Exhibit 10.1


 


 


STOCK PURCHASE AGREEMENT


by and among


The  Edward L. Chase Revocable
Trust


and


Chase Corporation


Dated as of December 10, 2003


 

















 


STOCK PURCHASE AGREEMENT


 


This
Stock Purchase Agreement (the “Agreement”), dated as of December 10, 2003,
is between Chase Corporation, a Massachusetts corporation, (“Chase”) which is
the holder of all of the issued and outstanding shares of capital stock of
Sunburst Electronic Manufacturing Solutions, Inc. a Massachusetts corporation
(“Sunburst”), and the Edward L. Chase Revocable Trust  (the “Trust”).


 


The
purpose of this Agreement is to set forth the terms upon which (1) the Trust
will purchase from Chase, and Chase will sell to the Trust, all of the
outstanding shares of capital stock of Sunburst, (2) Chase will repurchase
250,000 shares of its common stock currently held by the Trust,  and (3) the Voting Agreement between Chase
and the Trust will be amended so as to extend its term for an additional five
years and to reflect appropriate additional changes resulting from the
consummation of the transactions contemplated by this Agreement, all upon the
terms and subject to the conditions set forth herein;


 


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.  “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 1.2.  “Closing” shall mean the consummation of the
transactions contemplated by Article 2 and 3 of this Agreement in
accordance with the terms and upon the conditions set forth herein.


 


Section 1.3.  “Closing Date” shall mean the first Business
Day after the first date on which all of the conditions set forth in Articles
10 and 11 shall have been satisfied or duly waived or, if Chase and the Trust
shall mutually agree upon a different date, the date upon which they shall have
mutually agreed.


 


Section 1.4.  “Code” shall mean the Internal Revenue Code,
as amended, and any successor thereto.


 


Section 1.5.  “Environmental Law” shall mean any federal,
state, local and foreign statute, laws (including common or case law),
regulations, rules, judgments, orders or governmental restrictions relating to
the protection of human health or safety or the environment or to emissions,
discharges or releases of any hazardous substance into the environment.


 

















 


Section 1.6.  “Environmental Liabilities” shall mean any
liabilities arising or liabilities of any nature, whether direct or indirect,
joint or several, absolute or contingent, matured or unmatured, secured or
unsecured, in connection with or relating to the past or present business of
Sunburst which (i) arise under or relate to any Environmental Law and (ii)
arise from or relate in any way to actions or conditions existing before the
Closing Date.


 


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


 


Section 1.8.  “Knowledge” with respect to any Chase
reference herein shall mean the knowledge of any officer of Chase other than
Andrew Chase.


 


Section 1.9.  “Related Agreements” shall mean this
Agreement, the Voting Agreement Amendment in the form attached as Exhibit A,
the Confidentiality, Non-Disclosure and Non-Solicitation Agreement in the form
attached as Exhibit B, and the Lease Agreement in the form attached as Exhibit
C.


 


Section 1.10..  “Sunburst Shares” shall mean all of the
outstanding shares of common stock of Sunburst.


 


ARTICLE 2


 


Purchase and Sale of Sunburst Shares: Closing


 


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, Chase will sell, and the Trust will purchase
all of the Sunburst Shares owned by Chase, which constitute all of the issued
and outstanding Sunburst Shares.


 


Section 2.2.  Payment of Purchase Price.


 


(a)  The purchase price for the Sunburst Shares
shall consist of a certificate or certificates of common stock of Chase (the
“Chase Shares”) representing a number of the total outstanding number of shares
of Chase determined as follows: the aggregate number of Chase Shares to be
delivered on the Closing Date  with respect
to the Trust’s acquisition of the Sunburst Shares shall be determined by
dividing Two Million Eight Hundred Thousand Dollars ($2,800,000) by the average
closing price  of a share of Chase
common stock for the twenty (20) consecutive trading days ending two (2)
Business Days prior to the Closing Date (the “Average Closing Price”).


 


(b)  The foregoing purchase price is based on the
balance sheet of Sunburst as of August 31, 2003 (at which time the net
assets were $2,681,518) (attached hereto as Exhibit D) and is subject to
the following adjustments computed on the same assumptions: (i) any increase in
net assets subsequent to August 31, 2003 up to and including
November 30, 2003 will result in a dollar for dollar increase in the
purchase price; and (ii) any decrease in net assets subsequent to
August 31, 2003 up to and including November 30, 2003 will result in
a dollar for dollar decrease in the


 


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purchase price.  Notwithstanding the foregoing, it is understood
that as of the Closing Sunburst will not own any real estate, buildings or
building improvements but will lease its 
real estate from Chase and the debt set out on the Sunburst balance
sheet will not be a Sunburst liability to the extent that it relates to such
real estate. Attached hereto as Exhibit E is the balance sheet for
Sunburst as of November 30, 2003 and a calculation of the adjustments that
are expected to be made to the Purchase Price. 
An initial adjustment of $200,000 shall be settled at Closing
in Chase Shares and shall be calculated based upon the Average Closing
Price.  An additional adjustment shall
be made to the Purchase Price based upon any shortfall of the settlement at
Closing as calculated in accordance with the procedures specified in
Section 2.2(c).


 


(c) Within ten (10)
business days after the Closing, PricewaterhouseCoopers will carry out
procedures in accordance with Statement on Auditing Standards No. 71 and No.
100 in order to determine and report, in accordance with US generally accepted
accounting principles, to Chase and Sunburst the existence and accuracy of the
book value of the net assets (as summarized in Exhibit E) of Sunburst as of
November 30, 2003. Within ten (10) business days after receiving such report,
Chase or Sunburst, as the case may be, will pay in cash to the other party such
sum as may be due as a result of the calculations  to be performed pursuant to section 2.2(b) and the report of
PricewaterhouseCoopers. If the parties are unable to agree on the adjustments
to be made, a third party expert acceptable to the Trust shall be engaged by
Chase to determine such adjustments.  The
fees owing to any such third party expert shall be shared equally among the
parties.


 


ARTICLE 3


 


Voting Agreement Amendment


 


At the
Closing Chase and the Trust shall enter into to an Amendment to the Voting
Agreement between the Trust and Chase dated December 26, 2002 (the “Voting
Agreement Amendment”), which shall extend its term for an additional five years
and amend the agreement further so as to reflect the transactions contemplated
by this Agreement, all as set forth on Exhibit A attached hereto. Chase
shall, immediately prior to the Closing, reduce the aggregate outstanding
amount under the existing Sunburst line of credit by Two Hundred Thousand
Dollars ($200,000) in consideration of the Trust entering into the Voting
Agreement Amendment.


 


ARTICLE 4


 


Purchase and Sale of Chase Shares


 


Section 4.1.                                   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 Trust will sell, and Chase will purchase Two Hundred and Fifty Thousand
(250,000) shares of Chase Common Stock of Chase (the “Additional Chase Shares”)
owned by the Trust.


 


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Section 4.2.  Payment of Purchase Price.  At the Closing Chase will pay the Trust by
wire transfer or certified check an amount equal to 250,000 multiplied by the
Average Closing Price in consideration of the Additional Chase Shares.


 


ARTICLE 5


 


Closing Matters


 


Section 5.1.  Time and Place of Closing.  The Closing shall take place at 10:00 a.m.
on the Closing Date at the offices of Chase.


 


Section 5.2.  Closing Matters. At the Closing:





 


(a)  Chase shall deliver to the Trust
certificates for all of the Sunburst Shares to be purchased with appropriate
stock powers attached and properly signed and the Trust shall deliver to Chase
a letter executed by the Trust instructing the Trust’s broker to electronically
deliver to Chase’s account the Chase Shares required to be delivered to Chase
as provided in Article 2 hereof.


 


(b)  The Trust shall deliver to Chase a letter
executed by the Trust instructing the Trust’s broker to electronically deliver
to Chase’s account the Additional Chase Shares and Chase shall deliver by
certified check or wire transfer the consideration required to be paid by it
pursuant to Section 4.2 hereof.


 


(c)                                  Sunburst
and Chase shall have entered into a mutual Confidentiality, Non-Disclosure
and  Non-Solicitation Agreement in the
form attached as Exhibit B hereto.


 


(d)  Sunburst and Chase shall have entered into a
lease for Sunburst’s premises satisfactory to the Trust in the form of Exhibit
C attached hereto.


 


(e)  Chase and the Trust shall have entered into
the Voting Agreement Amendment in the form of Exhibit A hereto.


 


ARTICLE 6


 


Representations and Warranties of the Trust


 


The
Trust hereby represents and warrants to Chase as follows:


 


Section 6.1.  Organization; Authorization; etc. The Trust
is duly organized and validly existing under the laws of the Commonwealth of
Massachusetts. The Trust has full 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 Related Agreement and the consummation of
the transactions contemplated hereby and


 


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thereby will not violate
any provision of the organizational documents of the Trust or any order,
arbitration award, judgment, law, statute, regulation or decree to which the
Trust is a party or by which the Trust is bound .  This Agreement and each of the Related Agreements constitutes
the  valid and binding agreement of the
Trust and is enforceable against the Trust in accordance with its terms, except
as may be limited by bankruptcy, insolvency, moratorium or other laws affecting
the enforcement of creditors’ rights generally and by equitable principles.


 


Section 6.2.   Litigation; Orders. There are no lawsuits,
actions, administrative or arbitration or other proceedings or governmental
investigations pending against, or to the knowledge of the Trust, threatened
against the Trust that may have the effect of materially affecting or
prohibiting the transactions contemplated hereby. There are no judgments or
outstanding orders, injunctions, decrees, stipulations or awards (whether
rendered by a court or administrative agency or by arbitration) pending against
or, to the knowledge of the Trust, threatened against the Trust or any of its
properties or activities that may have the effect of materially affecting or
prohibiting the transactions contemplated hereby.


 


Section 6.3.   Investment Purpose.  The Trust is buying the Sunburst 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 6.4.   Title. Upon consummation of the
transactions contemplated by this Agreement, Chase will acquire title to all of
the Chase Shares and the Chase Additional Shares free and clear of any liens,
claims, charges, security interests, options or other legal or equitable
encumbrances of any kind.


 


Section 6.5.
Brokers. Finders. etc   The Trust 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 7


 


Representations and Warranties of Chase


 


Chase
hereby represents and warrants to the Trust as follows:


 


Section 7.1.  Incorporation; Authorization; etc.


 


(a)                                  Sunburst
is a corporation duly incorporated, validly existing and in good standing under
the laws of Massachusetts. 
Sunburst  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.  Sunburst is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where the character of
the property owned or leased by it or the nature of its activities makes such
qualification necessary, except for those jurisdictions where the failure to


 


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be so qualified would
not, individually or in the aggregate, have a material adverse effect.  Sunburst has heretofore delivered to the
Trust true and complete copies of the corporate charter and bylaws of Sunburst
as currently in effect.


 


(b)  Chase is a corporation duly incorporated,
validly existing and in good standing under the laws of Massachusetts.  Chase has all requisite corporate power and
authority to own all of its properties and assets, to carry on its business as
it is now being conducted and to enter into this Agreement.


 


(c)  The execution and delivery of this Agreement
and all Related Agreements does not, and the consummation of the transactions
contemplated hereby and thereby will not (i) violate any provision of Chase’s
Articles of Organization or By-laws, (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 or
encumbrance of any kind in the Sunburst Shares or in any of Sunburst’s assets
or properties pursuant to any mortgage, lien, lease, agreement, instrument,
order, arbitration award, judgment or decree to which Sunburst or Chase is a
party or by which either of them is bound, (iii) violate or conflict with any
other restriction of any kind or character to which Sunburst or Chase is
subject, or (iv) give rise to a loss of any benefit to which Sunburst is
entitled under any provision of any agreement or instrument binding upon
Sunburst or Chase or by which any of the assets of Sunburst may be bound,
except as may appropriately result from the transactions contemplated hereby
such as Sunburst’s debt restructuring.


 


(d)  The execution, delivery and performance by
Chase of this Agreement and the Related Agreements, and the consummation by
Chase of the transactions contemplated hereby and thereby, are within the
Chase’s corporate powers and  have been duly authorized by all necessary
corporate action on the part of Chase. 
Each of this Agreement and each Related Agreement has been duly executed
and delivered by Chase  and constitutes
a valid and binding agreement of Chase, enforceable in accordance with its
terms.


 


Section 7.2.  Capitalization; Structure; No Investments;
Title to Sunburst Shares.  (a)  The authorized capital stock of Sunburst is
as follows: 15,000 shares of common stock, with no par value , of which  1,603 shares are issued and
outstanding.  All of the issued and
outstanding shares of Sunburst’s 
capital stock have been duly authorized and are validly issued, fully
paid and nonassessable and owned by Chase. 
There are no outstanding obligations, options, warrants or other rights
of any kind to acquire or to issue or deliver shares of capital stock of any
class of Sunburst or any interest in Sunburst or any of its businesses.


 


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


 


(c)  Upon consummation of the transactions
contemplated by this Agreement, the Trust will acquire good and marketable
title to and unrestricted power to vote and sell all of the Sunburst Shares
free and clear of any lien, claims, charges, security interests, options, or
other


 


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legal or equitable
encumbrances any kind, other than those that may be imposed by federal or state
securities laws.


 


Section 7.3.  Financial Statements.  There have been previously delivered to the
Trust true and complete copies of the following (collectively, the “Financial
Statements”): the balance sheet for Sunburst as of August 31, 2003 and the
related statements of income, shareholders’ equity and cash flows of Sunburst
for the fiscal year ended August 31, 2003 (the “Balance Sheet Date”).


 


The
Financial Statements are complete and accurate in all material respects, were
prepared in accordance with the books and records of Sunburst and in accordance
with generally accepted accounting principles and present fairly in all
material respects the financial position, results of operations or other
information included therein of Sunburst for the periods or as of the dates
therein set forth, subject, where appropriate, to normal year-end adjustments
and the applicable footnote disclosures set forth in such statements, in each
case in accordance with generally accepted accounting principles consistently
applied during the periods involved.


 


Section 7.4  Litigation; 
Orders.  There are no lawsuits,
actions, administrative or arbitration or other proceedings or governmental
investigations pending or to the knowledge of Chase threatened against Sunburst
or any of its properties or that could, individually or in the aggregate, have
a material adverse effect on the business condition of Sunburst. There are no
judgments or outstanding orders, injunctions, decrees, stipulations or awards
(whether rendered by a court or administrative agency or by arbitration)
against Chase or Sunburst or any of their respective properties or businesses
that may have the effect of prohibiting the Stock Purchase or any business
practice or the conduct of any business by Sunburst.  No condemnation proceeding has been commenced against any asset
of Sunburst, and, to Chase’s knowledge, there is no basis or ground for any
such proceeding.


 


Section 7.5.  Copyrights; 
Trademarks;  Patents; etc..  Sunburst possesses adequate rights to use
free and clear of any encumbrances in its business as presently conducted
(without payment) all its Trade Rights and has not received any notice of
conflict that asserts the rights of others with respect thereto, and, to
Chase’s knowledge, there is no basis or ground for any such notice of
conflict.  Sunburst 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 7.6.  Licenses; Approvals; Other Authorizations;
Consents.


 


(a)              No
governmental licenses, permits, approvals and other authorizations are used or
required by Sunburst 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 Sunburst.  No proceeding is pending or threatened
seeking the revocation or limitation of any such license, permit, order or
other authorization.


 


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(b)             To
the knowledge of Chase, the conduct of the business of Sunburst complies in all
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 Sunburst, and each license, permit, order
and other authorization that is material to the business condition of Sunburst
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
consummation of the transactions contemplated hereby.


 


Section 7.7.  Labor Matters.  No work stoppage against Sunburst is pending or to the knowledge
of Chase threatened.  Sunburst is not
involved in or to the knowledge of Chase threatened with any labor dispute,
arbitration, lawsuit or administrative proceeding relating to labor matters
involving its employees.  None of the employees
of Sunburst is represented by any labor union, and there is no collective
bargaining agreement in effect with respect to the employees of Sunburst.


 


Section 7.8.  Employee Benefit Plans. Other than for
claims in the ordinary course for benefits under the Plans (as defined herein),
there are no actions, suits, claims or proceedings, pending or to the knowledge
of Chase threatened with respect to the Plans. 
“Plans” shall mean 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”).


 


Section 7.9.  Environmental Compliance.


 


(a)  To Chase’s knowledge, Sunburst has complied
in all material respects with all Environmental Laws and environmental permits
and  Sunburst has no Environmental
Liabilities.


 


(b)  No notice, demand, request for information,
citation, summons or order has been issued, no complaint has been filed, no
penalty has been assessed and no investigation is pending, or to Chase’s
knowledge, threatened by any governmental or other entity with respect to any
(i) alleged violation by Sunburst of any Environmental Law or environmental
permit, or any liability thereunder; (ii) alleged failure by Sunburst to have
any environmental permit; or (iii) use, generation, treatment, storage,
handling, recycle, transportation of disposal of any hazardous substance by
Sunburst.


 


(c)                                  There
have been no environmental investigations, studies, audits, tests, reviews or
other analyses conducted by or for Sunburst, or of which Chase has knowledge,
relating to any property or facility now or previously owned or leased by
Sunburst that have not been delivered to Sunburst.


 


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Section 7.10.  Tax Matters.


 


(a)                                  Sunburst
has never been a member of an affiliated group (within the meaning of
Section 1504(a) of the Code or any similar provision of state, local or
foreign law) filing a consolidated federal income tax return other than a group
the common parent of which is Chase. 
Chase will file a consolidated federal income tax return with Sunburst
for the taxable year immediately preceding the current taxable year, and will
file a consolidated federal income tax return for the current taxable year
which includes Sunburst for the period through and including the Closing Date.


 


(b)                                 Each of Sunburst and Chase has timely filed all
Tax returns and reports as required by law. 
All such returns and reports are true and correct in all material
respects.  Each of Sunburst and Chase
has paid all Taxes and other assessments due whether or not shown on such
returns.  Neither Sunburst nor Chase has
waived any statute of limitations with respect to Taxes or agreed to any
extension of time with respect to any Tax assessment or deficiency.  The provision for Taxes of Sunburst as shown
in the Financial Statements is adequate for Taxes due or accrued as of the
Balance Sheet Date.  Neither Sunburst
not Chase has been advised of any audit, action, suit, proceeding, claim,
examination, deficiency, or assessment with respect to any of its Tax returns or
any deficiency with respect to any such Taxes. 
Sunburst will not incur any liability for Taxes from the Balance Sheet
Date through the Closing Date other than in the ordinary course of business.


 


(b)                                 Sunburst
does not have any liability for the Taxes of any person or any other entity.


 


(c)                                  For
the purposes of this Agreement, “Tax” or “Taxes” means any federal, state,
local or foreign income, gross receipts, license, payroll, employment, excise,
severance, stamp, occupation, premium, windfall profits, environmental, customs
duties, capital stock, franchise, profits, withholding, social security (or
similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, including any interest, penalty
or addition thereto, whether disputed or not and including any obligation to
indemnify or otherwise assume or succeed to the Tax liability of any other
person or entity.


 


Section 7.11.  Compliance with Securities Laws.  In connection with the consummation of the
transactions contemplated by the Agreement and the Related Agreements, Chase
and Sunburst have complied with the Securities Act and the Securities Exchange
Act of 1934, as amended, and other applicable securities laws and stock
exchange rules, including without limitation Rule 13e-4 of the Exchange Act
regulating issuer tender offers.


 


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ARTICLE 8


 


Survival of Representations and Warranties and Covenants


 


Section 8.1.  Survival. 
The representations and warranties and covenants of Chase and the Trust
included or provided for herein, or in the Schedules or other instruments or
agreements delivered or to be delivered pursuant hereto, shall  survive the consummation of the Closing for
a period of two (2) years from the Closing Date or:


 


(i) in
the case of Section 7.9 (Environmental Compliance) for a period of three
(3) years from the Closing Date ; and


 


(ii)
in the case of Sections 7.10 and 9.5, 9.6 and 9.7 until the expiration of the
statutory period of limitations applicable to third party claims pertaining to
such matters, if later.


 


ARTICLE 9


 


Covenants of Chase and the Trust; Tax Indemnification


 


Section 9.1.  Investigation of Business.  The Trust may, prior to the Closing Date and
through its own personnel, independent accountants and attorneys, make such
investigation of Sunburst, including the confirmation of cash and cash
equivalents, inventories, 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
Chase  from its representations and
warranties or affect any of the Trust’s rights under this Agreement including
without limitation under Articles 10 and 12; 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 Sunburst
and Chase.  Consistent with the immediately
preceding sentence, Chase agrees to permit the Trust and its representatives to
have, after the date of execution hereof, full access to the premises and to
all the books and records of Sunburst and to furnish the Trust with financial
and operating data and other information with respect to the business and
properties of Sunburst as the Trust shall from time to time reasonably
request.  In addition, Chase will cause
Sunburst’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 Sunburst, as is reasonably requested in connection
with any such investigation, available to the Trust and its accountants and
attorneys during regular business hours. 
In the event of the termination of this Agreement, the Trust will
deliver to Sunburst all documents, work papers and other material obtained by
the Trust or on behalf of the Trust from Sunburst as a result of this Agreement
or in connection herewith, whether so obtained before or after the execution
hereof and Trust shall continue to hold all such information confidential,
which obligation shall survive the termination of this Agreement.


 


Section 9.2.  Further Assurances.  Chase and the Trust 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


 


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out the terms of this
Agreement.  Chase and the Trust further
covenant and agree that they will not take any action that will prevent their
performance of this Agreement in accordance with its terms.


 


Section 9.3.  Conduct of Business.  From the date hereof through the Closing,
except as otherwise consented to or approved by the Trust in writing or
provided for in this Agreement, Chase covenants and agrees to cause Sunburst:


 


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


 


(b)  not to change or amend its charter or
by-laws;


 


(c)  not to issue, sell or agree to issue or sell
(i) any Sunburst Shares or (ii) any securities convertible into, or options
with respect to, or warrants to purchase or rights to subscribe to, any
Sunburst Shares;


 


(d)  not to (i) declare, pay or set aside for
payment any dividend or other distribution in respect of any Sunburst Shares,
or (ii) directly or indirectly, redeem, purchase or otherwise acquire any
Sunburst Shares;


 


(e)                                  not
to make any capital expenditures or commitments with respect thereto, except
for expenditures or commitments in an aggregate amount less than $25,000;


 


(f)  not to 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 Sunburst with any funds other than in payment for goods or
services in the ordinary course of business


 


(g)  not to remove, transfer to Chase or others,
sell, or enter into any material contract with respect to, any of its
properties or assets, other than sales in the ordinary course of business;


 


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


 


(i)  to
maintain its corporate existence intact.


 


Section 9.4.  Preservation of Business.  Chase shall use its reasonable efforts to
preserve the businesses of Sunburst intact, to keep available to Sunburst and
the Trust the services of the employees of Sunburst and to preserve the good
will of customers and others having business relations with Sunburst.


 


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Section 9.5.  Tax Covenants.


 


(a)  Tax Periods Ending on or Before the
Closing Date.  Sunburst shall cause
to be prepared and filed all Tax returns for Sunburst for all periods ending on
or prior to the Closing Date which are filed after the Closing Date other than
income tax returns with respect to periods for which a consolidated income tax
return of Chase will include the operations of Sunburst.  Chase shall reimburse Sunburst for Taxes of
Sunburst with respect to such periods within fifteen (15) days after payment by
Sunburst of such Taxes. The amount of such reimbursement shall be an adjustment
to the purchase price for the Sunburst Shares.


 


(b)  Tax Periods Beginning Before and Ending
After the Closing Date.  Sunburst
shall  cause to be prepared and filed
any Tax returns of Sunburst for Tax periods which begin before the Closing Date
and end after the Closing Date. Chase shall pay to Sunburst within fifteen (15)
days after the date on which Taxes are paid with respect to such periods an
amount equal to the portion of such Taxes which relates to the portion of such
Tax period ending on the Closing Date. 
The amount of such reimbursement shall be an adjustment to the purchase
price for the Sunburst Shares.


 


(c)  Cooperation on Tax Matters.  The Trust, Sunburst and Chase shall
cooperate fully, as and to the extent reasonably requested by the other party,
in connection with the filing of tax returns pursuant to this Section and
any audit, litigation or other proceeding with respect to taxes. Chase will not
settle any audit of a Chase Tax return in a manner which would adversely affect
Sunburst after the Closing Date without the prior written consent of the Trust,
which shall not be unreasonably withheld.


 


(d)  Tax Sharing Agreements. All tax
sharing agreements or similar agreements with respect to or involving Sunburst
shall be terminated as of the Closing Date and, after the Closing Date, shall
have no further effect, whether for the current year or any prior or future
year.


 


(e)  Certain Taxes. All transfer,
documentary, sales, use, stamp, registration and other such taxes and fees
(including any penalties and interest) incurred in connection with this
Agreement shall be paid by Chase when due, and Chase will, at their own
expense, file all necessary tax returns and other documentation with respect to
all such transfer, documentary, sales, use, stamp, registration and other taxes
and fees, and, if required by applicable law, Sunburst will, and will cause its
affiliates to, join in the execution of any such tax returns and other
documentation.


 


Section 9.6.  Tax Indemnification.


 


(a)  Chase hereby indemnifies Sunburst and the
Trust against and agrees to hold each of them harmless from any (x) Tax of
Sunburst for all periods through and including the Closing Date, (y) Taxes of
any Person or entity other than Sunburst, and (z) any damages arising out of or
incident to the imposition, assessment or assertion of any such Tax, including
those incurred in the contest in good faith of appropriate proceedings for the
imposition, assessment or assertion of any such Tax (a “Loss”).


 


(b)                                 For
purposes of this Section and Section 9.5, in the case of any Taxes
that are imposed on a periodic basis and are payable for a taxable period that
includes (but does not end


 


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on) the Closing Date, the
portion of such Tax related to the portion of such taxable period ending on the
Closing Date shall (x) in the case of any Taxes other than Taxes based upon or
related to income, be deemed to be the amount of such tax for the entire
taxable period multiplied by a fraction the numerator of which is the number of
days in the taxable period ending on the Closing Date and the denominator of
which is the number of days in the entire taxable period, and (y) in the case
of any tax based upon or related to income, be deemed equal to the amount which
would be payable if the relevant taxable period ended at the end of the Closing
Date.  Any credits relating to a taxable
period that begins before and ends after the Closing Date shall be taken into
account as though the relevant taxable period ended on the Closing Date.  All determinations necessary to give effect
to the foregoing allocations shall be made in a manner consistent with prior
practice of Sunburst.


 


(c)                                  Upon
payment by the Trust, any of its affiliates or, effective upon the Closing,
Sunburst of any Loss, Chase shall discharge its obligation to indemnify
Sunburst or the Trust against such Loss by paying to Sunburst or the Trust an
amount equal to the amount of such Loss. 
Any such payment shall be an adjustment to the purchase price for the
Sunburst Shares.


 


(d)                                 Any
payment pursuant to this Section 9.6 shall be made not later than 30 days
after receipt by Chase of written notice from Sunburst stating that any Loss
has been paid by Sunburst or any of its affiliates and the amount thereof and
of the indemnity payment requested.  Any
payment required under this Section and not made when due shall bear
interest at the rate per annum determined, from time to time, under the
provisions of Section 6621(a)(2) of the Code for such day until paid.


 


(e)                                  Sunburst
agrees to give prompt notice to Chase of the assertion of any claim, or the
commencement of any suite, action or proceeding in respect of which indemnity
may be sought hereunder and of any Loss, which the Trust deems to be within the
ambit of this Section 9.6 (specifying with reasonable particularity the basis
therefor) and will give Chase such information with respect thereto as Chase
may reasonably request.  Chase may, at
its own expense, (i) participate in and, (ii) except in the case of a claim
that relates to Taxes described in Section 9.5(b), upon notice to the
Trust, assume the defense of any such suit, action or proceeding; provided
that (x) Chase’s counsel is reasonably satisfactory to the Trust, (y) Chase
shall thereafter consult with the Trust upon the Trust’s reasonable request for
such consultation from time to time with respect to such suit, action or
proceeding and (z) Chase shall not, without the Trust’s consent, agree to any
settlement with respect to any tax if such settlement could adversely affect
the past, present or future tax liability of the Trust, any of its affiliates
or, upon the Closing, Sunburst.  If
Chase assumes such defense, the Trust shall have the right (but not the duty)
to participate in the defense thereof and to employ counsel, at its own
expense, separate from the counsel employed by Chase.  Chase shall be liable for the fees and expenses of counsel
employed by the Trust for any period during which Chase has not assumed the
defense thereof.  Whether or not Chase
chooses to defend or prosecute any claim, all of the parties hereto shall
cooperate in the defense or prosecution thereof.


 


Section 9.7.  Certain Tax Disputes.  Disputes arising under Sections 9.5 and 9.6
and not resolved by mutual agreement shall be resolved by a firm of independent
public accountants having no material relationship to the Trust or Chase as is
reasonable acceptable to the Trust and


 


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Chase (“Accounting
Referee”).  The Accounting Referee shall
resolve any disputed terms within 30 days of having the item referred to it
pursuant to such procedures as it may require. 
The costs, fees and expenses of the Accounting Referee shall be borne
equally by the Trust and Chase.


 


Section 9.8                                      Transition
Services.  During a transition period
not to exceed six (6) months, Chase agrees to provide reasonable assistance at
a cost to Sunburst comparable to existing arrangements to migrate
infrastructure and operational systems, policies and procedures, including the
information technology systems necessary to run Sunburst’s business.


 


Section 9.9                                      10b5-1 Plan.  If requested by the Trust, Chase agrees to
cooperate with the Trust in implementing a 10b5-1 Plan to allow for additional
shares of Chase common stock to be sold on the open market as part of a regular
selling program.


 


ARTICLE 10


 


Conditions to the Trust’s
Obligation to Close


 


The obligation of Trust to consummate its obligations
hereunder 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 Trust): 


 


Section 10.1.                             Representations,
Warranties and Covenants of Chase.  Each
of the representations and warranties of Chase 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 Chase to be performed on or before the Closing Date
shall have been duly performed in all material respects.


 


Section 10.2. 
Closing Documents.  Chase shall
have furnished the Trust with:


 


(i)                                     copies
of the Articles of Incorporation of Sunburst certified as of recent date by the
Secretary of State of the Commonwealth of Massachusetts;


 


(ii)                                  the
original minute books of Sunburst and copies of the by-laws of Sunburst, each
certified as of the Closing Date by Sunburst’s Clerk or Assistant Clerk;


 


(iii)                               certificates for all of
the Sunburst Shares to be purchased, with appropriate stock powers attached,
properly signed;


 


(iv)  Chase
shall have delivered to the Trust  a
check or a wire transfer in the amounts set forth in Article 4 hereof and
the debt reduction specified in Article 3 hereof shall have occurred.


 


Section 10.3. 
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


 


15

















 


governmental body, to restrain or prevent or materially delay 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  Sunburst.


 


Section 10.4. The Voting Agreement Amendment shall
have been entered into.


 


Section 10.5.  Confidentiality, Non-Disclosure and
Non-Solicitation Agreement.  Chase and
Sunburst shall have executed and delivered the Confidentiality, Non-Disclosure  and Non-Solicitation Agreement.


 


Section 10.6.  Lease. 
Chase and Sunburst shall have executed the Lease Agreement.


 


Section 10.7.  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 the
transactions contemplated by this Agreement, shall have been filed, made or
obtained and all applicable waiting periods shall have expired or been
terminated.


 


Section 10.8  Line of Credit.  The Trust shall have secured for the benefit of Sunburst a line
of credit on terms acceptable to the Trust and Chase shall have executed a limited
guaranty in connection with such line of credit with terms acceptable to it and
to the Trust. The existing line of credit with Citizens Bank shall have been
terminated and any security interests which may be held by Citizens shall have
been released.


 


Section 10.9  Release from Indebtedness.  The $1,050,000 of outstanding debt as of
November 30, 2003 related to the building located at 70 Pleasant Street,
West Bridgewater, MA will be transferred from the Sunburst balance sheet to the
Chase balance sheet.


 


Section 10.10  Assignment of Trademarks.  The Sunburst trademark and logo shall have
been assigned by Chase to Sunburst.


 


ARTICLE 11


 


Conditions to Chase’s Obligation to Close


 


The obligation of Chase to consummate its obligations
hereunder 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 Chase):


 


Section 11.1.  Representations, Warranties and Covenants of
the Trust.  Each of the representations
and warranties of the Trust 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 Trust to be performed


 


16

















 


on or before the Closing Date shall have been duly performed in all
material respects, and Chase shall have received at the Closing Date a
certificate to that effect dated the Closing Date and executed on behalf of the
Trust by an authorized officer of the Trust.


 


Section 11.2. 
Delivery of Chase Shares.  The
Trust shall have delivered to Chase a letter executed by the Trust instructing
the Trust’s broker to electronically deliver to Chase’s account the Chase
Shares and the Additional Chase Shares, required to be delivered to it as
provided herein.


 


Section 11.3. 
Reserved.


 


Section 11.4.  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 or materially delay 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 Trust.  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.


 


ARTICLE 12


 


Termination. Amendment and Modification


 


Section 12.1. 
Termination.  This Agreement may
be terminated at any time prior to the Closing:


 


(a)                                  by
mutual written consent of each of the parties hereto, or


 


(b)                                 by
the Trust on the one hand or by Chase on the other hand (provided that the
party seeking termination has diligently and in good faith performed or
complied in all material respects with the agreements and covenants required to
be performed by it hereunder) in the event that the transactions contemplated
hereby are not consummated pursuant to this Agreement on or before
December 10, 2003 (the “Termination Date”) unless the parties hereto shall
have agreed upon an extension of time in which to consummate the transactions contemplated
hereby.


 


Section 12.2.  Amendment and Modification; Waiver.  Subject to applicable law, this Agreement
may be amended, modified or supplemented only by written agreement of the parties
hereto.  No failure or delay by either
party in exercising any right, power or privilege hereunder shall operate as a
waiver thereof nor shall any single or partial exercise thereof preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege.


 


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Section 12.3. 
Effect of Termination.   In the
event of the termination of this Agreement pursuant to this Article 12,
this Agreement, except for the provisions of Sections 13.2 and 13.5 hereof,
shall forthwith become void and have no effect, without any liability on the
part of any party. In the event of a termination of this Agreement pursuant to
this Article 12, neither party shall have any further rights or recourse
in connection herewith except for any breach resulting from the willful or
intentional actions of a party hereto.


 


ARTICLE 13


 


Miscellaneous


 


Section 13.1.  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 13.2. 
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 13.3. 
Entire Agreement.  This Agreement
and the Schedules and Exhibits hereto contain the entire agreement between the
parties in respect to the subject matter hereof and there are no agreements,
understandings, representations or warranties between the parties other than
those set forth or referred to therein.


 


Section 13.4.  Release of Prior Claims.  Effective on the Closing, and except as
otherwise provided herein, Chase, by the execution of this Agreement, releases
and forever discharges Sunburst and its directors, officers and employees and
Sunburst by execution of this Agreement, releases and forever discharges Chase
from any and all claims or demands, for all periods through the Closing Date,
arising out of or related to Sunburst or the actions or in actions of its
directors, officers and employees with respect thereto.


 


Section 13.5. 
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 13.6. 
Specific Performance.  Chase and
the Trust each acknowledge that, in view of the uniqueness of Sunburst, 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 13.7. 
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,


 


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postage prepaid, to the
appropriate address as set forth below. 
Notice to Chase or Sunburst shall be addressed to:


 


Chase Corporation


26 Summer Street


Bridgewater, MA 02324


Attention: President


 


with a copy to:


 


George M. Hughes, Esq.


Hughes & Associates


P.O. Box 610138


Newton Highlands, MA
02461-0138


 


or at such other address and to the attention of such other person as
Chase or Sunburst may designate by written notice to the Trust.  Notices to the Trust shall be addressed to:


 


The Edward L. Chase Revocable Trust


c/o Sarah Chase, Esq.


Ley and Young, P.C.


21 Custom House Street,
Suite 920


Boston, MA  02110


 


or at such other address
and to the attention of such other person as the Trust may designate by written
notice to Chase.  Any notice hereunder
shall be deemed to have been served or given as of the date such notice is
actually received.


 


Section 13.8. 
Successors and Assigns.  This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their successors and assigns; provided, however, that the Trust will not
assign its rights under this Agreement to an entity other than an entity
affiliated with the Trust without the written consent of Chase.


 


19

















 


IN
WITNESS WHEREOF, this Agreement has been signed by or on behalf of each of the
parties as of the day first above written.


 


 


	
   

  	
  CHASE
  CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Everett
  Chadwick

  	
   

  
	
   

  	
  Title: Vice President
  – Finance, CFO

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  EDWARD L. CHASE
  REVOCABLE

  TRUST

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Sarah Chase

  	
   

  
							



 


20

















 


Exhibits


 


	
  Exhibit A

  	
   

  	
  Voting Agreement
  Amendment

  
	
   

  	
   

  	
   

  
	
  Exhibit B

  	
   

  	
  Confidentiality,
  Non-Disclosure and Non-Solicitation Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
   

  	
  Lease between
  Chase and Sunburst

  
	
   

  	
   

  	
   

  
	
  Exhibit D

  	
   

  	
  August 31
  Balance Sheet

  
	
   

  	
   

  	
   

  
	
  Exhibit E

  	
   

  	
  November 30
  Balance Sheet

  



 


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