LIFE INSURANCE POLICY PURCHASE AGREEMENT
EXHIBIT 10.1
This
Life
Insurance Policy Purchase Agreement and its related Exhibits (the “Agreement”)
is
made and entered into as of this _____ day of ____________________, 20__, by
and
between
among Frozen
Food Express Industries, Inc.
(“Seller”),
located at 0000
Xxxxxx Xxxxxxx Xxxxx, Xxxxxx, XX 00000;
__________________________and ___________________________(“Purchaser”),
(collectively, the “Parties”)
RECITALS
WHEREAS,
Purchaser is in the business of acquiring certain life insurance policies;
and,
WHEREAS,
Seller is the owner of record of life insurance policy number _______________
(“Policy”)
(for
purposes of this Agreement, any references to the term “Policy” specifically
exclude any additional benefits to accidental death) with a face value of
$
____________________ issued by __________________
(“Insurer”)
and
insuring the life of _________________
(“Insured”);
and,
WHEREAS,
except for additional benefits for accidental death, Seller desires to sell,
and
Purchaser desires to purchase, the Policy subject to the terms and conditions
of
this Agreement and related Exhibits (such transaction, the “Life
Settlement”);
and,
WHEREAS,
the parties will enter into an agreement with an escrow agent.
AGREEMENT
NOW,
THEREFORE, in consideration of the foregoing and the representations, covenants,
and agreements set forth herein, and for other good and valuable consideration,
the sufficiency and receipt of which are hereby acknowledged, the Parties,
intending to be legally bound hereby, agree as follows:
1. Purchaser
will pay Seller the sum of $_________________
(“Purchase
Price”)
in
exchange for the Policy. Upon receipt by Escrow Agent from Seller of the
following forms (or similar forms) of Insurer (a) Transfer of Ownership and
Control, (b) Change of Beneficiary and (c) Collateral Assignment, if any
(collectively, the “Insurer’s
Forms”),
each
properly executed, the Purchaser shall deposit the Purchase Price in immediately
available funds into an Escrow Account within three (3) business days of such
receipt by the Escrow Agent.
2. Seller
has the sole responsibility to continue to make any and all premium payments
until Escrow Agent receives written acknowledgement from the Insurer of the
properly completed transfer of ownership of Policy and change of designated
beneficiary thereunder (“Confirmation”).
Following receipt by the Escrow Agent of Confirmation, the Purchaser or its
assignee will continue to make premium payments in respect of the Policy.
Failure by Seller to pay premiums and/or keep the Policy in force until Escrow
Agent receives Confirmation will constitute a material breach of this Agreement,
and Purchaser will have the right to rescind this Agreement. It is further
understood and agreed by the Parties that Seller will properly execute or cause
to be executed, including signatures, witness signatures, and notary seals
and
signatures, all attached Exhibits of this Agreement. Seller agrees that it
will
deliver (a) to Escrow Agent the Insurer’s Forms, each properly executed,
and (b) to Purchaser copies of this Agreement and each of the Exhibits to
this Agreement, together with any other documents required to be delivered
under
this Agreement, in each case, properly executed, witnessed or notarized, as
the
case may be; upon Purchaser determining that such documents are properly
executed, witnessed or notarized, as the case may be, Purchaser shall
immediately notify Escrow Agent and Seller in writing. In the event that the
document execution requirements of this Agreement are not satisfied and this
Agreement and any related documents are not returned within fourteen (14)
calendar days from the date of delivery of this Agreement and any related
documents by Purchaser to Seller, then Purchaser will have the right to rescind
this Agreement, conditioned solely (if applicable) on the return of ownership
and control of the beneficiary rights of the Policy to the Seller.
3. Except
for any additional benefits for accidental death, which Seller shall retain,
and
subject to the terms and conditions of this Agreement, Seller hereby irrevocably
sells, transfers, conveys, delivers and assigns to Purchaser all rights, titles,
claims, interests, options, benefits and privileges provided by the Policy
and
granted to the Seller and/or any beneficiaries under the Policy, free and clear
of all liens, pledges, interests or other encumbrances (“Encumbrances”).
Seller agrees that after the purchase of the Policy by Purchaser contemplated
herein, the Policy can be further sold, assigned, or otherwise transferred
to an
entity or person unknown to the Seller, without the Seller’s consent or
knowledge, but with notification to the Insured within twenty (20) days after
such sale or transfer.
4. Except
for accidental death benefits, which are expressly excluded from this Agreement,
and subject to the terms and conditions of this Agreement, Seller hereby
irrevocably sells, transfers, conveys and assigns to Purchaser all money payable
now or in the future under the Policy, including all dividends, options, cash
values, benefits and/or advantages set forth under the terms and conditions
of
the Policy. Notwithstanding the foregoing, if the Policy contains provisions
for
spousal or child riders, waiver of premium riders, or other provisions
(“Supplemental
Coverage”)
insuring the lives of spouses, family members, or anyone else other than the
Seller, then the Parties acknowledge and understand that the Supplemental
Coverage may be terminated at the discretion of the Purchaser. Thus, if the
Policy is a joint policy, or contains riders or other provisions insuring the
lives of a spouse, dependents or anyone else other than the Seller, there may
be
a loss of such coverage, and Seller should contact the Insurer or Seller’s
insurance agent to determine if that coverage may be converted in order to
avoid
losing the coverage.
5. Except
for any additional benefits for accidental death, which Seller shall retain,
and
subject to the terms and conditions of this Agreement, Seller hereby irrevocably
sells, transfers, conveys, delivers and assigns to Purchaser all rights of
control held by Seller in the Policy, including but not limited to, the right
to
change beneficiaries, the right to make claims and receive payments pursuant
to
the terms of the Policy, and the right to surrender Policy at any time and
receive for Purchaser's sole benefit the cash surrender value of the Policy,
if
any.
6. In
the
absence of fraud, all statements made by Seller shall be deemed representations
and not warranties. Seller hereby represents that:
A. Seller
is
the beneficial owner of the Policy;
B. Except
for any additional benefits for accidental death, which Seller shall retain,
the
irrevocable sale, transfer, and assignment of the Policy to Purchaser and its
successors and assigns, is valid and sufficient;
C. There
are
no proceedings in any bankruptcy, pending or, to the knowledge of Seller,
threatened, either voluntarily or involuntarily, by the Seller;
D. No
tax or
creditor lien has been filed against the Policy;
E. The
Policy has not been hypothecated and is not subject to any Encumbrances;
F. Seller
has made no prior sale, transfer or assignment of the Policy to any other person
or entity;
G. No
final
bankruptcy disclaimers involving the Seller have been issued since the issuance
of the Policy;
H. No
part
of the premiums due in at least four (4) of the first seven (7) years after
the
Policy was issued were paid by means of indebtedness;
I. Seller
has valid business reasons for selling the Policy rather than obtaining a
secured loan with such Policy as collateral. Seller has not transferred the
Policy to Purchaser with the actual intent to hinder, delay or defraud any
of
its creditors and such transfer of the Policy constitutes a practical and
reasonable course of action designed to improve the financial condition of
Seller without impairing the rights of its creditors;
J. From
and
after the purchase date, Seller understands and accepts that the transfer to
Purchaser of the Policy is a sale;
K. Subject
to the terms and conditions of this Agreement, except for any additional
benefits for accidental death, which Seller shall retain, Seller will not take
any action inconsistent with Purchaser’s ownership of the Policy. Subject to the
terms and conditions of this Agreement, if a third party, including a potential
purchaser of the Policy, should inquire, Seller will promptly indicate that
the
Policy has been sold to Purchaser and will claim no ownership interest in such
assets; and
L. Seller
will be solvent at all relevant times prior to, and will not be rendered
insolvent by, the sale of the Policy to Purchaser.
7. Seller
and Insured, if different, hereby acknowledge and agree that performance by
Purchaser of this Agreement is further conditioned upon (a) receipt and
acceptance by Purchaser at its executive office, and Purchaser’s further
execution, if applicable, of the following documents and verifications, in
each
case, properly executed, witnessed or notarized, as applicable, by Seller or
Insured, as the case may be, and in form and substance satisfactory to
Purchaser, as provided in Section 2 above, and (b) thereafter, Escrow
Agent’s receipt of Confirmation and Purchaser’s verification of the Confirmation
as provided in Section 11 below:
A. The
execution by all current beneficiary(ies) of the Release of Beneficiary Rights,
attached hereto as Exhibit
A;
B. The
execution by Insured of the Authorization of Continued Contact between the
Insured and Purchaser attached hereto as Exhibit
B.
Insured
acknowledges that Insured has the right to list any individual of legal age
as
his or her designated contact. Insured further acknowledges that if, for any
reason, Purchaser is unable to contact Insured’s designated contact(s) for a
period of thirty (30) days, Purchaser has the right to contact Insured directly.
Insured may change his or her designated contacts at any time, upon written
notice to Purchaser. Purchaser shall advise Seller and Insured, if different,
the name, address and telephone number of Purchaser, Purchaser’s representative,
or broker, who will contact Insured or his or her designated contact(s), and
shall notify Seller and Insured, if different, of any change in such
information. Insured acknowledges that Purchaser shall not contact Insured
or
his/her designated contact(s) for purposes of determining Insured’s health
status more frequently than once every thirty (30) days for life settlers with
a
life expectancy of one year or less, and no more than once every three (3)
months for life settlers with a life expectancy of more than one year. No person
shall contact Insured or his/her contact(s) for the purpose of determining
his/her health status unless Purchaser is registered as a life settlement
provider in the State of Texas;
C. The
execution by Insured of an Authorization to Release Medical Information,
attached hereto as Exhibit C
(“Authorization
to Release Medical Information”).
Insured acknowledges that that the Authorization to Release Medical Information
may be used to track Insured’s ongoing health status. Insured acknowledges that
Insured has the right, at any time, to revoke the Authorization to Release
Medical Information by providing written notice to Purchaser;
D. The
execution by the Seller of the Distribution Directions, attached hereto as
Exhibit
D
(“Distribution
Directions”);
E. The
execution by a licensed attending physician of a statement that the Insured
is
of sound mind and is under no constraint or undue influence to enter into the
Agreement, attached hereto as Exhibit
E;
F. The
execution by Seller of the Acknowledgement of Policy Values, attached hereto
as
Exhibit
F;
G. The
execution by Insured of the Limited Power of Attorney, attached hereto as
Exhibit G.
Insured
acknowledges that the Limited Power of Attorney may be used to track Insured’s
ongoing health status. Insured acknowledges that Insured has the right, at
any
time, to revoke the Limited Power of Attorney by providing written notice to
Purchaser;
H. The
execution by Seller of the Escrow Agreement, attached hereto as Exhibit
H;
I. The
execution by Seller of a form of Transfer of Ownership and Control or other
similar Insurer documents which transfer ownership of the Policy or absolutely
assigns all present and future rights in the Policy, substantially in the form
of Exhibit
I,
attached hereto;
J. The
execution by Seller of a Change in Beneficiary Form or other similar Insurer
document, substantially in the form of Exhibit
J,
attached hereto;
K. The
execution by Seller of a Collateral Assignment against the Policy, if necessary,
attached hereto as Exhibit K;
L. Execution
of any other document(s) required by the Insurer to effect transfer of ownership
or absolute assignment of the Policy to the Purchaser;
M. Execution
of any other document(s) that the Purchaser deems reasonably necessary in order
to facilitate the transfer of insurance benefits from the Seller to the
Purchaser in an expedient manner;
N. Purchaser’s
verification of all Policy and other information, including Insurer’s
verification of coverage; and
O. Execution
by Seller and Insured (if different) of Acknowledgement Form for Life
Settlements attached hereto as Exhibit L.
8. This
Agreement and its related Exhibits, together with the Life Settlement
Application and any attachments, constitutes the entire agreement between the
Parties, supersedes all prior agreements and understandings, and is irrevocably
binding upon the Seller, and its successors and assigns, and any beneficiaries,
both past and current, to the Policy, except as provided in Section 21 of this
Agreement.
9. Insured
hereby consents and agrees to the release of any and all medical records,
insurance information, or any additional medical or other information from
any
custodian thereof that may be requested from Insured or any third party by
Purchaser, now and in the future as the release of the same pertains to this
transaction. Insured acknowledges that Insured has the right to revoke
his/her/its consent to the release of such records at any time by providing
written notice of such revocation to Purchaser. Insured agrees to allow
Purchaser’s disclosure of such information to authorized third parties, on a
confidential basis, as required to effect the evaluation, transfer, sale, and/or
resale of the Policy.
10. Seller
hereby consents and agrees to execute or cause to be executed any and all future
documentation that is reasonably required concerning the Policy, or policy
information without right or ability to claim any further consideration.
11. Upon
receipt and
verification
of Confirmation, the Escrow Agent shall,
within
three
(3) business days,
wire
transfer to the Seller’s bank account or mail a certified or cashier’s check in
the full amount stated in Section 1 of this Agreement and in accordance with
the
Distribution Directions.
12. This
Agreement shall constitute a contract under the laws of the State of Texas,
and
for all purposes shall be governed by, construed under and enforced in
accordance with the laws of the State of Texas without regard to choice of
law
principles.
13. This
Agreement shall be binding upon and inure to the benefit of each of the Parties,
their respective successors and permitted assigns.
14. Any
term,
covenant or restriction of any provision of this Agreement that is held invalid,
void, unenforceable or against regulatory authority by a court of competent
jurisdiction or other authority shall not preclude the remaining terms,
covenants, restrictions or provisions from remaining in full force and effect,
and this Agreement shall in no way be affected, impaired or invalidated. The
invalid provision shall be construed as if it was not included in this
Agreement.
15. Each
Party acknowledges that, except as expressly set forth herein, no
representations of any kind or character have been made to it by any other
Party, or by any Parties’ agents, representatives, or attorneys, to induce the
execution of this Agreement.
16. Subject
to applicable law, this Agreement may not be modified, amended or supplemented
until approved by Seller and the officer of Purchaser and of Seller designated
in Section 25 of this Agreement and unless such approvals are endorsed on this
Agreement or attached to it. No person, other than the officer of Purchaser
and
of Seller designated in Section 25, has the authority to change this Agreement
or waive any of its provisions on behalf of Purchaser. Any amendment to this
Life Insurance Purchase Policy Agreement will be filed and approved prior to
any
use, issuance, or delivery, with the Texas Department of Insurance.
17. The
Parties hereby acknowledge and agree that each Party shall keep confidential
and
not disclose the existence or terms of this Agreement or negotiations, excluding
any such disclosures necessary to discharge legal duties, without the prior
written notice to the other parties. All medical or personal information about
the Insured and all financial information of the Seller (“Information”)
solicited or obtained by the Purchaser is confidential and disclosure of such
Information is subject to the restrictions listed herein.
18. The
failure of any Party at any time to insist on any one or more instances of
specific performance by another Party shall not be construed or affect the
right
of such Party, at a later time, to enforce any continuing performance,
subsequent failure to perform, or a delay in performing any terms
hereof.
19. Neither
this Agreement nor any of the rights, interests, or obligations hereunder shall
be assigned by the Seller, whether by operation of law or otherwise, without
the
prior written consent of the Purchaser. Purchaser agrees that it shall not
assign this Agreement, or any of its rights, interests, or obligations, prior
to
the effective date of Confirmation contemplated by this Agreement, and Seller
hereby acknowledges that thereafter Purchaser shall have all rights to assign
this Agreement without consent of Seller.
20. This
Agreement may be executed in multiple counterparts, including, without
limitation, facsimile counterparts, each of which shall be deemed an original,
and all of which shall together be considered one and the same Agreement,
effective on the date set forth above.
21. Seller
hereby acknowledges the following:
A. Seller
has received and read this entire Agreement including all Exhibits;
B. Seller
is
entering into this Agreement knowingly and voluntarily, and has a full and
complete understanding of this Agreement;
C. Seller
has entered into this Agreement of its own free will and deed, without duress
or
coercion;
D. Seller
has been given the opportunity and has been encouraged to seek the opinion
of an
attorney, financial advisor and/or tax consultant prior to entering into this
Agreement regarding, but not limited to, the scope of this Agreement, and
potential tax consequences;
E. Seller
is
aware that the payments received under Section 1 of this Agreement may be
subject to the claims of Seller’s creditors;
F. Seller
is
aware that as a result of the sale of Policy, there may be a potential loss
of
public assistance benefits;
G. Seller
is
aware that as a result of the sale of Policy, there may be a potential loss
of
coverage on other lives previously covered under a joint policy or family riders
contained within the Policy, if any, and that Seller has been advised to consult
with Insurer regarding the impacts of a life settlement on such
benefits;
H. Seller
is
aware that, except for any accidental death and/or dismemberment benefits,
which
are not subject to this Agreement, the amount of the current death benefit
as
of
________________ payable under the Policy to Purchaser upon completion of this
life settlement is ___________________and
there
are no additional guaranteed insurance benefits available under the
policy;
I. Seller
has the right to request, inspect and/or receive copies of relevant trust and
escrow agreements;
J. Seller
has the right to rescind this Agreement at any time, but not later than the
fifteenth (15th) calendar day after Seller’s receipt of the proceeds payable
hereunder by receipt of written notification prior to or on such 15th calendar
day by Purchaser at Purchaser’s address listed in this Agreement. Should the
Insured die at any time prior to the end of the rescission period, this
Agreement shall be deemed to have been rescinded and Purchaser shall refund
the
death benefit to the owner or beneficiaries designated in this Agreement for
this purpose. Any rescission is subject to repayment by the Seller to Purchaser
of all proceeds and monies previously paid to or on behalf of Seller, including
any premiums, loans and loan interest paid by the Purchaser; and
K. Any
person who knowingly presents false information in an application for insurance,
an application for a life settlement or in connection with a life settlement
purchase agreement may be guilty of a crime and may be subject to fines and
confinement in prison under the applicable federal and state laws.
22. Seller
acknowledges and agrees that all representations made by Seller in this
Agreement, including Exhibits, are true, correct, and accurate. Seller agrees
that if it fraudulently enters this transaction, then Seller agrees to indemnify
Purchaser for any and all costs, expenses, fees, interest and losses
(“Expenses”),
including, but not limited to, brokers’ and agents’ compensation, and escrow
agent, servicer and trustee fees, incurred by Purchaser. Seller further agrees
that in such event, Purchaser, at Purchaser’s sole discretion, may rescind this
contract. Upon such election of rescission by the Purchaser, Seller agrees
to
repay Purchaser (i) the Purchase Price, (ii) any premiums paid by Purchaser
with
respect to the Policy, and (iii) any Expenses. Upon receipt of such payment,
Purchaser shall promptly return the ownership of Policy and beneficiary
designation rights to Seller by executing all necessary forms.
23. At
Purchaser’s sole discretion, Purchaser may elect to retire any policy loan at
the time of distribution of the Purchase Price to Seller, in which case Seller
shall provide Purchaser with payment instructions therefor.
24. Should
Confirmation not occur for any reason within ninety (90) days of the date on
which the Purchase Price is deposited into the Escrow Account, or should a
rescission occur in accordance with Section 21 of this Agreement, this Agreement
will automatically terminate. Prior to that time, Seller or Purchaser may
terminate this Agreement at any time at their respective sole discretion upon
written notification to the other Party. Upon any termination of this Agreement,
funds deposited in the Escrow Account will be withdrawn by the Escrow Agent,
and
the Insurer’s Forms and any other executed Exhibits will be returned promptly to
Seller, provided that such documents will be returned to Seller only upon
payment by Seller to Purchaser of all premiums, if any, that Purchaser may
have
paid relative to the Policy.
25. Notices.
Any
notices or other communications required or permitted hereunder shall be
sufficiently given if sent by mail (postage prepaid), by hand delivery or by
telecopy (with a copy via mail or hand delivery), all as follows:
if
to
Purchaser, to:
______________________
and,
if
to Seller, to:
Frozen
Food Express Industries, Inc.
0000
Xxxxxx Xxxxxxx
Xxxxxx,
Xxxxx 00000
Attention:
________________________
Facsimile:
(____)
____-_____
or,
in
any case to such other address or facsimile number as shall be furnished in
writing by any such party to the other parties hereto. Such notices or other
communications so given shall be deemed to have been given on the date so
telecopied or hand delivered, as the case may be, or, in the case of a mailing,
on the third day after mailing.
26. Should
Seller retain an interest in the Policy, or if the Policy contains a provision,
whether in a rider or otherwise, providing for an additional death benefit
for
accidental death:
(a) Purchaser
will affect the transfer of the amount of the net death benefit only to the
extent or portion of the amount sold. Benefits in excess of the amount that
is
sold will be paid by the insurance company directly to the beneficiaries in
accordance with the terms of the Policy.
(b) The
additional death benefit for accidental death shall remain payable to the
beneficiary last named by Seller, not including Purchaser. In the absence of
a
beneficiary, the additional death benefit for accidental death shall be payable
to the estate of Seller or Insured, as applicable.
(c) Purchaser
will, upon acknowledgement of the perfection of the transfer,
either:
|
(i)
|
Advise
Seller, in writing, that Insurer has confirmed Seller’s remaining interest
in the Policy; or
|
|
(ii)
|
Send
Seller a copy of the document sent from Insurer that acknowledges
Seller’s
remaining interest in the Policy;
|
(d) Seller
shall pay all premiums for any remaining interests in the Policy, including
premiums for accidental death benefits.
