SALE OF A PARTNERSHIP INTEREST & ASSIGNMENT OF ASSET BASED TRAIL COMMISSIONS

  Username:

  Password:

Exhibit 10(r)

SALE OF A PARTNERSHIP INTEREST

& ASSIGNMENT OF ASSET BASED TRAIL COMMISSIONS

WHEREAS Legacy Marketing Group (“LMG”) is entitled to receive certain asset based trail commissions (“Trail Commissions”) as the result of certain marketing agreements with Transamerica Life Insurance Company, American National Insurance Company, Indianapolis Life Insurance Company, Investors Insurance Company, Old Mutual Financial Life Insurance Company, and Aviva plc (“Insurance Carriers”);

WHEREAS LMG earns these Trail Commissions on the cash value of certain fixed annuity and life insurance products of the Insurance Carriers previously sold by LMG;

WHEREAS LMG’s rights in these Trail Commissions are vested and survive the termination of the marketing agreements with the Insurance Carriers, and will continue for so long as each underlying insurance policy generating such Trail Commissions remains in force;

WHEREAS LMG has caused to be formed and is the sole limited partner of a subsidiary entity known as Legacy TM, LP (“Legacy TM”);

WHEREAS Legacy TM shall cause to be created a class of limited partnership interest called “Class A Limited Partnership Interest” defined to be that interest in the Partnership entitled to receive a) the Trail Commissions received from certain identified insurance policies in force after the Closing (the “Future Trails”); and b) thirty-three and one-third percent (33.33%) of the Trail Commissions revenues received from certain identified insurance policies in force on or before the Closing (the "Current Trails") for the one year period subsequent to the date of this Agreement (after which the receipt of income from the Current Trails shall terminate), less expenses of the partnership chargeable to Class A Partnership Interests, as more fully set forth in the First Amended and Restated Agreement of Limited Partnership (the “Partnership Agreement”), attached hereto as Exhibit A.

WHEREAS Legacy TM desires to purchase the Trail Commissions from LMG as set forth herein; and

WHEREAS LMG desires to transfer and assign all of its rights, title and interest in said Trail Commissions to Legacy TM.,

NOW, THEREFORE, in consideration of the mutual covenants contained herein, and for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Page 1 of 24

Sale of Trail Commissions .

At the Closing, as hereinafter defined, and subject to all of the terms and conditions of this Agreement, LMG shall sell and assign to Legacy TM, and Legacy TM shall acquire from LMG, free and clear of any mortgage, security interest, pledge, lien, conditional sales agreement, charge or other encumbrance, all rights, title and interest in and to all Trail Commissions to which LMG is now or may hereinafter become entitled under its current or past marketing agreements with Insurance Carriers.

Purchase Price; Payment.

For the sale and assignment of the Trail Commissions, Legacy TM shall provide the following consideration to LMG at Closing:

the sum of Six Million Five Hundred Thousand Dollars ($6,500,000.00) in cash; and

all of the Class A Limited Partnership Interest of Legacy TM.

Indemnification.

Legacy TM shall indemnify, hold harmless, and defend LMG from and against any claims brought by a third party related to this Agreement or the performance thereof arising out of Legacy TM’s intentional or reckless acts or omissions.

LMG shall indemnify, hold harmless, and defend Legacy TM from and against any claims brought by a third party related to this Agreement or the performance thereof arising out of LMG’s intentional or reckless acts or omissions, including but not limited to any claims that LMG’s rights in the Trail Commissions were encumbered, not transferable, not perfected, or not owned in whole or in part by LMG.

Reporting.

LMG shall provide monthly reports to Legacy TM listing the policy number and policy cash value. Legacy TM shall provide reports to LMG as set forth in the Partnership Agreement.

Closing.

The Closing shall be March 26, 2008.

Representations.

This Assignment shall be binding upon and inure to the benefit of LMG and Legacy TM and their respective successors and assigns. The parties further represent, as appropriate, that each is a legal entity able to enter into this Assignment, that each possesses the appropriate authority to so agree, and that the individual executing this Assignment on behalf of each party is authorized by that party to do so. The parties further agree that each is under no legal restriction or infirmity which would prevent entering into and complying with this Assignment. The parties further agree that no claim, lawsuit, or right of any third party exists which would affect the undertakings in this Assignment.

Page 2 of 24

Representation of LMG.

LMG represents that it owns the Trail Commissions and that it has obtained or will obtain the necessary consents of said Insurance Carriers for this Assignment, and that no such other consent is required to complete the transaction contemplated herein.

Delivery of the Partnership Interest.

Immediately upon Closing, LMG shall be deemed to have fully and completely transferred to Legacy TM all its rights, title and interest, if any, in, as well as possession, custody and control of, the Trail Commission.

LMG agrees that it is receiving and shall take possession of the Class A Partnership Interest in AS IS, WHERE IS, condition and acknowledges that it has previously been given the opportunity to and has conducted such investigations and inspections of the Class A Partnership Interest and its underlying assets as it has deemed necessary or appropriate for the purposes of this Agreement.

Investment Intent.

LMG is acquiring the Class A Partnership Interest for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof in violation of the Securities Act of 1933, as amended (the "Securities Act"). LMG acknowledges that the Class A Partnership Interest to be received is not registered under the Securities Act or any applicable state securities law, and that such Class A Partnership Interest may not be transferred or sold except pursuant to the registration provisions of such Securities Act or pursuant to an applicable exemption therefrom and pursuant to state securities laws and regulations as applicable, and that any certificate representing the Class A Partnership Interest will bear appropriate legends to that effect.

10.

Entire Agreement.

The parties agree that this Agreement constitutes the full, complete, and entire Agreement between them and supersedes all prior understandings, agreements, conversations, or representations between them with respect to the subject matter of this Assignment.

11.

Severability.

If any provision of this Agreement or the application thereof to any person or in any circumstances shall be held to be invalid, unlawful, or unenforceable to any extent, the remainder of this Agreement, and the application of such provision other than to the persons or in the circumstances deemed invalid, unenforceable or unlawful, shall not be affected thereby, and each remaining provision hereof shall continue to be valid and may be enforced to the fullest extent permitted by law.

12.

Construction and Interpretation.

This Agreement shall be construed and interpreted in accordance with the substantive laws of the State of California without reference to the principles of conflict of laws of such state.

Page 3 of 24

13.

Jurisdiction and Venue.

The parties agree to the exclusive jurisdiction and venue of the federal and state courts in Sonoma County, California, for any dispute arising out of this Assignment.

IN WITNESS HEREOF, the parties hereto have executed this Assignment.

LEGACY MARKETING GROUP

LEGACY TM, LP

By: /s/ R. Preston Pitts

R. Preston Pitts, General Partner:

/s/ R. Preston Pitts

Its: /i/ RPP

Date: March 26, 2008

Lynda Pitts, General Partner:

/s/ Lynda Pitts

Page 4 of 24

EXHIBIT A

AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

LEGACY TM, LP

FIRST AMENDED AND RESTATED

AGREEMENT OF LIMITED PARTNERSHIP

LEGACY TM, LP

This First Amended and Restated Agreement of limited partnership made March 26, 2008 between Preston Pitts and Lynda Regan, individuals with an office in California located at 2090 Marina, Petaluma, California 94954 collectively referred to in this agreement as the General Partner or General Partners, and all the parties who sign copies of this agreement to become Limited Partners, including any persons hereafter admitted to the Partnership as additional General Partners or Limited Partners.

WHEREAS, the Partnership was formed pursuant to a Certificate of Limited Partnership, dated as of October 3, 2007, which was executed by the organizer and filed for recordation in the office of the Secretary of State of the State of California on October 4, 2007 and a Limited Partnership Agreement dated as of October 4, 2007 between the General Partner and the Initial Limited Partner; and

WHEREAS, the parties desire to enter into this Amended and Restated Agreement of Limited Partnership of the Partnership to create Class A Limited Partnership Interests and Class B Limited Partnership Interests, and permit the withdrawal of the Initial Limited Partner and the admission of the parties listed on Schedule A as limited partners of the Partnership, and further to make the modifications set out in this Agreement.

NOW, THEREFORE, in consideration of the mutual promises and agreements herein made and intending to be legally bound hereby, the parties agree to amend and restate the Limited Partnership Agreement of the Partnership in its entirety to read as follows:

ARTICLE ONE

DEFINITIONS

1.1

Definitions . As used in this agreement, the indicated terms will have the following meanings:

1.1.1

"Act" will mean the California Revised Limited Partnership Act, as amended from time to time.

1.1.2

"Additional Limited Partners" will mean those persons admitted to the partnership pursuant to Paragraph 3.3.1.

1.1.3

"Affiliate" will mean, when used with reference to a specified person, any person that directly or indirectly, through one or more intermediaries, controls or is controlled by or is under common control with the specified person, or any person that is an officer of, partner in, or trustee of, or serves in a similar capacity with respect to the specified person or of which the specified person is an officer, partner, or trustee, or with respect to which the specified person serves in a similar capacity.

Page 5 of 24

1.1.4

"Agreement" shall mean this First Amended and Restated Agreement of Limited Partnership, as originally executed and as amended, modified, supplemented, or restated from time to time, as the context requires.

1.1.5

“Capital Account” and “Class Capital Account” shall have the following meanings:

(a)

The individual Capital Account that shall be established and maintained for each Partner, composed of all of the “Class Capital Accounts” of that Partner.

(b)

Individual Class Capital Account shall be established and maintained for each Partner in accordance with the following provisions:

(i)

(i) The Partnership intends to own and manage a stream of trailing commissions from insurance contracts (“Trailing Commissions”). The Partnership will establish one or more classes of Partner interests (each a “Class”), each of which will be entitled to receive income from certain Trailing Commissions. At the time that all of the contracts resulting in Trailing Commissions for a particular Class are terminated, or the class of partnership interest is liquidated by the Partnership, the General Partner in its exclusive discretion may terminate the Class Capital Accounts that relate to those Trailing Commissions and cause any balances in those Class Capital Accounts to be distributed to those Partners;

(ii)

After establishing for each Partner each Class Capital Account, there shall be credited thereto any additional Capital Contributions by such Partner designated for such Class, such Partner’s share of Profits with respect to that Class Capital Account, any items in the nature of income or gain that are specially allocated thereto pursuant hereto and the amount of any Partnership liabilities relating to that Class Capital Account that are personally assumed by such Partner or that are secured by any Partnership property distributed to such Partner;

(iii)

From each Class Capital Account of each Partner, there shall be debited the amount of cash and the fair market value of any Partnership property distributed to or withdrawn by such Partner pursuant to any provision of this Agreement and that is designated by the General Partner as being distributed from that Class Capital Account, the balance of that Class Capital Account if the General Partner elects to terminate it, such Partner’s share of Loss with respect to that Class Capital Account, any items in the nature of expenses or loss that are specially allocated thereto pursuant hereto and the amount of any liabilities of such Partner that are secured by any property contributed by such Partner to the Partnership; and

(iv)

In determining the amount of any liability, there shall be taken into account Code section 752(c) and any other applicable provisions of the Code and Regulations.

(c)

If any interest in the Partnership is transferred in accordance with this Agreement, the transferee shall succeed to the Capital Account and Class Capital Accounts of the transferor to the extent that it relates to the transferred interest.

(d)

The foregoing provisions and other provisions of this Agreement relating to the maintenance of Capital Accounts and Class Capital Accounts are intended to comply with Regulations section 1.704-1(b), and shall be interpreted and applied in a manner consistent therewith. If the General Partner determines that it is prudent to modify the manner in which the Capital Accounts and Class Capital Accounts, or any debits or credits thereto, are computed in order to comply with Regulations section 1.704-1(b), the General Partner may make such modification if it is not likely to have a material adverse effect on amounts distributable to any Partner pursuant hereto

Page 6 of 24

on the dissolution of the Partnership. The General Partner shall adjust the amounts debited or credited to Capital Accounts and Class Capital Accounts with respect to any property contributed to the Partnership or distributed to a Partner and any liabilities secured by such contributed or distributed property or assumed by the Partnership or Partner in connection with such contribution or distribution if the General Partner determines that such adjustments are necessary or appropriate under Regulations section 1.704-1(b)(2)(iv). The General Partner shall also make any appropriate modifications if unanticipated events might cause this Agreement not to comply with Regulations section 1.704-1(b), and the General Partner shall make all elections provided for under such Regulations.

1.1.6

"Capital Contribution" will mean the total amount of cash, securities, or other instruments contributed to the partnership by all the partners or any class of partners or any one partner, as the case may be (or the predecessor holders of the interest of such partner or partners).

1.1.7

“Class A Limited Partner” means any Person who becomes a Class A Limited Partner pursuant to the terms of this Agreement and identified as a Class A Limited Partner on Schedule A.

1.1.8

“Class B Limited Partner” means any Person who becomes a Class B Limited Partner pursuant to this Agreement and identified as a Class B Limited Partner on Schedule A.

1.1.9

“Class A Limited Partnership Interest” means that Interest in the Partnership entitled to receive the trailing commission revenues received from certain identified insurance policies in force after March 26, 2008 (the “Future Trails”), and thirty-three and one-third percent (33.33%) of the trailing commission revenues received from certain identified insurance policies in force on or before March 26, 2008 (the "Current Trails") for the one year period subsequent to the date of this Agreement (after which the receipt of income from the Current Trails shall terminate), less expenses of the partnership chargeable to Class A Partnership Interests.

1.1.10

“Class B Limited Partnership Interest” means that Interest in the Partnership entitled to receive a portion of the Current Trails equal to sixty-six and two thirds percent (66.67%) of the Current Trails for the one year period subsequent to the date of this Agreement and 100% of Current Trails thereafter, plus any other income of the partnership not otherwise allocated to Class A Limited Partnership Interests herein below, less expenses of the partnership chargeable to Class B Partnership Interests.

1.1.11

"Distributable Cash" will mean with respect to any period all cash revenues of the partnership (not including (a) capital contributions, (b) funds received by the partnership in respect of indebtedness incurred by the partnership, (c) interest or other income earned on contemporary investment of partnership funds pending utilization, and (d) proceeds from the sale of assets in partial or complete liquidation of the partnership), less the sum of the following: all amounts expended by the partnership pursuant to this agreement in such period; and such working capital or reserves or other amounts as the general partner reasonably determines to be necessary or appropriate for the proper operation of the partnership business and its winding up and liquidation.

1.1.12

"General Partner" shall mean Preston Pitts, Lynda Regan, or any person who, at the time of reference, serves as general partner of the p

This is only a partial view of this document. We have millions of legal documents and clauses drafted by top law firms.