EXHIBIT 10.6
TERMINATION AND ASSIGNMENT AGREEMENT
This Termination and Assignment Agreement (this "Agreement") is executed
this 19th day of October, 1995, effective August 15, 1995, by and between Xxxxx
Xxxxxxxx & Co., a California corporation ("JMC"), Xxxxxxx Xxxxx, Inc., a Florida
corporation ("Xxxxxxx"), and Xxxxxxx Xxxxx Trust Company, N.A., as Trustee
("Trustee") under that certain Trust Agreement ("Trust Agreement"), dated as of
August 1, 1990, as amended, by and between Trustee and JMC as Trustor of the
Trust thereby established.
R E C I T A L S
On August 1, 1990, JMC, Xxxxxxx and the Trustee entered into that certain
Services Agreement (as amended and restated effective December 9, 1994, the
"Services Agreement"), pursuant to which JMC and its Subsidiaries agreed to
provide certain services to the Trust, Trustee and Xxxxxxx.
As a result of recent interpretations of federal law and proposed changes
in state regulations governing the sale of annuities by financial institutions,
Xxxxxxx and JMC have agreed to terminate the Services Agreement in accordance
with Section 12.1(b) of such agreement, subject to the terms and conditions set
forth below. Xxxxxxx and JMC previously have manifested their intent to
terminate the Services Agreement by execution and delivery of that certain
letter of understanding dated August 15, 1995 (the "Letter of Understanding").
In connection with the termination of the Services Agreement, Xxxxxxx has agreed
to purchase and JMC has agreed to sell, transfer and assign all of its right,
title and interest to all asset and renewal fees earned after August 31, 1995 in
connection with annuity contracts sold to Xxxxxxx customers by JMC through the
Tax Advantage Program since the date of its inception (the "Asset Fee Income").
JMC, Xxxxxxx and Trustee have entered into that certain Interim Services
Agreement, dated the date hereof, pursuant to which JMC and its Subsidiaries
will provide certain administrative support services to Xxxxxxx'x new annuity
sales program (the "Interim Services Agreement") for a period commencing August
15, 1995, and ending October 27, 1995.
Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to those terms in the Services Agreement or the Interim
Services Agreement, as the case may be.
NOW THEREFORE, in consideration of the premises and mutual covenants and
undertakings hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
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ARTICLE I.
TERMINATION AND ASSIGNMENT
Section 1.1 Termination of Services Agreement. Pursuant to the terms
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of the Letter of Understanding, the parties hereby acknowledge that the Services
Agreement was terminated effective August 15, 1995 pursuant to Section 12.1(b)
thereof. All rights and obligations of the parties to the Services Agreement
with respect to the subject matter thereof arising after August 15, 1995 shall
be governed by the terms of this Agreement and the Interim Services Agreement.
Section 1.2 Assignments.
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(a) JMC agrees, and agrees to cause its wholly-owned subsidiaries, JMC
Financial Services Corporation and JMC Insurance Services Corporation, to (i)
sell, assign, transfer and convey to Xxxxxxx, or its designee, all of JMC's
right, title and interest in and to the Asset Fee Income earned by JMC or its
Subsidiaries after August 31, 1995 from Keyport Life Insurance Company, The Life
of Insurance Company of Virginia, Transamerica Life Insurance and Annuity
Company and Western-Southern Life Insurance Company (collectively, the "Provider
Companies") as a result of sales of annuity contracts sold to Xxxxxxx customers
by JMC through the Tax Advantage Program from November 5, 1990 to and including
the last day of the Transition Period (the "JMC Assignment"), subject only to
JMC's obtaining the prior written consent of the Provider Companies to the JMC
Assignment, and (ii) to execute any and all documents reasonably required in
connection with the JMC Assignment.
(b) Xxxxxxx and Trustee agree to sell, assign, transfer and convey to
JMC, or its designee, all of Xxxxxxx'x right, title and interest in and to the
Asset Fee Income earned by Xxxxxxx pursuant to the terms of the Services
Agreement and the Trust Agreement after August 31, 1995 as a result of sales of
First Penn-Pacific Life Insurance Company single premium life insurance
contracts sold to Xxxxxxx customers through the Tax Advantage Program from
November 5, 1990 to and including the last day of the Transition Period (the
"Xxxxxxx Assignment").
Section 1.3 Consideration. In consideration of the termination of
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the Services Agreement, the JMC Assignment and the Xxxxxxx Assignment the
parties agree to make the following payments:
(a) Xxxxxxx will pay JMC:
(i) in consideration of the JMC Assignment, the sum of
$4,045,000 (the "Asset Fee Income Purchase Price"), payable
subject to and promptly upon receipt of written consent to
the JMC Assignment from each affected Provider Company. In
the event that JMC does not deliver all of the required
consents to the JMC Assignment from the Provider Companies
at the same time, Xxxxxxx agrees to
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pay JMC the portion or portions of the Asset Fee Income
Purchase Price set forth opposite the name of each Provider
Company on Schedule 1.3(a)(i) hereto promptly upon receipt
of the written consent to the JMC Assignment from such
Provider Company.
(ii) in consideration of the termination of the Services
Agreement, the Transition Fee in the amount of $300,000,
payable in accordance with the terms of the Interim Services
Agreement.
(b) JMC will pay Xxxxxxx:
(i) in consideration of the Xxxxxxx Assignment, the sum of
$25,410, payable October 31, 1995; and
(ii) in full satisfaction of JMC's outstanding obligation to
indemnify Xxxxxxx under the Services Agreement for all legal
fees associated with JMC's administrative proceedings before
the Florida Department of Insurance and any related matters,
the sum of $75,000, payable August 15, 1995.
(c) On or prior to October 31, 1995, JMC shall provide Xxxxxxx with a
reconciliation of:
(i) any Asset Fee Income earned by JMC after August 31, 1995 and
received by JMC from the Provider Companies prior to the
effective date of any Provider Company's written consent to
the JMC Assignment;
(ii) any Chargebacks processed by the Provider Companies on or
after August 15, 1995 and prior to the effective date of any
Provider Company's written consent to the JMC Assignment
which Chargebacks were deducted from amounts payable to JMC
during this period; and
(iii) any additional Set-up Fees payable by JMC to Trustee
pursuant to Section 2.1 of this Agreement for the month of
August.
It is understood and agreed that upon obtaining the written consent of each
Provider Company and payment of the portion of the Asset Fee Income Purchase
Price identified on Schedule 1.3(a)(i) hereto, JMC will promptly pay Xxxxxxx the
amounts set forth in subsection 1.3(c)(i) above and Xxxxxxx will promptly
reimburse JMC for the amounts set forth in subsection 1.3(c)(ii) above. JMC and
Xxxxxxx may agree to setoff the amounts owing from one to the other, such that
only one party is obligated to make any transfer of funds. In addition, JMC
will pay Xxxxxxx any additional Set-up Fees no later than October 31, 1995.
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(d) JMC hereby acknowledges receipt of payment of the sums required
under Section 1.3(a)(ii) of this Agreement. Xxxxxxx hereby acknowledges receipt
of payment of the sums payable under Section 1.3(b)(ii) of this Agreement.
Section 1.4 Florida-based Sales Personnel. The separate December 9, 1994
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agreement between JMC and Xxxxxxx relating to Xxxxxxx'x right to hire certain of
JMC's Florida-based sales personnel shall remain in full force and effect and
Xxxxxxx shall continue to make all payments due JMC thereunder including
payments for systems support services.
ARTICLE II.
SALES AND SERVICING
Section 2.1 Future Sales. JMC hereby acknowledges that, effective
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August 15, 1995, Xxxxxxx is free of any restrictions imposed by the Services
Agreement with respect to offering annuity products directly to its customers.
To the extent Xxxxxxx enters into contracts with Provider Companies, Xxxxxxx
shall be entitled to continue to offer to its customers annuity products
previously designed and offered by JMC ("JMC Products). Xxxxxxx shall be
entitled to receive all compensation related to any future sales of annuity
products, including premiums for additions to existing annuity policies in the
event Xxxxxxx has entered into contracts for the sale of JMC Products with the
Provider Companies. If Xxxxxxx has not entered into or does not enter into such
contracts, JMC shall continue to permit Tax Advantage Customers to add
additional premiums to JMC Products during the Transition Period and will
process such transactions as provided in the Interim Services Agreement. During
the Transition Period, JMC will continue to pay Trustee a Set-up Fee of 7.00% on
all additions to the Trust Assets in accordance with the terms of the Services
Agreement and the Trust Agreement. To the extent Xxxxxxx has not entered into
contracts with any Provider Company prior to termination of the Transition
Period, Tax Advantage Customers will need to contact any such Provider Company
directly if they wish to make additional premium payments and neither JMC nor
Xxxxxxx will receive any compensation in connection with such additions.
Section 2.2 Chargebacks. In the event any Tax Advantage Customers
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surrenders a JMC Product during the chargeback period, the Provider Company will
chargeback some or all of the front sales commission paid at the time the
products was sold ("Chargeback"). JMC and Xxxxxxx agree Xxxxxxx is financially
responsible for all Chargebacks processed by the Provider Companies on and after
August 15, 1995. Such Chargebacks shall be deducted from the Asset Fee Income
otherwise payable by the Provider Companies to Xxxxxxx or paid to JMC by Xxxxxxx
as provided in Section 1.3(c) hereof.
Section 2.3 Sales Management and Compliance. On and after August 15,
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1995, Xxxxxxx shall have complete and sole responsibility (including financial
responsibility) for all sales, sales management and compliance aspects of its
annuities program including, without limitation, the following:
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(a) Supervision, management and compensation of the annuity sales
force;
(b) All appointment setting, tracking and reporting;
(c) All sales support, including product training, promotions,
marketing materials and sales personnel inquiries;
(d) All compliance responsibilities, including suitability reviews and
sales supervision; and
(e) All commission accounting with the exception of asset fee
accounting on the existing block prior to the JMC Assignment of the Asset Fee
Income to Xxxxxxx.
Section 2.4 Customer Complaints.
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(a) On and after August 15, 1995, Xxxxxxx shall have complete and sole
responsibility for the resolution of all complaints (whether written or oral)
received by JMC, any of its Subsidiaries or affiliates, or by any officer,
director, agent or employee of any of them or by Xxxxxxx, any of its
subsidiaries or affiliates, or by any officer, director, agent or employee or
any of them, from any person (including state and government agencies,
departments, divisions or offices or any self-regulatory organization
("Regulators")) with respect to the sales of JMC Products or the provision of
any of the services described in the Services Agreement ("Customer Complaints")
which arise on and after August 15, 1995, including Customer Complaints which
arise out of sales made or services provided by JMC, any of its Subsidiaries or
affiliates or any officer, director, agent or employee of any of them prior to
August 15, 1995. Such responsibility shall include, without limitation, the
research and investigation necessary to determine the validity of any Customer
Complaint, any and all communication with the complaining person, any former JMC
officer, director, employee or agent, or any Provider Company concerning the
Customer Complaint and the payment of all sums and other compensation which
Xxxxxxx shall determine in its sole judgment is merited under the circumstances.
In the event JMC receives any Customer Complaints on and after August 15, 1995,
it will forward them promptly to Xxxxxxx.
(b) JMC shall have complete and sole responsibility for the resolution
of all Customer Complaints which are listed on Schedule 3.4 attached hereto.
JMC shall make such payments and other compensation to the complaining persons
as JMC shall determine in its sole judgment is merited under the circumstances.
JMC will notify Xxxxxxx of the manner in which each of the Customer Complaints
listed on Schedule 3.4 attached hereto is resolved.
(c) Notwithstanding the foregoing, in the event that any Regulator
with jurisdiction over JMC, any of its affiliates or Subsidiaries, or any
officer, director, agent or employee of any of them, shall initiate a Customer
Complaint or become involved in any manner in any Customer Complaint, JMC shall
be responsible for the research and investigation necessary to determine the
validity of such Customer Complaint and any communication with the complaining
person, any current or former JMC officer, director, employee or agent, any
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Provider Company or such Regulator and Xxxxxxx, its subsidiaries and affiliates,
and any officer, director, agent or employee of any of them, shall cooperate
with JMC in connection therewith. In the event such Customer Complaint is
initiated by the Regulator, JMC shall be responsible for the payment of all sums
and other compensation to the complaining person. In the event the complaining
person contacts JMC or Xxxxxxx directly prior to the involving the Regulator,
subject to Section 2.4(f) hereof, Xxxxxxx shall be responsible for the payment
of all sums and other compensation to the complaining person.
(d) JMC, its affiliates and Subsidiaries will cooperate, and will use
their best efforts to cause any current officer, director, employee or agent of
any of them, to cooperate with Xxxxxxx in connection with the research and
investigation of any Customer Complaint.
(e) Xxxxxxx agrees that in connection with the resolution of any
Customer Complaint that it will obtain a written release satisfactory in form
and substance to JMC from the complaining person or persons releasing JMC, its
affiliates and Subsidiaries, and any officer, director, employee or agent of any
of them, from any future liability to such persons(s) prior to paying any
compensation to such complaining person or persons. In addition, in connection
with the negotiation and resolution of any Customer Complaint, Xxxxxxx agrees
that no licensed representative of Xxxxxxx Securities, Inc. or Xxxxxxx Annuities
Corporation will admit or imply orally or in writing that JMC, any of its
affiliates or Subsidiaries, or any officer, director, employee or agent or any
of them, engaged in any wrongful act or omission or is in any way responsible or
liable for any Customer Complaint nor will Xxxxxxx or any officer or employee of
Xxxxxxx issue any press release or make any statement to the press or general
public that would in any way damage or disparage the reputation of JMC, its
affiliates or Subsidiaries.
(f) Subject to Section 2.4(g) hereof, to the extent Xxxxxxx makes any
payment to a complaining person or persons arising out of Customer Complaints
for which Xxxxxxx is responsible pursuant to Section 2.4(a) hereof, JMC will
reimburse Xxxxxxx an amount equal to the Settlement Amount (as hereinafter
defined) if:
(i) JMC or its employees or agents affirmatively misrepresented
any material term of the annuity contract at the time it was
sold;
(ii) JMC or its employees or agents failed to make any required
disclosure to the complaining person. For purposes of this
Section 2.4(f)(ii), JMC shall not be deemed to have failed
to make any required disclosure if, to the extent
applicable, each of the following disclosures were made:
(1) that the annuity was not insured by the FDIC;
(2) that the annuity was not a bank deposit;
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(3) if the annuity was a variable annuity, that its market
value would fluctuate;
(4) if the annuity was an immediate annuity, that the
customers funds were irrevocably committed for a
specified period of time;
(5) that withdrawal penalties and income taxes may be
payable on distributions or terminations and the amount
and duration of any withdrawal penalties;
(6) that a withdrawal prior to age 59 1/2 may result in a
10% IRS tax penalty; and
(7) if the participant is not the annuitant or there is
more than one participant, that the convalescent care
waiver, if any, may not apply;
(iii) JMC or its employees or agents failed to provide the
complaining person with a product brochure, and if the
annuity is a variable annuity, a prospectus;
(iv) Any fixed annuity sold after February 15, 1994 or any
variable annuity sold at any time by JMC or its employees or
agents was not a suitable investment for the complaining
persons(s); or
(v) the Customer Complaint arises out of an error or omission in
connection with the sale or servicing of an annuity contract
other than those listed in subsections 2.4(f)(i) through
2.4(f)(iv).
(g) For purposes of determining whether any of the circumstances set
forth in Section 2.4(f) occurred, the following shall apply:
(i) All such determinations shall be based solely on the written
materials contained in JMC's customer files which materials
were created contemporaneously with the annuity sale or
service transaction being questioned and shall be made
without regard to any written or oral allegations or
statements made by the complaining person(s) or any oral or
non-contemporaneous written statements of the agent who
handled the annuity transaction at issue or of any other
person (including officers, employees or agents of Xxxxxxx
or any of its subsidiaries or affiliates);
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(ii) It shall be conclusive evidence that all of the required
disclosures set forth in Section 2.4(f)(ii) were made, if
the confidential profile and customer disclosure form, if
any, indicates by signature of the complaining person(s),
that such disclosures were made:
(iii) It shall be conclusive evidence that the complaining
person(s) received a product brochure and prospectus, if
necessary, if the confidential customer profile and customer
disclosure form, if any, indicates, by signature of the
complaining persons(s), that these documents were delivered;
(iv) All suitability judgments required by Section 2.4(f)(iv)
shall be based solely on the information contained on the
confidential customer profile. In addition, it shall be
conclusive evidence that any annuity was suitable if
applying the financial and other information set forth on
the confidential customer profile, the investment is found
to be suitable under the standards set forth on Schedule 2.4
hereto;
(v) Xxxxxxx shall undertake a complete investigation of all
Customer Complaints as provided in Section 2.4(a) hereof and
shall provide JMC with a copy of its complete file on any
Customer Complaint for which it seeks reimbursement from JMC
pursuant to Section 2.4(g) hereof. Such file shall include
at a minimum all written communications from the complaining
persons(s) or any written summaries of the complaining
persons(s) complaints and allegations prepared by Xxxxxxx or
its employees or agents, any written documentation provided
by the licensed representative who sold the annuity at
issue, the confidential customer profile and the customer
disclosure form, if any.
(vi) All requests for reimbursement by JMC pursuant to Section
2.4(f) shall be submitted, together with the complete
Customer Complaint file as provided in Section 2.4(g)(v), to
JMC within 30 days of the resolution by Xxxxxxx of any
Customer Complaint.
(h) For purposes of this Section 2.4, the term Settlement Amount shall
be the amount determined by subtracting the amount the complaining person(s)
actually receives from the issuer of the annuity upon full surrender of same
from the Investment Value (as hereinafter defined); provided, however, that the
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Settlement Amount cannot be a negative number. The Investment Value shall be an
amount equal to the product of the sum of money originally invested by the
complaining person(s) multiplied by the applicable rate available at Xxxxxxx on
a one-year certificate of deposit at the time the investment was made.
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ARTICLE III.
JMC REPRESENTATIONS AND WARRANTIES
Section 3.1 Corporate Authority. JMC is a California corporation,
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duly organized, validly existing and in good standing under the laws of the
State of California and has all requisite corporate power and authority to enter
into this Agreement and the Interim Services Agreement, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby.
Section 3.2 Enforceability of Agreement. The execution, delivery
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and performance of this Agreement and the Interim Services Agreement by JMC and
the consummation by JMC of the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action. This Agreement and the
Interim Services Agreement constitute legal, valid and binding obligations of
JMC enforceable against it in accordance with their respective terms, except as
such enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors rights generally and except as the enforcement of certain provisions
thereof may be limited by the application of general equitable principals of law
in certain circumstances (whether such provisions are considered in a proceeding
at law or in equity).
Section 3.3 Effect of Agreement. The execution and delivery of this
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Agreement and the Interim Services Agreement, the consummation of all other
transactions contemplated hereby and thereby and the fulfillment of the terms
hereof and thereof as well as the terms of all other documents executed in
connection herewith by JMC shall not (a) result in a breach of any of the terms
or provisions of, or constitute a default under, or conflict with: (i) except as
provided on Schedule 3.3 attached hereto, any agreement, indenture or other
instrument to which JMC is a party or by which it is bound; (ii) the Articles of
Incorporation or Bylaws of JMC; (iii) any judgment, decree, order or award of
any court, governmental body or arbitrator by which JMC is bound; or (iv) any
law, rule or regulation applicable to JMC or (b) except as provided on Schedule
3.3 attached hereto, require the consent, waiver, approval, license or
authorization of, or the filing with, any federal, state or local government,
governmental department or agency, with the exception of any required filing
with the Securities and Exchange Commission.
Section 3.4 Disclosure of Customer Complaints. Schedule 3.4
---------------------------------
attached hereto contains a complete and accurate list of all pending or
threatened Customer Complaints received by JMC, or any of its subsidiaries or
affiliates or by any officer, director, agent or employee of any of them prior
to August 15, 1995, from any person and JMC does not know or have reason to know
of the existence of any additional or threatened Customer Complaints other than
as listed in Schedule 3.4. JMC has furnished Xxxxxxx copies of all
correspondence and other documents in its possession related to any pending or
threatened Customer Complaints. All Customer Complaints received by JMC, or any
of its Subsidiaries or affiliates or by any officer, director, agent or employee
of any of them, on or after August 15, 1995 have been delivered to Xxxxxxx to be
handled as provided in Section 2.4 hereof.
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Section 3.5 JMC Annuity Provider Companies. JMC has contacted all
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of the Provider Companies to request their consent to the JMC Assignment. JMC
has also encouraged the Provider Companies to enter into agreements with Xxxxxxx
which would enable Xxxxxxx to continue to sell JMC Products through its annuity
sales program.
ARTICLE IV.
XXXXXXX REPRESENTATIONS AND WARRANTIES
Section 4.1 Corporate Authority. Xxxxxxx is a Florida corporation,
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duly organized, validly existing and in good standing under the laws of the
State of Florida and has all requisite corporate power and authority to enter
into this Agreement and the Interim Services Agreement, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. Trustee is a national banking association,
duly organized, validly existing and in good standing under the laws of the
State of Florida, is the sole trustee under the Trust Agreement and has all
requisite power and authority to enter into this Agreement and the Interim
Services Agreement, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby.
Section 4.2 Enforceability of Agreement. The execution, delivery
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and performance of this Agreement and the Interim Services Agreement by Xxxxxxx
and Trustee and the consummation by Xxxxxxx and Trustee of the transactions
contemplated hereby and thereby have been duly authorized by all necessary
corporate action. This Agreement and the Interim Services Agreement constitute
legal, valid and binding obligations of Xxxxxxx and Trustee enforceable against
them in accordance with their respective terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors rights generally
and except as the enforcement of certain provisions thereof may be limited by
the application of general equitable principals of law in certain circumstances
(whether such provisions are considered in a proceeding at law or in equity).
Section 4.3 Effect of Agreement. The execution and delivery of this
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Agreement and the Interim Services Agreement, the consummation of all other
transactions contemplated hereby and thereby and the fulfillment of the terms
hereof and thereof as well as the terms of all other documents executed in
connection herewith by Xxxxxxx and Trustee shall not (a) result in a breach of
any of the terms or provisions of, or constitute a default under, or conflict
with: (i) any agreement, indenture or other instrument to which either Xxxxxxx
or the Trustee is a party or by which they are bound; (ii) the Articles of
Incorporation or Bylaws of Xxxxxxx or Trustee; (iii) the Trust Agreement; (iv)
any judgment, decree, order or award of any court, governmental body or
arbitrator by which either Xxxxxxx or the Trustee are bound; or (v) any law,
rule or regulation applicable to Xxxxxxx or Trustee, or (b) require the consent,
waiver, approval, license or authorization of, or the filing with, any federal,
state or local government, governmental department or agency, the receipt of
which either Xxxxxxx or Trustee, as the case may be, have not obtained.
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ARTICLE V.
COOPERATION
The parties hereto shall execute and deliver any such additional
documents, and shall take such additional actions as are reasonably requested by
the other party hereto, for the purpose of accomplishing the transactions
contemplated hereby or carrying out the provisions hereof. In addition, Xxxxxxx
will, to the full extent necessary, assist and cooperate with JMC in
negotiations to obtain the consent of the Provider Companies to the JMC
Assignment.
ARTICLE VI.
MUTUAL RELEASE AND INDEMNIFICATION
Section 6.1 Release of Claims by Xxxxxxx and Trustee. Xxxxxxx and
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Trustee for themselves, their successors and assigns, do hereby release, remise,
acquit, exonerate, satisfy and forever discharge JMC, its Subsidiaries and
affiliates and their successors and assigns, and all of their respective
partners, shareholders, directors, officers, employees and agents,
(collectively, the "JMC Parties") from and with respect to any and all actions,
causes, causes of action, suits, disputes, controversies, claims, debts, sums of
money, offset rights, defenses, agreements, promises, covenants, losses,
damages, liabilities, judgments and demands of any and every kind and nature
whatsoever, known or unknown, whether in contract, in tort, or otherwise, at law
or in equity, which have accrued or may accrue, may have been had, may now be
possessed or may or shall be possessed in the future by Xxxxxxx or Trustee, or
any of their subsidiaries, affiliates, successors and assigns or their
respective partners, shareholders, directors, officers, employees and agents
(collectively, the "Xxxxxxx Parties") against the JMC Parties arising out of the
Services Agreement.
Section 6.2 Release of Claims by JMC. JMC, for itself, its
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successors and assigns, does hereby release, remise, acquit, exonerate, satisfy
and forever discharge the Xxxxxxx Parties from and with respect to any and all
actions, causes, causes of action, suits, disputes, controversies, claims,
debts, sums of money, offset rights, defenses, agreements, promises, covenants,
losses, damages, liabilities, judgments and demands of any and every kind and
nature whatsoever, known or unknown, whether in contract, in tort, or otherwise,
at law or in equity, which have accrued or may accrue, may have been had, may
now be possessed or may or shall be possessed in the future by the JMC Parties
against the Xxxxxxx Parties arising out of the Services Agreement.
Section 6.3 Survival. The respective representations and warranties
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of the parties contained in this Agreement or in any Schedule attached hereto
shall survive the consummation of the transactions contemplated hereby.
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Section 6.4 Indemnification by JMC. JMC hereby agrees to defend,
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indemnify and hold the Xxxxxxx Parties harmless against any and all liabilities,
claims, actions, proceedings, suits, damages, losses, penalties, judgments,
costs, expenses, fines, disbursements, and other obligations of any kind
whatsoever (including reasonable attorneys' fees and other expenses of
investigation, defense, litigation and settlement) with respect to or arising
out of (i) the failure of any representation or warranty made by JMC in this
Agreement to be true and correct in all material respects as of the date hereof,
or (ii) the failure of JMC to fulfill any of its covenants or agreements
hereunder or under the Interim Services Agreement.
Section 6.5 Indemnification by Xxxxxxx and Trustee. Xxxxxxx and
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Trustee, jointly and severally, agree to defend, indemnify and hold the JMC
Parties harmless against any and all liabilities, claims, actions, proceedings,
suits, damages, losses, penalties, judgments, costs, expenses, fines,
disbursements, and other obligations of any kind whatsoever (including
reasonable attorneys' fees and other expenses of investigation, defense,
litigation and settlement) with respect to or arising out of (i) the failure of
any representation or warranty made by Xxxxxxx or Trustee in this Agreement to
be true and correct in all material respects as of the date hereof, (ii) the
failure of Xxxxxxx or Trustee to fulfill any of their covenants or agreements
hereunder or under the Interim Services Agreement, (iii) any actions by the
Xxxxxxx Parties as Trustee, Trustor, recordkeeping agent or Agent for the Trust
subsequent to October 27, 1995, (iv) Xxxxxxx'x sales of annuities (including JMC
Products) on and after August 15, 1995, or (v), subject to Section 2.4(f)
hereof, Customer Complaints which are not listed on Schedule 3.4 attached
hereto.
Section 6.6 Defense. In defending the party indemnified pursuant to
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Sections 6.5 and 6.4 hereof, the indemnifying party agrees to (a) accept
immediately the defense of any of the indemnified parties in any action in which
any of the indemnified parties is an object of indemnifiable claims and (b)
disclose immediately to all parties in any action regarding such claims that the
indemnifying party is the party responsible for defending and indemnifying the
indemnified party. The indemnifying party agrees to reimburse the indemnified
party for any and all expenses including reasonable attorney's fees and costs
incurred as a result of the filing of any actions arising from any indemnifiable
claims or as a result of the receipt of settlement demands or other demands
relative to any indemnifiable claim.
Section 6.7 Time for Payment. All indemnification payments required
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to be made pursuant to this Article VI shall be made promptly after demand for
payment has been made by the indemnified party upon the indemnifying party.
Section 6.8 Transfer of Claims. Each of the parties hereto
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represents and warrants that as of the date of this Agreement, it has not
heretofore assigned, transferred, pledged or hypothecated or purposed to assign,
transfer, pledge or hypothecate to any person or entity any claim or matter
herein released, disclaimed, discharged or terminated.
ARTICLE VII.
MISCELLANEOUS
12
Section 7.1 Notices. All notices that are required or may be given
-------
pursuant to the terms of this Agreement shall be in writing and shall be
sufficient in all respects if delivered or mailed by registered or certified
mail postage prepaid, or if sent by telex or telefax (in each case promptly
confirmed by registered or certified mail postage prepaid), or by overnight
courier, addressed as follows:
If to Xxxxxxx, to: XXXXXXX SECURITIES, INC.
0000 Xxxxxxxxx Xxxx.
Xxxxxxxxxxxx, Xxxxxxx 00000
Attn: President
Telecopy number: (000) 000-0000
If to Trustee, to: XXXXXXX BANK TRUST COMPANY, N.A.
0000 Xxxxxxxxx Xxxx.
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attn: President
Telecopy number: (000) 000-0000
If to JMC, to: XXXXX XXXXXXXX & CO.
0000 Xxxxxxxx Xx. Xxx. 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxx, Chairman and
Chief Executive Officer
Telecopy number: (000) 000-0000
Section 7.2 Expenses. Except as otherwise expressly provided herein, the
--------
parties hereto shall pay all of their own expenses relating to the transactions
contemplated hereby, including, without limitation, the fees and expenses of
their respective counsel, accountants, and financial advisors. In the event of
litigation or other adversary proceeding with respect to this Agreement or the
transactions contemplated hereby, the nonprevailing party shall reimburse the
prevailing party for all reasonable attorney's fees and court costs incurred in
connection therewith.
Section 7.3 Amendments. This Agreement may not be changed orally, but
----------
only by agreement in writing signed by the parties hereto. Any provision of
this Agreement can be waived, amended, supplemented or modified only by written
agreement of the parties hereto.
Section 7.4 Interpretation. This Agreement has been negotiated fully
--------------
and fairly between the parties. If this Agreement becomes the subject of
interpretation by a court of law or equity or other third party, this Agreement
shall not be construed either against, or in favor of, JMC, Xxxxxxx or Trustee,
by virtue of one of the parties being deemed the draftsman of this Agreement.
Section 7.5 Severability. Any provision of this Agreement which is
------------
invalid, illegal or unenforceable shall be ineffective to the extent of such
invalidity, illegality or unenforceability,
13
without affecting in any way the remaining provisions hereof or rendering any
other provision of this Agreement invalid, illegal or unenforceable.
Section 7.6 Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and shall be binding upon the directors, principals, shareholders,
successors and assigns of the parties hereto.
Section 7.7 Dispute Resolution. In the event of any dispute, claim or
------------------
controversy which in any way relates to, results from or arises out of this
Agreement or the Interim Services Agreement, any amendment or breach hereof or
thereof, or any resulting transactions ("Dispute"), if the Dispute cannot be
settled through negotiations, the parties hereto agree to first try in good
faith to settle the Dispute by mediation under the Commercial Mediation Rules of
the American Arbitration Association, before resorting to arbitration, as
mandated below. Regardless of the outcome of such mediation, each party shall
bear its own costs and attorneys' fees and any mediation fees shall be shared by
the parties on an equal basis, one-half by JMC and one-half by Xxxxxxx and
Trustee.
Thereafter, any remaining Dispute shall be decided by neutral binding
arbitration in accordance with the rules of the American Arbitration Association
and not by court action. Such arbitration shall be conducted in Xxxxx County
Florida. Regardless of the outcome of the arbitration, each party shall bear
its own costs and attorneys' fees and any costs of expenses assessed by the
American Arbitration Association shall be shared by the parties on an equal
basis, one-half by JMC and one-half by Xxxxxxx and Trustee. Judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof; provided, however, that no arbitrator shall be permitted to award
punitive damages in such arbitration proceeding.
If any party hereto, after notice thereof, fails to be present or
represented at an arbitration hearing, or adjournment thereof, the arbitrator
may, nevertheless, in their discretion, proceed with the adjudication of the
Dispute.
Section 7.8 Confidentiality. Neither Xxxxxxx nor JMC shall disclose any
---------------
information or make any public announcement with respect to this Agreement or
the Interim Services Agreement prior to its execution. JMC and Xxxxxxx will
coordinate the content and timing of any internal and public announcements
regarding this Agreement and the Interim Services Agreement.
Section 7.9 Applicable Law. This Agreement is governed by, and shall be
--------------
construed and enforced in accordance with, the laws of the State of Florida,
except such laws that would render this choice of laws ineffective.
Section 7.10 Entire Agreement. This Agreement, together with the Interim
----------------
Services Agreement, evidence the entire agreement of the parties hereto with
respect to the subject matter hereof. The terms and conditions of this
Agreement and the Interim Services Agreement shall supersede the terms and
conditions of the Letter of Understanding and shall operate to terminate such
letter in accordance with Section 7.A. thereof.
14
This Agreement has been executed by the parties hereto as of the date first
above written.
XXXXX XXXXXXXX & CO.
By: /s/ Xxxxx X. Xxxxxxxx
---------------------
Xxxxx X. Xxxxxxxx, Chairman and Chief Executive
Officer
XXXXXXX XXXXX TRUST COMPANY, N.A.
By: /s/ Xxxxxxxx X. Xxxxxxx
----------------------
Authorized Officer
XXXXXXX XXXXX, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------
Authorized Officer
15
SCHEDULE 1.3(a)
XXXXX XXXXXXXX & COMPANY
XXXXXXX BANK
ASSET FEE PURCHASE
IN FORCE ASSETS
AS OF JULY 31, 1995
ASSETS IN FORCE
PROVIDER BALANCES AS OF ALLOCATION OF
COMPANY JULY 31, 1995 % OF TOTAL PURCHASE PRICE
--------- --------------- ---------- --------------
LICOVA 370,488,950 32.35% $1,308,521
Keyport 460,397,718 40.20% 1,626,068
WSLAC 172,663,091 15.08% 609,825
TransAmerica 141,733,539 12.38% 500,585
------------- ------- ----------
1,145,283,298 100% $4,045,000
============= ======= ==========
ANNUITY SUITABILITY GUIDE
IMMEDIATE
FIXED VARIABLE ANNUITY
Annuity Type ANNUITY ANNUITY (FIXED)
-------------------------------------------------------------
1. Personal Date
-------------------------------------------------------------
Age 1-2**3-6 1-2**3-6 2-6
-------------------------------------------------------------
2. Invested Assets
-------------------------------------------------------------
Prior Investment 1-4 2+ 1-4
Experience
-------------------------------------------------------------
3. Income & Taxes
-------------------------------------------------------------
Income 2+ 2+ 2+
-------------------------------------------------------------
Tax Bracket 1-4 1-4 1-4
-------------------------------------------------------------
4. Assets
-------------------------------------------------------------
a. Liquid Assets 2+ 2+ 2+
-------------------------------------------------------------
b. Asset Allocation 1+ 2+ 1+
-------------------------------------------------------------
5. Customer Needs
-------------------------------------------------------------
Risk Tolerance 1 2-5 1-5
-------------------------------------------------------------
Investment Objectives 1 & 4 1-4 1,2 & 4
-------------------------------------------------------------
CATEGORY KEYS
1 2 3 4 5 6
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
1. Personal Date
------------------------------------------------------------------------------------------------------------------------------------
Age 1-30 31-45 46-55 56-65 66-75 76+
------------------------------------------------------------------------------------------------------------------------------------
2. Invested Assets
------------------------------------------------------------------------------------------------------------------------------------
Prior Investment CDs only Some Moderate Extensive
Experience
------------------------------------------------------------------------------------------------------------------------------------
3. Income & Taxes
------------------------------------------------------------------------------------------------------------------------------------
Income $0-$9,999 $10,000-$29,999 $30,000-$59,999 $60,000-$99,999 $100,000+
------------------------------------------------------------------------------------------------------------------------------------
Tax Bracket 15% 28% 31% 31%+
------------------------------------------------------------------------------------------------------------------------------------
4. Assets
------------------------------------------------------------------------------------------------------------------------------------
a. Liquid Assets (after $0-$9,999 $10,000-$29,999 $30,000-$59,999 $60,000-$99,999 $100,000+
investment)
------------------------------------------------------------------------------------------------------------------------------------
b. Current Asset 100% low 100% low - 75%+ Low-moderate 50%+ Low Less than 50% - Low-
Allocation no risk moderate risk risk moderate risk moderate risk
------------------------------------------------------------------------------------------------------------------------------------
5. Customer Needs
------------------------------------------------------------------------------------------------------------------------------------
Risk Tolerance Low Moderate Moderate+ High Speculative
------------------------------------------------------------------------------------------------------------------------------------
Investment Objectives PRESERVING INCREASING INCOME MAXIMIZING GROWTH- TAX ADVANTAGES
PRINCIPAL WHILE OR VALUE - MODERATE GREATER FLUCTUATIONS
EARNING INTEREST FLUCTUATION
------------------------------------------------------------------------------------------------------------------------------------
Information extracted for the client profile is categorized in the Category
Keys chart and then compared to the Suitability Guide for approval
* May vary depending upon investment option selected.
** Would require a statement indicating funds are for retirement savings or
other long-term savings.
Schedule 3.3
1. Each of JMC's contracts with its Provider Companies prohibits JMC from
assigning its rights under the contract to another party without the prior
written consent of the Provider Company. Any attempt to assign these fees
in the absence of such consents would be a breach of the Provider Company
contracts.
1. On September 1, 1995, the Florida Department of Insurance published
proposed rules governing the sale of annuities on bank premises. One of
those proposed rules, Rule 4-223.031, purports to require any person
providing any of the services of an insurance administrator (as defined by
Florida law) in connection with annuities marketed in association with
financial institutions to obtain a certificate of authority from the
Department. As of the date of this Agreement, these proposed rules have
not taken effect.
In addition, Section 626.8805 Florida Statutes requires any person who is
an insurance administrator (as defined by Florida law) to obtain a
certificate of authority from the Department and other sections of the
Florida Statutes require the insurance administrator to maintain certain
records and provide certain notices, among other things.
JMC does not believe that its activities under this Agreement make it an
insurance administrator under Florida law. However, Florida-licensed
insurance agents are excluded from the definition of insurance
administrator. All business processing services provided by JMC under this
Agreement will be performed by Florida-licensed insurance agents.
SCHEDULE 3.4
XXXXXXX BANK
CUSTOMER COMPLAINTS - AS OF 8/15/95
CASE NO. CUSTOMER NAME DATE RCVD PROVIDER TYPE RESOLUTION
BB95-121 Xxxxxxxxx, Xxxxxxxxx 7/20/95 WSLAC MS Surrendered - paid $1,189.49
BB95-124 Xxxxxx, Xxxxxx 7/27/95 KLIC MS Letter to customer
BB95-125 Xxxxxxx, Xxxxxxx 7/27/95 WSLAC SU Surrendered - paid $355.74
XX00-000 Xxxxxxxx, Xxxxxx 7/27/95 TLIAC DS Letter to customer
XX00-000 Xxxxxx, Xxxxxxx 8/4/95 WSLAC DS, MS Letter to customer
BB94-999 Xxxxxxxx, Xxxxxxxxx 2/8/94 XXXX OH Referred to Legal
BB94-998 Xxxxxxxx, Xxxxxx 2/21/94 KLIC OH Referred to Legal
BB95-128 Xxxxx, Xxxxx 7/1/95 XXXX MS Letter to customer
XX00-000 Xxxxxx, Xxxxxxx 7/17/95 LICOVA MS Letter to customer
BB95-123 Row, Xxxxxxx 7/24/95 LICOVA DS, MS Letter to XXX
XX00-000 Xxxxxxx, Xxxxxxx 7/17/95 LICOVA MS Letter to customer
BB95-120 Xxxxxx, Xxxxx 7/17/95 TLIAC MS Letter to customer
XX00-000 Xxxxxxx, Xxxxxxx 9/7/95 KLIC MS In process
XX00-000 Xxxxxx, Xxxxx 5/26/95 KLIC MS In process
BB95-122 Xxxxxxx, Xxxxxxxx 7/24/95 KLIC MS Letter to SEC
MS - Misrepresentation DS - Disclosure SU - Unsuitable Investment OH - Other
