Document:

Exhibit 10.11

 

PURCHASE AGREEMENT

 

PURCHASE AGREEMENT, dated as of March 22, 2013, by and between Blackstone Mezzanine Partners II-A L.P. (“BMP”) and Blackstone Mezzanine Holdings II USS L.P. (together with BMP, collectively, “Sellers”) and Colt Defense LLC (“Buyer”).  Certain capitalized terms that are used but not defined herein are used with the meanings given such terms in the Buyer’s Amended and Restated Limited Liability Company Agreement dated as of June 12, 2003 reflecting the amendments adopted as of July 9, 2007 (the “LLC Agreement”).

 

WITNESSETH

 

WHEREAS, Sellers are the holders of 31,165.589 common units (the “Purchased Units”) of Buyer; and

 

WHEREAS, Buyer wishes to buy from Sellers and Sellers wish to sell to Buyer the Purchased Units, subject to the terms and conditions set forth herein.

 

NOW THEREFORE, in consideration of the premises and the mutual agreements, covenants and provisions contained herein, the parties hereto agree as follows:

 

1.                                      Sale and Purchase.  On the terms and subject to the conditions contained in this agreement, on the Closing Date (as defined below) Sellers shall sell, convey, transfer, assign and deliver (or cause to be delivered) to Buyer, and Buyer shall purchase and acquire from Sellers, all of the Purchased Units.

 

2.                                      Purchase Price; Certificate Issuance.  Subject to satisfaction of the conditions set forth in Section 3, on the Closing Date:

 

a.              Buyer shall pay to Sellers cash in the amount of $14.0 million in respect of the purchase of the Purchased Units, including the termination of the Rights (as defined below), (the “Purchase Price”), payable to each Seller as set forth on Exhibit A by wire transfer of immediately available funds to the accounts set forth on Exhibit B, against acknowledgment of receipt thereof by Sellers; and

 

b.              Sellers’ shall deliver to Buyer for cancellation duly endorsed existing certificate(s) representing all of the Purchased Units held by Sellers (the “Existing Certificates”).

 

3.                                      Conditions to Closing.

 

a.              Buyer’s obligation to pay the Purchase Price is subject to:

 

i.                  Buyer receiving duly executed counterparts of this agreement from Sellers;

 

 

ii.     all representations and warranties made by Sellers contained in Section 5 hereof shall be true and correct;

 

iii.    there shall not be pending or threatened any action, suit, proceeding, inquiry or investigation, governmental or otherwise, that seeks to restrain, enjoin, prevent the consummation of or otherwise challenge the sale of the Purchased Units to be sold hereunder;

 

iv.           Buyer receiving written evidence that each Blackstone Board Designee has resigned from the Governing Board of the Company and each of its subsidiaries effective as of the Closing Date;

 

v.              Buyer obtaining a waiver, in form and substance satisfactory to Buyer, pursuant to Buyer’s Credit Agreement, dated as of September 29, 2011 with Wells Fargo Capital Finance, LLC and the other parties named therein, which such waiver shall permit the consummation of the transactions contemplated by this agreement; and

 

vi.           Buyer receiving the written consent of Colt Defense Holding LLC or its designee that is an affiliate of Sciens Management LLC to the transactions contemplated by this Agreement.

 

b.              Sellers’ obligation to sell the Purchased Units is subject to:

 

i.                  Sellers receiving duly executed counterparts of this agreement from Buyer;

 

ii.     all representations and warranties made by Buyer contained in Section 6 hereof shall be true and correct; and

 

iii.    there shall not be pending or threatened any action, suit, proceeding, inquiry or investigation, governmental or otherwise, that seeks to restrain, enjoin, prevent the consummation of or otherwise challenge the sale of the Purchased Units to be sold hereunder.

 

iv.           Sellers’ receipt of evidence that Buyer has obtained a waiver, in form and substance satisfactory to Seller, pursuant to Buyer’s Credit Agreement, dated as of September 29, 2011 with Wells Fargo Capital Finance, LLC and the other parties named therein, which such waiver shall permit the consummation of the transactions contemplated by this agreement; and

 

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v.              Sellers’ receipt of evidence that Buyer has received the written consent of Colt Defense Holding LLC or its designee that is an affiliate of Sciens Management LLC to the transactions contemplated by this Agreement.

 

4.                                      Transfer of Purchased Units.  On the date on which all conditions set forth in Section 3 are satisfied (the “Closing Date”), (a) the Sellers shall deliver (or cause to be delivered) to Buyer the Existing Certificates, (b) Buyer shall wire the Purchase Price to Sellers,  (c) Sellers’ rights under Sections 5.9, 5.12.1, 6.1.1(a), 6.1.3, 11.2 and 14.2 (and any defined terms or other provisions to the extent related to any of the foregoing Sections) of the LLC Agreement (collectively, the “Rights”) shall terminate and (d) each Blackstone Board Designee’s resignation from the Governing Board of the Company shall become effective.

 

5.                                      Representations and Warranties of Sellers.  Sellers hereby jointly and severally represent and warrant to Buyer as follows:

 

a.              Sellers have full power to enter into and perform its obligations under this agreement.

 

b.              The execution and delivery of this agreement by Sellers, the performance by Sellers of the covenants and agreements hereunder, and the consummation by Sellers of the transactions contemplated hereby have been duly authorized, and this agreement constitutes a valid and legally binding obligation of Sellers, enforceable against Sellers in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, or other laws affecting generally the enforceability of creditors’ rights and by general principles of equity.

 

c.               Neither the execution and delivery of this agreement, nor the consummation of the transactions contemplated hereby, violates any agreement of Sellers, or any statute, ordinance, regulation, order, judgment, or decree of any court or governmental agency to which Sellers is bound or subject.

 

d.              Sellers are the sole record and beneficial owners of the Purchased Units, and, at the time of transfer of such Purchased Units pursuant to Section 4, will be free and clear of any lien, encumbrance, option, charge or restriction resulting from any actions by Sellers.  Sellers have the full right, power and authority to sell and transfer the Purchased Units to Buyer pursuant to Section 4.

 

e.               Sellers acknowledge that Buyer may have access to nonpublic information relating to the business, affairs, financial condition or prospects of Buyer and its subsidiaries that may be material to the decision of Buyer to purchase the Purchased Units. Sellers

 

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represent to Buyer that they have made their own analysis and decision based on information independently available to them whether to enter into this agreement.

 

6.                                      Representations and Warranties of Buyer.  Buyer hereby represents and warrants to Sellers as follows:

 

a.              Buyer is duly organized and validly existing under the laws of the jurisdiction of its organization and has full power to enter into and perform its obligations under this agreement.

 

b.              The execution and delivery of this agreement by Buyer, the performance by Buyer of its covenants and agreements hereunder, and the consummation by Buyer of the transactions contemplated hereby have been duly authorized by all necessary partnership action, and this agreement constitutes a valid and legally binding obligation of Buyer, enforceable against Buyer in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, or other laws affecting generally the enforceability of creditors’ rights and by general principles of equity.

 

c.               Neither the execution and delivery of this agreement, nor the consummation of the transactions contemplated hereby, violates any agreement of Buyer, or any statute, ordinance, regulation, order, judgment, or decree of any court or governmental agency to which Buyer is bound or subject.

 

d.              Buyer acknowledges that Sellers are currently members of Buyer and have representatives on the Governing Board of Buyer, and as such, Sellers may have access to nonpublic information relating to the business, affairs, financial condition or prospects of Buyer and its subsidiaries that may be material to the decision of Sellers to sell the Purchased Units. Buyer represents to Sellers that it has made its own analysis and decision based on information independently available to it whether to enter into this agreement.

 

e.               Buyer and each of its subsidiaries is, and after giving effect to the transactions contemplated by this agreement, Buyer and each of its subsidiaries shall be, Solvent.  For this purpose, “Solvent” means, as to any of Buyer or its subsidiaries (each, a “Person”) at any time, that (i) the fair value of the property of such Person is greater than the amount of such Person’s liabilities (including disputed, contingent and unliquidated liabilities) as such value is established and liabilities evaluated for purposes of Section 101(32)(A) of the Bankruptcy Code and, in the alternative, for purposes of the Uniform Fraudulent Transfer Act; (ii) the present fair saleable

 

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value of the property of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured; (iii) such Person is able to realize upon its property and pay its debts and other liabilities (including disputed, contingent and unliquidated liabilities) as they mature in the normal course of business; (iv) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities mature; and (v) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s property would constitute unreasonably small capital.  For such purposes, any contingent liability (including pending litigation, contingent obligations, pension plan liabilities and claims for federal, state, local and foreign taxes, if any) is valued at the amount that, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

7.                                      Subsequent Events.  If, on or prior to the date that is six months after the Closing Date (the “Clawback Period”), the Buyer or its Affiliates enters into an agreement to effect (a) a Company Sale, (b) a purchase of Common Units from an existing Member by Buyer, or (c) a distribution of cash by Buyer to its Members (other than tax distributions), and in connection with such event (each a “Subsequent Event”), the Members receive (or are entitled to receive) an amount per Common Unit (such amount, the “Subsequent Event Price Per Unit”) greater than $449.21(such amount, the “Purchase Price Per Unit”), then in each such case, upon consummation of such Subsequent Event, Buyer will pay to each Seller the product of (A) the difference between the Subsequent Event Price Per Unit and the Purchase Price Per Unit and (B) the total number of Purchased Units purchased from each Seller.  If after the Closing Date and prior to or in connection with any Subsequent Event, the Buyer effects any split, dividend, recapitalization or other similar transaction (other than any such transaction for which Sellers received a payment pursuant to clause (c) of the sentence immediately preceding this sentence) affecting the value of the Common Unit (each, an “Intervening Event”), then, in applying the provisions of this Section 7, the Subsequent Event Price Per Unit paid or to be paid in connection with such Subsequent Event shall be adjusted to reflect the value per Common Unit that would have been paid in connection with such Subsequent Event had no such Intervening Event occurred.

 

8.                                      Tax Matters.

 

a.              Closing of the Books.   In determining the taxable income, gain, loss, deduction, credit, and all other tax items allocated or apportioned to the Members for the portion of the Company’s Fiscal Year ending on the Closing Date, the Company shall adopt an interim closing of the books as of March 31, 2013.   This

 

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interim closing of the books shall be used by the parties for all tax reporting and compliance purposes.

 

b.              Allocation of Purchase Price.   For federal income purposes (and for purposes of corresponding provisions of state and local law) the Purchase Price (which shall be deemed to include any additional amounts paid to Sellers under Section 7 hereof) shall be allocated to the Buyer’s indirect interest in the tangible assets of the Company in an amount equal to the Company’s net book value of such tangible assets as determined for financial accounting purposes and as set forth in the Company’s financial statements.  Any additional Purchase Price remaining after the allocation of Purchase Price as described in the preceding sentence shall be allocated to goodwill of the Company.  None of the Purchase Price shall be allocated or apportioned to any fee, service, or other item.  Except as required by law, all of the parties shall account consistently for the allocation of Purchase Price in the manner described in this section for all tax reporting and compliance purposes, including for the purposes of determining any adjustments or items of the Company or any Member under Sections 734, 736, 743, and 751 of the Internal Revenue Code of 1986.

 

9.                                      Releases

 

a.              Release of Sellers.  As a material inducement to Sellers to enter into this agreement and consummate the transactions contemplated hereby, Buyer, for itself, its controlled Affiliates (other than the Releasees), and its and such Affiliates’ respective representatives, officers, directors, partners, managers, members, employees, successors and assigns (collectively, the “Buyer Releasing Parties”), hereby unconditionally and irrevocably releases and discharges each of the Sellers, each Seller’s Affiliates (other than the Buyer Releasing Parties), and their and such Affiliates’ respective representatives, officers, directors, managers, members, employees, successors and assigns (collectively, the “Seller Releasees”) from all claims, demands, actions, causes of action, suits, judgments, executions, damages, losses, expenses or other amounts whatsoever, whenever arising, whether known or unknown (collectively, “Claims”) which such Buyer Releasing Party ever had, now have or hereafter can, shall or may have arising from or related to (a) this agreement and the consummation of (or any failure to consummate) the transactions contemplated hereby (other than as a result of Sellers’ breach of their obligations hereunder), (b) the Sellers’ acquisition and ownership of the Common Units transferred to Buyer hereunder, or (c) Sellers’ exercise of their rights and privileges under the LLC Agreement on

 

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or prior to the date hereof, including pursuant to Section 5.9 of the LLC Agreement (collectively, the “Buyer Released Claims”).  Each of the Buyer Releasing Parties irrevocably covenants not to, directly or indirectly, assert any claim or demand, or commence, institute, or voluntarily aid in any way, or cause to be commenced or instituted, any claim, litigation, arbitration or proceeding of any kind against any Seller Releasee based upon any Buyer Released Claim.  Without in any way limiting any rights and remedies otherwise available to any Seller Releasee, each of the Buyer Releasing Parties shall indemnify and hold harmless each Seller Releasee from and against and shall pay to each Seller Releasee the amount of, or reimburse each Seller Releasee for all connection with (i) the assertion by or on behalf of such Buyer Releasing Party of any Buyer Released Claim, and (ii) the assertion by any third party of any claim or demand against any Seller Releasee which claim or demand arises directly or indirectly from, or in connection with, any assertion by or on behalf of such Buyer Releasing Party against such third party of any Buyer Released Claim. Each of the Buyer Releasing Parties acknowledges and agrees that the execution of this Release does not constitute any manner whatsoever an admission of liability on the part of any Seller Releasee for any Buyer Released Claim, and that such liability is specifically denied. If any provision of this Release is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Release will remain in full force and effect.  Any provision of this Release held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

 

b.              Release of Buyer.  As a material inducement to Buyer to enter into this agreement and consummate the transactions contemplated hereby, each Seller, each Seller’s Affiliates (other than the Releasees), and their and such Affiliates’ respective representatives, officers, directors, managers, members, employees, successors and assigns (collectively, the “Seller Releasing Parties”) hereby unconditionally and irrevocably releases and discharges Buyer, for itself, its Affiliates (other than the Seller Releasing Parties), and its and such Affiliates’ respective representatives, officers, directors, partners, managers, members, employees, successors and assigns (collectively, the “Buyer Releasees”) from Claims which such Seller Releasing Party ever had, now have or hereafter can, shall or may have arising from or related to (a) this agreement and the consummation of (or any failure to consummate) the transactions contemplated hereby (other than as a result of Buyer’s breach of its obligations hereunder) or (b) the Sellers’ acquisition and ownership of the Common Units transferred to Buyer hereunder (collectively, the “Seller Released Claims”).  Each of the Seller

 

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Releasing Parties irrevocably covenants not to, directly or indirectly, assert any claim or demand, or commence, institute, or voluntarily aid in any way, or cause to be commenced or instituted, any claim, litigation, arbitration or proceeding of any kind against any Buyer Releasee based upon any Released Claim.  Without in any way limiting any rights and remedies otherwise available to any Buyer Releasee, each of the Seller Releasing Parties shall indemnify and hold harmless each Buyer Releasee from and against and shall pay to each Buyer Releasee the amount of, or reimburse each Buyer Releasee for all connection with (i) the assertion by or on behalf of such Seller Releasing Party of any Seller Released Claim, and (ii) the assertion by any third party of any claim or demand against any Buyer Releasee which claim or demand arises directly or indirectly from, or in connection with, any assertion by or on behalf of such Seller Releasing Party against such third party of any Seller Released Claim. Each of the Seller Releasing Parties acknowledges and agrees that the execution of this Release does not constitute any manner whatsoever an admission of liability on the part of any Buyer Releasee for any Seller Released Claim, and that such liability is specifically denied. If any provision of this Release is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Release will remain in full force and effect.  Any provision of this Release held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable.

 

10.                               Waiver and Amendment.  Any term or provision of this agreement may be waived at any time by the party that is entitled to the benefits thereof, but only in a writing signed by such party, and this agreement may be amended or supplemented at any time, but only by written agreement of Buyer and Sellers.  Any such waiver with respect to a failure to observe any such provision shall not operate as a waiver of any subsequent failure to observe such provision unless otherwise expressly provided in such waiver.

 

11.                               Notices.  All notices, consents, requests, waivers and other communications provided for herein and all legal process in regard hereto and thereto shall be validly given, made or served, if in writing and delivered personally or sent by express courier, or certified or registered mail, postage prepaid as follows:

 

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If to Sellers, to

 

Blackstone Mezzanine Partners II-A L.P.

Blackstone Mezzanine Holdings II USS L.P.

345 Park Avenue

31st Floor

New York, NY 10154

Attention:   Marisa Beeney

E-Mail: GSOLegal@Blackstone.com

 

If to Buyer, to

 

Colt Defense LLC
 P.O. Box 118
 Hartford, CT 06141
 Attention:  General Counsel
 Facsimile:  (860) 244-1442

 

or to such other person or address as any party hereto may, from time to time, designate in a written notice given in a like manner.  Notice given by mail, express courier or personally delivered shall be deemed delivered as of the date so personally delivered or mailed.

 

12.                               Assignment.  This agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the parties hereto and their respective successors and permitted assigns, but neither this agreement nor any of the rights, interests or obligations hereunder shall be assigned by any party hereto without prior written consent of the other parties.

 

13.                               Governing Law.  This agreement shall be governed by and construed and enforced in accordance with the laws of New York, without giving effect to any provisions relating to conflicts of law.

 

14.                               Jurisdiction.  Each party irrevocably and unconditionally submits to and accepts the exclusive jurisdiction of any United States federal court sitting in the Southern District of New York, or, if such court does not have jurisdiction over the dispute, in the New York state court with jurisdiction sitting in the Borough of Manhattan, County and City of New York, for any action, suit or proceeding arising out of or based upon this agreement or any matter relating to it, and waives any objection it may have to the laying or venue in any such court or that such court is an inconvenient forum or does not have personal jurisdiction over it.

 

15.                               Waiver of Jury Trial.  EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES, AND AGREES TO CAUSE ITS SUBSIDIARIES TO WAIVE, ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

 

16.                               Headings.  The section headings contained in this agreement are for convenience only and are not a part of this agreement.

 

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17.                               Counterparts.  This agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original; such counterparts together shall constitute but one agreement.

 

18.                               Confidentiality.  Each of Buyer and Sellers hereby agrees, without the prior written consent of the other, to not disclose, and to otherwise keep confidential, the sale of the Purchased Units contemplated hereby, except to the extent that disclosure thereof is required by law, rule or regulation; provided, however, that Buyer and Sellers may disclose information regarding such sale to their respective accountants, attorneys, limited partners, shareholders and other interest holders, it being understood that such recipients shall be informed by the disclosing party of its confidentiality obligations under this Agreement and such recipients shall be directed by the disclosing party and agree to keep such information confidential and to comply with all such obligations.

 

19.                               Entire Agreement. This agreement constitutes the full and entire understanding and agreement between the parties with regard to the subject matter hereof.

 

[Signature Pages Follow]

 

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IN WITNESS WHEREOF, Sellers and Buyer have caused this agreement to be duly executed as of the day and year first above written.

 

 

	
 
    	
BLACKSTONE MEZZANINE PARTNERS II-A L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
Blackstone Mezzanine Associates II L.P.,
    
	
 
    	
 
    	
its General Partner
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Marisa J. Beeney
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name: Marisa J. Beeney
    
	
 
    	
 
    	
Title: Authorized Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
BLACKSTONE MEZZANINE HOLDINGS II USS L.P.
    
	
 
    	
 
    
	
 
    	
By:
    	
BMP II USS Side-by-side GP L.L.C.,
    
	
 
    	
 
    	
its General Partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Marisa J. Beeney
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name: Marisa J. Beeney
    
	
 
    	
 
    	
Title: Authorized Signatory
    

 

S-1

 

	
 
    	
COLT DEFENSE LLC
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ Gerald R. Dinkel
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Name: Gerald R. Dinkel
    
	
 
    	
 
    	
Title: President and Chief Executive OfficerExhibit 10.1

 

AMENDED AND RESTATED
 NON-QUALIFIED PERFORMANCE-BASED
 STOCK OPTION AGREEMENT
 FOR COMPANY EMPLOYEES
 UNDER NORTHEAST BANCORP
 2010 STOCK OPTION AND INCENTIVE PLAN

 

	
Name   of Optionee:
    	
 
    	
Richard   Wayne
    
	
 
    	
 
    	
 
    
	
Type   of Stock:
    	
 
    	
Voting   Common Stock
    
	
 
    	
 
    	
 
    
	
No. of   Option Shares:
    	
 
    	
118,808
    
	
 
    	
 
    	
 
    
	
Option   Exercise Price per Share:
    	
 
    	
$13.93
    
	
 
    	
 
    	
 
    
	
Grant   Date:
    	
 
    	
December 29,   2010
    
	
 
    	
 
    	
 
    
	
Expiration   Date:
    	
 
    	
December 29,   2020
    

 

Pursuant to the Northeast Bancorp 2010 Stock Option and Incentive Plan as amended through the date hereof (the “Plan”), Northeast Bancorp (the “Company”) hereby grants to the Optionee named above an option (the “Stock Option”) to purchase on or prior to the Expiration Date specified above all or part of the number of shares of Voting Common Stock of the Company specified above at the Option Exercise Price per Share specified above subject to the terms and conditions set forth herein and in the Plan.  This Stock Option is not intended to be an “incentive stock option” under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).

 

1.                                      Exercisability Schedule.  No portion of this Stock Option may be exercised until such portion shall have become exercisable.  Except as set forth below, and subject to the discretion of the Administrator (as defined in Section 2 of the Plan) to accelerate the exercisability schedule hereunder, this Stock Option shall be exercisable upon satisfaction of the performance goals set forth below.

 

(a)                                 Performance Conditions.  This Stock Option shall be exercisable with respect to the number of Option Shares set forth below upon the date as of which both of the following conditions have been satisfied: (i) during the Time Period set forth below, the closing price of the Stock exceeds the applicable Hurdle Price for at least 50 of the previous 75 consecutive trading days (such 50th day, the “Determination Date”) and (ii) the most recent annual assessment completed prior to the applicable Determination Date (or, if the most recent annual assessment completed prior to such Determination Date fails to satisfy the following condition, the first annual assessment completed after the Determination Date that satisfies such condition) of the Company’s internal controls, conducted using criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, concluded that the Company maintained effective internal control over

 

 

financial reporting, and, if applicable, the attestation report of the Company’s registered public accounting firm regarding internal controls over financial reporting verified such conclusion.

 

	
Incremental
   No. of
   Option
    	
 
    	
Performance Conditions
    	
 
    
	
Shares
    	
 
    	
Time Period
    	
 
    	
Hurdle Price
    	
 
    
	
39,602
    	
 
    	
Prior to the 5th anniversary of the Grant Date
    	
 
    	
$
    	
16.43
    	
 
    
	
 
    	
 
    	
Between the 5th and 6th anniversaries of the Grant Date
    	
 
    	
$
    	
18.58
    	
 
    
	
 
    	
 
    	
Between the 6th and 7th anniversaries of the Grant Date
    	
 
    	
$
    	
20.77
    	
 
    
	
39,603
    	
 
    	
Prior to the 6th anniversary of the Grant Date
    	
 
    	
$
    	
18.58
    	
 
    
	
 
    	
 
    	
Between the 6th and 7th anniversaries of the Grant Date
    	
 
    	
$
    	
20.77
    	
 
    
	
39,603
    	
 
    	
Prior to the 7th anniversary of the Grant Date
    	
 
    	
$
    	
20.77
    	
 
    

 

Once exercisable, this Stock Option shall continue to be exercisable at any time or times prior to the close of business on the Expiration Date, subject to the provisions hereof and of the Plan.

 

(b)                                 Termination of Unexercisable Stock Option.  Any portion of this Stock Option that is not exercisable as of the seventh anniversary of the Grant Date shall terminate immediately and be of no further force or effect.

 

(c)                                  Sale Event.  Upon a Sale Event, this Stock Option shall become exercisable in accordance with the exercisability schedule set forth above to the extent the Sale Price (as defined in Section 1 of the Plan) exceeds the applicable Hurdle Price.  Notwithstanding the foregoing, in the event the Sale Event is a stock transaction such that the then-existing investors of the Company have a continuing interest in the acquiring company, the parties will use good faith efforts to provide the same economics to the Optionee with respect to this Stock Option.

 

(d)                                 TARP Compliance.  The Company is currently a participant in the Capital Purchase Program, developed pursuant to the United States Department of Treasury’s Troubled Asset Relief Program (“TARP”) under the Emergency Economic Stabilization Act of 2008, as amended.  Notwithstanding anything herein to the contrary, to the extent the Optionee becomes subject to the restrictions of Section 30.10 of 31 C.F.R. part 30, an interim final regulation promulgated by the United States Department of Treasury (“Treasury”) governing executive compensation for recipients of financial assistance under TARP, and the related guidance thereto (the “TARP Rules”) and to the extent any portion of this Stock Option is not yet exercisable, no portion of the performance conditions set forth in Section 1(a) above may be satisfied with respect to such portion of this Stock Option during any period from such date through the date the Optionee is no longer subject to the limitations described in Section 30.10 of the TARP Rules

 

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(the “Tolled Period”), and no portion of this Stock Option shall not become first exercisable during the Tolled Period.

 

2.                                      Manner of Exercise.

 

(a)                                 The Optionee may exercise this Stock Option only in the following manner:  from time to time on or prior to the Expiration Date of this Stock Option, the Optionee may give written notice to the Administrator of his or her election to purchase some or all of the Option Shares purchasable at the time of such notice.  This notice shall specify the number of Option Shares to be purchased.

 

Payment of the purchase price for the Option Shares may be made by one or more of the following methods:  (i) in cash, by certified or bank check or other instrument acceptable to the Administrator; (ii) through the delivery (or attestation to the ownership) of shares of Stock that have been purchased by the Optionee on the open market or that are beneficially owned by the Optionee and are not then subject to any restrictions under any Company plan and that otherwise satisfy any holding periods as may be required by the Administrator; (iii) by the Optionee delivering to the Company a properly executed exercise notice together with irrevocable instructions to a broker to promptly deliver to the Company cash or a check payable and acceptable to the Company to pay the option purchase price, provided that in the event the Optionee chooses to pay the option purchase price as so provided, the Optionee and the broker shall comply with such procedures and enter into such agreements of indemnity and other agreements as the Administrator shall prescribe as a condition of such payment procedure; (iv) by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price; or (v) a combination of (i), (ii), (iii) and (iv) above.  Payment instruments will be received subject to collection.

 

The transfer to the Optionee on the records of the Company or of the transfer agent of the Option Shares will be contingent upon (i) the Company’s receipt from the Optionee of the full purchase price for the Option Shares, as set forth above, (ii) the fulfillment of any other requirements contained herein or in the Plan or in any other agreement or provision of laws, and (iii) the receipt by the Company of any agreement, statement or other evidence that the Company may require to satisfy itself that the issuance of Stock to be purchased pursuant to the exercise of Stock Options under the Plan and any subsequent resale of the shares of Stock will be in compliance with applicable laws and regulations.  In the event the Optionee chooses to pay the purchase price by previously-owned shares of Stock through the attestation method, the number of shares of Stock transferred to the Optionee upon the exercise of the Stock Option shall be net of the Shares attested to.

 

(b)                                 The shares of Stock purchased upon exercise of this Stock Option shall be transferred to the Optionee on the records of the Company or of the transfer agent upon compliance to the satisfaction of the Administrator with all requirements under applicable laws or regulations in connection with such issuance and with the requirements hereof and of the Plan.  The determination of the Administrator as to such compliance shall be final and binding on the Optionee.  The Optionee shall not be deemed to be the holder of, or to have any of the rights of a holder with respect to, any shares of Stock subject to this Stock Option unless and until this

 

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Stock Option shall have been exercised pursuant to the terms hereof, the Company or the transfer agent shall have transferred the shares to the Optionee, and the Optionee’s name shall have been entered as the stockholder of record on the books of the Company.  Thereupon, the Optionee shall have full voting, dividend and other ownership rights with respect to such shares of Stock.

 

(c)                                  The minimum number of shares with respect to which this Stock Option may be exercised at any one time shall be 100 shares, unless the number of shares with respect to which this Stock Option is being exercised is the total number of shares subject to exercise under this Stock Option at the time.

 

(d)                                 Notwithstanding any other provision hereof or of the Plan, no portion of this Stock Option shall be exercisable after the Expiration Date hereof.

 

3.                                      Termination of Employment.  If the Optionee’s employment by the Company or a Subsidiary (as defined in the Plan) is terminated, the exercisability of this Stock Option may be accelerated and the period within which to exercise the Stock Option may be subject to earlier termination as set forth below.  The Administrator’s determination of the reason for termination of the Optionee’s employment shall be conclusive and binding on the Optionee and his or her representatives or legatees.

 

(a)                                 Termination Due to Death or Disability.  If the Optionee’s employment terminates by reason of the Optionee’s death or disability (as determined by the Administrator) and such death or disability occurs (i) after the first anniversary of the Grant Date and on or prior to the second anniversary of the Grant Date, 20 percent of this Stock Option shall become exercisable as of the date of such death or disability, (ii) after the second anniversary of the Grant Date and on or before the third anniversary of the Grant Date, 40 percent of this Stock Option shall become exercisable as of the date of such death or disability or (iii) after the third anniversary of the Grant Date, 100% of this Stock Option shall become exercisable as of the date of such death or disability.   Such Stock Option may thereafter be exercised by the Optionee or the Optionee’s legal representative or legatee (as applicable) until the Expiration Date.

 

(b)                                 Termination for Cause.  If the Optionee’s employment terminates for Cause, any portion of this Stock Option outstanding on such date, whether or not exercisable, shall terminate immediately and be of no further force and effect.  For purposes hereof, “Cause” shall have the meaning ascribed to such term in the Employment Agreement by and between the Company and the Optionee.

 

(c)                                  Termination without Cause or for Good Reason.  If the Company terminates the Optionee’s employment without Cause or the Optionee resigns for Good Reason and such termination or resignation occurs (i) prior to the third anniversary of the Grant Date, this Stock Option shall become exercisable as of the date of such termination or resignation with respect to one-third of the total number of Option Shares subject to this Stock Option, and this Stock Option may become exercisable with respect to such additional number of Option Shares that become exercisable (notwithstanding such termination or resignation) during the twelve-month period following the date of termination or resignation (the “Additional Vesting Period”), or (ii) following the third anniversary of the Grant Date, this Stock Option shall become exercisable with respect to the number of Option Shares that become exercisable

 

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(notwithstanding such termination or resignation) during the lesser of (x) the Additional Vesting Period and (y) the seven-year period from the Grant Date.  Such Stock Option may be exercised, to the extent exercisable after expiration of the Additional Vesting Period (or the seven-year period from the Grant Date, if applicable), until the Expiration Date.  Any portion of this Stock Option that is not exercisable after expiration of the Additional Vesting Period (or the seven-year period from the Grant Date, if applicable) shall terminate immediately and be of no further force or effect.  For purposes hereof, “Good Reason” shall have the meaning ascribed to such term in the Employment Agreement by and between the Company and the Optionee.

 

(d)                                 Voluntary Termination.  If the Optionee resigns other than for Good Reason, any portion of this Stock Option that is exercisable on the date of termination may be exercised until the Expiration Date.

 

4.                                      Company’s Right of Repurchase.

 

(a)                                 Right of Repurchase.  The Company shall have the right (the “Repurchase Right”) upon the occurrence of any of the events specified in Section 4(b) below (the “Repurchase Event”) to repurchase from the Optionee (or any Permitted Transferee) some or all (as determined by the Company) of the exercisable portion of this Stock Option in accordance with the terms hereof at the purchase price specified below.  The Repurchase Right may be exercised by the Company within 12 months following the date of the Repurchase Event.  The Repurchase Right shall be exercised by the Company by giving the Optionee or any Permitted Transferee written notice on or before the last day of the Repurchase Period of its intention to exercise the Repurchase Right, and, together with such notice, tendering to the Optionee or any Permitted Transferee an amount equal to the difference between the Exercise Price per share and the fair market value per share of the underlying shares, multiplied by the number of shares subject to the Stock Option being repurchased (the “Repurchase Price”).  The Repurchase Price shall be paid in cash; provided, however, that upon a good faith determination that a cash payment would cause material adverse regulatory consequences, the Company may pay the Repurchase Price with a promissory note that is repaid over a period of time not to exceed two years, with interest equal to the “Prime Rate” determined as of the date the Repurchase Right is exercised.  The Repurchase Right shall terminate three years following the Grant Date.

 

(b)                                 Company’s Right to Exercise Repurchase Right.  The Company shall have the Repurchase Right in the event that the Optionee resigns for any reason, other than for Good Reason, death or disability.

 

(c)                                  Determination of Fair Market Value.  The fair market value of the shares shall be, for purposes of this Section 4, the average closing price of the Stock for the thirty trading days preceding the date the Board elects to exercise its repurchase rights in connection with a Repurchase Event.

 

5.                                      Restriction on Sale of Issued Shares.  None of the shares acquired upon exercise of this Stock Option may be sold, assigned, transferred, pledged, hypothecated, given away or in any other manner disposed of or encumbered, until the earlier of (i) three years following the exercisability of this Stock Option with respect to such shares or (ii) the sale of at least 50% of the Stock of the Company to an unrelated person or entity in a single transaction.

 

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Notwithstanding the foregoing, nothing contained in this Section 5(a) shall prohibit the Optionee from selling and/or otherwise disposing of the shares resulting from exercise of the Stock Option in order to satisfy the payment of the aggregate exercise price or any Federal, state or local taxes incurred on account of the exercise of the Stock Option.  This Section 5(a) will terminate and be of no further force or effect upon the earliest to occur of (i) a termination of Optionee’s employment by the Company without Cause or by the Optionee for Good Reason, (ii) a termination of Optionee’s employment due to death or disability or (iii) a termination of Optionee’s employment by the Optionee for any reason following the expiration of the initial three-year term of the employment agreement between the Company and the Optionee.

 

6.                                      Recoupment Policy.  The Optionee acknowledges and agrees that this Stock Option shall be subject to cancellation, and any Shares issued upon exercise of this Stock Option shall be subject to repurchase at cost, in each case at the discretion of the Board and to the extent permitted by applicable law, if (i) the Board determines that gross negligence, intentional misconduct or fraud by the Optionee caused or was a significant contributing factor to a materially adverse restatement of the Company’s financial statements and (ii) the vesting of such Stock Option was calculated or contingent upon the achievement of financial or operating results that were affected by the restatement and the vesting of such Stock Option would have been less had the financial statements been correct.

 

7.                                      Incorporation of Plan.  Notwithstanding anything herein to the contrary, this Stock Option shall be subject to and governed by all the terms and conditions of the Plan, including the powers of the Administrator set forth in Section 2(b) of the Plan.  Capitalized terms in this Agreement shall have the meaning specified in the Plan, unless a different meaning is specified herein.

 

8.                                      Transferability.  This Agreement is personal to the Optionee, is non-assignable and is not transferable in any manner, by operation of law or otherwise, other than by will or the laws of descent and distribution.  This Stock Option is exercisable, during the Optionee’s lifetime, only by the Optionee, and thereafter, only by the Optionee’s legal representative or legatee.

 

9.                                      Tax Withholding.  The Optionee shall, not later than the date as of which the exercise of this Stock Option becomes a taxable event for Federal income tax purposes, pay to the Company or make arrangements satisfactory to the Administrator for payment of any Federal, state, and local taxes required by law to be withheld on account of such taxable event.  The Optionee may elect to have the minimum required tax withholding obligation satisfied, in whole or in part, by authorizing the Company to withhold from shares of Stock to be issued a number of shares of Stock with an aggregate Fair Market Value that would satisfy the withholding amount due.

 

10.                               No Obligation to Continue Employment.  Neither the Company nor any Subsidiary is obligated by or as a result of the Plan or this Agreement to continue the Optionee in employment and neither the Plan nor this Agreement shall interfere in any way with the right of the Company or any Subsidiary to terminate the employment of the Optionee at any time.

 

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11.                               Notices.  Notices hereunder shall be mailed or delivered to the Company at its principal place of business and shall be mailed or delivered to the Optionee at the address on file with the Company or, in either case, at such other address as one party may subsequently furnish to the other party in writing.

 

	
 
    	
NORTHEAST   BANCORP
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Robert Glauber
    
	
 
    	
 
    	
Name:   Robert Glauber
    
	
 
    	
 
    	
Title:   Chairman of the Board of Directors
    

 

The foregoing Agreement is hereby accepted and the terms and conditions thereof hereby agreed to by the undersigned.

 

	
Dated:
    	
March 22,   2013
    	
 
    	
/s/   Richard Wayne
    
	
 
    	
Optionee’s   Signature
    

 

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