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 Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 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):
[X] No fee required.
[ ] 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:
_____________________________________________________________________
[ ] Fee paid previously with preliminary materials:
[ ] 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:
_____________________________________________________________________
--------------------------
NOTICE OF 2001 ANNUAL MEETING
AND PROXY STATEMENT
ANNUAL MEETING TO BE HELD
April 25, 2001
--------------------------
Dear Shareholder:
On behalf of our Board of Directors, I cordially invite you to attend the
2001 Annual Meeting of Shareholders of Brooke Corporation to be held at 10895
Grandview Drive, Suite 250, Overland Park, Kansas on Wednesday, April 25, 2001
at 11:00 a.m. local time.
The Notice of 2001 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,
April 13, 2001 /s/ Michael Hess
-----------------------------------------
Michael Hess
President
TABLE OF CONTENTS
Page
Notice of 2001 Annual Meeting................................................ 1
General Information.......................................................... 2
About the Meeting............................................................ 2
Proposal No. 1 - Election of Directors....................................... 5
Proposal No. 2 - Ratification of Appointment of Independent Auditor..........12
Solicitation of Proxies......................................................13
Annual Report................................................................13
Shareholder Proposals for 2002 Annual Meeting................................13
Other Matters................................................................13
Voting Trustees and Their Nominees...........................................14
Proxy/Voting Instruction Card
-------------------------------
NOTICE OF 2001 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 2001
-------------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders (the
"Meeting") of Brooke Corporation, a Kansas corporation (the "Company"), will be
held on Wednesday, April 25, 2001 at 11:00 a.m. local time, at 10895 Grandview
Drive, Suite 250, Overland Park, Kansas for the following purposes:
1. To elect five directors to the Board of Directors of the Company.
2. To ratify the selection of Summers, Spencer & Cavanaugh, CPAs,
Chartered as the Company's independent auditors for the fiscal year
ending December 31, 2001.
3. 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 close of business on April 13, 2001, 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
/s/ Anita Larson
---------------------------------
Anita Larson
Secretary
Phillipsburg, Kansas
Dated: April 13, 2001
1
BROOKE CORPORATION
205 F. Street, 2nd Floor
Phillipsburg, Kansas 67661
(913) 661-0123
--------------------------------------------------
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 25, 2001
--------------------------------------------------
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 Wednesday, April 25, 2001 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 2001 Annual Meeting will be first mailed
or given to the Company's shareholders on or about April 13, 2001.
Because many of the Company's shareholders may be unable to attend the
Meeting in person, the 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 two items at this
year's Meeting:
(1) The election of five directors to the Board; and
(2) A proposal to ratify the selection of Summers, Spencer & Cavanaugh,
CPAs, Chartered as the Company's independent auditors for the fiscal
year ending December 31, 2001.
WHO CAN VOTE AT THE MEETING?
The Board set April 13, 2001 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 close of business on April 13, 2001 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 13, 2001, there were 692,968
shares of Common Stock
2
outstanding held by a total of 198 shareholders of record. Therefore, there are
a total of 692,968 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
353,414 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 & Cavanaugh, 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.
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,
3
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 have no effect.
4
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 is 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 47 Chairman of the Board of Directors, Chief Executive Officer and
Director
Michael Hess 44 President and Director
Leland G. Orr 38 Treasurer, Chief Financial Officer, Assistant Secretary and
Director
John Allen 52 Director
Derrol Hubbard 44 Director
The following is a brief summary of the background of each director
nominee:
ROBERT D. ORR, 47, 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
5
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, 38, 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, 44, 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.
JOHN ALLEN, 52, 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, 44, 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
6
than five years prior to 1998, Mr. Hubbard was managing officer of DBarD, Inc.,
a family corporation with agricultural operations in Kansas.
COMPENSATION OF DIRECTORS
Directors Robert Orr, Leland Orr, and Michael Hess serve without cash
compensation and without other fixed remuneration. Directors 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.
MEETINGS OF THE BOARD AND OF COMMITTEES
The Board held eight meetings and did not act by unanimous consent during
the fiscal year ending December 31, 2000. During a director's tenure, no
director attended fewer than 75% of the aggregate of (a) the total number of
meetings of the Board during 2000; and (b) the total number of meetings held by
all committees of the Board on which the director served during 2000. The Board
does not have standing audit, nominating or compensation committees.
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, 39, 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.
SHAWN LOWRY, 27, Vice President and National Sales Manager, joined Brooke
in 1996 as a Corporate Sales Representative and in 1998 assumed the position of
Missouri State Manager. Prior to employment with Brooke, Mr. Lowry attended
Washburn University majoring in business finance and business economics. In
January 2000, Mr. Lowry was promoted to the regional manager over Brooke's
Dallas region. In August 2000, Mr. Lowry was promoted to National Sales Manager.
PRINCIPAL STOCKHOLDERS AND SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of common stock at March 31, 2001 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:
7
VOTING SECURITIES.
NAME AND TITLE OF CLASS NUMBER OF PERCENTAGE
ADDRESS OF OWNER SHARES OWNED OF CLASS1
Robert D. Orr2
Route #2, Box 53 Common Stock 14,450 2.09%
Smith Center, Kansas 66967
Anita Larson2
627 Louisiana Street Common Stock 12,000 1.73%
Lawrence, Kansas 66044
Leland G. Orr2
501 Berglund Drive Common Stock 3,400 0.49%
Phillipsburg, Kansas 67661
Michael Hess2
516 South Grant Common Stock 2,200 0.32%
Smith Center, Kansas 66967
All Executive Officers and Common Stock 32,050 4.63%
Directors As a Group (6 persons)4
Brooke Holdings, Inc.2, 3
205 F Street Common Stock 509,531 73.53%
Phillipsburg, Kansas 67661
- ---------------------------------------------------------
1. Percentage based on 692,968 shares of common stock outstanding.
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 December 31, 2000, Brooke Holdings, Inc., owned 509,531 shares of the
Company's common stock which represents 73.53% of the 692,968 shares of
common stock outstanding. Robert D. Orr, Leland G. Orr and Michael Hess
beneficially own 46.34%, 13.67% and 7.28%, respectively, of the shares of
common stock of Brooke Holdings, Inc.
4. Directors John Allen and Derrol Hubbard do not own any shares of the
Company's common stock.
NON-VOTING SECURITIES. 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. There are no options, warrants or rights
outstanding with respect to the securities of the Company.
8
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 the fiscal year 2000 exceeded $100,000, for
services rendered in all capacities to the Company and its subsidiaries:
NAME AND PRINCIPAL ANNUAL COMPENSATION LONG-TERM ALL OTHER COMPENSATION AGGREGATE
POSITION COMPENSATION REMUNERATION
Robert D. Orr1 $ 0 $ 0 $ 1,075 $ 1,075
(Chief Executive
Officer)
Michael Hess1 80,000 0 842 80,842
(President)
Leland G. Orr1 80,000 0 1,086 81,086
(Secretary, Treasurer)
Anita Larson2 66,000 0 6,013 72,013
(Vice President)
Shawn Lowry2 88,750 0 18,609 107,359
(Vice President)
- ---------------------------------------------------------
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, Anita Larson and Shawn Lowry
receive use of a vehicle for commuting purposes. Pursuant to the terms of an at
will employment agreement between Ms. Larson and the Company, Ms. Larson has
been retained as the manager of Brooke Life and Health, Inc., a wholly-owned
subsidiary of the Company. Ms. Larson's annual salary for such employment is
$66,000. Ms. Larson is also entitled to quarterly bonuses equal to 5% of the
quarterly growth of the Company's life and health insurance programs. During
2000 Ms. Larson received quarterly growth bonuses totaling $6013. In addition,
Ms. Larson is eligible for an annual bonus of $30,000, contingent upon the
Company's consolidated operating income attaining certain specified goals. The
Company anticipates that for the calendar year 2001, in the aggregate Ms.
Larson's bonuses will not exceed $5,000. Ms. Larson's employment agreement
contains a covenant not to compete. Although the Company believes this covenant
to by fully enforceable in accordance with its terms, a court of competent
jurisdiction may determine not to enforce the covenant or only partially enforce
the covenant.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Brooke Holdings, Inc., owns 100% of the common stock of GI Agency, Inc.
Accordingly, through their ownership interest in Brooke Holdings, Inc., Robert
D. Orr, Leland G. Orr and Michael Hess control 100% of the voting stock of GI
Agency, Inc. GI Agency, Inc. owns franchise agencies which purchase Master Agent
services and obtain loans from the Company at the same general prices and
general terms as provided to other unaffiliated franchise agents. As of December
31, 2000, the total outstanding balance of all loans made to GI Agency, Inc. by
the Company's finance subsidiary, Brooke Credit Corporation, was $1,363,426.37.
Amounts owed to the Company by GI Agency, Inc. are secured
9
by all the shares of the Company's common stock owned by Brooke Holdings, Inc.
which currently represents 73.53% of the total shares outstanding. As of
December 31, 2000, all but $60,000 of the loan balances of GI Agency, Inc., had
been sold to an unaffiliated lender. Because of the relationships described
above, certain conflicts of interest may arise between the Company and its
agents in attempting to resolve disputes that occur as a result of such
relationships.
The Company has assigned all of its right, title and interest in agreements
to purchase insurance agencies to GI Agency, Inc., without consideration from GI
Agency, Inc. In its role of matching agency buyers and sellers, the Company from
time to time executes purchase agreements to acquire agency assets and assigns
them to prospective or existing franchise agents. In the event that agency
assets purchased by the Company are not sold to a prospective or existing
franchise agent, the Company may assign it rights and obligations pursuant to
such purchase agreement to GI Agency, Inc. Such assignments allow the Company to
avoid retail competition with its franchise agents and positions GI Agency, Inc.
to operate such agencies until a purchaser can be identified. From January 1,
2000 through December 31, 2000, GI Agency Inc. has collected commissions on the
assets subject to such assignments in the amount of $400,153.
The Company shares office facilities with GI Agency, Inc. at its Grand
Island, Nebraska office location. Brooke Investments, Inc., a wholly-owned
subsidiary of the Company, leases the Grand Island property from an unaffiliated
lessor. The Company reimburses Brooke Investments, Inc. for payments made in
connection with the lease and GI Agency, Inc. reimburses the Company for its use
of the facilities. In 2000, GI Agency, Inc. reimbursed the Company $335,666 for
personnel expenses and $7,500 for office facilities expenses. Although expenses
are allocated between the Company and GI Agency, Inc., the expense allocation
has not been independently evaluated to determine fairness.
Robert D. Orr, Leland G. Orr and Michael Hess have each guaranteed certain
of the Company's obligations to banks. As of December 31, 2000, the amount of
such obligations outstanding were $857,748 and are scheduled to mature no later
than December 12, 2006. The loans are current: no monetary or other defaults
exist. In addition, Robert D. Orr, Leland G. Orr and Michael Hess have, in some
cases, each guaranteed amounts due to suppliers 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. The continuance of
these guaranties is important to the Company's prospects.
Brooke Holdings, Inc. borrowed $300,000 from the Company with repayment
secured by Brooke Holdings, Inc.'s ownership of 73.53% of the Company's common
stock. As of December 31, 2000, the amount outstanding on such loan was
$192,189. The loan bore interest at a rate of 11.50% per annum and was scheduled
to mature on December 31, 2000. The loan was renewed on December 31, 2000 at the
rate of thirteen percent (13%) per annum, and is scheduled to mature on December
31, 2001.
Anita Larson is married to John Arensberg, a partner in Arensberg Insurance
of Lawrence, Kansas and 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, the
Company's finance subsidiary, Brooke Credit Corporation, has made three loans to
Arensberg Insurance. As of December 31, 2000 the total outstanding balance of
such loans was $851,816.08. Each of the loans bears interest at a rate adjusted
annually and equal to 3.% per annum over the New York prime rate, which as of
the last date of determination was 11.5% for each loan as of December 31, 2000.
One of the loans is scheduled to mature on October 1, 2008 and the remaining two
loans are both scheduled to mature on July 1, 2009. All of the loans made to
Arensberg Insurance have been sold to an unaffiliated lender.
10
Ms. Anita Larson borrowed $30,000 from Brooke Credit Corporation. The loan
bears interest at a rate adjusted annually and equal to 2.5% per annum over the
New York prime rate, which as of the last date of determination was 12%. The
loan is scheduled to mature on August 1, 2005. The purpose of the loan was to
allow Ms. Larson to purchase stock of the Company.
The Company's employee handbook contains conflicts 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.
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, 2000,
the Company's officers, directors and 10% Shareholders have complied with the
Section 16(a) filing requirements.
11
PROPOSAL TWO
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITOR
The Board has selected Summers, Spencer & Cavanaugh, CPAs, Chartered to
serve as independent auditors of the Company for the fiscal year ending December
31, 2000. Summers, Spencer & Cavanaugh, 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 & Cavanaugh, 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 & Cavanaugh,
CPAs, Chartered as the Company's independent auditors for the fiscal year ending
December 31, 2001. Whether the proposal is approved or defeated, the Board may
reconsider its selection.
FISCAL 2000 AUDIT FIRM FEE SUMMARY
During the fiscal year 2000, the Company retained its principal auditor,
Summers, Spencer & Cavanaugh, 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 $18,806 in fees for professional services rendered in
connection with the audit of the Company's financial statements for the fiscal
year ended December 31, 2000.
THE BOARD RECOMMENDS THAT THE SHAREHOLDERS
VOTE "FOR" PROPOSAL NO. 2
12
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 on Form 10-KSB for the year ended December 31, 2000, including
financial statements and financial statement schedules, as filed with the
Securities and Exchange Commission.
SHAREHOLDER PROPOSALS FOR 2002 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. Since the date of this year's
annual meeting has been changed by more than thirty days from the date of the
previous year's meeting. Any proposals intended to be presented at the Company's
Annual Meeting of Shareholders to be held in the year 2002 must be received at
the Company's offices on or before December 1, 2001, 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 2002 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, 2001 and December 31, 2001.
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 2002 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.
13
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
/s/ Anita Larson
------------------------------
Anita Larson
Secretary
Phillipsburg, Kansas
April 13, 2001
14
PROXY/VOTING INSTRUCTION CARD
BROOKE CORPORATION
205 F. Street, 2nd Floor
Phillipsburg, Kansas 67661
(913) 661-0123
ANNUAL MEETING DATE: APRIL 25, 2001
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 on
April 13, 2001, 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 Wednesday, April 25, 2001
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 boxes [X] in ink. Sign, date and return this Proxy promptly, using
the enclosed envelope.
1. Election of Directors.
[ ] FOR ALL NOMINEES LISTED BELOW [ ] 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.
2. Proposal to ratify the selection of Summers, Spencer & Cavanaugh, CPAs,
Chartered as the Company's independent auditors for the fiscal year ending
December 31, 2001.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. 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 2001 Annual
Meeting of Shareholders, dated April 13, 2001, and the Proxy Statement furnished
therewith.
Dated _______________________________________2001
--------------------------------------------------
Authorized Signature
--------------------------------------------------
Title
--------------------------------------------------
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
[ ] ANNUAL MEETING. Please check here to indicate that you plan to
attend the Annual Meeting of Shareholders on April 25, 2001.
- -----------------------