ACQUISITION AGREEMENT by and among SPENCE & MATHEWS, INC. CRAIG O. LINSCOTT AND BRADLEY J. SCOTT and NORTHEAST BANK INSURANCE GROUP, INC. November 9, 2007 ACQUISITION AGREEMENT
by
and among
▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, INC.
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇ AND ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
and
NORTHEAST
BANK INSURANCE GROUP, INC.
November
9, 2007
THIS
ACQUISITION AGREEMENT
(“Agreement”) is made this 9th day of November, 2007, by and among ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, INC., a Maine corporation (the “Seller”), ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, a resident
of North Berwick, Maine, and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, a resident of Acton, Maine
(collectively, the “Shareholders”) and NORTHEAST BANK INSURANCE GROUP, INC., a
Maine corporation (the “Purchaser”); and relates to the purchase and sale of
substantially all of the assets, property, and undertakings of the
Seller.
RECITALS
The
Seller owns and operates a business
(the “Business”) engaged in providing the sale and servicing of
insurance. Shareholders collectively own all of the shares of stock
of Seller. The Seller is willing to sell to the Purchaser, and the
Purchaser is willing to purchase from the Seller, substantially all of the
assets used by the Seller in the Business upon the terms and conditions herein
set forth.
AGREEMENT
Therefore,
in consideration of the
premises and the mutual benefits to be derived from this Agreement, the parties
hereto, intending legally to be bound, hereby agree as follows:
SECTION
1: RECITALS
The
recital clauses set forth above are true and correct and are incorporated herein
by reference as though set forth verbatim herein.
SECTION
2: PURCHASE AND SALE OF ASSETS
2.1: Purchase
and Sale. The Seller agrees to sell, transfer, convey,
assign and deliver to the Purchaser, free and clear of all encumbrances, and
the
Purchaser agrees to purchase from the Seller, all of the Seller’s tangible and
intangible property owned and used in the operation of the Business (excluding
the Excluded Assets as hereinafter defined), including without limitation the
property listed and described below in this Section (all of such property being
purchased and sold are herein collectively referred to as the “Assets”) as
follows:
2.1.1: Goodwill. All
of the Seller’s goodwill and customer sales and service files related to the
Business.
2.1.2: Intangible
Assets. All of the Seller’s transferable right, title and
interest in and to its intangible assets associated with the Business, including
its name, assumed name, domain names, trade names, including, especially, the
names, “▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Inc.” and “▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ Insurance Agency,
Inc.”, cash and income received after 5:00 p.m. on November 30, 2007, notes
receivable, accounts receivable, rights, claims, choses in action, prepaid
expenses, advertising literature and brochures, contracts, patents, patent
applications, inventions, trademarks, copyrights, general intangibles, all
rights to any and all software, customer lists and relationships, supplier
and
provider lists and relationships, territorial rights, franchise licenses,
permits, and approvals, prepaid accounts, and other intangibles of every kind
and description.
2.1.3: Books
and Records. Excluding those items set forth in Article
2.2.3 below, the Seller’s books and records relating to the Business, including
records relating to customers, suppliers, providers, employees, and
contracts.
2.1.4: Machinery,
Equipment, Etc. All machinery, equipment, fixtures,
furnishings and furniture (the “Equipment”).
2.2: Excluded
Assets. The Assets to be purchased and sold hereunder do not
include the following assets (the “Excluded Assets”):
2.2.1: Certain
Cash and Income. Cash and income received before 5:00 p.m.
on November 30, 2007;
2.2.2: Certain
Tangible Property. A 1997 BMW automobile, a 2005 ▇▇▇▇ Deere
tractor, and a 2004 Ford F-250 truck;
2.2.3: Corporate
Records. The corporate seals, certificates of incorporation,
minute books, stock books, tax returns, books of account or other records having
to do with the corporate organization of Seller;
2.2.4: Employment
Agreements and Plans. The rights of Seller under any
employment agreement or arrangement or employee benefit plan or arrangement
(whether written or oral); and
2.2.5: This
Agreement. The rights of Seller under this
Agreement.
2.3: No
Assumption of Liabilities. The Purchaser shall not assume,
and shall not be liable for any of the Seller’s liabilities excepting any
obligations directly assumed by Purchaser as provided in this
Agreement.
SECTION
3: CONSIDERATION.
The
total consideration to be paid by
the Purchaser pursuant to this Agreement shall be as follows:
3.1: Purchase
Price. The Purchaser will pay to Seller Three Million Five
Hundred Forty-Three Thousand Dollars ($3,543,000.00) (the “Purchase Price”) for
the Assets.
3.2: Payment
of
Purchase Price. The Purchase Price will be paid to Seller as
follows:
3.2.1: Purchase
Deposit. Purchaser has deposited with Seller’s attorney,
▇▇▇▇▇▇ St. ▇. ▇▇▇▇▇▇▇, Esq., of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Broder & Micoleau
LLC, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇
(“Escrow Agent”) the sum of Five Thousand Dollars ($5,000.00) as ▇▇▇▇▇▇▇ money
(the “Purchase Deposit”). At Closing Escrow Agent will deliver the
Purchase Deposit to Seller to be applied to the Purchase Price.
3.2.2: Satisfaction
of Existing Debt. Seller represents to Purchaser that there
is no debt (including, without limitation, accrued employment taxes and pension
and retirement plan obligations) owed by the Seller except as set forth on
Exhibit 1 annexed hereto (said debt being collectively referred to as the
“Existing Debt”). Seller will pay all Existing Debt at or before the
Closing. To the extent any Existing Debt remains unpaid at Closing,
Purchaser may deduct the amount of unpaid Existing Debt from the Purchase Price
and apply the same to the satisfaction of unpaid Existing Debt.
3.2.3: Cash
at
Closing. Purchaser will pay to Seller at Closing the amount
of Three Million Thirty-Eight Thousand Dollars ($3,038,000.00) (less any amount
which Purchaser may deduct and apply to unpaid Existing Debt as provided in
subsection 3.2.2 above) in the form of a certified, bank cashier’s or attorney
trust account check.
3.2.4: Seller
Financing. The balance of the Purchase Price will be paid by
the delivery to the Seller at Closing of Purchaser’s promissory note (the
“Note”) in the original principal amount of Five Hundred Thousand Dollars
($500,000.00) with interest accruing at the annual rate of six and one-half
percent (6.5%) due and payable in equal annual payments beginning one year
following the Closing Date calculated to amortize the entire principal balance
and interest accruing thereon over a term ending on the 7th anniversary
of the
Closing Date. The obligation may be prepaid without
penalty. The Note will be substantially in the form of Exhibit 2-1
annexed hereto. The Note will be secured by the unlimited guaranty of
Northeast Bank, which Guaranty shall be substantially in the form of Exhibit
2-2
annexed hereto. The original principal amount of the Note may be
reduced in accordance with subsection 3.2.5 below.
3.2.5: Retention
Requirement. As long as ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ (except in the
case of his death, disability which prevents him from carrying out his
employment, or termination of employment) retains material control of all
aspects of the Business, the original principal amount of the Note will be
reduced if the net commission income received by the Purchaser from the
operations at Seller’s former office locations for the calendar year ending
December 31, 2010 (the “Actual Income”) is less than One Million Five Hundred
Seventy-Five Thousand Dollars ($1,575,000.00) (the “Minimum
Income”). The amount by which the original principal amount of the
Note will be reduced (the “Reduction Amount”) will be calculated as
follows:
Step
1: Calculate
Retention Percentage. The “Retention Percentage” is determined
by dividing the Actual Income by the Minimum Income and expressing the quotient
as a percent.
Step
2: Determine the
Adjusted Intangible Value. The “Adjusted Intangible Value” is
determined by multiplying the Intangible Value by the Retention
Percentage. The “Intangible Value” is equal to Three Million Five
Hundred Thousand Dollars ($3,500,000.00) (representing the portion of the
Purchase Price which is not allocated to tangible personal
property).
Step
3: Calculate the
Reduction Amount. The Reduction Amount is equal to the
Intangible Value less the Adjusted Intangible Value.
Actual
income will include policies re-written by Purchaser’s other office locations
which are currently written by Seller. If the principal amount of the
Note is reduced pursuant to this subsection, Seller and Purchaser at the request
of either will promptly execute an allonge to the Note setting forth the
Reduction Amount, amending the original principal amount of the Note, and
reducing the amount of each remaining annual payment accordingly to amortize
the
remaining unpaid balance in equal payments over the remaining term of the
Note.
SECTION
4: ALLOCATION OF PURCHASE PRICE
The
Purchase Price is allocated as
follows:
|
Equipment
|
$ 43,000.00
|
|
Goodwill and other assets
|
3,500,000.00
|
|
Total:
|
$ 3,543,000.00
|
The parties agree that the allocation set forth herein was determined by negotiation and each party covenants to take no position in any manner inconsistent with the foregoing allocation on any income tax return, or before any governmental agency charged with the collection of any income tax, or in any judicial proceeding, and each agrees to execute and file with the Internal Revenue Service a Form 8594 consistent with the allocation set forth herein.
SECTION
5: EMPLOYMENT AGREEMENTS.
5.1: Shareholders. The
Shareholders will enter into employment agreements (the “Shareholder Employment
Agreements”) with the Purchaser. The Shareholder Employment
Agreements will be substantially in the form of Exhibit 3-1 annexed hereto
for
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and substantially in the form of Exhibit 3-2 annexed hereto
for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
5.2: Key
Employees. Certain key employees (“Key Employee” when
referring to one or “Key Employees” when referring to more than one) of Seller
will, if they choose to be employed by the Buyer, enter into employment
agreements (the “Key Employee Employment Agreements”) with the
Purchaser. The Key Employee Employment Agreements will be
substantially in the forms of the exhibits annexed hereto and identified below
opposite the name of each of the Key Employees, all of whom are listed
below:
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
|
Exhibit
3-3
|
|
▇▇▇▇▇
S. D. ▇▇▇▇▇▇▇
|
Exhibit
3-4
|
|
▇▇▇
▇.
▇▇▇▇▇▇▇▇▇
|
Exhibit
3-4
|
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
|
Exhibit
3-5
|
5.3: Employment of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (“▇▇▇▇▇▇▇”) is the daughter of ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and a former employee of Seller. Should ▇▇▇▇▇▇▇ seek re-employment with the Business within the next three years, Purchaser agrees, if ▇▇▇▇▇▇▇ agrees, to retain her as an employee at an annual salary of no less than $38,000.00 provided she enters into an employment agreement with Purchaser substantially in the form annexed hereto as Exhibit 3-4 as will be required of all of the employees of Seller whom Purchaser hires.
5.
4: Other Employees. Other
employees of Seller who are hired by Purchaser will enter into an Employment
Agreement substantially in the form annexed hereto as Exhibit 3-4.
SECTION
6: CLOSING
6.1: Closing
Time and Place. The closing of the transactions contemplated
by this Agreement (the “Closing”) shall occur at the offices of ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, at 11:00 a.m. on November 30, 2007
(the “Closing Date”), or at such other time and place as may be agreed upon by
the parties hereto.
6.2: Transfer
of Title and Possession. At the Closing, the Seller shall
transfer title to the Assets free and clear of all liens and encumbrances by
executing and delivering to the Purchaser one or more warranty bills of sale
substantially in the form annexed as Exhibit 4 (the “▇▇▇▇ of Sale”), and any and
all other instruments or certificates of title necessary to effectuate the
transfer of title to the Assets as contemplated hereby, and shall transfer
possession of the Assets to the Purchaser.
6.3: Assignment
of Contracts. At the Closing, the Seller and the Purchaser
shall execute and deliver an instrument of assignment and assumption of
contracts and agreements, licenses and other instruments being assigned to
the
Purchaser hereunder, substantially in the form annexed as Exhibit 5 (the
“Assignment and Assumption Agreement”), and shall execute any other instruments
or certificates necessary to effect the assignment thereof.
This
Agreement and any document
delivered under this Agreement shall not constitute an assignment or an
attempted assignment of any contract contemplated to be assigned to the
Purchaser under this Agreement:
(a) which
is not
assignable without the consent of a third party if such consent has not been
obtained and such assignment or attempted assignment would constitute a breach
of such contract or agreement; or
(b) in
respect of
which the remedies for the enforcement of such contract or agreement available
to the Seller would not pass to the Purchaser.
The
Seller shall use its best efforts
to obtain the consents of third parties as may be necessary for the assignment
of the contracts. To the extent that any of the foregoing items are
not assignable by their terms or where consents to their assignment cannot
be
obtained as provided in this Section 6, such items shall be held by the Seller
in trust for the Purchaser and the covenant and obligations under those
contracts or agreements shall be performed by the Purchaser in the name of
the
Seller and all benefits and obligations existing therein shall be for the
account of the Purchaser. The Seller shall take or cause to be taken
such action in its name or otherwise as the Purchaser may reasonably require
so
as to provide the Purchaser with the benefits of those contracts or agreements
and to effect collection of money to become due and payable under such items
and
the Seller shall promptly pay over to the Purchaser all money received by the
Seller in respect of all of the foregoing items. Upon the Closing,
the Seller and the Purchaser shall execute and deliver a general assignment
of
contracts, leases and licenses agreement in the form attached as Exhibit 6,
under which the Seller shall authorize the Purchaser, at the Purchaser’s
expense, to perform all of the Seller’s obligations under the foregoing items
and constitute the Purchaser its attorney to act in the name of the Seller
with
respect to those items, and the Purchaser shall agree to assume those
obligations.
6.4:
Noncompetition Agreement. At the Closing, Seller and
Shareholders will enter into a Noncompetition Agreement substantially in the
form of the Noncompetition Agreement annexed hereto as Exhibit
7. Purchaser has delivered to Escrow Agent a deposit (the
“Noncompetition Deposit”) in the amount of Five Thousand Dollars ($5,000.00) to
be applied to the Eight Hundred Thousand Dollar ($800,000.00) consideration
for
the covenants in the Noncompetition Agreement. At Closing the Escrow
Agent will deliver the Noncompetition Deposit to Seller to be applied toward
the
consideration. Purchaser will pay to Seller the balance of said
consideration, Seven Hundred Ninety-Five Thousand Dollars ($795,000.00), in
accordance with the provisions of the Noncompetition Agreement and such
obligation shall be secured by the unlimited guaranty of Northeast Bank, such
Guaranty shall be in the form of Exhibit 2-2 annexed hereto.
6.5:
Errors and Omission Insurance. Purchaser and Seller
will obtain and produce at Closing satisfactory evidence of the following
insurance providing notice to the other at least ten (10) days prior to
cancellation or termination (if applicable):
6.5.1:
Purchaser. Purchaser will maintain a policy in form
and substance reasonably satisfactory to Seller insuring against errors and
omissions until the Note has been satisfied in full.
6.5.2:
Seller
and
Shareholders. Seller and Shareholders will purchase at or
prior to Closing a tail policy in form and substance reasonably satisfactory
to
Purchaser insuring against errors and omissions with the minimum policy limits
of Two Million Dollars ($2,000,000.00) for each occurrence and Four Million
Dollars ($4,000,000.00) in the aggregate. The insurance will be on a
“claims made” basis for a period extending a minimum of three (3) years
following the Closing.
6.6:
Leases for Office Locations. At the Closing, Seller
will deliver to purchaser a fully executed termination of the existing lease
between Seller and its landlord for the Seller’s business office located at ▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ in Rochester, New Hampshire. Purchaser will
undertake to enter into a new lease for said office in a form reasonably
acceptable to Purchaser signed by Seller’s said landlord which Purchaser will
execute at Closing. At the Closing, Seller and Purchaser will execute
and deliver an Assignment and Assumption Agreement with respect to the lease
between Seller and its landlord for the Seller’s business office located at ▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ in Berwick, Maine, pursuant to which Seller will assign the
lease and Purchaser will assume the rights and obligations of Seller under
the
lease. At the Closing, Seller will produce the landlord’s signed
written consent to the assignment if such consent is required under the
provisions of the lease. The lease for the Berwick office will be
amended by the Seller and its landlord prior to such assignment to the extent
necessary to provide that the landlord will be solely responsible, without
reimbursement from the tenant, for fire and casualty insurance for the building
and improvements, liability insurance for the landlord and those in privity
of
estate with the landlord, and for real estate taxes relating to the real estate,
building and improvements.
6.7:
Option to Purchase Berwick Real Estate. At the
Closing, Seller will deliver to Purchaser an option agreement (the “Option”) to
purchase the real estate located at 4 ▇▇▇▇▇▇▇▇ Square in Berwick, Maine and
more
particularly described in the deed from ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ to ▇▇▇▇▇▇▇▇ Square LLC
dated March 24, 2004 and recorded in the York County Registry of Deeds in Book
14038, Page 142 (the “Berwick Real Estate”). At Closing, the Option
will be signed by the owner (the “Owner”) of the Berwick Real Estate,
acknowledged before a notary public, and otherwise suitable for recording in
said registry. Seller will provide the Purchaser evidence of the
existence of the Owner and the authority of the officer or agent executing
the
Option to execute and deliver the Option to Purchaser. The Option
shall extend for a period of two (2) years following the Closing. The
Option will entitle the Purchaser to purchase the Berwick Real Estate for Three
Hundred Seventy-Five Thousand Dollars ($375,000.00) upon exercise of the Option
and require the Owner to deliver to Purchaser a quitclaim deed with covenant,
upon the terms and conditions set forth more fully in the Option.
SECTION
7: REPRESENTATIONS AND WARRANTIES
7.1: Representations
and Warranties of the Seller and Shareholders. As a material
inducement to the Purchaser to enter into and perform its obligations pursuant
to this Agreement, the Seller and Shareholders represent and warrant, jointly
and severally, as of the date hereof and the Closing Date, as
follows:
7.1.1: Organization
and Good Standing of the Seller. The Seller (a) is a
corporation duly organized, validly existing and in good standing under the
laws
of the State of Maine; (b) is qualified to do business as a foreign corporation
in the State of New Hampshire; (c) is not required to be qualified as a foreign
corporation in any jurisdiction where such qualification is required by the
nature of the Seller’s business other than in the State of New Hampshire; and
(d) has corporate power to carry on its business as it is now being conducted
and to enter into and perform its obligations pursuant to this
Agreement.
7.1.2: Ownership
of Shares; Ownership Interests. Shareholders own all of the
issued and outstanding shares of capital stock of the Seller and all other
securities of the Seller, if any, and there are no outstanding securities or
options, warrants or other rights to acquire any securities of the
Seller. Shareholders have full authority to vote Shareholders’ shares
of capital stock on all matters relating to the transactions contemplated by
this Agreement.
7.1.3: Authorization. The
execution and delivery by the Seller of this Agreement, and the consummation
by
the Seller of the transactions contemplated hereby and the performance of all
of
its obligations hereunder, have been duly authorized by all necessary action
on
the part of the Board of Directors and shareholders of the Seller; and this
Agreement, when executed and delivered by the Seller, will be the valid and
binding obligation of the Seller, enforceable in accordance with its terms
except as enforcement may be subject to laws relating to bankruptcy, insolvency
and creditors’ rights, and except as the availability of the remedy of specific
enforcement is subject to the discretion of any court from which such remedy
may
be sought.
7.1.4: Title
to Assets. The Seller has valid, marketable title to the
Assets, in its own name, free and clear of all claims, liens, charges,
encumbrances, and claimed interests of any kind of any other person or persons
whatsoever (excepting encumbrances which will be discharged at or prior to
Closing) and has full right, power and authority to sell, transfer, assign
and
deliver the Assets to the Purchaser hereunder, without any required consent
or
approval by any other party.
7.1.5: Extent
and Condition of Assets. The Assets constitute all of the
property used by the Seller in the conduct of the Business. The
Assets are located at the two business offices of the Seller, one at 4 ▇▇▇▇▇▇▇▇
Square in Berwick, Maine and the other at ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ in Rochester,
New
Hampshire, are in good operating condition, and are adequate and suitable for
the purposes for which they are presently being used.
7.1.6: Other
Rights to Purchase. No person other than the Purchaser has
any agreement or option or any right capable of becoming an agreement or option
for the purchase from the Seller of any of the Assets.
7.1.7: Non-Violation. The
execution and delivery of this Agreement by the Seller, and the consummation
by
it of the transactions contemplated hereby, do not and will not violate the
provisions of (1) any applicable Federal laws or laws of the State of Maine,
or
of any other state or jurisdiction in which the Seller does business, (2) the
Seller’s Articles of Incorporation or Bylaws, or (3) any order, judgment or
decree or any other restriction of any kind or character applicable to the
Seller or to the Assets. No default or breach will occur by virtue of
the consummation of the transactions contemplated hereunder in any material
respect under any contract, agreement, deed of trust, indenture, or other
instrument applicable to the Seller, and no rights of the Seller under any
such
existing contract, agreement, indenture, deed of trust, or other instrument
will
be limited, impaired or extinguished by virtue of the consummation of the
transactions contemplated hereunder, nor will the consummation of the
transactions contemplated hereunder result in the creation of any lien, charge
or encumbrance upon the Assets.
7.1.8: Financial
Statements. The Seller has delivered to the Purchaser true
and correct copies of the Seller’s annual financial statements for calendar
years 2005 and 2006 (and interim financial statements) (hereinafter the
“Financial Statements”). Such Financial Statements fairly and
accurately present the financial condition and the results of operations of
the
Seller for the periods then ended, in accordance with generally accepted
accounting principles, consistently applied. The Seller is subject to
no material liabilities, and has not guaranteed or otherwise become liable
for
the liabilities or obligations of others, except for those set forth in the
Financial Statements.
7.1.9: Absence
of Certain Changes or Events; Business Prospects. Since
December 31, 2006, there has not been any material adverse change (1) in the
Seller’s financial condition, assets, liabilities, properties, or Business,
including any damage, destruction or loss of property by fire or other casualty,
whether or not covered by insurance, or (2) to the best of the Seller’s
knowledge, in the Seller’s business prospects and relationships with its
lenders, customers, suppliers or other parties with whom it has contractual
relations. The Seller has not conducted the Business other than in
the ordinary course and consistent with the manner in which the Business has
been conducted before those dates. The Seller has not received any
information not generally available to the public that would indicate any
substantial risk that the future prospects of the Business might be affected
in
a materially adverse way.
7.1.10: Tax
Matters. The Seller has paid all taxes, interest and
penalties due or assessed and owed by it, and has duly filed all Federal, state,
local or other tax returns which are required to be filed. No
proceedings or other actions which are still pending or open have been taken
for
the assessment or collection of additional taxes of any kind from the Seller,
no
statute of limitations in respect of any taxes has been waived or extended
by or
on behalf of the Seller, and no examination by the Federal or state taxing
authorities or any other taxing authority is currently
pending. Present taxes which the Seller is required by law to
withhold or collect have been withheld or collected and have been paid over
to
the proper governmental authorities or are properly held by the Seller for
such
payment and will be paid when due.
7.1.11: Contracts
and Other Obligations. There are annexed hereto as Exhibit 8
complete and accurate lists of the following:
(a) all
leases to
which the Seller is a party as lessee or lessor, and all equipment leases,
with
respect to any of the Assets of the Business;
(b) all
other
contracts or agreements relating to the Business, including without limitation,
supply contracts, maintenance contracts, advertising contracts, software and
other license agreements, and service contracts (the “Contracts”).
The
Contracts are all in good standing
and in full force and effect unamended and no material default or breach exists
in respect of them on the part of any of the parties to them and no event has
occurred which, after the giving of notice or the lapse of time or both, would
constitute such a default or breach; the foregoing includes all the presently
outstanding material contracts entered into by the Seller in the course of
carrying on the Business.
Except
for Contracts and Licenses (as
defined in Section 7.1.16) requiring the consent to assignment of third parties
that are listed in Exhibit 8, there are no consents, authorizations, licenses,
franchise agreements, permits, approvals or orders of any person or government
required to permit the Seller to complete this transaction with the
Purchaser.
7.1.12: Employees. There
is annexed hereto as Exhibit 9 a list containing the name of each employee
of
the Seller engaged in the Business together with a description of the position
held by each such employee and the current rate of compensation of each such
employee, together with the terms of any contractual relationship therewith, if
any. The Seller has complied with all applicable Federal, state, and
local laws relating to the employment of labor, including the provisions thereof
relating to wages, hours, collective bargaining, the withholding and payment
of
social security and other taxes, and the provision and continuation of medical
insurance benefits under applicable law, and the Seller is not liable for any
arrearages of any wages or taxes, or penalties for failure to comply with the
foregoing, and has not committed any unfair labor practice. All wages
and all other payments due from the Seller to the employees in salary, accrued
vacation, or other fringe benefits have been paid. To the best of the
Seller’s and the Shareholders’ knowledge, no controversies are pending or
threatened between the Seller and any of its employees, and no attempts have
been made to organize the Seller’s employees into any trade union within the
past five (5) years.
7.1.13: Litigation. No
litigation proceeding, investigation or claim is pending or threatened against
the Seller relating to the Assets or the Business including without limitation
any actual or alleged injury to persons or property relating to the conduct
of
the Business before the Closing Date nor does the Seller know or have any
reasonable grounds to know of any basis for any such litigation, proceeding,
investigation or claim. The Seller is not involved in and has not
been served or put on notice of any litigation, claim, proceeding or
governmental investigation pending or threatened against or relating to the
Seller that will adversely affect the Seller’s ability to consummate the
transactions contemplated by this Agreement. To the best of the
Seller's and the Shareholders’ knowledge, no investigation of the Seller has
been conducted or is intended, nor remedial action taken or intended against
the
Seller, by any governmental authority.
7.1.14: Brokers. The
Seller has not incurred any obligation to pay compensation or commissions to
any
broker or other intermediary in connection with the transactions contemplated
hereby. The Seller and the Shareholders jointly and severally, will,
independent of the other provisions of this Agreement, indemnify the Purchaser
and hold the Purchaser harmless without deduction or offset against payment
of
any such compensation or commissions.
7.1.15: Proprietary
Property. Listed on Exhibit 10 are all trademarks, trade
names, domain names, service marks, or other intellectual property used in
the
conduct of the Business (the “Intellectual Property”), and all registrations or
filings of any of the foregoing. In the conduct of the Business, the
Seller has not, and is not to the best of its knowledge infringing upon any
trademark, service ▇▇▇▇, trade name, domain name, trade secret, patent,
copyright or other intellectual property or contractual rights of others, nor
using any confidential information, inventions, know-how, trade secrets,
customer lists or other intellectual property of others, nor is the Seller
aware
of any infringement by others of the Intellectual Property. All of
the Seller’s rights in and to the Intellectual Property are assignable to the
Purchaser without consent or approval by any third party. No employee
of the Seller owns, directly or indirectly in whole or in part, any patent,
trade-▇▇▇▇, trade name, domain name, brand name, copyright, moral right,
invention, process, know-how, formula or trade secret which the Seller is
presently using or the use of which is necessary for the Business.
7.1.16: Licenses
and Approvals. Listed on Exhibit 11 is each license, permit,
approval and certification by any governmental or industry oversight entity
necessary in the conduct of the Business (the “Licenses”). The Seller
has duly and properly obtained the Licenses, which are currently in full force
and effect. The Seller has filed all reports and returns required by
all governmental agencies necessary for the conduct of the Business and has
complied with all applicable Federal, state and local laws, regulations or
ordinances.
7.1.17: Insurance. Listed
on Exhibit 12 is each insurance policy maintained by the Seller upon the Assets
or the Business during the period beginning six (6) full calendar years before
the date hereof. All such policies have been in full force and effect
during such periods as described on Exhibit 12 and have afforded coverage on
an
“occurrence” basis during such periods (or, if on a “claims made” basis, the
Seller covenants that it will maintain such insurance, on substantially the
same
terms for a period of three years after the Closing Date), and there are no
existing disputes as to coverage under any such policies.
7.1.18: Compliance
with Laws; Environmental Compliance. Except as disclosed on
Exhibit 13, the Seller has at all times conducted the Business in full and
complete compliance with all applicable local, state and Federal laws and
regulations, including without limitation, any such local, state and Federal
laws and regulations relating to environmental matters (“Environmental Law”)
and/or occupational health and safety matters. There are no
substances in any of the Assets that legally cannot be disposed of in the manner
customarily used by the Seller for disposal.
The
Seller (1) has never sent a
substance or material meeting any one or more of the following criteria: (a)
it
is or contains a substance designated as a hazardous waste, hazardous substance,
hazardous material, pollutant, contaminant or toxic substance under any
Environmental Law; (b) it is toxic, explosive, corrosive, reactive, ignitable,
infectious, radioactive, mutagenic, dangerous or otherwise hazardous; (c) its
presence at some quantity requires investigation, notification or remediation
under any Environmental Law or common law; (d) it constitutes a danger, a
nuisance, a trespass or a health or safety hazard to persons or property; or
(e)
it is or contains, without limiting the foregoing, asbestos, polychlorinated
biphenyls, petroleum hydrocarbons, petroleum derived substances or waste, crude
oil or any fraction thereof, nuclear fuel, natural gas or synthetic gas
(collectively, the “Hazardous Material”) to a site that is contaminated by any
Hazardous Material or that, pursuant to any Environmental Law, (i) has been
placed on any Federal or state contamination sites list, or (ii) is subject
to
or the source of a claim, an administrative order, or other request to take
“removal”, “remedial”, “corrective”, or any other “response” action, as defined
in any Environmental Law, or to pay for the costs of any such action at the
site; (2) is in compliance with all Environmental Laws in all of its activities
and operations; (3) is not involved in any suit or proceeding and has not
received any notice or request for information from any governmental authority
or other third party with respect to a release or threatened release of any
Hazardous Material or violation or alleged violation of any Environmental Law,
and has not received notice of any claims from any person or entity relating
to
property damage or to personal injuries from exposure to any Hazardous Material;
(4) has timely filed every report required to be filed, acquired all necessary
certificates, approvals and permits (all of which are listed in Exhibit 12
and
none of which shall be lost or materially modified as a result of this
transaction), and generated and maintained all required data, documentation
and
records under any Environmental Law; and (5) will be able to comply with any
prospective requirement adopted or promulgated prior to the date hereof under
any Environmental Law and to be applicable to the Seller in the future without
material cost or change in the operations of the Seller.
7.1.19: Prepayment
for Services. Except as set forth on Exhibit 14, which will
be revised as of the Closing Date, the Seller has received no payments in
advance for sales or services to be performed after the Closing that relate
to
the Business.
7.1.20: Employee
Benefit Plans. Listed on Exhibit 15 is a true and complete
list (or in the case of unwritten plans, a description) of every stock purchase,
bonus, stock option, compensation, severance, incentive compensation, deferred
compensation, savings, pension, ex gratis, profit sharing, group insurance,
medical, disability, life insurance, hospitalization, dental, welfare, vacation,
sick pay, holiday, educational assistance or other employee benefit plan or
program established by the Seller for the benefit of employees engaged in the
Business, including without limitation, company cars, car allowances or car
use
policy, whether established by contract, policy, custom or course of dealing
(the “Employee Benefit Plans” and each as an “Employee Benefit
Plan”). The Seller agrees to provide Purchaser with a copy of any
Employee Benefit Plan document and any related documents reasonably requested
by
Purchaser.
(a) The
Seller represents and warrants that each Employee Benefit Plan is and has at
all
times been in material compliance with all Plan terms, laws, regulations,
reporting and other requirements applicable to such Plan, or any participant
in
such Plans, including but not limited to compliance with all pertinent Federal
and state requirements. The Seller has not received notification from
any other national or state agency that any Employee Benefit Plan is not in
compliance with any statute, regulation, ruling or any other action having
effect of law that is applicable to any of the Employee Benefit Plans. Except
as
set forth on Exhibit 15 neither the Seller nor the Business maintains, or has
maintained in the past five (5) years, any employee Benefit Plan, nor, except
as
set forth on Exhibit 15 has the Seller or the Business maintained any pension
plan or participated in or contributed to a multi-employer plan.
(b) The
Seller has
made all required contributions under each of the Employee Benefit Plans for
all
periods through and including the Closing Date or accruals therefore have been
provided for as shown on the financial statement of Seller and the
Business. No accumulated funding deficiency has occurred with respect
to any of the Employee Benefit Plans and there are no unfunded liabilities
in
connection with any of the Plans. In addition, the Seller has made
all payments due under any individual or group insurance arrangement, plan,
or
policy for all periods through and including the Closing Date.
(c) The
Seller shall
be responsible for the payment of all benefit liabilities incurred under any
Employee Benefit Plan prior to or as of the Closing Date, whether or not claims
for such liabilities have been filed prior to or on such Closing
Date. In addition, with respect to any of the Seller’s or the
Business’ health, medical, or dental insurance policies, the Seller agrees that
the Purchaser shall have no liabilities for any penalties for any kind resulting
from early or off-anniversary cancellation of any such policy, or for claims
for
benefit liabilities incurred under such policy, prior to and on the Closing
Date, whether or not any such claim has been filed prior to or on such date,
including, but not limited to, any runout claims paid from reserves, or any
terminal premium arrangements such as a deficit recoupment, retrospective
premiums, or delayed premium payments.
7.1.21: Disclosure. No
representation or warranty by the Seller made herein, or in any Exhibit or
Schedule hereto, contains or will contain any untrue statement of material
fact,
or omits or will omit to state a material fact necessary to make the statements
contained herein and therein not misleading.
7.2: Representations
by the Purchaser. As a material inducement to the Seller to
enter into and perform Seller’s obligations pursuant to this Agreement, the
Purchaser represents and warrants, as of the date hereof and the Closing Date,
as follows:
7.2.1: Organization
and Good Standing of the Purchaser. The Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws
of the State of Maine and has corporate power to carry on its business as it
is
now being conducted and, subject to any required governmental approvals to
enter
into and perform its obligations pursuant to this Agreement.
7.2.2: Authorization
by the Purchaser. The execution and delivery by the
Purchaser of this Agreement, and the consummation by the Purchaser of the
transactions contemplated hereby, have been duly authorized by all necessary
action on the part of the Purchaser, and this Agreement, when executed and
delivered by the Purchaser, will be the valid and binding obligation of the
Purchaser, enforceable in accordance with its terms except as enforcement may
be
subject to laws relating to bankruptcy, insolvency and creditors’
rights.
7.2.3: Non-Violation. The
execution and delivery of this Agreement by the Purchaser and the consummation
of the transactions contemplated hereby, do not and will not violate the
provisions of (1) any applicable laws of the United States, the State of Maine,
or of any other state or province of jurisdiction in which the Purchaser does
business, (2) the Purchaser’s Articles of Incorporation or Bylaws, or (3) any
order, judgment or decree or any other restriction of any kind or character
applicable to the Purchaser. No default or breach will, by virtue of
the consummation of the transactions contemplated hereunder, occur in any
material respect under any material contract, agreement, deed of trust,
indenture or other instrument applicable to the Purchaser.
7.2.4: Litigation. The
Purchaser is not involved in and has not been served or put on notice of any
material litigation, proceeding or governmental investigation pending or
threatened against or relating to the Purchaser that will adversely affect
the
Purchaser’s ability to consummate the transactions contemplated by this
Agreement.
7.2.5: Brokers. The
Purchaser has incurred no obligation to pay compensation or commissions to
any
broker or other intermediary in connection with the consummation of the
transactions contemplated hereby. The Purchaser will, independent of
the other provisions of this Agreement, indemnify the Seller and the
Shareholders and hold the Seller and the Shareholders harmless without deduction
or offset against payment of any such compensation or commissions.
7.2.6: Disclosure. No
representation or warranty by the Purchaser herein contains or will contain
any
untrue statement of material fact, or omits or will omit to state a material
fact necessary to make the statements contained herein not
misleading.
SECTION
8: PRE-CLOSING COVENANTS OF SELLER
As
a material inducement to the
Purchaser to enter into and perform its obligations under this Agreement, the
Seller hereby undertakes, covenants and agrees, from and after the date hereof
to the Closing Date, as follows:
8.1: Conduct
of Business. The Seller will conduct the Business in the
ordinary course, will neither dispose of any material assets nor alter in any
material fashion the nature of its assets or the relationships of its assets
and
liabilities, and the Seller will use its best efforts to preserve and promote
the Business.
8.2: Continuation
of Insurance. The Seller will continue in effect the
insurance coverages listed on Exhibit 12.
8.3: Employees. The
Seller shall pay its present employee workforce and shall remain current in
all
obligations relating thereto, including without limitation, withholdings,
benefits, and other payments, without material change until the Closing
Date. As of the Closing Date, the Seller will terminate the
employment of all of its employees to be hired by the Purchaser and shall
terminate the entitlements of all such employees to any benefits in the nature
of accrued vacation or sick leave, and will pay to all of its employees any
amounts due from the Seller in respect thereof. All of said employees
to be hired by Purchaser will enter into an Employment Agreement substantially
in the form annexed hereto as Exhibit 3-7.
8.4: Access
for Investigation. The Seller will furnish to the Purchaser
and its agents reasonable access, during normal business hours, to its property,
and to all customer lists, books, financial statements, income tax returns
and
any other records relating to the Business for purposes of allowing
investigation thereof by the Purchaser. The Purchaser and its agents
may, at the Purchaser’s sole cost and expense, conduct such investigations,
evaluations, surveys and appraisals of the Assets and the Business generally,
all as the Purchaser may deem appropriate in its discretion.
8.5: No
Discussions. Except to the extent reasonably necessary for
the performance of their obligations hereunder and the consummation of the
transactions contemplated by this Agreement, the Seller will refrain from any
discussions with any parties concerning the sale of the Assets and the Business
to other prospective purchasers, or other transactions inconsistent with the
transactions contemplated by this Agreement.
8.6: Application
for Consents. The Seller shall apply for and diligently seek
any consents or authorizations by third parties required to permit performance
by the Seller of its obligations hereunder.
8.7: Meeting
with Employees. Seller will allow Purchaser to meet with
Seller’s employees twice prior to Closing at a time of Purchaser’s choosing
subject to Seller’s approval which approval, will not be unreasonably withheld,
conditioned or delayed. The purpose of the meeting will be to answer
the employees’ questions concerning the transactions contemplated by this
Agreement and to permit the Purchaser to solicit such employees for employment
with the Purchaser. Nothing herein shall require the Purchaser to
employ, or offer employment to, any employee of the Seller except as otherwise
explicitly provided in this Agreement.
SECTION
9: CLOSING COVENANTS OF SELLER
As
a material inducement to the
Purchaser to enter into and perform its obligations under this Agreement, the
Seller hereby undertakes, covenants and agrees, from and after the Closing
Date,
as follows:
9.1: Discontinuance
of Business. The Seller shall discontinue any and all
activities in respect of the Business except for activities reasonably necessary
in connection with the winding up of the Business.
9.2: Discharge
of Accounts Payable and Other Obligations. The Seller shall
pay and discharge promptly when due all accounts payable and all other
obligations retained by the Seller that relate to the Business, including
without limitation, all state and Federal income, unemployment or similar taxes
and assessments which are owed or which might become owed by or on behalf of
the
Seller in respect of all periods of time before the Closing Date.
9.3: Change
of Name. The Seller shall take such actions as are necessary
to change its corporate name and to terminate any trade name registration used
with respect to the Business, in order to permit the Purchaser to adopt such
name or names as its corporate or assumed names, alone or in combination with
any other word or words.
9.4: Payment
of Certain Costs. The Seller shall pay, on the Closing Date,
any and all costs in connection with the prepayment of any of its borrowings,
if
any.
9.5: Cooperation
with Purchaser. The Seller shall, under direction by the
Purchaser, cooperate with the Purchaser in contacting customers, suppliers
and
all other parties with which the Seller has heretofore conducted any business,
for purposes of notifying all such parties of the transactions contemplated
by
this Agreement and concluding arrangements for the continuation of such business
relationships for the benefit of the Purchaser following the
Closing.
SECTION
9-1: CLOSING COVENANTS OF PURCHASER
As
a
material inducement to the Seller to enter into and perform its obligations
under this Agreement, the Purchaser hereby undertakes, covenants and agrees,
from and after the Closing Date, as follows:
9-1.1: Use
of the name of ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ Insurance. The Purchaser
agrees to operate the Business under the assumed names of ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
Insurance and/or ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, Inc., and to use no other assumed names,
until at least December 31, 2010 unless the Retention Requirement set forth
in
Section 3.2.5 is waived and is of no further effect.
SECTION
10: INDEMNIFICATION
10.1: Indemnification
by the Seller. The Seller and the Shareholders shall,
jointly and severally, indemnify, defend, and save and hold harmless the
Purchaser from and against any damage, liability, loss, expense or injury
(including without limitation reasonable attorneys’ fees and costs and expenses
incident to any claim, suit, action or proceeding) suffered by the Purchaser
in
respect of:
10.1.1: Breach
of Representations, Warranties and Covenants. Any and all
misrepresentations, inaccurate or incomplete representations, breach of any
warranty, or nonfulfillment of any covenant by the Seller contained in this
Agreement, including the Exhibits and Schedules hereto and any certificate
or
other instrument furnished or to be furnished to the Purchaser by or on behalf
of the Seller; and
10.1.2: Liabilities
as of the Closing Date. Any and all liabilities or
obligations of the Seller, existing as of the Closing Date or arising after
the
Closing Date but relating to the operation of the Business before the Closing
Date.
10.2: Indemnification
by the Purchaser. The Purchaser shall indemnify, defend, and
save and hold harmless the Seller, from and against any damage, liability,
loss,
expense or injury (including without limitation reasonable attorneys’ fees and
costs and expenses incident to any claim, suit, action or proceeding), suffered
by the Seller, in respect of:
10.2.1: Breach
of Representations, Warranties and Covenants. Any and all
misrepresentations, inaccurate or incomplete representations, breach of any
warranty, or nonfulfillment of any covenant by the Purchaser made or contained
in this Agreement, including the Exhibits and Schedules hereto and any
certificate or other instrument furnished or to be furnished to the Seller
by or
on behalf of the Purchaser; and
10.2.2: Liabilities
After the Closing Date. Any and all liabilities or
obligations of the Purchaser relating to the operation of the Business from
and
after the Closing Date.
10.3: Survival
of Representations and Warranties; Limitations. The
representations, warranties and covenants set forth in this Agreement shall
survive the Closing. Notwithstanding any provision of law which may
apply to limit the right to bring an action for indemnification under this
Section 10, no party shall assert any claim for indemnification hereunder later
than three (3) years after the Closing Date except for (a) claims in respect
of
any breach of the representations, warranties, and covenants set forth in
Section 7.1.1, 7.1.2, 7.1.3, 7.1.4 and 7.1.10 which may be asserted at any
time,
and (b) claims relating to noncompliance with the covenants and undertakings
set
forth in this Agreement or any document constituting a Schedule or an Exhibit
hereto, which may be asserted at any time subject to applicable statutes of
limitations in respect thereof.
10.4: Notice
of Claims and Response. If the party seeking indemnification
hereunder (for purposes of this Section 10, the “Indemnified Party”) shall
demand indemnification hereunder against the other party (for purposes of this
Section 10, the “Indemnifying Party”), such Indemnified Party shall notify the
Indemnifying Party of the facts and circumstances giving rise to such claim
for
indemnification. The Indemnified Party shall afford to the
Indemnifying Party access to all records and information relating to such claim,
facts and circumstances (except those matters privileged under applicable state
or Federal law or rules of evidence) reasonably necessary to permit the
Indemnifying Party to evaluate the merits of such claim or the accuracy of
such
facts and circumstances. Within thirty (30) days after receipt of any
such demand for indemnification, the Indemnifying Party shall by notice to
the
Indemnified Party acknowledge its obligation to indemnify the Indemnified Party
in respect of such claim, fact or circumstance, or reject the demanded
indemnification. A failure to respond to any such demand within said
thirty (30) day period shall be deemed to be a rejection of the
demand.
10.5: Opportunity
to Cure. Notwithstanding any rejection of a demand for
indemnification pursuant to Section 10.4, the Indemnifying Party shall be
entitled, within thirty (30) days after notice of any demand for
indemnification, at its sole cost and expense, to undertake to cure any
circumstances or pay or settle any claim which is the subject of said notice,
provided, however, that any indemnification hereunder with respect to such
claim, fact or circumstance shall continue to be available notwithstanding
such
undertaking to cure.
10.6: Defense
of Claims. Should any claims be made or suits or proceedings
be instituted which, if successfully prosecuted, would give rise to any
obligation to indemnify under this Section 10, the control of the defense
thereof shall be vested in the party that would bear the greatest risk of loss
as a consequence thereof pursuant to this Section 10, and the other party shall
be entitled to participate in such defense. Notwithstanding the
foregoing control of the defense provisions, no settlement of any claim, suit
or
proceeding which will result in liability pursuant to this Section 10, may
be
made without the consent of the party bearing such liability, which consent
will
not unreasonably be withheld.
10.7: De
Minimis Provisions. Notwithstanding the foregoing, no
payments in respect of any indemnification claim shall be required of any
Indemnifying Party unless and until the total amount of all indemnification
claims payable by such Indemnifying Party has exceeded Five Hundred Dollars
($500.00) after which, however, all such indemnification claims, including
those
included in the de minimis calculation, shall be subject to payment as provided
herein.
SECTION
11: CONDITIONS TO THE OBLIGATION OF THE PARTIES
11.1: Conditions
to the Obligation of the Purchaser. The obligation of the
Purchaser to perform its undertakings pursuant to this Agreement is conditioned
upon satisfaction of the following conditions, or written waiver thereof by
the
Purchaser, as of or before the Closing Date:
11.1.1: Performance. The
covenants and agreements of the Seller contained in this Agreement shall have
been performed and complied with in all material respects and all
representations and warranties made by the Seller shall be true in all material
respects.
11.1.2: Governmental
Approvals. The Purchaser shall have obtained governmental
approval of the transaction, if necessary, and no other governmental agency,
court or instrumentality shall have entered any order or taken any other action
that would enjoin or otherwise interfere with the consummation of the
transactions contemplated by this Agreement.
11.1.3: Delivery
of Certificates. The Seller shall have delivered to the
Purchaser the following (1) a certificate dated the Closing Date and signed
by
the Clerk of the Seller as to the adoption of resolutions on behalf of the
Board
of Directors and shareholders necessary to authorize the transactions
contemplated by this Agreement, and containing copies of Seller’s Articles of
Incorporation and Bylaws as then in effect, (2) a certificate issued by the
Secretary of the State of Maine as to the legal existence and good standing
of
the Seller and, if applicable, a certificate issued by the Secretary of State
of
each state in which the Seller is qualified to transact business, if any, as
to
the qualification and good standing of the Seller in each such state, (3) a
certificate of tax clearance or similar certificate issued by the appropriate
taxing authorities and Department of Labor of the State of Maine and the
appropriate governmental agency for the State of New Hampshire certifying that
the Seller has paid all taxes and withholdings due and payable in respect of
the
Business (or reasonably acceptable certification in lieu thereof if such
official certificates are unavailable at the Closing), (4) a certificate dated
the Closing Date and signed by the Clerk of the Seller as to the incumbency
of
any officers executing on behalf of Seller, this Agreement or any document
contemplated by this Agreement, and (5) any certificates requested by the
Purchaser from third party creditors of the Seller as to (a) the performance
of
all obligations by the Seller to such third party creditors as of the Closing
Date, (b) the amount of any payments due, if any, or (c) the discharge by the
Seller of its obligations to such third party creditors.
11.1.4: Execution
and Delivery of Third Party Consents, Documents and
Agreements. The third party consents, documents and
agreements contemplated hereby shall have been duly executed and delivered
by
and among the parties thereto, and originals or copies thereof, as appropriate,
shall have been delivered to the Purchaser.
11.1.5: Delivery
of Title to the Assets. The Seller shall have delivered to
the Purchaser title to the Assets by delivery of the ▇▇▇▇ of Sale in the form
annexed hereto as Exhibit 4, and any other documents as contemplated by this
Agreement and shall have delivered to the Purchaser possession of the Assets
as
required by this Agreement.
11.1.6: Assignment
of Contracts. The Seller shall have assigned to the
Purchaser the contracts identified on Exhibit 5 as contracts to be assumed
by
the Purchaser by executing and delivering to the Purchaser the Assignment and
Assumption Agreement in the form annexed as Exhibit 5, the Assignment and
Assumption Agreement for each lease for Seller’s two office locations and such
related documents as contemplated by this Agreement, together with any required
consents to assignment thereof from the other parties to such
contracts.
11.1.7: Results
of Investigation and Appraisal. No material change in the
condition of the Business, financial or otherwise, as reasonably determined
by
the Purchaser in its sole discretion, shall have occurred since December 31,
2006.
11.1.8: Licenses
and Approvals. The Purchaser shall have obtained all
licenses and approvals, and all permits, licenses and approvals of any
governmental or industry oversight entity necessary to the conduct of the
Business from and after the Closing Date. Purchaser agrees in good
faith and with due diligence to obtain all said licenses, permits and
approvals.
11.1.9: Delivery
of Legal Opinion. The Purchaser shall have received from the
Seller the opinion of Seller’s legal counsel addressed to the Purchaser in form
and content reasonably satisfactory to the Purchaser, to the effect
that:
(a) The
Seller is a corporation validly existing and in good standing under the laws
of
the State of Maine with all requisite power and authority to carry out its
respective obligations under the terms and conditions of this
Agreement.
(b) This
Agreement has been duly authorized, executed and delivered by the
Seller.
(c) The
execution, delivery and performance of this Agreement by the Seller and the
consummation of the transactions contemplated hereby will not violate the
Articles of Incorporation or Bylaws of the Seller or to the knowledge of such
counsel any order, writ, judgment or decree affecting the Seller.
11.1.10:
Delivery
of Noncompetition Agreement. Seller and Shareholders will
have executed and delivered to Purchaser the Noncompetition Agreement
substantially in the form annexed hereto as Exhibit 7.
11.1.11:
Delivery of Option. Seller will have delivered
the Option signed and acknowledged by the Owner and suitable for recording
in
the York County Registry of Deeds as provided in subsection 6.7 of this
Agreement.
11.1.12: New
Hampshire Lease. Seller will have delivered to Purchaser a
termination of its existing lease for the Rochester, New Hampshire office signed
by Seller and its landlord, and Purchaser will have entered into a new lease
with said landlord for said office as provided in subsection 6.6 of this
Agreement.
11.2: Conditions
to the Obligation of the Seller. The obligation of the
Seller and of the Shareholders to perform their respective undertakings pursuant
to this Agreement is conditioned upon satisfaction of the following conditions,
or written waiver thereof by the Seller, as of or before the Closing
Date:
11.2.1: Performance. The
covenants and agreements of the Purchaser contained in this Agreement shall
have
been performed and complied with in all material respects and all
representations and warranties made by the Purchaser shall be true in all
material respects.
11.2.2: Delivery
of Certificates. The Purchaser shall have delivered to the
Seller the following: (1) a certificate dated the Closing Date and
signed by the Clerk of the Purchaser as to the adoption of resolutions on behalf
of the Purchaser necessary to authorize the transactions contemplated by this
Agreement, (2) a certificate issued by the secretary of State of Maine as to
the
legal existence and good standing of the Purchaser, and (3) a certificate dated
the Closing Date and signed by the Clerk of the Purchaser as to the incumbency
of any officers executing this Agreement or any document contemplated by this
Agreement on behalf of the Purchaser, (4) a certificate dated the Closing Date
and signed by the Clerk of Northeast Bank as to the adoption of resolutions
on
behalf of Northeast Bank necessary to authorize its Guaranty as contemplated
by
this Agreement, (5) a certificate issued by the secretary of State of Maine
as
to the legal existence and good standing of Northeast Bank, and (6) a
certificate dated the Closing Date and signed by the Clerk of Northeast Bank
as
to the incumbency of any officers executing Northeast Bank’s guaranty and any
document contemplated by this Agreement to be executed on behalf of Northeast
Bank.
11.2.3: Payment
of Consideration. The Purchaser shall have paid to the
Seller the Purchase Price and executed and delivered to the Seller the Note
as
contemplated by Section 3, and Guarantor shall have executed and delivered
to
the Seller the Guaranty as contemplated by Section 3.
11.2.4:
Delivery of Legal Opinion. The Seller shall have received
from the Purchaser the opinion of Purchaser’s legal counsel addressed to the
Seller in form and content reasonably satisfactory to the Seller, to the effect
that:
(a) The
Purchaser and Northeast Bank are corporations validly existing and in good
standing under the laws of the State of Maine with all requisite power and
authority to carry out their respective obligations under the terms and
conditions of this Agreement.
(b) This
Agreement has been duly authorized, executed and delivered by the
Purchaser.
(c) The
execution, delivery and performance of this Agreement by the Purchaser and
the
consummation of the transactions contemplated hereby will not violate the
Articles of Incorporation or Bylaws of the Purchaser or to the knowledge of
such
counsel any order, writ, judgment or decree affecting the
Purchaser.
(d) The
execution, delivery and performance of the documents contemplated to be executed
by Northeast Bank pursuant to this Agreement and the consummation of the
transactions contemplated hereby will not violate the Articles of Incorporation
or Bylaws of Northeast Bank or to the knowledge of such counsel any order,
writ,
judgment or decree affecting Northeast Bank.
11.2.5:
Noncompetition Agreement. Purchaser shall have executed and
delivered to the Seller and the Shareholders the Noncompetition
Agreement.
11.2.6:
Guaranty. Northeast Bank shall have executed and
delivered to the Seller its guaranty as required by this Agreement.
SECTION
12: GENERAL
12.1: Confidentiality. Each
party to this Agreement (the “Parties”) acknowledges that it has received or may
have received information from other parties of a confidential or proprietary
nature. Except for such information to be used by the Purchaser in
the conduct of the Business after the Closing, each Party agrees to maintain
such information as confidential. The Parties shall treat all
information that they may acquire in relation to each other as strictly
confidential. No Party may disclose, or cause its representatives or
subsidiaries to disclose, any information gathered in the course of assessing
the transactions contemplated herein without obtaining the prior written consent
of the originator or owner of such information. Each Party shall use
the same degree of care to avoid the disclosure of confidential data and
information of the other Parties as it uses to protect its own confidential
data
and information. Except as and to the extent required by law, each
Party, present and future, shall not make any public comment, statement or
communication with respect to, or otherwise disclose or permit the disclosure
of
the existence of discussions regarding a possible transaction between the
Parties or any of the terms, conditions or other aspects of the transaction
proposed hereunder without the prior written approval of the other
Party.
12.2: Risk
of Loss. If, between the date of this Agreement and the
Closing Date, the Assets or any part or portion thereof should be damaged or
destroyed by fire or other casualty or shall in any way fail, and such fire,
casualty or failure shall materially interfere with the conduct of the Business,
or might have a material effect on the prospects for the Business in the
reasonable estimation of the Purchaser, then in any such case the Purchaser
shall have the right to rescind this Agreement by notice given to the Seller
on
or before the Closing Date. The Seller shall promptly notify the
Purchaser of each occurrence of the kind specified above, and shall provide
to
the Purchaser such information relating thereto as the Purchaser may thereafter
request.
12.3: Default
and Remedies. The remedies of any party upon default in the
performance of the obligations of the other party under this Agreement shall
be
as follows:
12.3.1: Default
by the Purchaser. Upon any material default by the Purchaser
in performing its obligations hereunder, which default is not waived by the
Seller, in writing, the Seller shall be entitled to terminate this Agreement,
and the Seller shall have no right to seek the specific performance of this
Agreement by the Purchaser, but shall have the right to retain the Purchase
Price Deposit and the Noncompetition Deposit as liquidated damages, actual
damages being too difficult to determine.
12.3.2: Default
by the Seller or Shareholders. Upon any material default by
the Seller or Shareholders in performing their respective obligations hereunder,
which default is not waived by the Purchaser, in writing, the Purchaser shall
be
entitled to (i) terminate this Agreement; and/or (ii) seek specific performance
of this Agreement by the Seller and Shareholders, the parties recognizing and
acknowledging the unique nature of the Assets and the irreparable harm suffered
by the Purchaser in such event.
12.4: Further
Assurances. The parties hereto agree to execute and deliver,
at any time before or after the Closing Date, any and all papers and documents
which may be reasonably necessary to carry out the terms of this
Agreement.
12.5: Entire
Agreement. The Exhibits and Schedules annexed hereto and
delivered concurrently herewith shall be deemed to be incorporated into and
made
part of this Agreement. This Agreement, including said Exhibits and
Schedules, contains the entire agreement between the parties hereto and there
are no agreements, representations, or warranties which are not set forth
herein. This Agreement may not be amended or revised except by a
writing signed by all parties hereto, and no waiver hereunder shall be effective
unless in writing.
12.6: Binding
Effect; Assignment. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and
assigns; provided, however, except as provided below, this Agreement and all
rights hereunder may not be assigned except by written consent of all parties
hereto. The foregoing notwithstanding, the Purchaser shall be
entitled to assign all or any portion of its rights and/or obligations hereunder
to its parent, Northeast Bank, or to any wholly owned subsidiary of Northeast
Bank, upon written notice thereof to the Seller.
12.7: Separate
Counterparts. This Agreement may be executed in several
identical counterparts each of which shall be deemed an original, but all of
which together shall constitute but one and the same instrument.
12.8: Consistent
Accounting. All parties to this Agreement shall report this
transaction in a manner consistent with each other for accounting, tax and
reporting purposes.
12.9: Transaction
Costs. Each party to this Agreement shall be responsible for
its own costs for any legal, accounting and other consulting services, if any,
attendant to the transactions contemplated by this Agreement.
12.10: Notices. All
notices hereunder, to be effective, shall be in writing and shall be delivered
by hand or by certified mail, postage and fees prepaid, to the party to be
notified as follows:
(i) if
to the Purchaser, to:
▇▇▇▇▇
▇.
▇▇▇▇▇▇▇, President
Northeast
Bank Insurance Group, Inc.
▇.▇.
▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇
with
a copy to:
▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, President
Northeast
Bank
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
with
a copy to:
▇▇▇▇▇▇
▇.
▇▇▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, P.A.
▇▇
▇▇▇▇
▇▇., ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
(ii) if
to the Seller or the Shareholders:
▇▇▇▇▇
▇.
▇▇▇▇▇▇▇▇, President
▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, Inc.
▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
with
a copy to:
▇▇▇▇▇▇
St. ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇,
Thaxter, Stevens, Broder & Micoleau LLC
▇▇▇
▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇.▇.
▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇-▇▇▇▇
unless
and until notice of another or different address shall be given as provided
herein. Notice shall be deemed to be given and received when
delivered by hand or by courier service or, in the case of notice sent by
certified mail, three (3) business days after deposited with the United States
Postal Service, whichever shall apply.
12.11: Severability. The
provisions of this Agreement are severable, and the invalidity of any provision
shall not affect the validity of any other provision.
12.12: Index
and Article Headings. The descriptive index and Article and
Section headings in this Agreement have been inserted solely for convenience
of
reference, and shall not be deemed to be a part of this Agreement.
12.13: Publicity;
Nondisclosure. No Party shall issue any press releases or
make any statements in the nature of publicity before the execution of this
Agreement without the prior written approval of the other
party. After the execution of this Agreement by all parties, the
Purchaser, the Seller and the Shareholders shall be entitled to make such public
statements as each deems appropriate with regard to the transactions
contemplated by this Agreement.
12.14: Governing
Law. The execution, interpretation, and performance of this
Agreement shall be governed by the laws in effect in the State of
Maine.
12.15: Exhibits. The
following Exhibits are annexed hereto and made a part of this
Agreement:
| Exhibit 1: | Existing Debt |
| Exhibit 2-1: | Promissory Note |
| Exhibit 2-2: | Guaranty of Northeast Bank |
| Exhibit 3-1: | Employment Agreement of Shareholder ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ |
| Exhibit 3-2: | Employment Agreement of Shareholder ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ |
| Exhibit 3-3: | Employment Agreement of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ |
| Exhibit 3-4: | Employment Agreement (Other Employees) |
| Exhibit 3-5: | Employment Agreement (▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇) |
|
Exhibit
4:
|
Warranty
▇▇▇▇ of Sale
|
|
Exhibit
5:
|
Assignment
and Assumption Agreement
|
|
Exhibit
6:
|
General
Assignment
|
|
Exhibit
7:
|
Noncompetition
Agreement
|
|
Exhibit
8:
|
Contracts
and Other Obligations
|
|
Exhibit
9:
|
List
of Employees
|
|
Exhibit
10:
|
Intellectual Property (including Trademarks, Trade Names, Domain Names and Service Marks) |
|
Exhibit
11:
|
Licenses |
| Exhibit 12: | Insurance Policies (Prior 6 Years) |
| Exhibit 13: | Environmental Law, Approvals, Permits, Violations |
| Exhibit 14: | Payments Received for Future Sales and Service |
| Exhibit 15: | Employee Benefit Plans |
SECTION
13: MANDATORY BINDING ARBITRATION
13.1:
Mandatory
Binding Arbitration. Any controversy or claim arising out of
or relating to this Agreement or any related agreement shall be settled by
arbitration in accordance with the following provisions:
13.2:
Disputes
Covered. The agreement of the parties to arbitrate covers all disputes
of every kind relating to or arising out of this Agreement, any related
agreement or any of the transactions contemplated by this Agreement (the
“Contemplated Transactions”). Disputes include actions for breach of
contract with respect to this Agreement or the related agreement, as well as
any
claim based upon tort or any other causes of action relating to the Contemplated
Transactions, such as claims based upon an allegation of fraud or
misrepresentation and claims based upon a federal or state statute. In addition,
the arbitrators selected according to procedures set forth below shall determine
the arbitrability of any matter brought to them, and their decision shall be
final and binding on the parties.
13.2:
Forum. The forum for the arbitration shall be located in
Lewiston, Maine.
13.3:
Law.
The governing law for the arbitration shall be the law of the State of Maine,
without reference to its conflicts of laws provisions.
13.4:
Selection. There shall be three arbitrators, unless the parties
are able to agree on a single arbitrator. In the absence of such agreement
within ten (10) days after the initiation of an arbitration proceeding, Seller
shall select one arbitrator and Purchaser shall select one arbitrator, and
those
two arbitrators shall then select, within ten (10) days, a third arbitrator.
If
those two arbitrators are unable to select a third arbitrator within such ten
(10)-day period, a third arbitrator shall be appointed by the commercial panel
of the American Arbitration Association. The decision in writing of at least
two
of the three arbitrators shall be final and binding upon the
parties.
13.5:
Administration. The arbitration shall be administered by the
American Arbitration Association.
13.6:
Rules. The rules of arbitration shall be the Commercial
Arbitration Rules of the American Arbitration Association, as modified by any
other instructions that the parties may agree upon at the time, except that
each
party shall have the right to conduct discovery in any manner and to the extent
authorized by the Federal Rules of Civil Procedure as interpreted by the federal
courts. If there is any conflict between those Rules and the provisions of
this
section, the provisions of this section shall prevail.
13.7:
Substantive
Law. The arbitrators shall be bound by and shall strictly enforce the
terms of this Agreement and may not limit, expand or otherwise modify its terms.
The arbitrators shall make a good faith effort to apply substantive applicable
law, but an arbitration decision shall not be subject to review because of
errors of law. The arbitrators shall be bound to honor claims of privilege
or
work-product doctrine recognized at law, but the arbitrators shall have the
discretion to determine whether any such claim of privilege or work product
doctrine applies.
13.8:
Decision. The arbitrators' decision shall provide a reasoned
basis for the resolution of each dispute and for any award. The arbitrators
shall not have power to award damages in connection with any dispute in excess
of actual compensatory damages and shall not multiply actual damages or award
consequential or punitive damages.
13.9:
Expenses. Each party shall bear its own fees and expenses with respect
to the arbitration and any proceeding related thereto and the parties shall
share equally the fees and expenses of the American Arbitration Association
and
the arbitrators.
13.10: Remedies;
Award. The arbitrators shall have power and authority to award any
remedy or judgment that could be awarded by a court of law in the State of
Maine.
The
award
rendered by arbitration shall be final and binding upon the parties, and
judgment upon the award may be entered in any court of competent jurisdiction
in
the United States.
[remainder
of page left blank intentionally—signatures begin on next
page]
IN
WITNESS WHEREOF, the parties hereto
have caused this Acquisition Agreement to be executed by their duly authorized
representative as an instrument under seal as of the day and year first above
written.
|
▇▇▇▇▇▇
& ▇▇▇▇▇▇▇, INC.
|
||
|
/s/
▇▇▇▇▇▇ St. F. ▇▇▇▇▇▇▇
▇▇▇▇▇▇
St. ▇. ▇▇▇▇▇▇▇
Witness
|
By:
|
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
Its
President
|
|
/s/
▇▇▇▇▇▇ St. F. ▇▇▇▇▇▇▇
▇▇▇▇▇▇
St. ▇. ▇▇▇▇▇▇▇
Witness
|
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, Individually
|
|
|
/s/
▇▇▇▇▇▇ St. F. ▇▇▇▇▇▇▇
▇▇▇▇▇▇
St. ▇. ▇▇▇▇▇▇▇
Witness
|
/s/
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇
▇. ▇▇▇▇▇, Individually
|
|
|
NORTHEAST
BANK INSURANCE GROUP, INC.
|
||
|
/s/
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇
Witness
|
By:
|
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇
Its
Treasurer
|