, Suits .
There are no actions, suits or proceedings pending or, to its
knowledge, threatened against or adversely affecting the Guarantor
or any of its properties, in or before any court, arbitrator or
other body, which, if adversely determined, would be reasonably
likely to have a Material Adverse Effect. The Guarantor is not in
default with respect to any order of any court, arbitrator or
governmental body.
(vii) Security
Interest . This Agreement, together with the financing
statements filed on or prior to the date hereof, is effective to
create a valid and perfected first priority security interest in
(i) all Brooke Franchise Agreements in which the Guarantor has
acquired or may hereafter acquire an interest and (ii) all
other Collateral now existing or hereafter arising or
acquired.
(viii) Not an Investment
Company . The Guarantor is not an “investment
company” or a company “controlled” by an
“investment company” within the meaning of the
Investment Company Act of 1940, as amended from time to time, or
any successor statute.
(ix) Taxes . The
Guarantor has paid when due all taxes payable by it other than
those taxes which are being contested in good faith and by proper
proceedings and as to which appropriate reserves are being
maintained in accordance with GAAP. The Guarantor has filed (on a
consolidated basis or otherwise) on a timely basis all tax returns
(including, without limitation, all foreign, federal, state, local
and other tax returns) required to be filed and is not liable for
taxes payable by any other Person. No tax lien or similar adverse
claim has been filed, and no claim is being asserted, with respect
to any such tax, assessment or other governmental
charge.
(x) Places of Business;
Jurisdiction of Incorporation . The principal places of
business and chief executive office of the Guarantor and the
offices where the Guarantor keeps all its Records are located at
the address(es) listed on Exhibit I hereto. The Federal Employer
Identification Number for the Guarantor is correctly set forth on
Exhibit I hereto. The Guarantor’s sole jurisdiction of
incorporation is the State of Kansas.
(xi) Names . In the
past five years, the Guarantor has not used any legal names, trade
names or assumed names other than Brooke Investments, Inc. and has
not engaged in any merger or consolidation, except as set forth on
Exhibit I hereto.
(xii) Solvency . The
Guarantor is solvent and will not become insolvent after giving
effect to the transactions contemplated hereby; the Guarantor is
able to pay its debts as they become due; and the Guarantor, after
giving effect to the transactions contemplated hereby, will have
adequate capital to conduct its business.
(xiii) ERISA . The
Guarantor is in compliance in all material respects with ERISA and
has not incurred and does not expect to incur any liabilities to
the Pension Benefit Guaranty Corporation (or any successor thereto)
under ERISA.
5. Affirmative Covenants
of the Guarantor . Until the Final Payout Date, the Guarantor
agrees that it will perform and observe its covenants and
agreements set forth in this Section 5.
(i) Reporting . The
Guarantor will maintain a system of accounting established and
administered in accordance with GAAP, and will furnish to the
Agent:
(a) Annual Financial
Reporting . Within 120 days after the close of each of its
fiscal years, financial statements for the Guarantor and its
consolidated Subsidiaries for such fiscal year prepared in
accordance with GAAP and certified in a manner acceptable to the
Agent by independent public accountants acceptable to the
Agent.
(b) Quarterly
Reporting . Within 45 days after the close of each of the
quarterly periods of each of its fiscal years, balance sheets for
the Guarantor and its consolidated Subsidiaries as at the close of
each such period and statements of income and retained earnings and
a statement of cash flows for the Guarantor and its consolidated
Subsidiaries for the period from the beginning of such fiscal year
to the end of such quarter, all prepared in accordance with GAAP
(subject to normal year-end adjustments and without footnotes) and
certified by the Guarantor’s chief financial
officer.
(c) S.E.C. Filings .
Promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular reports
which the Guarantor or any of their respective Affiliates files
with the Securities and Exchange Commission if any of such Persons
shall have a class of security that is publicly traded.
(d) Other Information
. Such other information (including non-financial information) as
the Agent or the Lender may from time to time reasonably
request.
(ii) Notices . The
Guarantor will notify the Agent in writing of any of the following
within one Business Day of learning of the occurrence thereof,
describing the same and, if applicable, the steps being taken with
respect thereto:
(a) Judgment . The
entry of any judgment or decree against the Guarantor or any of its
Affiliates.
(b) Litigation . The
institution of any litigation, arbitration proceeding or
government
|
