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


 

















 


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 


 

















 


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.


 


11

















 


(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.


 


12

















 


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.  


 


13

















 


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 


 


14

















 


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;


 


15

















 


(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.


 


16

















 


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 


 


17

















 


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 


 


18

















 


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 


 


19

















 


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.


 


20

















 


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














 


(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 


 


22

















 


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

















 


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

















 


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;


 


25

















 


(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

















 


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

















 


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

















 


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














 


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.


 


30

















 


(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.


 


31

















 


(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 


 


32

















 


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

















 


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


 

















 


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

  



 

















 


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