AGREEMENT made and entered into this ___________ day of ________________, 19__, by and among ABC INSURANCE AGENCY, INC., a Massachusetts corporation, having a principal place of business in Boston, Massachusetts, hereinafter referred to as the "Buyer", OLDCO INSURANCE AGENCY, INC., a Massachusetts corporation, having a principal place of business in Cambridge, Massachusetts, hereinafter referred to as the "Seller", and JOHN Q. HARVARD of Cambridge, Massachusetts, Hereinafter referred to as the "Stockholder."
WHEREAS, the Seller has been operating an insurance agency and brokerage business under the trade name and style of "GIGANTIC INSURANCE AGENCY" from a single Office location at 1000 Massachusetts Avenue, Cambridge, Massachusetts 02139, and
WHEREAS, the Stockholder is (a) the record and beneficial owner of all of the issued and outstanding capital stock of the Seller and (b) its Chief Executive Officer and, as such, desires to enter and conclude the within transaction and will benefit therefrom;
NOW, THEREFORE, in consideration of the mutual covenants herein contained and in reliance upon the representations and warranties hereinafter set forth, the parties do hereby agree as follows:
1. Sale of Assets. Subject to and in accordance with the terms and conditions herein contained, the Seller does hereby agree to sell, assign, transfer, convey and set over unto the Buyer effective as of December 1, 1992 (hereinafter referred to as the "Accounting Date"), and the Buyer does hereby agree to purchase the following described assets:
(a) The complete and entire customer list, all expiration files and customer account records used by the Seller in connection with the operation of its property and casualty insurance business (intending thereby, and for all purposes hereunder, to include (i) surety and fidelity bonds and (ii) group life, health and disability income insurance within the meaning of property and casualty insurance but specifically excluding all individual life, health and disability income insurance and annuities, which individual policies shall remain the property of the Seller), including therewith all underwriting files, claim files and correspondence files, together with all other usual and customary records in connection therewith, which assets are more specifically identified on the Schedule of Accounts annexed hereto, marked EXHIBIT "l(a)". Said accounts (hereinafter referred to as the "Subject Accounts") so identified on said Schedule of Accounts constitute all property and casualty insurance accounts owned by the Seller; provided, however, to the extent that any insurance account owned by the Seller is not set forth on EXHIBIT l(a), such account, shall constitute a Subject Account subject to this Agreement and be sold and transferred to the Buyer hereunder.
(b) The right to use the name "Oldco Insurance Agency" and the trade name "Gigantic Insurance Agency", which use shall be limited to the insurance business, the right to use the telephone, telecopier and telex numbers and post office box number presently used by the Seller and all of the goodwill attendant to the assets described in section 1(a).
(c) Those certain items of furniture, fixtures, equipment and supplies of the Seller (exclusive of motor vehicles) used in the operation of its business, which items are specified and identified on the Schedule of Tangible Personal Property annexed hereto and marked EXHIBIT "l(c)".
(d) Those certain agency agreements which the Seller now has with insurance companies which the Seller represents as agent, which agreements are listed and identified on EXHIBIT "l(d)" annexed hereto. Included with said assignment is the right to receive all so-called contingent bonus or profit sharing commissions, if any, which may be due and payable in 19__ and thereafter pursuant to said agency agreements or any other agreement in effect between the Seller and insurance companies which it represents, all of which agreements are intended to be included in the assignment of agency agreements made hereunder. The Buyer acknowledges that none of said agency agreements are assignable without the consent of the insurance companies which are parties thereto. The Seller makes no warranty or representation with respect to whether said entities will grant such requisite consent, and it is understood and agreed that the grant of such consent by any or all of said insurance companies shall not be a condition precedent to the obligations of the Buyer hereunder; provided, however, the Stockholder shall use his best efforts diligently and in good faith to assist the Buyer in obtaining the consent of such insurance companies to said assignment and/or the appointment of the Buyer as agent of said companies.
(e) Those certain employment agreements and/or covenants not to compete in effect between the Seller and its current and former employees, all of which are listed and identified on EXHIBIT "l(e)" annexed hereto.
2. Purchase Price. Allocated as provided for in section 5, as consideration for the assets to be sold and transferred hereunder as described in section 1 hereof and for the protective and restrictive covenants of the Seller and the Stockholder contained in section 24 hereof, the Buyer agrees to pay to the Seller the following:
(a) The sum of $1,000,000, and
(b) Subject to provisions of section 2(c), an amount equal to 40 percent of the Net Annual Commissions, as hereinafter defined, earned by the Buyer on account of the writing and/or renewal effective during the 60 months next following the Accounting Date (which 60 month period shall be referred to as the Experience Period) of property and casualty insurance for those certain accounts listed and described on EXHIBIT hereto which accounts shall be referred to hereinafter as the "Target Accounts." It is understood that, unless the context shall specifically provide to the contrary, any reference herein to Subject Accounts shall include all of the Target Accounts. For purposes of this Agreement, the phrase Net Annual Commissions" shall be defined as gross annual commissions, less return commissions, on account of the writing of new property and casualty insurance and/or renewal of existing property and casualty insurance business with an inception date (which phrase, for all purposes hereunder, shall include annual renewal dates) during the Experience Period for the Target Accounts including commissions on audit premiums, but excluding all so-called contingent, bonus or profit sharing commissions. Service fees (other than "late charges" on overdue premiums) charged for the handling, processing or other servicing of insurance or for risk management or insurance consulting services rendered to the Target Accounts, in addition to or in lieu of commissions, shall be deemed Net Annual Commissions hereunder. In the case of commissions on annual installment billings of policies written for a term of more than one year, the annual premium anniversary date shall be deemed an inception date. Commissions shall be deemed fully earned as of the inception date of the policy to which it shall apply subject to such return commissions, if any, as shall be paid out or allowed as credit with respect to such policy.
(c) The total consideration payable pursuant to section 2(b) shall not exceed the maximum sum of $1,850,000 nor shall it be less than $925,000.
3. Payment of Purchase Price. The consideration described in section 2 shall be due and payable as follows:
(a) At the closing hereunder, the Buyer shall pay to the Seller the sum of $300,000 payable, at the option of the Buyer, by a bank check or certified check, either being drawn on a bank with offices in the Commonwealth of Massachusetts or by wire transfer to an account designated by the Seller. If the Seller desires a wire transfer of funds, it shall so notify the Buyer not less than three business days prior to the Closing Date and shall provide the Buyer with the name of the bank, the bank's Federal Reserve wire routing number and the account name and number to which the wire is to be credited.
(b) The balance of $700,000 of said consideration of $1,000,000 shall be due and payable in 60 monthly payments of principal, together with interest at the rate of 9.5 percent per annum on a direct reduction amortization basis of $14,701.40 each, the first of which payments shall be due on February 1, 19__, and monthly thereafter on the first day of the next following 59 months. Said obligation shall be evidenced by a promissory note in the form of EXHIBIT "3 (b)" annexed hereto.
(c) On a monthly basis, on or before the last day of each month, the Buyer shall provide the Seller with an accounting of all insurance business written or renewed for the Target Accounts with an inception date during the second preceding month, the first of which accountings shall be due on February 28, l993, for the month of December, 1992, and monthly thereafter. Together with said accounting, the Buyer shall pay to the Seller 40 percent of the Net Annual Commission received on said business. No payment shall be due under this section 3(c) for any Target Account until the commission for such account has been received by or credited to the Buyer; provided, however, in the event the Buyer, at its option, shall elect to remit said percentage of commissions based on written business rather than when commissions are received, the Buyer shall be entitled to make such adjustments as shall be appropriate in the event of its non-receipt of commissions on such account. Following the end of the Experience Period, the Buyer shall continue to account for and pay to the Seller said share of commissions on business with an inception date during the Experience Period until the same has been fully accounted for hereunder.
4. Acceleration of Purchase Price. Notwithstanding the provisions of sections 2(c), 3(c) and 3(d), upon the occurrence, at any time during the
Experience Period, of
(a) any Event of Default, as defined in the Promissory Note annexed hereto as EXHIBIT "3(b)",
(b) failure of the Buyer to deliver any accounting and payment of consideration as required pursuant to section 3(c) on the due date thereof or within five days after notice of non-receipt thereof by the
Seller or
(c) the failure of the Buyer to deliver the accountings and payments required pursuant to section 3(c) on the due date thereof requiring notice of non-receipt to be sent by the Seller more than three times in any 12 month period, the Seller shall have the option (exercisable, if at all, by notice in writing given within 60 days following the occurrence of such Event of Default) to accelerate the remaining balance of that portion of the purchase price due to it pursuant to section 2(b) and demand immediate payment of the then present value of the maximum $1,850,000 less all payments made by the Buyer pursuant to section 3(c), which sum shall be discounted to its then present value at the rate of 10 percent per annum or portion thereof remaining until the end of the Experience Period. In the event the Seller exercises its option to accelerate payments as aforesaid, the present value of the accelerated payment shall bear interest at the prime rate (as published in the Wall Street Journal, Eastern Edition, on the date of exercise of option) plus 3.0 points.
5. Allocation of Purchase Price. The parties hereto agree that the total consideration to be paid hereunder shall be specifically allocated as follows. The parties further acknowledge the fairness and reasonableness of the following allocations and agree that for federal and state income tax purposes they will each report the same in accordance with such allocations.
(a) The sum of $87,000 shall be allocated specifically as consideration for the tangible personal property of the Seller described in section l(c) hereof.
(b) The sum of $603,000 shall be allocated specifically as consideration for the Subject Accounts (exclusive of the Target Accounts) described in section l(a) hereof.
(c) The sum of $110,000 shall be allocated specifically as consideration for the goodwill of the Seller described in section l(b) hereof.
(d) The sum of $200,000 shall be allocated specifically as the consideration for the protective and restrictive covenants of the Stockholder contained in section 24 hereof. No value is ascribed to the protective and restrictive covenants of the Seller contained in section 24 as the Seller is required to change its name and to liquidate following the closing. The said $200,000 shall be deemed to have been paid in full as a part of the payment made at the closing hereunder pursuant to section 3(a).
(e) The entire consideration payable pursuant to section 2(b) in excess of the fixed consideration of $1,000,000 provided for in section 2(a) shall be allocated specifically to the value of the Target Accounts.
(f) No value is ascribed to the value of the Agency Agreements referred to in section l(d) hereof as they have no intrinsic value, are assigned solely for the purpose of accounting convenience and are not without the consent of the insurance companies which are party thereto, which consent is neither assured nor a condition precedent to the obligations of either party hereto.
(g) No value is ascribed to the employment agreements and/or covenants not to compete referred to in section l(e) as they have no independent value and are assigned hereunder only to support and protect the value of the Subject Accounts.
6. Seller's Right to Audit. The Seller shall have the right to audit those books and records of the Buyer which pertain to the writing or renewal of insurance for Target Accounts for the purposes of verifying the accountings and payments due pursuant to section 3(c). Should the Seller elect to exercise its right to audit as aforesaid, it shall do so by notice to the Buyer in writing. Said notice shall designate the date (not sooner than five days from the date of notice) and time of such audit which shall be conducted on the premises of the Buyer during normal business hours or otherwise as the parties may agree; provided, however, no such audit may be conducted by the Buyer during such time as the Seller's books and records are being audited by the Seller's auditors for tax purposes or any other legitimate business purposes. The Buyer shall instruct its personnel to cooperate with the Seller's representatives in the conduct of such audit. In the event such audit shall determine that an error has been made in said accounting, then the parties shall make such adjustment as may be required within 10 days following completion of said audit. The Seller shall have the right to conduct such audit not more often than once in any six month period. Said audit shall be at the sole expense of the Seller unless the audit shall uncover an error in the accountings covered by the audit which, in the aggregate, result in the Seller having been underpaid by an amount in excess of a sum equal to 2 percent of the payments made within said accountings; in which case, the reasonable costs of said audit shall be borne by the Buyer. Costs of said audit shall not include any time charge for the Stockholder's personal time, if any.
7. Security. As security for payment of the portion of the consideration not paid at the closing, including that due pursuant to both sections 3(b) and 3(c), the Buyer shall provide the unconditional, irrevocable guarantee of its sole stockholder, Henry J. Lee of Boston, Massachusetts, which guarantee shall be endorsed on this Agreement and on the Promissory Note to be executed and delivered at the closing hereunder; and further, the Buyer shall provide the Seller with a security interest in and to all of the assets which the Buyer shall acquire from the Seller hereunder, which security interest shall be in accordance with a security agreement in form and substance satisfactory to the Seller and evidenced by a Uniform Commercial Code Financing Statement duly recorded with the Secretary of State of the Commonwealth of Massachusetts and the Clerk of the City of Boston.
8. Segregation of Accounts. The Buyer shall segregate the Subject Accounts acquired from the Seller hereunder from its other accounts by coding or other appropriate method acceptable to the Seller. The said coding shall not be deemed to imply any ownership interest in said accounts by the Seller, but shall be for purposes of identifying the assets on which the Seller shall have a security interest pursuant to the provisions of section 7 hereof. The Target Accounts shall be sub-coded in a manner acceptable to the Seller to set them apart from the remaining Subject Accounts and other accounts of the Buyer.
9. Buyer's Obligation to Service Subject Accounts. The Buyer acknowledges and agrees that it shall provide all necessary servicing which shall be required on and after the Accounting Date or the date of closing hereunder, whichever is later, with respect to all insurance business in force for the Subject Accounts; and further, the Buyer agrees to use its best efforts to market, renew and service all insurance business for the Target Accounts during the Experience Period in accordance with the usual custom and practice prevailing in Massachusetts and in accordance with good and sound business practices. The Buyer shall use its best efforts to service said business including the renewal of existing insurance consistent with its prevailing underwriting and credit standards; provided, however, the Buyer shall have the right to cancel any insurance policy at any time for any good and valid reason consistent with accepted custom and practice in Massachusetts. With respect to any such cancellation or non-renewal of insurance policies by the Buyer, it is agreed that the Buyer shall neither capriciously nor arbitrarily cancel or non-renew any insurance for the Target Accounts; and in making any determinations with respect to the same, the Buyer shall take into account the adverse affect the same may have upon the consideration ultimately to be received by the Seller under this Agreement.
10. Allocation of Accounts Receivable and Accounts Payables. The following provisions shall apply with respect to Accounts Receivable and Accounts Payable:
(a) Except as specifically provided to the contrary hereinafter, all accounts receivable and payable (whether billed or unbilled as of the Accounting Date) and all commissions attributable to the insurance written for the Subject Accounts with an inception date prior to the Accounting Date are now and shall remain in the property of and be the responsibility of the Seller and shall not be acquired by the Buyer.
(b) Except as specifically provided to the contrary hereinafter, all accounts receivable and payable (whether billed or unbilled as of the Accounting Date) and all commissions attributable to the insurance written for the Subject Accounts with an inception date prior to the Accounting Date are now and shall remain in the property of and be the responsibility of the Seller and shall not be acquired by the Buyer.
(c) Within 10 days after the Accounting Date, the Seller shall account for and deliver to the Buyer such premiums as the Seller may have collected for business written with an inception date on and after the Accounting Date; and thereafter, the Seller shall remit to the Buyer forthwith upon its receipt thereof any such receivables which are the property of the Buyer as provided herein.
(d) For purposes of this section and elsewhere throughout this Agreement, in determining the inception date of a policy, (i) annual anniversaries on policies written for a term in excess of one year shall be deemed to be an inception date as if the coverage were written for a one year period only except in the event the premium is prepaid for the entire policy term; but (ii) in the case of policies where the premium is billed in monthly or other less than annual installments, the premium billing due date shall be deemed an inception date.
11. Liability for Certain Return Commissions and Additional Commissions. The following provisions shall apply with respect to return commissions and additional commissions on endorsements and audit premium billings:
(a) The Seller shall be and remain responsible for return commissions which shall become due as a result of cancellations or endorsements processed by the Buyer on and after the Accounting Date with respect to the Subject Accounts but only to the extent that such may apply to insurance written by the Seller with an inception date prior to the Accounting Date. The Buyer covenants and agrees that it will not cancel any insurance in force as of the Accounting Date for the Subject Accounts for the purpose of rewriting such coverage with other insurance companies or otherwise rewriting such coverage; and in the event of such cancellation and rewrite, the Seller shall not be responsible for payment of any return commission on such cancelled policy.
(b) The Seller shall be and remain entitled to all additional commissions on endorsements to policies of insurance with an inception date prior to the Accounting Date and which endorsement is effective prior to the Accounting Date.
(c) The Buyer shall be entitled to all additional commissions with respect to endorsements which it shall process after the Accounting Date which are effective on or after the Accounting Date regardless of the inception date of the policy to which it shall apply.
(d) In the event the Buyer shall receive an audit premium billing from an insurance carrier, which shall be on account of insurance written by the Seller with an inception date prior to the Accounting Date, the Seller shall be entitled to all additional commissions thereon and shall be responsible for all return commissions with respect thereto. The Buyer shall use its best efforts to collect such audit premium billings from the Subject Accounts, shall notify the Seller of audit premium billings which remain unpaid after 30 days and, upon instruction by Seller, shall return the same to the issuing insurance carrier in a timely manner to avoid liability to such carrier therefor. In the event of the failure of the Buyer to so notify the Seller or to return the same to the issuing carrier upon instruction by the Seller, then the Buyer shall indemnify, defend and hold the Seller harmless with respect to any premiums which may be due and owing to any insurance company with respect thereto.
12. Contingent Commissions. With respect to any and all so-called contingent, bonus or profit sharing if any, which may be payable in 19__ by insurance companies on account of business which the Seller shall have written therewith in 1992 and/or prior thereto, the parties agree that the Seller shall be entitled to the entire amount thereof, if any. Should the Buyer receive such payments, it shall remit the full amount thereof to the Seller forthwith upon receipt. The Buyer shall be entitled to receive and retain all such contingent, bonus or profit sharing commissions, if any, which may be payable in 1992 and thereafter even to the extent that such commissions may, in whole or in part, relate to business written by the Seller in 1992 and/or prior thereto.
13. Collection of Seller's Accounts Receivable. The Buyer, at its own expense, hereby agrees to use its best efforts to collect the Seller's accounts receivable on behalf of the Seller for a period of 120 days following the Accounting Date (the "Collection Period"). The Buyer shall pursue the collection of such accounts receivable in a prudent and diligent manner; provided, however, it shall not be required to retain the services of collection agencies or attorneys or incur extraordinary expense beyond stationery, postage and normal office and administrative expense. The Buyer shall remit to the Seller any and all amounts of such collections forthwith upon collection thereof. In furtherance of the foregoing, it is agreed that:
(a) At the closing or within 10 days thereafter, the Seller shall provide the Buyer with a listing of all accounts receivable of the Seller (including all credit balances due to insureds for which the Seller is and shall remain responsible for reimbursing the insured or the Buyer in the event the Buyer shall pay such credit to the insured or allow such credit to the insured against premiums due the Buyer) identifying thereon such accounts receivable which shall remain the property of the Seller and such accounts receivable which become the property of the Buyer pursuant to the provisions of this Agreement. The Seller shall also provide the Buyer with a complete listing of all accounts payable to insurance companies or general agencies pertaining to business written with an inception date on or after the Accounting Date.
(b) Except in those instances where a specific instruction is given by an insured to the contrary or in the case of deposits paid for insurance written with an inception date on and after the Accounting Date, any amounts received by the Buyer from customers of the Seller acquired hereunder during the Collection Period shall be applied first in payment of premiums incurred by any such customer for insurance with an inception date prior to the Accounting Date until such indebtedness is paid in full, and all subsequent amounts received shall be applied toward premiums incurred by such customer for insurance with an inception date on or after said Accounting Date. After the expiration of the Collection Period, any amounts received by the Buyer from such customers shall be applied first in payment of premiums for insurance with an inception date on or after the Accounting Date, and any remaining balance shall be applied in payment of premiums for insurance with an inception date prior to that date.
(c) At the termination of the Collection Period, all of the aforesaid premium indebtedness for insurance effective prior to the Accounting Date which remains uncollected shall be turned back to the Seller, unless the parties mutually agree upon some other disposition of said indebtedness. Thereafter, the Seller shall be free to take any steps it deems necessary to enforce payment of said indebtedness, and the Buyer will cooperate to the extent of making available its books and records in any collection proceedings taken by the Seller.
(d) The Seller hereby reserves the right to remove any account receivable from the Buyer at anytime (whether during or after the Collection Period) should it desire to pursue collection on its own. Further, the Buyer agrees to cancel any existing business for non-payment of premium promptly upon of the Seller.
14. Representations and Warranties of the Seller and Stockholder. Except to the extent, if at all, set forth and disclosed on EXHIBIT "14" annexed hereto and by this reference made a part hereof, the Seller and the Stockholder do hereby, jointly and severally, represent and warrant to the Buyer as follows, which warranties and representations are true and complete as of the date hereof, shall be true and complete as of the closing hereunder and shall survive the closing:
(a) The Seller is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts and is duly qualified in each jurisdiction in which the Seller owns or leases properties or conducts operations and is required to qualify as a foreign corporation with full power and authority (corporate and other) to carry on the business in which it is engaged and to execute and deliver and carry out the transactions contemplated by this Agreement.
(b) The Stockholder has full power and authority to execute and deliver and carry out the transactions contemplated by this Agreement.
(c) The authorized capital stock of the Seller consists of 10,000 shares of no par value common stock, of which 4,800 shares are issued and outstanding and owned of record and beneficially by the Stockholder, free of all liens and encumbrances.
(d) The Seller is, and on the Closing Date will be, duly licensed by the Commonwealth of Massachusetts to conduct an insurance agency and brokerage business, and the Stockholder is a resident licensed insurance broker for all lines of insurance in the Commonwealth of Massachusetts. The Seller has full power and authority to conduct all of its business as now conducted. No other governmental permit, license or authorization is required for the conduct of such business. Each such permit, license and authorization is, and on the Closing Date will be, in full force and effect; none has been nor has there been any indication that any will be revoked, suspended or rescinded.
(e) The execution and delivery of this Agreement and the performance of the transactions contemplated hereby have been duly authorized by all requisite corporate and stockholder action and does not and will not result in a breach of or constitute a default under any provision of the Articles of Incorporation and amendments thereto, if any, or the By-laws of the Seller or any lease, license or other agreement to which it is a party or is bound, or by which any of its properties or assets may be bound or affected, nor will it violate any law, rule, regulation, order, writ, injunction or decree of any court or administrative agency to which the Seller may be subject.
(f) The Seller has good and marketable title to the assets to be sold and transferred hereunder free and clear of all liens, claims, security interests, encumbrances, restrictions or other charges of any kind. No other person, firm or corporation owns or has any record, beneficial or security interest in the said assets or any part thereof; and, at the Closing, the Buyer will acquire good, valid and marketable title of all of said assets free and clear of all liens, claims, security interests, encumbrances, restrictions or other charges of any kind.
(g) All of the Subject Accounts are direct accounts owned exclusively by the Seller, free of all liens, encumbrances, claims and demands of all persons. None of the Subject Accounts have been produced for the Seller by any producer or employee nor have any of the Subject Accounts been brokered into the Seller by anyone nor have any of the Subject Accounts been purchased by the Seller or otherwise acquired from anyone within 48 months immediately preceding the date of execution of this Agreement.
(h) Neither the Seller nor the Stockholder are a party to any agreement, whether written or oral, which in any manner restricts their right to enter into this Agreement and to carry out the terms and conditions hereof.
(i) The Seller is not in arrears under or in default of its obligations under any of the agency agreements listed on EXHIBIT l(d), all of which are in good standing.
(j) There is no pending litigation against the Seller or the Stockholder or proceedings before any administrative or licensing authority which in any manner may affect the value of or title to the assets to be sold hereunder, and there are no unsettled or unpaid judgments against the Seller or the Stockholder.
(k) The Seller and the Stockholder have no knowledge of any threatened claims or litigation against the Seller or the Stockholder or threatened proceedings against the Seller or the Stockholder before any administrative or licensing authority.
(l) The Seller has filed all federal, state and municipal income tax returns and all other applicable federal, state and municipal tax returns required to have been filed by it (unless the time for filing has been properly extended) and have paid the taxes shown to be due on any such returns filed, and no waivers or extensions of the statutory period of limitation within which assessments may be made have been granted with respect to any such return.
(m) The Seller has not had any of its tax returns for any year or period after 1988 audited by the Internal Revenue Service, the Commonwealth of Massachusetts or any other taxing authority nor is there any currently pending or scheduled audit of any of its tax returns by the Internal Revenue Service, the Commonwealth of Massachusetts or any other taxing authority.
(n) All premiums properly due and payable (meaning those not the subject of legitimate dispute, which dispute has been raised by the Seller in writing directed to the claimant) to insurance companies or general agents for business written for the Subject Accounts with an inception date prior to the Accounting Date have been paid or will be paid prior to any default thereon.
(o) EXHIBIT l(a) is a true and complete list of all of the Subject Accounts, and all of the Subject Accounts listed on EXHIBIT l(a) are active accounts with property and/or casualty insurance in force as of the date hereof. The Net Annual Commissions received by the Seller on account of all property and casualty insurance business written for the Subject Accounts by the Seller with an inception date during the 12 months ending 31, 1992, was $1,500,000, of which the sum of $925,000 was attributable to the Target Accounts. Neither the Seller nor the Stockholder have any knowledge of any specific account or accounts which has failed to renew its business with the Seller following October 31, 1992, or which does not intend to renew its business with the Seller hereafter.
(p) EXHIBIT l(d) is a true list of all agency agreements which the Seller has with property and casualty insurance companies. Neither the Seller nor the Stockholder has received any notices by or from any of said companies of their intent to cancel, amend or modify any such agreements, all of which agreements remain in full force and effect as of the date hereof. Neither the Seller nor the Stockholder has any knowledge of any intentions by any of said companies to give notice hereafter of their intent to cancel any of said agreements. Within the 48 months preceding the date of this Agreement, no insurance company has cancelled or otherwise terminated any agency agreement with the Seller.
(q) The Seller is not in arrears in the payment of any wages, withholding social security or other taxes thereon.
(r) The Seller does not have any contracts, agreements, understandings or arrangements of any kind, either oral or written, with respect to the sharing of fees or commissions on account of the Seller's business including, but not limited to, any contract, agreement, arrangement or understanding with any insurance carrier (except for the agency agreements with insurance companies) or with any insurance agent or broker or with any trade group or association or any other person or entity with respect to any of the Subject Accounts.
(s) Within the 60 months prior to the date of this Agreement, no other potential buyer or other insurance agent or broker or representatives thereof have received copies of or have had access to the Seller's files and records containing information relative to the Accounts including, but not limited to, expirations, dailies, customer lists and customer account records.
(t) The following documents supplied by the Seller to the Buyer upon which the Buyer has relied in entering into this Agreement are true and accurate in all material respects:
(i) Federal income tax returns of the Seller for the years ending December 31, 1991, and December 31, l990.
(ii) Financial Statements of the Seller for the years ending December 31, 1991, December 31, 1990, December 31, 1989, and December 31, 1988, prepared by Messrs. Long and Short, Certified Public Accountants, which statements are prepared in accordance with generally accepting accounting principles consistently applied and present fairly the financial condition of the Seller as at the dates thereof.
(iii) Internally prepared Balance Sheet and Income Statement of the Seller for the nine months ending September 30, 1992.
(iv) Statement of contingent commission income received by the Seller during the calendar years 1988 through 1991.
(v) Itemization of the ten largest accounts of the Seller listed on EXHIBIT l(a) (measured by commission and fee revenue) showing all revenue earned thereon for the 12 months ending September 30, 1992.
(vi) Four year (calendar years 1988 through 1991) Statement of Written Premium, Earned Premium, Loss Ratio and Losses of Seller with all insurance companies listed on EXHIBIT l(d).
(vii)Roster of employees including date of birth, date of hire, full name, position, social security number and total compensation paid thereto for the 12 months ending September 30, 1992.
(u) The Seller's books and records made available to the Buyer for examination have been kept in a manner which accurately reflect all material transactions of the Seller during the respective periods to which they relate, with no material differences between such books and records and the accounting methods applied by the Seller for tax purposes.
(v) Since December 31, 1991, there has been no material adverse change in the condition, financial or otherwise, of the Seller or of any of the assets to be sold to the Buyer hereunder.
(w) Since September 30, 1992, no employee listed on the roster of employees delivered pursuant to section 14(t) has terminated as an employee or has given or been given notice of termination nor has there been any change or any promise of any change in the salary or other compensation paid to any employee including the payment or promise of any bonus or additional vacation or benefits. No person not listed on said roster of employees has been hired or offered employment. There are no deferred compensation arrangements or agreements in effect between the Seller and any present or former employee.
(x) All of the employment agreements and covenants not to compete listed on EXHIBIT l(e), true and complete copies of which have been delivered to the Buyer heretofore, are valid and enforceable in accordance with their terms, and the Seller and Stockholder have no knowledge of any counterclaim which any party to such agreements (other than the Seller) may have which would limit or impair the enforceability of said agreements.
(y) Under applicable laws in effect at the time of the Closing hereunder, no consent, authorization or approval by, or filing with, any governmental body will be required in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby.
(z) The Seller has in effect a policy of errors and omissions insurance issued by Conservative Insurance Company, effective March 25, 1992, through March 25, 19__, being policy No. LP7106067, with limits of liability of not less than $2.5 million per occurrence and $2.5 million annual aggregate with a deductible of not more than $10,000 per occurrence, which coverage the Seller hereby covenants it will maintain in effect for a period of not less than 36 months following the Accounting Date by purchasing a so-called run-off" or endorsement extending the period within which claims may be made for acts or omissions prior to the Accounting Date, the cost of which coverage shall be borne exclusively by the Seller.
(za) All of the tangible personal property of the Seller listed on EXHIBIT l(c) is now in good and proper working order and will be delivered to the Buyer at the closing in good and proper working order without material damage thereto.
(zb) At no time during the existence of the Seller has the seller ever operated or conducted business under any fictitious or trade name other than Gigantic Insurance Agency". Said trade name is (i) owned by the Seller, free of the claims and demands of all persons, (ii) has been approved by the Massachusetts Division of Insurance and (iii) has been duly registered within the Commonwealth of Massachusetts and the City of Cambridge.
(zc) No representation or warranty by the Seller or the Stockholder in this Agreement or in any exhibit hereto, or in any list, schedule, statement, document or information set forth in or attached to any exhibit delivered pursuant to this Agreement, contains or will contain any untrue statement of a material fact or omits or will omit any material fact necessary in order to make the statements contained therein not misleading.
(zd) There are no facts known to the Seller or the Stockholder not disclosed in this Agreement or exhibits hereto or in any other written instrument delivered to the Buyer by or on behalf of the Seller or Stockholder that materially adversely affects or so far as reasonably foreseeable by the Seller and Stockholder) might materially adversely affect the value of the Subject Accounts or the ability of the Seller and/or Stockholder to perform the transactions contemplated by this Agreement.