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EXHIBIT 10.33
COMMISSION TRANSFER AGREEMENT
RELATING TO THE TRANSFER BY
X.X. XXXXXXX AND THE XXXXXXX ORGANIZATION, INC.
OF THE RIGHTS TO CERTAIN COMMISSIONS
TO XXXXX/XXXXXX, INC.
Dated: December __, 1998
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COMMISSION TRANSFER AGREEMENT
COMMISSION TRANSFER AGREEMENT made as of December __, 1998 by and
between X.X. XXXXXXX ("Principal"), THE XXXXXXX ORGANIZATION, INC., an Illinois
corporation and wholly owned by Principal ("TWO"), and XXXXX/XXXXXX, INC., a
Delaware corporation ("CBI").
W I T N E S S E T H:
WHEREAS, Principal is a shareholder in CBI and a successful insurance
producer who markets executive benefit and insurance plans to corporations and
not-for-profit organizations;
WHEREAS, Principal and CBI have entered into that certain Principal
Office Agreement on or about September 30, 1993 (the "Principal Office
Agreement") pursuant to which Principal has agreed to solicit, sell and
implement life insurance or consulting services and CBI has agreed to furnish
Principal marketing-materials, plan design ideas, selected life insurance
products and other services to assist Principal in the sales process;
WHEREAS, the Principal Office Agreement provides a procedure pursuant
to which each of CBI and Principal receive commissions and fees for services
performed thereunder;
WHEREAS, the Principal has assigned certain of these commissions to
TWO; and
WHEREAS, the Principal, TWO and CBI have agreed to reallocate how the
commissions and fees are paid to the Principal, TWO and CBI under the Principal
Office Agreement in exchange for the payment of $7,400,000 by CBI to TWO.
NOW, THEREFORE, in consideration of the premises, conditions and the
mutual covenants and agreements hereinafter set forth, the parties hereto agree
as follows:
1. Commissions to be Transferred. Subject to the terms and
conditions of this Agreement, Principal, TWO and CBI agree to modify the
Principal Office Agreement such that the commissions and fees related to
certain Covered Business (as such term is described in the Principal Office
Agreement) shall be modified as follows (the "Transferred Business"):
(a) Commissions and fees net of any CBI Administrative
Costs (as defined and determined pursuant to the Principal Office
Agreement) which results from the Transferred Business existing as of
December __, 1998 pursuant to the Principal Office Agreement and
listed on Exhibit A hereto (the "Transferred Commissions") shall be
divided between Principal and CBI such that 50% of the Transferred
Commissions is payable to CBI and 50% of the Transferred Commissions
is payable to the Principal, subject to the adjustments described
below.
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(b) Upon receipt of the Transferred Commissions by CBI,
CBI shall pay the Principal 50% of such Transferred Commissions which
shall be distributed on a monthly basis in accordance with the terms
of the Principal Office Agreement. CBI shall keep 31% of such
Transferred Commissions for its own account and CBI shall set up a
reserve on the CBI Balance Sheet equal to 19% of such Transferred
Commissions to be distributed in accordance herewith (the "Commission
Account").
(c) Within fifteen (15) days following the end of each
month, CBI shall conduct an accounting to determine the balance of the
Commission Account. If the balance of the Commission Account is
greater than the amounts provided for on Exhibit B (the "Target
Amount") with respect to the applicable month, CBI will distribute 50%
of such excess to the Principal within thirty (30) days following the
end of such month. If the balance of the Commission Account is less
than the Target Amount (the difference referred to as the "Shortfall
Amount"), CBI shall transfer all such amounts in the Commission
Account to its own account within thirty (30) days following the end
of such month (the "Transfer Date") and be entitled to keep all such
amounts. In addition, CBI shall be entitled to receive all
Transferred Commissions from the Transfer Date through the date on
which CBI has received Transferred Commissions, otherwise payable to
Principal, equal to the Shortfall Amount ("Shortfall Commissions").
The Shortfall Commissions shall be in addition to any other
Transferred Commissions which CBI shall otherwise be entitled to
receive. If the balance of the Commission Account is equal to the
Target Amount, no adjustment will be made.
(d) Principal or TWO, as appropriate, and CBI agree to
advise the various insurance companies related to the Transferred
Business described on Exhibit A hereto to pay CBI directly all
Transferred Commissions. CBI shall be the receiving party with
respect to all such commissions and fees and will be responsible for
paying Principal its share of such commissions and fees in accordance
herewith.
(e) All commissions and fees not related to Transferred
Business shall be allocated among the parties pursuant to the
Principal Office Agreement. All other terms and provisions of the
Principal Office Agreement, other than the terms and provisions
amended pursuant hereto, shall apply to the Transferred Commissions
and the Transferred Business.
2. Purchase Price. The purchase price to be paid for the
transfer of the Transferred Commissions hereunder shall be $7,400,000 (the
"Purchase Price"). The Purchase Price shall be paid to TWO at the Closing by
certified or cashier's check or wire transfer of funds.
3. Closing. The closing of the transfer of the Transferred
Commissions pursuant to this Agreement (the "Closing") shall take place on
December __, 1998 at such time and place as shall be mutually agreed upon by
the parties (the "Closing Date").
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4. Representations and Warranties of Principal. As of the date
hereof, and as of the Closing, Principal represents and warrants to CBI and TWO
as follows:
4.1 Capacity and Authority of Principal. Principal has
the power and authority to enter into and perform this Agreement and
the other documents and transactions contemplated hereby. This
Agreement and the other documents executed and delivered by Principal
pursuant hereto constitute the legal, valid and binding obligations of
Principal, enforceable in accordance with their respective terms.
4.2 No Conflict. Neither the execution, delivery or
performance of this Agreement and all other documents in connection
herewith nor the consummation of the transactions contemplated hereby
and thereby will violate or conflict with or constitute a breach of or
default under any contract, instrument, agreement, indenture, license,
law, order, regulation or judgment to which Principal is a party or by
which Principal or the Transferred Commissions may be bound or
affected. No authorization, consent or approval or any order of any
governmental or public authority or agency is required for the
execution, delivery or performance of this Agreement or the
consummation of the transactions contemplated hereby.
5. Representations and Warranties of TWO. As of the date hereof
and as of the Closing, TWO represents and warrants to Principal and CBI as
follows:
5.1 Organization, Standing and Authority of TWO. TWO is
a corporation duly organized, validly existing and in good standing
under the laws of Illinois, with the corporate power to execute and
deliver this Agreement and to carry out its obligations hereunder.
The execution, delivery and performance of this Agreement and all
other documents in connection herewith and the consummation of the
transactions contemplated hereby have been duly and validly authorized
by TWO's Board of Directors, and no other corporate proceedings on the
part of TWO are necessary to authorize this Agreement and the
transactions contemplated hereby. All requisite corporate action has
been taken to make them valid and binding upon TWO in accordance with
their respective terms. This Agreement and the other documents
executed and delivered by TWO pursuant hereto constitute legal, valid
and binding obligations of TWO, enforceable in accordance with their
respective terms.
5.2 No Conflict. Neither the execution, delivery or
performance of this Agreement and all other documents in connection
herewith nor the consummation of the transactions contemplated hereby
and thereby will violate or conflict with or constitute a breach of or
default under any contract, instrument, articles of incorporation,
by-law, agreement, indenture, license, law, order, regulation or
judgment to which TWO is a party or by which TWO or the Transferred
Commissions may be bound or affected. No authorization, consent or
approval or any order of any governmental or public authority or
agency is required for the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby.
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6. Representations and Warranties of CBI. As of the date hereof
and as of the Closing, CBI represents and warrants to Principal and TWO as
follows:
6.1 Organization, Standing and Authority of CBI. CBI is
a corporation duly organized, validly existing and in good standing
under the laws of Delaware, with the corporate power to execute and
deliver this Agreement and to carry out its obligations hereunder.
The execution, delivery and performance of this Agreement and all
other documents in connection herewith and the consummation of the
transactions contemplated hereby have been duly and validly authorized
by CBI's Board of Directors, and no other corporate proceedings on the
part of CBI are necessary to authorize this Agreement and the
transactions contemplated hereby. All requisite corporate action has
been taken to make them valid and binding upon CBI in accordance with
their respective terms. This Agreement and the other documents
executed and delivered by CBI pursuant hereto constitute legal, valid
and binding obligations of CBI, enforceable in accordance with their
respective terms.
6.2 No Conflict. Neither the execution, delivery or
performance of this Agreement and all other documents in connection
herewith nor the consummation of the transactions contemplated hereby
and thereby will violate or conflict with or constitute a breach of or
default under any contract, instrument, articles of incorporation,
by-law, agreement, indenture, license, law, order, regulation or
judgment to which CBI is a party or by which CBI or the Transferred
Commissions may be bound or affected. No authorization, consent or
approval or any order of any governmental or public authority or
agency is required for the execution, delivery or performance of this
Agreement or the consummation of the transactions contemplated hereby.
7. Survival of Representations and Warranties; Indemnities.
7.1 Survival. All representations, warranties and
covenants made by a party herein or hereunder shall be deemed to be
relied upon by the other party regardless of any investigation made by
or on behalf of such party, and all statements made in any
certificate, list, schedule, exhibit or other document delivered
pursuant hereto prior to or at the Closing shall be deemed warranties
and representations made under this Agreement.
7.2 Term of Transferred Commissions. The term of this
Agreement shall expire on December ___, 2008 ( the "Termination
Date"). Upon the Termination Date, the allocation of commissions and
fees with respect to the Transferred Commissions shall revert to the
allocations provided for in the Principal Office Agreement and the
terms of this Agreement related to such allocations shall no longer be
applicable.
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8. Conditions to Obligations of CBI. CBI's obligation to
consummate the transactions contemplated by this Agreement is subject to the
following conditions for the exclusive benefit of CBI, to be fulfilled and/or
performed on or prior to the Closing:
8.1 Accuracy of Representations and Warranties. The
representations and warranties made by Principal and TWO in this
Agreement shall be true and correct in all respects on and as of the
Closing.
8.2 Completion of a IPO. CBI shall have successfully
completed its initial public offering.
9. Conditions to Obligations of Principal and TWO. The
obligations of Principal and TWO to consummate the transactions contemplated by
this Agreement are subject to the following conditions for the exclusive
benefit of Principal and TWO, to be fulfilled and/or performed on or prior to
the Closing:
9.1 Accuracy of Representations and Warranties. The
representations and warranties made by CBI in this Agreement shall be
true and correct in all respects on and as of the Closing.
10. Miscellaneous.
10.1 Notice. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly
given if delivered in person or by courier or if sent by certified or
registered mail, postage prepaid, to the following:
If to Principal or TWO:
Xx. X.X. Xxxxxxx
c/o The Xxxxxxx Organization
000 Xxxxx Xxxxxxxx Xxxx Xxxxx
Xxxxx Xxxxxxxxxx, Xxxxxxxx 00000
If to CBI:
Xxx X. Xxxx
Xxxxx/Xxxxxx, Inc.
0000 Xxx Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
or to such other address as any party may designate by written notice in the
aforesaid manner.
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10.2 Assignability. This Agreement shall not be
assignable by any of the parties hereto, without the other parties'
written consent. This Agreement shall inure to the benefit of and be
binding upon the respective successors and any permitted assigns of
CBI, Principal and TWO.
10.3 Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of Texas.
10.4 Entire Agreement. This Agreement, the Exhibits
hereto, and other documents delivered or to be delivered pursuant to
this Agreement contain or will contain the entire agreement among the
parties hereto with respect to the transactions contemplated herein.
10.5 Waiver. Any failure of Principal and TWO or CBI to
comply with any obligation, covenant, agreement or condition herein
may be waived in writing by CBI (with respect to TWO and Principal)
and Principal (with respect to CBI), but such waiver or failure to
insist upon strict compliance with such obligation, covenant,
agreement or condition shall not operate as a waiver of, or estoppel
with respect to, any subsequent or other failure.
10.6 Amendment. This Agreement may be amended, modified,
or supplemented only by written agreement of the parties hereto.
10.7 Headings. The section and other headings contained
in this Agreement are for reference purposes only and shall not affect
the interpretation or meaning of this Agreement.
10.8 Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same Agreement.
10.9 Further Assurances. The parties will, from time to
time following the Closing, upon the reasonable request of the other
party, execute, acknowledge and deliver in proper form such further
instruments and perform such further acts as may be reasonably
necessary or desirable to give effect to the transactions contemplated
by this Agreement or any Exhibit hereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
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X.X. Xxxxxxx
THE XXXXXXX ORGANIZATION, INC.
By:
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Its: President
XXXXX/XXXXXX, INC.
By:
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Its: President
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EXHIBIT A
TRANSFERRED BUSINESS
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EXHIBIT B
TARGET AMOUNTS
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