Exhibit 10.12
PURCHASE AND SALE AGREEMENT
This Purchase And Sale Agreement is made as of January 16, 1997, by and
between Viaticus, Inc., a Delaware corporation the address of which is 200 South
Wacker Drive, Chicago, Illinois 60606 ("Viaticus"), and Dignity Partners, Inc.,
a Delaware corporation the address of which is 1700 Montgomery Street, Suite
250, San Francisco, California 94111 ("Seller").
WHEREAS, Seller wishes to sell, and Viaticus wishes to purchase, the
Portfolio (as defined in Section 1.16).
NOW, THEREFORE, in consideration of the foregoing premise, the mutual
covenants, representations and warranties set forth in this Agreement, and other
good and valuable consideration, the receipt and sufficiency of which are
expressly acknowledged by each of the parties to this Agreement, the parties to
this Agreement hereby agree as follows:
1. Definitions
The capitalized terms used in this Agreement shall have the meanings set
forth in this Section 1.
1.1 Acknowledgment. The term "Acknowledgment" shall mean, as to each Policy: (i)
confirmation from an Insurer, in a written form reasonably acceptable to
Viaticus, stating that Viaticus has been named exclusive owner and beneficiary
of the Policy, and that those changes have been received and duly recorded by
the Insurer that has written such Policy; and (ii) written confirmation from an
Insurer, on a form provided to such Insurer by Viaticus, of pertinent policy
information for the Policy, from which Viaticus reasonably concludes that it
will have the ability to collect the death benefits payable on the Policy.
1.2 Assignment Documents. The term "Assignment Documents" shall mean all
documents, in forms satisfactory to Viaticus and each respective Insurer,
necessary to: (i) assign each Policy to Viaticus; and (ii) designate Viaticus as
beneficiary of each Policy.
1.3 Broker Back-End Fees. The term "Broker Back-End Fees" shall mean any fees
due brokers upon collection of death benefits of any Policy, as set forth in
Exhibit "A" to this Agreement, each of which is based upon a percentage of the
death benefit payable pursuant to the applicable Policy.
1.4 Confidential Information. The term "Confidential Information" shall mean all
information or material which: (i) is proprietary to the disclosing party,
designated as Confidential Information by the disclosing party and not generally
known other than by the disclosing party; or (ii) the disclosing party obtains
from any third party which the disclosing party treats as proprietary and has
designated as Confidential Information, whether or not owned by the disclosing
party. "Confidential Information" shall not include information which the
receiving party can show is or was: (i) known by the receiving party at the time
of receipt from the disclosing party and not subject to any other nondisclosure
agreement between the parties to this Agreement; (ii) now, or which hereafter
becomes, generally known to the industry through no fault of the receiving
party; (iii) published or generally disclosed to the public by the disclosing
party; (iv) otherwise lawfully and independently developed by the receiving
party; or (v) lawfully acquired by the receiving party from a third party
without any obligation of confidentiality. With respect to information
concerning the
1
Policies, the Portfolio, the Persons insured under the Policies and Viators, all
such information shall be deemed the Confidential Information of Seller until
the Delivery Date of each such Policy, and, thereafter, on a Policy by Policy
basis, the Confidential Information of Viaticus.
1.5 Delivery Date. The term "Delivery Date" shall mean, with respect to
each Policy, the date upon which an Acknowledgment relative to such Policy is
delivered to Viaticus by the Insurer which issued such Policy.
1.6 Effective Date. The term "Effective Date" shall mean the date
first set forth above, which, upon execution of this Agreement, shall be the
effective date of this Agreement.
1.7 includes and including. The terms "includes" and "including" shall
mean, except where followed directly by the word "only", "includes, but is not
limited to", and "including, but not limited to," respectively, it being the
intention of the parties to this Agreement that any listing following thereafter
is illustrative and not exhaustive.
1.8 Insurer. The term "Insurer" shall mean, as to each Policy: (i) the
insurance company that issued the Policy at issue; and (ii) such other party as
may have the authority, in the reasonable discretion of Viaticus, to confirm to
Viaticus that Viaticus is the owner and beneficiary of such Policy (e.g., the
employer of a Person insured under a Policy).
1.9 Knowledge. The term "Knowledge" shall mean actual knowledge or
knowledge ascertainable after prudent investigation.
1.10 Licenses. The term "Licenses" shall mean all licenses, franchises,
permits, approvals, authorizations, exemptions, classification, consents,
registrations, certificates (including certificates of authority) and/or similar
documents or instruments.
1.11 Lien The term "Lien" shall mean any mortgage, pledge, assessment,
security interest, lease, sublease, lien, adverse claim, levy, charge and/or
other encumbrance of any kind, or any conditional sale contract, title retention
contract and/or other contract to give or to refrain from giving any of the
foregoing.
1.12 Net Face Amount. The term "Net Face Amount" shall mean the net
face amount of death benefits payable pursuant to a Policy, as set forth in
Exhibit "A" to this Agreement, in the column marked "Net Death Benefit."
1.13 Percentage Amount The term "Percentage Amount" shall mean, on a
Policy by Policy basis, a sum equal to that percentage of the Net Face Amount of
such Policy, as indicated on Exhibit "A" to this Agreement, in the column marked
"Price."
1.14 Person. The term "Person" shall mean any natural person, corporation,
insurance company, general partnership, limited partnership, proprietorship,
trust, union, association, court, tribunal, agency, government, department,
commission, self-regulatory organization, arbitrator, board, bureau,
instrumentality and/or other entity, enterprise, authority and/or business
organization.
2
1.15 Policy. The term "Policy" shall mean, individually, each life
insurance policy in the Portfolio.
1.16 Portfolio. The term "Portfolio" shall mean the entirety of the group
of Policies identified in Exhibit "A" to this Agreement as being purchased by
Viaticus pursuant to this Agreement.
1.17 Viator. The term "Viator" shall mean a Person who has sold a
Policy to Seller.
2. Portfolio Purchase
2.1 Purchase And Sale. Subject to the conditions subsequent set
forth in this Agreement, Seller hereby sells to Viaticus, and Viaticus hereby
purchases from Seller, the Portfolio.
2.2 Delivery Of Assignment Documents. Within five (5) days of the
Effective Date, Seller shall deliver to Viaticus Assignment Documents sufficient
to: (i) assign and/or change ownership of each Policy to Viaticus, using a form
of assignment reasonably satisfactory to Viaticus and satisfactory to each
respective Insurer; and (ii) designate Viaticus as beneficiary of each Policy,
using a designation of beneficiary reasonably satisfactory to Viaticus and
satisfactory to each respective Insurer.
2.3 Delivery Of Files. Within five (5) days of the Effective Date,
Seller shall deliver to Viaticus all files of Seller relating to the Portfolio,
and each Policy, including underwriting and administrative files.
2.4 Request For Assignment. Upon receipt by Viaticus of all Assignment
Documents, as required by Section 2.2, and the files of Seller relating to the
Portfolio, as required by Section 2.3, Viaticus shall promptly forward to each
Insurer the Assignment Documents, accompanied by a request that the Insurer
provide an Acknowledgment relative to such Policy.
2.5 Payment To Seller Of Percentage Amount. Promptly upon receipt by
Viaticus of Acknowledgment for each Policy, Viaticus shall pay to Seller the
Percentage Amount for such Policy, along with interest on the Percentage Amount
at the rate of four and one-half percent (4.5%) per annum from the Effective
Date to the date upon which such payment is made to Seller.
2.6 Payment Of Broker Back-End Fees. Promptly upon receipt by Viaticus of
the death benefits payable under each Policy, Viaticus shall pay, to the
broker(s) identified in Exhibit "A" to this Agreement, the Broker Back-End Fees
on such Policy, as set forth in Exhibit "A" to this Agreement. Notwithstanding
the foregoing, it is expressly agreed by the parties to this Agreement that: (i)
such payment obligation runs from Viaticus to Seller; (ii) Viaticus shall have
no obligation, covenant, representation or warranty directly to any such broker
whatsoever; and (iii) no such broker shall be a third party beneficiary to, or
otherwise have any rights arising out of, this Agreement.
2.7 Failure Of Acknowledgment. Either party to this Agreement shall have
the right to demand and cause the reassignment of any Policy (or Policies) to
Seller, and this Agreement shall be completed as if such Policy (or Policies)
had not been included in the Portfolio, in the event that: (i) any Insurer shall
fall or refuse to provide Acknowledgment relative to such Policy (or Policies)
for a period of sixty (60) days following the Effective Date; (ii) Viaticus
receives Acknowledgment relative to any Policy (or Policies) which Viaticus
determines, in its reasonable discretion, is unacceptable, provided that payment
by Viaticus of the Percentage
3
Amount by Viaticus pursuant to Section 2.5 shall be deemed acceptance of
Acknowledgment; (iii) Viaticus determines, in its good faith discretion, that it
will not be possible for Viaticus to obtain Acknowledgment relative to such
Policy (or Policies); or (iv) Viaticus determines, in its good faith discretion
within sixty (60) days of the Effective Date, that it will not be possible for
Viaticus to collect the death benefits payable on such Policy (or Policies). In
the event that either party to this Agreement provides written notice to the
other party to this Agreement of a demand for reassignment of any Policy (or
Policies) to Seller as set forth in this Section 2.7, Viaticus shall: (i)
request from the Insurer the return of and, upon receipt from the Insurer
deliver to Seller, the Assignment Documents for such Policy (or Policies); and
(ii) have no obligation to pay either the Percentage Amount or the Broker
Back-End Fees on such Policy (or Policies). In the event that either party to
this Agreement provides written notice to the other party to this Agreement of a
demand for reassignment of any Policy (or Policies) to Seller as set forth in
this Section 2.7, and Viaticus has Knowledge at the time of such demand that the
Person insured pursuant to such Policy (or Policies) has died, Viaticus shall:
(i) in the event that the death benefits payable pursuant to such Policy have
not been paid to Viaticus, take all action, and execute all documents,
reasonably necessary to cause such death benefits to be paid to Seller; and (ii)
in the event that the death benefits payable pursuant to such Policy have been
paid to Viaticus, be deemed to be holding the entire amount of such death
benefits in trust for Seller, and shall immediately remit to Seller the full
amount of such death benefits.
2.8 Alteration Of Percentage Amount And Broker Back-End Fees In The Event
Of Inaccuracy Of Net Face Amount. In the event that, within sixty (60) days of
the Effective Date, the Net Face Amount of any Policy is confirmed by Viaticus
to be different from the Net Face Amount set forth in Exhibit "A" to this
Agreement, the Percentage Amount under this Agreement shall be adjusted to equal
the percentage of the Net Face Amount, reflected in Exhibit "A" to this
Agreement, of the confirmed Net Face Amount for such Policy, and the Broker
Back-End Fees shall be adjusted pro rata. In the event that: (i) the Net Face
Amount of any Policy is so confirmed by Viaticus to be less than the Net Face
Amount set forth in Exhibit "A" to this Agreement, and such confirmation by
Viaticus takes place prior to disbursement to Seller of the Percentage Amount
for such Policy, Viaticus shall have the right to adjust the Percentage Amount
and the Broker Back-End Fees for such Policy, prior to disbursement to Seller;
(ii) the Net Face Amount of any Policy is confirmed by Viaticus to be less than
the Net Face Amount set forth in Exhibit "A" to this Agreement, and such
confirmation by Viaticus takes place subsequent to disbursement to Seller of the
Percentage Amount for such Policy, Seller shall be deemed to be holding the
entire excess amount of the Percentage Amount paid by Viaticus on such Policy in
trust for Viaticus, and shall immediately remit to Viaticus the full amount of
such excess amount(s), and, in the event that Seller shall fail or refuse, for
any reason whatsoever, to immediately remit to Viaticus the full amount of such
excess amount(s), Viaticus shall have the right, without limiting any other
rights and remedies which Viaticus may have, to withhold from Seller any further
payment(s) which may be due to Seller under this Agreement (including payment of
the Percentage Amount and/or the Broker Back-End Fees on any Policy, and
reimbursement pursuant to Section 3), up to the amount of the excess amount(s)
which Seller has failed or refused to remit to Viaticus; (iii) the Net Face
Amount of any Policy is confirmed by Viaticus to be greater than the Net Face
Amount set forth in Exhibit "A" to this Agreement, and such confirmation by
Viaticus takes place prior to disbursement to Seller of the Percentage Amount
for such Policy, Viaticus shall adjust the Percentage Amount and/or the Broker
Back-End Fees for such Policy, as applicable, prior to disbursement to Seller;
and (iv) the Net Face Amount of any Policy is confirmed by Viaticus to be
greater than the Net Face Amount set forth in Exhibit "A" to this Agreement, and
such confirmation by Viaticus takes place subsequent to disbursement to Seller
of the Percentage Amount for such Policy, Viaticus shall immediately remit to
Seller the full amount of such excess amount(s).
4
2.9 Alteration Of Percentage Amount In The Event Of Material Inaccuracy Of
Information Other Than Of Net Face Amount In the event that, within sixty (60)
days of the Effective Date, any material information concerning any Policy other
than Net Face Amount is confirmed by Viaticus to be materially inaccurate (e.g.,
information contained in Exhibit "A" to this Agreement other than Net Face
Amount; information provided by an Insurer, on the form provided to such Insurer
by Viaticus, of pertinent policy information for the Policy, from which Viaticus
reasonably concludes that it will have the ability to collect the death benefits
payable on the Policy; etc.), the parties to this Agreement shall negotiate in
good faith to adjust the Percentage Amount to take into account the material
inaccuracy, and the amount at which the Percentage Amount would have been set in
the event that the parties to this Agreement had each known of such material
inaccuracy as of the Effective Date. In the event that the good faith
negotiations required by the preceding sentence of this Section 2.9 do not
result in agreement within fifteen (15) days of commencement, Viaticus shall
have the right, upon written notice to Seller, to have this Agreement completed
as if the Policy (or Policies) as to which such material inaccuracy pertains had
not been included in the Portfolio. In the event that Viaticus provides such
written notice to Seller as set forth in this Section 2.9, and such written
notice is given prior to receipt from the Insurer of Acknowledgment, Viaticus
shall: (i) request from the Insurer the return of and, upon receipt from the
Insurer deliver to Seller, the Assignment Documents for such Policy (or
Policies); and (ii) have no obligation to pay either the Percentage Amount or
the Broker Back-End Fees on such Policy (or Policies). Accordingly: (i) with
respect to such Policies with regard to which no sum has been paid by Viaticus
as of the date such notice is effective, Viaticus shall have no obligation to
pay any sum whatsoever to Seller, including the Percentage Amount on such Policy
(or Policies), the Broker Back-End Fees on such Policy (or Policies) and/or any
reimbursement pursuant to Section 3; and (ii) with respect to such Policies with
regard to which any sum has been paid by Viaticus as of the date such notice is
effective, Seller shall be deemed to be holding all amounts paid by Viaticus
pursuant to this Agreement relative to such Policies, including the amount of
each Percentage Amount and/or each of the Broker Back-End Fees and/or amounts
paid pursuant to Section 3, in trust for Viaticus, and shall immediately remit
to Viaticus an amount equal to the sum total of all amounts paid by Viaticus
pursuant to this Agreement relative to such Policies. In the event that Viaticus
provides such written notice to Seller as set forth in this Section 2.9, and
such written notice is given subsequent to receipt from the Insurer of
Acknowledgment, Viaticus shall take all reasonable action necessary to cause the
Insurer on such Policy to return the ownership and beneficiary designation on
such Policy to the state at which such ownership and beneficiary designation
existed prior to such Acknowledgment, or such other state as may be reasonably
requested by Seller and/or take all action, and execute all documents,
reasonably necessary to cause such death benefits to be paid to Seller. In the
event that Viaticus provides such written notice to Seller as set forth in this
Section 2.9, and the death benefits payable pursuant to such Policy have been
paid to Viaticus, Viaticus shall be deemed to be holding the entire amount of
such death benefits in trust for Seller, and shall immediately remit to Seller
the full amount of such death benefits.
2.10 Death Of Insured Prior To Effective Date. In the event that any
Person insured pursuant to any Policy has died at any time prior to the
Effective Date, the death benefits payable under the terms of such Policy shall
be payable to Viaticus. Accordingly: (i) in the event that the parties to this
Agreement have Knowledge of such death prior to payment to Seller of such death
benefits, Seller shall take all action, and execute all documents, necessary to
cause such death benefits to be paid to Viaticus; and (ii) in the event that the
parties to this Agreement have Knowledge of such death subsequent to payment to
Seller of such death benefits, Seller shall be deemed to be holding such death
benefits in trust for Viaticus, and shall immediately remit to Viaticus the full
amount of such death benefits. In the event that any Person insured pursuant to
any
5
Policy has died at any time prior to the Effective Date, and Seller shall fail
or refuse, for any reason whatsoever, to either cause such death benefits to be
paid to Viaticus or remit to Viaticus the full amount of such death benefits, as
applicable, Viaticus shall have the right, without limiting any other rights and
remedies which Viaticus may have, to withhold from Seller any further payment(s)
which may be due to Seller under this Agreement (including payment of the
Percentage Amount and/or the Broker Back-End Fees on any Policy, and
reimbursement pursuant to Section 3), up to the amount of the death benefits
which Seller has failed or refused to either cause to be paid to Viaticus or
remit to Viaticus, as applicable. In the event that either party to this
Agreement obtains Knowledge that any Person insured pursuant to any Policy has
died at any time prior to the Effective Date, such party to this Agreement shall
immediately provide written notice of such Knowledge to the other party to this
Agreement.
2.11 Death Of Insured Between Effective Date And Receipt Of
Acknowledgment.
2.11.1 In the event that Seller provides Viaticus with written
notice, prior to the earlier of the sixtieth (60th) day subsequent to the
Effective Date or the date upon which Acknowledgment on a particular Policy is
received by Viaticus, that the Person insured pursuant to such Policy has died
at any time between the Effective Date and the date upon which Acknowledgment on
such Policy is received by Viaticus, the death benefits payable under the terms
of such Policy shall be payable to Seller, and this Agreement shall be completed
as if such Policy (or Policies) had not been included in the Portfolio. In the
event that Seller provides Viaticus with such notice: (i) and such notice is
given prior to payment to Viaticus of such death benefits, Viaticus shall take
all action, and execute all documents, necessary to cause such death benefits to
be paid to Seller; (ii) and such notice is given subsequent to payment to
Viaticus of such death benefits, Viaticus shall be deemed to be holding such
death benefits in trust for Seller, and shall immediately remit to Seller the
full amount of such death benefits; (iii) Viaticus shall have no obligation to
pay any sum whatsoever to Seller, including the Percentage Amount on such Policy
(or Policies), the Broker Back-End Fees on such Policy (or Policies) and/or any
reimbursement pursuant to Section 3; and (iv) with respect to such Policies with
regard to which any sum has been paid by Viaticus as of the date such notice is
effective, Seller shall be deemed to be holding all amounts paid by Viaticus
pursuant to this Agreement relative to such Policies, including the amount of
each Percentage Amount and/or each of the Broker Back-End Fees and/or amounts
paid pursuant to Section 3, in trust for Viaticus, and shall immediately remit
to Viaticus an amount equal to the sum total of all amounts paid by Viaticus
pursuant to this Agreement relative to such Policies.
2.11.2 The death benefits payable under the terms of all Policies
not reassigned to Seller by Viaticus pursuant to Section 2.7, the Persons
insured under which die between the Effective Date and the date upon which
Acknowledgment on such Policy is received by Viaticus (i.e., such Policies
regarding which Seller does not provide Viaticus with written notice, prior to
the earlier of the sixtieth (60th) day subsequent to the Effective Date or the
date upon which Acknowledgment on a particular Policy is received by Viaticus)
shall be payable to Viaticus. Accordingly: (i) with respect to each such Policy,
in the event that the parties to this Agreement have Knowledge of such death
prior to payment to Seller of such death benefits, Seller shall take all action,
and execute all documents, necessary to cause such death benefits to be paid to
Viaticus; and (ii) in the event that the parties to this Agreement have
Knowledge of such death subsequent to payment to Seller of such death benefits,
Seller shall be deemed to be holding such death benefits in trust for Viaticus,
and shall immediately remit to Viaticus the full amount of such death benefits.
In the event that any Person insured pursuant to any Policy has died at any time
prior to the Effective Date, and Seller shall fail or refuse, for any reason
whatsoever, to either cause such death benefits to be paid to Viaticus or remit
to Viaticus the
6
full amount of such death benefits, as applicable, Viaticus shall have the
right, without limiting any other rights and remedies which Viaticus may have,
to withhold from Seller any further payment(s) which may be due to Seller under
this Agreement (including payment of the Percentage Amount and/or the Broker
Back-End Fees on any Policy, and reimbursement pursuant to Section 3), up to the
amount of the death benefits which Seller has failed or refused to either cause
to be paid to Viaticus or remit to Viaticus, as applicable.
3. Maintenance Of Portfolio
From the Effective Date through the date upon which the Percentage Amount
is disbursed to Seller pursuant to Section 2.5, Seller shall use its best
efforts to keep each Policy in full force and effect, including by paying the
premiums due on each Policy. Viaticus shall promptly reimburse to Seller the
actual and reasonable cost of performance under this Section 3 with respect to
Policies which Viaticus purchases pursuant to this Agreement, upon written
request from Seller, which written request shall be accompanied by documentation
evidencing such actual and reasonable cost. Notwithstanding the foregoing,
Seller shall: (i) provide written notice to Viaticus of any necessity to pay any
single such cost in excess of Five Thousand Dollars ($5,000), not less than
three (3) days prior to the last date for paying such cost; and (ii) not be
required to incur any single such cost in excess of Five Thousand Dollars
($5,000), nor be entitled to reimbursement for any single such cost, unless
Viaticus provides Seller with written approval to incur such cost within the
three (3) day notice period
4. Confidentiality
4.1 No Disclosure. Except as may be required by law (including the
Securities Act of 1933 and the Securities Exchange Act of 1934, in each case as
such Act has been or may hereafter be amended) or legal process, each party to
this Agreement shall: (i) hold in confidence, and not disclose or reveal to any
Person or entity, any Confidential Information disclosed under this Agreement
without the clear and express prior written consent of a duly authorized
representative of the disclosing party; and(ii) not use or disclose any of the
Confidential Information for any purpose at any time, other than for the limited
purpose of performance under this Agreement
4.2 Seller Obligation To Have Personnel Execute Nondisclosure Agreements.
Seller hereby represents and warrants to Viaticus that all personnel of Seller
who may receive Confidential Information of Viaticus, including such personnel
who may have had access to information regarding the Policies, the Portfolio,
the Persons insured under the Policies and/or the Viators, which information
shall be deemed the Confidential Information of Viaticus as of the Delivery Date
for each Policy, shall have executed a written nondisclosure agreement: (i)
standard in the viatical settlement industry; and (ii) acceptable to Viaticus,
in its reasonable discretion.
5. Representations And Warranties Of Seller
Seller represents and warrants to Viaticus, as set forth in this Section
5.
5.1 Existence. As of the date of this Agreement and, with respect to each
Policy, on the Delivery Date for such Policy, Seller is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, and has full power and authority to own, operate and lease its
assets and to
7
carry on its business as now being conducted and as it shall be conducted upon
consummation of the transactions contemplated by this Agreement.
5.2 Power And Authority. As of the date of this Agreement and, with
respect to each Policy, on the Delivery Date for such Policy, Seller has the
requisite power and authority to execute and deliver this Agreement and to
perform its obligations under this Agreement, and the consummation by Seller of
the transaction memorialized by this Agreement has been duly and validly
authorized by all necessary action on the part of Seller.
5.3 Licensing. As of the date of this Agreement and, with respect to each
Policy, on the Delivery Date for such Policy, Seller owns or otherwise validly
holds, or has taken all action reasonably necessary to own or otherwise validly
hold, all Licenses that were required for it to conduct its business, operations
and affairs in all material respects at the time that it acquired each Policy,
including all such Licenses as may be required to conduct viatical settlement
business in each State within the United States. To the best of Seller's
knowledge, no proceeding is pending or threatened for the denial, revocation,
withdrawal or termination of any such License. No Policy in the Portfolio has
been owned at any point in time by any Person which did not own or otherwise
validly hold, or had taken all action reasonably necessary to own or otherwise
validly hold, all Licenses that were required for such Person to conduct its
business, operations and affairs in all material respects at the time that such
Person acquired each Policy, including all such Licenses as may be required to
conduct viatical settlement business in each State within the United States.
5.4 Ownership Of Policies. As of the date of this Agreement and, with
respect to each Policy, on the Delivery Date for such Policy, Seller is the sole
owner and beneficiary of such Policy, or otherwise has the right, power and
authority with respect to such Policy to sell such Policy to Viaticus pursuant
to this Agreement and to grant to Viaticus all of the rights set forth in this
Agreement.
5.5 Performance Under Viatical Settlement Contracts. As of the date of
this Agreement and, with respect to each Policy, on the Delivery Date for such
Policy, Seller has performed in all material respects the obligations required
to be performed by it to date under, and is not in default under any of the
conditions or agreements contained in, any contract pursuant to which Seller
acquired any interest in any Policy. Seller has no unperformed obligations to
any Viator with respect to any Policy.
5.6 No Claims. As of the date of this Agreement and, with respect to each
Policy, on the Delivery Date for such Policy, there are no claims, actions,
suits, investigations, writs, judgments, decrees, orders or proceedings pending,
or threatened, against Seller or its assets and properties (including the
Portfolio and/or any Policy), at law or in equity, by any Person that have or
may reasonably be expected to have a material adverse effect on: (i) the
validity or enforceability of this Agreement; (ii) the ability of Seller to
perform its obligations under this Agreement; and/or (ii) the value of the
Portfolio and/or any Policy.
5.7 No Liens. With respect to each Policy, on the Delivery Date
for such Policy, there will exist no Lien against the Portfolio and/or any
Policy.
5.8 No Breach Of Other Agreements. As of the date of this Agreement
and, with respect to each Policy, on the Delivery Date for such Policy,
neither the execution and delivery of this Agreement by Seller, the
performance by Seller of its obligations under this Agreement nor the
consummation by Seller of the
8
transactions contemplated under this Agreement shall: (i) require the consent of
any Person, other than consents which have been both obtained and disclosed to
Viaticus; or (ii) contravene any other contract or obligation of Seller,
including, to the best of Seller's knowledge, such contracts or other
obligations (including statutory obligations) through which Seller has or may
have a duty to keep confidential information concerning the Policies, the
Portfolio, the Persons insured under the Policies and Viators.
5.9 No Misrepresentation. As of the date of this Agreement and, with
respect to each Policy, on the Delivery Date for such Policy, no covenant,
representation or warranty by Seller contained in this Agreement contains any
untrue statement of a material fact, or omits to state a material fact necessary
to make the covenants, representations and warranties set forth in this
Agreement not misleading in light of the circumstances under which such
statements were made.
6. Representations And Warranties Of Viaticus
Viaticus represents and warrants to Seller, as set forth in this Section
6, as of the date of this Agreement.
6.1 Corporate Existence. Viaticus is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has full corporate power and authority to own, operate and
lease its assets and to carry on its business as now being conducted and as it
shall be conducted upon consummation of the transactions contemplated by this
Agreement.
6.2 Corporate Power And Authority. Viaticus has the requisite power and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement, and the consummation by Viaticus of the transaction
memorialized by this Agreement has been duly and validly authorized by all
necessary action on the part or Viaticus.
6.3 Licensing. Viaticus owns or otherwise validly holds, or has taken all
action reasonably necessary to own or otherwise validly hold, all Licenses that
are required for it to conduct its business, operations and affairs in all
material respects at the time that it acquires each Policy pursuant to this
Agreement, including all such Licenses as may be required to conduct viatical
settlement business in each State within the United States. To the best of
Viaticus' knowledge, no proceeding is pending or threatened for the denial,
revocation, withdrawal or termination of any such License.
6.4 No Claims. There are no claims, actions, suits, investigations, writs,
judgments, decrees, orders or proceedings pending, or threatened, against
Viaticus, or its assets and properties, at law or in equity, by any Person that
have or may reasonably be expected to have a material adverse effect on: (i) the
validity or enforceability of this Agreement; and/or (ii) the ability of
Viaticus to perform its obligations under this Agreement.
6.5 Compliance With Policy Documentation. Viaticus shall comply with the
following system of Seller used to monitor Persons insured under Policies, as
set forth in the files to be provided to Viaticus: (i) not more frequently than
approximately every six weeks, such Persons are mailed, in a blank envelope, a
postage prepaid return postcard inquiring whether the Person has changed status
(including address, employment and health care provider); and (ii) only in the
event such Person does not return such card within
9
a reasonable time, and cannot be reached telephonically, may Persons set forth
in the contact list for such Person be contacted.
6.6 No Breach Of Other Agreements. Neither the execution and delivery of
this Agreement by Viaticus, the performance by Viaticus of its obligations under
this Agreement nor the consummation by Viaticus of the transactions contemplated
under this Agreement shall: (i) require the consent of any Person; or (ii)
contravene any other contract or obligation of Viaticus, including, to the best
of Viaticus' knowledge, such contracts or other obligations (including statutory
obligations) through which Viaticus has or may have a duty to keep confidential
information concerning the Policies, the Portfolio, the Persons insured under
the Policies and Viators.
6.7 No Misrepresentation. No covenant, representation or warranty by
Viaticus contained in this Agreement contains any untrue statement of a material
fact, or omits to state a material fact necessary to make the covenants,
representations and warranties set forth in this Agreement not misleading in
light of the circumstances under which such statements were made.
7. Termination
7.1 Termination Of This Agreement. This Agreement may not be terminated by
either party to this Agreement except in accordance with this Section 7. Any
termination of this Agreement pursuant to this Section 7 shall be only with
respect to those Policies as to which Viaticus has not paid Seller the
Percentage Amount as of the effective date of such termination. In the event of
any such termination, Viaticus shall: (i) take all action, and execute all
documents, reasonably necessary to cause the return of ownership and beneficiary
designation on any such Policies that Viaticus shall not purchase pursuant to
this Agreement to the state at which such ownership and beneficiary designation
existed prior to any Acknowledgment, or such other state as may be reasonably
requested by Seller; and (ii) take all action, and execute all documents,
reasonably necessary, to cause the death benefits under any such Policies that
Viaticus shall not purchase pursuant to this Agreement to be paid to Seller and,
in the event that Viaticus has received payment of any death benefits under any
such Policy, Viaticus shall be deemed to be holding such death benefits in trust
for Seller and shall immediately remit to Seller the full amount of such death
benefits. Accordingly: (i) with respect to Policies that Viaticus shall not
purchase pursuant to this Agreement with regard to which no sum has been paid by
Viaticus as of the date such termination is effective, Viaticus shall have no
obligation to pay any sum whatsoever to Seller, including the Percentage Amount
on such Policy (or Policies), the Broker Back-End Fees on such Policy (or
Policies) and/or any reimbursement pursuant to Section 3; and (ii) with respect
to Policies that Viaticus shall not purchase pursuant to this Agreement with
regard to which any sum has been paid by Viaticus as of the date such
termination is effective, Seller shall be deemed to be holding all amounts paid
by Viaticus pursuant to this Agreement, including the amount of each Percentage
Amount and/or each of the Broker Back-End Fees and/or amounts paid pursuant to
Section 3, in trust for Viaticus, and shall immediately remit to Viaticus an
amount equal to the sum total of all such amounts paid by Viaticus pursuant to
this Agreement.
7.2 Termination For Cause. Either party to this Agreement shall have the
right to terminate this Agreement at any time, effective upon written notice of
termination to the other party to this Agreement, in the event that such other
party to this Agreement materially fails to perform any of its material
obligations under this Agreement and such failure continues unremedied for a
period of ten (10) days after written notice
10
of such failure from the party to this Agreement alleging such failure.
Notwithstanding the foregoing, in the event of a termination of this Agreement
pursuant to this Section 7.2, all executory payment obligations of Viaticus
pursuant to Section 2.5 and Section 2.6 shall survive such termination.
7.3 Automatic Termination. This Agreement shall terminate automatically,
with no further act or action required of either party to this Agreement, in the
event that: (i) a receiver is appointed for Seller or its property; (ii) Seller
makes an assignment for the benefit of its creditors; (iii) any proceedings are
commenced by, for or against Seller under any bankruptcy or insolvency for
debtor's relief law; or (iv) Seller is liquidated or dissolved. Notwithstanding
the foregoing, this Agreement shall not automatically so terminate in the event
that Viaticus provides Seller with written notice, within thirty (30) days of
notice to Viaticus of an event which would effect an automatic termination of
this Agreement pursuant to this Section 7.3, that Viaticus desires to keep this
Agreement in full force and effect. Notwithstanding the foregoing, in the event
of a termination of this Agreement pursuant to this Section 7.3, all executory
payment obligations of Viaticus pursuant to Section 2.5 and Section 2.6 shall
survive such termination.
7.4 No Damages Or Indemnification For Termination. Neither party to this
Agreement shall be liable to the other party to this Agreement for damages of
any kind, including incidental or consequential damages, or for indemnification,
solely on account of the lawful termination of this Agreement, even if informed
of the possibility of such damages. Neither party to this Agreement shall be
liable to the other party to this Agreement by reason of termination of this
Agreement for compensation, reimbursement or damages on account of any loss of
prospective profits on anticipated sales or on account of expenditures,
investments, leases or other commitments relating to the business or goodwill of
either party to this Agreement, notwithstanding any law to the contrary.
7.5 Survival. The provisions of this Agreement that by their sense and
context are intended to survive termination of this Agreement, including
provisions regarding confidentiality, shall so survive this Agreement.
8. Indemnity And Actions
8.1 Mutual Indemnity. Each party to this Agreement shall defend, at its
sole expense, any claim, suit or proceeding brought against the other party to
this Agreement, insofar as such claim, suit or proceeding is based upon a claim
by a third party alleging facts or circumstances that, if true, would constitute
a breach of any covenant, representation or warranty in this Agreement of the
party from whom indemnity is sought, provided the party seeking indemnity gives
written notice of any such suit or proceeding promptly upon first learning of
such suit or proceeding, and provides the party from which indemnity is sought,
at no cost, with such assistance and cooperation as such party may reasonably
request in the defense thereof. The indemnifying party shall pay any damages and
costs assessed against the party entitled to indemnity (or paid or payable by
such party pursuant to a settlement agreement or any other resolution, formal or
informal, provided that such settlement agreement or other resolution is
approved by the indemnifying party, which approval shall not be unreasonably
withheld or delayed) in connection with such claim, suit or proceeding. The
party providing indemnity shall indemnify and hold the party entitled to
indemnity harmless from and with respect to any such loss or damage (including
reasonable attorneys' fees and costs).
11
8.2 Other Indemnity By Seller. Seller shall defend and indemnify Viaticus
(including reasonable attorneys' fees and costs of litigation) against and hold
Viaticus harmless from, any and all claims by any third party resulting from the
acts, omissions or misrepresentations of Seller, regardless of the form of
action.
8.3 Handling Of Actions. In the event of any claim, action or proceeding
against Viaticus based upon allegations that if true would constitute a breach
of any of the representations, covenants or warranties made by Seller under this
Agreement, Viaticus shall have the right to defend any such claim, action or
proceeding through counsel of its own choice and to make Seller a party to such
action or proceeding.
9. Miscellaneous
9.1 Time Of The Essence. Time is of the essence with respect to
the performance of every Section of this Agreement with regard to which time
of performance is a factor.
9.2 Notices. Except as specifically provided in this Agreement, all
notices required under this Agreement shall be in writing and shall be given by
personal delivery, national overnight courier service or U.S. mail, certified or
registered, postage prepaid, return receipt requested, to the parties to this
Agreement at their respective addresses first set forth above, or to any party
to this Agreement at such other address(es) as shall be specified in writing by
such party to this Agreement to the other party to this Agreement in accordance
with the terms and conditions of this Section 9.2. All notices shall be deemed
effective upon personal delivery, one (1) business day following deposit with
any national overnight courier service in accordance with this Section 9.2, or
three (3) days following deposit in the United States mail in accordance with
this Section 9.2.
9.3 Entire Agreement. This Agreement constitutes the entire understanding
and agreement, and supersedes any and all prior or contemporaneous
representations, understandings and agreements, between the parties to this
Agreement with respect to the subject matter of this Agreement, all of which are
merged in this Agreement. Notwithstanding the foregoing, any confidentiality
agreements between the parties to this Agreement are separate from this
Agreement and, except as expressly stated in this Agreement, nothing contained
in this Agreement shall be construed as affecting the rights or obligations of
either party to this Agreement set forth in any such agreement. It is expressly
understood and agreed that no employee, agent or other representative of either
party to this Agreement has any authority to bind such party to this Agreement
with regard to any statement, representation, warranty or other expression
unless the same is specifically set forth or incorporated by reference in this
Agreement. It is expressly understood and agreed that, there being no
expectation of the contrary between the parties to this Agreement, no usage of
trade or custom and practice within the industry, and no regular practice or
method of dealing between the parties to this Agreement, shall be used to
modify, interpret, supplement or alter in any manner the express terms of this
Agreement or any part of this Agreement.
9.4 Further Assurances Seller shall execute and deliver any and all
additional papers and documents necessary to effectuate, do any and all acts
reasonably necessary in connection with the performance of the obligations of
Seller under, and carry out the intent of the parties to, this Agreement.
Without limiting the generality of the foregoing, Seller shall use reasonable
efforts to assist Viaticus in communicating with Viators, Persons insured under
the Policies and/or Insurers, as deemed necessary by Viaticus in its reasonable
discretion.
12
9.5 Independent Parties. Nothing contained m this Agreement shall be
deemed to create, or be construed as creating, a joint venture or partnership
between the parties to this Agreement. Neither party to this Agreement is, by
virtue of this Agreement or otherwise, authorized as an agent or legal
representative of the other party to this Agreement. Neither party to this
Agreement is granted any right or authority to assume or to create any
obligation or responsibility, express or implied, on behalf or in the name of
the other party to this Agreement, or to bind such other party to this Agreement
in any manner.
9.6 No Third Party Beneficiary. Nothing contained in this Agreement shall
be deemed to create, or be construed as creating, any third party beneficiary
right of action upon any third party or entity whatsoever, in any manner
whatsoever.
9.7 Waiver. No waiver of any provision of this Agreement, or any rights or
obligations of either party to this Agreement under this Agreement, shall be
effective, except pursuant to a written instrument signed by the party or
parties to this Agreement waiving compliance, and any such waiver shall be
effective only in the specific instance and for the specific purpose stated in
such writing.
9.8 Amendments. All amendments or modifications of this Agreement shall be
binding upon the parties to this Agreement despite any lack of consideration so
long as such amendments or modifications are in writing and executed by the
parties to this Agreement.
9.9 Severability. In the event that any provision of this Agreement is
found invalid or unenforceable pursuant to judicial decree or decision, the
remainder of this Agreement shall remain valid and enforceable according to its
terms.
9.10 Assignment. Either party to this Agreement shall have the right to
assign or transfer this Agreement (including rights and duties of performance)
to any entity: (i) which owns more than fifty percent (50%) of the issued and
outstanding voting stock of such party; (ii) in which such party owns more than
fifty percent (50%) of the issued and outstanding voting stock; (iii) which
acquires all or substantially all of the operating assets of such party; or (iv)
into which such party is merged or reorganized pursuant to any plan of merger or
reorganization. Notwithstanding the foregoing, or any other provision of this
Agreement, nothing in this Agreement, or otherwise, shall be deemed as a
prohibition on alienation of any kind by Viaticus of any Policy. This Agreement
shall be binding upon and inure to the benefit of each of the parties to this
Agreement and their respective legal successors and permitted assigns.
9.11 Extension Of Benefits To Viaticus Affiliates. All rights and benefits
to Viaticus under this Agreement shall be deemed to extend, and inure to the
benefit, of any parent, subsidiary or affiliate of Viaticus. Notwithstanding the
foregoing, and except with respect to an entity to which this Agreement is
assigned by Viaticus pursuant to Section 9.10, no parent, subsidiary or
affiliate of Viaticus shall have any obligation or duty to Seller whatsoever,
such obligations and duties resting solely with Viaticus.
9.12 No Breach Without Notice. Neither party to this Agreement shall be
deemed to be in material breach of any of its obligations under this Agreement
unless and until such party to this Agreement shall have been given written
notice of the nature of such breach, and shall have failed to cure such breach
within thirty (30) days after receipt of such written notice.
13
9.13 Forum And Jurisdiction. This Agreement was entered into in the State
of California, and its validity, construction, interpretation and legal effect
shall be governed by the laws and judicial decisions of the State of California
applicable to contracts entered into and performed entirely within the State of
California. Notwithstanding the foregoing, any action at law or in equity
arising under this Agreement shall be filed only in an appropriate State or
Federal Court located in the County of Cook, State of Illinois. The parties to
this Agreement hereby consent and submit to the personal jurisdiction of such
courts for the purposes of litigating any such action.
9.14 Attorneys' Fees. In the event any litigation or other proceeding is
brought by either party to this Agreement in connection with this Agreement, the
prevailing party in such litigation or other proceeding shall be entitled to
recover from the other party all costs, attorneys' fees and other expenses
incurred by such prevailing party in such litigation.
9.15 No Election Of Remedies. Resort to any one or more rights or remedies
contained in this Agreement by either party to this Agreement shall not preclude
that party to this Agreement from subsequently resorting to any or all other
available legal rights or remedies.
9.16 Counterparts. This Agreement may be executed in counterparts, each of
which shall be deemed an original and all of which together shall constitute one
and the same instrument.
IN WITNESS WHEREOF the parties to this Agreement have hereunto set their
hands on the day and year first above written.
VIATICUS, INC. DIGNITY PARTNERS, INC
By: By:
--------------------------- ---------------------------
Name: Name:
------------------------- -------------------------
Title: Title:
------------------------ ------------------------