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TABLE OF CONTENTS
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
(Amendment No. )
| Filed by the Registrantý | ||
| Filed by a Party other than the Registranto | ||
Check the appropriate box: | ||
| o | Preliminary Proxy Statement | |
| o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| ý | Definitive Proxy Statement | |
| o | Definitive Additional Materials | |
| o | Soliciting Material Pursuant to §240.14a-13 | |
BROOKE CORPORATION | ||||
(Name of Registrant as Specified In Its Articles) | ||||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
| Payment of Filing Fee (Check the appropriate box): | ||||
| ý | No fee required | |||
| o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11 | |||
(1) | Title of each class of securities to which transaction applies: | |||
| (2) | Aggregate number of securities to which transaction applies: | |||
| (3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |||
| (4) | Proposed maximum aggregate value of transaction: | |||
| (5) | Total fee paid: | |||
| o | Fee paid previously with preliminary materials. | |||
| o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
| (1) | Amount Previously Paid: | |||
| (2) | Form, Schedule or Registration Statement No.: | |||
| (3) | Filing Party: | |||
| (4) | Date Filed: | |||
NOTICEof 2003 ANNUAL MEETINGand PROXY STATEMENT
ANNUAL MEETING TO BE HELD
April 24, 2003
DEAR SHAREHOLDER:
On behalf of our Board of Directors, I cordially invite you to attend the 2003 Annual Meeting of Shareholders of Brooke Corporation to be held at 10895 Grandview Drive, Suite 250, Overland Park, Kansas on Thursday, April 24, 2003 at 11:00 a.m. local time.
The Notice of 2003 Annual Meeting of Shareholders and the Proxy Statement that follow describe the business to be conducted at the meeting.
Whether you own a few or many shares of stock of Brooke Corporation, it is important that your shares of stock be represented. If you cannot personally attend the meeting, we encourage you to make certain you are represented at the meeting by signing and dating the accompanying proxy card and promptly returning it in the enclosed envelope. Returning your proxy card will not prevent you from voting in person, but will assure that your vote will be counted if you are unable to attend the meeting.
Sincerely,
Michael Hess
President
April 14, 2003
BROOKE CORPORATION
210 W. State Street
Phillipsburg, Kansas 67661
(913) 661-0123
NOTICE OF 2003 ANNUAL MEETING OF SHAREHOLDERS TO BE HELD APRIL 24, 2003
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the "Meeting") of Brooke Corporation, a Kansas corporation (the "Company"), will be held on Thursday, April 24, 2003 at 11:00 a.m. local time, at 10895 Grandview Drive, Suite 250, Overland Park, Kansas for the following purposes:
- 1.
- To elect six directors to the Board of Directors of the Company.
- 2.
- To ratify the selection of Summers, Spencer & Callison, CPAs, Chartered as the Company's independent auditors for the fiscal year ending December 31, 2003.
- 3.
- To consider and vote on a proposal to approve the amendments of the Company's bylaws proposed by the Company's Board of Directors.
- 4.
- To transact such other business as may properly come before the Meeting and at any postponements or adjournments thereof.
Only shareholders of record at the open of business on April 14, 2003, are entitled to notice of and to vote at the Meeting or at any postponements or adjournments thereof.
You are cordially invited and urged to attend the Meeting. All shareholders, whether or not they expect to attend the Meeting in person, are requested to complete, date and sign the enclosed form of Proxy and return it promptly in the postage-paid, return-addressed envelope provided for that purpose. By returning your Proxy promptly you can help the Company avoid the expense of follow-up mailings to ensure a quorum so that the Meeting can be held. Shareholders who attend the Meeting may revoke a prior proxy and vote in person as set forth in the proxy statement.
THE ENCLOSED PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY. THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE IN FAVOR OF THE PROPOSED ITEMS. YOUR VOTE IS IMPORTANT.
By Order of the Board of Directors
Anita Larson
Secretary
Phillipsburg, Kansas
Dated: April 14, 2003
GENERAL INFORMATION
This proxy statement is furnished in connection with the solicitation of proxies by and on behalf of the Board of Directors (the "Board") of Brooke Corporation, a Kansas corporation (the "Company"), for use at the Annual Meeting of Shareholders of the Company to be held at 10895 Grandview Drive, Suite 250, Overland Park, Kansas on Thursday, April 24, 2003 at 11:00 a.m. local time, and at any and all postponements or adjournments thereof (collectively referred to herein as the "Meeting"). This proxy statement, the accompanying form of proxy (the "Proxy") and the Notice of the Annual Meeting will be first mailed or given to the Company's shareholders on or about April 14, 2003.
Because many of the Company's shareholders may be unable to attend the Meeting in person, Board solicits proxies by mail to give each shareholder an opportunity to vote on all matters presented at the Meeting. Shareholders are urged to:
- (1)
- read this Proxy Statement carefully;
- (2)
- specify their choice in each matter by marking the appropriate box on the enclosed Proxy; and
- (3)
- sign, date and return the Proxy by mail in the postage-paid, return-addressed envelope provided for that purpose.
ABOUT THE MEETING
What is being voted on at the Meeting?
The Board is asking shareholders to consider and approve three items at this year's Meeting:
- (1)
- The election of six directors to the Board;
- (2)
- A proposal to ratify the selection of Summers, Spencer & Callison, CPAs, Chartered as the Company's independent auditors for the fiscal year ending December 31, 2003; and
- (3)
- A proposal to approve the amendments to the Company's bylaws.
Who can vote at the Meeting?
The Board set April 14, 2003 as the record date for the Meeting. Only persons holding shares of the Company's common stock, $1.00 par value ("Common Stock"), of record at the open of business on April 14, 2003 will be entitled to receive notice of and to vote at the Meeting. Each holder of Common Stock will be entitled to one vote per share on each matter properly submitted for vote to our shareholders at the Meeting. On April 14, 2003, there were 4,649,838 shares of Common Stock outstanding held by a total of five hundred fifty-five (555) shareholders of record. Therefore, there are a total of 4,649,838 votes that will be entitled to be cast at the Meeting.
What constitutes a quorum for the Meeting?
Quorum for the Meeting is based on the number of votes that can be cast rather than the number of actual shares of stock that are represented because each share of Common Stock has one vote per share. To have a quorum, we need 2,371,417 of the votes entitled to be cast to be present, in person or by proxy, including votes as to which authority to vote on any proposal is withheld, shares of stock abstaining as to any proposal, and broker non-votes (where a broker submits a proxy but does not have authority to vote a customer's shares of stock on one or more matters) on any proposal, will be considered present at the Meeting for purposes of establishing a quorum for the transaction of business at the meeting. Each of the foregoing categories will be tabulated separately.
How do I vote?
If you complete and properly sign the accompanying proxy card and return it to the Company, it will be voted as you direct, unless you later revoke the Proxy. Unless instructions to the contrary are marked, or if no instructions are specified, shares of stock represented by a Proxy will be voted for the proposals set forth on the Proxy, and in the discretion of the persons named as proxies on such other matters as may properly come before the Meeting. If you are a registered shareholder, that is, if you hold your shares of stock in certificate form, and you attend the Meeting, you may deliver your completed proxy card in person. If you hold your shares of stock in "street name," that is, if you hold your shares of stock through a broker or other nominee, and you wish to vote in person at the Meeting, you will need to obtain a proxy form from the institution that holds your shares of stock.
Can I change my vote after I return my proxy card?
Yes. Even after you have submitted your Proxy, you may change your vote at any time before the Proxy is exercised by filing with the Secretary of the Company, at the address indicated above, either a written notice of revocation, a duly executed Proxy bearing a later date, or if you vote in person at the Meeting. The powers of the proxy holders will be suspended if you attend the Meeting in person and so request. However, attendance at the Meeting will not by itself revoke a previously granted Proxy. If you want to change or revoke your Proxy and you hold your Shares in "street name," contact your broker or the nominee that holds your shares. Any written notice of revocation sent to us must include the shareholder's name and must be received prior to the Meeting to be effective.
What vote is required to approve each item?
Election of Directors. The election of each director nominee (Proposal No. 1) requires the affirmative vote of a plurality of the outstanding shares of Common Stock present and entitled to vote at the Meeting. The Company's shareholders are not entitled to cumulate votes with respect to the election of directors.
Ratification of Appointment of Independent Auditors. The ratification of the selection of Summers, Spencer & Callison, CPAs, Chartered as the Company's independent auditors (Proposal No. 2) requires the affirmative vote of a majority of the outstanding shares of Common Stock present and entitled to vote at the Meeting.
Approval of Proposed Company Bylaw Amendments. The approval of the proposed Company bylaw amendments (Proposal No. 3) requires the affirmative vote of a majority of the outstanding shares of Common Stock issued and outstanding.
Other Matters. If you hold your shares of stock in "street name," your broker or nominee may not be permitted to exercise voting discretion with respect to some of the matters to be acted upon. Thus, if you do not give your broker or nominee specific instructions, your shares of stock may not be voted on those matters and will not be counted in determining the number of shares of stock necessary for approval. Shares of stock represented by such "broker non-votes" will, however, be counted in determining whether there is a quorum.
Abstentions are counted in tabulations of the votes cast on proposals presented to shareholders, while, broker non-votes are not counted for purposes of determining whether a proposal has been approved. Therefore, for all matters presented at the Meeting, abstentions will have the same effect as a vote against the proposal and, for all matters presented at the Meeting, broker non-votes will not be counted.
PROPOSAL ONE
ELECTION OF DIRECTORS
At the Meeting, it is intended that the Common Stock represented by properly executed Proxies will be voted to elect the director nominees, unless authority so to vote is withheld. Each nominee is currently a member of the Board of Directors and all of the nominees have indicated a willingness to serve as a director if elected. If elected, each nominee will serve until the next annual meeting of shareholders or until his earlier removal or resignation. The Board has no reason to believe that any of the director nominees will be unable to serve as directors or become unavailable for any reason. If, at the time of the Meeting, any of the director nominees shall become unavailable for any reason, the persons entitled to vote the Proxy will vote, as such persons shall determine in his or her discretion, for such substituted nominee or nominees, if any, nominated by the Board. Currently, the only family relations among any of the directors of the Company are between Robert D. Orr and Leland G. Orr. Robert D. Orr and Leland G. Orr are brothers.
The affirmative vote of a plurality of the votes present or represented to vote at the Meeting is necessary to elect each director nominee. Shareholders of the Company will have an opportunity on their Proxy to vote in favor of one or more director nominees while withholding authority to vote for one or more director nominees.
THE BOARD RECOMMENDS THAT SHAREHOLDERS GRANT AUTHORITY FOR THE ELECTION OF THE NOMINEES TO THE BOARD OF DIRECTORS
Directors
The following table sets forth certain information with respect to the directors of the Company:
| Name | Age | Position | ||
|---|---|---|---|---|
| Robert D. Orr | 49 | Chairman of the Board of Directors, Chief Executive Officer and Director | ||
| Michael Hess | 47 | President and Director | ||
| Leland G. Orr | 40 | Treasurer, Chief Financial Officer, Assistant Secretary and Director | ||
| John Allen | 54 | Director | ||
| Derrol Hubbard | 46 | Director | ||
| Joe Lee Barnes | 49 | Director | ||
The following is a brief summary of the background of each director nominee:
ROBERT D. ORR, 49, Director, Chairman of the Board and Chief Executive Officer, is the founder of the Company. From 1992 to 1996, Mr. Orr served as President of Farmers State Bank, Phillipsburg, Kansas. From 1989 to 1991, Mr. Orr served as Chairman of the Board of Brooke State Bank, Jewell, Kansas; and from 1987 to 1989, Mr. Orr served as President of First National Bank, Smith Center, Kansas. Mr. Orr has also been a self-employed insurance agent for American Family Insurance Company. Mr. Orr is an honors graduate of Fort Hays State University with a Bachelor of Arts degree in Political Science. Mr. Orr also completed the Graduate School of Banking program at the University of Colorado. Mr. Orr is the author of a book on independent insurance agents titled "Death of an Insurance Salesman?" which was written and published in 2000. From 1996 through the present, Mr. Orr's business activities have been focused on performing the functions of Chairman of the Board and Chief Executive Officer of the Company.
LELAND G. ORR, 40, Director, Assistant Secretary, Treasurer and Chief Financial Officer, has been an officer and director of the Company since its inception. Mr. Orr is a certified public accountant and, from January 1991 to December 1994, served as President of Brooke State Bank, Jewell, Kansas. From January 1984 to September 1987, Mr. Orr worked for Kennedy, McKee & Company (formerly Fox & Company) (an accounting firm) of Dodge City, Kansas. Mr. Orr is a graduate of Fort Hays State University with a Bachelor of Science Degree in Accounting and is a member of the American Institute of Certified Public Accountants, the Kansas Society of Certified Public Accountants and the Central Kansas Chapter of Certified Public Accountants. From 1995 through the present, Mr. Orr's business activities have included performing the functions of Director, Secretary or Assistant Secretary, Treasurer and Chief Financial Officer of the Company. In addition, during this time period, Mr. Orr has managed the Company's processing center in Phillipsburg, Kansas.
MICHAEL HESS, 47, Director and President, was an original investor in the Company. From 1975 to 1989, Mr. Hess was employed by Western Resources (a utility company). In 1989, Mr. Hess began his employment with the Company as Vice President. As a result of his success within the Company and his familiarity with the Company's operations, Mr. Hess was appointed President and National Sales Manager of the Company in 1996. Mr. Hess has also owned several small businesses and currently serves as a director of Patrons Insurance Company and Great Plains Mutual Insurance Company. Since his appointment as President and National Sales Manager in 1996, Mr. Hess' primary business activities have been the strategic development of the Company's relationships with suppliers and growth of the Company's Master Agent program. In 2000, Mr. Hess ceased performing the functions of National Sales Manager in order to focus his activities as President of the Company on developing relationships with national suppliers and the Company's specialty programs. In 2002, Mr. Hess became President and Director of CJD & Associates LLC, a limited liability company organized under the state laws of Kansas and a subsidiary of the Company. CJD & Associates LLC is a licensed insurance agency that sells insurance programs and excess surplus insurance on a wholesale basis, under the trade name of Davidson-Babcock.
JOHN ALLEN, 54, became a director of the Company in January, 2001. Mr. Allen is Chief Operating Officer of the Cincinnati Reds. During Mr. Allen's career with the Cincinnati Reds, he has served in his current capacity of Chief Operating Officer since October, 1999, as Managing Executive from June, 1996 to October, 1999 and as controller from May, 1995 to June, 1996. Prior to joining the Cincinnati Reds, Mr. Allen was director of business operations for the Columbus Clippers, the Class AAA minor league affiliate of the New York Yankees. Prior to his employment with the Columbus Clippers, Mr. Allen worked for the accounting firm of Arthur Anderson in Kansas City, Missouri and was a partner and senior vice president of GRA, Inc. of Merriam, Kansas. Mr. Allen earned an undergraduate degree from Kansas State University and a master's degree in Sport Management from Ohio State University. Mr. Allen has been honored with the Certificate of Friendship from the Cincinnati Human Relations Commission and the Community Service Award from the Talbert House. He also has been honored by Cincinnati Magazine in its annual "Best of Cincinnati" issue.
DERROL HUBBARD, 46, became a director of the Company in January, 2001. Mr. Hubbard currently serves in various management capacities with several real estate, gaming and venture capital companies, although since 1998 his primary responsibilities have been as Real Estate Development Manager for R.D. Hubbard Enterprises, Inc. Mr. Hubbard is also President of DDH Enterprises, LLC, Double D Real Estate, Inc., H & H Development, LLC, Pinnacle Development, LLC, Pinnacle Development II all of which are involved in real estate businesses and several of which are involved in residential development around the Bighorn Golf Course in Palm Desert, California. Mr. Hubbard is also Vice President of HBH Investments, LLC which makes venture capital investments and is managing member of New Mexico Gaming, LLC which operates and distributes gaming machines in New Mexico. For more than five years prior to 1998, Mr. Hubbard was managing officer of DBarD, Inc., a family corporation with agricultural operations in Kansas.
JOE LEE BARNES, 49, is being proposed as a board member for the first time. Mr. Barnes is a family physician and 50% owner of Smith County Family Practice in Smith Center, Kansas. Mr. Barnes is a native of Kansas and a licensed Kansas state physician. In addition he has maintained his medical practice in the state since July of 1985. Mr. Barnes is a community leader, and currently serves on the Smith County Development Committee. He received a bachelors degree in Biology from Wichita State University in Wichita, Kansas and his Medical Doctorate from the University of Kansas School of Medicine.
COMPENSATION OF DIRECTORS
Directors Robert Orr, Leland Orr, and Michael Hess serve without cash compensation and without other fixed remuneration. Messrs. Allen and Hubbard, however, each receive $2000 plus reasonable travel allowance for each board meeting attended in person, $200 for each board meeting attended via teleconference, and $500 for each board meeting attended via video conference. Joe Barnes would be subject to the same compensation as Directors Allen and Hubbard upon his election to the Board.
MEETINGS OF THE BOARD AND OF COMMITTEES
The Board held six meetings and acted by unanimous consent two times during the fiscal year ending December 31, 2002. During a director's tenure, no director attended fewer than 73.34% of the aggregate of (a) the total number of meetings of the Board during 2002; and (b) the total number of meetings held by all committees of the Board on which the director served during 2002. The Board does have standing audit, executive, and compensation committees.
The Audit Committee has reviewed and discussed the audited financial statements with the Company's management. In addition, the Audit Committee has discussed with the independent auditors the matters required to be discussed by SAS 61. The Audit Committee has received the written disclosures and the letter from the independent accountants required by Independence Standards Board Standard No. 1 and has discussed with the independent accountant the independent accountant's independence. Based on the review and discussions recited in this paragraph the Audit Committee recommended that the Board of Directors include the audited financial statements included in the Company's Annual Report on Form 10-KSB for the fiscal year 2002. The Audit Committee met six times during the fiscal year ending December 31, 2002 and the members of the Audit Committee are Leland G. Orr, John Allen, and Derrol Hubbard.
The Company formed Executive and Compensation Committees during fiscal year 2001. The purpose of the Compensation Committee is to provide assistance to corporate directors in fulfilling their responsibility to the shareholders, potential shareholders, and investment community relating to the review of the compensation programs and policies of the Company. The Compensation Committee met three times during the fiscal year ending December 31, 2002 and the members of the Committee are Derrol Hubbard and John Allen.
The Executive Committee's purpose is to provide assistance to the board of directors. The Committee has the power to act and adopt resolutions on administrative matters. In addition, the Committee has limited powers to act in emergency situations. The Executive Committee met six times during the fiscal year ending December 31, 2002 and the members of the Committee are Robert Orr, Leland Orr, and Michael Hess.
INFORMATION ABOUT NON-DIRECTOR EXECUTIVE OFFICERS
Set forth below is information about the executive officers and employees who are expected to make a significant contribution to the business of the Company that are not also directors of the Company, including age, principal occupation during the last five years and the date each became an executive officer or employee of the Company
ANITA LARSON, 41, Vice President, General Counsel and Secretary, joined the Company in 1999. Prior to joining the Company, Ms. Larson was employed by The Equitable Life Assurance Society of the United States, New York, New York, where she was Vice President and Counsel from May 1996 to May 1999. From January 1995 to May 1996, Ms. Larson was Chief Administrative Officer of First Security Benefit Life Insurance and Annuity Company of New York. Ms. Larson started her career at Security Benefit Group, Inc. where she was Second Vice President and Counsel. Ms. Larson received a bachelors degree from the University of Kansas and a Juris Doctorate from the University of Kansas School of Law.
KYLE GARST, 33, Vice President of the Company and National Investment Sales Manager, joined the Company joined the Company in 1994 as a sales representative. Mr. Garst is a graduate from Kansas State University with a Bachelor of Science degree in Business Finance. From January 1997 to March 1999, Mr. Garst worked as a sales representative and profit center leader for Koch Industries. In March 1999, Mr. Garst returned to the Company as the State Manager for Oklahoma and in August 2000, he was named Regional Sales Manager for Texas, Oklahoma, and Louisiana. In December 2001, Mr. Garst was promoted to National Investment Sales Manager, a position previously occupied by Company Director Michael Hess. Mr. Garst's duties under his new title include: investor relations, co-ordination of Company activities to secure an exchange listing for the Company, supervision of the Company's investment sales group and all investment sales activities.
PRINCIPAL STOCKHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of common stock at March 31, 2003 by (i) each person or group known by the Company to be the beneficial owner of more than 5% of the outstanding shares of Common Stock; (ii) each nominee for director of the Company; (iii) each of the executive officers named in the Summary Compensation Table herein under "Executive Compensation;" and (iv) all directors and executive officers of the Company as a group:
Voting Securities.
| Name and Address of Owner | Title of Class | Number of Shares Owned | Percentage of Class(1) | ||||
|---|---|---|---|---|---|---|---|
| Robert D. Orr(2)(9)(10) Route #2, Box 53 Smith Center, Kansas 66967 | Common Stock | 3,149,455 | 67.73 | % | |||
| Leland G. Orr(2)(9)(11) 501 Berglund Drive Phillipsburg, Kansas 67661 | Common Stock | 514,938 | 11.13 | % | |||
| Michael Hess(2)(9)(12) 516 South Grant Smith Center, Kansas 66967 | Common Stock | 277,025 | 6.01 | % | |||
| John Allen(4)(9) 100 Main St. Cincinnati, Ohio 45202 | Common Stock | 0 | 0.05 | % | |||
| Derrol Hubbard(4)(9) 73-405 El Paso, Suite 32D Palm Desert, California 92260 | Common Stock | 0 | 0.05 | % | |||
| Joe Lee Barnes 108 East Third St. Smith Center, Kansas 66967 | Common Stock | 0 | 0.00 | % | |||
| Name and Address of Owner | Title of Class | Number of Shares Owned | Percentage of Class(1) | ||||
|---|---|---|---|---|---|---|---|
| Anita Larson(2)(7)(9) 627 Louisiana Street Lawrence, Kansas 66044 | Common Stock | 74,400 | 1.65 | % | |||
| Shawn Lowry(5)(9) 1205 N. 2nd St. E. Louisburg, Kansas 66053 | Common Stock | 72,000 | 1.60 | % | |||
| Michael Lowry(5)(9) 11751 W. 118th Terr. Overland Park, Kansas 66210 | Common Stock | 63,000 | 1.41 | % | |||
| Kyle Garst(2)(6)(9) 12726 Flint Lane Overland Park, Kansas 66210 | Common Stock | 68,316 | 1.52 | % | |||
| All Executive Officers and Directors As a Group (9 persons)(4)(8)(9) | Common Stock | 3,461,251 | 74.85 | % | |||
| Brooke Holdings, Inc.(2)(3) 210 W. State St. Phillipsburg, Kansas 67661 | Common Stock | 3,062,155 | 65.86 | % | |||
- (1)
- Percentage based on 4,649,838 shares of common stock outstanding as of March 31, 2003.
- (2)
- The person or entity specified above has sole voting power and sole investment power of their respective shares of the Company's common stock.
- (3)
- As of March 31, 2003, Brooke Holdings, Inc., owned 3,062,155 shares of the Company's common stock which represents 65.86% of the 4,649,838 shares of common stock outstanding. Robert D. Orr, Leland G. Orr, and Michael Hess beneficially own 54.77%, 16.15%, and 8.60%, respectively, of the shares of common stock of Brooke Holdings, Inc.
- (4)
- Directors Derrol Hubbard and John Allen do not own any shares of the Company's common stock as of March 31, 2003.
- (5)
- On May 31, 2001, Shawn Lowry transferred his common shares to First Financial Group, L.C., a limited liability company where Mr. Lowry serves as manager and co-member with a 53.33% ownership position. On May 31, 2001 Michael Lowry transferred his common shares to First Financial Group, L.C, where he serves as manager and co-member with a 46.67% ownership position. Shawn Lowry and Michael Lowry have equal voting power in First Financial.
- (6)
- Kyle Garst beneficially owns 64,236 shares of the Company's common stock through his sole ownership of American Financial Group, LLC, a limited liability company in which Mr. Garst is sole manager and sole member.
- (7)
- Ms. Larson's shares include 1,200 shares owned by Tom Arensberg, Ms. Larson's husband. Ms. Larson disclaims beneficial ownership of these shares.
- (8)
- Includes the common stock shares beneficially owned by Robert D. Orr, Leland G. Orr, Michael Hess, Shawn Lowry, Michael Lowry, Anita Larson, and Kyle Garst.
- (9)
- Percentage of class figure includes stock options that each individual has a right to acquire within 60 days of February 28, 2003.
- (10)
- Robert D. Orr indirectly beneficially owns 3,069,576 shares of the Company's common stock through his 54.77% ownership of Brooke Holdings, Inc. common stock.
- (11)
- Leland G. Orr beneficially owns 495,738 shares of the Company's common stock through his 16.15% ownership of Brooke Holdings, Inc. common stock.
- (12)
- Michael Hess beneficially owns 263,982 shares of the Company's common stock through his 8.60% ownership of Brooke Holdings, Inc. common stock.
Non-Voting Securities. As of March 31, 2003 none of the officers or directors own non-voting securities of the Company. The Company is unaware of any shareholder who owns more than 10% of the Company's non-voting securities.
Options, Warrants, and Rights. On February 26, 2002 the Company filed a Form S-8 with the Commission for the registration of 90,000 shares of common stock. The title of this class of securities is Brooke Corporation 2001 Compensatory Stock Option Plan. Although 90,000 shares were authorized by the shareholders for issue pursuant to the Company's stock option plan, pursuant to the anti-dilution provisions of the plan, this number of authorized shares was increased to 540,000.
On March 13, 2002 Robert D. Orr, Leland G. Orr, Michael Hess, Shawn Lowry, Michael Lowry, Anita Larson, Kyle Garst, John Allen, and Derrol Hubbard were each granted 2,000 stock options in the Company's common stock. The price of each option for Michael Hess, Shawn Lowry, Michael Lowry, Anita Larson, John Allen, and Derrol Hubbard was $25 per share. The price of each option for Leland and Robert Orr was $27.50 per share. Pursuant to the anti-dilution provisions of the plan, the number of authorized shares granted to Robert D. Orr, Leland G. Orr, Michael Hess, Shawn Lowry, Michael Lowry, Anita Larson, Kyle Garst, John Allen, and Derrol Hubbard was increased to 12,000 shares for each individual. Similarly, the price of each option for Michael Hess, Shawn Lowry, Michael Lowry, Anita Larson, Kyle Garst, John Allen, and Derrol Hubbard was reduced to $4.17 per share. The price of each option for Robert Orr and Leland Orr was reduced to $4.58 per share. The options carry a term of five years with level vesting over a five-year period. In September 2002 Robert Orr remitted back to the Company his grant of 12,000 options.
EQUITY COMPENSATION PLAN
On February 26, 2002 the Company filed a form S-8 with the SEC to register 90,000 shares of the Company's common stock under the Company's 2001 Compensatory Stock Option Plan. This plan was approved by the Company's shareholders on February 27, 2001. Pursuant to the anti-dilution provisions of the plan, this number of authorized shares was increased to 540,000.
Equity Compensation Plan Information
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) | ||||
|---|---|---|---|---|---|---|---|
| Equity compensation plans approved by security holders | 274,560 | $ | 4.17 - $4.58 | 265,440 | |||
| Equity compensation plans not approved by security holders | N/A | N/A | N/A | ||||
| Total | 274,560 | $ | 4.17 - $4.58 | 265,440 | |||
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and long term compensation during the Company's last fiscal year of the Company's Chief Executive Officer and other most highly compensated executive officers of the Company, whose salary and bonus for Fiscal 2002 exceeded $100,000, for services rendered in all capacities to the Company and its subsidiaries:
| Name and Principal Position | Annual Compensation | Bonus | All Other Compensation | Aggregate Remuneration | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Robert D. Orr(1)(3) (Chief Executive Officer) | $ | 135,000 | 0 | $ | 7,900 | $ | 143,900 | |||||
| Michael Hess(1) (President) | $ | 98,124 | $ | 6,314 | $ | 460 | $ | 104,898 | ||||
| Leland G. Orr(1) (Secretary, Treasurer) | $ | 98,124 | 0 | $ | 2,925 | $ | 101,049 | |||||
| Shawn Lowry(2) (President, Brooke Franchise Corporation) | $ | 90,000 | $ | 13,500 | $ | 4,243 | $ | 107,743 | ||||
- (1)
- Other compensation set forth above for Robert D. Orr, Leland G. Orr and Michael Hess is for use of a vehicle for personal and commuting use.
- (2)
- In addition to the compensation set forth above Shawn Lowry receives use of a vehicle for commuting purposes.
- (3)
- Robert Orr received $90,000 in compensation from Brooke Holdings, Inc. and $45,000 in compensation from the Company for the fiscal year ending December 31, 2002.
Option/SAR Grants in Last Fiscal Year
(Individual Grants)
| Name(a) | Number of Securities Underlying Options/SARs granted(#) (b) | Percent of total options/SARs granted to employees in fiscal year (c) | Exercise or base price ($/Sh) (d) | Expiration date (e) | |||||
|---|---|---|---|---|---|---|---|---|---|
| Robert D. Orr(1), Chairman of the Board of Directors and CEO | 12,000 | 4.2 | % | $ | 4.58 | March 13, 2007 | |||
| Leland G. Orr, Director, Vice President and Treasurer | 12,000 | 4.2 | % | $ | 4.58 | March 13, 2007 | |||
| Michael Hess, Director, President | 12,000 | 4.2 | % | $ | 4.17 | March 13, 2007 | |||
| John Allen, Director | 12,000 | 4.2 | % | $ | 4.17 | March 13, 2007 | |||
| Derrol Hubbard, Director | 12,000 | 4.2 | % | $ | 4.17 | March 13, 2007 | |||
| Anita Larson, Vice President, General Counsel, Secretary | 12,000 | 4.2 | % | $ | 4.17 | March 13, 2007 | |||
| Kyle Garst, Vice President, Investment Sales Manager | 12,000 | 4.2 | % | $ | 4.17 | March 13, 2007 | |||
| Shawn Lowry, President, Brooke Franchise Corporation | 12,000 | 4.2 | % | $ | 4.17 | March 13, 2007 | |||
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
At the request of the Company, Robert D. Orr, Leland G. Orr and Michael Hess have, in some cases, each personally guaranteed payment of amounts due suppliers by the Company under certain agency agreements. The amounts guaranteed under such agency agreements vary depending on the value of premiums to be collected under such agency agreements. Mr. Orr, Mr. Orr and Mr. Hess have also each personally guaranteed repayment of a $960,000 line of credit loan to First National Bank and Trust of Phillipsburg, Kansas. No compensation or other benefit is provided to Mr. Orr, Mr. Orr or Mr. Hess for making personal guarantees on behalf of the Company even though the continuance of these guarantees is important to the Company's prospects.
At the request of the Company, Robert Orr, Leland Orr, Michael Hess, and Shawn Lowry each personally guaranteed repayment to Brooke Credit Corporation of a promissory note made to Austin Agency, Inc., Brownsville, Texas, for the acquisition of an insurance agency. On December 31, 2002, the Company's total loss exposure related to this loan was zero because the entire loan balance of $1,036,333 was sold without recourse to an unaffiliated lender. Without Mr. Orr, Mr. Orr, Mr. Hess and Mr. Lowry's personal guarantees, Austin Agency did not qualify for credit and the Company would have missed an expansion opportunity. The four guarantors have each acquired 6.25% of the outstanding stock of Austin Agency, Inc. as consideration for their guarantees although Mr. Orr, Mr. Orr, Mr. Hess and Mr. Lowry have stated their intentions to return their stock to Austin Agency for cancellation as soon as their guarantees are released.
Robert D. Orr, Leland G. Orr and Michael Hess own 100% of the voting stock of GI Agency, Inc. Although GI Agency, Inc. was a franchise agent for the Company in previous years, it is not currently a franchise agent and its business operations do not include insurance sales. On December 31, 2002, the Company's total loss exposure related to loans made by Brooke Credit Corporation to GI Agency, Inc. was zero because all such loan balances, totaling $1,861,601, were sold without recourse to an unaffiliated lender.
Robert D. Orr, Leland G. Orr and Michael Hess own a controlling interest in Brooke Holdings, Inc., which owned 67.10% of the Company's common stock on December 31, 2002. Prior to enactment of the Sarbanes-Oxley Act in July, 2002, the Company had extended unsecured credit to Brooke Holdings in the total amount of $608,189 bearing interest at a rate of 9.5% per annum and maturing on December 31, 2002. Brooke Holdings expects to repay, or refinance with a third party, this credit extension by June 30, 2003.
Shawn Lowry, President of Brooke Franchise Corporation, a subsidiary of the Company, is the sole manager of First Financial Group, L.C., a Kansas limited liability company. Michael Lowry, President of Brooke Credit Corporation, the finance subsidiary of the Company, and Shawn Lowry are the co-members of First Financial Group, L.C. Kyle Garst is the sole manager and sole member of American Financial Group, L.C., a Kansas limited liability company. First Financial Group, L.C. and American Financial Group, L.C. help insurance agencies qualify for credit by providing loan guarantees, typically in exchange for an ownership interest in the insurance agency. This activity provides significant benefit to the Company by qualifying more agents for credit. On June 1, 2001, First Financial Group, L.C., guaranteed 65% of a Brooke Credit Corporation loan to Palmer, L.L.C. of Baxter Springs, Kansas and received a 15% profit interest in Palmer, L.L.C. as consideration. The loan was originated on June 1, 2001 and is scheduled to mature on September 1, 2011. As of December 31, 2002, the entire loan principal balance of $694,971 was sold to unaffiliated lenders. The Company's exposure to loss on this loan is limited to a recourse obligation by Brooke Credit Corporation on $427,475 of loan participation balances. On August 30, 2002, First Financial Group, L.C. guaranteed 50% of a Brooke Credit Corporation loan to Stein and Associates, L.L.C. of Kearney, Missouri and received a 10% profit interest in Stein and Associates, L.L.C. as consideration. The loan was originated on August 30, 2002, and is scheduled to mature on August 15, 2014. As of December 31, 2002 the entire loan principal balance of $547,611 was sold to unaffiliated lenders. The Company's exposure to loss on this loan is limited to a recourse obligation by Brooke Credit Corporation on $410,703 of loan participation balances. On October 15, 2001 American Financial Group, L.C. and First Financial Group, L.C. each guaranteed 50% of a Brooke Credit Corporation loan to The Wallace Agency, L.L.C. of Wanette, Oklahoma and each received a 7.5% profit interest in The Wallace Agency. The loan was originated on October 15, 2001 and is scheduled to mature on January 1, 2014. As of December 31, 2002 the entire loan principal balance of $422,454 was sold to unaffiliated lenders. The Company's exposure to loss on this loan is limited to a recourse obligation by Brooke Credit Corporation on $291,590 of loan participation balances.
On February 7, 2001, Shawn Lowry borrowed $28,000 from Brooke Credit Corporation bearing interest at a rate adjusted annually and equal to 3.5% per annum over the New York prime rate, which as of the last date of determination was 12%. This loan was scheduled to mature on February 15, 2006 but was paid off by Mr. Lowry on March 28, 2002. On September 17, 2001, Mr. Lowry borrowed $12,000 from Brooke Credit Corporation bearing interest at 10% with a scheduled maturity date of December 31, 2001. On October 1, 2001, Mr. Lowry borrowed $2,500 from Brooke Credit Corporation bearing interest at 10% with a maturity date of December 31, 2001. On October 31, 2001, Mr. Lowry borrowed $79,283 from Brooke Credit Corporation bearing interest at 3.5% per annum over the New York prime rate with a maturity date of November 1, 2011. The purpose of the loans was to allow Mr. Lowry to purchase stock of the Company and finance the operations of First Financial Group, L.C. Mr. Lowry paid off these loans on March 28, 2002.
Anita Larson is married to John Arensberg, a partner in Arensberg Insurance of Overland Park, Kansas. The Company and Arensberg Insurance have entered into a franchise agreement pursuant to which Arensberg Insurance participates in the Company's master agent program. In addition, Brooke Credit Corporation has extended credit to Arensberg Insurance to acquire an insurance agency. The loan was made on substantially the same terms and conditions as provided to other agents and is schedule to mature on October 1, 2009. As of December 31, 2002, the entire loan principal balance of $714,337 was sold to unaffiliated lenders. The Company's exposure to loss is limited to a recourse obligation by Brooke Credit Corporation on $245,120 of loan participation balances. The Company entered into a franchise agreement and made loan advances to Arensberg Insurance partnership prior to Ms. Larson's employment by the Company. Furthermore, Ms. Larson is not a partner of Arensberg Insurance. The Company believes that the partners of Arensberg Insurance are established and credible businessmen and therefore believes its exposure to loss from its recourse obligation is limited.
Anita Lowry is a sister to Robert D. Orr and Leland G. Orr and the mother of Shawn Lowry and Michael Lowry and is married to Don Lowry. Don and Anita Lowry are shareholders of American Heritage Agency, Inc. of Hays, Kansas. The Company and American Heritage Agency, Inc. entered into a franchise agreement on February 28, 1999 pursuant to which American Heritage Agency, Inc. participates in the Company's master agent program. As of December 31, 2002, Brooke Credit Corporation had six loans outstanding to American Heritage Agency with total principal balances of $557,587. All such loans were made on substantially the same terms and conditions as provided to other agents and are scheduled to mature on October 15, 2003, August 15, 2003, January 16, 2005, September 1, 2010, February 1, 2014 and April 1, 2014. The Company's exposure to loss is limited to retained principal loan balances of $4,997 because all other loan balances have been sold to unaffiliated lenders without recourse.
The Company sells insurance to its Board of Directors and its employees. The aggregate of these transactions is not significant to the financial statements. The Company's employee handbook contains conflict of interest guidelines which are applicable to Company management and employees. The purpose of the guidelines is to prevent an employee in a position to influence a decision regarding the Company to use such influence for personal gain. Pursuant to the guidelines, an employee in such a position is required to notify an officer of the Company of the existence of such a situation.
Lori Hess is the wife of Michael Hess and has purchased a loan participation from Brooke Credit Corporation through her Individual Retirement Account in the amount of $103,299. The balance of the loan participation outstanding purchased by Ms. Hess was zero as of December 31, 2002.
Robert D. Orr has purchased a loan participation from Brooke Credit Corporation through his Individual Retirement Account in the amount of $115,911. The balance of the loan participation outstanding purchased by Mr. Orr was zero as of December 31, 2002.
The Election of Directors requires the affirmative vote of a plurality of the outstanding shares of Common Stock present and entitled to vote at the Meeting.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's executive officers and directors, and persons who own more than ten percent (10%) of a registered class of the Company's equity securities ("10% Shareholders") to file with the Securities and Exchange Commission reports of ownership and changes in ownership of equity securities of the Company and to furnish the Company with copies of all Section 16(a) forms they file with the Securities and Exchange Commission. Based solely on its review of the copies of such forms received by the Company for its fiscal year ended December 31, 2002, the Company's officers, directors and 10% Shareholders have complied with the Section 16(a) filing requirements.
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
The Board has selected Summers, Spencer & Callison, CPAs, Chartered to serve as independent auditors of the Company for the fiscal year ending December 31, 2003. Summers, Spencer & Callison, CPAs, Chartered has served as the Company's independent auditors since 1997. The Shareholders of the Company are being asked to ratify this selection at the Meeting.
Representatives of Summers, Spencer & Callison, CPAs, Chartered will be present at the Meeting via teleconference and will have the opportunity to make a statement if they desire to do so and will be available to respond to appropriate questions from shareholders.
Although it is not required to do so, the Board is submitting its selection of the Company's independent auditors for ratification by the shareholders at the Meeting in order to ascertain the views of shareholders regarding such selection. A majority of the votes cast at the Meeting, if a quorum is present, will be sufficient to ratify the selection of Summers, Spencer & Callison, CPAs, Chartered as the Company's independent auditors for the fiscal year ending December 31, 2003. Whether the proposal is approved or defeated, the Board may reconsider its selection.
FISCAL 2002 AUDIT FIRM FEE SUMMARY
During the fiscal year 2002, the Company retained its principal auditor, Summers, Spencer & Callison, CPAs, Chartered, to provide services in the categories and amounts described below.
Audit Fees. Summers, Spencer & Cavanaugh, CPAs, Chartered billed the Company an aggregate of $235,269 in fees for professional services rendered in connection with the audit of the Company's financial statements for the fiscal year ended December 31, 2002.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 2
PROPOSAL THREE
APPROVAL OF AMENDMENTS TO COMPANY BYLAWS
At the meeting, the shareholders will be asked to consider and vote on the proposed amendments to Articles II and III of the bylaws of the Company as set forth in the Company's Amendment and Restatement to the Bylaws attached hereto as Appendix A and made a part hereof.
Two new amendments to the Company's bylaws will be presented to the Company's shareholders. The amendment proposed for Article II, #5 "Fixing of Record Date" requires that the Company, in the case of a stockholders meeting, set a record date for determination of stockholders not to exceed thirty days prior to the meeting date and that if no date of record is set by the board, the record date shall be the date of mailing of notice of the meeting to the stockholders. In addition, the proposed amendment requires the Company to establish a record date for the purpose of determining stockholders to be at least ten days after the date on which the dividend is declared (declaration date). This proposed amendment, if adopted, would enable the Company, if it later decided to do so, to fulfill the record date requirement of a national stock exchange service and thereby help the Company obtain a listing on the exchange for the purpose of providing a public market for its common stock.
The proposed amendment for Article III, #13 changes the number of board members from three to two that are necessary to form a Board Committee. This proposal is designed to accommodate the shareholders vote, in February, 2002 to form a Compensation Committee with only two directors.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS VOTE "FOR" PROPOSAL NO. 3
SOLICITATION OF PROXIES
This solicitation is being made by mail on behalf of the Board, but may also be made without additional remuneration by officers or employees of the Company by telephone, telegraph, facsimile transmission or personal interview. The expense of the preparation, printing and mailing of this Proxy Statement and the enclosed form of Proxy and Notice of Special Meeting, and any additional material relating to the Meeting which may be furnished to shareholders by the Board subsequent to the furnishing of this Proxy Statement, has been or will be borne by the Company. The Company will reimburse banks and brokers who hold the Common Stock in their name or custody, or in the name of nominees for others, for their out-of-pocket expenses incurred in forwarding copies of the proxy materials to those persons for whom they hold Common Stock. To obtain the necessary representation of shareholders at the Meeting, supplementary solicitations may be made by mail, telephone or interview by officers of the Company or selected securities dealers. It is anticipated that the cost of any other supplementary solicitations, if any, will not be material.
ANNUAL REPORT
The Company has mailed with this proxy solicitation material the Company's Annual Report.
SHAREHOLDER PROPOSALS FOR 2004 ANNUAL MEETING
Shareholders are entitled to present proposals for action at shareholders' meetings if they comply with the requirements of the SEC's proxy rules, Kansas law and the Company's charter and bylaws. In connection with this year's Meeting, no shareholder proposals were presented. Any proposals intended to be presented at the Company's Annual Meeting of Shareholders to be held in the year 2004 must be received at the Company's offices on or before December 31, 2003, in order to be considered for inclusion in the Company's proxy statement and form of proxy relating to such meeting.
The accompanying proxy card grants the proxy holders discretionary authority to vote on any matter raised at the Meeting. If a shareholder intends to submit a proposal at the Company's 2004 Annual Meeting Shareholders, which proposal is not intended to be included in the Company's proxy statement and form of proxy relating to such meeting, the shareholder's notice of the proposal must be received by the Company between December 1, 2003 and December 31, 2003. If a shareholder fails to submit the proposal by such date, the Company will not be required to provide any information about the nature of the proposal in its proxy statement, and the proposal will not be considered at the 2004 Annual Meeting of Shareholders.
Proposals should be sent to Anita Larson at 10895 Grandview Drive, Suite 250, Overland Park, KS 66210.
OTHER MATTERS
The Board is not aware of any matters to come before the Meeting, other than those specified in the Notice of Annual Meeting. However, if any other matter requiring a vote of the shareholders should arise at the Meeting, it is the intention of the persons named in the accompanying Proxy to vote such Proxy in accordance with their best judgment.
VOTING TRUSTEES AND THEIR NOMINEES
Please advise the Company whether other persons are the beneficial owners of Common Stock for which proxies are being solicited from you, and, if so, the number of copies of this Proxy Statement and other soliciting materials you wish to receive in order to supply copies to the beneficial owners of the Common Stock.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. SHAREHOLDERS, WHETHER OR NOT THEY EXPECT TO ATTEND THE MEETING IN PERSON, ARE URGED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED FOR THAT PURPOSE. BY RETURNING YOUR PROXY CARD PROMPTLY YOU CAN HELP THE COMPANY AVOID THE EXPENSE OF FOLLOW-UP MAILINGS TO ENSURE A QUORUM SO THAT THE MEETING CAN BE HELD. SHAREHOLDERS WHO ATTEND THE MEETING MAY REVOKE A PRIOR PROXY AND VOTE THEIR PROXY IN PERSON AS SET FORTH IN THIS PROXY STATEMENT.
By Order of the Board of Directors
Anita Larson
Secretary
Phillipsburg, Kansas
April 14, 2003
APPENDIX A
CERTIFICATE OF AMENDMENT TO
AND RESTATEMENT OF THE BYLAWS OF
BROOKE CORPORATION
CERTIFICATE OF AMENDMENT TO AND RESTATEMENT OF THE BYLAWS
OF
BROOKE CORPORATION
ARTICLE I—OFFICES
The principal office of the corporation in the State of Kansas shall be located in the city of Phillipsburg, County of Phillipsburg. The corporation may have such other offices, either within or without the State of incorporation as the board of directors may designate or as the business of the corporation may from time to time require.
ARTICLE II—STOCKHOLDERS
1. ANNUAL MEETING.
The annual meeting of the stockholders of the corporation shall be held each year within one hundred and twenty (120) days after the close of the immediately preceding fiscal year of the corporation for the purpose of electing directors and conducting such other proper business as may come before the meeting. The date, time, and place of the annual meeting shall be determined by the board of directors of the corporation.
2. SPECIAL MEETINGS.
Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the president or by the directors, and shall be called by the president at the request of the holders of not less than forty per cent of all the outstanding shares of the corporation entitled to vote at the meeting.
3. PLACE OF MEETING.
The directors may designate any place, either within or without the State unless otherwise prescribed by statute, as the place of meeting for any annual meeting or for any special meeting called by the directors. A waiver of notice signed by all stockholders entitled to vote at a meeting may designate any place, either within or without the state unless otherwise prescribed by statute, as the place for holding such meeting. If no designation is made, or if a special meeting be otherwise called, the place of meeting shall be the principal office of the corporation.
4. NOTICE OF MEETING.
Written or printed notice stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten nor more than thirty days before the date of the meeting, either personally or by mail, by or at the direction of the president, or the secretary, or the officer or persons calling the meeting, to each stockholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the stockholder at his address as it appears on the stock transfer books of the corporation, with postage thereon prepaid.
5. FIXING OF RECORD DATE.
In the case of a meeting of stockholders, the directors may fix in advance a date as the record date for any such determination of stockholders, such date in any case to be not more than thirty days prior to the meeting date. If no record date is fixed for the determination of stockholders entitled to notice of or to vote at a meeting of stockholders, the date on which notice of the meeting is mailed shall be the record date for such determination of stockholders. When a determination of stockholders entitled to vote at any meeting of stockholders has been made as provided in this section, such determination shall apply to any adjournment thereof. For the purpose of determining stockholders entitled to receive payment of any dividend the corporation will establish a record date at least ten days after the date on which the dividend is declared (declaration date).
6. VOTING LISTS.
The officer or agent having charge of the stock transfer books for shares of the corporation shall make, at least twenty days before each meeting of stockholders, a complete list of the stockholders entitled to vote at such meeting, or any adjournment thereof, arranged in alphabetical order, with the address of and the number of shares held by each, which list, for a period of twenty days prior to such meeting, shall be kept on file at the principal office of the corporation and shall be subject to inspection by any stockholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to inspection by any stockholder at any time during usual business hours. Such list shall also be produced and kept open at the time and place of the meeting and shall be subject to the inspection of any stockholder during the whole time of the meeting. The original stock transfer book shall be prima facie evidence as to who are the stockholders entitled to examine such list or transfer books or to vote at the meeting of stockholders.
7. QUORUM.
At any meeting of stockholders, fifty-one percent of the outstanding shares of the corporation entitled to vote, represented in person or by proxy, shall constitute a quorum at a meeting of stockholders. If less than said number of the outstanding shares are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. At such adjournment meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. The Stockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.
8. PROXIES.
At all meeting of stockholders, a stockholder may vote by proxy executed in writing by the stockholder or by his duly authorized attorney in fact. Such proxy shall be filed with the secretary of the corporation before or at the time of the meeting.
9. VOTING.
Each stockholder entitled to vote in accordance with the terms and provisions of the certificate of incorporation and these bylaws shall be entitled to one vote, in person or by proxy, for each share of stock entitled to vote held by such stockholders. Upon the demand of any stockholder, the vote for directors and upon any question before the meeting shall be by ballot. All elections for directors shall be decided by plurality vote; all other questions shall be decided by majority vote except as otherwise provided by the Certificate of Incorporation or the laws of this State.
10. ORDER OF BUSINESS.
The order of business at all meetings of the stockholders, shall be as follows:
- 1.
- Roll Call.
- 2.
- Proof of notice of meeting or waiver of notice.
- 3.
- Reading of minutes of preceding meeting.
- 4.
- Reports of Officers.
- 5.
- Reports of Committees.
- 6.
- Election of Directors.
- 7.
- Unfinished Business.
- 8.
- New Business.
11. INFORMAL ACTION BY STOCKHOLDERS.
Unless otherwise provided by law, any action required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of the shareholders, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof.
ARTICLE III—BOARD OF DIRECTORS
1. GENERAL POWERS.
The business and affairs of the corporation shall be managed by its board of directors. The directors shall in all cases act as a board, and they may adopt such rules and regulations for the conduct of their meetings and the management of the corporation, as they may deem proper, not inconsistent with these bylaws and the laws of this State.
2. NUMBER, TENURE AND QUALIFICATIONS.
The number of directors of the corporation shall be at least one and not more than eight. Each director shall hold office until the next annual meeting of stockholders and until his successor shall have been elected and qualified.
3. REGULAR MEETINGS.
A regular meeting of the directors, shall be held without other notice than this by-law immediately after, and at the same place as, the annual meeting of stockholders. The directors may provide, by resolution, the time and place for the holding of additional regular meetings without other notice than such resolution.
4. SPECIAL MEETINGS.
Special meetings of the directors may be called by or at the request of the president or any two directors. The person or persons authorized to call special meetings of the directors may fix the place for holding any special meeting of the directors called by them.
5. NOTICE.
Notice of any special meeting shall be given at least Seven (7) days previously thereto by written notice delivered personally, or by telegram or mailed to each director at his business address. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail so addressed, with postage thereon prepaid. If notice be given by telegram, such notice shall be deemed to be delivered when the telegram is delivered to the telegraph company. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened.
6. QUORUM.
At any meeting of the directors, fifty-one percent shall constitute a quorum for the transaction of business, but if less than said number is present at a meeting, a majority of the directors present may adjourn the meeting from time to time without further notice.
7. MANNER OF ACTING.
The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the directors.
8. NEWLY CREATED DIRECTORSHIPS AND VACANCIES.
Newly created directorships resulting from an increase in the number of directors and vacancies occurring in the board for any reason except the removal of directors without cause may be filled by a vote of a majority of the directors then in office, although less than a quorum exists. Vacancies occurring by reason of the removal of directors without cause shall be filled by vote of the stockholders. A director elected to fill a vacancy caused by resignation, death or removal shall be elected to hold office for the unexpired term of his predecessor.
9. REMOVAL OF DIRECTORS.
Any or all of the directors may be removed for cause by vote of the stockholders or by action of the board. Directors may be removed without cause only by vote of the stockholders.
10. RESIGNATION.
A director may resign at any time by giving written notice to the board, the president or the secretary of the corporation. Unless otherwise specified in the notice, the resignation shall take effect upon receipt thereof by the board or such officer, and the acceptance of the resignation shall not be necessary to make it effective.
11. COMPENSATION.
No compensation shall be paid to directors, as such, for their services, but by resolution of the board a fixed sum and expenses for actual attendance at regular or special meeting of the board may be authorized. Nothing herein contained shall be construed to preclude any director from serving the corporation in any other capacity and receiving compensation therefor.
12. PRESUMPTION OF ASSENT.
A director of the corporation who is present at a meeting of the directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless his dissent shall be entered in the minutes of the meeting or unless he shall file his written dissent to such action with the person acting as the secretary of the meeting before the adjournment thereof or shall forward such dissent by registered mail to the secretary of the corporation immediately after the adjournment of the meeting. Such right to dissent shall not apply to a director who voted in favor of such action.
13. EXECUTIVE AND OTHER COMMITTEES.
The board, by resolution, may designate from among its members an executive committee and other committees, each consisting of two or more directors. Each such committee shall serve at the pleasure of the board.
ARTICLE IV—OFFICERS
1. NUMBER.
The officers of the corporation shall be a president, a vice-president, a secretary and a treasurer, each of whom shall be elected by the directors. Such other officers and assistant officers as may be deemed necessary may be elected or appointed by the directors.
2. ELECTION AND TERM OF OFFICE.
The officers of the corporation to be elected by the directors shall be elected annually at the first meeting of the directors held after each annual meeting of the stockholders. Each officer shall hold office until his successor shall have been duly elected and shall have qualified or until his death or until he shall resign or shall have been removed in the manner hereinafter provided.
3. REMOVAL.
Any officer or agent elected or appointed by the directors may be removed by the directors whenever in their judgment the best interests of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.
4. VACANCIES.
A vacancy in any office because of death, resignation, removal, disqualification or otherwise, may be filled by the directors for the unexpired portion of the term.
5. PRESIDENT.
In the absence of the chairman or in event of his death, inability or refusal to act, the president shall perform the duties of the chairman, and when so acting, shall have all the powers of and be subject to all the restrictions upon the chairman. The president shall perform such other duties as from time to time may be assigned to him by the chairman or by the directors. He may sign, with the secretary or any other proper officer of the corporation thereunto authorized by the directors, certificates for shares of the corporation, any deeds, mortgages, bonds, contracts, or other instruments which the directors have authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the directors or by these bylaws to some other officer or agent of the corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of president and such other duties as may be prescribed by the directors from time to time.
6. VICE-PRESIDENT.
In the absence of the president or in event of his death, inability or refusal to act, the vice-president shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice-president shall perform such other duties as from time to time may be assigned to him by the President or by the directors.
7. SECRETARY.
The secretary shall keep the minutes of the stockholders' and of the directors' meetings in one or more books provided for that purpose, see that all notices are duly given in accordance with the provisions of these bylaws or as required, be custodian of the corporate records and of the seal of the corporation and keep a register of the post office address of each stockholder which shall be furnished to the secretary by such stockholder, have general charge of the stock transfer books of the corporation and in general perform all duties incident to the office of secretary and such other duties as from time to time may be assigned to him by the president or by the directors.
8. TREASURER.
If required by the directors, the treasurer shall give a bond for the faithful discharge of his duties in such sum and with such surety or sureties as the directors shall determine. He shall have charge and custody of and be responsible for all funds and securities of the corporation; receive and give receipts for moneys due and payable to the corporation from any source whatsoever, and deposit all such moneys in the name of the corporation in such banks, trust companies or other depositories as shall be selected in accordance with these bylaws and in general perform all of the duties incident to the office of treasurer and such other duties as from time to time may be assigned to him by the president or by the directors.
9. SALARIES.
The salaries of the officers shall be fixed from time to time by the directors and no officer shall be prevented from receiving such salary by reason of the fact that he is also a director of the corporation.
10. CHAIRMAN.
The chairman shall be the principal executive officer of the corporation and, subject to the control of the directors, shall in general supervise and control all of the business and affairs of the corporation. He shall, when present, preside at all meetings of the stockholders and of the directors.
ARTICLE V—CONTRACTS, LOANS, CHECKS AND DEPOSITS
1. CONTRACTS.
The directors may authorize any officer or officers, agent or agents, to enter into any contract or execute and deliver any instrument in the name of and on behalf of the corporation, and such authority may be general or confined to specific instances.
2. LOANS.
No loans shall be contracted on behalf of the corporation and no evidences of indebtedness shall be issued in its name unless authorized by a resolution of the directors. Such authority may be general or confined to specific instances.
3. CHECKS, DRAFTS, ETC.
All checks, drafts or other orders for the payment of money, notes or other evidences of indebtedness issued in the name of the corporation, shall be signed by such officer or officers, agent or agents of the corporation and in such manner as shall from time to time be determined by resolution of the directors.
4. DEPOSITS.
All funds of the corporation not otherwise employed shall be deposited from time to time to the credit of the corporation in such banks, trust companies or other depositaries as the directors may select.
ARTICLES VI—CERTIFICATES FOR SHARES AND THEIR TRANSFER
1. CERTIFICATES FOR SHARES.
Certificates representing shares of the corporation shall be in such form as shall be determined by the directors. Such certificates shall be signed by the president and by the secretary or by such other officers authorized by law and by the directors. All certificates for shares shall be consecutively numbered or otherwise identified. The name and address of the stockholders, the number of shares and date of issue, shall be entered on the stock transfer books of the corporation. All certificates surrendered to the corporation for transfer shall be canceled and no new certificates shall be issued until the former certificate for a like number of shares shall have been surrendered and canceled, except that in case of a lost, destroyed or mutilated certificate a new one may be issued therefore upon such terms and indemnity to the corporation as the directors may prescribe.
2. TRANSFERS OF SHARES.
(a) Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, and cancel the old certificate; every such transfer shall be entered on the transfer book of the corporation which shall be kept at its principal office.
(b) The corporation shall be entitled to treat the holder of record of any share as the holder in fact thereof, and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person whether or not it shall have express or other notice thereof, except as expressly provided by the laws of this state.
ARTICLE VII—FISCAL YEAR
The fiscal year of the corporation shall begin on the 1st day of January in each year.
ARTICLE VIII—DIVIDENDS
The directors may from time to time declare, and the corporation may pay, dividends on its outstanding shares in the manner and upon the terms and conditions provided by law.
ARTICLE IX—SEAL
The directors shall provide a corporate seal which shall be circular in form and shall have inscribed thereon the name of the corporation, the state of incorporation, year of incorporation and the words, "Corporate Seal".
ARTICLE X—WAIVER OF NOTICE
Unless otherwise provided by law, whenever any notice is required to be given to any stockholder or director of the corporation under the provisions of these bylaws or under the provisions of the articles of incorporation, a waiver thereof in writing, signed by the person or persons entitled to such notice, whether before or after the time stated therein, shall be deemed equivalent to the giving of such notice.
ARTICLE XI—AMENDMENTS
These bylaws may be altered, amended or repealed and new bylaws may be adopted by a vote of the stockholders representing a majority of all the shares issued and outstanding, at any annual stockholders' meeting or at any special stockholders' meeting when the proposed amendment has been set out in the notice of such meeting.
BROOKE CORPORATION
210 W. State Street
Phillipsburg, Kansas 67661
(913) 661-0123
ANNUAL MEETING DATE: APRIL 24, 2003
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF
DIRECTORS
The undersigned shareholder of Brooke Corporation (the "Company"), a Kansas corporation, hereby constitutes and appoints Anita Larson, Secretary, and each of them, proxies, with full power of substitution, for and on behalf of the undersigned to vote, as designated below, according to the number of shares of the Company's $1.00 par value common stock held of record by the undersigned at the open of business on April 14, 2003, and as fully as the undersigned would be entitled to vote if personally present, at the Annual Meeting of Shareholders to be held at 10895 Grandview Drive, Suite 250, Overland Park, Kansas on Thursday, April 24, 2003 at 11:00 a.m. local time, and at any postponements or adjournments thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED. IF PROPERLY EXECUTED AND NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR EACH OF THE OTHER ITEMS SET FORTH ON THE PROXY.
Please mark boxesý in ink. Sign, date and return this Proxy promptly, using the enclosed envelope.
- 1.
- Election of Directors.
o FOR ALL NOMINEES LISTED BELOW o WITHHOLD AUTHORITY
(except as marked to the contrary below) to vote all nominees listed below
(INSTRUCTION: To withhold authority to vote for any individual nominee, write that nominee's name on the space provided below.)
Robert D. Orr, Michael Hess, Leland G. Orr, John Allen, Derrol Hubbard, and Joe Barnes.
- 2.
- Proposal to ratify the selection of Summers, Spencer & Callison, CPAs, Chartered as the Company's independent auditors for the fiscal year ending December 31, 2003.
| o FOR | o AGAINST | o ABSTAIN |
- 3.
- Proposal to approve the amendments to the Company's bylaws proposed by the Board of Directors.
| o FOR | o AGAINST | o ABSTAIN |
- 4.
- In the discretion of such proxy holders, upon such other business as may properly come before the Meeting or any and all postponements or adjournments thereof.
The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders, dated April 24, 2003 and the Proxy Statement furnished therewith.
| Dated | 2003 | |||
Printed Name | ||||
Authorized Signature | ||||
Title | ||||
Printed Name | ||||
Authorized Signature | ||||
Title | ||||
Please sign exactly as name appears on the envelope in which this Proxy was mailed to you. When shares are held by joint tenants, both should sign. Executors, administrators, trustees and other fiduciaries, and persons signing on behalf of corporations or partnerships, should so indicate when signing.
TO SAVE THE COMPANY ADDITIONAL VOTE SOLICITATION EXPENSES, PLEASE SIGN, DATE AND RETURN THIS PROXY PROMPTLY, USING THE ENCLOSED ENVELOPE.
NON-VOTING INSTRUCTIONS
- o
- ANNUAL MEETING. Please check here to indicate that you plan to attend the Annual Meeting of Shareholders on April 24, 2003.
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