Stock Purchase Agreement

AGREEMENT made this ____ day of __________, 19__, by and among PURCHASER INSURANCE AGENCY, INC., a Massachusetts corporation having a principal place of business in Boston, Massachusetts, hereinafter referred to as the "Buyer," ROGER A. ABLE of Lexington, Massachusetts, hereinafter referred to individually as "Able," and JOHN B. BAKER of Newton, Massachusetts, hereinafter referred to individually as "Baker"; both Able and Baker being referred to hereinafter jointly as the "Sellers."

RECITALS:

• The Sellers are the owners of all of the issued and outstanding capital stock of TARGET INSURANCE AGENCY, INC., an Massachusetts corporation having a principal place of business at 1000 Commonwealth Avenue, Boston, Massachusetts 02000, hereinafter referred to as the "Agency."
• The Sellers desire to sell to the Buyer all of the issued and outstanding capital stock of the Agency and to enter into the employ of the Buyer.
• The Buyer desires to purchase from the Sellers all of the issued and outstanding capital stock of the Agency and to secure the employment of the Sellers.

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:

W I T N E S S E T H :

• Purchase and Sale of Stock. Subject to and in accordance with the terms and conditions of this Agreement, on the Closing Date (as hereinafter defined) the Sellers agree to sell, and the Buyer agrees to purchase, all of the issued and outstanding shares of capital stock of the Agency owned by the Sellers, hereinafter referred to as the "Subject Stock," as follows:
• shares from Able
• shares from Baker
• Purchase Price. Subject to potential adjustment as set forth hereinafter, the Buyer agrees to pay to the Sellers the aggregate sum of $472,828.00, hereinafter referred to as the "Base Price," together with interest at the rate of 8.0 percent per annum, which principal sum and interest shall be due and payable as follows:
• Subject to adjustment as provided hereinafter, the Base Price and

Due Date	Principal	Interest	Total Payment
At the closing
hereunder	$21,428	$0	$21,428
15-Feb-97	$72,014	$13,700	$85,714
15-Feb-98	$54,225	$31,489	$85,714
15-Feb-99	$58,726	$26,988	$85,714
15-Feb-00	$63,600	$22,114	$85,714
15-Feb-01	$68,879	$16,835	$85,714
15-Feb-02	$74,596	$11,118	$85,714
15-Feb-03	$59,360	$4,928	$64,288
	$472,828	$127,172	$600,000

3. In the event that the Net Annual Commissions (as hereinafter defined) earned by the Agency during the period from September 30, 1997 through September 29, 1998 (the "Experience Period") shall be less than $360,000, then the Base Price shall be reduced by a sum equal to 1.5 times the difference between $360,000 and the actual Net Annual Commissions earned by the Agency during the Experience Period.
4. In the event that the Net Annual Commissions earned by the Agency during the Experience Period shall be more than $400,000, then the Base Price shall be increased by an amount equal to 1.5 times the difference between $400,000 and the actual Net Annual Commissions earned by the Agency during the Experience Period; provided, however, in no event shall the amount of increase be more than $60,000 (inclusive of interest imputed therein at the rate of 8.0 percent per annum) regardless of whether Net Annual Commissions during the Experience Period shall exceed $440,000.
5. The Buyer shall calculate the amount of Net Annual Commissions which the Agency shall earn during the Experience Period, which calculation shall be made and a copy thereof delivered to the Sellers on or before December 29, 1998. In the event that an adjustment shall be required to the Base Price, the amount thereof shall be divided by six, and each of the remaining installments due pursuant to section 2(a) from 1994 through 1999 shall be increased or decreased, as the case may be, by one-sixth of the total adjustment to the Base Price.
6. The Base Price shall be subject to further adjustment as follows: (i) in the event that during the year 1994 the Agency shall receive any so-called contingent, bonus or profit sharing commissions which shall be on account of business produced by the Agency during the year 1997 or prior thereto, the Buyer shall pay to the Sellers an aggregate amount equal to 100 percent of such commissions in excess of the first $28,000 thereof but less than $112,000 plus 75 percent of the amount of such commissions in excess of $112,000, which sum shall be due and payable within 15 days of the receipt of such commissions by the Agency, if any, and (ii) the Buyer shall pay to the Sellers an amount equal to 100 percent of all Direct Bill Commissions, as hereinafter defined, received by the Agency during the month of October, 1997. Direct Bill Commissions shall be defined as commissions paid to the Agency by insurance companies which bill insureds directly for premiums on insurance policies produced by the Agency.
7. Except to the extent provided to the contrary in a written instrument or instruments signed by both of the Sellers and delivered to the Buyer at anytime or times hereafter with respect to the Base Price or any adjustment thereto, all aggregate payments to be made to the Sellers by the Buyer hereunder shall be allocated and paid by the Buyer to each of the Sellers as follows:
1. Able: 57.14 percen
2. Baker: 42.86 percen
8. Net Annual Commissions shall be defined as gross annual commissions less return commissions on property and casualty insurance with an inception date (or annual renewal date in the case of a policy written for a term in excess of one year) during the Experience Period, excluding, however, all so-called contingent, bonus or profit sharing commissions. Service fees (other than "late charges" on overdue premiums) charged for the servicing of insurance or for risk management or insurance consulting service shall be deemed to be included as Net Annual Commissions. Notwithstanding the foregoing, in the case of monthly or other periodic installment billings (other than annual billings on policies written for a term in excess of one year), commissions thereon shall be deemed to be earned on the due date of the installment billing. Commissions shall be deemed fully earned as of the inception date (or annual renewal date) of the policy to which it applies or, in the case of monthly or other periodic billings, on the due date thereof, subject to return commissions, if any, paid, payable or allowed as credit to the insured, provided that the premium therefor has been paid.
9. Representations and Warranties of the Sellers. Except to the extent as may be set forth on the Disclosure Schedule annexed hereto as EXHIBIT A and by this reference made a part hereof, the Sellers, jointly and severally, do hereby warrant and represent to the Buyer as follows and agree that such warranties and representations are true, accurate and complete as of the date hereof, will be so at the Closing Date, and shall survive the Closing hereunder:
1. The Sellers have full and complete right, power and authority to execute and deliver this Agreement and to carry out the transactions contemplated hereby.
2. This Agreement constitutes the legal, valid and binding obligation of the Sellers, enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy and insolvency laws and other laws affecting creditors' rights and subject to the general principles of equity affecting the right to specific performance and injunctive relief.
3. The execution and delivery of this Agreement and the performance of the transactions contemplated hereby will not (i) result in a breach of or constitute default under or give rise to rights of any kind in anyone not a party hereto pursuant to any provision of any lease, license or other agreement to which either of the Sellers are a party or are bound or by which any of their properties or assets may be bound or affected, nor (ii) violate any order, writ, injunction or decree of any court or administrative agency.
4. The Agency is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts with full corporate power and authority to own its assets and to operate its business as carried on by it heretofore.
5. The Agency is, and on the Closing Date will be, duly licensed by the Commonwealth of Massachusetts to conduct a full lines (property, casualty, bonds, life, accident and health) insurance agency business and has the lawful power and authority to conduct all of its business as now conducted. The Agency has all licenses and permits required by any and all jurisdictions in which it transacts business. The Agency has the licenses set forth and identified on SCHEDULE 3(e), all of which are in full force and good standing with expiration dates as set forth on SCHEDULE 3(e). No governmental permit, license or authorization other than as set forth on SCHEDULE 3(e) is required for the conduct of such business. The Agency has been operated in a manner which is in compliance with all applicable laws, regulations and ordinances of the United States, the Commonwealth of Massachusetts and all municipalities in which the Agency has been located, to which laws, regulations and ordinances the Agency is subject.
6. No license or permit issued to the Agency at any time has ever been revoked, suspended or rescinded.
7. The Agency has one class of stock, to wit: 500 authorized shares of common, $50 par value, voting stock of which 70 shares are fully paid and non-assessable, issued and outstanding, owned of record and beneficially by the Sellers as set forth in section 1 hereof and 30 shares are held in the Treasury of the Agency. No additional shares of stock shall be created or issued prior to the Closing Date by stock division or otherwise. Except as set forth above, no shares of capital stock, and no options, warrants or rights of any kind to acquire, or convert any obligation into, any shares of capital stock of the Agency are currently outstanding nor shall any such options, warrants or rights be created prior to the Closing Date. All of said issued and outstanding shares have been issued in full compliance with applicable statutes and regulations of the United States of America and the Commonwealth of Massachusetts.
8. The Sellers each hold record title to, and beneficial interest in, their respective shares of the Subject Stock, free and clear of all encumbrances. All restrictions on transfer applicable to the Subject Stock, if any, have been waived or will be waived prior to the closing.
9. The Agency will enter into no agreement of reorganization, recapitalization, merger or consolidation nor will it enter into any agreement to purchase any business or other entity prior to the Closing Date.
10. The Agency has no subsidiaries, whether wholly or partially owned, nor is the Agency a party with any other entity or individual in any joint venture or other undertaking. k.The Agency does not own, and never has owned, any real property.
11. The Agency has no agreement with any employee, director, agent or officer except oral agreements of employment that may be terminated at will. SCHEDULE 3(l) contains a true and complete roster of the employees of the Agency setting forth the name of the employee, current rate of regular compensation, date and amount of last bonus or other special compensation, if any, commission rates, if any, and date of last raise or other change in compensation. No changes in compensation of any employee shall be made or promised prior to the Closing Date. No employee has given notice of intent to terminate his or her employment nor has or will the Agency terminate any of its employees except for cause and with notice to the Buyer. SCHEDULE 3(l) contains a true and complete itemization of all existing employee fringe benefit plans and a description of the terms thereof. The Sellers and the Agency are not engaged in any unfair labor practices and are not in arrears in the payment of any wages, withholding social security or other taxes thereon. None of the employees of the Agency is represented by any labor union, and no organizational drive by any labor union is pending or threatened.
12. No approval or consent is necessary from any governmental agency or from any individual or entity not a party hereto in order to carry out the transactions contemplated herein.
13. No provision of the Articles of Incorporation including all amendments thereto, if any, or By-laws of the Agency or of any agreement, indenture, instrument of understanding or any judgment, decree, rule or regulation to which the Agency is a party or by which it is bound, have been, or will be, violated by the execution by Sellers of this Agreement or the performance or satisfaction of any undertaking, covenant or condition herein contained, and all requisite corporate and other authorizations for such execution, delivery, performance and satisfaction have been duly obtained. The Agency is not in default in the performance, observance or fulfillment of any of the terms or conditions of its Articles of Incorporation, amendments thereto or its By-laws.
14. All returns and reports of the Agency with respect to federal, state and local taxes (including, but not limited to, income taxes, insurance premium taxes and employment taxes) required to be filed prior to the date hereof have been duly filed, and any such returns and reports required to be filed on or before the Closing Date will be duly filed. All of such returns and reports are complete and accurate. No waivers of statutes of limitations are in effect with respect to any such returns or reports. All taxes set forth on said returns or reports shown as owing by the Agency have been paid in full, including any interest and penalties. No claims of a tax deficiency or unpaid tax obligation have been asserted by any federal, state or local authority with respect to the Agency. The Agency has not had any of its tax returns for any year or period 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.
15. The Agency is not a party to any litigation or administrative action or other judicial or administrative proceedings. There are no outstanding orders, decrees, judgments, liens, attachments, encumbrances or stipulations by, with or through any court or administrative agency affecting the Agency, its business or properties. To the best of the knowledge of the Sellers, (i) there is no litigation or administrative action which has been threatened against the Agency and (ii) there has occurred no event nor does there exist any condition on the basis of which any such litigation or other judicial or administrative action might properly be commenced.
16. The financial statements of the Agency for the Agency's fiscal years ending December 31, 1994, December 31, 1995, and December 31, 1996, prepared by the firm of Bright, Sharp and Accurate, Certified Public Accountants, Cambridge, Massachusetts, and a copy of the internally prepared balance sheet and income statement of the Agency for the interim period ending June 30, 1997, copies of which have been provided to the Buyer prior to execution hereof, all of which have been prepared, to the best of Sellers' knowledge, in accordance with generally accepted accounting principles, consistently applied throughout the periods covered thereby and present fairly the financial condition of the Agency as of the dates thereof. The aforesaid financial statements make adequate provision for or disclosure of all fixed, absolute and contingent liabilities, obligations and commitments of the Agency including, but not limited to, accrued taxes as of the dates thereof. No material adverse changes or events have occurred or will occur prior to the Closing hereunder affecting the condition of the Agency, financial or otherwise, as it was on June 30, 1997. For the purposes of this Agreement, a material adverse change shall include, but shall not be limited to, liens, attachments or security interests on the assets of the Agency, sale or transfer by the Agency of any of its assets, declaration of dividends by the Agency or liabilities incurred by the Agency other than in the ordinary course of business or as explicitly permitted pursuant to this Agreement or in writing by the Buyer hereafter.
17. The Agency's books and records made available to the Buyer for examination have been kept in a manner which reflect accurately all material transactions of the Agency during the respective periods to which they relate, with no material differences between such books and records and the accounting methods applied by the Agency for tax purposes. The Agency has no liabilities, contingent or otherwise, except as reflected on its books and records.
18. As of the date hereof and as of the Closing Date, all of the accounts receivable of the Agency arose, and hereafter will arise, only from bona fide transactions in the ordinary course of business. None of such accounts receivable is subject to any counterclaim or set-off or defense of any kind other than credits, if any, which may be to customers in the ordinary course of business and which are reflected on the books and records of the Agency. Further, it is agreed and understood that, if any of the accounts receivable due from any Customer of the Agency remain uncollected by the Agency 90 days after the Closing Date, on such date, the Sellers will pay to the Agency the then remaining outstanding balance of all such receivables. At the time that such payment is made, the Agency shall assign to the Sellers the balance of such uncollected receivables and any amounts collected thereafter by the Sellers shall belong to the Sellers.
19. SCHEDULE 3(t) contains a complete and accurate list of all tangible personal property owned by the Agency, all of which is owned by the Agency free and clear of all liens, security interests, encumbrances and claims of every name and nature. All of such tangible personal property is now, and on the Closing Date will be, in good and proper working order and, except as may be set forth on SCHEDULE 3(t), is now and shall remain on the premises of the Agency.
20. SCHEDULE 3(u) contains a list of all tangible personal property in the possession of the Agency, which property is leased by the Agency. The Agency is not in default of any of said leases. All of such tangible personal property is now, and on the Closing Date will be, in good and proper working order and, except as may be set forth on SCHEDULE 3(u), is now and shall remain on the premises of the Agency.
21. There is no tangible personal property (which phrase shall be deemed to include fixtures) on the premises of the Agency that is not either owned by the Agency and set forth on SCHEDULE 3(t) or leased by the Agency and set forth on SCHEDULE 3(u). w.The Agency owns all rights to use its corporate name, free of encumbrance or restriction of every kind and nature undisputed by the claims and demands of anyone. The Agency does not and never has operated under any trade name or fictitious name.
22. SCHEDULE 3(x) contains a true and complete list of all policies of insurance including, but not limited to, errors and omissions insurance which are in force and effect covering the properties and risks of the Agency, which list contains the name of the underwriting insurance company, policy number, limits of liability and expiration dates of each such policy. All premiums due on such policies have been paid in full. No notice of cancellation of such policy has been received by the Agency nor threatened by the underwriting carrier. No notice of intent not to renew any such policy has been received by the Agency or threatened by the underwriting insurance carrier. The Sellers have no knowledge that any such policy will not be renewed by the underwriting carrier in the normal course of business. The Agency is not in default of any obligation it may have pursuant to any such policy of insurance.
23. The Agency 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 Agency's business except for agreements at will with duly licensed insurance brokers which submit insurance business to the Agency, all of which agreements, whether written or oral, are set forth in detail on SCHEDULE 3(y).
24. Within the 48 months preceding the date hereof, no other potential buyer or other insurance agent or broker or representatives thereof have received copies of or have had access to the Agency's files and records containing information relative to the Customers of the Agency including, but not limited to, expirations, dailies, customer lists and customer account records.
25. Except for leases of tangible personal property set forth on SCHEDULE 3(u), a lease of premises occupied by the Agency which is the subject matter of the next following subpart of this section; and except as set forth on SCHEDULE 3(aa), the Agency is not a party to any leases, contracts or other agreements, whether oral or written. The Agency is not in default on any lease, contract or agreement to which it is a party and, to the best of the knowledge, information and belief of the Sellers, no other party thereto is in default thereof.
26. The Agency is a tenant pursuant to a written lease of the premises now occupied by it at 1000 Commonwealth Avenue, Boston, Massachusetts 02000, a true and complete copy of which lease has been delivered to the Buyer, the pertinent details of which are set forth on SCHEDULE 3(bb). The Agency is not in default of any of its obligations with respect to said lease or the occupancy of said premises. Neither the Agency nor the Sellers have received any notice of eviction or other notice to quit said premises. The Agency occupies no other real estate.
27. Except as set forth on SCHEDULE 3(l), the Agency currently does not have, and has never had, any pension, benefit, profit sharing, retirement, deferred compensation, welfare, disability, bonus, severance pay or other similar employee benefit plan, program or agreement, whether reduced to writing or not, relating to the employees of the Agency. The Agency has not contributed to, nor does it have any past or present obligation to contribute to, any stock option plan or stock purchase plan or other plan designed to hold the stock of the Agency. All employee benefits plans set forth on SCHEDULE 3(l) which are required to comply with the provisions of the Employee Retirement Income and Security Act of 1974 ("ERISA"), as amended, are in full compliance therewith, and no act or omission by the Agency as of the date hereof and continuing through the Closing Date has created, or will create, any liability of the Agency, whether absolute or contingent, with respect to said plans pursuant to ERISA or otherwise except as set forth on the books and records of the Agency.
28. Except to the extent, if at all, provided for on the financial statements of the Agency delivered to the Buyer, the Agency has not made, and prior to the Closing Date will not make, any outstanding loans to its agents, directors, stockholders, officers or employees. The Agency does not have any liability for any accrued vacation pay or entitlement thereto.
29. The Agency is a party to those certain Agency Agreements with insurance companies, which Agency Agreements are listed on SCHEDULE 3(ee), the "Agency Agreements," all of which are in full force and effect as of the date hereof and will be so at the Closing Date. Neither the Agency nor the Sellers have received any notice from any insurance company party to the Agency Agreements of its intention to terminate, modify or suspend any of the Agency Agreements, and the Sellers have no knowledge of any intention of any such insurance company to issue a notice of its intent to terminate, modify or suspend any of the Agency Agreements. The Agency is not in default of any term or condition of any of the Agency Agreements.
30. All of the insurance accounts on the books of the Agency for which the Agency writes insurance (its "Customers") are direct accounts of the Agency, none of which have been referred to the Agency by any other insurance agent or broker. None of said Customers are municipalities or governmental agencies or entities owned or controlled by any municipality or governmental agency. None of the expirations, files and records for the Customers of the Agency have been purchased by the Agency or otherwise acquired from anyone within the 60 months immediately preceding the date of execution of this Agreement. The Agency is the owner of the expirations and all other files and records with respect to insurance business written for its Customers, free and clear of encumbrances and claims and demands of anyone. All of the Customers and all of the property and casualty insurance currently in force and effect for Customers of the Agency is listed on SCHEDULE 3(ff) together with the current annual premiums and commissions thereon. The Net Annual Commissions received by the Agency on account of the writing of property and casualty insurance with an inception date or annual renewal date during the 12 months ending August 31, 1997, was not less than $400,000 on annual premiums of not less than $3 million. The Sellers have no knowledge of any one or more Customers listed on SCHEDULE 3(ff) which does not intend to continue its insurance business in force and effect through the Agency and to renew the same through the Agency in the normal course of business.
31. SCHEDULE 3(gg) contains a true and complete list of all bank accounts, money market accounts, accounts with stock brokerage firms and safe deposit boxes of the Agency and the signatories thereunder. There are no credit cards issued to the Agency, the Sellers, any employee of the Agency or any other person or entity under which the Agency has any current or potential future liability.
32. No persons, firms, associations, corporations or business organizations hold general or special powers of attorney from the Agency.
33. No facts are known to the Sellers which would adversely affect the operations and organization of the Agency or its condition, financial or otherwise, in any material way, except as disclosed herein or in exhibits annexed hereto. No intentionally or knowingly untrue or misleading statements have been made by the Sellers in this Agreement, nor have the Sellers omitted any fact or state of events necessary to make the statements herein not misleading.
34. SCHEDULE 3(jj) contains a schedule of all officers and directors of the Agency.
35. Neither the Sellers nor any member of their immediate families have any interests, direct or beneficial, in corporations or other entities which compete with the Agency in any manner in its present business as to the sale, marketing and servicing of insurance.
36. That certain employment agreement between the Agency and Charles M. Producer dated September 20, 1992, a true copy of which has been delivered to the Buyer, is the valid and binding obligation of said Charles M. Producer in all respects enforceable against him without any claim of offset, counterclaim or defense of any name or nature.
37. Between the date of this Agreement and the Closing hereunder, the Sellers will:
1. deliver to the Buyer copies of (1) the Articles of Incorporation of the Agency, including all amendments thereto, if any, (2) the By-Laws of the Agency, including all amendments thereto, if any, and (3) copies of the minutes of all meetings and records of actions by consent without meetings of the Board of Directors and the Stockholders, which minutes and/or actions by consent reflect all actions taken by said Board of Directors and Stockholders. All such documents shall be true copies thereof and accurate and complete in all respects. True and complete copies of all minutes of meetings of the Board of Directors and/or Stockholders or records of action by consent thereof without meetings, if any, which shall occur after the date of those delivered to the Buyer hereunder shall be delivered to the Buyer no later than the Closing Date hereunder;
2. make no transfer, pledge or assignment of the Subject Stock or any interest therein;
3. continue and maintain the business of the Agency in the ordinary course, undertaking any and all reasonable acts and taking all reasonable precautions to maintain for the Agency, its business, Customers, supply sources, employees and all other contractual or business patterns and relationships of the Agency;
4. notify the Buyer immediately of any incident, event or occurrence which (1) would render any statement herein or information furnished hereunder misleading or materially inaccurate, (2) materially and adversely affects the Agency or (3) is not within the ordinary and normal course of business of the Agency; in which event, the Buyer may, at its option, terminate this Agreement;
5. maintain the present method of accounting of the Agency;
6. not incur any new indebtedness or other obligation for the Agency or undertake any capital expenditures, investments or improvements for the Agency other than in the ordinary course of business;
7. not settle or compromise any accounts receivable or other sums due the Agency for less than the amount set forth as due on the balance sheets, books, records and returns of the Agency except to the extent of bad debt reserves as reflected on the books of the Agency;
8. not increase or supplement any salaries or wages of officers or employees of the Agency or provide said officers or employees with deferred compensation or other employee benefits whatsoever;
9. not issue any loans to officers or employees of the Agency other than as advances against the next single salary payment due per officer or employee;
10. not perform any acts which would cause or precipitate a breach of this Agreement.
10. Conditions Precedent to the Buyer's Obligations. The obligations of the Buyer hereunder shall be subject to the fulfillment in all respects by the Sellers of the following conditions at or prior to the Closing or the waiver thereof by the Buyer:
1. Each of the warranties and representations of the Sellers contained herein shall have been true and correct in all material respects as of the date of execution hereof and shall be so on the Closing Date as evidenced by a certificate of the Sellers to that effect, except for matters that may have taken place after the execution hereof and which are expressly permitted hereunder or assented to in writing by the Buyer hereafter.
2. The Sellers shall have performed and complied with, in all material respects, all covenants and agreements required by this Agreement to be performed or complied with at or prior to the Closing Date.
3. The Sellers shall use their best efforts to preserve all of the assets of the Agency, including the Customers of the Agency.
4. The Sellers shall allow the Buyer's employees and representatives to communicate with the directors, officers, employees and agents of the Agency at reasonable times.
5. The Sellers shall furnish to the Buyer such reasonable information and documents with respect to the business of the Agency, including, but not limited to, the Customers and other assets of the Agency as shall be requested from time to time.
6. There shall be no pending or threatened litigation, arbitration or administrative proceedings against the Agency.
7. There shall have been no material adverse change in the condition, financial or otherwise, of the Agency.
8. No insurance company which has an agency agreement with the Agency shall have terminated, modified or suspended its agency agreement with the Agency nor issued any intent to terminate, modify or suspend such agreement.
9. Able shall have entered into an Employment Agreement with the Buyer in the form of EXHIBIT C annexed hereto and on the Closing Date be ready, willing and able to perform his duties and obligations pursuant to said Employment Agreement.
10. Baker shall have entered into an Employment Agreement with the Buyer in the form of EXHIBIT C annexed hereto and on the Closing Date be ready, willing and able to perform his duties and obligations pursuant to said Employment Agreement.
11. On the Closing Date, the Agency shall have cash, cash equivalents and valid and collectible accounts receivable, net of reserves, which, in the aggregate, are at least equal to all liabilities of the Agency, whether absolute or contingent, including, but not limited to, reserves for taxes and those certain liabilities to Underwriting Insurance Company which are due and payable after the Closing Date which arise out of two loan agreements between the Agency and Underwriting Insurance Company dated August 26, 1992 and August 26, 1992, respectively, the proceeds of which were used to purchase the computer system presently used by the Agency in the operation of its business. At the Closing, the Sellers shall deliver to the Buyer a true and complete balance sheet of the Agency in the format of EXHIBIT B prepared in accordance with generally accepted accounting principles, consistently applied, which shall reflect the foregoing.
12. The Buyer shall receive at the Closing an opinion of counsel to the Sellers in form and substance satisfactory to the Buyer.
13. The Sellers shall pay or reimburse the Agency for the Net Premium (as defined hereinafter) incurred by the Agency in purchasing an endorsement to the existing errors and omissions insurance policy (professional liability policy) covering the Agency, which endorsement shall extend for a period not less than 36 months from the Closing Date the discovery and reporting period with respect to acts or omissions alleged to have occurred on or prior to the Closing Date, which endorsement is commonly referred to as so-called "tail" or "run-off" coverage. Net premium shall be defined as the gross premium charged by the insurance company for said endorsement less credit for return premium due, if any, on account of cancellation of said insurance policy. Notwithstanding the foregoing, it is understood that the intent of the Buyer is to cause the Agency to cancel said policy as of November 1, 1997; however, in the event the Buyer shall fail to so act, the Sellers shall be entitled to a credit against the amount for which they shall be liable under this section equal to the amount of return premium which would be due if said policy had been cancelled effective as of November 1, 1997.
11. Warranties and Representations of the Buyer. The Buyer does hereby represent and warrant to the Sellers as follows and agrees that such warranties and representations are true, accurate and complete as of the date hereof, and will be so on the Closing Date, and shall survive the Closing hereunder:
1. The Buyer is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Massachusetts.
2. The Buyer has full power and authority to execute, deliver and carry out the transactions contemplated by this Agreement.
3. The execution and delivery of this Agreement and the performance of the transactions contemplated hereby will not
1. result in a breach of, or constitute a default under, or give rise to rights of any kind in anyone not a party hereto pursuant to any provision of any lease, license or other agreement to which the Buyer is a party or is bound, or by which any of his properties or assets may be bound or affected, no
2. violate any order, writ, injunction or decree of any court or administrative agency.
1. This Agreement has been executed by the Buyer and is the valid and binding obligation of the Buyer, enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy and insolvency laws and other laws affecting creditors' rights and subject to the general principles of equity affecting the right to specific performance and injunctive relief.
2. The Buyer is not a party to any litigation, legal or administrative action or other judicial or administrative proceedings. There are no outstanding orders, decrees, judgments, liens, attachments, encumbrances or stipulations by, with or through any court or administrative agency affecting the Buyer, his business or properties. To the best of the knowledge of the Buyer, there is no such litigation threatened against the Buyer.
12. Conditions Precedent to the Sellers' Obligations. The obligations of the Sellers hereunder shall be subject to the fulfillment in all respects by the Buyer of the following conditions at, or prior to, the Closing or the waiver thereof by the Sellers:
1. Each of the warranties and representations of the Buyer contained herein shall have been true and correct in all material respects as of the date of execution hereof and shall be so on the Closing Date as evidenced by a certificate of the Buyer to that effect, except for matters that may have taken place after the execution hereof and which are expressly permitted hereunder or assented to by the Sellers hereafter.
2. The Buyer shall have performed and complied with, in all material respects, all covenants and agreements required by this Agreement to be performed or complied with at or prior to the Closing Date.
3. The Buyer shall have entered into an employment agreement with Able in the form of EXHIBIT C annexed hereto.
4. The Buyer shall have entered into an employment agreement with Baker in the form of EXHIBIT C annexed hereto.
13. Sellers' Indemnification of the Buyer and the Agency. Subject to the limitation set forth hereinafter in this section, the Sellers, jointly and severally, do hereby agree to indemnify, defend and hold the Buyer and the Agency harmless of and from
1. all debts, claims, taxes (including interest and penalties with respect thereto), actions and causes of action of every name and nature other than those which are specifically set forth on the books and records of the Agency as of the Closing Date and which have been disclosed to the Buyer prior to the Closing hereunder that arise out of the operation and conduct of the Agency prior to the Closing hereunder;
2. all claims for real or alleged errors and omissions arising out of the operation and conduct of the Agency prior to the Closing;
3. any breach of any warranty, representation, covenant or undertaking of the Sellers set forth herein or in any certificate or instrument executed or delivered by them hereunder; and
4. return commissions, if any, due with respect to Customers of the Agency, which return commissions come due after the Closing Date with respect to cancellations of or other endorsement to insurance policies written by the Agency with an inception date or annual renewal date on or prior to the Closing Date. The foregoing indemnification shall not apply to any claims which are covered by valid and collectible insurance or to the extent that the Buyer shall cause the Agency to terminate, non-renew or reduce the present insurance coverage carried by the Agency; provided, however, the Sellers shall remain responsible for the amount of such claims to the extent that they fall beneath the deductibles or exceed the limits of liability of such insurance policies.
14. Procedure for Indemnification. In the event a claim shall be made against the Sellers for indemnification (other than a claim directly against the Sellers) as provided for in section 7 hereof, then upon notice (including therewith copies of any and all legal process and documents which may be served on the Agency or the Buyer or claim letters or other documents asserting a claim or demand) to the Sellers and upon the failure by the Sellers within 15 days from the date of notice to assume the defense of such claim, the Agency or the Buyer shall be permitted and authorized to defend, settle and pay such claim on their own, the reasonable costs of which defense, judgment, settlement (including attorneys' fees) or other compromise thereof shall be borne and paid by the Sellers as provided hereinabove. In the event that the Sellers shall assume the defense of any such claim, they shall pursue such defense in a diligent, reasonable and competent manner. In the event the Sellers shall retain counsel to represent them in such defense, the selection of such counsel shall be subject to the prior written approval of the Buyer, which approval shall not be unreasonably withheld or delayed. The Buyer shall be kept fully apprised of all proceedings in the course of such defense and shall have full and complete access to counsel retained by the Sellers, which counsel shall be instructed in writing by the Sellers that he is authorized to release to the Buyer any and all information which it may request with respect to such claim. No settlement of any such claim shall be effected without the prior written consent of the Buyer, which consent shall not be unreasonably withheld or delayed.
15. Protective and Restrictive Covenants of the Sellers. In recognition of the fact that the Agency is engaged in a personal service business involving confidential information constituting trade secrets and personal relationships with insureds, the success of which business is in large part due to the exclusive retention of such confidential information and continuation of such personal relationship with insureds, each of the Sellers does hereby, jointly and severally, covenant and agree as follows and acknowledges that the following covenants are reasonably necessary for the protection of the Buyer and may be enforced to the extent set forth herein or to such extent and in such fashion (including equitable relief) as any court of competent jurisdiction may deem reasonable and proper:
1. All information concerning the business of the Agency (other than that which is now within the public domain), including the insurance of Customers of the Agency and including expiration data in connection therewith, is confidential information, constituting trade secrets, and will be treated by them as such. The Sellers will not, directly or indirectly, make use of such information concerning the business of the Agency for their own benefit or that of anyone else, nor divulge such information to anyone other than the Buyer.
2. The Sellers acknowledge and agree that the protective and restrictive covenants contained in the Employment Agreements (EXHIBIT C) which they shall execute at the Closing hereunder have been agreed to by each of them as a material and substantial inducement to the Buyer to enter into this Agreement and to carry out the terms and conditions hereof, without which the Buyer would not have entered into this Agreement. Further, such covenants, although set forth in said Employment Agreements, are made by the Sellers not only in the capacity of the Sellers as employees of the Buyer but also as a material and substantial part of this Agreement and shall be enforceable against the Sellers as they are selling stockholders as part of the transaction contemplated by this Agreement as if said covenants were reprinted herein.
16. Closing. The Closing hereunder shall take place at 10:00 a.m. at the office of David A. Bakst, Esquire, Morrison, Mahoney & Miller, counsel for the Buyer, 250 Summer Street, Boston, Massachusetts 02210 on October 25, 1997 (the "Closing Date") or at such other place and on such other date as may be agreed upon in writing by the parties hereto.
1. At the Closing, the Sellers shall deliver to the Buyer:
   1. certificates representing all of the Subject Stock of the Agency owned by the Sellers, duly endorsed, with the signature of the Sellers guaranteed by a bank or witnessed by their attorney;
   2. the corporate minute book, stock record book and seal of the Agency;
   3. the written resignations of all of the officers and directors of the Agency;
   4. a certified copy of the Articles of Incorporation of the Agency and any amendments thereto;
   5. a Certificate of Good Standing of the Agency issued by the Secretary of State of the Commonwealth of Massachusetts, dated not more than 30 days prior to the Closing Date;
   6. a Certificate of Good Standing of the Agency issued by the Department of Revenue of the Commonwealth of Massachusetts, dated not more than 30 days prior to the Closing Date;
   7. the Closing Balance Sheet required pursuant to section 4(k);
   8. the Employment Agreement between Able and the Buyer;
   9. the Employment Agreement between Baker and the Buyer;
   10. such other instruments and documents as may be necessary or appropriate to assure the Buyer of full and unencumbered title, possession and control of the Subject Stock to evidence compliance by the Sellers with all of their warranties, representations, covenants and undertakings herein contained and otherwise to carry out the intent hereof.
2. At the Closing, the Buyer shall deliver to the Sellers:
   1. the funds required pursuant to section 2(a)(i);
   2. a copy, duly certified by the Corporate Secretary of the Buyer, of a Vote of the Buyer attesting to the adoption of a resolution of the Board of Directors of the Buyer to enter into and carry out the terms hereof;
   3. the Employment Agreement between Able and the Buyer;
   4. the Employment Agreement between Baker and the Buyer;
   5. such other instruments and documents as may be necessary or appropriate to evidence compliance by the Buyer with all of its warranties, representations, covenants and undertakings herein contained and to carry out the purposes hereof.
3. After the Closing, all parties shall execute and deliver such additional instruments and documents as may be necessary or appropriate to carry out the terms and conditions hereof.
17. Publicity. Except as may be required by law or except as may be permitted by the consent of the parties hereto,
1. no party hereto from the date hereof through the Closing Date shall make or issue any press release or any public statement or announcement with respect to this Agreement or the transaction contemplated hereby, and
2. following the Closing Date, no party shall make any public disclosure of the purchase price paid by the Buyer hereunder. With respect to the consent of the Sellers hereunder, the consent of either Seller shall be deemed sufficient. With respect to the consent of the Buyer, the consent of its President or Treasurer shall be deemed sufficient.
18. Best Efforts To Comply. All of the parties hereto covenant and agree that they shall use their best efforts to comply with, obtain satisfaction of and carry out all of the terms and conditions set forth herein.
19. Buyer's Right of Offset. Any sums which the Sellers may owe to the Buyer hereunder, whether on account of the obligation to indemnify the Buyer for certain actions or on account of any breach of warranty, representation or covenant herein contained or provided or otherwise, may be offset by the Buyer against any and all sums which the Buyer may owe to the Sellers hereunder; provided, however, such right of offset shall not relieve the Sellers of their obligation to indemnify or reimburse the Buyer, as aforesaid, but shall be only as a matter of convenience for the Buyer should it elect to make such offset in whole or in part.
20. Procedure for Notice. Any notices required hereunder shall be in writing and deemed to have been received
1. on the date delivered if delivered in hand to the Sellers, or if to the Buyer, to its President only,
2. the next following business day after being sent if sent by Federal Express or other recognized overnight courier service that requires signatures of recipients upon delivery, or
3. two business days after mailing, postage prepaid, by certified mail, return receipt requested, to the party entitled to notice at the addresses as follow, or such other address as may be directed by notice given hereafter. A business day shall be deemed any day on which the United States Postal Service shall have regular mail deliveries to the address to which the notice shall be directed:
If to the Sellers:

Mr. Roger A. Able
285 Clinton Road
Lexington, MA 02173
Mr. John B. Baker
116 University Road
Newton, MA 02159

with a copy to:

John Q. Diligence, Esquire
Lawless, Outlaw & Vague
1000 Legal Tower
Boston, Massachusetts 02111

If to the Buyer:

Purchaser Insurance Agency, Inc.
Attn: President

If by mail:

P.O. Box 10000
Boston, MA 02000

If by courier:

1000 Commonwealth Avenue
Boston, Massachusetts 02000

with a copy to:

David A. Bakst, Esquire
Morrison, Mahoney & Miller
250 Summer Street
Boston, Massachusetts 02210


21. Payment of Expenses. Except as otherwise expressly provided herein, the Buyer and the Sellers each shall pay their own expenses in connection with this Agreement and the transactions contemplated hereby.
22. Recovery of Legal Fees. In the event that legal proceedings (including arbitration proceedings) are commenced by the Buyer against the Sellers, or by the Sellers against the Buyer, in connection with this Agreement or the transactions contemplated hereby, the party or parties which do not prevail in such proceedings shall pay the reasonable attorneys' fees and other costs and expenses, including investigation costs, incurred by the prevailing party in such proceedings.
23. No Broker or Finder. All parties warrant and represent to each other that no broker or finder was involved in this transaction and that no commission or finder's fee is due on account of this transaction or the consummation hereof. Each party shall indemnify, defend and hold the other parties harmless from and against any claim for brokerage commissions, finder's fees or other compensation made by any person who claims to have dealt with the indemnifying party in bringing about or effecting the transaction contemplated by this Agreement.
24. Modification or Amendment. This Agreement may not be modified, revised, altered, added to or extended in any manner, or superseded except by an instrument in writing signed by the parties hereto.
25. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the Commonwealth of Massachusetts.
26. Counterparts. This Agreement may be executed in several counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument representing the agreement of the parties hereto.
27. No Waiver of Provisions. The failure by any party to enforce any provision or provisions of this Agreement shall not be in any way construed as a waiver of any such provision or provisions nor prevent that party thereafter from enforcing each and every other provision of this Agreement.
28. Severability. The invalidity or unenforceability of any particular provision of this Agreement shall not affect the other provisions hereof, and this Agreement shall be construed in all respects as if such invalid or unenforceable provisions were omitted.
29. Rule of Construction. The parties do hereby acknowledge and agree that each party has participated fully itself and through counsel in the drafting of this Agreement and that the language of all parts of this Agreement, in all cases, shall be construed as a whole, according to its fair meaning, and not strictly for or against any party. The normal rule of law which provides that on interpreting written instruments, ambiguities are to be construed against the drafting party shall not be applicable to, or used in resolving, any dispute concerning the meaning or intent of this Agreement as a whole or any of its provisions.
30. Section Headings. The section headings are for the convenience of the parties and in no way alter, modify, amend, limit or restrict the contractual obligations of the parties.
31. Entire Agreement. This Agreement (including all exhibits hereto) contains the entire agreement between the parties hereto and supersedes any and all prior agreements, arrangements or understandings between the parties relating to the subject matter hereof. No oral understandings, oral statements, oral promises or oral inducements exist. No representations, warranties, covenants or conditions, express or implied, whether by statute or otherwise, other than as set forth herein, have been made by the parties hereto.
32. Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and, in the case of a corporate party, its successors and assigns, and, in the case of an individual party, to his heirs, legal representatives and assigns; provided, however, no assignment by a party of its rights and/or interests in and to this Agreement shall in any manner relieve the assigning party of or from any of his or its obligations, liabilities or undertakings herein contained.

IN WITNESS WHEREOF, the said PURCHASER INSURANCE AGENCY, INC. has caused this instrument to be executed in its name and on its behalf by a duly authorized officer, and the said ROGER A. ABLE and JOHN B. BAKER have each set their hands hereunto, each on the date set forth following their signature, all as of the date first above written. No party shall be bound hereunder unless and until this Agreement or a duplicate counterpart hereof shall have been executed by all parties.

PURCHASER INSURANCE AGENCY, INC.

INDEX OF EXHIBITS AND SCHEDULES

Exhibits Section Reference

A Seller's Disclosures

B Format of Closing Balance Sheet 4(k)

Cable and Baker Employment Agreement 4(i) and 6©, 4(j) and 6(d)

Schedules

EXHIBIT A

DISCLOSURE STATEMENT AND ITEMIZATION OF EXCEPTION TO WARRANTIES AND REPRESENTATIONS OF THE SELLERS PURSUANT TO SECTION 3

The following facts and statements hereby and heretofore disclosed by the Sellers to the Buyer constitute exceptions to the Sellers' warranties and representations contained in section 3 of the within Agreement. The numbering hereon is intended to coincide with the numbering of the Sellers' warranties and representations in said section 3.

EXHIBIT B

PURCHASER CLOSING BALANCE SHEET PURSUANT TO SECTION 4(k)