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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: July 31, 1998
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COMMISSION TRANSFER AGREEMENT
COMMISSION TRANSFER AGREEMENT made as of July 31, 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").
WITNESSETH:
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 June 30,
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 January 1, 1999
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 31, 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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