SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act Of 1934
Date of Report (Date of Earliest Event Reported) May 25, 1999
CHASE CORPORATION
(Exact Name of Registrant as Specified in Charter)
Massachusetts 1-5408 11-1797126
05-0420158
(State or Other
Jurisdiction of (Commission File Number) (IRS Employer
Incorporation) Identification No.)
26 Summer Street, Bridgewater, MA 02324
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (508) 279-1789
Not Applicable
(Former Name or Former Address, If Changed Since Last Report.)
Item 2. Aquisition and disposition of Assets
Chase Corporation (the "Company") has purchased all of the stock of
RWA, Inc.("RWA") from its sole shareholder, Richard W. Aho, for cash of five
million dollars and a promissary note , payable over three, of three million
dollars. An additional amount may be paid contingent upon future performance
of RWA based upon fifty percent of the amount by which average annual earnings
for the thiry six months ended May 31, 2002 before interest, tax, depreciation
and amortization multiplied by four exceed eight million dollars and a
performance consideration based upon thiry percent of the amount by which net
income before taxes exceeds certain base amounts. Mr. Aho has no material
relationship to Chase Corporation, its affiliates, its officers and directors
or their associates. The transaction is being financed through available cash,
borrowing from BankBoston and from future operations.
RWA is engaged in electronic manufacturing services to the electronics industry
and will continue its current operations.
Item 7. Financial Statements and Exhibits
(a) The financial statements required by Section 210-3.05(b) will be
filed by amendment not later than sixty days from the due date of this report.
(b) The pro forma financial information required pursuant to
Article 11 of Regulation S-X will be filed by amendment not later than sixty
days from the due date of this report.
(c) Exhibits.
2.1 Stock Purchase Agreement
10.1 Employment Agreement
99.1 Press Release
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Chase Corporation
June 2,1999 /s/ Peter R. Chase
(Date) Peter R. Chase
Chief Executive Officer
June 2, 1999 /s/ Everett Chadwick, Jr.
(Date) Everett Chadwick, Jr.
Chief Financial Officer and
Principal Accounting Officer
STOCK PURCHASE AGREEMENT
by and among
Richard W. Aho,
RWA, Inc.
and
CHASE CORPORATION
Dated as of May 1, 1999
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of May 1, 1999,
is by and among (i) Richard W. Aho ("Shareholder") who is the holder of all
of the issued and outstanding shares of capital stock of RWA, Inc., a
Massachusetts corporation (the "Company"), (ii) Chase Corporation, a
Massachusetts corporation (the "Buyer"), and (iii) the Company.
WHEREAS, the Buyer desires to purchase from the Shareholder, and the
Shareholder desires to sell to the Buyer, all of the outstanding shares of
capital stock of the Company upon the terms and subject to the conditions
set forth herein (the "Stock Purchase");
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE 1
Certain Definitions
As used in this Agreement the following terms shall have the following
respective meanings:
Section 1.1. "Ancillary Agreements" mean this agreement, the note
referred to in Section 2.3(b) hereof and the employment agreement referred
to in Section 2.4(d) hereof.
Section 1.2. "Balance Sheet" shall have the meaning set forth in
Section 4.3 hereof.
Section 1.3. "Business Condition" shall have the meaning set forth
in Section 4.4 hereof.
Section 1.4. "Business Day" shall mean any day that is not Saturday,
Sunday or a day on which banks in Massachusetts are permitted or required
to be closed.
Section 1.5. "Closing" shall mean the consummation of the
transactions contemplated by Article 2 of this Agreement in accordance with
the terms and upon the conditions set forth herein.
Section 1.6. "Closing Date" shall mean the first Business Day after
the first date on which all of the conditions set forth in Articles 8 and
9 shall have been satisfied or duly waived or, if the Shareholder and the
Buyer shall mutually agree upon a different date, the date upon which they
shall have mutually agreed.
Section 1.7. "Code" shall mean the Internal Revenue Code, as amended,
and any successor thereto.
Section 1.8. "ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as amended.
Section 1.9. "Shares" shall mean all of the outstanding shares of
common stock, $.01 par value, of the Company.
ARTICLE 2
Sale of Stock: Closing
Section 2.1. Purchase and Sale. On the basis of the representations,
warranties, covenants and agreements and subject to the satisfaction or
waiver of the conditions set forth herein, on the Closing Date, the
Shareholder will sell, and the Buyer will purchase all of the Shares owned
by the Shareholder, which constitute all of the issued and outstanding
Shares.
Section 2.2. Time and Place of Closing. The Closing shall take place
at 10:00 a.m. on the Closing Date at the offices of the Buyer.
Section 2.3. Payment of Purchase Price. The purchase price for the
Shares consists of a combination of (i) cash, (ii) delivery of a
promissory note of the Buyer, (iii) a contingent payout and (iv)
performance consideration all as described as follows:
(a) At the Closing, the Buyer shall cause to be paid by certified or
bank check or by wire transfer to an account designated by Shareholder to
the Shareholder Five Million Dollars ($5,000,000).
(b) At the Closing Buyer will also deliver to Shareholder Buyer's
promissory note in the principal amount of Three Million Dollars
($3,000,000) in substantially the form set forth in Exhibit A attached
hereto.
(c) The Contingent Payment shall be calculated as set forth in this
paragraph. The average twelve (12) month earnings for the thirty six (36)
months ending May 31, 2002 before interest, taxes, depreciation and
amortization ("EBITDA") for such thirty six month period will be computed
in accordance with generally accepted accounting principles by Buyer's
independent certified public accountant. The resulting EBITDA will be
multiplied by four and the Eight Million Dollars ($8,000,000) payment
provided for in section 2.3 (a) and (b) will be subtracted therefrom. Fifty
percent (50%) of the balance will be paid to Shareholder in eight
quarterly installments commencing July 1,2002. An example of the
foregoing calculation is as follows:
If average 12 month EBITDA for the 36 months ending May 31, 2002 =
$3,000,000, EBITDA x 4 = $12,000,000. $12,000,000 minus $8,000,000 yields
$4,000,000 of which 50% will be paid to the Shareholder.
In computing EBITDA, specific reasonable charges for services rendered
the Company by Buyer will be deducted such as accounting, data processing,
marketing, insurance, banking and other related charges.
(d) Shareholder shall be entitled to performance consideration
computed as follows. The performance consideration shall equal 30% of the
amount by which RWA's Net Income Before Taxes as determined by the Buyer's
independent certified public accountants computed in accordance with
generally accepted accounting principles exceeds the base amount. In
computing performance consideration Net Income Before Taxes will be
adjusted to eliminate all charges for interest expense, depreciation or
goodwill amortization resulting from increases in the basis of, or the
recognition of assets not previously recorded, as a result of a Section 338
election, purchase accounting or otherwise as a result of the purchase of
RWA's common stock as contemplated by the Agreement. The Company will cause
its books and records to be maintained in such manner as will allow for
segregation, identification and accounting for expenses and revenues in
accordance with generally accepted accounting principles. The base amount
shall be as follows:
through the first twelve months from the Closing Date
$1,500,000
months thirteen through twenty four
$1,500,000
months twenty five through thirty six $1,250,000
months thirty seven through forty eight $1,000,000
months forty nine through sixty $1,000,000.
The performance consideration shall be payable within sixty (60) days of
the close of each twelve month period.
(e) It is expressly understood and agreed by the parties
hereto that the inclusion of the contingent payment as part of this
Agreement is a principal term hereof and that the opportunity to achieve
same constitutes substantial consideration for Shareholder's willingness
to execute this Agreement and consummate the transactions contemplated
herein and that the calculation of EBITDA and the base amounts as described
above are predicated upon the assumption that the Company will continue to
be operated after the Closing using good business judgment and in good
faith, and not directly or indirectly in a manner designed or intended to
thwart the earning of the contingent payment.
The Buyer agrees that if in the future it determines to make any
material changes that are inconsistent with the historical operation of the
Company, it will in good faith consult with the Shareholder prior to making
such changes to arrive at a fair method to preserve the Shareholder's
ability to achieve the contingent payment contemplated above.
The Buyer will require any successor (whether direct or
indirect, by purchase (asset or stock), merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company
to expressly assume and agree to perform the provisions of Section 2.3 (c)
through (e) inclusive in the same manner and to the same extent that the
Buyer would be required to perform if no such succession had taken place.
Section 2.4.
Closing Matters
At the Closing:
(a) the Shareholder shall deliver to the Buyer (i) certificates for
all of the Shares to be purchased, with appropriate stock powers attached,
properly signed together with the related stock books and stock transfer
records; (ii) copies of the Articles of Organization of the Company,
certified as of recent date by the Commonwealth of Massachusetts; and (iii)
copies of the By-laws, certified as of the Closing Date by the Clerk of the
Company; and (iv) the original minute and stock books of the Company
certified as of the Closing Date by the Clerk of the Company;
(b) the Company shall deliver to the Buyer the written opinion, dated
the Closing Date, of Messrs. Duane, Morris & Heckscher, LLP, counsel to the
Shareholder and the Company, in the form set forth in Exhibit B hereto;
(c) the Buyer shall deliver to the Shareholder the written opinion,
dated the Closing Date, of Hughes & Associates, counsel to the Buyer, in
the form set forth in Exhibit C hereto;
(d) Shareholder shall deliver to the Buyer and the Buyer
shall deliver to Shareholder duly executed copies of an Employment
and Non-Compete Agreement in the form attached as Exhibit D
hereto.
(e) The Company shall have delivered to the Buyer duly executed Non-
Compete Agreements in a form reasonably satisfactory to Buyer, with respect
to such key employees as Buyer may reasonably request.
ARTICLE 3
Representations and Warranties
of the Shareholder
The Shareholder hereby represents and warrants to the Buyer as follows:
Section 3.1. Authorization; etc. (a) The Shareholder has full power and
authority to execute and deliver this Agreement and to perform his
obligations under this Agreement. This Agreement is the legal, valid and
binding obligation of the Shareholder, enforceable against him in
accordance with its terms, subject to bankruptcy, reorganization and
creditors' rights generally and by equitable principles.
(b) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not (i) violate
any provision of, or be an event that is, or with the passage of time will
result in, a violation of, or result in the acceleration of or entitle any
party to accelerate (whether after the giving of notice or lapse of time
or both) any obligation under, or result in the imposition of any lien upon
or the creation of a security interest in any of the Shares pursuant to any
mortgage, lien, lease, agreement, instrument, order, arbitration award,
judgment or decree to which the Shareholder is a party or by which he is
bound, or (ii) violate or conflict with any other restriction of any kind
or character to which the Shareholder is subject.
(c) Upon consummation of the Stock Purchase at the Closing as
contemplated by this Agreement, the Buyer will acquire title to all of the
Shares free and clear of any liens, claims, charges, security interests,
options or other legal or equitable encumbrances of any kind.
(d) Schedule 4.9 contains a list of all governmental and other
registrations, filings, consents, transfers, applications, notices,
approvals, orders, qualifications, licenses, permits, approvals, other
authorizations and waivers and other actions of any kind required to be
made, filed, given or obtained by the Shareholder with, to or from any
persons or governmental authorities or private agencies in connection with
the consummation of the Stock Purchase.
Section 3.2. Disclosure. To the best of the Shareholder's knowledge,
no representation, warranty or statement made by the Shareholder or the
Company in this Agreement or in the Schedules attached hereto or in the
certificates or other written materials furnished to the Buyer or its
representatives, attorneys and accountants in connection with this
Agreement and the transactions contemplated hereby or thereby, contains any
untrue statement of a material fact or omits to state a material fact
required to be stated herein or therein or necessary to make the statements
contained herein or therein not misleading.
Section 3.3. Brokers. Finders. etc Except as set forth in Schedule
3.3, the Shareholder has not employed and is not subject to any claim of,
any broker, finder, consultant or intermediary in connection with the
transactions contemplated by this Agreement who might be entitled to a fee
or commission upon the consummation of the transactions contemplated
hereby.
ARTICLE 4
Representations and Warranties
of Shareholder and the Company
Shareholder and the Company hereby jointly and severally represent and
warrant to the Buyer as follows:
Section 4.1. Incorporation; Authorization; etc.
(a) The Company is a corporation duly incorporated, validly
existing and in good standing under the laws of Massachusetts. The Company
(i) has all requisite corporate power and authority to own all of its
properties and assets and to carry on its business as it is now being
conducted; (ii) is in good standing, and is duly licensed, authorized or
qualified to transact business in each jurisdiction in which the ownership
or lease of real property or the conduct of its business requires it to be
so qualified; and (iii) has all government licenses, permits, approvals and
other authorizations necessary to own its properties and assets and carry
on its business as it is now being conducted.
(b) The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not (i) violate
any provision of the Company's Articles of Organization or By-laws, (ii)
violate any provision of, or be an event that is, or with the passage of
time will result in, a violation of, or result in the acceleration of or
entitle any party to accelerate (whether after the giving of notice or
lapse of time or both) any obligation under, or result in the imposition
of any lien upon or the creation of a security interest in any of the
Shares or any of the Company's assets or properties pursuant to any
mortgage, lien, lease, agreement, instrument, order, arbitration award,
judgment or decree to which the Company or Shareholder is a party or by
which either of them is bound, or (iii) violate or conflict with any other
restriction of any kind or character to which the Company or Shareholder
is subject.
Section 4.2. Capitalization; Structure; No Investments. (a) The
authorized capital stock of the Company consists of 300,000 shares of
common stock, par value $.01 per share, of which 60,000 shares are issued
and outstanding. All of the issued and outstanding shares of the Company's
capital stock are validly issued, fully paid and nonassessable and owned
by the Shareholder. There are no outstanding obligations, options,
warrants or other rights of any kind to acquire shares of capital stock of
any class of the Company or any interest in the Company or any of its
businesses.
(b) The Company has no subsidiaries and no equity investment of any kind
in any corporation, association, partnership, joint venture or other
entity.
Section 4.3. Financial Statements. There have been previously delivered
to the Buyer true and complete copies of the following (collectively, the
"Financial Statements"): (i) the reviewed balance sheet of the Company for
each of the three fiscal years ended as of December 31 through 1998 and the
related reviewed statements of income, retained earnings and changes in
financial position for each of the such years and (ii) the balance sheets
of the Company as of March 31, 1999, and the related unaudited statements
of income, retained earnings and changes in financial position (the " 1999
Financial Statements").
The Financial Statements are complete and accurate in all material
respects, were prepared in accordance with the books and records of the
Company and in accordance with generally accepted accounting principles and
present fairly in all material respects the financial position, results of
operations or other information included therein of the Company for the
periods or as of the dates therein set forth, subject, where appropriate,
to normal year-end adjustments and the applicable footnote disclosures set
forth in such statements, in each case in accordance with generally
accepted accounting principles consistently applied during the periods
involved.
Section 4.4. Title; Leases; Condition of Properties. Except as set
forth in Schedule 4.4 hereto, the Company has good and marketable title,
free and clear of any liens, claims, charges, options or other title
defects or encumbrances, to each piece of real and personal property
reflected on or included in the Balance Sheet and to each piece of real and
personal property acquired by the Company since the date of the Balance
Sheet, except where the failure to have such good and marketable title
would not, individually or in the aggregate, have a material adverse effect
on the business, assets, results of operations, or condition (financial or
otherwise) (collectively, the "Business Condition") of the Company.
Except as set forth in Schedule 4.4 hereto and except with respect to any
lease terminable on 30 days' notice or less, each lease on each piece of
leased or occupied, as the case may be, real property listed opposite its
name in Schedule 4.4 (a complete copy of each of which leases has been
previously delivered to the Buyer), which together constitute all real
property leased by the Company is binding on the Company, and to the
knowledge of the Shareholder, each other party thereto; no default, event
of default or event which, with the giving of notice, the passage of time
or both would constitute a default or event of default, exists and is
continuing under any such lease with respect to the tenant or, to the best
of each of Shareholder's and the Company's knowledge, with respect to the
landlord under any such lease; the tenant under each such lease is now in
possession of such leased real property; there is no pending or to the
knowledge of the Shareholder threatened proceeding that might interfere
with the quiet enjoyment of the tenant under any such lease; and neither
the Stock Purchase nor any transaction contemplated by this Agreement shall
constitute a default under any such lease.
Except as set forth in Schedule 4.4 hereto, to the knowledge of the
Shareholder, the leased premises and operations of the Company conform in
all respects with all applicable restrictive covenants, deeds and
restrictions and all applicable Federal, state and local laws, ordinances
and regulations (including those relating to zoning and environmental
protection) except where a failure so to conform would not, individually
or in the aggregate, have a material adverse effect on the Business
Condition of the Company. To the knowledge of Shareholder, all leased
premises or operations of the Company that are subject to the Occupational
Safety and Health Act of 1970, as amended, comply in all respects with
employee working conditions as prescribed by such Act except where a
failure so to comply would not, individually or in the aggregate, have a
material adverse effect on the Business Condition of the Company.
Section 4.5. Inventories. Except as set forth in Schedule 4.5 hereto,
the inventories reflected on the Balance Sheet or thereafter acquired by
the Company consist primarily of items of a quality and quantity usable or
saleable in the ordinary course of business at the amount reflected on the
Balance Sheet, in the case of inventories reflected thereon, or, in the
case of such inventories acquired after the date of the Balance Sheet, at
the amount reflected on the books of the Company.
Section 4.6. Changes Since December 31, 1998. Except as set forth in
Schedule 4.6 hereto or as reflected in the 1999 Financial Statements, since
December 31, 1998, there has not been:
(a) any material adverse change in the business, assets, results of
operations, or condition (financial or otherwise) of the Company from that
shown in the 1998 Financial Statements;
(b) any material decrease in the total assets or net worth of the
Company from the amounts reflected on the Balance Sheet, other than
decreases resulting from depreciation in accordance with the accounting
practices of the Company in effect as of the date of the Balance Sheet;
(c) any change in any of the assets, licenses, permits or franchises of
the Company that could, in the aggregate, have a material adverse effect
on the Business Condition of the Company, or any change in the nature of
the business, methods of accounting or accounting practice, or manner of
conducting business that could, individually or in the aggregate, have a
material adverse effect on the Business Condition, licenses, permits or
franchises of the Company;
(d) any damage, destruction or other casualty loss that could, in the
aggregate, have a material adverse effect on the Business Condition of the
Company;
(e) any amendment, modification or termination of any existing, or
entering into any new, contract (other than purchase or sales orders
entered into in the ordinary course of business), agreement, Plans (as
defined in Section 4.15 hereof), lease, license, permit, franchise or
arrangement that could, individually or in the aggregate, have a material
adverse effect on the Business Condition of the Company;
(f) any bonus paid or any increase in the rate of compensation or in the
benefits payable or to become payable to any officer or other employee of
the Company over the levels in effect at December 31, 1998, other than (i)
normal bonuses and merit increases for those officers and employees with
aggregate annual compensation from the Company of less than $25,000, (ii)
the benefits from the employment contracts and the bonuses listed on
Schedule 4.12 , (iii) increases required by applicable law and (iv)
dividends equal to the tax liabilities arising to the Shareholder as a
result of the Company's 1998 and 1999 earnings prior to the Closing, as
determined by Langbort & Buettner, L.L.P., Company's accountant prior to
the Closing and subject to the reasonable approval of Livingston & Haynes,
the Buyer's accountant.;
(g) any disposition by the Company of any asset other than in the
ordinary course of business that had a net book value at the time of
disposition of $5,000 or more; or
(h) any direct or indirect redemption, purchase or other acquisition
of, or any declaration, setting aside or payment of any dividend or other
distribution on or in respect of, any Shares.
Section 4.7. Litigation; Orders. Except as provided in Schedule 4.7
hereto, there are no lawsuits, actions, administrative or arbitration or
other proceedings or governmental investigations pending or to the
knowledge of Shareholder threatened against the Company and not covered by
adequate insurance that could result in a judgment against it in an amount
that exceeds $5,000 or that could, individually or in the aggregate, have
a material adverse effect on the Business Condition of the Company. There
are no judgments or outstanding orders, injunctions, decrees, stipulations
or awards (whether rendered by a court or administrative agency, or by
arbitration) against the Company or any of its properties or businesses
that may have the effect of prohibiting the Stock Purchase or any business
practice or the conduct of any business by the Company. No condemnation
proceeding has been commenced against any asset of the Company, and, to
each of Shareholder's and the Company's knowledge, there is no basis or
ground for any such proceeding.
Section 4.8. Copyrights; Trademarks; Patents; etc. Schedule 4.8
contains a description of all material copyrights, trademarks, trade names,
patents and similar rights owned by or registered in the name, or used in
the business of, the Company ("Trade Rights"). The Company possesses
adequate and enforceable rights to use in its business as presently
conducted (without payment) all its Trade Rights and has not received any
notice of conflict that asserts the rights of others with respect thereto,
and, to each of Shareholder's and the Company's knowledge, there is no
basis or ground for any such notice of conflict. The Company has in all
material respects performed all the obligations required to be performed
by it, and is not in default in any material respect, under any agreement
relating to any Trade Right.
Section 4.9. Licenses; Approvals; Other Authorizations; Consents. (a)
No governmental licenses, permits, approvals and other authorizations are
used or required by the Company in the conduct of its business, except for
such licenses, permits, approvals and other authorizations (i) as are in
full force and effect and (ii) the failure to have which would not,
individually or in the aggregate, have a material adverse effect on the
Business Condition of the Company. No proceeding is pending or threatened
seeking the revocation or limitation of any such license, permit, order or
other authorization.
(b) Schedule 4.9 contains a list of all governmental and other
registrations, filings, consents, transfers, applications, notices,
approvals, orders, qualifications, licenses, permits, approvals, other
authorizations and waivers of any kind required to be made, filed, given
or obtained by any of the Shareholder or the Company with, to or from any
persons or governmental authorities or private agencies in connection with
the consummation of the Stock Purchase. To the knowledge of Shareholder,
the conduct of the business of the Company complies in all respects with
all applicable laws, governmental licenses, permits, orders and other
authorizations that are applicable thereto except where the failure so to
comply would not, individually or in the aggregate, have a material adverse
effect on the Business Condition of the Company, and each license, permit,
order and other authorization that is material to the Business Condition
of the Company has been obtained and is in full force and effect, and will
not cease to remain in full force and effect in accordance with its terms
by reason of the Stock Purchase.
Section 4.10. Labor Matters. No work stoppage against the Company is
pending or to the knowledge of Shareholder threatened. The Company is not
involved in or to the knowledge of Shareholder threatened with any labor
dispute, arbitration, lawsuit or administrative proceeding relating to
labor matters involving its employees. None of the employees of the
Company is represented by any labor union, and there is no collective
bargaining agreement in effect with respect to the employees of the
Company.
Section 4.11. Liabilities. Except as set forth in Schedule 4.11, the
Company has no material obligations or liabilities of any nature, whether
direct or indirect, joint or several, absolute or contingent, matured or
unmatured, secured or unsecured, other than:
(a) liabilities disclosed or provided for in the Balance Sheet, and
(b) liabilities incurred in the ordinary course of business since
December 31, 1998, none of which, individually or in the aggregate,
could have a material adverse effect on the Business Condition of the
Company.
Section 4.12. Contracts; Agreements; etc. Except as set forth in
Schedule 4.12 (true and complete copies of all contracts and other
documents listed in Schedule 4.12 having previously been delivered to the
Buyer), the Company is not a party to or subject to any of the following:
(a) any agent's, salesman's, broker's, dealer's, distributor's
franchise, subcontractor's or manufacturer's representative contract or
similar agreement, arrangement or understanding, whether written or oral,
express or implied, or having any other basis, with respect to the
manufacture, sale or distribution of products of, or furnishing of services
by, the Company that is not terminable on notice of 30 days or less without
penalty or other financial obligation;
(b) any employment or consultation contract, or other compensation
commitment or arrangement, whether written or oral, express or implied, or
having any other basis (except for contracts included in Schedule 4.15 or
otherwise provided for herein) that (i) is not terminable on notice of 30
days or less without penalty or other financial obligation, and (ii) under
which any officer or employee of the Company receives total salary and
other compensation from the Company of $25,000 or more per annum or more
than $50,000 over the term of the contract;
(c) any plan (except as included in Schedule 4.15) or any contract
or arrangement, oral or written, or any statutory obligation providing for
bonuses, pensions, options, deferred compensation, retirement payments,
profit sharing or the like in excess of $10,000 in the aggregate
(true and complete copies of any such plans, contracts or arrangements, or
an accurate summary of the material terms thereof, having previously been
delivered to the Buyer);
(d) any lease or other agreement or arrangement for the use of
personal property involving payment of annual rentals in excess of $20,000
in the aggregate;
(e) any contract, agreement, arrangement or license (including but
not limited to contracts for indebtedness) with respect to which payments
are denominated in a foreign currency;
(f) any contract, agreement, loan or arrangement with the Shareholder
or with any affiliate or relative of the Shareholder;
(g) any insurance policies naming the Company as an insured or
beneficiary or as a loss payable payee, or for which the Company has paid
all or part of the premium in force as of the date of this Agreement (true
and complete copies of all insurance policies listed in Schedule 4.12
having previously been made available to the Buyer);
(h) any instrument or agreement relating to indebtedness by way of
lease-purchase arrangements, conditional sale, guarantee or other
undertakings (except purchase orders made in the ordinary course of
business) on which others rely in extending credit, any joint venture
agreements or any chattel mortgages and other security arrangements with
respect to the personal property and equipment used by the Company;
(i) except for shrink wrap licenses for off-the-shelf software, any
license agreement, either as licensor or licensee (except as included in
Schedule 4.8);
(j) any contract or option for the purchase or sale of real property;
or
(k) any other contracts (excluding sales and purchase orders made in
the ordinary course of business consistent with past practices), whether
written or oral, except those that (i) were made in the ordinary course of
business, (ii) are terminable on 30 days' or less notice by the Company
without penalty or other financial obligation, and (iii) in each case
involve aggregate future payments by or to the Company of $50,000 or less.
Neither the Company nor, to the best knowledge of Shareholder or the
Company, any other party to any such contract, agreement, plan, lease,
license or permit, has breached any material provision of, or is in
violation or default in any material respect under the terms of, or has
caused or permitted to exist any event that with or without due notice or
lapse of time or both would constitute a material default or material event
of default, under any such contract, agreement, plan, lease, license or
permit. All such contracts, agreements, plans, leases, licenses and
permits are valid and binding obligations of the Company and in full force
and effect and the consummation of the Agreement will not result in any
default thereof and will not require the consent of any other party
thereto, and subject to the receipt of any consents or other matters
referred to in Schedule 4.9, the execution and delivery of this Agreement
by each of the Shareholder and the Company and the consummation of the
transactions contemplated hereby will not violate any material provision
of, or result in the acceleration of any material obligation under or the
termination of, any such contract, agreement, plan, lease, license or
permit.
Section 4.13. Interests of Certain Persons. Except as set forth in
Schedule 4.13, none of the Shareholder, the officers or directors of the
Company, or any person with whom any officer or director of the Company has
any direct or indirect relation by blood, marriage or adoption, has any
interest in (i) any contract, arrangement or understanding with, or
relating to, the business or operations of the Company; (ii) any right to
receive any payment (whether in respect of money borrowed, services
rendered, or otherwise) from the Company; (iii) any property (real or
personal), tangible or intangible, used or intended to be used in, or
pertaining to, the business or operations of the Company; or (iv) any
business or entity that competes with the Company.
Section 4.14. Taxes. The Company has timely filed or will timely
file (taking into account extensions) all Federal, state, local and foreign
tax returns and filings required by applicable law to be filed by it for
all taxable periods ended or ending on or before the Closing Date and has
paid or, where payment is not yet required to be made, has set up an
adequate accrual for the payment of, all taxes required to be paid in
respect of the periods covered by such returns and filings. With respect
to all taxable periods starting on or prior to the Closing Date but ending
on the Closing Date, the Company has set up or will set up an adequate
accrual for the payment of all taxes required to be paid with respect to
those periods (treating for this purpose the Closing Date as the last day
of a taxable period of the Company whether or not the Closing Date is in
fact the last day of such taxable period). All tax returns and filings
required to be made, including any amendments to date, have been prepared
in good faith without negligence or willful misrepresentation and are
complete and accurate in all material respects. The Company is not
delinquent in the payment of any tax, assessment or governmental charge
required to be paid by it. No election under Section 341(f) of the Code,
has been or shall hereafter be made to treat the Company as a consenting
corporation (as defined in Section 341(f) of the Code). No deficiencies for
any tax, assessment or governmental charge have been asserted or assessed
against the Company that have not been settled. The Company has not
executed any request for waiver or extension of the time to assess any tax
that has not been revoked. There have been no audits of the Federal,
state, local and foreign income or franchise tax liabilities of the Company
for any of the five most recent fiscal years of the Company. For the
purposes of this Agreement, the term "tax" shall include all Federal,
state, local and foreign taxes and all interest and penalties thereon.
Section 4.15. Employee Benefit Plans. (a) Schedule 4.15 contains a
written list of all employee benefit plans relating to employee benefits
with respect to which the Company has or may incur any future or contingent
obligations, including, without limitation, all plans, agreements
or arrangements relating to deferred compensation, pensions, profit
sharing, retirement income or other benefits, stock purchase and stock
option plans, bonuses, severance arrangements, health benefits, insurance
benefits and all other employee benefit or fringe benefits (collectively,
the "Plans"). There have been furnished to the Buyer copies of all Plans,
which copies are accurate and complete in all respects. The Company is not
a participant in (i) any multiemployer plan within the meaning of Section
4101(a)(3) of ERISA or (ii) any employee pension benefit plan (as defined
in Section 3(2) of ERISA) which is subject to either Title IV of ERISA or
Section 412 of the Code.
(b) Each Plan has been administered and operated in accordance with
its terms and applicable law except where the failure to do so would not,
individually or in the aggregate, have a material adverse effect on the
Business Condition of the Company. To the extent applicable, each Plan is
"qualified" within the meaning of Section 401(a) of the Code and each
related trust is exempt from tax under Section 501(a) of the Code. No
favorable determination letter has been received from the Internal Revenue
Service with respect to either such Plan. No liability under ERISA or
otherwise has been incurred or, based upon existing facts, may be expected
to be incurred with respect to any Plan, that would, individually or in the
aggregate, have a material adverse effect on the Business Condition of the
Company.
(c) The Company has not engaged in any transaction in connection with
which it, directly or indirectly, would be subject to either a civil
penalty assessed pursuant to Section 502(i) of ERISA or a tax imposed by
Section 4975 of the Code that would, individually or in the aggregate, have
a material adverse effect on the Business Condition of the Company. The
Company has not instituted proceedings to terminate any Plan. To the best
of Shareholder's knowledge, there exists no condition or set of
circumstances that presents a risk of the termination or partial
termination of any Plan, which could result in a liability on the part of
the Company in an amount that would, individually or in the aggregate, have
a material adverse effect on the Business Condition of the Company.
(d) Full payment has been made of all amounts that the Company was
or will be required under the terms of any of the Plans to have paid as
contributions to such Plans on or prior to the Closing Date except as set
forth in Schedule 4.15.
(e) Other than for claims in the ordinary course for benefits under
the Plans, there are no actions, suits, claims or proceedings, pending or
to the knowledge of Shareholder threatened. Section 4.16. Insurance. The
Company has in full force and effect the insurance policies listed in
Schedules 4.4 and 4.12. The Company will maintain or cause to be
maintained in full force and effect all such insurance policies or
replacement policies through the Closing Date. The Company and Shareholder
believe that such insurance policies are adequate to protect the Company's
assets from all risks customarily insured against.
Section 4.17. Disclosure. To the best of the each of Shareholder's
and the Company's knowledge, no representation, warranty or statement made
by the Shareholder or the Company in this Agreement or in the Schedules
attached hereto or in the certificates or other written materials furnished
to the Buyer or its representatives, attorneys and accountants in
connection with this Agreement and the transactions contemplated hereby or
thereby, contains any untrue statement of a material fact or omits to state
a material fact required to be stated herein or therein or necessary to
make the statements contained herein or therein not misleading.
Section 4.18. Brokers; Finders. Except as set forth in Schedule 3.3,
neither the Company nor the Shareholder has employed, or is subject to any
claim of, any broker, finder, consultant or intermediary in connection with
the transactions contemplated by this Agreement who might be entitled to
a fee or commission upon the consummation of the transactions contemplated
hereby.
ARTICLE 5
Representations and
Warranties of the Buyer
The Buyer represents and warrants to the Company and to the
Shareholder as follows:
Section 5.1. Incorporation; Authorization; etc. The Buyer is a
corporation duly organized, validly existing and in good standing under the
laws of the Commonwealth of Massachusetts. The Buyer has full corporate
power and is duly authorized to perform its obligations under and to
consummate the transactions contemplated by this Agreement. The execution,
delivery and performance of this Agreement and the Ancillary Agreements and
the consummation of the transactions contemplated hereby and thereby will
not violate any provision of the Articles of Incorporation or By-Laws of
the Buyer or any provision of any mortgage, lien, lease, agreement,
instrument, order, arbitration award, judgment, law, statute, regulation
or decree to which the Buyer is a party or by which the Buyer is bound and
will not violate or conflict with any other material restriction of any
kind or character to which the Buyer is subject. This Agreement and the
Ancillary Agreements constitute the legal, valid and binding agreement of
the Buyer and each is enforceable against the Buyer in accordance with its
terms, except as may be limited by bankruptcy, insolvency, moratorium or
other laws affecting the enforcement of creditors' rights generally and by
equitable principles.
Section 5.2. Brokers; Finders; etc. The Buyer has not employed or
is subject to any claim of any broker, finder, consultant or other
intermediary in connection with the transactions contemplated by this
Agreement who might be entitled to a fee or commission from the Buyer upon
the consummation of the transactions contemplated hereby , other than
pursuant to an agreement wit Gateway Financial.
Section 5.3. Litigation; Orders. Except as provided in Schedule 5.3
hereto, there are no lawsuits, actions, administrative or arbitration or
other proceedings or governmental investigations pending or to the
knowledge of Buyer threatened against Buyer and not covered by adequate
insurance that could result in a judgment against it in an amount that
exceeds $50,000 or that could, individually or in the aggregate, have a
material adverse effect on the Business Condition of the Buyer. There are
no judgments or outstanding orders, injunctions, decrees, stipulations or
awards (whether rendered by a court or administrative agency, or by
arbitration) against the Buyer or any of its properties or businesses that
may have the effect of prohibiting the Stock Purchase, or could affect
materially any business practices of the Company following the Closing.
Section 5.4. Investment Purpose. Buyer is buying the Shares for
investment only and not with a view to resell in connection with any
distribution thereof, except in compliance with the Securities Act of 1933,
as amended (the "securities Act"), and all other applicable securities
laws. Buyer is an "accredited investor" within the meaning of the
Securities Act.
Section 5.5. Financing. On the Closing Date, Buyer will have
sufficient funds to consummate the transactions contemplated by this
Agreement to occur at the Closing.
ARTICLE 6
Survival of Representations
and Warranties; Indemnity
Section 6.1. Survival. (a) Subject to Section 6.1(b) hereof, the
representations and warranties of the Shareholder, the Company and the
Buyer included or provided for herein, or in the Schedules or other
instruments or agreements delivered or to be delivered pursuant hereto,
shall survive the consummation of the Stock Purchase at the Closing for
a period of two (2) years from the Closing Date.
(b) The representations and warranties contained in Section 13.1(a)
and (c) shall survive indefinitely and Section 4.14 shall survive until the
expiration of the statute of limitations with respect to the tax returns
of the Company for the periods referred to in such Section; provided,
however, that if prior to any such date, Shareholder shall have been
notified of a claim for indemnity hereunder and such claim shall not have
been finally resolved or disposed of at such date, any representation or
warranty which is the basis for such claim shall continue to survive as to
such claim and shall remain a basis for indemnity until such claims is
finally resolved or disposed of.
Section 6.2. Indemnity. Subject to the other provisions of this
Article 6, after the Closing Date, the Shareholder shall indemnify and hold
harmless the Buyer and its successors and assigns, and the Buyer shall
indemnify and hold harmless the Shareholder and their successors and
assigns (the party or parties being indemnified referred to as the
"Indemnified Party" and the other party referred to as the "Indemnifying
Party"), from, against and in respect of any and all damages, deficiencies,
costs, expenses or losses ("Claims")(net of any tax benefit that results
in a reduction in the amount of Federal, state, local or other income or
other tax actually paid by the Indemnified Party) resulting from any
breach of any representation or warranty, covenant or agreement of the
Indemnifying Party. Notwithstanding the foregoing, Buyer's right to
indemnification under this Section 6.2 shall be subject to the following
provisions:
(a) No indemnification shall be payable by Shareholder unless the
total of all Claims shall exceed $80,000 in the aggregate (the
"Basket"), whereupon the amount of all Claims in excess of the
Basket shall be recovered in accordance with the terms hereof; and
(b) Shareholder shall not be obligated to indemnify any Buyer
Indemnified Party after the cumulative amount of all Claims exceeds
$5,000,000.
Section 6.3. Indemnification Procedure. The Indemnified Party shall
notify the Indemnifying Party with reasonable promptness of its discovery
of any matter giving rise to a claim of indemnity pursuant hereto. With
respect to any third party claim or action that could give rise to
indemnity hereunder, the Indemnified Party and the Indemnifying Party shall
each have the opportunity to participate in the defense of such claim or
action with counsel of each party's choice and at each party's own expense
and, in any event, such claim or action may not be settled unless the
Indemnified Party, on the one hand, and the Indemnifying Party, on the
other hand, consent thereto, which consent shall not be unreasonably
withheld.
Section 6.4. Indemnification Sole Remedy. Except as to those covenants
or agreements to be performed after Closing, the indemnification contained
in this Agreement shall be deemed to be the exclusive remedy of the
Indemnified Party in connection with or arising from any failure by the
Indemnifying Party to perform any of its covenants or obligations in this
Agreement or in the agreements related hereto or any breach by the
Indemnifying Party of any warranty or the inaccuracy of any representation
of the Indemnifying Party contained in this Agreement. Notwithstanding
anything herein to the contrary, nothing herein shall preclude a party from
obtaining injunctive relief or specific performance to enforce a breach of
this Agreement.
ARTICLE 7
Covenants of the Shareholder,
the Buyer and the Company
Section 7.1. Investigation of Business. The Buyer may, prior to the
Closing Date and through its own personnel, independent accountants and
attorneys, make such investigation of the Company, including the
confirmation of cash and cash equivalents, inventories, receivables and
liabilities, and the inspection of real and personal properties and
equipment, as it deems necessary or advisable; provided, however, that such
investigation shall not in any way release either the Shareholder or the
Company from their representations and warranties hereunder; and further
provided that any such investigation shall be conducted upon reasonable
prior notice in such a manner so as to minimize any disruption to the
personnel and operations of the Company. Consistent with the immediately
preceding sentence, the Company and the Shareholder agree to permit the
Buyer and its representatives to have, after the date of execution hereof,
full access to the premises and to all the books and records of the Company
and to furnish the Buyer with such existing financial and operating data
and other information with respect to the business and properties of the
Company as the Buyer shall from time to time reasonably request. In
addition, the Company and the Shareholder will cause the Company's
accountants to make their personnel, work papers and such other requested
documentation relating to their work papers and to their reports on the
books and records of the Company, as is reasonably requested in connection
with any such investigation, available to the Buyer and its independent
public accountants and attorneys during regular business hours. In the
event of the termination of this Agreement, the Buyer will deliver to the
Company all documents, work papers and other material obtained by the Buyer
or on behalf of the Buyer from the Company as a result of this Agreement
or in connection herewith, whether so obtained before or after the
execution hereof and Buyer shall continue to comply with the provisions of
a Confidentiality Agreement previously executed wit the Company, which
shall survive the termination of this Agreement..
Section 7.2. Obtaining Consents and Governmental Approvals. The
Shareholder, the Company and the Buyer will cooperate and use their
respective best efforts to make promptly all governmental and other
registrations, filings, consents, transfers, applications, notices,
approvals, orders, qualifications, licenses, permits, approvals, other
authorizations and waivers and other actions of any kind required to be
made, filed, given or obtained by any of the Shareholder or the Company
with, to or from any persons or governmental authorities or private
agencies in connection with the consummation of the Stock Purchase (as the
same are listed in Schedule 4.9) and the other transactions contemplated
by this Agreement.
Section 7.3. Payment of Taxes. The Shareholder agrees to pay all
income or capital gains taxes, if any, arising solely out of the sale of
the Shares pursuant to . The Buyer agrees to cause the Company to pay, or
dividend to the Shareholder, an amount equal to the tax liability of the
Shareholder based on the Company's 1998 earnings and the earnings of the
Company through the Closing. The parties agree that no election shall be
made under section 338(h)(10) of the Code. The parties further agree to
make the election under Section 1377(a)(2) of the Code, or Section 1362
(e)(3) of the code as applicable, to close the Company's tax year as of the
Closing Date.
Section 7.4. Further Assurances. The Shareholder, the Company and the
Buyer covenant and agree that, from time to time, whether at or after the
Closing Date, each of them will execute and deliver such further
instruments of conveyance and transfer and take such other action as may
be necessary to carry out the terms of this Agreement. The Shareholder,
the Company and the Buyer further covenant and agree that they will not
take any action that will prevent their performance of this Agreement in
accordance with its terms.
Section 7.5. Conduct of Business. From the date hereof through the
Closing, except as otherwise consented to or approved by the Buyer in
writing or provided for in this Agreement, the Company covenants and
agrees, and the Shareholder covenant and agree that they will not cause or
allow the Company to breach or violate such covenant and agreement, that:
(a) the Company shall operate its business in the ordinary and usual
course and in good faith, consistent with past management practices;
(b) the Company shall not change or amend its charter or by-laws;
(c) the Company shall not issue, sell or agree to issue or sell (i) any
Shares or (ii) any securities convertible into, or options with respect to,
or warrants to purchase or rights to subscribe to, any Shares;
(d) the Company shall not (i) declare, pay or set aside for payment any
dividend or other distribution in respect of any Shares, or (ii) directly
or indirectly, redeem, purchase or otherwise acquire any Shares;
(e) the Company shall not make any capital expenditures, or commitments
with respect thereto, except for expenditures or commitments in an
aggregate amount less than $5,000;
(f) the Company shall not incur, assume or guarantee any
indebtedness for money borrowed (which for this purpose shall
include nonrecourse borrowings) or otherwise enter into any
transaction, agreement, arrangement or understanding pursuant to
which any third party agrees to provide or provides the Company
with any funds other than in payment for goods or services in the
ordinary course of business
(g) the Company shall not remove, transfer to the Shareholder or
others, sell, or enter into any material contract with respect to, any of
its properties or assets, other than sales in the ordinary course of
business;
(h) the Company shall not grant any bonus or any increase in the rate of
compensation or in the benefits pay able or to become payable to any
officer or other employee or to any agent or consultant over the levels in
effect at the date hereof other than (i) normal merit increases for those
officers and employees with aggregate annual compensation from the Company,
of less than $25,000 or (ii) increases required by applicable law;
(i) except as set forth in Schedule 7.5 hereto, and except in the
ordinary course of business, the Company shall not encumber or permit to
become subject to any encumbrance any of its assets or enter into any other
transaction or make any other commitment;
(j) the Company shall not amend, or take any steps to amend, any of the
Plans; and
(k) the Company shall maintain its corporate existence intact.
Section 7.6. Preservation of Business. The Shareholder and the Company
shall use their respective best efforts to preserve the businesses of the
Company intact, to keep available to the Company and the Buyer the services
of the employees of the Company and to preserve the good will of customers
and others having business relations with the Company.
Section 7.7. Certified Financial Statements. The Shareholder and the
Company shall cooperate with Buyer's accountants in undertaking an audit
of the Company and certifying that the Financial Statements present fairly
the financial position, results of operations or other information included
therein of the Company for such periods or as of such dates as the Buyer
may reasonably require, in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved.
ARTICLE 8
Conditions to the Buyer's Obligation to Close
The obligations of Buyer to consummate the Stock Purchase is subject to
the satisfaction on or prior to the Closing Date of all of the following
conditions (any of which may be waived by the Buyer):
Section 8.1. Representations, Warranties and Covenants of the
Shareholder. Each of the representations and warranties of the Shareholder
contained in this Agreement shall be true in all respects on and as of the
Closing Date with the same effect as though such representations and
warranties had been made on and as of such date (except for changes
permitted by this Agreement), each of the covenants and agreements of the
Shareholder to be performed on or before the Closing Date shall have been
duly performed in all material respects, and the Buyer shall have received
at the Closing a certificate to that effect in the form set forth in
Exhibit E hereto dated the Closing Date and executed by or on behalf of the
Shareholder.
Section 8.2. Closing Documents. The Shareholder shall have furnished
the Buyer with:
(i) copies of the Articles of Incorporation of the Company certified as
of recent date by the Secretary of State of the Commonwealth of
Massachusetts;
(ii) the original minute books of the Company and copies of the By-laws
of the Company, each certified as of the Closing Date by the Company's
Secretary; and
(iii) certificates for all of the Shares to be purchased, with
appropriate stock powers attached, properly signed, together with evidence
of payment of any applicable stock transfer taxes and together with the
related stock books and stock transfer records.
Section 8.3. Filings; Consents; Waiting Periods. All registrations,
filings, applications, notices, transfers consents, approvals, orders,
qualifications, waivers and other actions of any kind required of any
persons or governmental authorities or private agencies, including, but
without limitation, any approvals required by any person to whom the
Company is indebted in connection with (i) the consummation of the Stock
Purchase, (ii) the other transactions contemplated by this Agreement, shall
have been filed, made or obtained and all applicable waiting periods shall
have expired or been terminated.
Section 8.4. No Litigation. No action, suit or proceeding shall have
been instituted by any person or entity, or threatened by any governmental
agency or body, before a court or governmental body, to restrain or prevent
the carrying out of the transactions contemplated by this Agreement or that
seeks other relief with respect to any of such transactions or that could,
individually or in the aggregate, have a material adverse effect on the
Business Condition of the Buyer or of the Company. At the Closing Date,
there shall be no injunction, restraining order or decree of any nature of
any court or governmental agency or body in effect that restrains or
prohibits the consummation of the Stock Purchase.
Section 8.5. Opinion of Shareholder and the Company's Counsel. The
Shareholder shall have delivered to the Buyer the written opinion, dated
the Closing Date, of Messrs. Duane Moris & Hecjscher, LLP counsel for the
Shareholder and counsel for the Company, in the form set forth in Exhibit
B hereto.
Section 8.7. Employment Agreement. The Shareholder shall have executed
and delivered the Employment and Non-Compete Agreement referred to in
Section 2.4 hereof.
Section 8.8. Non-Compete Agreements. The Company's key
employees shall have executed and delivered the Non-Compete Agreements
referred to in Section 2.4 hereof.
ARTICLE 9
Conditions to the Shareholder's
Obligation to Close
The obligation of the Shareholder to consummate the Stock Purchase is
subject to the satisfaction on or prior to the Closing Date of all of the
following conditions (any of which may be waived by the Shareholder):
Section 9.1. Representations, Warranties and Covenants of the Buyer.
Each of the representations and warranties of the Buyer contained in this
Agreement shall be true on and as of the Closing Date with the same effect
as though such representations and warranties had been made on and as of
such date, each of the covenants and agreements of the Buyer to be
performed on or before the Closing Date shall have been duly performed, and
the Shareholder shall have received at the Closing Date a certificate to
that effect dated the Closing Date and executed on behalf of the Buyer by
an authorized officer of the Buyer.
Section 9.2. Payment of Purchase Price. The Buyer shall have
delivered to the Shareholder checks or a wire transfer in the amount set
forth in Section 2.3 (a) hereof and a promissory note in the amount set
forth in Section 2.3(b) hereof payable in each case to the Shareholder.
Section 9.3. Filings; Consents; Waiting Periods. All registrations,
filings, applications, notices, transfers consents, approvals, orders,
qualifications, waivers and other actions of any kind required of any
persons or governmental authorities or private agencies, including, but
without limitation, any approvals required by any person to whom the Buyer
is indebted in connection with (i) the consummation of the Stock Purchase,
(ii) the other transactions contemplated by this Agreement, shall have been
filed, made or obtained and all applicable waiting periods shall have
expired or been terminated.
Section 9.4. No Litigation. No action, suit or proceeding shall have
been instituted by any person or entity, or threatened by any governmental
agency or body, before a court or governmental body, to restrain or prevent
the carrying out of the transactions contemplated by this Agreement or that
seeks other relief with respect to any of such transactions or that could,
individually or in the aggregate, have a material adverse effect on the
Business Condition of the Buyer or of the Company. At the Closing Date,
there shall be no injunction, restraining order or decree of any nature of
any court or governmental agency or body in effect that restrains or
prohibits the consummation of the Stock Purchase.
Section 9.5. No Injunction. At the Closing Date, there shall be no
injunction, restraining order or decree of any nature of any court or
governmental agency or body in effect that restrains or prohibits the
consummation of the Stock Purchase.
Section 9.6. Employment Agreement. The Buyer shall have executed and
delivered to the Shareholder the employment agreement referred to in
Section 2.4.
Section 9.7. Opinion of the Buyer's Counsel. The Buyer shall have
delivered to the Shareholder the written opinion, dated the Closing Date,
of Hughes & Associates, counsel for the Buyer, in the form set forth in
Exhibit C hereto.
Section 9.8. Guarantees. Buyer shall indemnify Shareholder against any
liability arising out of any guarantees Shareholder may have entered into
on behalf of the Company which shall not have been fully discharged and
released as of the Closing.
ARTICLE 10
Termination. Amendment and Modification
Section 10.1. Termination. This Agreement may be terminated at any
time prior to the Closing:
(a) by mutual consent of each of the parties hereto, or
(k) by the Buyer on the one hand or by Shareholder and the Company
on the other hand (provided that the party seeking termination has
diligently and in good faith performed or complied in all material
respects with the agreements and covenants required to be
performed by it hereunder) in the event that the transactions
contemplated hereby are not consummated pursuant to this Agreement
on or before June 30, 1999 (the "Termination Date") unless the
parties hereto shall have agreed upon an extension of time in
which to consummate the transactions contemplated hereby.
Section 10.2. Amendment and Modification. Subject to applicable law,
this Agreement may be amended, modified or supplemented only by written
agreement of the parties hereto.
Section 10.3. Effect of Termination. In the event of the
termination of this Agreement pursuant to this Article 10, this Agreement,
except for the provisions of Section 11.5 hereof, shall forthwith become
void and have no effect, without any liability on the part of any party.
In the event of a termination of this Agreement pursuant to this Article
10, neither party shall have any further rights or recourse in connection
herewith except for any breach resulting from the willful or intentional
actions of a party hereto.
ARTICLE 11
Miscellaneous
Section 11.1. Counterparts. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more counterparts have
been signed by each of the parties and delivered to the other party.
Section 11.2. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts
without reference to the choice of law principles thereof.
Section 11.3. Entire Agreement. This Agreement and the Schedules and
Exhibits hereto contain the entire agreement between the parties and there
are no agreements, understandings, representations or warranties between
the parties other than those set forth or referred to therein.
Section 11.4. Release of Prior Claims. Effective on the Closing, and
except as otherwise provided herein, the Shareholder, by the execution of
this Agreement, releases and forever discharges the Company and its
directors, officers and employees and the Company by execution of this
Agreement, releases and forever discharges the Shareholder from any and all
claims or demands, for all periods through the Closing Date, arising out
of or related to the Company or the actions or in actions of its directors,
officers and employees with respect thereto.
Section 11.5. Expenses. Except as set forth in this Agreement, all
legal and other costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the
party incurring such costs and expenses.
Section 11.6. Specific Performance. The Shareholder and the Buyer each
acknowledge that, in view of the uniqueness of the Company, the parties
hereto would not have an adequate remedy at law for money damages in the
event that this Agreement were not performed in accordance with its terms,
and therefore agree that the parties hereto shall be entitled to specific
enforcement of the terms hereof in addition to any other remedy to which
the parties hereto may be
entitled, at law or in equity.
Section 11.7. Notices. All notices hereunder shall be sufficiently
given for all purposes hereunder if in writing and delivered personally or
sent by registered mail or certified mail, postage prepaid, to the
appropriate address as set forth below. Notice to the Shareholder or the
Company shall be addressed to:
Richard Aho
RWA, Inc.
37 Washington Street
Melrose, MA 02176
with a copy to:
Martin B. Shulkin, Esq.
Duane, Morris & Heckscher, LLP
One International Place
Boston, MA 02110
or at such other address and to the attention of such other person as the
Shareholder or the Company may designate by written notice to the Buyer.
Notices to the Buyer shall be addressed to:
Chase Corporation
26 Summer Street
Bridgewater, MA 02324
Attention: President
with a copy to:
George M. Hughes, Esq.
Hughes & Associates
P.O. Box 610138
Newton Highlands, MA 02461-0138
or at such other address and to the attention of such other person as the
Buyer may designate by written notice to the Shareholder. Any notice
hereunder shall be deemed to have been served or given as of the date such
notice is actually received.
Section 11.8. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their
successors and assigns; provided, however, that the Buyer will not
assign its rights under this Agreement to an entity other than an entity
affiliated with the Buyer without the written consent of the
Shareholder.
IN WITNESS WHEREOF, this Agreement has been signed by or on behalf of
each of the parties as of the day first above written.
CHASE CORPORATION
By: /s/ Peter R. Chase
Title: President, CEO
RWA, INC.
By: /s/ Richard W. Aho
Title: President
/ s/ Richard W. Aho
Richard W. Aho, sole shareholder
Schedules.
Schedule 4.2 Ownership Interests.
Schedule 4.4 Title; Leases; Condition of Properties.
Schedule 4.5 Inventories.
Schedule 4.6 Changes since December 31, 1998.
Schedule 4.7 Litigation; Orders.
Schedule 4.8 Copyrights, Trademarks, Patents, etc.
Schedule 4.9 Licenses; Approvals, Other
Authorizations, Consents,
Reports, etc. required
in connection with the Stock Purchase.
Schedule 4.11 Liabilities.
Schedule 4.12 Contracts, Agreements, etc.
Schedule 4.13 Interests of Certain Persons.
Schedule 4.15 Employee Benefit Plans.
Exhibits.
Exhibit A Promissory Note of the Buyer.
Exhibit B Form of opinion of Duane, Morris & Heckscher, LLP
counsel to the Shareholder and the Company
Exhibit C Form of opinion of Hughes & Associates, counsel to the Buyer
Exhibit D Form of Employment and Non-Compete Agreement
Exhibit E Form of certificate of the Shareholder - omitted
Exhibit A
Promissory Note
$3,000,000 Bridgewater, Massachusetts
FOR VALUE RECEIVED, Chase Corporation, a corporation organized
under the laws of the Commonwealth of Massachusetts (the "Maker"),
hereby promises to pay to the order of Richard Aho (the "Payee") the
sum Three Million Dollars ($3,000,000) in twelve equal quarterly
installments of Two Hundred and Fifty Thousand Dollars ($250,000)
each on the first day of September, December, March, and June
commencing September 1, 1999. From June 2, 2001 until the final
payment on June 1, 2002 unpaid principal of this note shall bear
interest at the rate of five percent (5%) per annum; this note shall
not otherwise bear interest.
The holder of this note may declare the principal hereof and accrued
interest hereon immediately due and payable in the event that the
Maker shall (i) default in the payment of any installment of the
principal of or accrued interest on this note when the same shall
become due and payable and such default shall continue uncured for
a period of 10 business days after notice of such default, (ii) make
an assignment for the benefit of creditors or apply for the
appointment of a trustee, liquidator or receiver of the Maker or of
any substantial part of the assets of the Maker, or there shall have
been filed against Maker any case or proceeding under any
bankruptcy, reorganization, insolvency or similar law now or
hereafter in effect, and such case or proceeding is not dismissed
within 60 days of its filing and (iii) if Maker is liquidated,
dissolved, ceases to exist, or sells all or substantially all of its
assets.
The Maker hereby waives presentment, demand, notice, protest and all
other demands or notices in connection with delivery, acceptance,
performance, default or enforcement of this note and assents to any
extensions or postponements of the time of payment or any other
indulgence.
The Maker agrees to pay all costs of collection, including
reasonable attorneys' fees.
This note shall take effect as a sealed instrument and shall be
governed by the substantive laws of the Commonwealth of
Massachusetts.
Dated: May 26,1999
CHASE CORPORATION
By:______________________
Attest:
____________________
Exhibit B
May 25, 1999
To: Chase Corporation
26 Summer Street
Bridgewater, MA 02324
Re: RWA, Inc.
Ladies and Gentlemen:
We have acted as counsel to RWA, Inc., a Massachusetts
corporation (the "Company") and Richard W. Aho, the sole shareholder
of the Company (the "Shareholder"), in connection with the Stock
Purchase Agreement dated as of May 1, 1999 (the "Agreement") by and
among the Company, the Shareholder and you (the "Purchaser"). This
opinion is furnished to you pursuant to Section 2.4(b) of the
Agreement. Capitalized terms used in this opinion but not otherwise
defined herein shall have the meanings given to them in the Agreement.
A. SCOPE OF REVIEW
In rendering this opinion, we have examined and relied upon:
1. Executed counterpart copies of: (a) the Agreement (including
the Exhibits thereto), and (b) Employment, Non-Compete,
Confidentiality and Inventions Agreement of even date herewith (the
"Employment Agreement") by and between the Shareholder and the
Purchaser (the foregoing agreements being sometimes hereinafter
collectively referred to as the "Transaction Documents");
2. A copy of the Articles of Organization, certified by the
Secretary of State of the Commonwealth of Massachusetts;
3. A copy of the by-laws of the Company, certified by the
Secretary of the Company;
4. A copy of the Action by Written Consent of the Sole Director
and Sole Shareholder of the Company dated as of May 25, 1999; and
5. A certificate of the Secretary of State of the Commonwealth
of Massachusetts dated May 18, 1999 attesting to Company's due
incorporation, legal existence and good standing as a corporation in
the Commonwealth of Massachusetts (the "Massachusetts Certificate").
6. Affidavit of Richard W. Aho as to certain factual matters
dated as of May 25, 1999.
B. ASSUMPTIONS
For purposes of the opinions set forth below, we have assumed
(with your permission and without any independent investigation on our
part) and relied upon:
1. The genuineness of all signatures, the authenticity of all
certificates and other documents submitted to us as originals and the
completeness and conformity to original documents of all documents
submitted to us as photostatic or certified copies;
2. The accuracy and completeness of (i) all representations and
warranties as to factual matters made by each of the parties in the
Transaction Documents;
3. That all natural persons executing the Transaction
Documents, either individually or on behalf of a corporation or other
business entity, are legally competent;
4. That the Purchaser has full legal capacity, competency,
power and authority to execute, enter into, perform its obligations
under and receive the benefits of each of the Transaction Documents to
which it is a party;
5. That the execution, delivery and performance of the
Transaction Documents by the Purchaser has been duly authorized by all
necessary corporate or other action, and that the Purchaser has duly
executed and delivered each of the Transaction Documents; and
6. That the Transaction Documents are the legal and binding
obligations of the Purchaser, enforceable in accordance with their
respective terms, and the Purchaser has complied and will comply with
the respective obligations thereunder.
C. QUALIFICATIONS AND LIMITATIONS
Our opinions set forth below are further qualified to the extent
that:
1. We express no opinion as to:
(i) the validity or enforceability of any of the
provisions of the Transaction Documents or any rights granted to any
party pursuant thereto to the extent that the same are affected or
limited by or subject to (1) applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or similar laws
affecting the rights of creditors generally, or (2) the availability
of the remedy of specific performance or injunctive or other equitable
relief (whether enforcement is sought in equity or law) being subject
to the discretion of the court before which any proceeding for such
remedy may be brought, or (3) equitable principles or standards of
reasonableness or to the discretion of the court before which any
proceeding for enforcement thereof may be brought (whether enforcement
is sought in law or equity);
(ii) compliance or non-compliance with the anti-fraud
provisions of applicable federal or state law;
(iii) the enforceability of any non-compete covenant,
to the extent such enforceability may be affected or limited by
equitable principles or subject to standards of reasonableness or to
the discretion of the court before which any proceeding for
enforcement thereof may be brought; or
(iv) the enforceability of any provisions relating to
choice of law, waivers or to delay or omission of enforcement of
rights or remedies.
2. We express no opinion herein as to the effect of the law of
any state or jurisdiction other than the law of the United States of
America and the law of the Commonwealth of Massachusetts as applied by
the courts of the Commonwealth of Massachusetts. No opinion is given
herein as to choice of law which may apply to the Transaction
Documents or the transactions contemplated thereby.
3. Except as explicitly set forth in Paragraphs A1 - A6 above,
we have undertaken no factual investigation in any regard, although
nothing has come to our attention which would suggest that any
certificate or document referred to in said paragraph is inaccurate or
incomplete in any material respect. To the extent that our opinion
relates to matters as to which governmental agencies have issued
certificates, these opinions speak as of the respective dates of such
certificates. With respect to any matters stated "to our knowledge,"
our opinions are limited to the actual knowledge of the lawyers in
this firm who have been involved in the transactions contemplated by
the Agreement. Our opinion as to the due incorporation, valid
existence and good standing of the Company is based solely on the
Massachusetts Certificate.
4. This opinion is being given as of its date based upon the
facts and assumptions set forth herein and upon existing law and
interpretations thereof in effect on the date hereof. No assurance
can be given that there will not be subsequent changes in such facts
and assumptions, or in such law and interpretations thereof, which may
affect the conclusions set forth herein, and we assume no obligation
to supplement, amend or update this opinion in the event of such
changes.
5. This opinion is issued solely for the benefit of the
addressee hereof in connection the transactions contemplated by the
Transaction Documents, and may not be relied on by any other person or
for any other purpose.
D. OPINIONS
Based upon and subject to the limitations and qualifications
herein set forth, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly
existing and in corporate good standing under the laws of the
Commonwealth of Massachusetts and has full corporate power and
authority to conduct its business as presently conducted, to enter
into and perform each of the Transaction Documents and to carry out
the transactions contemplated thereby.
2. Each of the Agreement and the Employment Agreement has been
duly executed and delivered by Shareholder and is the valid and
binding obligation of the Shareholder enforceable against him in
accordance with their respective terms, subject as to enforcement of
remedies to applicable bankruptcy, insolvency, reorganization or
similar laws affecting generally the enforcement of creditor's rights
and subject to a court's discretionary authority with respect to the
granting of a decree ordering specific performance or other equitable
remedies.
3. The Agreement has been duly authorized by all necessary
corporate action, and the Agreement has been duly executed and
delivered by the Company. The Agreement constitutes the valid and
binding obligation of the Company enforceable in accordance with its
terms, subject as to enforcement of remedies to applicable bankruptcy,
insolvency, reorganization or similar laws affecting generally the
enforcement of creditor's rights and subject to a court's
discretionary authority with respect to the granting of a decree
ordering specific performance or other equitable remedies. The
execution and delivery of the Agreement and the sale of the Shares
thereunder will not conflict with, or result in any breach of any of
the terms, conditions, or provisions of, or constitute a default
under, the Articles of Organization or By-Laws of the Company, each as
amended to date and presently in effect, or to our knowledge, any
indenture, lease, agreement, or other instrument known to us to which
the Company is a party or by which it or any of its properties are
bound, or any decree, judgment or order known to us specifically
naming the Company, except as may be provided by the Agreement.
4. As of the Closing, the Company's authorized capital stock
consists of 300,000 shares of common stock, $.01 par value, of which
60,000 shares are issued and outstanding. All of the Company's
outstanding shares of stock have been duly authorized and validly
issued and are fully paid and non-assessable. We are not aware of any
encumbrances with respect to the Shares and the certificate(s)
evidencing the Shares and instruments of transfer relating thereto
delivered to Purchaser at Closing are such as to transfer and vest in
Purchaser all of the Shareholder's right, title and interest in and to
the Shares, upon the purchase of the Shares pursuant to the Agreement.
5. No governmental consents, approvals authorizations or orders
are required for the consummation by the Company and Shareholder of
the transactions contemplated by the Transaction Documents.
6. To our knowledge, except as set forth in Schedule 4.7 to the
Agreement, there is no action, suit or proceeding, or governmental
inquiry or investigation, pending or threatened against the Company.
E. CONCLUSION
By acceptance of this letter, the Purchaser hereby acknowledges
and agrees that, with respect to any of the affairs of the Company,
including, without limitation, the transactions contemplated by the
Transaction Documents, it has not looked to or relied upon any
representation, warranty, statement or information provided by Duane,
Morris & Heckscher LLP, whether orally or in writing, except as
expressly set forth in this letter with and subject to the
qualifications set forth herein.
Very truly yours,
DUANE, MORRIS & HECKSCHER LLP
Exhibit C
May 26, 1999
Richard W. Aho
RWA, Inc.
37 Washington Street
Melrose, MA 02176
Dear Mr. Aho:
We have acted as counsel for Chase Corporation, a Massachusetts
corporation ("Chase"), in connection with its purchase from you of 60,000
shares of the common stock, $0.01 par value (the "Shares") of RWA, Inc.,
a Massachusetts corporation ("RWA") Such purchase of Shares is pursuant to
a Stock Purchase Agreement (the "Agreement") between you, RWA and Chase
dated as of May 1, 1999. Capitalized terms used herein but not otherwise
defined shall have the meanings given to such terms in the Agreement.
In rendering this opinion, we have examined originals or photostatic
or certified copies of the following documents and records:
(a) The Agreement;
(b) The Promissory Note dated as of the date hereof in the
principal amount of $3,000,000 (the "Note") of Chase payable to your
order;
(c) The Articles of Organization and by-laws of Chase , each as
amended, certified by the Secretary of the Commonwealth of
Massachusetts and the Clerk of Chase, respectively;
(d) Copies of Written Consents or minutes of meetings of the Board
of Directors of Chase;
(e) A Certificate of Legal Existence and Good Standing of Chase
issued by the Secretary of the Commonwealth of Massachusetts;
and
The documents described in paragraphs (a) through (e) above are
hereinafter referred to, collectively, as the "Transaction Documents".
We have also examined such other documents as we have deemed necessary
for purposes of this opinion. In rendering this opinion, we have relied
upon certain representations of Chase .
In the course of our examination, we have assumed the capacity of all
natural persons, the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents submitted
to us as photostatic or certified copies and the authenticity of the
originals of such copies.
Based on the foregoing and subject to the qualifications set forth in
the last paragraph of this opinion, we are of the opinion that:
1. Chase is a corporation duly organized, validly existing and in
good standing with the
Secretary of State of the Commonwealth of Massachusetts and has all
necessary power to enter into and perform the transactions contemplated by
the Transaction Documents in accordance with their respective terms,
including the power to purchase the Shares.
2. Each of the Agreement and the Note has been duly authorized by
all requisite action on the part of Chase, has been duly executed and
delivered by Chase and constitutes the valid and binding obligation of
Chase, enforceable in accordance with its terms.
3. The execution, delivery and performance by Chase of the
purchase of the Shares in the manner contemplated by the Agreement and the
payment of the Note will not violate any applicable law or Chase's Articles
of Organization or by-laws and, to the best of our knowledge, will not
result in a breach of, or conflict with, or constitute a default under, or
except as may be provided by the Agreement, result in the creation or
imposition of any lien, charge or encumbrance of any nature whatsoever upon
any of the assets or property of Chase pursuant to any indenture, agreement
or instrument to which Chase is a party or by which it is bound.
4. No governmental consents, approvals, authorizations or orders
are required for the consummation by Chase of the transactions contemplated
by the Transaction Documents. The purchase of the Shares by Chase pursuant
to the Agreement constitutes a legal and valid purchase of stock under the
laws of the Commonwealth of Massachusetts.
The foregoing opinion is qualified to the extent that the
enforceability of each of the Agreement and the Note is subject to general
principles of equity and to applicable bankruptcy, insolvency, moratorium
or similar laws affecting the enforcement of creditors' rights generally,
including principles of equitable subordination.
Very truly yours,
Hughes & Associates
Exhibit D
Employment, Non-Compete, Confidentiality and Inventions
Agreement.
This agreement (the "Agreement") dated , 1999 is entered into between
Chase Corporation, a corporation organized under the laws of the
Commonwealth of Massachusetts (the "Company") and Richard Aho, of
, Massachusetts (the "Executive").
The purpose of the Agreement is to set forth the arrangements between
the Company and Executive relating to Executive's employment by the
Company, including undertakings with respect to non-competition,
confidentiality and the ownership of intellectual property and inventions.
Executive and the Company hereby agree as follows:
1. EMPLOYMENT OF EXECUTIVE BY THE COMPANY.
0.1 Employment. The Company hereby employs
Executive as the general manager of its RWA division or
subsidiary ("RWA"). Executive's title shall be that of
RWA's president. Executive agrees to devote his full
business time and best efforts to the business of the
Company and shall discharge such Executive
responsibilities and offices consistent at all times with
his position as president as may be assigned to him by the
Board of Directors of the Company from time to time.
Executive shall not render material services to any third
person, firm or corporation without prior written consent
of the Company. The foregoing undertakings shall not
preclude management of Executive's personal affairs.
1.2 Term. Executive's employment shall be for a two
year term and shall thereafter continue, in all cases subject to
termination by Executive or the Directors as provided in section 2 of this
Agreement.
1.3 Compensation. Executive shall be paid a salary of
one hundred and twenty five thousand dollars on an annualized basis which
shall be payable in equal monthly installments or more frequently in
accordance with the Company's usual policy.
1.4 Benefits. Executive shall be eligible to participate in all
employee benefit programs of RWA that are in effect generally for its
Executive personnel and, more specifically, shall entitled to the benefits
set out in Exhibit A of this Agreement.
1.5 Expenses. Executive is authorized to incur reasonable
expenses for promoting the business of the Company in accordance with the
normal policy of the Company as in effect from time to time. The Company
will reimburse Executive for all such expenses upon the presentation of
itemized accounts of such expenditures along with documentation of such
expenses as required by the Company.
2 TERMINATION.
2.1 Termination for Cause. The Company may terminate Executive's
employment at any time for "Cause", upon written notice specifying the
reasons. As used in this Agreement, term "Cause" shall mean:
(i) Willful misconduct or neglect by Executive of his duties hereunder as
determined in good faith by the Company,
(ii) Conviction of a felony or the commission of an act of dishonesty
or moral turpitude,
(iii) A material breach of this Agreement which continues uncured for
fifteen (15) days after the Company has given written notice to Executive
specifying reasonable detail the material breach.
2.2 Termination without Cause. Notwithstanding any other provision of
Agreement, the Company may terminate Executive's employment without cause
at any time, for any reason, effective upon sixty (60) days written notice
to Executive. In the event of a termination without cause by the Company,
the Company shall pay Executive the compensation, including all benefits,
payable hereunder for the balance, if any, of the initial term.
2.3 Disability. If Executive is unable to perform his regular duties
of employment, with reasonable accommodation, by reason of illness or
incapacity for periods aggregating three months or more within a twelve
(12) mouth period, the Company shall not be required to pay compensation
to him pursuant to this Agreement during such continued period of illness
incapacity which exceeds such three-month period. Executive's full
compensation shall be reinstated upon his return to employment and the
discharge of his duties hereunder. If it is determined provided herein that
because of Executive's disability he is, and for a continuous period of at
least six (6) months has been, unable to discharge his duties in full
hereunder, the Company shall have right to terminate his employment. The
determination of Executive's disability for purposes of section shall be
made by a qualified physician acceptable to Executive and the Company. In
event that Executive and the Company are unable to agree upon a qualified
physician, each party shall select a qualified physician, and in the event
those two physicians are unable to agree upon determination as to
Executive's disability, a third neutral physician ("Neutral Physician")
selected by the parties' physicians shall be selected. The determination
of disability by the Neutral Physician shall be binding for purposes of
this Agreement. In the event of a termination as a result disability,
Executive shall be bound by the noncompetition and nonsolicitation
provisions of section 3 of this Agreement.
2.4 Resignation. Executive may at any time subsequent to two years
from the date hereof resign employment, effective upon one hundred and
eighty (180) days written notice to the Company and may terminate his
employment effective on the expiration of the initial two (2) year term by
providing at least one hundred and eighty days prior written notice. Upon
such resignation, Executive shall be bound by the noncompetition and
nonsolicitation provisions section 3 of this Agreement and, except as
otherwise specifically set forth in this Agreement, the obligations of the
Company to Executive under this Agreement shall terminate upon the
effective date of such resignation. Executive agrees to continue to perform
his duties hereunder and otherwise assist the Company in an orderly
transition during such one hundred and eighty-day period.
In the event that Executive resigns his employment, other
than for "Good Reason", as hereinafter defined, prior to the expiration of
the initial two year term , the payments provided in Section 2.3 (d) of
the Stock Purchase Agreement by and among the Executive, RWA and the
Company dated as of May 1, 1999 shall be adjusted as follows:
in the event such resignation becomes effective during the
first twelve months of Executive's employment, no performance consideration
shall be payable;
in the event such resignation becomes effective subsequent to
the first twelve months of the initial term, the performance consideration
payable for months 1 through 12 shall be payable in full and the balance
shall be payable as follows:
in the event that Executive's resignation becomes
effective during months 13 through 15 , 10% of the performance
consideration with respect to months thirteen through sixty
shall be payable;
in the event that Executive's resignation becomes
effective during months 16 through 18, 30% of the performance
consideration with respect to months thirteen through sixty
shall be payable;
in the event that Executive's resignation becomes
effective during months 19 through 21, 50% of the performance
consideration with respect to months thirteen through sixty
shall be payable; and
in the event that Executive's resignation becomes
effective during months 22 through 24, 70% of the performance
consideration with respect to months thirteen through sixty
shall be payable.
"Good Reason" shall mean that the Executive has determined in
good faith that the Company has failed to assign to him on a consistent
basis executive duties performable within seventy five miles of RWA's
current offices which are commensurate with the level of executive duties
contemplated by this Agreement, (2) he is prevented by the Company from
continuing to fulfill his responsibilities at a level contemplated by this
Agreement, or (3) the Company unreasonably fails to fund capital
expenditures necessary for the projected needs and growth of RWA's business
on a profitable basis over a reasonable period of time provided that such
expenditures, determined in good faith, are consistent with the Company's
usual policies for approving expenditures.
3. NONCOMPETITION AND NONSOLICITATION.
3.1 General. During any period that Executive is employed by the
Company, Executive shall not, directly or indirectly, engage in competition
with the Company, without first obtaining the written consent of the
Company. Notwithstanding the foregoing, the direct or indirect
ownership of one percent (1%) or less of the stock of a Competitive
Business whose shares are listed on a national securities exchange or are
quoted on the National Association of Securities Dealers Automated
Quotation System shall not, in and of itself, be deemed to be a violation
of this section.
3.2. Non-Competition Subsequent to Employment For a period of five
years after termination of Executive's employment with the Company whether
by the Company with or without cause or by the Executive, Executive shall
not (i) solicit, directly or indirectly, or (ii) sell or provide a
Competitive Product or Service to, on behalf of a Competitive Business, any
account, client or customer with whom RWA has conducted business or for
whom RWA has performed any services during the period of Executive's
employment with the Company, including, but not limited to, any person or
entity who was a potential account, client or customer of RWA as a result
of contacts, including the exchange proposals, having been made between RWA
and such person or entity within one hundred and eighty (180) days prior
to Executive's severance of his employment with the Company.
3.3 Non-Solicitation. For a period of five years after the
termination of Executive's employment with the Company whether by the
Company with or without cause or by the Executive, Executive will not,
directly or indirectly, solicit, interfere with, hire, offer to hire any
employee of the Company, or seek to persuade or induce any employee of
Company to discontinue his or her employment with the Company in order to
become employed or associated with any business with which Executive is
employed or associated with in capacity, including himself individually.
3.4 Extension. The applicable time period set forth in this section
shall be extended for the time of any breach by Executive of any terms of
this Agreement.
2.5 Definitions.
3.5.1 As used in this Agreement, the term "engage in
competition with Company" shall mean owning, directly or indirectly, any
equity interest option or right to acquire an equity interest in any
Competitive Business as hereinafter defined, or managing, being employed
by or rendering services, directly or indirectly, either as an individual,
owner, principal, manager, employee, consultant, independent contractor,
advisor, partner, joint-venturer, officer director, shareholder or member
of, or in any other capacity whatsoever with or through, any Competitive
Business, whether such services are compensated or uncompensated.
3.5.2. As used in this Agreement, the term "Competitive Business" is
defined as any person, entity or organization, including Executive, who or
which is engaged in the business of electronic manufacturing services.
3.5.3. As used in this Agreement, the term "Competitive Product or
Service" is defined as any product, process, system or service of any
person, entity organization other than the Company, in existence or under
development which is the same as or similar to , any product, process,
system or service that is produced by RWA.
3.5.4. As used in this Agreement, the term "indirectly" means actions
taken by a person or entity that is acting with Executive's aid,
assistance, advice or authority or is under his direction or control.
3.5.5. As used in this Agreement, the term "solicit directly or
indirectly" means sell, communicate with, or in any way to induce any
interest in purchasing for the account of a Competitive Business any
Competitive Product or Services.
4. NONDISCLOSURE OF CONFIDENTIAL OR PROPRIETARY INFORMATION.
4.1 General. Executive acknowledges that in the course of
his employment with Company he will become acquainted with and/or develop
certain Confidential or Proprietary Information belonging to the Company
and its customers, that this Confidential or Proprietary Information is not
generally known outside of the Company, and that the protection of such
Confidential or Proprietary Information is necessary to the successful
conduct of the Company's business and the preservation of the integrity of
its relationships with its customers.
4.2 Non-Disclosure. Executive shall never, during the term of his
employment by the Company thereafter, directly or indirectly publish,
disseminate or otherwise disclose, deliver or make available to any third
party, either orally or in writing, any Confidential or Proprietary
Information as defined in this Agreement, without the prior written consent
of the Company; nor will Executive use such Confidential or Proprietary
Information for his own benefit or for the benefit of any other person
firm, association or business entity. Executive shall use such
Confidential Information only in performance of his duties for the Company
and in accordance with any Company policy with respect to the protection
of Confidential and Proprietary Information. Executive further agrees not
to attempt to intercept data, gain access to the Company's data in
transmission, or attempt entry into any Company system or file for which
he is not authorized, or intentionally adversely affect integrity of any
Company data or systems through the introduction of unauthorized code or
data through unauthorized deletion.
4.3 Precautions. During the term of his employment and thereafter,
Executive shall exercise commercially reasonable precautions to protect the
integrity and confidentiality of the Confidential or Proprietary
Information. He will not remove any Confidential or Proprietary
Information or copies thereof from the Company's premises except to the
extent necessary to fulfill the duties of employment, and then only with
the prior written consent of the Company. Upon the termination his
employment with the Company, and at any time upon the Company's request,
Executive shall return immediately to the Company any and all Confidential
or Proprietary Information and copies thereof then in his possession or
control.
4.4 Definition. As used in this Agreement, the term "Confidential
or Proprietary Information means, without limitation, the Developments
hereinafter defined and any information and materials that are treated by
the Company as confidential or proprietary, including without limitation
all trade and business secrets of the Company, whether or not reduced to
writing; information received by or disclosed to the Company by third
parties under an obligation of confidence; technical, business or
financial information of the Company, the use or disclosure of which might
reasonably be construed to be contrary to the interests of the Company; and
proprietary customer information and customer-related materials in the
Company's files. Confidential Information is contained in various media,
including without limitation, records, patent applications, computer
programs in object and/or source code, diagnostic techniques, flow charts,
other program documentation, manuals, plans, proposals, contracts,
drawings, designs, specifications, supply and customer lists, internal
financial data and other documents and records of the Company, whether or
not labeled or identified as "Confidential" or prepared in full or in part
by the Company or Executive. The definition of "Confidential or
Proprietary Information" herein shall not include information which (a)
is or becomes generally known within the Company's industry; (b) was known
to Executive at the time it was disclosed as evidenced by Executive's
written records at the time of disclosure, provided that such records
were disclosed to the Company at that time; (c) is lawfully and in good
faith made available to Executive by a third party who did not derive it
from the Company or receive it from the Company under an obligation of
confidentiality, and who imposes no obligation of confidentiality on
Executive; or d) is required to be disclosed by Executive by a governmental
authority or by order of a court of competent jurisdiction, provided that
such disclosure is subject to all applicable governmental or judicial
protection available for like material and reasonable advance notice is
given to the Company.
5 OWNERSHIP OF DEVELOPMENTS
5.1 Ownership of Developments. All Developments are and shall remain
the exclusive property of the Company, and the Company may use or pursue
them without restriction or additional compensation to Executive.
Executive shall promptly and fully disclose to the Company all Developments
developed by him during the period of his employment. Executive shall keep
and maintain complete written records of all Developments and of all work
or investigations done or carried out by him at all stages thereof, which
records shall the exclusive property of the Company.
5.2 Assignment. Executive: (a) hereby assigns, sets over and transfers
to the Company all his right, title and interest in and to all Developments
and (b) during and after his employment will cooperate fully in obtaining
patent, trademark, service mark, copyright or other proprietary protection
for such Developments, all in the name of the Company, or its nominee, at
Company's cost and expense, and, without limitation, shall execute and
deliver on request applications, assignments and other documents, and take
such other measures as the Company shall reasonably request in order to
perfect the Company's rights in the Developments (including giving of
testimony in the event of contested proceedings), and hereby appoints the
Company his attorney to execute and deliver any such documents on his
behalf in the event Executive fails refuses to execute and deliver any such
documents. Executive understands that, to the extent this Agreement shall
be construed in accordance with the laws of any state that limits the
assignability to the Company of certain employee inventions, this Agreement
shall be interpreted not to apply to such invention which a court rules
or the Company agrees is subject to such state limitation.
5.3 Copyright Executive acknowledges that all original works of
authorship made by him during the course of his employment are protectible
by copyright and are intended to be "works made for hire", as that term is
defined in Section 101 of the United States Copyright Act of 1976 (the
"Act") and shall be the property of the Company. Executive further
acknowledges that the Company shall be the sole author of all such works
within the meaning of the Act. If the copyright to any such copyrightable
work shall not be the property of the Company by operation of law,
Executive will without further consideration, assign to the Company all of
his right, title and interest in such copyrightable work and will cooperate
with the Company and its designees, at the Company's expense, to secure,
maintain and defend for the Company's benefit copyrights and any extensions
and renewals thereof on any and all such work. Executive hereby waives all
claims to moral rights in any Developments.
5.4 Definition. As used in this Agreement, the term "Developments"
means, without limitation, ideas, concepts, discoveries, inventions,
developments, know-how, trade secrets, techniques, methodologies,
modifications, improvements, original works of authorship, documentation,
designs, data, and software programs (however embodied), rights (whether
or protectible under state, federal, or foreign patent, trademark,
copyright, mask work protection, trade
secrecy or similar laws) that are conceived, discovered, invented,
developed, created, made, reduced to practice or tangible medium (i.e.,
"developed") by Executive or under his direct (individually or with others)
during the period of his employment by the Company (whether or not during
regular work hours) and that (a) are developed by use of Company's
equipment or facilities or at the Company's expense, or (b) are directly
or indirectly related to the Company's business.
6. BREACH AND REMEDIES.
6.1 Legal proceedings. The parties agree that in the event one party
breaches any part parts of this Agreement, legal proceedings may be
instituted against that party for breach of contract. In addition,
Executive agrees and acknowledges that a violation of sections 3, 4, or
5 of this Agreement shall entitle the Company to terminate this Agreement
immediately, which termination shall be conclusively deemed to be a
termination for cause.
6.2 Equitable relief Executive further acknowledges and agrees that the
Company's remedies at law for a breach of sections 3, 4, or 5 of this
Agreement are inadequate and that harm caused thereby is irreparable.
Accordingly, Executive expressly agrees that in the event of a violation
of sections 3, 4, or 5 of this Agreement, the Company shall be entitled to
equitable relief enforcing the terms of this Agreement, including without
limitation, specific performance, temporary restraining order, preliminary
injunction or permanent injunction to prevent any breach attempted breach
thereof The provisions of sections 3, 4, or 5 shall survive the
termination of this
Agreement, in addition to any others which may survive pursuant to the
terms of this Agreement.
7. AMENDMENT.
7.1 This Agreement shall be binding upon the parties, and may not be
released discharged, abandoned, supplemented, amended, changed or modified
in any manner, orally otherwise, except by an instrument in writing of
concurrent or subsequent date, signed by a duly authorized officer or
representative of each of the parties hereto.
8. SEVERABILITY.
8.1 The invalidity or unenforceability of any particular
provision of this Agreement shall not affect the other provisions but the
obligation to be fulfilled under such invalid or unenforceable provision
shall automatically be reduced to the limit of validity or enforceability
prescribed by law, and this Agreement shall be construed in all respects
as if such invalid or unenforceable were omitted.
9. ASSIGNMENT.
9.1 Executive's obligations hereunder and his rights hereunder are
personal, and Executive may not make any assignment of this Agreement or
any interest herein, by operation of law or otherwise, without the prior
written consent of the Company. This Agreement shall be binding upon and
shall inure to the benefit of the Company and any successor to it, and any
such successor shall be deemed substituted for the Company under the
provisions of this Agreement. For the purposes of this Agreement, the term
"successor" shall mean any person, firm, corporation or other business
entity which at any time whether by merger, purchase, liquidation or
otherwise, shall acquire all or substantially all of the assets or business
of the Company.
10. CONSTRUCTION.
10.1 The terms of this Agreement are contractual in nature and not a
mere recital. This Agreement shall be governed by and construed in
accordance with the substantive laws of Commonwealth of Massachusetts.
Captions herein are inserted for convenience, do not constitute a
part of this Agreement, and shall not be admissible for the purpose of
proving the intent of parties.
11. VALIDITY.
11.1 Should any provision of this Agreement be declared or be determined
by any court competent jurisdiction to be illegal or invalid, the validity
of the remaining parts, terms or provisions shall not be affected thereby
and said illegal or invalid part, term or provision shall be deemed not be
a part of this Agreement.
12. WAIVER.
12.1 No waiver of any provision of this Agreement shall be
effective unless made in writing and signed by the waiving party. The
waiver of any breach of this Agreement by either party or the failure of
either party to require the performance of any term or obligation of this
Agreement, in whole or in part, in any one instance shall not constitute
a waiver of or prevent any subsequent enforcement of such term or
obligation in another instance or be deemed a waiver of any subsequent
breach.
13. ENTIRE AGREEMENT.
13.1 This Agreement contains and constitutes the entire
understanding and agreement between the parties hereto respecting the
subject matter hereof and supersedes and cancels all previous written
verbal negotiations, agreements, commitments, and writings in connection
herewith.
14. EXECUTION.
14.1 This Agreement may be executed in two or more, duplicate
counterparts, each of which shall be treated as an original, but all of
which together shall constitute one and the same instrument, and in
pleading or proving any provision of this Agreement it shall not be
necessary produce more than one such counterpart.
15. NOTICES.
15.1 Any notice hereunder shall be in writing and personally delivered
or mailed registered or certified mail, postage prepaid, overnight delivery
or telecopy, and addressed to either party at his address as appearing in
the records of the Company and to the Company at its principal office, or
at such other address as may be specified by a party to the other given by
notice given in the manner herein provided.
IN WITNESS WHEREOF, the parties have executed this Agreement under
seal on the date first above written.
CHASE CORPORATION
By:______________________
_______________________
Executive
Exhibit A
Fringe Benefits
FOR IMMEDIATE RELEASE
CHASE CORPORATION EXPANDS EMS HOLDINGS
Bridgewater, MA.- May 26, 1999 (CCF: ASE) Chase
Corporation has acquired for cash and notes totaling
$8 million, RWA, Inc. of Melrose, Massachusetts. RWA
provides electronic manufacturing services (EMS) to the
electronics industry with current revenues of about
$10 million. The deal announced today is the second such
investment by the Corporation this year. In January the
Company acquired the remaining interest in subsidiary
Sunburst Electronic Manufacturing Solutions (formerly DC
Scientific) of West Bridgewater, MA. Both companies will
be operated separately and as wholly owned subsidiaries of
Chase Corporation.
In making the announcement Peter R. Chase, President and
Chief Executive Officer of Chase Corporation commented,
"Electronic manufacturing services is an industry that
continues to demonstrate impressive market growth
throughout North America and in particular the Northeast
region." Technology Forecasters, Inc., a California-based
research firm that tracks the electronic manufacturing
services industry, projects the North American EMS market
to reach $137 billion by the year 2002. "The acquisition
of Sunburst EMS provided us the opportunity to understand
first hand a market that we had identified as having
strategic potential in 1996. Now, with the addition of
RWA, we have established an EMS business unit which
reflects our ongoing commitment to this growing industry
segment", Chase added.
EMS companies provide a wide range of design and assembly
services to virtually every type of Original Equipment
Manufacturer (OEM). About 35% of all OEM's outsource some
or all of their production and this number is expected to
exceed 60% within three years.
Richard Aho, President of RWA will continue in that
capacity. RWA was founded in 1984 and operates principally
in New England and the northeast. Aho commented, "We are
very pleased to be joining Chase Corporation. RWA has
grown with the industry and the added management strength
and resources of Chase will enable us to expand more
quickly. We are also looking forward to capitalizing on
the many synergies that exist with Sunburst EMS."
Chase Corporation is a diversified, advanced manufacturing
company providing a wide-variety of high quality products
and services to multiple industries. Since the founding of
the Company in 1946, Chase has grown to become a
successful, carefully managed, multi-divisional company
with a global customer base.
- -----------------------------------------------------------
- -------------------------------------------------
For more information contact Andrew Chase - (508) 279-1789
E-mail: [email protected]
