Exhibit 10.1


 


SEVERANCE
AGREEMENT


 


This
Agreement dated as of October 1, 2008 is by and between Chase Corporation,
a Massachusetts corporation (the “Company”), and Gregory A. Pelagio, (the “Executive”),


 


WHEREAS,
the Company has determined that it is desirable, to induce the Executive to
remain in the employ of the Company and also to place him in a position to act
in the best interests of the Company and its stockholders in the event of a
proposal for transfer of control of the Company, to provide certain severance
benefits to the Executive if his employment with the Company terminates under
the circumstances described below.


 


NOW,
THEREFORE, the Company and the Executive hereby agree as follows:


 


1.                                       Definitions.  For purposes of this Agreement
only, the following definitions shall apply:


 


(a)                                  “Cause” for termination of the Executive’s
employment by the Company shall mean and be limited to


 


(i)            the Executive’s willful and continued failure
to substantially perform his duties to the Company (other than any such failure
resulting from the Employee’s incapacity due to physical or mental illness),
provided that the Company has delivered a written demand for substantial
performance to the Executive specifically identifying the manner in which the
Company believes that the Executive has not substantially performed his duties
and that the Executive has not cured such failure within 30 days after such
demand;


 


(ii)           willful conduct by
the Executive which is demonstrably and materially injurious to the Company;


 


(iii)          material violation
of any Company policy, including any code of conduct or standard of ethics of
the Company applicable to the Executive;


 


(iv)          the Executive’s conviction of, or pleading of
guilty or nolo contendere to, a felony; or


 


(v)           the Executive’s willful
violation of any material provision of any confidentiality, nondisclosure,
assignment of invention, noncompetition or similar agreement entered into by
the Executive in connection with his employment by the Company.


 


For purposes of this definition, no act or failure to act on the
Executive’s part shall be deemed “willful” unless done or omitted to be done by
the Executive not in good faith and without reasonable belief that his action
or omission was in the best interests of the Company.


 

















 


(b)                                 “Change in Control” means the occurrence of
any of the following events:


 


(i) any
“person” (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than the Company, any trustee or other fiduciary holding
securities under an employee benefit plan of the Company or a corporation
owned, directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of stock of the Company
becomes the “beneficial owner” (as defined 
in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 45% or more of the combined voting power
of the Company’s then outstanding securities;


 


(ii) during
any period of twenty-four (24) consecutive months (not including any period prior
to the date of this Agreement), individuals who at the beginning of such period
constitute the Board and any new director (other than a director designated by
a person who has entered into an agreement with the Company to effect a
transaction described in subparagraphs (i), (ii) or (iii)) whose election
by the Board or nomination for election by the Board or by the stockholders of
the Company was approved by a vote of at least a majority of the directors then
still in office who either were directors at the beginning of such period or
whose election or nomination for election was previously so approved, cease for
any reason to constitute a majority thereof; or


 


(iii) the
stockholders of the Company approve a merger or consolidation of the Company
with any other corporation, other than (i) a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) at least 50% of
the combined voting securities of the Company or such surviving entity
outstanding immediately after such merger or consolidation or (ii) a
merger or consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no “person” (as hereinabove defined) acquires
45% or more of the combined voting power of the Company’s then outstanding
securities; or


 


(iv) the
stockholders of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company of all or
substantially all of the Company’s assets.


 


(c)                                  “Disability” means such physical or mental incapacity as to
make the Executive unable to perform the essential functions of his employment
duties for a period of at least six months with or without reasonable
accommodation.  If any question shall
arise as to whether during any period the Executive is so disabled as to be
unable to perform the essential functions of his employment duties with or
without reasonable accommodation, the Executive may, and at the request of the
Company shall, submit to the Company a certification in reasonable detail by a
physician selected by the Company to whom the Executive or the Executive’s guardian
has no reasonable objection as to whether the Executive is so disabled or how
long such disability is expected to continue, and such certification shall for
the purposes of this Agreement be conclusive of the issue.  The Executive shall cooperate with any
reasonable request of the physician in connection with such certification.  If such question shall arise and the
Executive 


 


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shall fail to submit such
certification, the Company’s determination of such issue shall be binding on
the Executive.


 


(d)                                 “Good Reason” means shall mean the occurrence, in connection with
a Change in Control, of any of the following events (provided that the
Executive shall have given the Company prior written notice describing such
event and the matter shall not have been fully remedied by the Company within
30 days after receipt of such notice) :


 


(i)            any reduction of
the Executive’s then existing annual base salary, bonus and/or other short-term
incentives;


 


(ii)           the Company
has failed to continue in effect any health, welfare, retirement, vacation and
other fringe benefit plans of the Company in which the Executive participated
at the time of the Change in Control (or plans providing substantially
equivalent benefits) other than as a result of the normal expiration of any
such plan in accordance with its terms as in effect at the time of the Change
in Control, or the Company shall have taken or failed to take any action which
would adversely affect the Executive’s continued participation in or the
benefits receivable by the Executive under any such plan as in effect at the
time of the Change in Control;


 


(iii)          the Company
has failed to assign to him on a consistent basis executive duties performable
at the location at which he worked before the Change in Control which are
commensurate with the level of executive duties performed by him immediately
prior to such Change in Control;


 


(iv)          any failure by the
Company to obtain the assumption of this Agreement by any successor or assign
of the Company.


 


2.                                       Termination of Employment Without Cause.   If
the Executive’s employment with the Company is terminated at any time  without Cause (and other than by reason of
death, Disability or retirement) the Executive shall receive the benefits set
forth in Section 4 hereof.


 


3.                                       Change in Control. 
Notwithstanding Section 2 of this Agreement, this Section 3
shall apply if, within twenty-four (24) months immediately following a Change
in Control, the Executive’s employment is terminated by the Company without
Cause (and other than by reason of death, Disability or retirement) or the
Executive terminates his employment with the Company for Good Reason, the
Executive shall be entitled to the benefits set forth in Section 4.


 


4. (a)                      payment of his base salary, in accordance
with the Company’s regular payroll practices, for a one year period commencing
on his termination date, such salary to be paid at a rate equal, on an
annualized basis, to the greater of his annual base salary in effect immediately
prior to the Change in Control or his annual base salary in effect immediately
prior to the termination of employment, provided, however, (i) no such payments shall be made until
the earlier of (A) six months and one day following the termination date or
(B) the earliest date as of which such payments may begin  without penalty  pursuant to Section 409A(a)(2) of
the  U.S. Internal Revenue Code of
1986 (the “Code”) and (ii) all
such payments that are deferred pursuant to clause (i) shall be paid in
the aggregate on the first day that such payments may be made pursuant to
clause (i).  For purposes of this subsection, the term “base salary” shall
include 


 


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bonuses which shall be
computed by averaging the last two annual bonuses (annualizing bonuses with
respect to a partial year), if any;


 


(b)                                 continued participation in  the benefits in effect for Executive as of
the date of termination, subject to the terms and conditions of the respective
plans and applicable law, for a period of 
one year following the termination date; provided that to the extent
that the Company’s plans, programs and arrangements do not permit such
continuation of Executive’s participation following his termination, the
Company shall provide the Executive with an amount which is sufficient for him
to purchase equivalent benefits, such amount to be paid quarterly in
advance;  provided, further, however,
that if the Executive becomes employed by another employer and is eligible to
receive medical or other welfare benefits under another employer-provided plan,
the Executive’s entitlement to participate in the Company’s medical or other
welfare benefit plans or to receive such alternate payments shall, to the
extent such medical or welfare benefits are offered by the other employer,
cease as of the date the Executive is eligible to participate in such plans,
and the Executive shall notify the Company of his eligibility under such other
plans.


 


(c)                                  reasonable
costs of an out-placement service used by the Executive for a period not to
exceed one year following termination of employment.


 


5.                                       Death,
Disability or Retirement.  If the
Executive’s employment is terminated by reason of death, Disability or
retirement, the Executive shall not be entitled to receive any benefits under
this Agreement pursuant to Sections 2 or 3 but may be entitled to certain
death, disability or retirement benefits offered by the Company pursuant to its
employee benefit plans.


 


6.                                       Taxes.


 


(a)                                  All payments to be made to the Executive
under this Agreement will be subject to any required withholding of federal,
state and local income and employment taxes.


 


(b)                                 Notwithstanding
anything in this Agreement to the contrary, if any of the payments provided for
in this Agreement, together with any other payments which the Executive has the
right to receive from the Company, would constitute a “parachute payment” (as
defined in Section 280G(b)(2) of the Internal Revenue Code of 1986,
as amended), the payments pursuant to this Agreement shall be reduced to the
largest amount as will result in no portion of such payments being subject to
the excise tax imposed by Section 4999 of the Code.


 


7.                                       Release.  The Executive’s entitlement to receive the
payments contemplated by Sections 3 hereof shall be contingent upon
execution by the Executive on the date of termination of a release in form and
substance reasonably satisfactory to the Company (the “Release”).  By execution of this Agreement, the Executive
hereby acknowledges and agrees that such payments are and shall be good and
sufficient consideration for such Release.


 


8.                                       No Duty to Mitigate.  In
no event shall the Executive be obligated to seek other employment or take any
other action by way of mitigation of the amounts payable to the Executive under
any of the provisions of this Agreement and, except as contemplated by Section 4(b) hereof,
any benefits payable to the Executive hereunder shall not be subject to
reduction for any compensation received from other employment.


 


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9.                                       Successors and Assigns.


 


(a)                                  This Agreement is personal to the Executive
and is not assignable by the Executive, other than by will or the laws of
descent and distribution, without the prior written consent of the Company.


 


(b)                                 This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns.


 


(c)                                  The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place.  As used in
this Agreement, “Company” shall mean the Company as defined above and any
successor to its business and/or assets that assumes and agrees to perform this
Agreement.


 


10.                                 No
Right to Continued Employment. 
Nothing contained in this Agreement shall be considered a contract of
employment or construed as giving the Executive any right to be retained in the
employ of the Company.  Nothing in this
Agreement shall otherwise restrict in any way the rights of the Company to
terminate the Executive at any time and for any reason, with or without cause.


 


11.                                 Miscellaneous.


 


(a)                                  Applicable Law.  This
Agreement shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts, without giving effect to the conflict of laws
principles thereof.


 


(b)                                 Amendment; Waiver.  This
Agreement may not be modified or amended in any manner except by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.  The waiver by
either party of compliance with any provision of this Agreement by the other
party shall not operate or be construed as waiver of any other provision of
this Agreement, or of any subsequent breach by such party or a provision of
this Agreement.


 


(c)                                  Entire
Understanding.  This Agreement constitutes
the entire understanding and agreement between the parties hereto with regard
to the compensation and benefits payable to the Executive in the circumstances
described herein, superseding all prior understandings and agreements, whether
oral or written.


 


(d)                                 Fees
and Expenses.  The Company agrees to
pay as incurred and within 30 days after submission of supporting
documentation, to the full extent permitted by law, all legal fees and related
expenses the Executive may reasonably incur as a result of any contest
(regardless of the outcome thereof) by the Company, the Executive or others of
the validity or enforceability of, or liability under, any provision of this
Agreement (including as a result of any contest by the Executive about the
amount of any payment pursuant to this Agreement) following a Change in
Control.


 


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(e)                                  Notices.  All notices and other
communications hereunder shall be in writing and shall be delivered by hand
delivery, by a reputable overnight courier service, or by registered or
certified mail, return receipt requested, postage prepaid, in each case
addressed as follows:


 


If to the Company:


 


Chase Corporation


 


26 Summer Street


Bridgewater, MA 02324


Attention: General Counsel


 


If to the Executive:


 


Gregory A. Pelagio


 


316 Glencove Drive


New Kensington, PA 
15068


 


or to such other address as either party shall have
furnished to the other in writing in accordance herewith.  Any notice or communication shall be deemed
to be delivered upon the date of hand delivery, one day following delivery to
an overnight courier service, or three days following mailing by registered or
certified mail.


 


(f)                                    Headings.  The headings of paragraphs herein are
included solely for convenience of reference and shall not control the meaning
of interpretations of any of the provisions of this Agreement.


 


(g)                                 Severability.  The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement, which shall remain in full force and
effect.


 


(h)                                 Counterparts.  This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
each of which shall be deemed an original.


 


IN WITNESS WHEREOF, the
Company has caused this Agreement to be executed by its duly authorized officer
and the Executive has executed this Agreement as of the date first written
above.


 


	
  CHASE CORPORATION

  	
   

  	
  Gregory A. Pelagio

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Peter R. Chase, Chairman
  and CEO

  	
   

  	
  /s/ Gregory A. Pelagio

  
				



 


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