**Exhibit10.1**

 

**DATED 18 DECEMBER 2009**

** **

** **

**(1)  GRACE CONSTRUCTION PRODUCTS LIMITED**

** **

**(2)  CHASE PROTECTIVE COATINGS LIMITED**

** **

**(3)  DAREX UK LIMITED**

** **

**(4)     CHASE CORPORATION**

** **

** **

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** **

**Asset Purchase Agreement**

** **

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** **

** **

**Mundays LLP**

**Cedar House**

**78 Portsmouth Road**

**Cobham**

**Surrey KT11 1AN**

** **

**Tel: +44 (0) 1932 590500**

**Fax: +44 (0) 1932 590220**

** **

**Ref:PW01/8875/27/1654690**

** **

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| 1.         | Interpretation                                              | 2      |
|------------|-------------------------------------------------------------|--------|
| 2.         | Agreement  to Sell and Purchase                             | 18     |
| 3.         | Purchase  Price and Payment                                 | 20     |
| 4.         | Set Off                                                     | 21     |
| 5.         | Completion                                                  | 21     |
| 6.         | Warranties                                                  | 21     |
| 7.         | Limitations  on Claims                                      | 22     |
| 8.         | Risk and  Insurance                                         | 23     |
| 9.         | Apportionments  and Prepayments                             | 23     |
| 10.        | Liabilities  of the Seller and the Buyer                    | 24     |
| 11.        | VAT                                                         | 25     |
| 12.        | Indemnities                                                 | 26     |
| 13.        | The  Employees                                              | 26     |
| 14.        | The  Business Contracts                                     | 30     |
| 15.        | Future  Trading and Trade Enquiries                         | 33     |
| 16.        | Book  Debts                                                 | 34     |
| 17.        | Data  Protection                                            | 35     |
| 18.        | Restrictive  Covenants                                      | 35     |
| 19.        | Confidentiality  and Announcements                          | 37     |
| 20.        | Conduct  of Indemnity Claims                                | 39     |
| 21.        | Guarantees                                                  | 41     |
| 22.        | Further  Assurance                                          | 42     |
| 23.        | Assignment                                                  | 42     |
| 24.        | Whole  Agreement                                            | 42     |
| 25.        | Variation  and Waiver                                       | 42     |
| 26.        | Costs                                                       | 43     |
| 27.        | Notice                                                      | 43     |
| 28.        | Severance                                                   | 45     |
| 29.        | Agreement  Survives Completion                              | 45     |
| 30.        | Third  Party Rights                                         | 45     |
| 31.        | Successors                                                  | 45     |
| 32.        | Counterparts                                                | 45     |
| 33.        | Language                                                    | 45     |
| 34.        | Governing  Law and Jurisdiction                             | 46     |
| Schedule 1 |                                                        |
|       | Completion Amount Apportionments  Schedule                  |   |
| Schedule 2 |                                                        |
|       | Completion                                                  |   |
|       | Part 1 - Completion  Obligations                       |   |
|       | Part 2 - Actions and  Obligations after Completion     |   |
| Schedule 3 |                                                        |
|       | The Business Contracts                                      |   |
| Schedule 4 |                                                        |
|       | Part 1 The  Transferring Employee — Brian Ramsden |   |
|       | Part 2 The Retiring  Employee                          |   |
|       | Part 3 The Toll  Employees                             |   |
| Schedule 5 |                                                        |
|       | Fixed and Moveable Assets                                   |   |
| Schedule 6 |                                                        |
|       | The Business Intellectual  Property Rights                  |   |

 

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|                     | Part 1 — The  Registered Intellectual Property Rights   |   |
|--------------------------|-------------------------------------------------------------------|--------|
|                     | Part 2 — The  Unregistered Intellectual Property Rights |   |
|                     | Part 3 — The Shared  IPR’s                         |   |
| Schedule 7               |                                                              |
|                     | Warranties                                                        |   |
|                     | Part 2 - Intellectual  Property                              |   |
|                     | Part 3 — Pensions                                       |   |
| Schedule 8               |                                                              |
|                     | Seller’s Limitations and  Liability and Conduct of Claims    |   |
| Schedule 9               |                                                              |
|                     | Form of Fair  Processing Notice                              |   |
| Schedule 10              |                                                              |
|                     | Guarantee Provisions                                              |   |
| Schedule 11              | 86                                                                |
|                     | Earn Out Payments                                                 | 86     |
| Schedule 1The VAT Letter |                                                              |

 

[Certain schedules to the agreement are omitted from this exhibit ascontemplated by Item 601(b)(2) of Regulation S-K. The registrant will furnishsupplementally to the Commission, upon request, a copy of any omittedschedule.]

 

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** **

**DATED:**  18December 2009

** **

**PARTIES**

** **

1.                                                **GRACECONSTRUCTION PRODUCTS LIMITED**incorporated and registered in England and Wales withcompany number 00614807 whose registered office is at 635 Ajax Avenue, Slough,Berkshire SL1 4BM (“Seller”);

 

2.                                                **CHASEPROTECTIVE COATINGS LIMITED**incorporated and registered in England and Wales withcompany number 06329116 whose registered office is at Harbour Road, Rye, EastSussex TN31 7TE (“Buyer”); and

 

3.                                                **DAREX UK LIMITED** incorporated and registeredin England and Wales with company number 03445732 whose registered office is at635 Ajax Avenue, Slough, Berkshire SL1 4BM (“Darex”); and

 

4.                                                **CHASECORPORATION**incorporated and registered in Massachusetts, United States of Americawith its principal address at 26 Summer Street, Bridgewater, Massachusetts02324,****United States of America (“Chase Corp.”).

 

**RECITAL**

 

A.                                            TheSeller has agreed to sell and transfer, and the Buyer has agreed to purchase,the Business (together with the Assets) on and subject to the terms andconditions of this agreement.

 

B.                                              Inconsideration of the Buyer (and the relevant Buyer’s Group companies) agreeingto enter into this agreement and the other documents referred to in thisagreement, Darex has agreed to enter into this agreement and give the guaranteeprovided in clause 20.1 and Schedule 10.

 

C.                                              Inconsideration of the Seller (and the relevant Seller Group companies) agreeingto enter into this agreement and the other documents referred to in thisagreement, Chase Corp. has agreed to enter into this agreement and give theguarantee provided in clause 20.2 and Schedule 10.

 

1

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** **

**OPERATIVE PROVISIONS**

** **

**1.**                                      Interpretation

** **

1.1                                 The definitions and rules ofinterpretation in clause 1 apply in this agreement.

 
| **Accounts**            | the  unaudited schedule of fixed assets used in the Business as listed in Schedule  5 and the unaudited profit and loss account of the Business for the financial  year ended on the Accounts Date and the unaudited profit and loss account for  the Business for the period thereafter to 31 August 2009 as contained in  Data Room Document 20.22 ; |
|-------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **              |                                                                                                                                                                                                                                                                                                                                                        |
| **Accounts Date**       | 31 December 2008;                                                                                                                                                                                                                                                                                                                                      |
| ** **              |                                                                                                                                                                                                                                                                                                                                                        |
| **Agency Contracts**    | the  agreements and arrangements with agents and distributors entered into on or  prior to the Effective Time by or on behalf of the Seller in connection with,  and in the ordinary course of, the Business, being the contracts which are  set out in Part 2 of Schedule 3;                                                                          |
| ** **              |                                                                                                                                                                                                                                                                                                                                                        |
| **Agency Warranties**   | the warranties set out in paragraph 7 (but only so far as they relate  to the Agents and the Agency Contracts) and paragraph 10 of Part 1 of  Schedule 7;                                                                                                                                                                                              |
| ** **              |                                                                                                                                                                                                                                                                                                                                                        |
| **Agents**              | those agents and distributors who are parties to the Agency  Contracts;                                                                                                                                                                                                                                                                                     |
| ** **              |                                                                                                                                                                                                                                                                                                                                                        |
| **Assets**              | the  property, rights and assets owned by the Seller and agreed to be sold  pursuant to clause 2.1;                                                                                                                                                                                                                                                         |
| ** **              |                                                                                                                                                                                                                                                                                                                                                        |
| **Assumed Liabilities** | the  obligations of the Seller at and following the Effective Time in relation to  the Business Contracts (but excluding the Excluded Contract Liabilities);                                                                                                                                                                                                |
| ** **              |                                                                                                                                                                                                                                                                                                                                                        |
| **Book Debts**          | all trade  and other debts and amounts owing to the Seller at the Effective Time in  respect of goods or                                                                                                                                                                                                                                                    |

 

2

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| ** **               | services  supplied by the Seller in the course of carrying on the Business prior to the  Effective Time (whether or not invoiced);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|--------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **Bonus**                | means the  management bonus payable to the Transferring Employee in accordance with the  terms set out in a letter to the Transferring Employee from the Seller dated  11 May 2009;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| ** **               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **Business**             | means:

(i)                                     the Pipewrap Business; and

 

(ii)                                  the Tapes Business

or any part  of them;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| ** **               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **Business Contracts**   | the Customer  Contracts and the Agency Contracts;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
| ** **               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **Business Day**         | a day (other  than a Saturday, Sunday or public holiday) when banks in London are open for  business;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| ** **               |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
| **Business Information** | all  information (whether or not confidential and in whatever form held) owned by  the Seller which relates wholly or mainly to:

(a)                        to any part of  the Business and Assets; or

(b)                       any products manufactured  or sold or services rendered by the Business in the 36 months prior to the  date of this agreement; or

(c)                        any  documentation, reports, formulae, designs, specifications, drawings, data,  manuals or instructions relating to (a) or (b); or

(d)                       the operations,  management, administration or financial affairs of the Business (including  any business plans or forecasts or information relating to future business  development); or

(e)                       the  sale or marketing of any of the products |

 

3

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| ** **                                 | manufactured or sold or services rendered by the Business in the 36  months prior to the date of this agreement, including all customer and  supplier names and lists, sales and marketing information (including targets,  sales and market share statistics, market surveys and reports on research)  product and marketing literature and catalogues; or

(f)                         the Customers or the  Employees; |
|--------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| **Business Intellectual  Property Rights** | all the  Intellectual Property Rights owned, used or held for use by the Seller or any  member of the Seller Group in, or in connection with, the Business (being all  those rights set out in Parts 1, 2 and 3 of Schedule 6);                                                                                                                                                                                                                                                                                                                   |
| ** **                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| **Business Names**                         | ServiWrap  and Servishield or any name including those words or any colourable imitation  of them but not including the Servicised Mark or any other Seller Mark;                                                                                                                                                                                                                                                                                                                                                                                 |
| ** **                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| **Buyer Group**                            | the Buyer,  its holding company or any holding company of any such holding company and  all companies and undertakings which are now or in the future become a  Subsidiary or subsidiary undertaking of the Buyer or any such holding  company;                                                                                                                                                                                                                                                                                                   |
| ** **                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| **Buyer’s Solicitors**                | Mundays LLP  of Cedar House, 78 Portsmouth Road, Cobham, Surrey KT11 1AN;                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
| ** **                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| **Claim**                                  | a claim  under the Warranties and a Claim is **connected**with  another Claim or Substantiated Claim if they arise out of the occurrence of  the same event or relate to the same subject matter;                                                                                                                                                                                                                                                                                                                                                 |
| ** **                                 |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
| **Companies Act**                          | the  Companies Act 2006;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

 

4

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| **Completion**           | the  completion of the sale and purchase of the Business and the Assets in  accordance with this agreement;                                                                                                                                                                                                                                                              |
|--------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **               |                                                                                                                                                                                                                                                                                                                                                                     |
| **Completion Amount**    | the sum of  £5,983,000 exclusive of any VAT that may be applicable (if any), being the  initial consideration for the Business and the Assets to be paid by the Buyer  to the Seller in accordance with clause 3.2;                                                                                                                                                 |
| ** **               |                                                                                                                                                                                                                                                                                                                                                                     |
| **Completion Date**      | the close of  business on the date on which Completion takes place pursuant to clause 5;                                                                                                                                                                                                                                                                                 |
| ** **               |                                                                                                                                                                                                                                                                                                                                                                     |
| **Compromise Agreement** | the  compromise agreement in the agreed form between the Seller and the Buyer and  the Retiring Employee to be delivered to the Buyer pursuant to paragraph 1(l) of  Part 1 of Schedule 2 ;                                                                                                                                                                    |
| ** **               |                                                                                                                                                                                                                                                                                                                                                                     |
| **Connected**            | has the  meaning given in section 839 of the Income and Corporation Taxes Act 1988;                                                                                                                                                                                                                                                                                      |
| ** **               |                                                                                                                                                                                                                                                                                                                                                                     |
| **Creditors**            | all trade  debts and accrued charges owing by the Seller to the trade creditors of the  Seller in the ordinary course of the Business;                                                                                                                                                                                                                                   |
| ** **               |                                                                                                                                                                                                                                                                                                                                                                     |
| **Customer Cash**        | all cash  sums belonging or referable to Customers, or potential customers, of the  Business which are held by or deposited with the Seller as deposits for, or  advance or instalment payments in relation to, any Customer Contract, or so  held or deposited in relation to any contract or order which any such  customer may place with the Business in the future; |
| ** **               |                                                                                                                                                                                                                                                                                                                                                                     |
| **Customer Contracts**   | all  contracts, engagements or orders entered into on or prior to the Effective  Time by or on behalf of the Seller with Customers for the manufacture and  sale of goods or provision of services by the Seller in connection with, and  in the ordinary course of, the                                                                                                 |

 

5

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| ** **            | Business  which, at the Effective Time, remain to be performed in whole or in part by  the Seller, being all the contracts which are set out in Part 1 of  Schedule 3;                                                                                                                                                                                                                                                                    |
|-----------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **            |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **Customer Data**     | the Customer  **personal data** (as defined in the DPA  1998) which form part of the Customer Database;                                                                                                                                                                                                                                                                                                                                        |
| ** **            |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **Customer Database** | the database  owned by the Seller for the exclusive purpose of providing products and/or  services to Customers;                                                                                                                                                                                                                                                                                                                               |
| ** **            |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **Customers**         | the  customers and former customers of the Business;                                                                                                                                                                                                                                                                                                                                                                                           |
| ** **            |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **Data Controller**   | as defined  in section 1 of the DPA 1998;                                                                                                                                                                                                                                                                                                                                                                                                      |
| ** **            |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **Data Employees**    | the Seller’s  Employees and former Employees;                                                                                                                                                                                                                                                                                                                                                                                             |
| ** **            |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **Data Room**         | the  information posted online at https://datasite.merrillcorp.com by Merrill  Corporation on behalf of the Seller entitled Surf 2009 as at 15 December 2009  which information shall be copied onto agreed form CDs exchanged between the  parties at or shortly after Completion and reference to a numbered **Data Room Document** shall be the document indexed with  that number in the Data Room as set forth on such CD; |
| ** **            |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **Demand**            | any action,  award, claim or other legal recourse, complaint, cost, debt, demand, expense,  fine, liability, loss, outgoing, penalty or proceeding;                                                                                                                                                                                                                                                                                            |
| ** **            |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **Disclosed**         | fully and  fairly disclosed (with sufficient explanation and detail to identify the  nature and scope of the matters disclosed) in or under the Disclosure Letter;                                                                                                                                                                                                                                                                             |

 

6

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| **Disclosure Letter**   | a letter  from the Seller to the Buyer with the same date as this agreement together  with the bundle of documents attached to it (Disclosure Bundle), each in the  agreed form;                                                                                                                                                                                                                                             |
|-------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **              |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **DPA 1998**            | the Data  Protection Act 1998;                                                                                                                                                                                                                                                                                                                                                                                               |
| ** **              |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **Earn Out Payment(s)** | the earn out  payments provided for under clause 3.4 (if any);                                                                                                                                                                                                                                                                                                                                                               |
| ** **              |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **Effective Time**      | Close of  business on the Completion Date;                                                                                                                                                                                                                                                                                                                                                                                   |
| ** **              |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **Employee Data**       | the **personal data** (as defined in the DPA 1998) of the  Transferring Employees which form part of the Employee Database;                                                                                                                                                                                                                                                                                                  |
| ** **              |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **Employee Database**   | the database  owned by the Seller in connection with the Transferring Employee;                                                                                                                                                                                                                                                                                                                                              |
| ** **              |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **Employees**           | any or all  of the Transferring Employee, the Retiring Employee and the Toll Employees;                                                                                                                                                                                                                                                                                                                                      |
| ** **              |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **Encumbrance**         | any  mortgage, charge (fixed or floating), pledge, lien, hypothecation, guarantee,  trust, right of set-off or other third party right or interest (legal or  equitable) including any assignment by way of security, reservation of title  or other security interest of any kind, howsoever created or arising, or any  other agreement or arrangement (including a sale and repurchase agreement)  having similar effect; |
| ** **              |                                                                                                                                                                                                                                                                                                                                                                                                                         |
| **Environmental Laws**  | all  applicable laws, statutes, regulations, secondary legislation, bye-laws,  common law, directives, treaties and other measures, judgments and decisions  of any court or tribunal, codes of practice and guidance notes which are  legally binding and in force as at the date of this agreement in so far as  they relate to or apply to the environment, including Part IIA of the                                |

 

7

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| ** **                         | Environmental  Protection Act 1990 and any regulations and guidance made or issued  thereunder;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
|------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **Environmental Loss**             | any and all losses, damages, liabilities, claims, costs and expenses  which arise directly from any Soil or Groundwater Contamination or under  Environmental Laws (excluding any losses, damages, liabilities, claims, costs  and expenses which relate to any interruption or disruption to the business  carried on by the Buyer or the Buyer’s Group or any other losses incidental  or consequential to Soil or Groundwater Contamination or under applicable  Environmental Laws);                                                                                                                                                                                                                                                                                                                 |
| ** **                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **Escrow Account**                 | as defined in the Escrow Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| ** **                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **Escrow Agreement**               | the escrow account agreement between the Seller and the Buyer to be  entered into on Completion in the agreed form;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| ** **                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **Excluded Assets**                | the assets  used in the Business set out in clause 2.2 as being excluded from the sale  pursuant to this agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| ** **                         |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **Excluded Contract  Liabilities** | all  liabilities of the Seller relating to or arising in connection with:

(a)                        any breach of a  Customer Contract which is attributable to any act, neglect, omission or  default of any member of the Seller Group before Completion; or

(b)                       any product delivered by  any member of the Seller Group or any service performed by any member of the  Seller Group before Completion other than the supply of any products pursuant  to the Toll Manufacturing Agreement the liability for which shall be upon and  subject to |

 

8

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| ** **                     | the terms of the Toll Manufacturing  Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|--------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Excluded Liabilities**       | the Excluded  Contract Liabilities, the Leasing and Hire Agreements, Supplier Contracts and  all the liabilities or obligations relating to the Business or Assets (other  than the Assumed Liabilities) and outstanding on, or accrued or referable to  the period up to and including, the Effective Time or arising by virtue of  the sale and purchase recorded by this agreement, including any and all  liabilities in respect of National Insurance, PAYE, VAT or other Taxation attributable  to the Seller in respect of the Business, the Assets or the Employees  relating to the period ending on the Effective Time and all bank and other  overdrafts and loans owing by the Seller; |
| ** **                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Facility**                   | the Seller’s  production facility at 635 Ajax Avenue, Slough, Berkshire SL1 4BH UK;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| ** **                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Fixed and Moveable  Assets** | all those  items listed in part a of Schedule 5;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| ** **                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Goodwill**                   | the  goodwill, custom and connection of the Seller in relation to the Business,  together with the exclusive right for the Buyer and its successors and  assigns to carry on the Business under the Business Names and to represent  themselves as now carrying on the Business from Completion and for a period  of 12 months from Completion as carrying on the Business in succession to the  Seller in the manner provided under the IP Agreement;                                                                                                                                                                                                                                             |
| ** **                     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| **Group**                      | the company  in question, its holding company or any holding company of any such holding  company and all companies and undertakings which now or in the future become  a Subsidiary or subsidiary undertaking of the company in question or of any  such holding                                                                                                                                                                                                                                                                                                                                                                                                                                  |

 

9

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| ** **                        | company;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|-----------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **Indemnity Claim**               | any claim  which may be made under the provisions of this agreement or any of the  documents entered into pursuant to this agreement pursuant to which one party  (the “Indemnifier”) is to indemnify another party (the “Indemnified Party”)  in any respect;                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| ** **                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **Intellectual Property  Rights** | patents,  rights to inventions, copyright and related rights, moral rights, trade marks  and service marks, trade names and domain names, rights in get-up, rights in  goodwill or to sue for passing off or unfair competition, rights in designs,  rights in computer software, database rights and rights in confidential  information (including know-how and trade secrets) and any other intellectual  property rights in each case whether registered or unregistered and including  all applications (or rights to apply) for, and renewals or extensions of,  such rights and all similar or equivalent rights or forms of protection which  now subsist or which may in the future subsist in any part of the world; |
| ** **                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **IP Agreement**                  | the  Intellectual Property Agreement to be entered into between the Seller and the  Buyer at Completion in the agreed form;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
| ** **                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **IT System**                     | all computer  hardware (including network and telecommunications equipment) and software  (including associated preparatory materials, user manuals and other related  documentation) owned, used, leased or licensed by the Seller (whether or not  used in the Business);                                                                                                                                                                                                                                                                                                                                                                                                                                                    |

 

10

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| **Know How**                     | all  confidential or proprietary industrial and commercial information, know how  and techniques in any form including without limitation drawings,  specifications, test results, reports and those set out in any procedures  owned by the Seller or utilised in any processes methodologies or other  actions operated by the Seller and which relate to the Business and the  Assets;                                                                                     |
|----------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **Leasing and Hire  Agreements** | all those  contracts, engagements or orders entered into on or before the Effective Time  in relation to the leasing, lease purchase or hire of goods or equipment for  use in, and in the ordinary course of, the Business which at the Effective  Time remain to be performed in whole or in part, which have been entered into  by or for the benefit of the Seller, or the benefits of which are held in  trust for or have been assigned or subcontracted to the Seller; |
| ** **                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **Pipewrap**                     | means  self-adhesive products consisting of a carrier film treated with rubberised  asphalt adhesive with a release liner, moulding putty and primers that, in  each case, are exclusively for the application to metal pipelines, metal  pipeline fittings and marine pilings to protect from corrosion;                                                                                                                                                                     |
| ** **                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **Pipewrap Business**            | the  manufacture and sale of Pipewrap as conducted by the Seller at and from the  Facility during the 12 months prior to the Completion Date;                                                                                                                                                                                                                                                                                                                                 |
| ** **                       |                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| **Purchase Price**               | the total  purchase price exclusive of any VAT that may be applicable (if any) to be  paid for the Business and Assets by the Buyer consisting of the Completion  Amount and, if any become due and payable, the Earn Out Payments;                                                                                                                                                                                                                                           |

 

11

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| **Private Label Customer**                        | the company  that entered into the agreement with the Seller disclosed as Data Room  Document 4.2 and any member if its Group;                                                                                                                                                                                                                                                                                                                                       |
|---------------------------------------------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Redundancy Payment**                            | the amount  payable to each Employee calculated by multiplying two thirds of the  Employee’s gross monthly salary by the Employee’s number of completed years  of service, up to a maximum of 1 year’s gross salary;                                                                                                                                                                                                                                  |
| ** **                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Registered Intellectual  Property Rights**      | the  registered Intellectual Property Rights used in connection with the Business  and Assets details of which are specified in Part 1 of Schedule 6;                                                                                                                                                                                                                                                                                                           |
| ** **                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Registered Intellectual  Property Assignments** | the  assignments of the Registered Intellectual Property Rights from the Seller,  the Seller’s holding company and the Seller’s ultimate holding company to the  Buyer in the agreed form and to be entered into at  Completion;                                                                                                                                                                                                                           |
| ** **                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Retained Business**                             | means any  development and manufacture of Tapes by the Seller at any of its facilities,  other than the Facility and any sale of Tapes by the Seller other than sales  of Tapes directly or knowingly through a third party or parties to the  Private Label Customer for resale by the Private Label Customer to end-users  in Germany, Austria, Slovenia, Switzerland, Denmark, Belgium, Netherlands and  Luxembourg under the Private Label Customer’s name; |
| ** **                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Retiring Employee**                             | the person  whose details are set out in Part 2 of Schedule 4 and who has entered  into the Compromise Agreement;                                                                                                                                                                                                                                                                                                                                               |
| ** **                                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Seller Executives**                             | Messrs. Phillipe  Abecassis, David Goodall, Les Hounslow, Karen Christian, Roger Fieldsend and                                                                                                                                                                                                                                                                                                                                                                  |

 

12

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| ** **                             | Mike A.  James;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|----------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **Seller Group**                       | the Seller,  its holding company or any holding company of any such holding company and  all companies and undertakings which now or in the future become a Subsidiary  or subsidiary undertakings of the Seller or of any such holding company;                                                                                                                                                                                                                                                                                                                                    |
| ** **                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **Seller Marks**                       | the names  “Grace,” “Grace Construction Products,” and any other name that includes the  word “Grace”;                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| ** **                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **Seller’s Scheme**               | the pension  scheme known as the Grace UK Pension Plan, established with effect from 24 August 1948  and which is registered under Chapter 2 of Part 4 of the Finance Act  2004;                                                                                                                                                                                                                                                                                                                                                                                          |
| ** **                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **Seller’s Solicitors**           | Shoosmiths of Apex Plaza, Forbury Road, Reading,  Berkshire RG1 1SH (ref: Emma Gibson);                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| ** **                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **Servicised Mark**                    | the  registered and unregistered trade mark and name known as “Servicised” which  is owned and exclusively held by the Seller;                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| ** **                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **Shared IPR**                         | the Business  Intellectual Property Rights listed in Part 3 of Schedule 6 and which  are the subject of the licence back to the Seller under the IP Agreement;                                                                                                                                                                                                                                                                                                                                                                                                                 |
| ** **                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **Soil or Groundwater  Contamination** | any  contamination:

(a)                            in soil or groundwater at or  under the property at 635, Ajax Avenue, Slough (the “Property”) at  Completion; or

(b)                           any other soil or  groundwater at Completion and resulting from migration from the Property; |
| ** **                             |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| **Stock**                              | the stock-in-trade  of the Business including raw materials, goods and other assets purchased for  resale,                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |

 

13

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| ** **              | stores,  component parts and work-in-progress, together with finished products and  packaging and promotional material, owned or agreed to be bought by the  Seller in connection with the Business at the Effective Time (including any  items which, although subject to reservation of title, are under the control  of the Seller);                                                                                                                                                                                                        |
|-------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **Subsidiary**          | in relation  to a company wherever incorporated (a holding company) means a **subsidiary**as defined in section 1159 of the Companies Act  2006 and any other company which is itself a subsidiary (as so defined) of a  company which is itself a subsidiary of such holding company. Unless the  context otherwise requires, the application of this definition to any company  at any time will apply to the company as it was at that time, and a  subsidiary undertaking shall be construed in accordance with section 1162 of  that Act; |
| ** **              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **Substantiated Claim** | is a Claim  in respect of which liability is admitted by the Seller, or which has been  adjudicated on by a court of competent jurisdiction and no right of appeal  lies in respect of such adjudication or the parties are prevented by passage  of time or otherwise from making an appeal;                                                                                                                                                                                                                                                  |
| ** **              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **Supplier Contracts**  | all  contracts, engagements or orders entered into on or before the Effective Time  by or on behalf of the Seller for the supply or sale of goods or services to  the Seller in connection with and in the ordinary course of the Business,  which at the Effective Time remain to be performed in whole or in part;                                                                                                                                                                                                                           |
| ** **              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| **Tapes**               | means  self-adhesive products consisting of a carrier film including high density,  cross-laminated polyethylene with a paper release liner treated with                                                                                                                                                                                                                                                                                                                                                                                       |

 

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| ** **                        | rubberised  asphalt that are no more than one metre wide and that are used exclusively to  flash joints in walls and windows in residential and commercial structures to  prevent water and air infiltration;                                                                                                                                                                                                                                                                                        |
|-----------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Tapes Business**                | means  the manufacture of Tapes at the Facility and the sale of Tapes from the  Facility exclusively to the Private Label Customer and exclusively for resale  by the Private Label Customer under the Private Label Customer’s name to  end-users in Germany, Austria, Slovenia, Switzerland, Denmark, Belgium,  Netherlands and Luxembourg as conducted by the Seller during the 12 months  prior to the Completion Date and for the avoidance of doubt not including the  Retained Business; |
| ** **                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Taxation or Tax**               | all forms of  taxation and statutory, governmental, state, federal, provincial, local,  government or municipal charges, duties, imposts, contributions, levies,  withholdings or liabilities wherever chargeable and whether of the UK or any  other jurisdiction; and any penalty, fine, surcharge, interest, charges or  costs relating thereto;                                                                                                                                                  |
| ** **                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Tax Warranties**                | the  warranties set out in Part 4 of Schedule 7;                                                                                                                                                                                                                                                                                                                                                                                                                                                |
| ** **                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Third Party Consent**           | a consent,  licence, approval, authorisation or waiver required from a third party for  the conveyance, transfer, assignment or novation in favour of the Buyer of  any of the Assets in terms acceptable to the Buyer;                                                                                                                                                                                                                                                                              |
| ** **                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Toll Manufacturing  Agreement** | the toll  manufacturing agreement between the Seller and the Buyer to be entered into  on Completion in the agreed form;                                                                                                                                                                                                                                                                                                                                                                             |
| ** **                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| **Toll Employees**                | the persons  who will continue to be employed by the                                                                                                                                                                                                                                                                                                                                                                                                                                                 |

 

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| ** **                                     | Seller to  perform the Toll Manufacturing Agreement being those persons whose names are  set out in Part 3 of Schedule 4);                                                                                                                              |
|------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** **                                     |                                                                                                                                                                                                                                                         |
| **Transaction**                                | the  transaction contemplated by this agreement or any part of that transaction;                                                                                                                                                                             |
| ** **                                     |                                                                                                                                                                                                                                                         |
| **Transferring Employee**                      | the person  whose details are set out in Part 1 of Schedule 4, being the only person  whose employment will transfer to the Buyer pursuant to the sale and purchase  to be effected under this agreement;                                               |
| ** **                                     |                                                                                                                                                                                                                                                         |
| **Transition Obligations  Agreement**          | the  agreement in the agreed form to be entered into between the Seller and the  Buyer at Completion for the provision of certain transitional obligations by  the Seller to the Buyer;                                                                      |
| ** **                                     |                                                                                                                                                                                                                                                         |
| **TUPE**                                       | the Transfer  of Undertakings (Protection of Employment) Regulations 2006;                                                                                                                                                                                   |
| ** **                                     |                                                                                                                                                                                                                                                         |
| **TUPE 1981**                                  | the Transfer  of Undertakings (Protection of Employment) Regulations 1981;                                                                                                                                                                                   |
| ** **                                     |                                                                                                                                                                                                                                                         |
| **Unregistered  Intellectual Property Rights** | the Know How and any other unregistered Intellectual Property Rights  used in connection with the Business and Assets and details of which are  specified in Part 2 of Schedule 6;                                                                      |
| ** **                                     |                                                                                                                                                                                                                                                         |
| **Unused Material**                            | means all inventory, stock, packaging, labels and raw materials that  is unused or unsaleable as at the Completion Date and which is not suitable  for use by the Seller in performing its obligations under the terms of the  Toll Manufacturing Agreement; |
| ** **                                     |                                                                                                                                                                                                                                                         |
| **VAT**                                        | value added  tax chargeable under the VATA 1994 and any similar replacement or additional  tax;                                                                                                                                                              |

 

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| **VAT Records** | all records  referred to in section 49 of VATA 1994; |
|-----------------|------------------------------------------------------|
| ** **      |                                                 |
| **VATA 1994**   | the Value  Added Tax Act 1994;                       |
| ** **      |                                                 |
| **Warranties**  | the  warranties set out in clause 6 and Schedule 7;  |

 

1.2                                 Clause, schedule and paragraphheadings do not affect the interpretation of this agreement.

 

1.3                                 A reference to a clause or aschedule is a reference to a clause of, or schedule to, this agreement. Areference to a paragraph is to a paragraph of the relevant schedule, and areference to an appendix is to the relevant appendix to this agreement.

 

1.4                                 A **person**includes a natural person, corporate or unincorporated body (whether or nothaving separate legal personality).

 

1.5                                 A reference to a **company** shall include any company, corporation or other bodycorporate, wherever and however incorporated.

 

1.6                                 Words in the singular includethe plural and in the plural include the singular.

 

1.7                                 A reference to one genderincludes a reference to the other gender.

 

1.8                                 A reference to a particularstatute, statutory provision or subordinate legislation is a reference to it asit is in force from time to time taking account of any amendment orre-enactment and includes any statute, statutory provision or subordinatelegislation which it amends or re-enacts and subordinate legislation for thetime being in force made under it. Provided that, as between the parties, nosuch amendment or re-enactment shall apply for the purposes of this agreementto the extent that it would impose any new or extended obligation liability orrestriction on, or otherwise adversely affect the rights of, any party.

 

1.9                                 A reference to **writing** or **written**includes faxes but not e-mail.

 

1.10                           Documents in **agreed form** are documents in the form agreed by the partiesto this agreement and initialled by them or on their behalf for identification.

 

1.11                           A reference in this agreementto **other documents referred to in this agreement**is a reference to the following documents:

 

1.11.1                  the IP Agreement;

 

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1.11.2         the Registered Intellectual PropertyAssignments;

 

1.11.3         the Transition Obligations Agreement;

 

1.11.4         the Toll Manufacturing Agreement; and

 

1.11.5         the Disclosure Letter.

 

1.12            Where the words **include(s)**,**including** or **inparticular**are used in this agreement, they are deemed to have thewords “without limitation” following them.

 

1.13            Any obligation in this agreement on aperson not to do something includes an obligation not to agree or allow thatthing to be done.

 

1.14            Where the context permits, **other** and**otherwise** areillustrative and shall not limit the sense of the words preceding them.

 

1.15            References to any English legal terms, forany action, remedy, method of judicial proceeding, legal document, legalstatus, court, official or any other legal concept or thing shall, in respectof any jurisdiction other than England, be deemed to include a reference towhat most nearly approximates to the English legal term in that jurisdiction.

 

1.16            References to times of the day are, unlessthe context requires otherwise, to London time and references to a day are to aperiod of 24 hours running from midnight on the previous day.

 

1.17            Any amount expressed to be in poundssterling shall, to the extent that it requires, in whole or in part, to beexpressed in any other currency in order to give full effect to this agreement,be deemed for that purpose to have been converted into the relevant currencyimmediately before the close of business on the date of this agreement (or, ifthat is not a Business Day, the Business Day immediately before it). Subject toany applicable legal requirements governing conversions into that currency, therate of exchange shall be Royal Bank of Scotland’s spot rate for the purchaseof that currency with sterling at the time of the deemed conversion.

 

**2.**                Agreement to Sell and Purchase

** **

2.1              Unless expressly provided in thisagreement, the Seller shall sell with full title guarantee and the Buyer inreliance on the Warranties and with a view to carrying on the business as 

 

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a going concern, shall purchase free fromall Encumbrances with effect from the Effective Time:

 

2.1.1           the Goodwill;

 

2.1.2           the Fixed and Moveable Assets;

 

2.1.3           the benefit (subject to the provisions ofclause 14) of the Business Contracts;

 

2.1.4           the Business Information;

 

2.1.5           the Business Intellectual Property Rights;

 

2.1.6           all of the Seller’s rights against thirdparties, including rights under any warranties, conditions, guarantees orindemnities or under the Sale of Goods Act 1979, relating to any of the Assetsand the benefit of all sums to which the Seller is entitled from third partiesor insurers in respect of loss or damage to the Assets;

 

2.1.7           the Customer Cash.

 

2.2              The following shall be excluded from thesale under this agreement:

 

2.2.1           the Excluded Liabilities;

 

2.2.2           the Servicised Mark and the Seller’s Marks;

 

2.2.3           the Creditors;

 

2.2.4           the IT System;

 

2.2.5           the lease of the Facility;

 

2.2.6           any right of action to which the Seller maybe entitled (whether in contract, tort or otherwise) other than pursuant to orin connection with any Customer Contracts, or the Business IntellectualProperty Rights;

 

2.2.7           all contracts and arrangements relating tothe Business entered into outside the ordinary course of business;

 

2.2.8           all the Seller’s cash-in-hand or at thebank or at any other financial institution including the Book Debts;

 

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2.2.9           the Stock;

 

2.2.10         any Tax for which the Seller is liable,whether or not then due, and any liability for financing charges relating tothe Business;

 

2.2.11         the Seller’s accounts and accountingrecords which do not relate exclusively to the Business;

 

2.2.12         the benefit of any and all insurance claimsand repayments arising on or before the Effective Time in relation to theBusiness or the Assets;

 

2.2.13         the statutory books and minutes of theSeller;

 

2.2.14         any letter of credit; and

 

2.2.15         the Supplier Contracts.

 

2.3              The sale and purchase of each of the Assetsis interdependent and shall be completed simultaneously.

 

2.4              The Purchase Price shall be apportionedbetween the Assets as shown in Schedule 1.

 

2.5              The Seller agrees that the apportionment ofthe Purchase Price between the Assets in Schedule 1 shall not in any way limitthe Buyer’s remedies or any remedies or any amount recoverable by the Buyer inrespect of the Assets.

 

**3.**                Purchase Price and Payment

** **

3.1              The Purchase Price consists of theCompletion Amount and, if any becomes due and payable, the Earn Out Payments.

 

3.2              The Completion Amount (excluding the VATpayable on the Completion Amount) shall be paid in cash on Completion by theBuyer by electronic transfer to the client account of the Seller’s Solicitorsat Royal Bank of Scotland plc, 62/63 The City, Threadneedle Street, London EC2R8LA, account number 21738452, sort code 15 -10- 00, reference EBG.

 

3.3              The Purchase Price shall be deemed to bereduced by the amount of any payment made to the Buyer for a breach of anyWarranty or under clause 12 (Indemnities) of this Agreement and (withoutprejudice to clause 2.5) the reduction shall be allocated as nearly as possible

 

20

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to the Assets to which the breach orindemnity relates or, if that is not practicable or possible, in such manner asthe Buyer shall decide.

 

3.4              The provisions of Schedule 11 shall applyin relation to the Earn Out Payments, if any.

 

**4.**                Set Off

** **

Neither party shall be entitled to set-off any amountsowed to it (or any member of its Group) by the other party (or any member ofits Group) under this agreement or any other documents referred to in thisagreement against any amounts payable by it to the other party (or any memberof its Group) under this agreement or any other documents referred to in thisagreement or any other agreement or arrangement with the other party (or anymember of its Group).

 

**5.**                Completion

** **

5.1              Completion shall take place on theCompletion Date:

 

5.1.1           at the offices of the Buyer’s Solicitors;or

 

5.1.2           at any other place agreed in writing by theSeller and the Buyer.

 

5.2              At Completion, the Buyer and the Sellershall each comply with their respective obligations set out in Part 1 ofSchedule 2.

 

5.3              Following Completion, the Buyer and theSeller shall each comply with their respective obligations set out in Part 2of Schedule 2.

 

5.4              At and with effect from Completion, theSeller hereby assigns to the Buyer the Unregistered Intellectual PropertyRights.

 

5.5              All information and data held by the Sellerand the Seller’s Group which describes the Know How and any other UnregisteredIntellectual Property Rights will be provided to the Buyer at and immediatelyfollowing Completion.

 

**6.**                Warranties

** **

6.1              The Buyer enters into this agreement on thebasis of and in reliance on, the Warranties.

 

21

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6.2              The Seller warrants to the Buyer that eachWarranty is true, accurate and not misleading except as Disclosed.

 

6.3              The Seller agrees that any informationsupplied by or on behalf of any of the Employees to the Seller or its advisersin connection with the Warranties, the information Disclosed in the DisclosureLetter or otherwise shall not constitute a warranty, representation orguarantee as to the accuracy of such information in favour of the Seller, andthe Seller hereby undertakes to the Buyer that it waives any and all claimswhich it might otherwise have against any of the Employees in respect of suchclaims.

 

6.4              Warranties given so far as the Seller isaware are deemed to be given to the best of the knowledge and belief of theSeller Executives, having made due and careful enquiry of the Seller’s recordsand relevant employees, including without limitation Brian Ramsden.

 

6.5              Each of the Warranties is separate and, unlessexpressly provided to the contrary, is not limited by reference to any otherWarranty or anything in this agreement.

 

6.6              No information of which the Buyer and/orits agents and/or advisers has constructive or imputed knowledge, or whichcould have been discovered (whether by investigation made by the Buyer or madeon its behalf), shall prejudice or prevent any Claim or reduce any amountrecoverable thereunder.

 

**7.**                Limitations on Claims

** **

7.1              The liability of the Seller for Claimsshall be subject to the provisions of Schedule 8 which shall be an aggregateliability with any liability of the Seller under the Toll ManufacturingAgreement.  Any amounts awarded, or which the Seller agrees to pay, in respect ofany liability (whether in contract, tort or otherwise) for any claims arisingunder the Toll Manufacturing Agreement shall be taken into account indetermining whether or not any amount claimed under this Agreement exceeds thelimitation under paragraph 2.2 of Schedule 8.

 

7.2              None of the limitations in Schedule 8 shallapply:

 

7.2.1           to any other claim under this agreement(including without limitation breach of clause 2.1 or a claim under theindemnities set out in clause 12 of this agreement);

 

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7.2.2           to a Claim that arises or is delayed as aresult of fraud or wilful concealment by the Seller, or any member of theSeller Group, or any employee or officer (or former employee or officer), agentor adviser of the Seller or any member of the Seller Group.

 

**8.**                Risk and Insurance

** **

8.1              The Seller has carried on the Business forits own benefit and at its own risk up to the Effective Time. The Assets shallbe at the risk of the Buyer from the Effective Time.

 

8.2              All profits and receipts of the Business(other than profits earned or receivable in respect of work-in-progress), alllosses and, subject to clause 9, all outgoings incurred or payable by theSeller in connection with the Business and referable to the period up to andincluding the Effective Time shall belong to, and be paid and discharged by,the Seller.

 

8.3              All profits and receipts in respect of theBusiness Contracts and, subject to clause 9 and clause 12, all losses andoutgoings incurred or payable by the Seller in connection with the Business Contractsand referable to the period after the Effective Time shall belong to, and bepaid and discharged by, the Buyer.

 

8.4              Nothing in this agreement shall have theeffect of making the Buyer liable in any way under any guarantees or warrantiesgiven by the Seller to any Customer in relation to goods sold or servicesrendered by the Seller prior to the Effective Time, the liability for whichshall remain absolutely with the Seller.

 

**9.**                Apportionments and Prepayments

** **

9.1              The periodical charges and periodicaloutgoings of the Business Contracts or related to the Assets, being thenon-customer rebates, insurance and all liabilities in relation to salaries,wages, entitlement to paid holiday, employee bonus or commission, expenses,National Insurance and pension contributions and liability to Taxation shall beapportioned on a time basis, so that such part of the relevant chargesattributable to the period ending at the Effective Time shall be borne by theSeller and such part of the relevant charges attributable to the periodcommencing on the day immediately following the Effective Time shall be borneby the Buyer.  All licence fees,royalties and other periodical receipts relating to the Business Contracts andthe Assets shall be apportioned between the Seller and the Buyer on a likebasis.

 

23

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9.2              Where any product or service is to beprovided by the Buyer under any Business Contract after the Effective Time, butany payment (whether by way of deposit, prepayment or otherwise) in respect ofthe price or cost of such product or service has been received by the Sellerbefore the Effective Time, the Seller shall pay an amount equal to the amountof that payment (excluding any amount in respect of VAT for which the Seller isrequired to account) to the Buyer and shall hold such sum in trust for theBuyer until it is paid.

 

9.3              All money or other items belonging to theBuyer, which are received by the Seller on or after the Effective Time inconnection with the Business Contracts or any of the Assets, shall be held intrust for the Buyer and shall be paid promptly to the Buyer.

 

9.4              All money or other items belonging to theSeller, which are received by the Buyer on or after the Effective Time inconnection with the Business Contracts or any of the Assets, shall be held intrust for the Seller and shall be paid promptly to the Seller save as providedfor in clause 16.5 of this agreement.

 

9.5              Any sum due between the parties pursuant tothis clause 9 shall be paid in cash within five Business Days of receipt:

 

9.5.1           if to the Seller, in the mannercontemplated by clause 3; and

 

9.5.2           if to the Buyer, to such bank account asthe Buyer may notify to the Seller.

 

**10.**             Liabilities of the Seller andthe Buyer

** **

10.1            The Buyer shall:

 

10.1.1         with effect from the Effective Time, assumeresponsibility for and indemnify and hold the Seller harmless against thepayment and performance of the Assumed Liabilities; and

 

10.1.2         pay, satisfy or discharge any furtherdebts, liabilities and obligations incurred by the Buyer in connection with theBusiness Contracts after Completion save as provided for in the TollManufacturing Agreement and shall indemnify and hold the Seller harmlessagainst any and all obligations, liabilities and Demands arising therefrom.

 

10.2            Nothing in this agreement shall pass to theBuyer, or shall be construed as acceptance by the Buyer of, any liability, debtor other obligation of the Seller (whether accrued, 

 

24

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absolute, contingent, known or unknown) foranything done or omitted to be done before Completion in the course of or inconnection with the Business or the Assets (save to the extent that any suchliability is included in the Assumed Liabilities) and the Seller shall:

 

10.2.1         indemnify and hold the Buyer harmlessagainst any and all obligations, liabilities and Demands arising therefrom,including the Excluded Liabilities; and

 

10.2.2         perform any obligation falling due forperformance or which should have been performed before Completion, includingthe Excluded Liabilities.

 

**11.**             VAT

** **

11.1            TheCompletion Amount and all other payments made under this agreement shall bedeemed to be exclusive of VAT.

 

11.2            TheBuyer has with the agreement of the Seller submitted a written application toHM Revenue & Customs (“**HMRC**”), a copyof which is contained at Schedule 12 (the “**VAT Letter**”),asking for confirmation as to whether the Transaction is a taxable supply forthe purposes of VAT, or the transfer of a going concern under Article 5 ofthe VAT (Special Provisions) Order 1995 (a “**TOGC**”).

 

11.3            The Buyer hereby represents and warrantsthat it is registered for VAT under registration number 909 454 016, and shallprovide the Seller with a copy of its registration prior to Completion.

 

11.4            The Seller hereby represents and warrantsthat it is a member of a VAT group which has registration number 705 745 042,and shall provide the Buyer with a copy of its certificate of registrationprior to Completion.

 

11.5            If,prior to Completion, the Buyer has received written confirmation from HMRC thaton the basis of the VAT Letter the Transaction:

 

11.5.1         doesnot constitute a TOGC then the Buyer shall pay the VAT chargeable on theCompletion Amount and the Seller shall issue a valid VAT invoice to the Buyer;or

 

11.5.2         doesconstitute a TOGC, then the Buyer shall provide a copy of HMRC’s determinationto the Seller and no VAT shall be payable by the Buyer and no VAT invoice shallbe issued by the Seller.

 

25

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11.6            If,prior to Completion the Buyer has not received written confirmation from HMRCas to whether or not the Transaction is a TOGC, then on Completion:

 

11.6.1         the Buyer and the Seller shall each executethe Escrow Agreement and deliver their signed original to the other; and

 

11.6.2         upon the Escrow Agreement being so executedand exchanged, the Buyer shall pay £897,450 (being the VAT payable on theCompletion Amount) in to the Escrow Account which shall be dealt with inaccordance with the terms of the Escrow Agreement.

 

**12.**             Indemnities

** **

12.1            The Seller undertakes to indemnify and holdthe Buyer harmless against all Demands (including professional fees and costs)which may be suffered or incurred by the Buyer and which arise directly orindirectly in connection with the following matters:

 

12.1.1         all and any Environmental Losses (whetherarising before or after the Effective Time) except to the extent they are theBuyer’s liability pursuant to the express terms of the Toll ManufacturingAgreement; and;

 

12.1.2         all and any claims for products sold ordelivered, or services performed by the Seller or for breach of law by theSeller in relation to the Business prior to the Effective Time.

 

12.2            Any payment made in respect of a claim underthis clause 12 shall include:

 

12.2.1         an amount in respect of all costs andexpenses incurred by the Buyer in relation to the bringing of the claim(including a reasonable amount in respect of management time); and

 

12.2.2         any amount necessary to ensure that, afterTaxation of the payment, the Buyer is left with the same amount it would havehad if the payment had not been subject to Taxation.

 

**13.**             The Employees

** **

For the purpose of this clause 13:

 

26

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“**Indemnity Limit**” means, for each Employee,the value of the Redundancy Payment of the particular Employee together witheither proper notice or an amount of salary equivalent to the Employee’s noticeperiod.

 

13.1            The parties agree that the sale andpurchase pursuant to this agreement will constitute a relevant transfer for thepurposes of TUPE and, accordingly, that it will not itself operate so as toterminate the contracts of employment of any of the Employees. The partiesfurther agree that:

 

13.1.1         the Transferring Employee’s contract ofemployment shall be transferred to the Buyer pursuant to TUPE with effect fromthe Effective Time;

 

13.1.2         the Retiring Employee’s contract ofemployment shall not transfer to the Buyer pursuant to TUPE by virtue of theRetiring Employee objecting to the transfer and entering into the CompromiseAgreement and the Seller undertakes to meet all of its obligations under thesaid Compromise Agreement and the Seller shall indemnify and hold the Buyerharmless from all Demands of the Retiring Employee under the CompromiseAgreement;

 

13.1.3         the Toll Employee’s contracts of employmentshall not be transferred to the Buyer pursuant to TUPE by virtue of the partiesentering into the Toll Manufacturing Agreement and the parties agree to dealwith the Toll Employees and any Demands made by the Toll Employees in themanner provided for under the Toll Manufacturing Agreement.

 

13.2            The Seller undertakes to the Buyer:

 

13.2.1         that it has complied with, and shall up toand including the Effective Time, comply with all of its obligations (howsoeverarising) due to or in connection with the Transferring Employee or any bodyrepresenting them (or any of the said obligations the Seller would have hadunder or in connection with such contracts but for TUPE);

 

13.2.2         that it has paid and shall pay all sums dueto or in relation to the Transferring Employee up to and including theEffective Time (whether arising under common law, statute, equity or otherwise)including all salaries, wages, employee bonus or

 

27

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|   | commission, expenses, National Insurance and  pension contributions, liability to Taxation, and other sums payable in  respect of any period up to the Effective Time;                                                                                                                                                                                                                                                                                             |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 13.2.3 | that in respect of the Transferring Employee it  has complied and shall comply in all respects with its obligations under  regulation 11 of TUPE;                                                                                                                                                                                                                                                                                                                  |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 13.2.4 | that there are no sums owing to or from the  Transferring Employee other than reimbursement of expenses for the current  month, wages for the current salary period;                                                                                                                                                                                                                                                                                               |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 13.2.5 | that in respect of the Transferring Employee, it  has complied and shall comply in all respects with regulation 13 of TUPE  (subject in the case of the Seller’s obligations under Regulation  13(2)(d) of TUPE to the Buyer providing the information required under  Regulation 13(4) of TUPE) and that it has provided and shall provide to  the Buyer such information as the Buyer may request in writing in order to  verify such compliance; |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 13.2.6 | that it has not terminated and shall not terminate  or take any steps to terminate (constructively or otherwise) the employment  of the Transferring Employee without the prior written consent of the Buyer;                                                                                                                                                                                                                                                      |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 13.2.7 | that it has not transferred and shall not transfer  the Transferring Employee from working within the Business and it has not  induced and shall not induce the Transferring Employee to resign his  employment in the Business;                                                                                                                                                                                                                                   |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 13.2.8 | that it shall not employ, engage or transfer any  person who is not an Employee to work in the Business without the prior  written consent of the Buyer;                                                                                                                                                                                                                                                                                                           |
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                               |
| 13.2.9 | that it shall pay to the Transferring  Employee the Bonus on or before 31 March 2010.                                                                                                                                                                                                                                                                                                                                                                         |

 

13.3            The Buyer undertakes to theSeller to comply with its obligation under Regulation 13(4) prior to theTermination Date.  The Buyer agrees to assistthe Seller in the event that any consultation is required in relation to anymeasures proposed by the Buyer.

 

13.4            The Seller shall indemnify and hold theBuyer harmless, up to the greater of the Indemnity Limit or any tribunal orcourt award for each Employee against any payments, penalties, 

 

28

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costs, claims, demands, damages, compensation, fines,awards, losses and expenses (including any legal or other professional fees onan indemnity basis) and any other liabilities or Demands whatsoever (“Costs”)arising from any claim or otherwise in respect of:

 
| 13.4.1 | the employment of the Employees or any other  person by the Seller on or prior to the Effective Time; or                                                                                                                                                     |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                         |
| 13.4.2 | any act or omission of the Seller on or prior to  the Effective Time in relation to the employment of any person (including the  termination of their employment); or                                                                                        |
|   |                                                                                                                                                                                                                                                         |
| 13.4.3 | any failure by the Seller to comply with its  obligations to inform and consult under Regulations 13 and 14 of TUPE (save  to the extent that such Costs arise out of the Buyer’s failure to provide  information under Regulation 13(4) of TUPE); |
|   |                                                                                                                                                                                                                                                         |
| 13.4.4 | the transfer of the employment or engagement of  any person other than the Transferring Employee to the Buyer (including for  the avoidance of doubt the Retiring Employee and the Toll Employees);                                                          |
|   |                                                                                                                                                                                                                                                         |
| 13.4.5 | The Bonus for the Transferring Employee.                                                                                                                                                                                                                     |

 

13.5            The Buyer shallindemnify the Seller against all Costs arising from any claim or otherwise inrespect of:

 
| 13.5.1 | any liabilities of the Seller that are created or  increased and that are directly attributable to a negligent or unreasonable  act or omission of the Buyer or; |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                             |
| 13.5.2 | any failure by the Buyer to comply with its  obligations to provide information under Regulation 13(4) of TUPE; and                                         |

 

13.6            If any contract of employment or engagementor collective agreement not Disclosed (other than in relation to the Employees)to the Buyer has effect as if originally made between the Buyer and any personor body or their representatives as a result of the provisions of TUPE orotherwise:

 
| 13.6.1 | the Buyer may terminate such contract or  agreement; and                                                                                                             |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                 |
| 13.6.2 | provided that notice of such termination takes  place within 1 month of the Buyer becoming aware of such contract or  agreement transferring to it, the Seller shall |

 

29

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|   | indemnify and hold the Buyer harmless against all  Demands (including any liability to Taxation and legal and other professional  fees and expenses) that the Buyer may suffer, incur, sustain, pay or be put  to: |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                               |
|   |  13.6.2.1                                                                                                                                                                                                     | by reason of, on account of or arising out of such  termination; or |
|   |                                                                                                                                                                                                               |   |
|   |  13.6.2.2                                                                                                                                                                                                     | arising from such contract or collective agreement  before the Effective Time, if the Buyer does not terminate such contract or  collective agreement. |

 

13.7            Without prejudice to the other provisionsof this clause 13, the Seller shall, at its own expense, give the Buyer suchassistance as the Buyer may reasonably require to contest any Demand by anyperson employed or engaged in the Business at or before the Effective Time ortheir representatives resulting from or in connection with this agreement,subject always to the Seller’s obligations under the DPA 1998.

 

13.8            The Seller shall, on request by the Buyerand at the Seller’s expense, provide to the Buyer such information or documentsas the Buyer may reasonably require relating to the terms of employment,pension and life assurance arrangements, health benefits, welfare or any othermatter concerning the Transferring Employee or any trade union, employeerepresentative or body of employees or their representatives or relating tocollective agreements or collective or individual grievances in the periodbefore the Effective Time.

 

13.9            All wages,salaries, expenses, commission, accrued bonus, sick pay, maternity, paternityand adoption pay, liabilities in respect of income tax and National InsuranceContributions and any other periodic outgoings due or accruing (includingcontractual holiday pay, lieu days and any arrears in holiday pay) in respectof the Transferring Employee which relates to any period:

 
| 13.9.1 | after  the Completion Date shall be borne by the Buyer; and     |
|--------|-----------------------------------------------------------------|
|   |                                                            |
| 13.9.2 | on or before the Completion Date shall be  borne by the Seller. |

 

**14.**             The Business Contracts

 

14.1            The Seller shall, with effect from theEffective Time, assign to the order of the Buyer, or procure the assignment tothe order of the Buyer of, all the Business Contracts which are capable ofassignment without a Third Party Consent.

 

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14.2            If any of the Business Contracts cannot beassigned or novated without obtaining a Third Party Consent, then the Sellerand the Buyer shall use their respective reasonable endeavours to obtain suchconsents.

 

14.3            Insofar as any of the Business Contractscannot be assigned or novated to the Buyer without Third Party Consent thenpending such consent or where any of the Business Contracts are incapable oftransfer to the Buyer by assignment, novation or other means then:

 

14.3.1         the Seller shall at the Buyer’s request useits reasonable endeavours with the co-operation of the Buyer to procure suchassignment or novation;

 

14.3.2         unless and until any such Business Contractis assigned or novated, the Seller shall for a period of not less than 18months after Completion continue its corporate existence and shall hold suchBusiness Contract and any monies, goods or other benefits received thereunderas trustee for the Buyer and its successors in title absolutely;

 

14.3.3         the Buyer shall (if such sub-contracting ispermissible and lawful under the Business Contract in question), act as theSeller’s sub-contractor, and to the extent they are Assumed Liabilities performall the obligations of the Seller under such Business Contract and, wheresub-contracting is not permissible, the Buyer shall perform such obligations asagent for the Seller;

 

14.3.4         the Seller shall not from Completion takeany action or otherwise do anything in relation to the Business Contractswithout the Buyer’s prior written consent save in respect of any BusinessContracts the performance of which has been completed in part by the Sellerprior to the Completion and the action or deed solely relates to such partialperformance and without effect or import to any other part of the BusinessContract or its performance by the Buyer;

 

14.3.5         unless and until any such Business Contractis assigned or novated, the Seller shall (so far as it lawfully may) give allsuch reasonable assistance as the Buyer may reasonably require (at the Seller’scost) to enable the Buyer to enforce its rights under such Business Contractand (without limitation) shall, on prior written request, provide access to allrelevant books, documents and other information in relation to such BusinessContract as the Buyer may require from time to time.

 

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14.4            In addition to the provisions of clause14.3 the following provisions shall apply in relation to those BusinessContracts which are Agency Contracts:

 

14.4.1         The Seller shall pay to the relevant Agents(and indemnify and hold the Buyer harmless against any Demands for) commissionsarising under the Agency Contracts in respect of orders placed up to theEffective Time notwithstanding such commissions may not be due and payableuntil after the Effective Time.

 

14.4.2         If the Agency Contract has not beenassigned or novated within 180 days of Completion the Seller may at any timethereafter give the Buyer 30 days prior written notice of its intention toterminate the Agency Contract and shall provide the Buyer with a draft of itsintended notice of termination (“Termination Notice”).

 

14.4.3         The Termination Notice shall specify thename and address of the Agent upon whom it is to be served, details of theAgency Contract to be terminated and the number of days or months from the dateof the Termination Notice after which the Agency Contract will terminate, whichshall be not less than any Termination Notice period specified in the AgencyContract or if greater or none is so specified the Termination Notice periodthat applies under the governing law of the Agency Contract or such othernotice period as the Buyer and the Seller may agree.

 

14.4.4         The Seller shall co-operate with any reasonablerequest made by the Buyer in connection with the content or giving of theTermination Notice but shall not thereby be obliged to agree to any extensionof the applicable termination notice period under sub-clause 14.4.3.

 

14.4.5         The Seller and the Buyer shall co-operateto ensure that any obligations on the part of the Seller under the AgencyContracts or under the governing law of the Agency Contracts which apply upontheir termination are so far as reasonably possible duly satisfied.

 

14.4.6         Without prejudice to any liability on thepart of the Seller to the Buyer for any breach of the Agency Warranties or theprovisions of this clause 14.4 the Buyer’s indemnity under clause 14.8 shallapply in relation to any Demand made by the Agent by reason of the Seller’stermination of the Agency Contract and the Buyer shall have the conduct of anysuch Demands that may be brought by the Agent in accordance with the provisionsof clause 20; and

 

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14.4.7         the obligations of the Buyer and the Sellerpursuant to clause 14.3 shall cease in relation to any Agency Contract forwhich a Termination Notice is served upon expiry of such Termination Notice.

 

14.5            Nothing in this agreement shall beconstrued as an assignment or attempted assignment if such assignment orattempted assignment would constitute a breach of such Business Contract.

 

14.6            Nothing in this clause 14 or elsewhere inthis agreement shall have the effect of making the Buyer liable in any wayunder any guarantees or warranties given by the Seller to any Customer inrelation to goods sold or services rendered by the Seller before the EffectiveTime, the liability for which shall remain absolutely with the Seller.

 

14.7            The Seller shall indemnify and hold theBuyer harmless from and against all Demands of whatsoever nature relating toand payable in respect of the Business or Assets which are attributable to theperiod up to and including the Effective Time, including any act or omission onthe part of the Seller in relation to the Business Contracts or any defects in,or alleged defects in, goods supplied or services provided prior to theEffective Time, and in particular any claim under any warranty or under theSale of Goods Act 1979 or the Supply of Goods Act 1994.

 

14.8            The Buyer shall indemnify and hold theSeller harmless from and against all Demands of whatsoever nature relating toand payable in respect of the Business or Assets which are attributable to theperiod after the Effective Time, including any act or omission on the part ofthe Buyer in relation to the Assumed Liabilities under Business Contracts or(subject to the terms of the Toll Manufacturing Agreement) any defects in, oralleged defects in, goods supplied or services provided after the EffectiveTime, and in particular any claim under any warranty or under the Sale of GoodsAct 1979 or the Supply of Goods Act 1994.

 

**15.**             Future Trading and Trade Enquiries

** **

For a period of 18 months following Completion, the Seller shallpromptly refer to the Buyer all enquiries relating to the Business, includingenquiries relating to orders for any stocks, spares, parts, accessories andother equipment manufactured or sold, or any services provided in connectionwith the Business, which the Seller may receive after Completion.

 

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**16.**             Book Debts

 

16.1            The Buyer shall not acquire the Book Debts,which shall remain the property and responsibility of the Seller.

 

16.2            Notwithstanding that the Book Debts are ExcludedAssets, the Buyer shall (at the Seller’s cost) (where such cost is incurredwith a third party) use reasonable endeavours to collect the Book Debts on theSeller’s behalf (which may include at the Buyer’s sole discretion withholdingfurther supplies), but the Buyer shall not be bound to withhold furthersupplies or take any legal proceedings or other enforcement steps to recoverthe same. Any money received by the Buyer in the course of collecting any BookDebts from a person who is also indebted to the Buyer shall be deemed to havebeen paid in or towards the discharge of the oldest Book Debt except to theextent that the debtor in question has disputed such Book Debt or any aspect ofthe order to which it relates.  Nothingin this clause 16.2 shall oblige the Buyer to take or omit to take any actionwhich in the reasonable opinion of the Buyer is likely to affect the Goodwillof the Business.

 

16.3            In order that the Buyer can comply with itobligations under clause 16.2 the Seller shall at or following Completionprovide the Buyer with full details of the Book Debts so as to enable the Buyerto pursue recovery.

 

16.4            The Seller shall not seek to recover theBook Debts directly and shall not do anything to hinder their collection by theBuyer and, in particular, the Seller shall not assign any of the Book Debts toany third party. The Seller shall keep the Buyer properly informed of anypayments that may be made to the Seller in respect the Book Debts.

 

16.5            Within five Business Days of the end ofeach month, commencing after Completion, the Buyer shall provide the Sellerwith a statement of the Book Debts collected in that month (or, in the case ofthe first such month, the period between Completion and the end of such month)and shall remit to the Seller the amounts received during that period.

 

16.6            If it becomes apparent that recovery of anyBook Debt is not likely to be possible within a reasonable period and in anyevent within the 3 month period unless legal proceedings are instituted, theBuyer shall advise the Seller in writing. The Seller shall give 10 days noticeto the Buyer of its intention to take, consider taking, threaten or generallyseek enforcement of its rights to recovery of any unrecoverable Book Debt.

 

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16.7            The obligations of the Buyer and the Sellerunder this clause 16 shall cease absolutely three months after Completion, savethat:

 
| 16.7.1 | if thereafter any payments are made to the Buyer  in respect of Book Debts, the Buyer shall remit the same to the Seller; and                                                                                                                                                                                                                                       |
|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                |
| 16.7.2 | the Buyer shall (at the Seller’s cost) reasonably  co-operate in any proceedings brought by the Seller for recovery of any Book  Debts but for the avoidance of doubt such co-operation shall not include the  Buyer withholding further supplies, or itself taking or being a party to any  legal proceedings or other enforcement steps to recover the same. |

 

**17.**             Data Protection

 

17.1            Notwithstanding any other provision of thisagreement, the Buyer undertakes that, on receipt of the Customer Database andthe Employee Database on the Completion Date:

 
| 17.1.1 | it shall duly observe all its obligations as a  Data Controller under the DPA 1998 which arise in connection with processing  Customer Data and Employee Data; and                                    |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                  |
| 17.1.2 | it shall send a fair processing notice to each  Customer identified in the Customer Database and the Transferring Employee in  the form set out in Schedule 9 within one week of the Completion Date; |

 

**18.**             Restrictive Covenants

 

18.1            The Seller covenants that it shall not (andthat it shall procure that no member of the Seller’s Group shall), during theperiod of five years beginning with the Completion Date, carry on or beemployed, engaged or interested directly or indirectly (whether by acquisitionor otherwise) in any part of the Business.

 

18.2            The Seller covenants that it shall not (andthat it shall procure that no member of the Seller’s Group shall) during theperiod of five years beginning with the Completion Date, deal with or seek thecustom for the supply of:

 
| 18.2.1 | any Pipewrap products to any person that is at the  Completion Date, or that has been at any time during the period of 12 months  immediately preceding that date, an agent, client or customer of any part of  the Business; or |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

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| 18.2.2 | any Tapes products to the Private Label Customer. |
|--------|---------------------------------------------------|

 

18.3            The Seller covenants that it shall not (andthat it shall procure that no member of the Seller’s Group shall), at any timeduring the period of five years beginning with the Completion Date:

 
| 18.3.1 | offer employment to, enter into a contract for the  services of, or attempt to entice away from the Buyer the Transferring  Employee;         |
|--------|-----------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                          |
| 18.3.2 | procure, facilitate the making any such offer or  attempt by any person other than by virtue of providing references in the  ordinary course. |

 

18.4            The undertakings in this clause 18 areintended for the benefit of the Buyer and apply to actions carried out by theSeller (or any member of the Seller Group) in any capacity, and whetherdirectly or indirectly, on behalf of the Seller (or any member of the SellerGroup), or on behalf of any other person or jointly with any other person.

 

18.5            The Seller may without being in breach ofthis clause 18:

 
| 18.5.1 | hold for investment purposes only any units of any  authorised unit trust or not more than 3% of any class of shares or  securities of any company traded on any recognised stock exchange; or |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                           |
| 18.5.2 | carryout its obligations under the Toll  Manufacturing Agreement.                                                                                                                              |

 

18.6            The provisions of clause 18.2 shall notapply to the activities of a business acquired by Seller after the Completionif such acquisition is completed after four years and six months of Completionor if the Seller closes or divests itself completely of all those parts of theacquired business whose activities would otherwise be in breach of clause 18.1or 18.2 within six months after its acquisition.

 

18.7            Each of the covenants in this clause 18 is:

 
| 18.7.1 | a separate undertaking by the Seller and shall be  enforceable by the Buyer separately and independently of its right to enforce  any one or more of the covenants in this clause 18; and |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                      |
| 18.7.2 | considered fair and reasonable by the parties, but  if any restriction is found to be unenforceable but would be valid if any  part of it were deleted, or the period or                  |

 

36

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|   | area of application reduced, the restriction shall  apply with such modification as may be necessary to make it valid and  effective to the maximum available period or area as is enforceable under  law. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

18.8            The consideration for the undertakingscontained in this clause 18 is included in the Completion Amount.

 

18.9            After the Completion, the Buyer and theBuyer Group shall have no right to use the Seller Marks (except to the extentthey may include any products or packaging supplied by the Seller under theToll Manufacturing Agreement) or the Servicised Mark.  The Seller owns and shall continue to own allSeller Marks, and the Buyer shall have no claim or right in the SellerMarks.  The Seller and its affiliatesshall retain all rights in the Seller Marks, and shall be entitled to all usesof the Seller Marks that existed prior to this Agreement, as well as to any andall future uses of the Seller Marks anywhere throughout the world.

 

**19.**             Confidentiality and Announcements

 

19.1            Each party undertakes to keep confidentialall the information that it has acquired about the other party and to use suchinformation only for the purposes contemplated by this agreement.

 

19.2            Except as otherwise provided in thisagreement, the Seller shall, at Completion, deliver up to the Buyer, or as theBuyer may direct, all records, papers and documents in its possession or underits control which contain Business Information.

 

19.3            Except as otherwise provided in thisagreement, the Seller undertakes to the Buyer that, at any time after exchangeof this agreement, it shall not, and it shall procure that no member of theSeller Group, nor their respective consultants, employees or officers shall(directly or indirectly):

 
| 19.3.1 | disclose to any person whatsoever or use to the  detriment of the Buyer, the Buyer’s Group or the Business; or |
|--------|---------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                |
| 19.3.2 | otherwise makes use of; or                                                                                          |
|   |                                                                                                                |
| 19.3.3 | through any failure to exercise all due care and  diligence cause any unauthorised disclosure of,                   |

 

37

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the BusinessInformation or  Know-How or any othersecret or confidential information concerning the Business or Assets.

 

19.4            No party is required to keep confidentialor to restrict its use of information that:

 

19.4.1         is or becomes public knowledge other thanas a direct or indirect result of being disclosed in breach of this agreement;or

 

19.4.2         the parties agree in writing is notconfidential; or

 

19.4.3         has been lawfully disclosed to the relevantparty by a third party and that it has acquired free from any obligation ofconfidence to any other person.

 

19.5            Either party may disclose any informationthat it is otherwise required to keep confidential under this clause 19:

 

19.5.1         to such professional advisers, consultantsand employees or officers of its group as are reasonably necessary to advise onthis agreement, or to facilitate the Transaction, provided that the disclosingparty procures that the people to whom the information is disclosed keep itconfidential as if they were that party; or

 

19.5.2         with the written consent of the otherparty; or

 

19.5.3         to the extent that the disclosure isrequired:

 
| 19.5.3.1 | by law; or                                                                                                                                                                                                                                                  |
|----------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                                                                                                                        |
| 19.5.3.2 | by a regulatory body, tax authority or securities  exchange including but not limited to all information announcements required  to be filed by the Buyer from time to time in respect of this agreement by  the U.S Securities and Exchange Commission; or |
|     |                                                                                                                                                                                                                                                        |
| 19.5.3.3 | to make any filing with, or obtain any  authorisation from, a regulatory body, tax authority or securities exchange;  or                                                                                                                                    |
|     |                                                                                                                                                                                                                                                        |
| 19.5.3.4 | under any arrangements in place under which  negotiations relating to terms and conditions of employment are conducted; or                                                                                                                                  |
|     |                                                                                                                                                                                                                                                        |
| 19.5.3.5 | to protect the disclosing party’s interest in any legal proceedings,                                                                                                                                                                                   |

 

38

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but shall usereasonable endeavours to consult the other party and to take into account anyreasonable requests it may have in relation to the disclosure before making it.

 

19.6            Each party shall supply the other with anyinformation about itself, its group or this agreement as the other mayreasonably require for the purposes of satisfying the requirements of a law,regulatory body or securities exchange to which the requiring party is subject.

 

19.7            No announcement, circular or otherpublicity in connection with the subject matter of this agreement (other thanas permitted by this agreement) shall be made prior to Completion by or onbehalf of the Seller or the Buyer without the approval of the other as to itscontent, form and manner of publication (such approval not to be unreasonablywithheld or delayed), except that any announcement, circular or other publicityrequired to be made or issued by the Seller or the Buyer pursuant to any legalor regulatory authority may be made or issued by the Seller or the Buyerwithout such approval. The Buyer and the Seller shall consult together on theform of any such announcement, circular or other publicity and the other partyshall promptly provide such information and comment as the party issuing suchannouncement, circular or other publicity may from time to time reasonablyrequest.

 

**20.**             Conduct of Indemnity Claims

 

20.1            The provisions of this clause 20 shallapply to any claim made by a third party against the Seller or the Buyer whichis reasonably expected will give rise to an Indemnity Claim (and hereinafterreferred to as an Indemnity Claim).

 

20.2            The Indemnified Party shall within areasonable period of time of becoming aware of the same inform the Indemnifierin writing of any claim by a third party which falls within clause 20.1.  For the avoidance of doubt a delay in givingsuch notice shall not discharge the Indemnity Claim but to the extent that suchdelay increases the loss, damage or expenses to the Indemnified Party, suchloss, damage or expense shall not be recoverable from the Indemnifier.

 

20.3            Subject to the Indemnified Party beingindemnified and secured to its reasonable satisfaction in accordance withclause 20.4 and subject to the provisions of sub-clause 20.3.3:

 

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20.3.1         the Indemnified Party shall take suchaction and give such information and assistance as the Indemnifier mayreasonably request in writing to avoid, dispute, resist, mitigate, compromiseor defend any such Indemnity Claim and to appeal against any judgment given inrespect thereof including (without limitation) applying to postpone so far aslegally possible the payment of any Taxation; and

 

20.3.2         on the written request of the Indemnifier,allow the Indemnifier conduct of any legal proceedings of whatsoever naturearising out of any such Indemnity Claim (**“Proceedings**”)provided that the Indemnifier shall keep the Indemnified Party fully informedat all times in respect of the Proceedings and take or refrain from taking suchactions as the Indemnified Party may reasonably request from time to time. Forthis purpose, the Indemnified Party shall (at the Indemnifier’s expense) giveor procure to be given to the Indemnifier all such reasonable assistance as theIndemnifier may reasonably require and shall appoint such solicitors and otherprofessional advisers as the Indemnifier may nominate with the agreement of theIndemnified Party (such agreement not to be unreasonably withheld or delayed)to act on behalf of the Indemnified Party in accordance with the Indemnifier’sinstructions.

 

20.3.3         Where any Proceedings are taken over by theIndemnifier in accordance with sub-clause 20.3.3:

 
| 20.3.3.1 | the Indemnifier shall keep the Indemnified Party  fully and promptly informed of the Proceedings; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                |
|----------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
| 20.3.3.2 | the Indemnifier shall not make any settlement or  compromise of the Third Party Claim which is the subject of Proceedings, nor  agree to any matter in the conduct of such Proceedings which may affect the  amount of the liability in connection with such Indemnity Claim without the  prior approval of the Indemnified Party, such approval not to be unreasonably  withheld or delayed, and provided always that, in the event of the  Indemnified Party refusing approval of such settlement or compromise, the  Indemnifier shall  have no liability in  respect of the Indemnity Claim arising therefrom in excess of the figure at  which they could have settled or compromised the relevant Indemnity Claim and  the Indemnified Party shall be liable for any costs incurred since |

 

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|   | the proposed date of settlement or compromise. For  the avoidance of doubt it shall be reasonable for the Indemnified Party to  refuse its approval to any settlement or compromise of the Proceedings unless  the terms of the settlement or compromise are themselves subject to the  relevant indemnity. |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

 

20.4            Where the Indemnifier takes over theconduct of any Proceedings pursuant to the provisions of sub-clause 20.3.3 theIndemnifier shall indemnify and secure the Indemnified Party to its reasonablesatisfaction in respect of all past, present and future costs, charges,expenses, damages, counterclaims, Taxation and other awards which may bereasonably and properly incurred or awarded against the Indemnified Party as aconsequence of any actions taken by or at the request of the Indemnifierpursuant to clause 20.3.

 

**21.**             Guarantees

 

21.1            Darex unconditionally and irrevocablyguarantees to the Buyer (and any relevant Buyer’s Group company) the due andcomplete performance by the Seller (and any relevant Seller  Group company) of all its and thoseobligations under this agreement and the other documents referred to in thisagreement in the terms set out in Schedule 10 and in this respect Darex isreferred to as “Guarantor” and the Buyer (and any relevant Buyer’s Groupcompany) as the “Guaranteed Party” and the Seller (and any relevant SellerGroup company) as the “Principal”.

 

21.2            Chase Corp. unconditionally and irrevocablyguarantees to the Seller (and any relevant Seller Group company) the due andcomplete performance by the Buyer (and any relevant Buyer’s  Group company) of all its and thoseobligations under this agreement and the other documents referred to in thisagreement in the terms set out in Schedule 10 and in this respect Chase Corp.is referred to as “Guarantor” and the Seller (and any relevant Seller Groupcompany) as the “Guaranteed Party” and the Buyer (and any relevant Buyer’sGroup company) as the “Principal”.

 

21.3            Chase Corp. warrants that it has allrequisite power and authority and has taken all necessary corporate actions toenable it to enter into and perform this agreement which constitutes a bindingobligation on Chase Corp. in accordance with its terms.

 

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**22.**             Further Assurance

 

At their ownexpense each party shall promptly execute and deliver all such documents, anddo all such things, as may be reasonably required by the other party for thepurpose of giving full effect to the provisions of this agreement.

 

**23.**             Assignment

 

23.1            Except as otherwise provided in thisagreement, no party may assign, or grant any Encumbrance over or deal in anyway with any of its rights under this agreement or any document referred to init.

 

23.2            Each person that has rights under thisagreement is acting on its own behalf.

 

23.3            Each of the Seller and the Buyer may assignits rights under this agreement (or any document referred to in this agreement)but not its obligations to, in the case of the Seller to a member of the SellerGroup, or in the case of the Buyer to a member of the Buyer’s Group.

 

**24.**             Whole Agreement

** **

24.1            This agreement, and any documents referredto in it, constitute the whole agreement between the parties and supersede anyprevious arrangement, understanding or agreement between them relating to thesubject matter they cover.

 

24.2            Nothing in this clause 24 operates to limitor exclude any liability for fraud.

 

**25.**             Variation and Waiver

** **

25.1            A variation of this agreement shall be inwriting and signed by or on behalf of each party.

 

25.2            Any waiver of any right under thisagreement is only effective if it is in writing and signed by the waiving orconsenting party and it applies only in the circumstances for which it is givenand shall not prevent the party who has given the waiver or consent fromsubsequently relying on the provision it has waived.

 

25.3            No failure to exercise or delay inexercising any right or remedy provided under this agreement or by lawconstitutes a waiver of such right or remedy or shall prevent any futureexercise in whole or in part thereof.

 

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25.4            No single or partial exercise of any rightor remedy under this agreement shall preclude or restrict the further exerciseof any such right or remedy.

 

25.5            Unless specifically provided otherwise,rights arising under this agreement are cumulative and do not exclude rightsprovided by law.

 

**26.**             Costs

** **

Unless otherwise provided, all costs and expenses in connection withthe negotiation, preparation, execution and performance of this agreement, andany documents referred to in it, shall be borne by the party that incurred thecosts.

 

**27.**             Notice

** **

27.1            A notice given under this agreement:

 

27.1.1         shall be in writing in the English language(or be accompanied by a properly prepared translation into English);

 

27.1.2         shall be sent for the attention of theperson, and to the address, given in this clause 27 (or such other address orperson as the relevant party may notify to the other party); and

 

27.1.3         shall be:

 

27.1.3.1          delivered personally; or

 

27.1.3.2          delivered by commercial courier; or

 

27.1.3.3          sent by pre-paid first-class post orrecorded delivery; or

 

27.1.3.4          (if the notice is to be served by postoutside the country from which it is sent) sent by airmail.

 

27.2            The addresses for service of notice are:

 

27.2.1         Grace Construction Products Limited

 

Address:  635 Ajax Avenue, Slough, Berkshire  SL1 4BH

 

For the attentionof: Jens Ebinghaus

 

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27.2.2         Chase Protective Coatings Limited

 

Address: HarbourRoad, Rye, East Sussex  TN31 7TE

 

For the attentionof: David Greenman

 

27.2.3         Darex

 

Address:  635 Ajax Avenue, Slough, Berkshire  SL1 4BH

 

For the attentionof: David Michael

 

27.2.4         Chase Corp.

 

Address:  26 Summer Street, Bridgewater, Massachusetts02324, United States of America

 

For the attentionof: Peter Chase

 

27.3            A notice is deemed to have been received:

 

27.3.1         if delivered personally, at the time ofdelivery; or

 

27.3.2         if delivered by commercial courier, at thetime of signature of the courier’s receipt; or

 

27.3.3         if sent by pre-paid first class post orrecorded delivery, 48 hours from the date of posting; or

 

27.3.4         if sent by airmail, five days from the dateof posting; or

 

27.3.5         if deemed receipt under the previousparagraphs of this clause 27.3 is not within business hours (meaning 9.00 am to5.30 pm Monday to Friday on a day that is a Business Day), when business nextstarts in the place of deemed receipt.

 

27.4            To prove service, it is sufficient to provethat in the case of post, that the envelope containing the notice was properlyaddressed and posted.

 

27.5            For the avoidance of doubt, a notice underthis agreement shall not be valid if sent by e-mail.

 

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**28.**             Severance

 

28.1            If any provision of this agreement (or partof a provision) is found by any court or administrative body of competentjurisdiction to be invalid, unenforceable or illegal, the other provisionsshall remain in force.

 

28.2            If any invalid, unenforceable or illegalprovision would be valid, enforceable or legal if some part of it were deleted,the provision shall apply with whatever modification is necessary to giveeffect to the commercial intention of the parties.

 

**29.**             Agreement Survives Completion

 

This agreement(other than obligations that have already been fully performed) remains in fullforce after Completion.

 

**30.**             Third Party Rights

** **

This agreementand the documents referred to in it are made for the benefit of the parties tothem and their successors and permitted assigns, and are not intended tobenefit, or be enforceable by, anyone else.

 

**31.**             Successors

** **

The rights andobligations of the parties shall continue for the benefit of and shall bebinding on their respective successors and assigns.

 

**32.**             Counterparts

** **

This agreementmay be executed in any number of counterparts, each of which is an original andwhich together have the same effect as if each party had signed the samedocument.

 

**33.**             Language

** **

If this agreementis translated into any language other than English, the English language textshall prevail.

 

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**34.**             Governing Law and Jurisdiction

 

34.1            This agreement and any disputes or claimsarising out of or in connection with its subject matter or formation (includingnon-contractual disputes or claims) are governed by and construed in accordancewith the law of England.

 

34.2            The parties irrevocably agree that thecourts of England have exclusive jurisdiction to settle any dispute or claimthat arises out of or in connection with this agreement or its subject matteror formation (including non-contractual disputes or claims).

 

This agreement has been executed as a deedand is delivered and takes effect on the date stated at the beginning of it.

 

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**Schedule11**

 

## **Earn Out Payments**

 

**1****.****                                     ****Definitions**

 

In this Schedule 11 thefollowing definitions shall apply:

 

“**AcquiredPerson**” means a Person designated by Buyer as an Acquired Person bywritten notice (specifying the Waterproofing Products with respect to whichsuch Person is designated an Acquired Person) delivered to Seller promptlyafter such Person becomes an Affiliate of Buyer who:

 

(i) becomes anAffiliate of Buyer after the Completion Date;

 

(ii) is not and hasnever been an Earn Out Third Party;

 

(iii) independentlyfrom Buyer, any Affiliate of Buyer and any Earn Out Third Party, developed andmanufactured Waterproofing Product that included, incorporated or otherwiseutilised any formulas which are the same or similar to any of the formulas inthe Earn Out Intellectual Property Rights (such specific Waterproofing Productis designated “Independent Product”) at least six months before such Personbecame an Affiliate of Buyer; and

 

(iv) generated NetSales of such Independent Product of more than £25,000 (excluding Net Sales toBuyer, any Affiliate of Buyer or any Earn Out Third Party) before such Personbecame an Affiliate of Buyer.

 

“**AcquiredProduct**” means Independent Product that is manufactured or sold byan Acquired Person to a Person other than the Buyer, an Affiliate of the Buyeror an Earn Out Third Party.

 

“**Affiliate**”means any company, partnership or other business entity which directly orindirectly controls, is controlled by, or is under common control with aspecified Person.  Solely for purposes ofthis definition, “Control” of a specified Person that is an entity shall meanthe possession of the power to direct or cause the direction of the managementand 

 

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policies of such Person, whetherthrough the ownership of voting securities, by contract, or otherwise.

 

“**Earn OutIntellectual Property Rights**” means the following formulas but doesnot include the related process Know How: 4000 UK Compound (covered by patent EP0606298-B1); Standard UK Compoundfor Pipewrap; and High Temperature UK Compound for Pipewrap.

 

“**Earn OutProduct**” means:  (i) anyWaterproofing Product which is manufactured or sold by the Buyer, any Affiliateof the Buyer or any Earn Out Third Party in or from the Buyer’s existingfacility at Harbour Road, Rye, East Sussex (whether or not hereafter owned oroccupied by the Buyer and) and whether or not such Waterproofing Productincludes, incorporates or otherwise utilises the Earn Out Intellectual PropertyRights; and (ii) any Transferred Product; and for the avoidance of anydoubt an Earn Out Product shall not include any existing product or servicesold or provided by the Buyer or any Affiliate of the Buyer to any Person otherthan the Buyer or any Affiliate of the Buyer at the date of this agreementexcept any such products manufactured or sold by the Buyer or any Affiliate ofthe Buyer in or from the Buyer’s facility at Harbour Road, Rye, East Sussex.

 

“**Earn OutThird Party**” means a Person other than the Buyer or any Affiliate ofthe Buyer that has been assigned, transferred, licensed or otherwise grantedrights with respect to all or any part of the Earn Out Intellectual PropertyRights directly or indirectly by the Buyer or any Affiliate of the Buyer, andsuch Earn Out Third Party’s Affiliates.

 

“**Net Sales**”means the gross amount invoiced for the sale or lease of any Product lesscredits for returns of unused Product and allowances, sales taxes, freight andother such charges; provided however, that unless an Affiliate of the seller orlessor of such Product to which any such sale or lease is made is an actualconsumer of such Product, sales of such Product to such Affiliate of the selleror lessor of such Product shall not be included within such computations, butresales or leases of such Product by such Affiliate of the seller or lessor ofsuch Product shall be included as Net Sales.

 

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“**Person**”means any individual, partnership, firm, trust, association, company, limitedliability company, corporation, joint venture, unincorporated organization,other business entity or governmental authority.

 

“**Product**”means Earn Out Product, Acquired Product or Independent Product, as the casemay be.

 

“**TransferredProduct**” means any Waterproofing Product that includes, incorporatesor utilizes the Earn Out Intellectual Property Rights which is manufactured orsold from any location other than Rye, East Sussex by the Buyer, any Affiliateof the Buyer or any Earn Out Third Party; provided however, that TransferredProduct does not include Acquired Product.

 

“**WaterproofingProduct**” means high density, cross-laminated polyethylene membranes;low density polyethylene membranes; and aluminium and high densitycross-laminated polyethylene membranes that, in each case, have a releaseliner, are treated with rubberized bitumen and are used to prevent water, air,methane and radon infiltration; provided however, that Waterproofing Productshall exclude products that are applied as bridge deck membrane and productsthat include a saturated inner layer.

 

**2.             Earn Out Calculation**

 

For a period of five (5) calendaryears commencing 1st January 2010,the Buyer shall pay the Seller an Earn Out Payment equal to twenty percent(20%) of Net Sales of Earn Out Products that exceed £1,000,000 in each calendaryear.  Example shall be:

 

Year 1 Net Sales of Earn OutProduct total £900,000, no Earn Out Payment is due;

 

Year 2 Net Sales of Earn OutProduct total £1,500,000, excess is £500,000 and at 20% of the excess the EarnOut Payment would be £100,000;

 

Year 3 Net Sales of Earn OutProduct total £900,000, no Earn Out Payment is due.

 

Earn Out Payments due underthis Agreement shall be calculated and payable on an annual basis correspondingto a calendar year.  The calculated EarnOut Payment for each calendar 

 

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year shall be paid by theBuyer to the Seller within ninety (90) days following the end of such calendaryear.

 

**3.****            ****Earn Out Accounting**

 

An accounting report of thecalculation of the Earn Out Payment by the Buyer shall accompany each Earn OutPayment in writing and shall be provided within ninety (90) days following theend of each calendar year even if no Earn Out Payment is payable for thatcalendar year. The report shall include the quantity of Earn Out Products soldor transferred, the Net Sales of Earn Out Product (broken down for each EarnOut Product and location), the total of Net Sales of Earn Out Product and theamount of the Earn Out Payment attributable to the Net Sales of Earn OutProduct.  The accounting report shallinclude complete information broken down for the Buyer, each Affiliate of theBuyer (including without limitation each Acquired Person) and each Earn OutThird Party.  In addition to the annualaccounting report, within 15 days following the end of each calendar quarter,the Buyer shall provide to the Seller an estimate of the amount of Earn OutPayment that Buyer reasonably expects will be paid in respect of the currentcalendar year based on year-to-date sales (and the related “run rate”) as ofthe end of such calendar quarter.

 

**4.****            ****Earn Out Audit**

 

The Buyer shall keeprecords, files and books of account sufficient to:

 

(i)            verify theaccuracy and completeness of the annual accounting report provided pursuant toparagraph 3 of this Schedule 11; such records, files and books of account shallbe preserved until at least the first anniversary after the end of the relevantcalendar year; and

 

(ii)           support the Buyer’sdesignation of any Person as an Acquired Person; such records, files and booksof account shall be preserved until the sixth (6th) anniversary of theCompletion Date.

 

Upon notice to the Buyerdelivered within ninety (90) days of being provided with the accounting reportby the Buyer pursuant to paragraph 3 of this Schedule 11, the Seller shall 

 

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have the right to carry outan independent audit of such accounting report, the accuracy of the calculationof the Earn Out Payment, and, if the Buyer has designated (during or prior tosuch calendar year) an Acquired Person, whether such Person is in fact anAcquired Person.  The independent auditshall be conducted by a certified public accountant of the Seller’s choice whois approved by the Buyer (such approval not to be unreasonably withheld ordelayed and the Buyer acknowledges that any “Big 4” accounting firm is deemedapproved) (the “Accountant”).  With theapproval of the Seller, in the Seller’s sole discretion, the Accountant mayretain an independent 3rd party industrial engineering expert (the “Consultant”)to assist in the audit.  The Consultantshall be proposed by the Accountant and mutually agreed upon by the Seller andthe Buyer (such approval not to be unreasonably withheld or delayed) TheAccountant and the Consultant shall each be bound by a ConfidentialityAgreement to be given in favour of the Buyer. The Buyer agrees to use reasonable endeavours to provide the Accountantand the Consultant access, upon reasonable notice and during normal businesshours, to the rubberized bitumen blending process and those records, files andbooks of account reasonably deemed necessary by the Accountant for the solepurpose of providing a determination of the accuracy of the accounting report,the accuracy of the calculation of the Earn Out Payment and whether a Persondesignated by Buyer as an Acquired Person is in fact an Acquired Person.  The Accountant and the Consultant shall beescorted by Buyer personnel while on Buyer’s manufacturing premises and shallcomply with all reasonable health, safety, environmental and security policiesof Buyer while on the Buyer’s premises. Such audit shall be at the Seller’s sole expense; provided however, thatin its sole discretion, the Seller may terminate the audit at any time anddischarge the Accountant and the Consultant.

 

The amount of anyunderpayment of the Earn Out Payment(s) determined by the Accountant shallbe paid by the Buyer to the Seller within fifteen (15) calendar days followingthe Accountant giving the Buyer and the Seller written notice of his or herdetermination.  If the amount of anyunderpayment of Earn Out Payment for a specific calendar year as determined bythe Accountant exceeds twenty percent (20%) of the amount of Earn Out Paymentactually paid to the Seller for such year prior to the commencement of suchaudit, an additional twenty percent (20%) of the amount of the underpayment ofthe Earn Out Payment for such calendar year as determined by the Accountantshall be paid by the Buyer to the Seller as set forth in the precedingsentence.

 

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**5.****            ****License or Other Transfer**

 

The Buyer shall ensure thateach Affiliate of the Buyer (including without limitation any Acquired Person)and each Earn Out Third Party, if any, agrees to be subject to the terms ofthis Schedule 11, including without limitation, the Buyer shall cause eachAffiliate of the Buyer (including without limitation any Acquired Person) andeach Earn Out Third Party to agree to provide the reports provided underparagraph 3 of this Schedule 11 and to keep the records, files and books ofaccount, provide such access (including without limitation access tomanufacturing facilities) and to permit such audits as are provided underparagraph 4 of this Schedule 11.

 

Promptly following anyassignment, transfer, license or other grant of rights with respect to the EarnOut Intellectual Property Rights directly or indirectly from the Buyer or anyof its Affiliates to any Person or the acquisition of a Person that Buyerbelieves may be designated an Acquired Person, the Buyer shall provide to theSeller written notice of such assignment, transfer, license, grant oracquisition.

 

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| **EXECUTED AS A DEED**                           |                          |                   |
|--------------------------------------------------|-------------------------------|------------------------|
| by                                               | /s/ David Michael        |                   |   |
| for and on behalf of                             |                          | /s/ David Michael |
| **GRACE CONSTRUCTION**                           |                          | Director               |
| **PRODUCTS LIMITED**                             |                          |                   |
| in the presence of:                              |                          |                   |
|                                             |                          |                   |
|                                             |                          |                   |
| Witness Signature:                               | /s/ Rachel Reeves        |                   |   |
| Witness Name:                                    | Rachel Reeves                 |                   |   |
| Witness Address:                                 | Apex Plaza                    |                   |   |
|                                             | Reading                       |                   |   |
| Witness Occupation:                              | Solicitor                     |                   |   |
| ** **                                       |                          |                   |
|                                             |                          | /s/               |
|                                             |                          |
| **EXECUTED AS A DEED**  by  for and on behalf of |                          |
| **CHASE PROTECTIVE COATINGS LIMITED**            |                          | Director               |
| in the presence of:                              |                          |                   |
|                                             |                          |                   |
|                                             |                          |                   |
| Witness Signature:                               | /s/ Christopher Saunders |                   | Mundays LLP |
| Witness Name:                                    | Christopher Saunders          |                   | Solicitors and Notaries Public |
| Witness Address:                                 |                          |                   | Cedar House, 78 Portsmouth Road |
|                                             |                          |                   | Cobham, Surrey KT11 1AN |
| Witness Occupation:                              | Solicitor                     |                   | Tel: +44 (0) 1932 590500 |
|                                             |                          |                   | Fax: +44 (0) 1932 590220 |
|                                             |                          |                   |   |
|                                             |                          |                   |   |
| **EXECUTED AS A DEED**                           |                          | /s/ David Michael |
| by                                               | /s/ David Michael        |                   | Director |
| for and on behalf of                             |                          |                   |
| **DAREX UK LIMITED**in  the presence of:         |                          |                   |
| ** **                                       |                          |                   |
| ** **                                       |                          |                   |
| Witness Signature:                               | /s/ Rachel Reeves        |                   |   |
| Witness Name:                                    | Rachel Reeves                 |                   |   |
|                                                  |                               |                        |  |  |

 

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| Witness Address:                          | Apex Plaza              |   |     |
|-------------------------------------------|-------------------------|--------|----------|
|                                      | Forbury Rd              |   |     |
| Witness Occupation:                       | Solicitor               |   |     |
|                                      |                    |   |
|                                      |                    |   |
| **EXECUTED AS A DEED**                    |                    |   |
| by                                        | /s/                |   | Director |
| for and on behalf of                      |                    |   |
| **CHASE CORPORATION**in  the presence of: |                    |   |
| ** **                                |                    |   |
| ** **                                |                    |   |
| Witness Signature:                        | /s/ Terry M. Jones |   |     |
| Witness Name:                             | Terry M. Jones          |   |     |
| Witness Address:                          | 80 Joe Long Rd          |   |     |
|                                      | Brewster, MA 02631      |   |     |
| Witness Occupation:                       | Business Exec.          |   |     |
|                                           |                         |        |          |  |

 

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