Exhibit 10.5


 


CASH
COLLATERAL AGREEMENT


 


This
Agreement is made as of this 2nd day of December, 2003 by and between Chase
Corporation having an address of 26 Summer Street, Bridgewater, Massachusetts
(“Pledgor”) and Citizens Bank of Massachusetts having an address of 28 State
Street, Boston, MA  02109 (“Lender”).


 


RECITALS


 


1.                                       In
a transaction of even date herewith, Lender is making a loan to Sunburst
Electronic Manufacturing Solutions, Inc., a Massachusetts corporation having an
address of 70 Pleasant Street, West Bridgewater, MA (the “Borrower”) in the
original principal amount of $2,000,000.00 (the “Loan”).


 


2.                                       The
Loan is evidenced by a certain Revolving Demand Line of Credit Note of even
date herewith from Borrower to Lender in the original amount of $2,000,000.00
(the “Note”) and is secured by, among other things, a Security Agreement of
even date herewith (the “Security Agreement”) by Borrower to Lender.


 


3.                                       As
a condition to making the Loan, Pledgor has delivered to Lender a certain
Limited Guaranty of even date herewith (the “Guaranty”) and Lender requires
Pledgor to deposit with Lender the sum of $500,000.00 to be held with Lender in
an interest-bearing deposit account (to be selected by Pledgor), Account No.
                              
(the “Cash Collateral”) as security for the prompt and timely payment and
performance of Pledgor’s obligations under the Guaranty and Borrower’s
obligations under the Note, the Loan Agreement and all other instruments
executed in connection with the Loan (hereinafter collectively referred to as
the “Loan Documents”) upon the terms and conditions hereinafter provided.


 


4.                                       Pledgor
has agreed to deposit the Cash Collateral with Lender to be held by Lender as
security for the prompt and timely payment and performance of Pledgor’s and
Borrower’s obligations under the Loan Documents upon the terms and conditions
hereinafter set forth.


 


AGREEMENT


 


For good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Pledgor and Lender hereby agree as follows:


 


1.                                       The
terms used herein shall have the same meanings as defined in the Guaranty.  In order to secure the Pledgor’s full and
timely payment and performance of the Guaranteed Obligations (as defined in the
Guaranty), Pledgor hereby grants, assigns and transfers to Lender all of
Pledgor’s right, title and interest in and to all sums now on deposit or
subsequently deposited by Pledgor from time to time with Lender including,
without limitation, the Cash Collateral, and all renewals, substitutions and
replacements thereof, and any other proceeds of any collateral covered by any
of the Loan Documents and all interest (if any) earned on any of


 


1

















 


such sums (collectively,
the “Collateral”).  Pledgor shall not be
permitted to make withdrawals from any accounts into which the Cash Collateral
is held or deposited.


 


2.                                       This
Agreement shall become operative immediately and shall terminate upon the
termination of the Guaranty.  Upon
termination of this Agreement, Lender shall return the Cash Collateral to
Pledgor.


 


3.                                       Pledgor
has not and will not hereafter enter into any agreement under which any
deduction or offset may be claimed against, or permit any other lien or
encumbrance to exist with respect to any monies deposited with the Lender,
except in favor of Lender.


 


4.                                       Pledgor
will do, make, execute and deliver to Lender all such further acts, things,
deeds, assurances and other documents as the Lender may request to vest in and
assure to the Lender its rights hereunder in any of the Collateral.


 


5.                                       Subject
to the terms of the Guaranty, and regardless of the adequacy of any other
collateral, any and all deposits or other sums at any time credited by or due
from the Lender to Pledgor may at any time be applied to or set off against
Obligations on which the Pledgor is primarily liable (including without
limitation Pledgor’s obligations under the Loan Documents) and may, at or after
the maturity thereof, be applied to or set off against Obligations on which the
Pledgor is secondarily liable.


 


6.                                       The
Pledgor shall pay to the Lender on demand any and all expenses, including
reasonable counsel fees, incurred or paid by the Lender in protecting or
enforcing its rights with respect to the Collateral.


 


7.                                       The
Pledgor waives demand, notice, protest, notice of acceptance of this Agreement,
notice of loans made, credit extended, collateral received or delivered or
other action taken in reliance hereon and all other demands and notices of any
description.  Lender shall have no duty
as to the collection or protection of the Collateral or any income thereon, nor
as to the preservation of rights against prior parties, nor as to the
preservation of any rights pertaining thereto beyond the safe custody thereof.  Lender shall not be deemed to have waived
any of its rights upon or under the Obligations or the Collateral unless such
waiver be in writing and signed by Lender. 
No delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or other rights.  A waiver on any one occasion shall not be construed as a bar to
or waiver of any right on any future occasion.


 


8.                                       This
Agreement and all rights and obligations hereunder, including matters of
construction, validity and performance, shall be governed by the law of the
Commonwealth of Massachusetts.  This
Agreement is intended to take effect as a sealed instrument.


 


2

















 


EXECUTED as an instrument
under seal as of the day and year first above written.


 


	
   

  	
  CHASE
  CORPORATION

  
	
   

  	
   

  	
   

  
	
  /s/ Paula M
  Myers

  	
   

  	
  By:

  	
  /s/ Everett
  Chadwick

  	
   

  
	
  Witness

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Everett Chadwick

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Treasurer

  	
   

  
										



 


3