**Exhibit 10.2**

 

**TERM LOAN AGREEMENT**

 

THISLOAN AGREEMENT (this “**Agreement**”)dated as of December 15, 2009 is by and between RBS Citizens, NationalAssociation, successor by merger to Citizens Bank of Massachusetts, with itsprincipal address at 28 State Street, Boston, Massachusetts 02110 (the “**Bank**”); and Chase Corporation, a Massachusetts corporationwith its principal address at 26 Summer Street, Bridgewater, Massachusetts02324 (the “**Borrower**”).  Certain capitalized terms used herein withoutdefinition in the text where utilized are defined in Article 12 hereof.

 

Whereas,the Borrower desires to obtain a $7,000,000 term loan from the Bank.

 

Whereas,the Bank is willing to provide such term loan as contemplated above, subject tothe terms and conditions of this Agreement.

 

Now therefore, the parties hereto,intending to be legally bound, and in consideration of the foregoing and themutual covenants contained herein, hereby agree as follows:

 

# **Section 1.  Term Loan Amount and Terms**

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## 1.1                                 Loan Amount.  Pursuant to this Agreement, the Bank agreesto provide as of the date hereof an unsecured term loan to the Borrower in theamount of Seven Million Dollars ($7,000,000) (the “**Loan**”).to be evidenced by a certain Term Note (the “**Note**”) of even date herewith by Borrower tothe Bank in the original principal amount of the Commitment.  The Term Loan shall provide funding for theacquisition of the business of Servi-wrap pipe coatings and Henkel TerosonBautechnik construction waterproofing tapes private label business carried onby Grace Construction Products Limited, a limited company incorporated inEngland and Wales with company number 00614807 (the “**Target**”), as of the date of such acquisition (the “**Target Assets**”) by Borrower.

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## 1.2                                 AvailabilityPeriod.** **The loan is available from the Bank on or about the date ofthis Agreement as a single disbursement.

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## 1.3                                 Repayment Terms.

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(a)                                  The Borrower will make monthly interestand principal payments under the Loan as set forth in the Note.  The Loan shall mature three (3) yearsafter the date of this Agreement upon which date the entire remaining balanceof the Loan, if any, shall be immediately due and payable.

 

(b)                                 The Borrowermay prepay the Loan in full or in part at any time.  The prepayment will be applied to the mostremote payment of principal due under this Agreement.

 

## 1.4                                 Cross-Default.  The Loan shall be cross-defaulted with allother obligations of Borrower (and its Subsidiaries to the Bank, Bank ofAmerica, N.A., its successors and assigns (“**BoA**”)and any other lenders of Borrower and its Subsidiaries.  If, at any time during the term of thisAgreement and notwithstanding the maturity date set forth in the Note, an eventof default shall exist under any of such Borrower’s obligations, Bank shall beentitled, at Bank’s sole election, to accelerate the Note and demand fullpayment of any outstanding balances due thereunder.

 

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# **Section 2. Fees And Expenses**

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## 2.1                                 Loan Fee.  The Borrower agrees to pay a loan fee in theamount of 0.4% of the Loan Amount.  Thisfee is due on the date of this Agreement.

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## 2.2                                 Waiver Fee.  If the Bank, at its discretion, agrees towaive or amend any terms of this Agreement, the Borrower will, at the Bank’soption, pay the Bank a fee for each waiver or amendment in an amount advised bythe Bank at the time the Borrower requests the waiver or amendment.  Nothing in this paragraph shall imply thatthe Bank is obligated to agree to any waiver or amendment requested by theBorrower.  The Bank may impose additionalrequirements as a condition to any waiver or amendment.

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## 2.3                                 Expenses.  The Borrower agrees to immediately repay theBank for expenses that include, but are not limited to, filing, recording andsearch fees, appraisal fees, title report fees, and documentation fees.

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## 2.4                                 ReimbursementCosts.  The Borrower agrees toreimburse the Bank for any expenses it incurs in the preparation of thisAgreement and any agreement or instrument required by this Agreement.  Expenses include, but are not limited to,reasonable attorneys’ fees, including any allocated costs of the Bank’sin-house counsel to the extent permitted by applicable law.

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# **Section 3.  Disbursements, Payments And Costs**

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## 3.1                                 Disbursementsand Payments.

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(a)                                  Each payment bythe Borrower will be made in U.S. Dollars and immediately available funds bydebit to a deposit account, as described in this Agreement or otherwiseauthorized by the Borrower.  For paymentsnot made by direct debit, payments will be made by mail to the address shown onthe Borrower’s statement or at one of the Bank’s banking centers in the UnitedStates, or by such other method as may be permitted by the Bank.

 

(b)                                 The Bank mayhonor instructions for advances or repayments given by any one of theindividuals authorized to sign loan agreements on behalf of the Borrower, orany other individual designated by any one of such authorized signers (each an “**Authorized Individual**”).

 

(c)                                  For any paymentunder this Agreement made by debit to a deposit account, the Borrower will maintainsufficient immediately available funds in the deposit account to cover eachdebit.  If there are insufficientimmediately available funds in the deposit account on the date the Bank entersany such debit authorized by this Agreement, the Bank may reverse the debit.

 

(d)                                 Eachdisbursement by the Bank and each payment by the Borrower will be evidenced byrecords kept by the Bank.  In addition,the Bank may, at its discretion, require the Borrower to sign one or morepromissory notes.

 

## 3.2                                 Banking Days.** **Unlessotherwise provided in this Agreement, a banking day is a day other than aSaturday, Sunday or other day on which commercial banks are authorized toclose, or are in fact closed, in the state where the Bank’s lending office islocated, and, if such day relates to amounts bearing interest at an offshorerate (if any), means any such day on which dealings in dollar deposits areconducted among banks in the offshore dollar interbank market.  All payments and disbursements which would bedue on a 

 

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## day which is not a bankingday will be due on the next banking day. All payments received on a day which is not a banking day will beapplied to the credit on the next banking day.

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## 3.3                                 Taxes.** **Ifany payments to the Bank under this Agreement are made from outside the UnitedStates, the Borrower will not deduct any foreign taxes from any payments itmakes to the Bank.  If any such taxes areimposed on any payments made by the Borrower (including payments under thisparagraph), the Borrower will pay the taxes and will also pay to the Bank, atthe time interest is paid, any additional amount which the Bank specifies byBank Certificate as necessary to preserve the after-tax yield the Bank wouldhave received if such taxes had not been imposed.  The Borrower will confirm that it has paidthe taxes by giving the Bank official tax receipts (or notarized copies) withinthirty (30) days after the due date.

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# **Section 4.  Conditions. **Before the Bank is required toextend any credit to the Borrower under the Note, it must receive any documentsand other items it may reasonably require, in form and content acceptable tothe Bank, including any items specifically listed below.

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## 4.1                                 Authorizations.  If the Borrower or any guarantor is anythingother than a natural person, evidence that the execution, delivery andperformance by the Borrower and/or such guarantor of this Agreement and anyinstrument or agreement required under this Agreement have been dulyauthorized.

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## 4.2                                 GoverningDocuments.** **A copy of the Borrower’s and eachGuarantors’ organizational documents.

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## 4.3                                 Guarantees.** **Guaranteessigned by each of the Guarantors and in forms reasonably acceptable to the Bank(the “**Guarantees**”).

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## 4.4                                 Absence ofLiens.  Evidence satisfactory to theBank that there are no liens or encumbrances on assets of the Borrower or anyGuarantor except those that have been approved by the Bank in writing.

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## 4.5                                 Payment of Fees.  Payment of all fees and other amounts due andowing to the Bank, including without limitation payment of all accrued andunpaid expenses incurred by the Bank as required by the paragraph entitled “ReimbursementCosts.”

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## 4.6                                 Good Standing.  Certificates of good standing for theBorrower and each Guarantor from its jurisdiction of formation and from anyother jurisdiction in which the Borrower or such Guarantor is required toqualify to conduct its business.

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## 4.7                                 Legal Opinion.** **Awritten opinion from Mundays LLP, the Borrower’s legal counsel, covering suchmatters as the Bank may require.  Theterms of the opinion must be acceptable to the Bank.

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## 4.8                                 Insurance.** **Evidenceof insurance coverage, as required in the “Covenants” section of thisAgreement.

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## 4.9                                 Acquisition;Information to be provided to Bank.  Although this Loan is unsecured, Bank ismaking this Loan to provide financing for the simultaneous lien-freeacquisition by a wholly-owned subsidiary of Borrower of the Target Assets (the “**Acquisition**”).  It shall therefore be a condition of the Bankadvancing funds under this Agreement that such funds shall be used for theAcquisition.  Borrower shall be requiredto provide Bank with a copy of the purchase agreement, copies of all proposedand then executed transfer documentation and evidence of the completion of theAcquisition simultaneously with the execution of this Agreement.

 

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## 4.10                           Other RequiredDocumentation.  Submissionto the Bank of the definitive purchase agreement relating to the purchase ofall of the Target Assets, together with such other documents as the Bank or itscounsel may require.

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## 4.11                           AdditionalConditions to Loan.  The makingof the Loan under this Agreement is conditioned upon the following: (i) theBorrower’s representations and warranties herein shall be true and correct asof the date of the Loan; (ii) there shall exist no Event of Default norany event which, with notice or lapse of time or both, would become such anEvent of Default; (iii) there shall have occurred no material adversechange in the financial condition, business or prospects of the Borrower; (iv) ifit shall have so requested, the Bank shall have received a certificate signedby the President and Secretary of the Borrower as to the foregoing; and (v) Borrowershall have obtained the written consent of BoA to enter into this Agreement ifrequired under the loan documents entered into between Borrower and BoA.  Its acceptance of the Loan shall constitutethe Borrower’s representation and warranty to the effect set forth in clauses(i), (ii) and (iii) above.

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# **Section 5.  Representations And Warranties. **Whenthe Borrower signs this Agreement, and until the Bank is repaid in full, theBorrower makes the following representations and warranties.  Each request for an extension of creditconstitutes a renewal of these representations and warranties as of the date ofthe request.

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## 5.1                                 Formation.  The Borrower and each Guarantor has been dulyformed and existing under the laws of the state or other jurisdiction whereorganized.

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## 5.2                                 Authorization.** **ThisAgreement, and any instrument or agreement required hereunder, are within theBorrower’s and the respective Guarantor’s powers, have been duly authorized,and do not conflict with any of its organizational papers.

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## 5.3                                 EnforceableAgreement.  This Agreementis a legal, valid and binding agreement of the Borrower, enforceable againstthe Borrower in accordance with its terms, and any instrument or agreementrequired hereunder, when executed and delivered, will be similarly legal,valid, binding and enforceable against the Borrower or as it may appear to be aparty thereto, each Guarantor.

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## 5.4                                 Good Standing.  In each state in which the Borrower or anyGuarantor does business, it is properly licensed, in good standing, and, whererequired, in compliance with fictitious name statutes.

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## 5.5                                 No Conflicts.  This Agreement does not conflict with anylaw, agreement, or obligation by which the Borrower or any Guarantor is bound.

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## 5.6                                 FinancialInformation.  Allfinancial and other information that has been or will be supplied to the Bankis sufficiently complete to give the Bank accurate knowledge of the Borrower’sconsolidated and consolidating financial condition, including all materialcontingent liabilities.  Since the dateof the most recent financial statement provided to the Bank, there has been nomaterial adverse change in the business condition (financial or otherwise),operations, properties or prospects of the Borrower or its subsidiaries,individually or collectively.

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## 5.7                                 Lawsuits.** **Thereis no lawsuit, tax claim or other dispute pending or threatened against theBorrower or any Guarantor which, if lost, would impair the Borrower’s or suchGuarantor’s financial condition or ability to repay the Loan evidenced by theNote, except as have been disclosed in writing to the Bank.

 

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## 5.8                                 Permits,Franchises.  TheBorrower and each Guarantor possesses all permits, memberships, franchises,contracts and licenses required and all trademark rights, trade name rights,patent rights, copyrights, and fictitious name rights necessary to enable it toconduct the business in which it is now engaged.

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## 5.9                                 OtherObligations.  Neither theBorrower nor any Guarantor is in default on any obligation for borrowed money,any purchase money obligation or any other material lease, commitment,contract, instrument or obligation, except as have been disclosed in writing tothe Bank.

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## 5.10                           Tax Matters.** **Neitherthe Borrower nor any Guarantor has knowledge of any pending assessments oradjustments of its income tax for any year and all taxes due have been paid,except as have been disclosed in writing to the Bank.

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## 5.11                           No Event ofDefault.  There is no event which is, orwith notice or lapse of time or both would be, a default under this Agreement.

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## 5.12                           Insurance.  The Borrower has obtained, and maintained ineffect, the insurance coverage required in the “Covenants” section of thisAgreement.

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## 5.13                           ERISA Plans.

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(a)                                  Each Plan(other than a multiemployer plan) is in compliance in all material respectswith the applicable provisions of ERISA, the Code and other federal or statelaw.  Each Plan has received a favorabledetermination letter from the IRS and to the best knowledge of the Borrower,nothing has occurred which would cause the loss of such qualification.  The Borrower has fulfilled its obligations,if any, under the minimum funding standards of ERISA and the Code with respectto each Plan, and has not incurred any liability with respect to any Plan underTitle IV of ERISA.

 

(b)                                 There are noclaims, lawsuits or actions (including by any governmental authority), andthere has been no prohibited transaction or violation of the fiduciaryresponsibility rules, with respect to any Plan which has resulted or couldreasonably be expected to result in a material adverse effect.

 

(c)                                  With respect toany Plan subject to Title IV of ERISA:

 

(i)            No reportableevent has occurred under Section 4043(c) of ERISA for which the PBGCrequires 30-day notice.

 

(ii)           No action bythe Borrower or any ERISA Affiliate to terminate or withdraw from any Plan hasbeen taken and no notice of intent to terminate a Plan has been filed under Section 4041of ERISA.

 

(iii)          No terminationproceeding has been commenced with respect to a Plan under Section 4042 ofERISA, and no event has occurred or condition exists which might constitutegrounds for the commencement of such a proceeding.

 

(d)                                 The followingterms have the meanings indicated for purposes of this Agreement:

 

(i)            “**Code**” means the Internal Revenue Code of 1986, as amendedfrom time to time.

 

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(ii)                                  “**ERISA**” means the Employee Retirement Income Security Act of1974, as amended from time to time.

 

(iii)                               “**ERISA Affiliate**” means any trade or business (whether or notincorporated) under common control with the Borrower within the meaning of Section 414(b) or(c) of the Code.

 

(iv)                              “**PBGC**” means the Pension Benefit Guaranty Corporation.

 

(v)                                 “**Plan**” means a pension, profit-sharing, or stock bonus planintended to qualify under Section 401(a) of the Code, maintained orcontributed to by the Borrower or any ERISA Affiliate, including anymultiemployer plan within the meaning of Section 4001(a)(3) of ERISA.

 

## 5.14                           Location ofBorrower.  The placeof business of the Borrower (or, if the Borrower has more than one place ofbusiness, its chief executive office) is located at the address listed on thesignature page of this Agreement.

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# **Section 6.  Affirmative Covenants. **TheBorrower agrees, so long as credit is available under this Agreement and untilthe Bank is repaid in full:

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## 6.1                                 Use of Proceeds.  To use the proceeds of the Loan only forfinancing of the Acquisition.

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## 6.2                                 LegalExistence; Qualification; Compliance.  The Borrower will maintain (and will causeeach Subsidiary of the Borrower to maintain) its corporate existence and goodstanding in the jurisdiction of its formation. The Borrower will qualify to do business and will remain qualified andin good standing (and the Borrower will cause each Subsidiary of the Borrowerto qualify and remain qualified and in good standing) in each otherjurisdiction where the failure so to qualify could (singly or in the aggregatewith all other such failures) have a Material Adverse Effect.  The Borrower will comply in all material respectswith (and will cause each Subsidiary of the Borrower to comply with) itscharter documents and by-laws.  TheBorrower will comply with (and will cause each Subsidiary of the Borrower tocomply with) all applicable laws, rules and regulations (including,without limitation, ERISA and those relating to environmental protection) otherthan (a) laws, rules or regulations the validity or applicability ofwhich the Borrower or such Subsidiary shall be contesting in good faith byproceedings which serve as a matter of law to stay the enforcement thereof and (b) thoselaws, rules and regulations to failure to comply with any of which couldnot (singly or in the aggregate) have a Material Adverse Effect.

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## 6.3                                 Maintenance ofProperty; Insurance.  Subject to§7.8, the Borrower will maintain and preserve (and will cause each Subsidiaryof the Borrower to maintain and preserve) all of its properties in good workingorder and condition, making all necessary repairs thereto and replacementsthereof.  The Borrower will maintain (andwill cause each of its Subsidiaries to maintain) insurance with respect to itsproperty and business against such liabilities, casualties and contingenciesand of such types and in such amounts as shall be reasonably satisfactory tothe Bank from time to time and in any event all such insurance as may from timeto time be customary for companies conducting a business similar to that of theBorrower in similar locales.

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## 6.4                                 Payment ofTaxes and Charges.  TheBorrower will pay and discharge (and will cause each Subsidiary of the Borrowerto pay and discharge) all taxes, assessments and governmental charges or leviesimposed upon it or upon its income or property, including, without limitation,taxes, assessments, charges or levies relating to real and personal property,franchises, income, unemployment, old age benefits, withholding, or sales oruse, prior to the date on which penalties would attach thereto, and all 

 

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## lawful claims (whether forany of the foregoing or otherwise) which, if unpaid, might give rise to a lienupon any property of the Borrower or any such Subsidiary, except any of theforegoing which is being contested in good faith and by appropriate proceedingswhich serve as a matter of law to stay the enforcement thereof and for whichthe Borrower has established and is maintaining adequate reserves.  The Borrower will maintain in full force andeffect, and comply with the terms and conditions of, all permits, permissionsand licenses necessary or desirable for its business.

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## 6.5                                 Accounts.  The Borrower will maintain depositoryaccounts with the Bank.

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## 6.6                                 Conduct ofBusiness.  TheBorrower will conduct, in the ordinary course, the business in which it ispresently engaged.  The Borrower willnot, without the prior written consent of the Bank, directly or indirectly(itself or through any Subsidiary) enter into any other lines of business,businesses or ventures which are not reasonably related to the business inwhich the Borrower is presently engaged.

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## 6.7                                 ReportingRequirements.  TheBorrower will furnish to the Bank:

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(a)                                  Within 90 daysafter the end of each fiscal year of the Borrower, a copy of the annual auditreport for such fiscal year for the Borrower, including therein consolidatedbalance sheets of the Borrower and Subsidiaries as at the end of such fiscalyear and related consolidated statements of income, stockholders’ equity andcash flow for the fiscal year then ended. The annual consolidated financial statements shall be certified byindependent public accountants selected by the Borrower and reasonablyacceptable to the Bank (which acceptable accountants shall includePricewaterhouseCoopers) such certification to be in such form as is generallyrecognized as “unqualified”.  TheBorrower will also deliver to the Bank, within 90 days following the end ofeach fiscal year, an annual budget for the following year (including incomestatement projections) for the Borrower, prepared by the Borrower’s managementand approved by the Borrower’s Board of Directors, such budget to be in suchdetail as is reasonably satisfactory to the Bank.

 

(b)                                 Within 45 daysafter the end of each fiscal quarter of the Borrower, consolidated balancesheets of the Borrower and Subsidiaries and related consolidated statements ofincome and cash flow, unaudited but prepared in accordance with generallyaccepted accounting principles consistently applied fairly presenting thefinancial condition of the Borrower and Subsidiaries as at the dates thereof andfor the periods covered thereby and certified as complete by the chieffinancial officer of the Borrower, such balance sheets to be as at the end ofsuch fiscal quarter and such statements of income and cash flow to be for suchfiscal quarter and for the fiscal year to date, in each case together with acomparison to the results for the corresponding fiscal period of theimmediately prior fiscal year.

 

(c)                                  At the time ofdelivery of each annual or quarterly report or financial statement of theBorrower, a certificate executed by the chief financial officer of the Borrowerstating that he or she has reviewed this Agreement and the other Loan Documentsand has no knowledge of any Event of Default or, if he or she has suchknowledge, specifying each such Event of Default and the nature thereof.  Each such certificate given as at the end ofany fiscal quarter of the Borrower will set forth the calculations necessary toevidence compliance with §§6.8-6.9.

 

(d)                                 As soon aspossible and in any event within five days after the Borrower has actualknowledge of the occurrence of any Default or Event of Default, the statementof the 

 

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Borrower setting forthdetails of each such Default or Event of Default and the action which theBorrower proposes to take with respect thereto.

 

(e)                                  Promptly afterreceipt, a copy of all audits or reports submitted to any Company byindependent public accountants in connection with any annual special or interimaudit of the books and records of such Company prepared by such accountants andany “management letter” prepared by such accountants.

 

(f)                                    Promptly afterthe commencement thereof, notice of all actions, suits and proceedings beforeany court or governmental department, commission, board, bureau, agency orinstrumentality, domestic or foreign, to which the Borrower or any Subsidiaryof the Borrower is a party.

 

(g)                                 Promptly uponrequest, such other information respecting the financial condition, operationsand prospects of the Borrower or any Subsidiary as the Bank may from time totime reasonably request.

 

## 6.8                                 TotalLiabilities to Tangible Net Worth Ratio.  The Borrower shall maintain a ratio of TotalLiabilities to Tangible Net Worth not exceeding 2.00:1.00 to be tested at theend of each fiscal quarter of Borrower.

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## 6.9                                 Debt ServiceCoverage Ratio.  Forthe  twelve month period ending on each May 31,August 31, November 30 and February 28(29), the Borrower willnot permit the ratio of Operating Cash Flow to Debt Service to be less than1.25:1.00.

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## 6.10                           Books andRecords; Inspections.  TheBorrower will maintain (and will cause each of its Subsidiaries to maintain)complete and accurate books, records and accounts which will at all timeaccurately and fairly reflect all of its transactions in accordance withgenerally accepted accounting principles consistently applied.  The Borrower will, at any reasonable time andfrom time to time upon reasonable notice and during normal business hours (andwithout any necessity for notice following the occurrence of an Event ofDefault), permit the Bank, and any agent or representatives thereof, to examineand make copies of and take abstracts from the records and books of account of,and visit the properties of the Borrower and its Subsidiaries, and to discussits affairs, finances and accounts with its officers, directors and/orindependent accountants, all of whom are hereby authorized and directed tocooperate with the Bank in carrying out the intent of this §6.10.  Each financial statement of the Borrowerhereafter delivered pursuant to this Agreement will be complete and accurateand will fairly present the financial condition of the Borrower as at the datethereof and for the periods covered thereby; provided, as to interimstatements, that footnotes and the information normally contained therein arenot included and that such statements are subject to year-end adjustments.

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# **Section 7.  Negative Covenants. **Withoutlimitation of any other covenants and agreements contained herein or elsewhere,the Borrower agrees that so long as this Agreement remains in effect, and anyobligations of the Borrower shall be outstanding:

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## 7.1                                 Indebtedness.  The Borrower will not create, incur, assumeor suffer to exist any Indebtedness (nor allow any of its Subsidiaries tocreate, incur, assume or suffer to exist any Indebtedness), except for:

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(a)                                  Indebtednessowed to the Bank or existing Indebtedness to BoA, including without limitationfuture disbursements for use for working capital, general corporatepurposes,  letters of credit or capitalexpenditures under a certain $10,000,000 demand line of credit from BoA to theBorrower;

 

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(b)                                 Indebtedness ofthe Borrower or any Subsidiary for taxes, assessments and governmental chargesor levies not yet due and payable;

 

(c)                                  unsecuredcurrent liabilities of the Borrower or any Subsidiary (other than for moneyborrowed or for purchase money Indebtedness with respect to fixed assets)incurred upon customary terms in the ordinary course of business;

 

(d)                                 purchase moneyIndebtedness (including, without limitation, Capital Lease Obligations)hereafter incurred to equipment vendors, equipment lessor and other Personsproviding purchase money financing to the Borrower for new equipment purchasedor leased by the Borrower after the date hereof for use in the Borrower’sbusiness; provided that the Indebtedness permitted under this clause (d) ofthis §7.1 will not exceed $500,000 in the aggregate outstanding at any onetime;

 

(e)                                  other Indebtedness(not described in any of clauses (a)-(d) above) existing at the datehereof, but only to the extent set forth as item 7.1 of the attached DisclosureSchedule;

 

(f)                                    any guarantiesor other contingent liabilities expressly permitted pursuant to §7.3; and

 

(g)                                 Any SyntheticLease, so long as the Bank has previously approved the terms thereof inwriting.

 

## 7.2                                 Liens.  The Borrower will not create, incur, assumeor suffer to exist (nor allow any of its Subsidiaries to create, incur, assumeor suffer to exist) any mortgage, deed of trust, pledge, lien, securityinterest, or other charge or encumbrance (including the lien or retainedsecurity title of a conditional vendor) of any nature (collectively, “**Liens**”), upon or with respect to any of itsproperty or assets, now owned or hereafter acquired (including, withoutlimitation, any trustee process affecting any account of the Borrower with theBank), except that the foregoing restrictions shall not apply to:

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(a)                                  Liens fortaxes, assessments or governmental charges or levies on property of theBorrower or any of its Subsidiaries if the same shall not at the time bedelinquent or thereafter can be paid without interest or penalty or are beingcontested in good faith and by appropriate proceedings which serve as a matterof law to stay any enforcement thereof and as to which adequate reserves aremaintained;

 

(b)                                 Liens imposedby law, such as carriers’, warehousemen’s and mechanics’ liens and othersimilar Liens arising in the ordinary course of business for sums not yet dueor which are being contested in good faith and by appropriate proceedings whichserve as a matter of law to stay the enforcement thereof and as to whichadequate reserves are maintained;

 

(c)                                  pledges ordeposits under workmen’s compensation laws, unemployment insurance, socialsecurity, retirement benefits or similar legislation;

 

(d)                                 Liens in favorof the Bank;

 

(e)                                  Liens in favorof equipment vendors, equipment lessors and other Persons securing any purchasemoney Indebtedness permitted by clause (d) of §7.1; provided that no suchLien will extend to any property of the Borrower other than the specific itemsof equipment financed;

 

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(f)                                    rights of thelicensee under any commercially reasonable license of technology or otherintellectual property given by the Borrower to any of the Borrower’s customersin the ordinary course of its business;

 

(g)                                 refinancings,renewals or extensions of any of the foregoing Liens; provided, however, thatno such refinanced, renewed or extended Lien at any time will extend to anyproperty of any property of any Borrower or any Subsidiary other than thespecific assets previously subject to such Liens;

 

(h)                                 easements,rights-of-way, restrictions and other similar encumbrances incurred in theordinary course of business that, in the aggregate, do not in any casematerially detract from the value of the property subject thereto or materiallyinterfere in the ordinary conduct of the business of the Borrower or any of itsSubsidiaries.

 

(i)                                     other Liensexisting at the date hereof, but only to the extent and with the relativepriorities set forth on item 7.2 of the attached Disclosure Schedule.

 

## 7.3                                 Guaranties.  The Borrower will not, without the priorwritten consent of the Bank, assume, guarantee, endorse or otherwise becomedirectly or contingently liable (including, without limitation, liable by wayof agreement, contingent or otherwise, to purchase, to provide funds forpayment, to supply funds to or otherwise invest in any debtor or otherwise toassure any creditor against loss) (and will not permit any of its Subsidiariesso to assume, guaranty or become directly or contingently liable) in connectionwith any indebtedness of any other Person, except (a) guaranties byendorsement for deposit or collection in the ordinary course of business, and (b) guarantiesexisting at the date hereof and described on item 7.3 of the attachedDisclosure Schedule.

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## 7.4                                 Loans andAdvances.  TheBorrower will not make (and will not permit any Subsidiary to make) any loansor advances to any Person, including, without limitation, the Borrower’sdirectors, officers and employees, except (a) as described on item 7.4 ofthe attached Disclosure Schedule, (b) so long as no Default then exists,Affiliate Loans, (c)  advances to such directors, officers or employeeswith respect to expenses incurred by them in the ordinary course of theirduties and advances against salary, all of which loans and advances under thisclause (c) will not exceed, in the aggregate, $100,000 outstanding at anyone time, and (d) advances for security deposits.

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## 7.5                                 Subsidiaries;Acquisitions.  Other thanthe Acquisition, which Acquisition is expressly permitted, the Borrower willnot, without the prior written consent of the Bank, make (and will not permitany Subsidiary to make) any acquisition of all or substantially all of thestock or other Equity Interest of any other Person or of all or substantiallyall of the assets of any other Person, other than, any acquisition the purchaseprice for which does not exceed $1,000,000. The Borrower will not become apartner in any partnership or limited liability company.  The Borrower will promptly inform the Bank ifit forms any Subsidiaries after the date of this Agreement.

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## 7.6                                 Merger.  The Borrower (and its Subsidiaries) will not,without the prior written consent of the Bank, merge or consolidate with anyPerson, or sell, lease, transfer or otherwise dispose of (whether in one ormore transactions) any material portion of its assets (including, withoutlimitation, any material portion of its intellectual property), other than (a) ina sale of inventory in the ordinary course; and (b) licensing of any ofits intellectual property in the ordinary course of Borrower’s business toanother Person on commercially reasonable terms.

##  

## 7.7                                 AffiliateTransactions.  Except fortransactions described on item 7.7 of the attached Disclosure Schedule, theBorrower will not, without the prior written consent of the Bank, enter intoany transaction,

 

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## including, withoutlimitation, the purchase, sale or exchange of any property or the rendering ofany service, with any Affiliate of the Borrower, except in the ordinary courseand pursuant to the reasonable requirements of the Borrower’s business and uponfair and reasonable terms no less favorable to the Borrower than would beobtained in a comparable arms’-length transaction with any Person not anAffiliate; provided that nothing in this §7.7 shall be deemed to restrict thepayment of salary or other similar payments to any officer or director of theBorrower at a level consistent with the salary and other payments being paid atthe date of this Agreement and heretofore disclosed in writing to the Bank, norto prevent the hiring of additional officers at a salary level consistent withindustry practice, nor to prevent reasonable periodic increases in salary orbenefits.

##  

## 7.8                                 Change ofStructure, etc.  TheBorrower will not change its corporate name or legal structure, nor will theBorrower change its fiscal year or materially change its methods of financialreporting unless, in each instance, prior written notice of such change isgiven to the Bank and prior to such change the Borrower enters into amendmentsto this Agreement in form and substance reasonably satisfactory to the Bank inorder to preserve unimpaired the rights of the Bank and the obligations of theBorrower hereunder.

##  

## 7.9                                 Hazardous Waste.  Except as provided below, the Borrower willnot dispose of or suffer or permit to exist any hazardous material or oil onany site or vessel owned, occupied or operated by the Borrower or anySubsidiary of the Borrower, nor shall the Borrower store (or permit anySubsidiary to store) on any site or vessel owned, occupied or operated by theBorrower or any such Subsidiary, or transport or arrange the transport of, anyhazardous material or oil (the terms “hazardous material”, “oil” and “vessel”,respectively, being used herein with the meanings given those terms in Mass.Gen. Laws. Ch. 21E or any comparable terms in any comparable statute in effectin any other relevant jurisdiction).  TheBorrower shall provide the Bank with written notice of (i) the intendedstorage or transport of any hazardous material or oil by the Borrower or anySubsidiary of the Borrower, (ii) any potential or known release or threatof release of any hazardous material or oil at or from any site or vesselowned, occupied or operated by the Borrower or any Subsidiary of the Borrower,and (iii) any incurrence of any expense or loss by any government orgovernmental authority in connection with the assessment, containment orremoval of any hazardous material or oil for which expense or loss the Borroweror any Subsidiary of the Borrower may be liable.  Notwithstanding the foregoing, the Borrowerand its Subsidiaries may use, store and transport, and need not notify the Bankof the use, storage or transportation of, (x) oil in reasonablequantities, as fuel for heating of their respective facilities or for vehiclesor machinery used in the ordinary course of their respective businesses and (y) hazardousmaterials that are solvents, cleaning agents or other materials used in theordinary course of the respective business operations of the Borrower and itsSubsidiaries in reasonable quantities, as long as in any case the Borrower ofthe Subsidiary concerned (as the case may be) has obtained and maintains ineffect any necessary governmental permits, licenses and approvals, complieswith all requirements of applicable federal, state and local law relating tosuch use, storage or transportation, follows the protective and safetyprocedures that a prudent businessperson conducting a business the same as orsimilar t o that of the Borrower or such Subsidiary (as the case may be) wouldfollow, and disposes of such materials (not consumed in the ordinary course)only through licensed providers of hazardous waste removal services.

##  

## 7.10                           No Margin Stock.  No proceeds of the Loan shall be useddirectly or indirectly to purchase or carry any margin security.

##  

## 7.11                           NegativePledges.  The Borrower will not enterinto (and will not permit any of its Subsidiaries to enter into) any agreement,amendment or arrangement (excluding this Agreement or any other Loan Documentor any loan document with BoA) prohibiting or restricting (a) such Personfrom amending or otherwise modifying this Agreement or any other Loan Document,(b) the creation or assumption of any 

 

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##  

## Liens upon its properties,revenues or assets, whether now owned or hereafter acquired or (c) theability of any such Person to make any payment or distribution, directly orindirectly, to the Borrower.

##  

# **Section 8. Default And Remedies.**

# ** **

## 8.1                                 If any Eventsof Default (as defined below) occurs, the Bank may do one or more of thefollowing: declare the Borrower in default, stop making any additional creditavailable to the Borrower, and require the Borrower to repay its entire debtimmediately and without prior notice.  Ifan event which, with notice or the passage of time, will constitute an Event ofDefault has occurred, the Bank has no obligation to make advances or extendadditional credit under this Agreement. In addition, if any Event of Default occurs, the Bank shall have allrights, powers and remedies available under any instruments and agreementsrequired by or executed in connection with this Agreement, as well as allrights and remedies available at law or in equity.  If an Event of Default occurs under the paragraphentitled “Bankruptcy,” below, with respect to the Borrower, then the entiredebt outstanding under this Agreement will automatically be due immediately.

##  

## 8.2                                 The occurrenceof any one of the following events shall constitute an event of default (eachan “**Event of Default**”) hereunder:

##  

(a)                                  The Borrowershall (i) fail to make any payment of interest within five (5) daysof the date when due or (ii) fail to make any payment of principalhereunder or under any obligation to the Bank on or before the date when due;or

 

(b)                                 Anyrepresentation or warranty of the Borrower contained herein shall at any timeprove to have been incorrect in any material respect when made or anyrepresentation or warranty made by the Borrower in connection with the Loanshall at any time prove to have been incorrect in any material respect whenmade; or

 

(c)                                  The Borrowershall default in the performance or observance of any agreement or obligationunder §§6.2, 6.7, 6.8, 6.9 and 6.10 or any provision of Article 7 hereof;or

 

(d)                                 The Borrowershall default in the performance of any other term, covenant or agreementcontained in this Agreement (ie., other than subsections 8.2(a), (b) and (c) above)and such default shall continue unremedied for 30 days after written noticethereof shall have been given to the Borrower unless a different cure period orno cure period is otherwise specified or if Lender deems such default to not bereasonably susceptible to cure , or

 

(e)                                  Any default onthe part of the Borrower or any Subsidiary of the Borrower shall exist, andshall remain unwaived or uncured beyond the expiration of any applicable noticeand/or grace period, under any other contract, agreement or undertaking nowexisting or hereafter entered into with or for the benefit of the Bank (or anyaffiliate of the Bank), including without limitation, any Hedging Obligation(as defined in Rider A to the Note); or

 

(f)                                    Any otherIndebtedness of the Borrower or any Subsidiary of the borrower for borrowedmoney or representing the deferred purchase price of any property in excess of$500,000  in aggregate principal amountor with respect to any instrument evidencing, guaranteeing, securing orotherwise relating to any such Indebtedness shall have been declared to be dueand payable prior to its stated maturity or shall not have been paid at thestated maturity thereof; or

 

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(g)                                 The Borrowershall be dissolved or the Borrower or any Subsidiary of the Borrower shallbecome insolvent or bankrupt or shall cease paying its debts as they mature orshall make an assignment for the benefit of creditors, or a trustee, receiveror liquidator shall be appointed for the Borrower or any Subsidiary of theBorrower or for a substantial part of the property of the Borrower or any suchSubsidiary, or bankruptcy, reorganization, arrangement, insolvency or similarproceedings shall be instituted by or against the Borrower or any suchSubsidiary under the laws of any jurisdiction (except for an involuntaryproceeding filed against the Borrower or any Subsidiary of the Borrower whichis dismissed within 90 days following the institution thereof); or

 

(h)                                 Any executionor similar process shall be issued or levied against any material part of theproperty of the Borrower or any Subsidiary and such execution or similarprocess shall not be paid, stayed, released, vacated or fully bonded within 10days after its issue or levy; or

 

(i)                                     Any finaluninsured judgment in excess of $500,000 shall be entered against any Borroweror any Subsidiary of the borrower by any court of competent jurisdiction andshall remain unpaid, unbonded or unstayed for a period of 60 days; or

 

(j)                                     The Borrower orany Subsidiary of the Borrower shall fail to meet its minimum fundingrequirements under ERISA with respect to any employee benefit plan (or otherclass of benefit which the PBGC has elected to insure) or any such plan shallbe the subject of termination proceedings (whether voluntary or involuntary)and there shall result from such termination proceedings a liability of theborrower or any Subsidiary of the Borrower to the PBGC which, in each case, inthe reasonable opinion of the Bank may have material adverse effect upon thefinancial condition of the Borrower or any such Subsidiary; or

 

(k)                                  Any LoanDocument shall for any reason (other than due to payment in full of all amountsevidenced thereby or due to discharge in writing by the Bank) not remain infull force and effect; or

 

(l)                                     Any Subsidiaryof the Borrower shall cease to be a direct or indirect wholly-owned Subsidiary.

 

# **Section 9.  Enforcing This Agreement; Miscellaneous**

# ** **

## 9.1                                 Rights andRemedies on Default.  Upon theoccurrence of any Event of Default, in addition to any other rights andremedies available to the Bank hereunder or otherwise, the Bank may exerciseany one or more of the following rights and remedies (all of which shall becumulative):

##  

(a)                                  Declare theentire unpaid principal amount due under this Agreement and then outstanding,all interest accrued and unpaid thereon and all other amounts payable underthis Agreement, and all other Indebtedness of the Borrower to the Bank, to beforthwith due and payable, whereupon the same shall become forthwith due andpayable, without presentment, demand, protest or notice of any kind, all ofwhich are hereby expressly waived by the Borrower.

 

(b)                                 Exercise allrights and remedies hereunder and under each and any other agreement with theBank, and exercise all other rights and remedies which the Bank may have underapplicable law.

 

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##  

## 9.2                                 Set-off.  Borrower hereby grants to Bank, a continuinglien, security interest and right of setoff as security for all liabilities andobligations to Bank, whether now existing or hereafter arising, upon andagainst all deposits, credits, collateral and property, now or hereafter in thepossession, custody, safekeeping or control of Bank or any entity under thecontrol of RBS Citizens, National Association or its affiliates and itssuccessors and assigns or in transit to any of them, At any time, withoutdemand or notice (any such notice being expressly waived by Borrower), Bank maysetoff the same or any part thereof and apply the same to any liability orobligation of Borrower even though unmatured and regardless of the adequacy ofany other collateral. ANY AND ALL RIGHTS TO REQUIRE THE BANK TO EXERCISE ITSRIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES ANY OFTHE OBLIGATIONS PRIOR TO THE EXERCISE BY THE BANK OF ITS RIGHT OF SET-OFF UNDERTHIS SECTION ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

##  

## 9.3                                 GAAP.  Except as otherwise stated in this Agreement,all financial information provided to the Bank and all financial covenants willbe made under generally accepted accounting principles, consistently applied.

##  

## 9.4                                 Governing Law.  This Agreement shall be governed by andconstrued in accordance with the laws of The Commonwealth ofMassachusetts.  To the extent that theBank has greater rights or remedies under federal law, whether as a nationalbank or otherwise, this paragraph shall not be deemed to deprive the Bank ofsuch rights and remedies as may be available under federal law.

##  

## 9.5                                 Successors andAssigns.  This Agreement is binding onthe Borrower’s and the Bank’s successors and assignees.  The Borrower agrees that it may not assignthis Agreement without the Bank’s prior consent.  The Bank may sell participations in or assignthis Loan, and may exchange information about the Borrower or any Subsidiary(including, without limitation, any information regarding any hazardoussubstances) with actual or potential participants or assignees.  If a participation is sold or the Loan isassigned, the purchaser will have the right of set-off against the Borrower andany Guarantor.

##  

## 9.6                                 DisputeResolution Provision.** **This paragraph, including thesubparagraphs below, is referred to as the “Dispute Resolution Provision.”  This Dispute Resolution Provision is amaterial inducement for the parties entering into this agreement.

##  

(a)                                  This DisputeResolution Provision concerns the resolution of any controversies or claimsbetween the parties, whether arising in contract, tort or by statute, includingbut not limited to controversies or claims that arise out of or relate to: (i) thisagreement (including any renewals, extensions or modifications); or (ii) anydocument related to this agreement (collectively a “**Claim**”).  For the purposes of this Dispute ResolutionProvision only, the term “parties” shall include any parent corporation,subsidiary or affiliate of the Bank involved in the servicing, management oradministration of any obligation described or evidenced by this agreement.

 

(b)                                 At the requestof any party to this agreement, any Claim shall be resolved by bindingarbitration in accordance with the Federal Arbitration Act (Title 9, U.S. Code)(the “**Act**”). The Act will apply even though this agreement provides that it isgoverned by the law of a specified state.

 

(c)                                  Arbitrationproceedings will be determined in accordance with the Act, the then-current rules andprocedures for the arbitration of financial services disputes of the AmericanArbitration Association or any successor thereof (“**AAA**”),and the terms of this Dispute Resolution Provision.  In the event of any inconsistency, the termsof this Dispute 

 

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Resolution Provision shallcontrol.  If AAA is unwilling or unableto (i) serve as the provider of arbitration or (ii) enforce anyprovision of this arbitration clause, the Bank may designate anotherarbitration organization with similar procedures to serve as the provider ofarbitration.

 

(d)                                 The arbitrationshall be administered by AAA and conducted, unless otherwise required by law,in any U.S. state where real or tangible personal property collateral for thiscredit is located or if there is no such collateral, in the state specified inthe governing law section of this agreement. All Claims shall be determined by one arbitrator; however, if Claimsexceed Five Million Dollars ($5,000,000), upon the request of any party, theClaims shall be decided by three arbitrators. All arbitration hearings shall commence within ninety (90) days of thedemand for arbitration and close within ninety (90) days of commencement andthe award of the arbitrator(s) shall be issued within thirty (30) days ofthe close of the hearing.  However, thearbitrator(s), upon a showing of good cause, may extend the commencement of thehearing for up to an additional sixty (60) days.  The arbitrator(s) shall provide aconcise written statement of reasons for the award.  The arbitration award may be submitted to anycourt having jurisdiction to be confirmed and have judgment entered andenforced.

 

(e)                                  The arbitrator(s) willgive effect to statutes of limitation in determining any Claim and may dismissthe arbitration on the basis that the Claim is barred. For purposes of theapplication of any statutes of limitation, the service on AAA under applicableAAA rules of a notice of Claim is the equivalent of the filing of alawsuit.  Any dispute concerning this arbitrationprovision or whether a Claim is arbitrable shall be determined by thearbitrator(s), except as set forth at subparagraph (h) of this DisputeResolution Provision.  The arbitrator(s) shallhave the power to award legal fees pursuant to the terms of this agreement.

 

(f)                                    This paragraphdoes not limit the right of any party to: (i) exercise self-help remedies,such as but not limited to, setoff; (ii) initiate judicial or non-judicialforeclosure against any real or personal property collateral; (iii) exerciseany judicial or power of sale rights, or (iv) act in a court of law toobtain an interim remedy, such as but not limited to, injunctive relief, writof possession or appointment of a receiver, or additional or supplementaryremedies.

 

(g)                                 The filing of acourt action is not intended to constitute a waiver of the right of any party,including the suing party, thereafter to require submittal of the Claim toarbitration.

 

(h)                                 Any arbitrationor trial by a judge of any Claim will take place on an individual basis withoutresort to any form of class or representative action (the “**Class ActionWaiver**”).  Regardless ofanything else in this Dispute Resolution Provision, the validity and effect ofthe Class Action Waiver may be determined only by a court and not by anarbitrator.  The parties to thisAgreement acknowledge that the Class Action Waiver is material andessential to the arbitration of any disputes between the parties and isnonseverable from the agreement to arbitrate Claims. If the Class ActionWaiver is limited, voided or found unenforceable, then the parties’ agreementto arbitrate shall be null and void with respect to such proceeding, subject tothe right to appeal the limitation or invalidation of the Class ActionWaiver.  **The Parties acknowledge and agree that under no circumstances will aclass action be arbitrated.**

 

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(i)                                     By agreeing tobinding arbitration, the parties irrevocably and voluntarily waive any rightthey may have to a trial by jury in respect of any Claim.  Furthermore, without intending in any way tolimit this agreement to arbitrate, to the extent any Claim is not arbitrated,the parties irrevocably and voluntarily waive any right they may have to atrial by jury in respect of such Claim. This waiver of jury trial shall remain in effect even if the Class ActionWaiver is limited, voided or found unenforceable.  **WHETHER THE CLAIM IS DECIDED BY ARBITRATION OR BY TRIAL BY AJUDGE, THE PARTIES AGREE AND UNDERSTAND THAT THE EFFECT OF THIS AGREEMENT ISTHAT THEY ARE GIVING UP THE RIGHT TO TRIAL BY JURY TO THE EXTENT PERMITTED BYLAW.**

 

## 9.7                                 Severability;Waivers.  If any part of this Agreementis not enforceable, the rest of the Agreement may be enforced.  The Bank retains all rights, even if it makesa loan after default.  If the Bank waivesa default, it may enforce a later default. Any consent or waiver under this Agreement must be in writing.

##  

## 9.8                                 Attorneys’ Fees.** **TheObligors shall reimburse the Bank for any reasonable costs and attorneys’ feesincurred by the Bank in connection with the enforcement or preservation of anyrights or remedies under this Agreement and any other documents executed inconnection with this Agreement, and in connection with any amendment, waiver, “workout”or restructuring under this Agreement. In the event of a lawsuit or arbitration proceeding, the prevailingparty is entitled to recover costs and reasonable attorneys’ fees incurred inconnection with the lawsuit or arbitration proceeding, as determined by thecourt or arbitrator.  In the event thatany case is commenced by or against any Obligor under the Bankruptcy Code(Title 11, United States Code) or any similar or successor statute, the Bank isentitled to recover costs and reasonable attorneys’ fees incurred by the Bankrelated to the preservation, protection, or enforcement of any rights of theBank in such a case.  As used in thisparagraph, “attorneys’ fees” includes the allocated costs of the Bank’sin-house counsel.

##  

## 9.9                                 One Agreement.** **ThisAgreement and any related security or other agreements required by thisAgreement, collectively:

##  

(a)                                  represent thesum of the understandings and agreements between the Bank and the Borrowerconcerning this credit;

 

(b)                                 replace anyprior oral or written agreements between the Bank and the Borrower concerningthis credit; and

 

(c)                                  are intended bythe Bank and the Borrower as the final, complete and exclusive statement of theterms agreed to by them.

 

In the event of any conflictbetween this Agreement and any other agreements required by this Agreement,this Agreement will prevail.  Anyreference in any related document to a “promissory note” or a “note” executedby the Borrower and dated as of the date of this Agreement shall be deemed torefer to this Agreement, as now in effect or as hereafter amended, renewed, orrestated.

 

## 9.10                           Indemnification.  The Borrower will indemnify and hold the Bankharmless from any loss, liability, damages, judgments, and costs of any kindrelating to or arising directly or indirectly out of (a) this Agreement orany document required hereunder, (b) any credit extended or committed bythe Bank to the Borrower hereunder, and (c) any litigation or proceedingrelated to or arising out of this Agreement, any such document, or any suchcredit.  This indemnity includes but isnot limited to attorneys’ fees (including the allocated cost of in-housecounsel).  This indemnity extends to theBank, its parent, subsidiaries and all of their directors, officers, employees,agents, successors, attorneys, and assigns. This 

 

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##  

## indemnity will surviverepayment of the Borrower’s obligations to the Bank.  All sums due to the Bank hereunder shall beobligations of the Borrower, due and payable immediately without demand.

##  

## 9.11                           Notices.  Unless otherwise provided in this Agreementor in another agreement between the Bank and the Borrower, all notices requiredunder this Agreement shall be personally delivered or sent by first class mail,postage prepaid, or by overnight courier, to the addresses on the signature page ofthis Agreement, or sent by facsimile to the fax numbers listed on the signaturepage, or to such other addresses as the Bank and the Obligors may specify fromtime to time in writing.  Notices andother communications shall be effective (i) if mailed, upon the earlier ofreceipt or five (5) days after deposit in the U.S. mail, first class,postage prepaid, (ii) if telecopied, when transmitted, or (iii) ifhand-delivered, by courier or otherwise, when delivered.

##  

## 9.12                           Headings.  Article and paragraph headings are forreference only and shall not affect the interpretation or meaning of anyprovisions of this Agreement.

##  

## 9.13                           Counterparts.  This Agreement may be executed in as manycounterparts as necessary or convenient, and by the different parties onseparate counterparts each of which, when so executed, shall be deemed anoriginal but all such counterparts shall constitute but one and the sameagreement.

##  

## 9.14                           ObligorInformation; Reporting to Credit Bureaus.** **The Obligors authorizethe Bank at any time to verify or check any information given by any Obligor tothe Bank, check the Obligors’ credit references, verify employment, and obtaincredit reports.  The Borrower agrees thatthe Bank shall have the right at all times to disclose and report to creditreporting agencies and credit rating agencies such information pertaining tothe Borrower and/or all guarantors as is consistent with the Bank’s policiesand practices from time to time in effect.

##  

## 9.15                           Limitation ofInterest and Other Charges.  If, at any time, the rate of interest,together with all amounts which constitute interest and which are reserved,charged or taken by the Bank as compensation for fees, services or expensesincidental to the making, negotiating or collection of the Loan evidencedhereby, shall be deemed by any competent court of law, governmental agency ortribunal to exceed the maximum rate of interest permitted to be charged by theBank to the Borrower under applicable law, then, during such time as such rateof interest would be deemed excessive, that portion of each sum paidattributable to that portion of such interest rate that exceeds the maximumrate of interest so permitted shall be deemed a voluntary prepayment ofprincipal.  As used herein, the term “applicablelaw” shall mean the law in effect as of the date hereof; provided, however,that in the event there is a change in the law which results in a higherpermissible rate of interest, then this Agreement shall be governed by such newlaw as of its effective date.

##  

# **Section 10.  Defined Terms. **Inaddition to terms defined elsewhere in this Agreement, as used herein, thefollowing terms have the respective meanings set forth in this Section 10.  Any defined term used in the plural precededby the definite article shall be taken to encompass all members of the relevantclass. Any defined term used in the singular preceded by “any” shall be takento indicate any number of the members of the relevant class.  All calculations contemplated by financialterms used with respect to the Borrower and its Subsidiaries shall be made on aconsolidated basis, in accordance with GAAP and any other financial definitionsnot otherwise defined herein shall have the meanings given to them under GAAP.

# ** **

## “**Affiliate**”Any Person which, directly or indirectly, controls or is controlled by or isunder common control with the Borrower; any officer or director of theBorrower; any Person owning of record or beneficially, directly or indirectly,5% or more of any class of capital stock of the Borrower or 5% or more of anyclass of capital stock or other equity interest having voting power (underordinary 

 

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##  

## circumstances) of any of the other Personsdescribed above; and any member of the immediate family of any of theforegoing.

##  

## “**BankCertificate**” A certificate signed by an officer of the Bank settingforth any additional amount required to be paid by the Borrower to the Bankpursuant to §3.3 of this Agreement, which certificate shall be submitted by theBank to the Borrower in connection with each demand made at any time by theBank upon the Borrower with respect to any such additional amount, and eachsuch certificate shall, save for manifest error, constitute preemptive evidenceof claim by the Bank for all or any part of any additional amount required tobe paid by the Borrower may be made before and/or after the end of the periodto which such claim relates or during which such claim has arisen and beforeand/or after any payment hereunder to which such claim relates.  Each Bank Certificate shall set forth inreasonable detail the basis for and the calculation of the claim to which itrelates.

##  

## “**CapitalExpenditures**”  As to anyPerson for any period, the sum of all amounts which would, in accordance withGAAP, be included as additions to property, plant and equipment and otherCapital Expenditures for such period, including, without limitation, amountswith respect to capitalized leases.

##  

## “**CapitalLease Obligations**”   As to anyperson, the obligations of such Person or any of its Subsidiaries to pay rentor other amounts under any lease of (or other arrangement conveying the rightto use) real or personal property, or a combination thereof; to the extent suchobligations are required to be classified and accounted for as a capital leaseon a balance sheet of such Person under GAAP. For purposes of this Agreement, the amount of such obligations at any timeshall be the capitalized amount thereof at such time determined in accordancewith GAAP.

##  

## “**CERCLA**”The Comprehensive Environmental Response, Compensation and Liability Act of1980, 42, U.S.C. Section 9601 etseq., as amended by theSuperfund Amendments and Reauthorization Act of 1986, Pub. L. No. 99-499,100 Stat. 1613.

##  

## “**DebtService**”  For any period, theaggregate amount of principal and interest and fees paid or required to be paidduring such period in respect of all indebtedness for borrowed money of theBorrower and its Subsidiaries.

##  

## “**Default**”  Any event or circumstance which, with thepassage of time or the giving of notice or both, could become an Event ofDefault.

##  

## “**EarningsBefore Interest and Taxes**” For any period, Net Income for such period *plus* taxes in respect of income and profits paid oraccrued by the Borrower and its Subsidiaries during such period and InterestExpense to the extent deducted in calculating Net Income for such period.

##  

## “**EquityInterests**”  Any and allshares, interests, participations or other equivalents (however designated) ofcapital stock, partnership interests, member interests and any and allequivalent ownership interests in a Person and any and all warrants, rights oroptions to purchase any of the foregoing, other than equity interests orwarrants, right or options issued in connection with the exercise by a presentor former employee, officer or director under a stock incentive plan, stockoption plan or other equity-based compensation plan or arrangement.

##  

## “**ERISA**”  The Employee Retirement Income Security Actof 1974, as amended.

##  

## “**GAAP**”  generallyaccepted accounting principles in the United States as in effect from time totime consistently applied.

 

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##  

## “**Guarantors**”  collectively, C.I.M Industries, Inc., aNew Hampshire corporation, RWA, Inc., a Massachusetts corporation, andCapital Services of New York, Inc., a New York corporation, each of whichindividually may be called a Guarantor.

##  

## “**Indebtedness**”  Allobligations of a Person, whether current or long-term, senior or subordinated,which in accordance with GAAP would be included as liabilities upon such Person’sbalance sheet at the date as of which indebtedness, is to be determined, andshall also include guaranties, endorsements (other than for collection in theordinary course of business) or other arrangements whereby responsibility isassumed for the obligations of others, whether by agreement to purchase orotherwise acquire the obligations of others, including any agreement,contingent or otherwise, to furnish funds through the purchase of goods,supplies or services for the purpose of payment of the obligations of others.

##  

## “**InterestExpense**”  For any period, theaggregate amount of interest paid or required to be paid during such period inrespect of all indebtedness of the Borrower and its Subsidiaries (includingimputed interest on Capital Lease Obligations) and amortized debt discount forsuch period.

##  

## “**LoanDocuments**”  Each of thisAgreement, the Note, the Guarantees and each other instrument, document oragreement evidencing, securing, guaranteeing or relating in any way to theLoan, all whether now existing or hereafter arising or entered into.

##  

## “**Material Adverse Effect**” A material adverse effect on (a) the business, property, operationsor condition (financial or otherwise) of the Borrower and its Subsidiaries,taken as a whole, (b) the ability of Borrower or any Guarantor to performits obligations under the Loan Documents to which it is a party, or (c) thevalidity or enforceability of this Agreement, the Note, the Guarantees, or,taken as a whole, the other Loan Documents, or the rights or remedies of theBank under this Agreement, or, taken as whole, the other Loan Documents.

##  

## “**Net Income**”(or “**Net Loss**”)** **Thebook net income (or book net loss, as the case may be) of a Person for anyperiod, after all taxes actually paid or accrued and all expenses and othercharges determined in accordance with generally accepted accounting principlesconsistently applied.

##  

## “**Obligors**”  Collectively, the Borrower and allGuarantors.

##  

## “**Obligations**”  All indebtedness, covenants, agreements,liabilities and obligations, now existing or hereafter arising, made by theBorrower with or for the benefit of the Bank or owed by the Borrower to theBank in any capacity.

##  

## “**OperatingCash Flow**”  For any period,Earnings Before Interest and Taxes *plus*depreciation and amortization for such period, *minus* unfinanced Capital Expenditures, dividends anddeferred compensation paid or incurred during such period, and *minus* any cash taxes paid.

##  

## “**PBGC**”  The Pension Benefit Guaranty Corporation orany successor thereto.

##  

## “**Person**”  An individual, corporation, partnership,limited partnership, limited liability company, joint venture, trust orunincorporated organization, or a government or any agency or politicalsubdivision thereof.

##  

## “**Subsidiary**”  Any corporation or other entity of which aPerson and/or any of its Subsidiaries directly or indirectly, owns, or has theright to control or direct the voting of fifty (50%) percent or more of theoutstanding capital stock or other ownership interest having general votingpower (under ordinary circumstances).

 

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##  

## “**SyntheticLeases**”  Means any syntheticlease, tax retention operating lease, off-balance sheet loan or similaroff-balance sheet financing product where such transaction is consideredborrowed money Indebtedness for tax purposes but is classified as an operatinglease under GAAP.

##  

## “**TangibleNet Worth**”  At the applicabledate, the total assets of the Borrower and its Subsidiaries *minus* (a) the sum of any amountsattributable to (i) goodwill, (ii) intangible items such asunamortized debt discount and expense, patents, trade and service marks andnames, copyrights and research and development expenses except prepaidexpenses, (iii) all reserves not already deducted from assets, (iv) anywrite-up in the book value of assets resulting from any revaluation thereofsubsequent to the date hereof, and (v) the value of any minority interestsin any companies, and (b) Total Liabilities of the Borrower and itsSubsidiaries.

##  

## “**TotalLiabilities**”  The aggregateamount of liability of a Person determined in accordance with GAAP.

 

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TheBorrower executed this Agreement as of the date stated at the top of the firstpage, intending to create an instrument executed under seal.

 

 
| CHASE CORPORATION |
|-------------------|
|              |
|              |
| By                | /s/ Kenneth L. Dumas |   |
|              | Kenneth L. Dumas, Chief  Financial Officer |

 

Address where notices to

the Borrower are to be sent:

 
| 26 Summer Street     |
|----------------------|
| Bridgewater MA 02324 |
| Attn:                |
| Telephone:           | 508-279-1789 |   |
| Facsimile:           | 508-697-6419 |   |

 

 
|   |   | RBS CITIZENS, NATIONAL  ASSOCIATION           |
|--------|--------|-----------------------------------------------|
|   |   |                                          |
|   |   |                                          |
|   |   | By                                            |   |
|   |   | Typed Name                                    | William Lingard |
|   |   | Title                                         | Senior Vice President |
|   |   |                                          |
|   |   | Address where notices to                      |
|   |   | the Bank are to be sent:                      |
|   |   | 28 State Street                               |
|   |   | Boston, MA 02109                              |
|   |   | Attn: William Lingard,  Senior Vice President |
|   |   | Facsimile: 617-723-9371                       |

 

 

***Federal law requires the “Bank” to providethe following notice. The notice is not part of the foregoing agreement orinstrument and may not be altered. Please read the notice carefully.***

 

**USA PATRIOTACT NOTICE**

 

Federal law requires allfinancial institutions to obtain, verify and record information that identifieseach person who opens an account or obtains a loan.  The Bank will ask for the Borrower’s legalname, address, tax ID number or social security number and other identifyinginformation.  The Bank may also ask foradditional information or documentation or take other actions reasonably necessaryto verify the identity of the Borrower, guarantors or other related persons.

 

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**DISCLOSURE SCHEDULE**

 

None.

 

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