Exhibit 10.15.1

 

STOCK PURCHASE AGREEMENT

 

by and among

 

the Shareholders of C.I.M. Industries Inc.,

 

C.I.M. Industries Inc.

 

and

 

CHASE CORPORATION

 

Dated as of September 1, 2009

 

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STOCK PURCHASE AGREEMENT

 

THIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of September 1, 2009
(the “Effective Date”), is by and among (i) Thomas A. Palmer, Trustee of the
Thomas A. Palmer Family Trust, Robert E. Scribner, Trustee of the Robert E.
Scribner Family Trust, Scott S. Scribner, Paul W. Sullivan, and Richard H.
Stephens (collectively, the “Shareholders”), who are the holders of all of the
issued and outstanding shares of capital stock (the “Shares”) of C.I.M.
Industries Inc., a New Hampshire corporation (the “Company”), (ii) Chase
Corporation, a Massachusetts corporation (the “Buyer”), and (iii) the Company.

 

WHEREAS, the Buyer desires to purchase from the Shareholders, and the
Shareholders desire to sell to the Buyer, all of the outstanding shares of
capital stock of the Company upon the terms and subject to the conditions set
forth herein (the “Stock Purchase”);

 

NOW, THEREFORE, the parties hereto agree as follows:

 

ARTICLE 1

 

Certain Definitions

 

As used in this Agreement the following terms shall have the following
respective meanings:

 

Section 1.1             “Ancillary Agreements” mean, collectively, the Notes (as
defined in Section 2.3(a)(ii) hereof), the Lease (as defined in
Section 2.4(c) hereof), and the Non-Compete Agreements with the Shareholders (as
defined in Section 2.4(b) hereof).

 

Section 1.2             “Business Condition” shall have the meaning set forth in
Section 4.4 hereof.

 

Section 1.3             “Business Day” shall mean any day that is not Saturday,
Sunday or a day on which banks in Massachusetts are permitted or required to be
closed.

 

Section 1.4             “Closing” shall mean the consummation of the
transactions contemplated by Article 2 of this Agreement in accordance with the
terms and upon the conditions set forth herein (including, without limitation,
the provisions of Section 1.5).

 

Section 1.5             “Closing Date” shall mean Friday, September 4, 2009;
provided, that the Closing and the Closing Date shall not be deemed to have
occurred unless and until all of the conditions of Closing set forth in this
Agreement (including, without limitation, the receipt by each Shareholder of his
respective portion of the Cash Consideration payable at the Closing) have been
satisfied or waived on or before 12:00 p.m. (Eastern Time) on September 4, 2009,
time being of the essence; provided, that such time on said date may be extended
by the mutual agreement of the Buyer and the Shareholder Representatives (as
defined in Section 2.5(a)).  If all of such Closing conditions have not been
satisfied or waived by 12:00 p.m. (Eastern Time) on

 

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Friday, September 4, 2009 (or, if applicable, such later time on said date as
may be approved by the Buyer and the Shareholder Representatives), then the
Closing and the Closing Date shall not be deemed to have occurred and this
Agreement shall automatically terminate.

 

Section 1.6             “Code” shall mean the Internal Revenue Code of 1986, as
amended, and any successor thereto.

 

Section 1.7             “ERISA” shall mean the Employee Retirement Income
Security Act of 1974, as amended.

 

Section 1.8             “Proportionate Share” shall mean, with respect to a
particular Shareholder, such Shareholder’s proportionate ownership of the Shares
(expressed as a percentage), as set forth in Exhibit A attached hereto.

 

Section 1.9             “Shares” shall mean all of the outstanding shares of
common stock, $1.00 par value, of the Company.

 

ARTICLE 2

 

Sale of Stock; Closing; Shareholder Representatives

 

Section 2.1             Purchase and Sale.  On the basis of the representations,
warranties, covenants and agreements and subject to the satisfaction or waiver
of the conditions set forth herein, on the Closing Date the Shareholders will
sell, and the Buyer will purchase, all of the Shares owned by the Shareholders,
which constitute all of the issued and outstanding Shares.

 

Section 2.2             Time and Place of Closing.  The Closing shall take place
at 10:00 a.m. on the Closing Date at the offices of Cook, Little, Rosenblatt &
Manson, p.l.l.c., 1000 Elm Street, 20th Floor, Manchester, New Hampshire 03101. 
In lieu of physical delivery of Closing documents on the Closing Date, the
parties may, at their option, elect to deliver on the Closing Date any or all of
such Closing documents by facsimile, emailed pdf files, or other means of
electronic communication mutually agreed by the parties, in which case originals
of such documents shall also promptly be delivered following the Closing.

 

Section 2.3             Payment of Purchase Price.

 

(a)           Purchase Price.  The purchase price for the Shares (the “Purchase
Price”) consists of a combination of cash and the delivery of promissory notes
of the Buyer, all as hereinafter set forth in this Section.  The various
components of the Purchase Price shall be allocated among the Shareholders
according to their respective Proportionate Shares.  At the Closing:

 

(i)            the Buyer shall pay or cause to be paid to the Shareholders, by
wire transfer of immediately available funds (with respect to a particular
Shareholder, to such account of such Shareholder as is specified in Exhibit A),
an amount (the “Cash

 

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Consideration”) equal to Sixteen Million Five Hundred Thousand Dollars
($16,500,000), subject to adjustment following the Closing as set forth in
Sections 2.3(b)(i) and 2.3(c), and also subject to the provisions of
Section 2.3(f); and

 

(ii)           Buyer will deliver to the Shareholders non-negotiable promissory
notes (the “Notes”) in the aggregate principal amount of Three Million Dollars
($3,000,000) in substantially the form attached hereto as Exhibit B.

 

(b)           Company Cash.  All of the Company’s cash and cash equivalents
(including marketable securities) as of the Closing Date (the “Company Cash”)
will be treated as follows:

 

(i)            the NWC Cash (as defined in Section 2.3(c)(v)) shall be retained
by the Company and shall be used in determining the Cash-Adjusted Closing Net
Working Capital (as defined in Section 2.3(c)); and

 

(ii)           the remainder of the Company Cash (the “Retained Company Cash”),
as determined at Closing by the Shareholder Representatives and the Buyer, will
be retained by the Company and will be added to the amount of the Cash
Consideration portion of the Purchase Price.

 

(c)           Net Working Capital.  The Company shall prepare a preliminary
balance sheet of the Company as of the close of business on the Closing Date,
which preliminary balance sheet shall be prepared on a basis consistent with the
Company’s past practices and shall show the projected financial condition of the
Company as of the close of business on the Closing Date.  Such preliminary
balance sheet shall be delivered by the Company to the Buyer on or before the
Closing.  In addition, within ten (10) days following the Closing Date, the
Company’s current accounting firm, Maloney & Kennedy, PLLC, shall deliver to the
Shareholder Representatives (as defined in Section 2.5) and the Buyer an actual
balance sheet of the Company as of the Closing Date, which balance sheet (the
“Closing Balance Sheet”) shall be prepared by the Company’s controller on a
basis consistent with the Company’s past practices.  To the extent that the
actual Net Working Capital as of the Closing (the “Closing Net Working
Capital”), as shown in the Closing Balance Sheet, plus the NWC Cash (said sum
being the “Cash-Adjusted Closing Net Working Capital”), varies from One Million
Seven Hundred Fifty Thousand Dollars ($1,750,000) the (“NWC Target”), the Cash
Consideration portion of the Purchase Price will be adjusted dollar-for-dollar,
up or down, in accordance with the following provisions:

 

(i)            As used herein, “Net Working Capital” means the Company’s total
current assets (excluding cash, marketable securities, and notes receivable, and
including accounts receivable and prepaid expenses) less total current
liabilities, as computed in accordance with GAAP (as defined in Section 4.3). 
Attached hereto as Exhibit J is a computation showing the Company’s Net Working
Capital as of June 30, 2009 based on the 2009 Interim Financial Statements (as
defined in Section 4.3(a)(ii)), and the amount of the Closing Net Working
Capital shall be computed in the same manner shown in Exhibit J.

 

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(ii)           The Closing Net Working Capital will be reduced dollar for dollar
with respect to (i) any accounts receivable of the Company listed on
Schedule 2.3(c)(ii) hereto, which Schedule 2.3(c)(ii) shall be amended as of the
Closing Date to include any accounts receivable that are ninety (90) or more
days past the invoice date (the “Excluded Accounts Receivable”), and (ii) any
inventory of the Company listed on Schedule 2.3(c)(ii) hereto (the “Excluded
Inventory”).  A count of the Company’s inventory at its Houston, Texas facility
was made by the Company on Friday, August 28, 2009 (the “Inventory Count”), and
representatives of the Buyer and of the Company’s accounting firm were present
to observe the Inventory Count.  At the Closing, the Shareholder Representatives
and the Buyer shall (A) update and agree upon the value of the Company’s
inventory as of the Closing Date, using the Company’s established method of
accounting and basing such value on the Inventory Count with adjustments for
purchased raw materials received by the Company, raw materials processed by the
Company, and inventory shipped by the Company subsequent to August 28, 2009 and
prior to the Closing Date (such adjustments to be based on documentation
provided by the Company in support thereof), and (B) estimate, and shall attempt
to agree upon, the amount of the Closing Net Working Capital.  If, at the
Closing, the Shareholder Representatives and the Buyer are unable to agree upon
the amount of the Closing Net Working Capital, then they shall mutually
determine the amount of the Net Working Capital within thirty (30) days
following the Closing; provided, that, if they are unable to do so within such
thirty (30) day period, then the determination of the amount of the Closing Net
Working Capital shall be made by Ernst & Young LLP (or if such firm is unable or
unwilling to do so, another mutually-agreed independent firm of nationally
recognized public accountants that does not provide a material amount of
services to either the Buyer or the Company) (the “Neutral Accountants”), and
the fees and expenses charged by the Neutral Accountants shall be paid fifty
percent (50%) by the Buyer and fifty percent (50%) by the Shareholders.

 

(iii)          If the Cash-Adjusted Closing Net Working Capital exceeds the NWC
Target, then the amount of the Cash Consideration shall be increased by the
excess amount.  In such case, if the amount of the Cash-Adjusted Closing Net
Working Capital is determined at the Closing, then the excess amount shall be
added to the Cash Consideration and such adjusted Cash Consideration amount
shall be paid by the Buyer to the Shareholders at the Closing; otherwise, if the
amount of the Cash-Adjusted Closing Net Working Capital is determined after the
Closing, then the excess amount shall be paid by the Buyer to the Shareholders
(in accordance with their respective Proportionate Shares), by wire transfer of
immediately available funds (or such other form of payment as may be acceptable
to the Shareholder Representatives), within ten (10) days following the date on
which the Cash-Adjusted Closing Net Working Capital is so determined.

 

(iv)          If the Cash-Adjusted Closing Net Working Capital is less than the
NWC Target, then the amount of the Cash Consideration shall be decreased by the
deficiency amount.  In such case, if the amount of the Cash-Adjusted Closing Net
Working Capital is determined at the Closing, then the deficiency amount shall
be subtracted from the Cash Consideration and such adjusted Cash Consideration
amount shall be paid by the Buyer to the Shareholders at the Closing; otherwise,
if the amount of

 

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the Cash-Adjusted Closing Net Working Capital is determined after the Closing,
then the deficiency amount shall be paid by the Shareholders (in accordance with
their respective Proportionate Shares) to the Buyer, by wire transfer of
immediately available funds (or such other form of payment as may be acceptable
to the Buyer), within ten (10) days following the date on which the
Cash-Adjusted Closing Net Working Capital is so determined.

 

(v)           Prior to the Closing, the Shareholders Representatives shall
estimate the Closing Net Working Capital amount.  To the extent that such
estimated amount is less than the NWC Target, the Shareholders Representatives
shall cause the Company to retain an amount of cash (the “NWC Cash”) equal to
the estimated deficiency and shall notify the Buyer and the Shareholders of the
Closing Net Working Capital amount and the amount of NWC Cash.

 

(vi)          To the extent any of the Excluded Accounts Receivable are
subsequently paid or any of the Excluded Inventory is subsequently sold within
twelve (12) months of the Closing, the respective proceeds (of collection and/or
sale) shall be remitted promptly by the Buyer to the Shareholders pro rata in
accordance with their  respective Proportionate Shares.  Buyer shall make
reasonable efforts to collect the Excluded Accounts Receivables and to sell the
Excluded Inventory.  For purposes hereof, if a customer pays an invoice that Is
not specifically applicable to a particular account receivable, the amount
received shall be applied to the oldest account receivable(s) for that customer
on the Company’s books.

 

(d)           Warranty Claims.  As of the Closing, the Company shall have
accrued an expense of $57,920.39 (the “Reserved Product Warranty Expense
Accrual”) for product warranty claims, including warranty expenditures and
materials, related to the Stillwater Dam project and the Center Ethanol project
(the “Reserved Product Warranty Claims”).  The Reserved Product Warranty Expense
Accrual is in addition to $46,273.49 ($42,079.61 paid to Purcell and $4,193.88
for materials shipped for Purcell’s use) of warranty expenditures made to date
by the Company on the Stillwater Dam project.  The Reserved Product Warranty
Expense Accrual shall be considered a current liability of the Company for
purposes of calculating the Closing Net Working Capital.

 

(e)           Houston Warehouse.

 

(i)            The construction of the Company’s warehouse at its Houston, Texas
facility (the “Houston Warehouse”) has received a certificate of occupancy.  The
Shareholders shall be responsible for the payment of all amounts required to
(A) obtain the release of all mechanic’s liens pertaining to the construction of
the Houston Warehouse filed against the Houston Warehouse real estate prior to
the Closing Date (the “Houston Warehouse Construction Liens”), and (B) resolve
any costs incurred by the Company arising out of disputes involving the
construction of the Houston Warehouse (the “Houston Warehouse Dispute Costs”),
including any such disputes between the Company and its former general
contractor, The Hartford Construction Group, LLC (“Hartford Construction”), or
any of Hartford Construction’s agents, or between the Company and any suppliers
or materialmen to the

 

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Houston Warehouse construction project (as an example, and not by way of
limitation, the Houston Warehouse Dispute Costs include reasonable legal fees
incurred by the Company in any litigation involving such disputes); provided,
that any recovery made by the Company from Hartford Construction, any such
suppliers or materialmen, or otherwise related to the Houston Warehouse
construction project, whether by way of counterclaim or otherwise, shall be
netted against the Houston Warehouse Dispute Costs.

 

(ii)           Prior to the Closing, the Company shall deposit the sum of Two
Hundred Thirty-one Thousand Five Hundred Ninety-six and 78/100 Dollars
($231,596.78) (the “Houston Holdback Amount”) into a trust account (the “Trust
Account”) with the Company’s law firm, Cokinos, Bosien & Young or such other law
firm as the Shareholder Representatives and the Buyer may designate at any time
hereafter (the “Law Firm”).  The Trust Account shall be maintained until all of
the Houston Warehouse Construction Liens have been released or such earlier date
as may be mutually agreed by the Shareholder Representatives and the Buyer,
provided that the Law Firm shall be entitled to withdraw Fifty Thousand Dollars
($50,000) out of such Trust Account for payment of its fees and expenses and
settlement of individual liens (the “Law Firm Fees and Expenses”) and may
interplead the remaining funds in the Trust Account with the court having
applicable jurisdiction over the Houston Warehouse Construction Liens (the
“Interpleaded Funds”).  If any amounts are required to be expended to obtain
releases of the Houston Warehouse Construction Liens or to pay for Houston
Warehouse Dispute Costs beyond the Houston Holdback Amount, then such excess
amounts shall be deemed to be Claims (as defined in Section 6.2) and shall be
subject to the Buyer’s indemnification rights under Section 6.2.  Upon (A) the
release of all of the Houston Warehouse Construction Liens, and (B) the payment
of (or provision for payment of) all Houston Warehouse Dispute Costs, then any
remaining portion of the Houston Holdback Amount shall be paid to the
Shareholders pro rata according to their respective Proportionate Shares.

 

(iii)          No funds, except for the Law Firm Fees and Expenses and the
Interpleaded Funds, shall be expended from the Trust Account without the
approval of the Shareholder Representatives and the Buyer.

 

(iv)          The Shareholder Representatives and the Buyer shall confer or
discuss by telephone (or, if necessary, meet at a mutually-agreed location) no
less than monthly to review the status of Houston Warehouse Construction Liens
and Houston Warehouse Dispute Costs and, except for the Law Firm Fees and
Expenses and the Interpleaded Funds, to jointly approve the withdrawal from the
Houston Holdback Account and distribution to the Shareholders of such amounts as
may be appropriate in light of liens that have been released and costs
resolved.  In the event the Houston Holdback Amount proves insufficient to
satisfy in full all such requirements and costs, then such excess amounts shall
be deemed to be Claims (as defined in Section 6.2) and shall be subject to the
Buyer’s indemnification rights under Section 6.2.

 

(f)            Einhorn.  Einhorn Associates, Inc. (“Einhorn”) is serving as
investment banker for the Company and the Shareholders and is entitled to a fee
upon the consummation of the Stock Purchase.  Notwithstanding anything to the
contrary in this Agreement, the

 

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Shareholders hereby request that Buyer pay, and Buyer hereby agrees to pay, a
certain portion of the Purchase Price otherwise payable to the Shareholders, as
follows:

 

(i)            with respect to the Cash Consideration payable to the
Shareholders, (A) Buyer shall pay to Einhorn, from the Cash Consideration
payable at the Closing, such amount as is designated by the Shareholder
Representatives as being payable to Einhorn at the Closing (the “Einhorn Closing
Payment”), which amount shall be completed in Exhibit A, and (B) Buyer shall pay
the balance of the Cash Consideration payable to the Shareholders at the Closing
pro rata in accordance with their respective Proportionate Shares (as set forth
in Exhibit A); and

 

(ii)           with respect to any payment of principal, interest, or late
charges under each Note, Buyer shall pay (A) one percent (1%) of the amount of
such payment to Einhorn, and (B) the balance of such payment amount to the payee
of such Note.

 

Any such payment to Einhorn shall be made by wire transfer of immediately
available funds to such bank or other financial institution account for Einhorn
as is set forth in Exhibit A (or to such other account with a bank or other
financial institution located within the United States as may hereafter be
designated by Einhorn in writing to Chase).

 

(g)           Notices to Shareholders.  Buyer agrees that it shall provide
prompt written notice to all Shareholders (using the list of names and addresses
as provided herein or as updated in writing by the Shareholder Representatives)
of each post-Closing payment made by Buyer to the Shareholders and to Einhorn
under this Agreement (including all payments made by Buyer pursuant to the
Notes).

 

Section 2.4             Closing Matters.  At the Closing:

 

(a)           the Shareholders shall deliver to the Buyer (i) certificates for
all of the Shares, with appropriate stock powers attached, properly signed,
together with the related stock books and stock transfer records; (ii) copies of
the Articles of Incorporation of the Company, certified as of recent date by the
Secretary of State of New Hampshire; (iii) copies of the Bylaws of the Company,
certified as of the Closing Date by the Secretary of the Company; and (iv) the
original minute and stock books of the Company, certified as of the Closing Date
by the Secretary of the Company;

 

(b)           each Shareholder shall deliver to the Buyer a duly executed copy
of a non-competition agreement (a “Non-Compete Agreement”) in the form attached
as Exhibit C hereto;

 

(c)           The Company and ALROX, LLC shall execute and deliver a lease for
the Company’s premises located at 23 Elm Street, Peterborough, New Hampshire
(the “Lease”) in substantially the form set forth in Exhibit D attached hereto;

 

(d)           The Buyer shall deliver the Cash Consideration and the Notes to
the Shareholders as set out and subject to adjustments as set forth in
Section 2.3 hereof;

 

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(e)           The Company shall deliver to the Buyer the written opinion, dated
the Closing Date, of Messrs. Cook, Little, Rosenblatt & Manson, pllc, counsel to
the Shareholders and the Company, in the form set forth in Exhibit F hereto; and

 

(f)            The Buyer shall deliver to the Shareholders the written opinion,
dated the Closing Date, of Hughes & Associates, counsel to the Buyer, in the
form set forth in Exhibit G hereto.

 

Section 2.5             Shareholder Representatives.

 

(a)           Robert E. Scribner and Paul W. Sullivan are hereby appointed by
the Shareholders to act as representatives and agents for the Shareholders (each
a “Shareholder Representative”).  All actions to be taken by the Shareholder
Representatives under this Agreement shall be evidenced by, and may only be
taken upon, the written direction of both of the Shareholder Representatives. 
Any notices sent to the Shareholder Representatives shall be sent to both of
them.

 

(b)           The Shareholders hereby authorize the Shareholder Representatives
to:

 

(i)            make all decisions relating to the determination of the Closing
Net Working Capital and any resulting adjustment to the Cash Consideration
portion of the Purchase Price pursuant to Section 2.3(c);

 

(ii)           take all action, including making payments from the Houston
Holdback Amount to obtain a certificate of occupancy for the Houston Warehouse
and releases of all Houston Warehouse Construction Liens;

 

(iii)          take all action necessary in connection with the defense and/or
settlement of any claims for which the Shareholders may be required to indemnify
the Buyer pursuant to Section 6.2;

 

(iv)          give and receive all notices required to be given by or to the
Shareholders under this Agreement (other than the notices required to be given
to all Shareholders pursuant to Section 2.3(g)); and

 

(v)           take any and all additional action as is contemplated to be taken
by or on behalf of Shareholders by the terms of this Agreement.

 

(c)           Except for fraud, bad faith, or willful breach of this Agreement
by the Shareholder Representatives, all decisions and actions by the Shareholder
Representatives pursuant to the authority granted to them by this Section 2.4
shall be binding upon all of the Shareholders, no Shareholder shall have the
right to object, dissent, protest, or otherwise contest the same, and the Buyer
and the Company may rely upon such authority and the decisions and actions so
taken by the Shareholder Representatives.  In the event that either Shareholder
Representative dies, becomes unable to perform his responsibilities hereunder,
is removed (by a

 

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majority vote of the Shareholders according to their respective Proportionate
Shares), or resigns from such position, then the Shareholders shall select a
successor Shareholder Representative (by majority vote of the Shareholders
according to their respective Proportionate Shares) and shall notify the Buyer
and Company thereof in writing; provided, that the Shareholders hereby agree
that the first such successor Shareholder Representative shall be Scott S.
Scribner.

 

ARTICLE 3

 

Representations and Warranties of Each Shareholder

 

Each Shareholder hereby represents and warrants to the Buyer as follows:

 

Section 3.1             Authorization; etc.

 

(a)           Such Shareholder has full power and authority to execute and
deliver this Agreement and to perform his obligations under this Agreement. 
This Agreement is the legal, valid and binding obligation of such Shareholder,
enforceable against him in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors’ rights generally
and general equitable principles regardless of whether such enforceability is
considered in a proceeding at law or in equity.

 

(b)           The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not (i) violate any
provision of, or be an event that is, or with the passage of time will result
in, a violation of, or result in the acceleration of or entitle any party to
accelerate (whether after the giving of notice or lapse of time or both) any
obligation under, or result in the imposition of any lien upon or the creation
of a security interest in any of such Shareholder’s Shares pursuant to any
mortgage, lien, lease, agreement, instrument, order, arbitration award, judgment
or decree to which such Shareholder is a party or by which he is bound, or
(ii) violate or conflict with any other material restriction of any kind or
character to which such Shareholder is subject (other than such restrictions, if
any, that are being terminated prior to the Closing, including pursuant to
Section 7.7).

 

(c)           Upon consummation of the Stock Purchase at the Closing as
contemplated by this Agreement, the Buyer will acquire title to all of such
Shareholder’s Shares, free and clear of any liens, claims, charges, security
interests, options or other legal or equitable encumbrances of any kind.

 

(d)           Schedule 4.9 contains a list of all governmental and other
registrations, filings, consents, transfers, applications, notices, approvals,
orders, qualifications, licenses, permits, approvals, other authorizations and
waivers and other actions of any kind required to be made, filed, given or
obtained by such Shareholder with, to or from any persons or governmental
authorities or private agencies in connection with the consummation of the Stock
Purchase.

 

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Section 3.2             Disclosure.  To such Shareholder’s knowledge, no
representation, warranty or statement made by the Shareholders or the Company in
this Agreement or in the Schedules attached hereto or in the certificates or
other written materials required to be furnished to the Buyer or its
representatives, attorneys and accountants in connection with this Agreement and
the transactions contemplated hereby or thereby, contains any untrue statement
of a material fact or omits to state a material fact required to be stated
herein or therein or necessary to make the statements contained herein or
therein not misleading.

 

Section 3.3             Brokers, Finders, etc.  Except as set forth in
Schedule 3.3, such Shareholder has not employed and is not subject to any claim
of, any broker, finder, consultant or intermediary in connection with the
transactions contemplated by this Agreement who might be entitled to a fee or
commission upon the consummation of the transactions contemplated hereby.

 

ARTICLE 4

 

Representations and Warranties of All Shareholders

 

The Shareholders, severally in accordance with their respective Proportionate
Shares, and subject to the provisions of Section 11.9, hereby represent and
warrant to the Buyer as follows:

 

Section 4.1             Incorporation; Authorization; etc.

 

(a)           The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of New Hampshire.  The Company
(i) has all requisite corporate power and authority to own all of its properties
and assets and to carry on its business as it is now being conducted; (ii) is in
good standing, and is duly licensed, authorized or qualified to transact
business in each jurisdiction in which the ownership or lease of real property
or the conduct of its business requires it to be so qualified; and (iii) has all
government licenses, permits, approvals and other authorizations necessary to
own its properties and assets and carry on its business as it is now being
conducted.

 

(b)           Except as set forth in Schedule 4.1(b), the execution and delivery
of this Agreement does not, and the consummation of the transactions
contemplated hereby will not (i) violate any provision of the Company’s
governance documents, (ii) violate any provision of, or be an event that is, or
with the passage of time will result in, a violation of, or result in the
acceleration of or entitle any party to accelerate (whether after the giving of
notice or lapse of time or both) any obligation under, or result in the
imposition of any lien upon or the creation of a security interest in any of the
Company’s assets or properties pursuant to any mortgage, lien, lease, agreement,
instrument, order, arbitration award, judgment or decree to which the Company is
a party or by which it is bound, or (iii) violate or conflict with any other
restriction of any kind or character to which the Company is subject.

 

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Section 4.2             Capitalization; Structure; No Investments.

 

(a)           The authorized capital stock of the Company consists of 15,000
shares of common stock, par value $1.00 per share, of which 3,910 shares are
issued and outstanding.  All of the issued and outstanding shares of the
Company’s capital stock are validly issued, fully paid and nonassessable and
owned by the Shareholders as set forth in Exhibit A.  There are no outstanding
obligations, options, warrants or other rights of any kind to acquire shares of
capital stock of any class of the Company or any interest in the Company or any
of its businesses.

 

(b)           The Company has no subsidiaries and no equity investment of any
kind in any corporation, association, partnership, joint venture or other
entity.

 

Section 4.3             Financial Statements.

 

(a)           There have been previously delivered to the Buyer true and
complete copies of the following:

 

(i)            the reviewed financial statements of the Company for each of the
Company’s three (3) most recent fiscal years (i.e., the Company’s fiscal years
ending December 31, 2006, December 31, 2007, and December 31, 2008)
(collectively, the “Financial Statements”); and

 

(ii)           the management-prepared, unaudited balance sheet and statement of
income of the Company as of June 30, 2009 (the “2009 Interim Financial
Statements”).

 

(b)           The Financial Statements and the 2009 Interim Financial Statements
are complete and accurate in all material respects and were prepared in
accordance with the books and records of the Company.  The Financial Statements
were prepared in accordance with generally accepted accounting principles in the
United States of America consistently applied on a basis consistent with the
Company’s past practices including for the periods involved (“GAAP”) (unless and
then to the extent otherwise stated therein) and present fairly in all material
respects the financial position, results of operations or other information
included therein of the Company for the periods or as of the dates therein set
forth, in each case in accordance with GAAP.

 

Section 4.4             Title; Leases; Condition of Properties.

 

(a)           Except as set forth in Schedule 4.4 hereto, the Company has good
and marketable title, free and clear of any liens, claims, charges, options or
other title defects or encumbrances, to each piece of real and personal property
reflected on or included in the December 31, 2008 balance sheet and to each
piece of real and personal property acquired by the Company since the date of
such balance sheet, except where the failure to have such good and marketable
title would not, individually or in the aggregate, have a material adverse
effect on the business, assets, results of operations, or condition (financial
or otherwise) (collectively, the “Business Condition”) of the Company.

 

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(b)           Except as set forth in Schedule 4.4 hereto and except with respect
to any lease terminable on 30 days’ notice or less, each lease on each piece of
leased or occupied real property listed opposite its name in Schedule 4.4 (a
complete copy of each of which leases has been previously delivered to the
Buyer), which together constitute all real property leased by the Company is
binding on the Company, and to the knowledge of the Shareholders, each other
party thereto; no default, event of default or event which, with the giving of
notice, the passage of time or both would constitute a default or event of
default, exists and is continuing under any such lease with respect to the
tenant or, to the Shareholders’ knowledge, with respect to the landlord under
any such lease; the tenant under each such lease is now in possession of such
leased real property; there is no pending, or to the knowledge of the
Shareholders threatened, proceeding that might interfere with the quiet
enjoyment of the tenant under any such lease; and neither the Stock Purchase nor
any transaction contemplated by this Agreement shall constitute a default under
any such lease.

 

(c)           Except as set forth in Schedule 4.4 hereto, to the knowledge of
the Shareholders, the leased premises and operations of the Company conform in
all respects with all applicable restrictive covenants, deeds and restrictions
and all applicable Federal, state and local laws, ordinances and regulations
(including those relating to zoning and environmental protection) except where a
failure so to conform would not, individually or in the aggregate, have a
material adverse effect on the Business Condition of the Company.  To the
knowledge of the Shareholders, all leased premises or operations of the Company
that are subject to the Occupational Safety and Health Act of 1970, as amended,
comply in all respects with employee working conditions as prescribed by such
Act except where a failure so to comply would not, individually or in the
aggregate, have a material adverse effect on the Business Condition of the
Company.

 

(d)           To the knowledge of the Shareholders, the Company’s plant and
equipment are in working order adequate for the purposes for which the Company
is currently using such plant and equipment.  No other representation or
warranty is made as to the condition of any of such plant or equipment, nor as
to whether such plant and equipment will continue to remain in such working
order or whether such working order is or will be satisfactory to the Buyer. 
Without limiting the generality of the foregoing disclaimers, the Buyer
acknowledges and agrees that (i) various improvements might be made to such
plant and equipment (including, without limitation, the Buyer-Identified
Improvements (as defined below)), and (ii) the Shareholders shall have no
liability or responsibility for any Buyer-Identified Improvement nor for any
other improvement that may be necessary or desirable.  As used herein, the
“Buyer-Identified Improvements” include blender replacement, low NOX boiler
retrofit, stack test, bag dump stations, and air conditioning for isocyanate
storage area.

 

Section 4.5             Inventories.  Except as set forth in Schedule 4.5
hereto, the inventories reflected on the December 31, 2008 balance sheet or
thereafter acquired by the Company consist primarily of items of a quality and
quantity usable or saleable in the ordinary course of business at the amount
reflected on such balance sheet, in the case of inventories reflected thereon,
or, in the case of such inventories acquired after the date of such balance
sheet, at the amount reflected on the books of the Company.

 

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Section 4.6             Changes.  Except as set forth in Schedule 4.6 hereto or
as reflected in the 2009 Interim Financial Statements, since December 31, 2008,
there has not been:

 

(a)           any material adverse change in the Business Condition of the
Company from that shown in the December 31, 2008 balance sheet;

 

(b)           any material decrease in the total assets or net worth of the
Company from the amounts reflected on the December 31, 2008 balance sheet, other
than decreases resulting from depreciation in accordance with the accounting
practices of the Company in effect as of the date of such balance sheet;

 

(c)           any change in any of the assets, licenses, permits or franchises
of the Company that could, in the aggregate, have a material adverse effect on
the Business Condition of the Company, or any change in the nature of the
business, methods of accounting or accounting practice, or manner of conducting
business that could, individually or in the aggregate, have a material adverse
effect on the Business Condition, licenses, permits or franchises of the
Company;

 

(d)           any damage, destruction or other casualty loss that could, in the
aggregate, have a material adverse effect on the Business Condition of the
Company;

 

(e)           any amendment, modification or termination of any existing, or
entering into any new, contract (other than purchase or sales orders entered
into in the ordinary course of business), agreement, Plans (as defined in
Section 4.15 hereof), lease, license, permit, franchise or arrangement that
could, individually or in the aggregate, have a material adverse effect on the
Business Condition of the Company;

 

(f)            any bonus paid or any increase in the rate of compensation or in
the benefits payable or to become payable to any officer or other employee of
the Company over the levels in effect at December 31, 2008;

 

(g)           any disposition by the Company of any asset other than in the
ordinary course of business that had a net book value at the time of disposition
of $5,000 or more; or

 

(h)           any direct or indirect redemption, purchase or other acquisition
of, or any declaration, setting aside or payment of any dividend or other
distribution on or in respect of, any Shares.

 

Section 4.7             Litigation; Orders.  Except as provided in Schedule 4.7
hereto, there are no lawsuits, actions, administrative or arbitration or other
proceedings or governmental investigations pending, or to the knowledge of the
Shareholders threatened, against the Company and not covered by adequate
insurance or the Reserved Product Warranty Expense Accrual that could result in
a judgment against it in an amount that exceeds $5,000 or that could,
individually or in the aggregate, have a material adverse effect on the Business
Condition of the Company. 

 

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There are no judgments or outstanding orders, injunctions, decrees, stipulations
or awards (whether rendered by a court or administrative agency, or by
arbitration) against the Company or any of its properties or businesses that may
have the effect of prohibiting the Stock Purchase or any business practice or
the conduct of any business by the Company.  No condemnation proceeding has been
commenced against any asset of the Company, and, to the Shareholders’ knowledge,
there is no basis or ground for any such proceeding.

 

Section 4.8             Copyrights; Trademarks; Patents; etc.  Schedule 4.8
contains a description of all registered copyrights, trademarks, trade names,
patents and similar rights owned by or registered in the name of the Company
(“Trade Rights”).  The Company possesses adequate and enforceable rights to use
in its business as presently conducted (without payment) all its Trade Rights
and has not received any unresolved notice of conflict that asserts the rights
of others with respect thereto, and, to the Shareholders’ knowledge, there is no
basis or ground for any such notice of conflict.  The Company has in all
material respects performed all the obligations required to be performed by it,
and is not in default in any material respect, under any agreement relating to
any Trade Right.

 

Section 4.9             Licenses; Approvals; Other Authorizations; Consents.

 

(a)           Except as set forth in Schedule 4.9, no governmental licenses,
permits, approvals and other authorizations are used or required by the Company
in the conduct of its business, except for such licenses, permits, approvals and
other authorizations (i) as are in full force and effect and (ii) the failure to
have which would not, individually or in the aggregate, have a material adverse
effect on the Business Condition of the Company.  No proceeding is pending or
threatened seeking the revocation or limitation of any such license, permit,
order or other authorization.

 

(b)           Schedule 4.9 contains a list of all governmental and other
registrations, filings, consents, transfers, applications, notices, approvals,
orders, qualifications, licenses, permits, other authorizations and waivers of
any kind required to be made, filed, given or obtained by any of the
Shareholders or the Company with, to or from any persons or governmental
authorities or private agencies in connection with the consummation of the Stock
Purchase.  To the knowledge of the Shareholders, the conduct of the business of
the Company complies in all material respects with all applicable laws,
governmental licenses, permits, orders and other authorizations that are
applicable thereto except where the failure so to comply would not, individually
or in the aggregate, have a material adverse effect on the Business Condition of
the Company, and each license, permit, order and other authorization that is
material to the Business Condition of the Company has been obtained and is in
full force and effect, and will not cease to remain in full force and effect in
accordance with its terms by reason of the Stock Purchase.

 

Section 4.10           Labor Matters.  No work stoppage against the Company is
pending, or to the knowledge of the Shareholders, threatened.  The Company is
not involved in or, to the knowledge of the Shareholders, threatened with any
labor dispute, arbitration, lawsuit or administrative proceeding relating to
labor matters involving its employees.  None of the

 

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employees of the Company is represented by any labor union, and there is no
collective bargaining agreement in effect with respect to the employees of the
Company.

 

Section 4.11           Liabilities.  Except as set forth in Schedule 4.11 and
except for any obligations or liabilities related to the Reserved Product
Warranty Claims in an aggregate amount not to exceed the Warranty Expense
Accrual, the Company has no material obligations or liabilities of any nature,
whether direct or indirect, joint or several, absolute or contingent, matured or
unmatured, secured or unsecured, other than:

 

(a)           liabilities disclosed or provided for in the December 31, 2008
balance sheet (or in the notes to the December 31, 2008 Financial Statements),
and

 

(b)           liabilities incurred in the ordinary course of business since
December 31, 2008, none of which, individually or in the aggregate, could have a
material adverse effect on the Business Condition of the Company.

 

Section 4.12           Contracts; Agreements; etc.  Except as set forth in
Schedule 4.12 (true and complete copies of all contracts and other documents
listed in Schedule 4.12 having previously been made available to the Buyer), the
Company is not a party to or subject to any of the following:

 

(a)           any agent’s, salesman’s, broker’s, dealer’s, distributor’s
franchise, subcontractor’s or manufacturer’s representative contract or similar
agreement, arrangement or understanding, whether written or oral, express or
implied, or having any other basis, with respect to the manufacture, sale or
distribution of products of, or furnishing of services by, the Company that is
not terminable on notice of 30 days or less without penalty or other financial
obligation;

 

(b)           any employment or consultation contract, or other compensation
commitment or arrangement, whether written or oral, express or implied, or
having any other basis (except for contracts included in Schedule 4.15 or
otherwise provided for herein) that (i) is not terminable on notice of 30 days
or less without penalty or other financial obligation, and (ii) under which any
officer or employee of the Company receives total salary and other compensation
from the Company of $25,000 or more per annum or more than $50,000 over the term
of the contract;

 

(c)           any plan (except as included in Schedule 4.15) or any contract or
arrangement, oral or written, or any statutory obligation providing for bonuses,
pensions, options, deferred compensation, retirement payments, profit sharing or
the like in excess of $10,000 in the aggregate (true and complete copies of any
such plans, contracts or arrangements, or an accurate summary of the material
terms thereof, having previously been made available to the Buyer);

 

(d)           any lease or other agreement or arrangement for the use of
personal property involving payment of annual rentals in excess of $5,000 in the
aggregate;

 

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(e)           any contract, agreement, arrangement or license (including but not
limited to contracts for indebtedness) with respect to which payments are
denominated in a foreign currency;

 

(f)            any contract, agreement, loan or arrangement with any of the
Shareholders or with any affiliate or relative of any of the Shareholders;

 

(g)           any insurance policies naming the Company as an insured or
beneficiary or as a loss payable payee, or for which the Company has paid all or
part of the premium in force as of the Effective Date (true and complete copies
of all insurance policies listed in Schedule 4.12 having previously been made
available to the Buyer);

 

(h)           any instrument or agreement relating to indebtedness by way of
lease-purchase arrangements, conditional sale, guarantee or other undertakings
(except purchase orders made in the ordinary course of business) on which others
rely in extending credit, any joint venture agreements or any chattel mortgages
and other security arrangements with respect to the personal property and
equipment used by the Company;

 

(i)            except for shrink wrap licenses for off-the-shelf software, any
license agreement, either as licensor or licensee (except as included in
Schedule 4.8);

 

(j)            any contract or option for the purchase or sale of real property;
or

 

(k)           any other uncompleted contracts (excluding sales and purchase
orders made in the ordinary course of business consistent with past practices),
whether written or oral, except those that (i) were made in the ordinary course
of business, (ii) are terminable on 30 days’ or less notice by the Company
without penalty or other financial obligation, and (iii) in each case involve
aggregate future payments by or to the Company of $25,000 or less.

 

Except as set forth in Schedule 4.12, neither the Company nor, to the knowledge
of the Shareholders, any other party to any such contract, agreement, plan,
lease, license or permit, has breached any material provision of, or is in
violation or default in any material respect under the terms of, or has caused
or permitted to exist any event that with or without due notice or lapse of time
or both would constitute a material default or material event of default, under
any such contract, agreement, plan, lease, license or permit.  All such
contracts, agreements, plans, leases, licenses and permits are valid and binding
obligations of the Company and in full force and effect and the consummation of
the Agreement will not result in any default thereof and will not require the
consent of any other party thereto, and subject to the receipt of any consents
or other matters referred to in Schedule 4.9, the execution and delivery of this
Agreement by each of the Shareholders and the Company and the consummation of
the transactions contemplated hereby will not violate any material provision of,
or result in the acceleration of any material obligation under or the
termination of, any such contract, agreement, plan, lease, license or permit.

 

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Section 4.13           Interests of Certain Persons.  Except as set forth in
Schedule 4.13, none of the Shareholders, the officers or directors of the
Company, or any person with whom any officer or director of the Company has any
direct or indirect relation by blood, marriage or adoption, has any interest in
(i) any contract, arrangement or understanding with, or relating to, the
business or operations of the Company; (ii) any right to receive any payment
(whether in respect of money borrowed, services rendered, or otherwise) from the
Company; (iii) any property (real or personal), tangible or intangible, used or
intended to be used in, or pertaining to, the business or operations of the
Company; or (iv) any business or entity that competes with the Company.

 

Section 4.14           Taxes.  The Company has timely filed or will file all
Federal, state, local and foreign tax returns and filings required by applicable
law to be filed by it for all taxable periods ended or ending on or before the
Closing Date and has paid or, where payment is not yet required to be made, has
set up an adequate accrual for the payment of, all taxes required to be paid in
respect of the periods covered by such returns and filings.  With respect to all
taxable periods starting on or prior to the Closing Date but ending on the
Closing Date, the Company has set up or will set up an adequate accrual for the
payment of all taxes required to be paid with respect to those periods (treating
for this purpose the Closing Date as the last day of a taxable period of the
Company whether or not the Closing Date is in fact the last day of such taxable
period).  All tax returns and filings required to be made, including any
amendments to the Effective Date, have been prepared in good faith without
negligence or willful misrepresentation and are complete and accurate in all
material respects.  The Company is not delinquent in the payment of any tax,
assessment or governmental charge required to be paid by it.  No deficiencies
for any tax, assessment or governmental charge have been asserted or assessed
against the Company that has not been settled.  The Company has not executed any
request for waiver or extension of the time to assess any tax that has not been
revoked.  Except as set forth in Schedule 4.14, there have been no audits of the
Federal, state, local and foreign income or franchise tax liabilities of the
Company for any of the five (5) most recent fiscal years of the Company.  For
the purposes of this Agreement, the term “tax” shall include all Federal, state,
local and foreign taxes and all interest and penalties thereon.

 

Section 4.15           Employee Benefit Plans.

 

(a)           Schedule 4.15 contains a written list of all employee benefit
plans relating to employee benefits with respect to which the Company has or may
incur any future or contingent obligations, including, without limitation, all
plans, agreements or arrangements relating to deferred compensation, pensions,
profit sharing, retirement income or other benefits, stock purchase and stock
option plans, bonuses, severance arrangements, health benefits, insurance
benefits and all other employee benefit or fringe benefits (collectively, the
“Plans”).  There have been furnished to the Buyer copies of all Plans, which
copies are accurate and complete in all material respects.  The Company is not a
participant in (i) any multiemployer plan within the meaning of
Section 4101(a)(3) of ERISA or (ii) any employee pension benefit plan (as
defined in Section 3(2) of ERISA) which is subject to either Title IV of ERISA
or Section 412 of the Code.

 

(b)           Each Plan has been administered and operated in accordance with
its terms and applicable law except where the failure to do so would not,
individually or in the

 

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aggregate, have a material adverse effect on the Business Condition of the
Company.  To the extent applicable, each Plan is “qualified” within the meaning
of Section 401(a) of the Code and each related trust is exempt from tax under
Section 501(a) of the Code.  A favorable determination letter has been received
from the Internal Revenue Service with respect to each such Plan.  No liability
under ERISA or otherwise has been incurred or, based upon existing facts, may be
expected to be incurred with respect to any Plan, that would, individually or in
the aggregate, have a material adverse effect on the Business Condition of the
Company.

 

(c)           The Company has not engaged in any transaction in connection with
which it, directly or indirectly, would be subject to either a civil penalty
assessed pursuant to Section 502(i) of ERISA or a tax imposed by Section 4975 of
the Code that would, individually or in the aggregate, have a material adverse
effect on the Business Condition of the Company.  The Company has not instituted
proceedings to terminate any Plan.  To the Shareholders’ knowledge, there exists
no condition or set of circumstances that presents a risk of the termination or
partial termination of any Plan, which could result in a liability on the part
of the Company in an amount that would, individually or in the aggregate, have a
material adverse effect on the Business Condition of the Company.

 

(d)           Full payment has been made of all amounts that the Company was or
will be required under the terms of any of the Plans to have paid as
contributions to such Plans on or prior to the Closing Date except as set forth
in Schedule 4.15.

 

(e)           Other than for claims in the ordinary course for benefits under
the Plans, there are no actions, suits, claims or proceedings, pending or, to
the knowledge of Shareholders, threatened.

 

Section 4.16           Insurance.  The Company has in full force and effect the
insurance policies listed in Schedule 4.12.  The Company will maintain or cause
to be maintained in full force and effect all such insurance policies or
replacement policies through the Closing Date.

 

Section 4.17           Environmental.  Except as set forth in Schedule 4.17
hereto:

 

(a)           the Company has all permits required by environmental laws and
necessary for the conduct of the Company’s business other than those permits
whose absence would not reasonably be expected to have a material adverse effect
on the Business Condition of the Company, and the Company is in compliance with
such permits and other requirements of applicable environmental laws;

 

(b)           neither the Company nor any Shareholder has received any written
notice of claims by any governmental authority alleging that the Company has
violated or not complied with any environmental laws, and no Shareholder has any
knowledge that such action by a governmental authority is threatened;

 

(c)           neither the Company nor any Shareholder has received any written
notice, claim, or request for information relating to any real property now or
formerly owned or leased by the Company, or relating to any third party waste
disposal site, alleging that the

 

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Company is or may be liable to another person or governmental authority as a
result of a release of contaminants or threatened release by or generated by the
Company; and

 

(d)           the Shareholders have no knowledge of any release at or on any
real property owned or leased by the Company that would reasonably be expected
to have a material adverse effect on the Business Condition of the Company.

 

Section 4.18           Disclosure.  To the Shareholders’ knowledge, no
representation, warranty or statement made by the Shareholders in this Agreement
or in the Schedules attached hereto, or in the certificates or other written
materials furnished to the Buyer at the Closing in consummating the Stock
Purchase, contains any untrue statement of a material fact or omits to state a
material fact required to be stated herein or therein or necessary to make the
statements contained herein or therein not misleading.

 

Section 4.19           Brokers; Finders.  Except as set forth in Schedule 3.3,
the Company has not employed, nor is the Company subject to any claim of, any
broker, finder, consultant or intermediary in connection with the transactions
contemplated by this Agreement who might be entitled to a fee or commission upon
the consummation of the transactions contemplated hereby.

 

ARTICLE 5

 

Representations and Warranties of the Buyer

 

The Buyer represents and warrants to the Company and to the Shareholders as
follows:

 

Section 5.1             Incorporation; Authorization; etc.  The Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the Commonwealth of Massachusetts.  The Buyer has full corporate power and is
duly authorized to perform its obligations under and to consummate the
transactions contemplated by this Agreement.  The execution, delivery and
performance of this Agreement and the Ancillary Agreements and the consummation
of the transactions contemplated hereby and thereby will not violate any
provision of the Articles of Incorporation or Bylaws of the Buyer or any
provision of any mortgage, lien, lease, agreement, instrument, order,
arbitration award, judgment, law, statute, regulation or decree to which the
Buyer is a party or by which the Buyer is bound and will not violate or conflict
with any other material restriction of any kind or character to which the Buyer
is subject.  This Agreement and the Ancillary Agreements constitute the legal,
valid and binding agreements of the Buyer and each is enforceable against the
Buyer in accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors’ rights generally and general
equitable principles regardless of whether such enforceability is considered in
a proceeding at law or in equity.

 

Section 5.2             Brokers; Finders; etc.  The Buyer has not employed or is
subject to any claim of any broker, finder, consultant or other intermediary in
connection with the transactions

 

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contemplated by this Agreement who might be entitled to a fee or commission from
the Buyer upon the consummation of the transactions contemplated hereby.

 

Section 5.3             Litigation; Orders.  There are no lawsuits, actions,
administrative or arbitration or other proceedings or governmental
investigations pending or to the knowledge of Buyer threatened against Buyer and
not covered by adequate insurance that could result in a judgment against it
that could, individually or in the aggregate, have a material adverse effect on
the Business Condition of the Buyer.  There are no judgments or outstanding
orders, injunctions, decrees, stipulations or awards (whether rendered by a
court or administrative agency, or by arbitration) against the Buyer or any of
its properties or businesses that may have the effect of prohibiting the Stock
Purchase, or could affect materially any business practices of the Company
following the Closing.

 

Section 5.4             Investment Purpose.  Buyer is buying the Shares for
investment only and not with a view to resell in connection with any
distribution thereof, except in compliance with the Securities Act of 1933, as
amended (the “Securities Act”), and all other applicable securities laws.

 

Section 5.5             Financing.  As of the Effective Date Buyer has a
commitment of financing from Bank of America (and Buyer has not been advised nor
otherwise understands that there is any likelihood that such financing will not
be available to Buyer on or before the Closing Date),  and on the Closing Date
Buyer will have sufficient funds, to consummate the transactions contemplated by
this Agreement to occur at the Closing.

 

ARTICLE 6

 

Survival of Representations
and Warranties; Indemnity

 

Section 6.1             Survival.

 

(a)           Subject to Section 6.1(b) hereof, the representations and
warranties of the Shareholders and the Buyer included or provided for herein, or
in the Schedules or any of the Ancillary Agreements, shall survive the
consummation of the purchase of the Shares at the Closing for a period (the
“Survival Period”) commencing on the Closing Date and continuing until the
earlier of (i) the third (3rd) anniversary of the Closing Date, or (ii) the date
on which the Notes shall become due and payable in full (including by reason of
the exercise of any right of the holders of the Notes to accelerate the Buyer’s
payment obligations thereunder, as provided for in the Notes).

 

(b)           If prior to the expiration of the Survival Period, the
Shareholders shall have been notified of a Claim (as defined in Section 6.2) and
such Claim shall not have been finally resolved or disposed of at such date,
then any representation or warranty which is the basis for such Claim shall
continue to survive as to such Claim and shall remain a basis for indemnity and
set-off under Section 6.2 until such Claim is finally resolved or disposed of.

 

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Section 6.2             Indemnification Set-off in favor of Buyer.  Subject to
the provisions of this Section 6.2 and the other provisions of this Article 6,
the Shareholders shall indemnify and hold harmless the Buyer and its successors
and assigns, from, against and in respect of any and all damages, deficiencies,
out-of-pocket costs and expenses (including reasonable attorneys’ fees),
liabilities or losses (net, with respect to any indemnitee, of (i) any tax
benefit that actually results in a reduction in the amount of any Federal,
state, local or other income or other tax obligations of such indemnitee, and
(ii) any applicable insurance coverage that may be available to such indemnitee
or, in the case of any insurance coverage of the Company in effect on the
Closing Date that is cancelled, not renewed, or otherwise terminated after the
Closing, that would have been available to such indemnitee had such insurance
coverage of the Company not been cancelled, not renewed, or otherwise
terminated) incurred as a result of any breach of any representation or
warranty, covenant or agreement of the Shareholders under this Agreement
(subject to such netting, the “Claims”).  The Buyer’s right to indemnification
under this Section 6.2 shall be subject to the following provisions:

 

(a)           Except as otherwise specifically provided in Section 6.2(c) below,
no indemnification shall be payable by the Shareholders unless the total of all
Claims shall exceed One Hundred Thousand Dollars ($100,000) in the aggregate
(the “Threshold”), whereupon the amount of all Claims in excess of the Threshold
shall be recoverable in accordance with the terms hereof;

 

(b)           Buyer’s sole right against the Shareholders shall be limited to
the right of set-off against the then outstanding balance and accrued interest
of the Notes, with such set-off being applied proportionately among the
Shareholders in accordance with their respective Proportionate Shares; provided,
that if a particular Claim relates to a particular Shareholder with respect to
such Shareholder’s representations and warranties under Article 3 or to any
covenant or agreement of such Shareholder under this Agreement, then the Buyer’s
right of set-off for such Claim shall be made solely against such Shareholder’s
Proportionate Share.  The foregoing set-off shall be applied first against the
earliest principal and interest coming due.  The foregoing indemnification
set-off shall be the sole liability of the Shareholders with respect to any
Claims;

 

(c)           With respect to any Claims that (i) are Houston Warehouse
Construction Liens (as referenced in Section 2.3(e)(i)) or Houston Warehouse
Dispute Costs (as also defined in Section 2.3(e)(i)), (ii) are Reserved Product
Warranty Claims in excess of the Reserved Product Warranty Expense Accrual, or
(iii) involve a breach of any representation or warranty under Section 4.14
relating to taxes, Buyer’s right of set-off against the Notes as provided in
Section 6.2(b) shall be from the first dollar thereof and without charge against
the Threshold; and

 

(d)           Notwithstanding anything to the contrary set forth in this
Agreement, Buyer shall not be entitled to be indemnified, and the Shareholders
shall have no responsibility, obligation, or liability whatsoever, with respect
to any Claim or other damages, deficiencies, out-of-pocket costs and expenses
(including reasonable attorneys’ fees), liabilities or losses related to:

 

21

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(i)            any actual or alleged environmental contamination or other issues
involving the Company’s former facility located in Oakland, California or the
Company’s operations at that facility; or

 

(ii)           any capital or other expenditures related to the Company’s
facilities in Houston, Texas (including, without limitation, the installation,
repair, replacement, or removal of any equipment located at such facilities),
all of which are being provided in “as is, where is” condition without any
express or implied warranties of any kind or nature except as otherwise
expressly set forth in Section 4.4(d).

 

All risks involving or related to any of the foregoing shall remain with the
Company and are assumed by the Buyer.

 

Section 6.3             Indemnification Set-Off Sole Remedy.  Except as to those
obligations to be performed by any Shareholder under any of the Ancillary
Agreements after Closing, the indemnification set-off provisions contained in
Section 6.2 shall be the exclusive remedy of the Buyer and its successors and
assigns in connection with or arising from (a) any failure by any of the
Shareholders to perform any of their covenants or obligations in this Agreement,
or (b) any breach by any of the Shareholders of any of their warranties or
representations contained in this Agreement.

 

Section 6.4             Indemnification by Buyer.  Buyer shall indemnify and
hold harmless the Shareholders and their respective heirs, successors and
assigns, from, against and in respect of any and all damages, deficiencies,
out-of-pocket costs and expenses (including reasonable attorneys’ fees),
liabilities or losses (net, with respect to any indemnitee, of (i) any tax
benefit that actually results in a reduction in the amount of any Federal,
state, local or other income or other tax obligations of such indemnitee, and
(ii) any applicable insurance coverage that may be available to such indemnitee)
incurred as a result of any breach of any representation or warranty, covenant
or agreement of the Buyer under this Agreement.

 

SECTION 6.5             CLAIMS FOR INDEMNIFICATION.

 

(A)           WHENEVER ANY CLAIM SHALL ARISE FOR INDEMNIFICATION HEREUNDER
(INCLUDING, IN THE CASE OF BUYER, FOR SET-OFF AGAINST THE NOTES), THE PARTY
SEEKING INDEMNIFICATION (OR SET-OFF) (THE “INDEMNIFIED PARTY”) SHALL PROMPTLY
NOTIFY THE PARTY FROM WHOM SUCH INDEMNIFICATION (OR SET-OFF) IS SOUGHT (THE
“INDEMNIFYING PARTY”) OF THE CLAIM IN QUESTION (AN “INDEMNIFICATION CLAIM”) AND,
WHEN KNOWN, THE FACTS CONSTITUTING THE BASIS FOR SUCH INDEMNIFICATION CLAIM.  NO
DELAY ON THE PART OF THE INDEMNIFIED PARTY IN NOTIFYING THE INDEMNIFYING PARTY
SHALL RELIEVE THE INDEMNIFYING PARTY FROM ANY LIABILITY OR OBLIGATION HEREUNDER,
EXCEPT TO THE EXTENT OF ANY PREJUDICE CAUSED BY OR ARISING OUT OF SUCH DELAY.

 

(B)           IN THE EVENT OF ANY INDEMNIFICATION CLAIM RESULTING FROM OR THAT
RELATES TO ANY CLAIM OR LEGAL PROCEEDING BY A THIRD PARTY (A “THIRD PARTY
INDEMNIFICATION CLAIM”), THE NOTICE TO THE INDEMNIFYING PARTY SHALL SPECIFY, IF
KNOWN, THE AMOUNT OR AN ESTIMATE OF THE AMOUNT

 

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OF THE LIABILITY ARISING THEREFROM AND SHALL INCLUDE COPIES OF ANY
CORRESPONDENCE, PLEADINGS OR OTHER DOCUMENTATION RECEIVED FROM THE THIRD PARTY
OR ITS LEGAL COUNSEL RELATING TO SUCH THIRD PARTY INDEMNIFICATION CLAIM.  THE
INDEMNIFYING PARTY (AND, IN THE CASE WHERE THE SHAREHOLDERS ARE THE INDEMNIFYING
PARTY, THE SHAREHOLDER REPRESENTATIVES ON BEHALF OF THE SHAREHOLDERS), AT THE
SOLE COST AND EXPENSE OF THE INDEMNIFYING PARTY, MAY, UPON WRITTEN NOTICE TO THE
INDEMNIFIED PARTY GIVEN WITHIN TWENTY (20) DAYS AFTER THE DATE OF THE DELIVERY
OF THE NOTICE OF THE THIRD PARTY CLAIM FROM THE INDEMNIFIED PARTY, ASSUME THE
DEFENSE OF SUCH THIRD PARTY INDEMNIFICATION CLAIM WITH COUNSEL APPROVED BY THE
INDEMNIFIED PARTY (WHICH APPROVAL SHALL NOT BE UNREASONABLY WITHHELD).  UNTIL
THE EXPIRATION OF SUCH TWENTY (20) DAY PERIOD, THE INDEMNIFIED PARTY SHALL NOT,
WITHOUT THE PRIOR WRITTEN CONSENT OF THE INDEMNIFYING PARTY, SETTLE OR
COMPROMISE ANY SUCH THIRD PARTY INDEMNIFICATION CLAIM TO THE EXTENT THAT SUCH
SETTLEMENT WOULD IMPOSE ANY OBLIGATIONS ON THE INDEMNIFYING PARTY.

 

(c)           If the Indemnifying Party assumes the defense of a Third Party
Indemnification Claim, the Indemnified Party shall be entitled to participate in
(but not control) such defense, with its counsel and at its own expense.  In
addition, if the Indemnifying Party so assumes such defense, it shall take all
steps reasonably determined by it to be necessary in the defense or settlement
thereof; provided, however, that the Indemnifying Party shall not consent to any
settlement or to the entry of any judgment with respect to such Third Party
Indemnification Claim which does not include a complete release of the
Indemnified Party from all liability with respect thereto or which imposes any
liability or obligation on the Indemnified Party (other than an award of
monetary damages that are to be paid or otherwise satisfied in full by the
Indemnifying Party) without the prior written consent of the Indemnified Party.

 

(d)           If the Indemnifying Party does not assume the defense of any Third
Party Indemnification Claim, (i) the Indemnified Party may defend against such
Third Party Indemnification Claim in such manner as it may reasonably deem
appropriate, including, but not limited to, settling such claim or legal
proceeding on such terms as the Indemnified Party may reasonably and in good
faith deem appropriate, and (ii) the Indemnifying Party shall be entitled to
participate in (but not control) the defense of such Third Party Indemnification
Claim, with its counsel and at its own expense.

 

Section 6.6             Equitable Relief.  Notwithstanding anything herein to
the contrary, nothing herein shall preclude a party from obtaining injunctive
relief or specific performance to enforce a breach of this Agreement.

 

ARTICLE 7

 

Covenants of the Shareholders, the Buyer and the Company

 

Section 7.1             Investigation of Business.

 

(a)           The Buyer may, prior to the Closing Date and through its own
personnel, independent agents, accountants and attorneys, make such
investigation of the Company, including, without limitation, the confirmation of
cash and cash equivalents, inventories,

 

23

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receivables and liabilities, and the inspection of real and personal properties
and equipment, as it deems necessary or advisable; provided, however, that such
investigation shall not in any way release the Shareholders from their
representations and warranties hereunder; and further provided that any such
investigation shall be conducted upon reasonable prior notice in such a manner
so as to minimize any disruption to the personnel and operations of the
Company.  Consistent with the immediately preceding sentence, the Company and
the Shareholders agree to permit the Buyer and its representatives to have full
access to the premises and to all the books and records of the Company and to
furnish the Buyer with such existing financial and operating data and other
information with respect to the business and properties of the Company as the
Buyer shall from time to time reasonably request.  In addition, the Company and
the Shareholders will cause the Company’s accountants to make their personnel,
work papers and such other requested documentation relating to their work papers
and to their reports on the books and records of the Company, as is reasonably
requested in connection with any such investigation, available to the Buyer and
its independent agents, accountants and attorneys during regular business hours.

 

(b)           In the event that Buyer (i) is not reasonably satisfied as to the
Company’s ongoing availability of a reliable and sustainable supply of
proprietary raw materials (excluding, for purposes hereof, any such proprietary
raw materials that have been disclosed to Buyer prior to the execution and
delivery of this Agreement, such disclosure to be supported by reasonable
documentation), or (ii) is not reasonably able to verify the Company’s product
margins as reported to Buyer (based on the costs of such proprietary raw
materials), then Buyer may terminate this Agreement by written notice to the
Company and the Shareholders given on or before 8:00 p.m. (Eastern Time) on
September 3, 2009, time being of the essence.

 

Section 7.2             Obtaining Consents and Governmental Approvals.  The
Shareholders, the Company and the Buyer will cooperate and use their respective
best efforts to make promptly any governmental and other registrations, filings,
consents, transfers, applications, notices, approvals, orders, qualifications,
licenses, permits, approvals, other authorizations and waivers and other actions
of any kind which may be required to be made, filed, given or obtained by any of
the Shareholders or the Company with, to or from any persons or governmental
authorities or private agencies in connection with the consummation of the
purchase of the Shares and the other transactions contemplated by this
Agreement.

 

Section 7.3             Payment of Taxes.  Each Shareholder agrees to pay all
income or capital gains taxes, if any, arising solely out of the sale of such
Shareholder’s Shares to the Buyer pursuant to this Agreement.

 

Section 7.4             Further Assurances.  The Shareholders, the Company and
the Buyer covenant and agree that, from time to time, whether at or after the
Closing Date, each of them will execute and deliver such further instruments of
conveyance and transfer and take such other action as may be necessary to carry
out the terms of this Agreement.  The Shareholders, the Company and the Buyer
further covenant and agree that they will not take any action that will prevent
their performance of this Agreement in accordance with its terms.

 

24

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Section 7.5             Conduct of Business.  From the Effective Date through
the Closing, except as set forth in Schedule 7.5 hereto or as may otherwise be
consented to or approved by the Buyer in writing or provided for in this
Agreement, the Company covenants and agrees, and the Shareholders covenant and
agree that they will not cause or allow the Company to breach or violate such
covenant and agreement, that:

 

(a)           the Company shall operate its business in the ordinary and usual
course and in good faith, consistent with past management practices;

 

(b)           the Company shall not change or amend its Articles of
Incorporation or Bylaws;

 

(c)           neither the Company nor any Shareholder shall issue, sell or agree
to issue or sell (i) any Shares (other than by a Shareholder to a revocable
trust established by such Shareholder for estate planning purposes) or (ii) any
securities convertible into, or options with respect to, or warrants to purchase
or rights to subscribe to, any Shares;

 

(d)           subject to and except as otherwise permitted by the provisions of
Section 2.3(b) the Company shall not (i) declare, pay or set aside for payment
any dividend or other distribution in respect of any Shares, or (ii) directly or
indirectly, redeem, purchase or otherwise acquire any Shares;

 

(e)           the Company shall not make any capital expenditures, or
commitments with respect thereto;

 

(f)            the Company shall not incur, assume or guarantee any indebtedness
for money borrowed (which for this purpose shall include nonrecourse borrowings)
or otherwise enter into any transaction, agreement, arrangement or understanding
pursuant to which any third party agrees to provide or provides the Company with
any funds other than in payment for goods or services in the ordinary course of
business;

 

(g)           the Company shall not remove, transfer to the Shareholders or
others, sell, or enter into any material contract with respect to, any of its
properties or assets, other than sales and contracts entered into in the
ordinary course of business and certain new private label contracts;

 

(h)           the Company shall not grant any bonus or any increase in the rate
of compensation or in the benefits payable or to become payable to any officer
or other employee or to any agent or consultant;

 

(i)            except in the ordinary course of business, the Company shall not
encumber or permit to become subject to any encumbrance any of its assets or
enter into any other transaction or make any other commitment that would
reasonably be expected to have a material adverse effect on the Business
Condition of the Company;

 

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(j)            the Company shall not amend, or take any steps to amend, any of
the Plans, except to the extent otherwise required to comply with applicable
law; and

 

(k)           the Company shall maintain its corporate existence intact.

 

Section 7.6             Preservation of Business.  The Shareholders and the
Company shall use their respective best efforts to preserve the business of the
Company intact, to keep available to the Company and the Buyer the services of
the employees of the Company and to preserve the goodwill of customers and
others having business relations with the Company.

 

Section 7.7             Termination of Stock Restrictions.  Subject to and
conditioned upon the consummation of the Closing, the Shareholders and the
Company hereby agree that any and all agreements, obligations, covenants, and
restrictions of any kind that may be in effect between any or all of such
parties, if any, that would otherwise prohibit, limit, or restrict in any manner
the purchase and sale of the Shares pursuant to this Agreement shall be and they
hereby are terminated immediately prior to the consummation of the Closing and
shall thereafter be null and void and of no further force or effect.

 

Section 7.8             Continued Employment; Employee Benefits.  Immediately
following the Closing, Buyer covenants and agrees to offer, or to cause the
Company to offer, all employees of the Company (other than R. Eugene Scribner)
continued employment, at compensation levels equivalent to their current
compensation levels, at their current work locations, and with the benefits
listed in Schedule 7.8 attached hereto; provided, however, that nothing
contained herein shall be construed to prevent, from and after the Closing, the
termination of employment of any such employee nor the modification or
termination of any such benefits.  Buyer covenants and agrees that (a) the only
benefits listed in Schedule 7.8 that are tenure-based are Buyer’s 401(k) plan
and vacation policies, and (b) each Company employee who continues to be
employed by the Company following the Closing shall be credited, for tenure
purposes under Buyer’s 401(k) plan and vacation policies, with tenure from and
after the start date of such employee’s employment with the Company.  In
addition the waiting period for any medical benefits will be waived as of the
Closing Date for all such employees.

 

ARTICLE 8

 

Conditions to the Buyer’s Obligation to Close

 

The obligation of Buyer to consummate the Stock Purchase is subject to the
satisfaction on or prior to the Closing Date of all of the following conditions
(any of which may be waived by the Buyer):

 

Section 8.1             Representations, Warranties and Covenants of the
Shareholders.  Each of the representations and warranties of the Shareholders
contained in this Agreement shall be true in all respects on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date (except for changes permitted by this
Agreement), each of the covenants and agreements of the Shareholders to be
performed on or

 

26

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before the Closing Date shall have been duly performed in all material respects,
and the Buyer shall have received at the Closing a certificate to that effect in
the form set forth in Exhibit H hereto dated the Closing Date and executed by or
on behalf of the Shareholders.

 

Section 8.2             Closing Documents.  The Shareholders shall have
furnished the Buyer with:

 

(a)           copies of the Articles of Incorporation of the Company certified
as of recent date by the Secretary of State of the New Hampshire;

 

(b)           the original minute books of the Company and copies of the Bylaws
of the Company, each certified as of the Closing Date by the Company’s
Secretary; and

 

(c)           certificates for all of the Shares to be purchased, with
appropriate stock powers attached, properly signed, together with evidence of
payment of any applicable stock transfer taxes and together with the related
stock books and stock transfer records.

 

Section 8.3             Filings; Consents; Waiting Periods.  All registrations,
filings, applications, notices, transfers, consents, approvals, orders,
qualifications, waivers and other actions of any kind required of any persons or
governmental authorities or private agencies (including, but without limitation,
any approvals required by any person to whom the Company is indebted) in
connection with (a) the consummation of the Stock Purchase, and (b) the other
transactions contemplated by this Agreement, shall have been filed, made or
obtained and any applicable waiting periods shall have expired or been
terminated.

 

Section 8.4             No Litigation.  No action, suit or proceeding shall have
been instituted by any person or entity, or threatened by any governmental
agency or body, before a court or governmental body, to restrain or prevent the
carrying out of the transactions contemplated by this Agreement or that seeks
other relief with respect to any of such transactions or that could,
individually or in the aggregate, have a material adverse effect on the Business
Condition of the Company (excluding any Houston Warehouse Construction Claim). 
At the Closing Date, there shall be no injunction, restraining order or decree
of any nature of any court or governmental agency or body in effect that
restrains or prohibits the consummation of the Stock Purchase.

 

Section 8.5             Opinion of Shareholders’ and the Company’s Counsel.  The
Shareholders shall have delivered to the Buyer the written opinion, dated the
Closing Date, counsel for the Shareholders and counsel for the Company.

 

Section 8.6             Resignations.  All persons serving as directors of the
Company and all persons serving as officers of the Company, shall have submitted
their written resignations to the Company, such resignations to be conditional
upon and effective immediately prior to the consummation of the Closing.  The
persons serving as the administrators of the Company’s 401(k) plan shall remain
as administrators until the plan is terminated, which shall occur approximately
thirty (30) days following the Closing.

 

Section 8.7             Ancillary Agreements.  The Ancillary Agreements shall
have been executed and delivered.

 

27

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Section 8.8             Houston Holdback Amount.  The Houston Holdback Amount
shall have been paid by the Company to the Law Firm and deposited into the Trust
Account.

 

ARTICLE 9

 

Conditions to the Shareholders’ Obligation to Close

 

The obligation of the Shareholders to consummate the Stock Purchase is subject
to the satisfaction on or prior to the Closing Date of all of the following
conditions (any of which may be waived by the Shareholders):

 

Section 9.1             Representations, Warranties and Covenants of the Buyer. 
Each of the representations and warranties of the Buyer contained in this
Agreement shall be true on and as of the Closing Date with the same effect as
though such representations and warranties had been made on and as of such date,
each of the covenants and agreements of the Buyer to be performed on or before
the Closing Date shall have been duly performed, and the Shareholders shall have
received at the Closing Date a certificate to that effect in the form set forth
in Exhibit I hereto dated the Closing Date and executed on behalf of the Buyer
by an authorized officer of the Buyer.

 

Section 9.2             Payment of Purchase Price.  The Buyer shall have paid
and delivered to the Shareholders the Purchase Price in the manner set forth in
Section 2.3(a) hereof, provided that (i) the Retained Company Cash component of
the Cash Consideration, if not paid at Closing, shall be paid and delivered no
later than four (4) business days following the Closing Date, and shall
constitute an absolute and unconditional obligation of the Buyer which shall
survive the Closing and shall not be subject to any right of setoff, and (ii) to
the extent the amount of Retained Company Cash included in the Cash
Consideration is based upon an agreed upon estimate of the Closing Net Working
Capital by the Shareholders’ Representatives and the Buyer at Closing, the
amount so paid shall be subject to subsequent adjustment pursuant to the
provisions of Sections 2.3(c)(ii), (iii) and (iv).

 

Section 9.3             No Litigation.  No action, suit or proceeding shall have
been instituted by any person or entity, or threatened by any governmental
agency or body, before a court or governmental body, to restrain or prevent the
carrying out of the transactions contemplated by this Agreement or that seeks
other relief with respect to any of such transactions or that could,
individually or in the aggregate, have a material adverse effect on the Business
Condition of the Buyer.  At the Closing Date, there shall be no injunction,
restraining order or decree of any nature of any court or governmental agency or
body in effect that restrains or prohibits the consummation of the Stock
Purchase.

 

Section 9.4             Filings; Consents; Waiting Periods.  All registrations,
filings, applications, notices, transfers consents, approvals, orders,
qualifications, waivers and other actions of any kind required of any persons or
governmental authorities or private agencies in connection with (a) the
consummation of the Stock Purchase, and (b) the other transactions contemplated
by this

 

28

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Agreement, shall have been filed, made or obtained and any applicable waiting
periods shall have expired or been terminated.

 

Section 9.5             Opinion of the Buyer’s Counsel.  The Buyer shall have
delivered to the Shareholders the written opinion, dated the Closing Date, of
Hughes & Associates, counsel for the Buyer, in the form set forth in Exhibit G
hereto.

 

Section 9.6             Ancillary Agreements.  The Ancillary Agreements shall
have been executed and delivered.

 

ARTICLE 10

 

Termination; Amendment and Modification

 

Section 10.1           Termination.  In the event of any termination of this
Agreement, the Buyer will deliver to the Company all documents, work papers and
other materials obtained by the Buyer or its representatives from the Company or
its representatives as a result of this Agreement or in connection herewith,
whether so obtained before or after the execution hereof.  In addition, the
Buyer shall continue to comply with the provisions of a confidentiality letter
agreement dated December 8, 2008 executed by the Buyer and by the Company’s
investment banking firm, Einhorn Associates, Inc., which provisions shall
survive the termination of this Agreement.

 

Section 10.2           Amendment and Modification.  Subject to applicable law,
this Agreement may be amended, modified or supplemented only by written
agreement of the parties hereto.

 

ARTICLE 11

 

Miscellaneous

 

Section 11.1           Counterparts.  This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement,
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other party.

 

Section 11.2           Governing Law.  This Agreement shall be governed by and
construed in accordance with the substantive laws of the Commonwealth of
Massachusetts without reference to the choice of law principles thereof.

 

Section 11.3           Entire Agreement.  This Agreement and the Schedules and
Exhibits hereto contain the entire agreement between the parties and there are
no agreements, understandings, representations or warranties between the parties
other than those set forth or referred to therein.

 

29

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Section 11.4           Release of Prior Claims.  Effective on the Closing, and
except for the respective obligations of the parties under this Agreement and
under the Ancillary Agreements:

 

(a)           the Shareholders, by the execution of this Agreement, release and
forever discharge the Company and its directors, officers and employees from any
and all claims or demands, for all periods through the Closing Date, arising out
of or related in any way to the Company or the actions or inactions of its
directors, officers and employees with respect thereto; provided, that the
foregoing release shall not apply to, and the Company and Buyer agree to pay and
honor, the following:

 

(i)            any accrued and unpaid compensation and employee benefits payable
to any employee Shareholder as of the Closing Date,

 

(ii)           any accrued reimbursable expenses payable to any employee
Shareholder, or

 

(iii)          any right arising under applicable law, the Company’s Articles of
Incorporation or Bylaws, or under any insurance policy maintained by the
Company, to be defended by or indemnified from any claim made against a
Shareholder by reason of his being a shareholder, director, officer, or employee
of the Company; and

 

(b)           the Company, by the execution of this Agreement, releases and
forever discharges the Shareholders from any and all claims or demands, for all
periods through the Closing Date, arising out of or related in any way to the
Company or the actions or inactions of the Shareholders (whether in their
respective capacity(ies) as shareholders, directors, officers and/or employees
of the Company) with respect thereto, except for claims against a Shareholder
involving fraud, embezzlement of Company funds or similar felonious actions
against the Company by such Shareholder.

 

Section 11.5           Expenses.  Except as set forth in this Agreement, all
legal and other costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such costs and expenses.

 

Section 11.6           Specific Performance.  The Shareholders and the Buyer
each acknowledge that, in view of the uniqueness of the Company, the parties
hereto would not have an adequate remedy at law for money damages in the event
that this Agreement were not performed in accordance with its terms, and
therefore agree that the parties hereto shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which the
parties hereto may be entitled, at law or in equity.

 

Section 11.7           Notices.  All notices hereunder shall be sufficiently
given for all purposes hereunder if in writing and delivered personally or sent
by registered mail or certified mail, postage prepaid, to the appropriate
address as set forth below.

 

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(a)                                  Notice to the Shareholders shall be given
to the Shareholders Representatives addressed to:

 

Robert E. Scribner

304 Reid Road

Francestown, NH 03043

 

and

 

Paul W. Sullivan

22 Lookout Hill

Peterborough, NH 03458

 

with a copy to:

 

James G. Cook, Esq.

Cook, Little, Rosenblatt & Manson, p.l.l.c.

1000 Elm Street

Manchester, NH 03101

 

or at such other address and to the attention of such other person as the
Shareholders may designate by written notice to the Buyer.

 

(b)(i)                      Notice to the Company given before the Closing shall
be addressed to:

 

C.I.M. Industries Inc.

23 Elm Street

Peterborough, NH 03458

Attn: President

 

with a copy to:

 

James G. Cook, Esq.

Cook, Little, Rosenblatt & Manson, p.l.l.c.

1000 Elm Street

Manchester, NH 03101

 

or at such other address and to the attention of such other person as the
Company may designate by written notice to the Buyer.

 

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(ii)                                  Notice to the Company given after the
Closing shall be addressed to:

 

C.I.M. Industries Inc.

c/o Chase Corporation

26 Summer Street

Bridgewater, MA 02324

Attention: Peter R. Chase, Chairman and CEO

 

with a copy to:

 

George M. Hughes, Esq.

Hughes & Associates

P.O. Box 590321

Newton Center, MA 02459-0321

 

or at such other address and to the attention of such other person as the
Company may designate by written notice to the Shareholders.

 

(c)                                  Notices to the Buyer shall be addressed to:

 

Chase Corporation

26 Summer Street

Bridgewater, MA 02324

Attention: Peter R. Chase, Chairman and CEO

 

with a copy to:

 

George M. Hughes, Esq.

Hughes & Associates

P.O. Box 590321

Newton Center, MA 02459-0321

 

or at such other address and to the attention of such other person as the Buyer
may designate by written notice to the Shareholders.

 

Any notice hereunder shall be deemed to have been served or given as of the date
such notice is actually received.

 

Section 11.8           Successors and Assigns.  This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective heirs,
successors and assigns.

 

Section 11.9           Knowledge; Palmer’s Representations and Warranties.

 

(a)           As used in this Agreement, references to a Shareholder’s
“knowledge” or like terms shall mean such Shareholder’s actual knowledge.  With
respect to Thomas A. Palmer, Trustee of the Thomas A. Palmer Family Trust
(“Palmer”), Palmer has never been employed by

 

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the Company, has never served as a director of the Company, and has only served
as an officer of the Company in a very limited, non-operational capacity (i.e.,
as an Assistant Secretary of the Company during the period August 19, 1988
through August 15, 2007).

 

(b)           Palmer does not personally make any of the representations or
warranties set forth in Article 4 of this Agreement.  However, Palmer is and
will be severally liable as a Shareholder in accordance with his Proportionate
Share pursuant and subject to the applicable provisions of Article 6; for the
avoidance of doubt, such several liability includes Palmer’s liability with
respect to his representations and warranties under Article 3 and also with
respect to the Shareholders’ representations and warranties under Article 4 (in
the latter case, even though such representations and warranties are not being
made personally by Palmer).

 

[SIGNATURE PAGE FOLLOWS]

 

33

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IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of each of
the parties, all as of the Effective Date.

 

 

Chase:

 

Chase Corporation

 

 

 

 

 

By:

 

 

Title:

Chairman

 

 

 

Company:

 

C.I.M. Industries Inc.

 

 

 

 

 

By:

 

 

Title:

President

 

 

 

Shareholders:

 

 

 

 

 

Thomas A. Palmer, Trustee of the

 

Thomas A. Palmer Family Trust

 

 

 

 

 

Robert E. Scribner, Trustee of the

 

Robert E. Scribner Family Trust

 

 

 

 

 

Scott S. Scribner

 

 

 

 

 

Paul W. Sullivan

 

 

 

 

 

Richard H. Stephens

 

The undersigned hereby accept their appointment as Shareholder Representatives
under the applicable provisions of the foregoing Stock Purchase Agreement and
agree to undertake and perform their duties and authorities as set forth in said
Stock Purchase Agreement, all as of the Effective Date.

 

 

 

 

Robert E. Scribner

 

 

 

 

 

Paul W. Sullivan

 

Signature Page to Stock Purchase Agreement

 

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List of Exhibits

 

Exhibit A

 

Shareholder Allocations

 

 

 

Exhibit B

 

Form of Notes

 

 

 

Exhibit C

 

Form of Non-Compete Agreement

 

 

 

Exhibit D

 

Form of Lease Amendment

 

 

 

Exhibit E

 

Intentionally Omitted

 

 

 

Exhibit F

 

Form of Legal Opinion of Messrs. Cook, Little, Rosenblatt & Manson, pllc ,
counsel to Company and Shareholders

 

 

 

Exhibit G

 

Form of Legal Opinion of Hughes & Associates, counsel to the Buyer

 

 

 

Exhibit H

 

Form of Closing Certificate of the Shareholders

 

 

 

Exhibit I

 

Form of Closing Certificate of the Buyer

 

 

 

Exhibit J

 

Computation of Company’s Net Working Capital as of June 30, 2009

 

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List of Schedules

 

Schedule 2.3(c)(ii)

 

Excluded Accounts Receivable and Excluded Inventory

 

 

 

Schedule 3.3

 

Brokers and Finders

 

 

 

Schedule 4.1(b)

 

Incorporation; Authorization, etc.

 

 

 

Schedule 4.4

 

Title; Leases; Condition of Properties [includes Exhibit 4.4(a)]

 

 

 

Schedule 4.5

 

Inventories

 

 

 

Schedule 4.6

 

Changes since December 31, 2008

 

 

 

Schedule 4.7

 

Litigation; Orders

 

 

 

Schedule 4.8

 

Copyrights, Trademarks & Patents [includes Exhibit 4.8]

 

 

 

Schedule 4.9

 

Licenses, Approvals, Other Authorizations, Consents, Reports, etc. required in
connection with the Stock Purchase [includes Exhibit 4.9]

 

 

 

Schedule 4.11

 

Liabilities

 

 

 

Schedule 4.12

 

Contracts, Agreements, etc. [includes Exhibit 4.12(a) and Exhibit 4.12(g)]

 

 

 

Schedule 4.13

 

Interests of Certain Persons

 

 

 

Schedule 4.14

 

Taxes

 

 

 

Schedule 4.15

 

Employee Benefit Plans

 

 

 

Schedule 4.17

 

Environmental [includes Exhibit 4.17]

 

 

 

Schedule 7.5

 

Conduct of Business

 

 

 

Schedule 7.8

 

Employee Benefits

 

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