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) JANUARY 7, 2000
-------------------------------
DEVCON INTERNATIONAL CORPORATION
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(Exact name of registrant as specified in its charter)
FLORIDA
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(State or other jurisdiction of incorporation)
000-07152 59-0671992
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(Commission File Number) (IRS Employer Identification No.)
1350 EAST NEWPORT CENTER DRIVE, SUITE 201
DEERFIELD BEACH, FLORIDA 33442
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(Address of principal executive offices, including Zip Code)
Registrant's telephone number, including area code (954) 429-1500
-----------------------------
N/A
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(Former name or former address, if changed since last report)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On January 7, 2000, Devcon International Corp. (the "Company"),
completed the disposition (the "Disposition") of all of the outstanding capital
stock of Devcon Masonry Products (BVI) Ltd. ("DMP"), a company which conducts
ready-mix concrete and quarry operations on Tortola, British Virgin Islands, and
certain assets of V.I. Cement & Building Products, Inc. ("VICBP") relating to
VICBP's ready-mix concrete operations in St. Thomas, U.S. Virgin Islands,
including vehicles, equipment, office furniture and fixtures and accounts
receivable. The effective date of the Disposition was December 31, 1999. The
purchasers are Paulina Dean, St. Thomas Concrete, Inc. ("STC") and W. Kemble
Ketcham ("Ketcham"). Paulina Dean is a relative of Ketcham. Ketcham has served
as one of the Company's regional managers for the past five years. Previously,
Ketcham was general manager and a principal owner of the Company's Tortola
business. The Disposition was valued at approximately $10,869,529, and consisted
of the following: (i) $6,000,000 in cash, (ii) a promissory note from STC and
DMP to the Company for $2,480,000, and (iii) 420,100 shares of the Company's
common stock, par value $.01 per share (the "Common Stock"), having a fair
market value of $2,389,529 on January 6, 2000. The purchase price was determined
based upon negotiations between the Company and Ketcham.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(b) Pro Forma Financial Information.
The following unaudited pro forma consolidated condensed financial
information is furnished in accordance with Article 11 of Regulation
S-X:
The pro forma consolidated balance sheet of the company as of September
30, 1999 is based on the historical balance sheet of the Company and
has been adjusted to reflect the Disposition of the Company's shares in
DMP and the ready-mix business and certain assets in St Thomas, USVI,
combined ( the "Business"). The pro forma consolidated statements of
operations for the year ended December 31, 1998 and the nine months
ended September 30, 1999 are based on historical financial statements
of the Company and have been adjusted to reflect the Disposition as
though the Business had been sold at the beginning of the periods being
reported.
The pro forma consolidated financial information does not purport to be
indicative of results that would have occurred had the Disposition been
in effect for the period presented, nor does it purport to be
indicative of the results that will be obtained in the future. The pro
forma consolidated financial information is based on certain
assumptions and adjustments described in the notes hereto and should be
read in conjunction therewith.
2
<PAGE>
Devcon International Corp.
Pro Forma Consolidated Statement of Operations
Year Ended December 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
DEVCON PRO FORMA PRO FORMA PRO FORMA
CONSOLIDATED ADJUSTMENT (a) ADJUSTMENT (b) TOTAL
------------ -------------- -------------- ----------
<S> <C> <C> <C> <C>
Concrete and related products revenue 50,448,275 (11,798,350) 38,649,925
Contracting revenue 15,358,591 15,358,591
Other revenue 371,386 371,386
----------- ----------- ---------- ----------
Total revenue 66,178,252 (11,798,350) 54,379,902
Cost of concrete and related
products revenue (41,281,263) 9,219,293 (32,061,970)
Cost of contracting revenue (12,899,491) (12,899,491)
Cost of other revenue (245,880) (245,880)
----------- ----------- ---------- ----------
Gross profit 11,751,618 (2,579,057) 9,172,561
Selling, general and
administrative expense (11,266,706) 1,374,654 (9,892,052)
Credit for litigation 460,794 460,794
----------- ----------- ---------- ----------
Operating income (loss) 945,706 (1,204,403) (258,697)
Gain on sale of equipment 507,256 (16,874) 490,382
Interest expense (2,113,224) 21,038 546,000 (1,546,186)
Interest and other income 1,362,156 (57,315) 207,700 1,512,541
Minority interest and other 121,820 121,820
----------- ----------- ---------- ----------
(121,992) (53,151) 753,700 578,557
Income before taxes 823,714 (1,257,554) 753,700 319,860
Income Taxes (339,441) 34,082 (50,498) (355,857)
----------- ----------- ---------- ----------
Net income 484,273 (1,223,472) 703,202 (35,997)
Basic earnings (loss) per share 0.11 (0.01)
Diluted earnings (loss) per share 0.11 (0.01)
Number of shares outstanding, basic 4,498,935 (420,100) 4,078,835
Number of shares outstanding, diluted 4,520,460 (420,100) 4,100,360
(a) Pro forma statement of operations of the disposed Business. In calculating
the cost of goods sold, adjustment was done to standard cost of raw
material to reflect the agreed upon price between VICBP and STC of
aggregates that VICBP will be selling STC in the future at a price higher
than cost. Allocation of overhead expense for the St. Thomas portion of
the business was done according to labor utilization within VICBP.
Intercompany charged interest was eliminated from DMP's expenses. Taxes
were calculated at the existing tax rates for the Business.
(b) Reduction of interest expense due to pay-off of debt at 9.1% average interest rate 546,000
Increase of interest income due to note from DMP/STC at 8.38% average interest rate 207,700
Tax effect of pro forma adjustments (50,498)
</TABLE>
3
<PAGE>
Devcon International Corp.
Pro Forma Consolidated Balance Sheet
September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
DEVCON PRO FORMA PRO FORMA PRO FORMA
CONSOLIDATED ADJUSTMENT (c) ADJUSTMENT (d) TOTAL
------------ -------------- -------------- ----------
<S> <C> <C> <C> <C>
Assets
Cash and cash equivalents 1,925,705 (75,929) 1,849,776
Receivables, net 11,986,801 (1,270,814) 826,667 11,542,654
Inventories 4,841,378 (540,496) 4,300,882
Assets held for sale 8,722,458 8,722,458
Other current assets 1,067,493 (5,490) 1,062,003
----------- ----------- ----------- -----------
Total current assets 28,543,835 (1,892,729) 826,667 27,477,773
Property, plant and equipment 38,508,974 (4,632,619) 33,876,355
Receivables, net 9,466,276 1,653,333 11,119,609
Intangible and other assets, net 2,589,230 (444,851) 2,144,379
----------- ----------- ----------- -----------
Total assets 79,108,315 (6,970,199) 2,480,000 74,618,116
=========== =========== =========== ===========
Liabilities and stockholders' equity
Accounts payable, trade and other 4,943,620 (47,743) 4,895,877
Accrued expenses and other liabilities 1,996,768 (52,152) 1,944,616
Notes payable to banks 1,150,000 1,150,000
Current portion of long term debt 6,686,404 (2,100,000) 4,586,404
Income tax payable 376,203 230,808 607,011
----------- ----------- ----------- -----------
Total current liabilities 15,152,995 (99,895) (1,869,192) 13,183,908
Long term debt, excluding current
portion and notes payable to banks 17,170,904 (322,286) (3,900,000) 12,948,618
Minority interest 1,081,448 1,081,448
Other long term liabilities 2,036,224 1,000,000 3,036,224
----------- ----------- ----------- -----------
Total liabilities 35,441,571 (422,181) (4,769,192) 30,250,198
Stockholders' equity
Common stock 449,894 (100) 100 449,894
Treasury stock (78,132) (2,389,529) (2,467,661)
Additional paid-in capital 12,064,133 (100) 12,064,033
Accumulated other comprehensive income-
Cumulative translation adjustment (1,275,112) (1,275,112)
Retained earnings 32,505,961 (6,547,918) 9,638,721 35,596,764
----------- ----------- ----------- -----------
Total stockholders' equity 43,666,744 (6,548,018) 7,249,192 44,367,918
Total liabilities and stockholders' equity 79,108,315 (6,970,199) 2,480,000 74,618,116
=========== =========== =========== ===========
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
(c) Balance sheet of the disposed Business.
(d) Increase in receivables due to note receivable from purchasers 826,667
Increase in receivables due to note receivable from purchasers, long term portion 1,653,333
Reduction in current portion of long term debt due to pay-off of loans with sales
proceeds (2,100,000)
Tax payable increased due to the effect of taxes on the transaction, calculated
on book values as of 9/30/1999, the actual tax provision will differ 230,808
Reduction in long term debt due to pay-off of loans with proceeds (3,900,000)
Other liabilities increased due to recording a contingent purchase price reduction 1,000,000
Common stock increased due to the consolidation entry for shares in DMP 100
Treasury stock decreased due to receipt of stock as part of purchase price (2,389,529)
Additional paid-in capital reduced due to the consolidation entry for shares in DMP (100)
Retained earnings increased due to:
Recording of purchase price proceeds 10,869,529
Recording of tax expense (230,808)
Recording of purchase price contingency (1,000,000) 9,638,721
</TABLE>
5
<PAGE>
Devcon International Corp.
Pro Forma Consolidated Statement of Operations
Nine Months Ended September 30, 1999
(Unaudited)
<TABLE>
<CAPTION>
DEVCON PRO FORMA PRO FORMA PRO FORMA
CONSOLIDATED ADJUSTMENT (e) ADJUSTMENT (f) TOTAL
------------ -------------- -------------- -----------
<S> <C> <C> <C> <C>
Concrete and related products revenue 42,897,787 (8,774,575) 34,123,212
Contracting revenue 10,604,325 10,604,325
---------- ---------- ----------- -----------
Total revenue 53,502,112 (8,774,575) 44,727,537
Cost of concrete and related
products revenue (35,059,938) 7,245,384 (27,814,554)
Cost of contracting revenue (8,964,862) (8,964,862)
---------- ---------- ----------- -----------
Gross profit 9,477,312 (1,529,191) 7,948,121
Selling, general and
administrative expense (9,060,334) 1,262,037 (7,798,297)
Credit for litigation 1,054,602 1,054,602
---------- ---------- ----------- -----------
Operating income (loss) 1,471,580 (267,154) 1,204,426
Gain on sale of equipment (133,231) 4,267 (128,964)
Interest expense (1,822,637) 9,542 405,000 (1,408,095)
Interest and other income 654,497 (20,840) 145,183 778,840
Minority interest and other 667,761 667,761
---------- ---------- ----------- -----------
(633,610) (7,031) 550,183 (90,458)
Income before taxes 837,970 (274,185) 550,183 1,113,968
Income Taxes (317,917) 4,720 (36,862) (350,059)
----------- ----------- ----------- -----------
Net income 520,053 (269,465) 513,321 763,909
Basic earnings per share 0.12 (g) 0.19
Diluted earnings per share 0.11 (g) 0.18
Number of shares outstanding, basic 4,489,361 (420,100) 4,069,261
Number of shares outstanding, diluted 4,560,290 (420,100) 4,140,190
(e) The Company disposed of the Business. In calculating the cost of goods
sold, adjustment was done to standard cost of raw material to reflect the
agreed upon price between VICBP and STC of aggregates that VICBP will be
selling STC in the future at a price higher than cost. Allocation of
overhead expense for the St. Thomas portion of the business was done
according to labor utilization within VICBP. Taxes were calculated at the
existing tax rates for the Business.
(f) Reduction of interest expense due to pay-off of debt at 9.0% average interest rate 405,000
Increase of interest income due to note from DMP/STC at 7.81% average interest rate 145,183
Tax effect of pro forma adjustments (36,862)
(g) Basic and diluted shares outstanding were reduced in the pro forma total
earning per share by 420,100 shares, which is the amount of shares that
the purchaser delivered to the Company as part of the purchase price.
</TABLE>
6
<PAGE>
(c) Exhibits
EXHIBIT
NUMBER DESCRIPTION
------ -----------
2.1 Purchase Agreement, effective as of December 31, 1999 by and among
Devcon International Corp, a Florida corporation, V.I. Cement &
Building Products, Inc., a Delaware corporation, Paulina Dean, an
individual, St. Thomas Concrete Inc., an entity formed and existing
under the laws of the U.S. Virgin Islands and W. Kemble Ketcham, an
individual.
7
<PAGE>
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.
DEVCON INTERNATIONAL CORP.
Dated: January 24, 2000 By: /s/ JAN NORELID
-----------------------------------------
Name: Jan Norelid
Its: VP Finance and Chief Financial Officer
8
<PAGE>
EXHIBITS INDEX
EXHIBIT DESCRIPTION
------- -----------
2.1 Purchase Agreement, effective as of December 31, 1999 by and among
Devcon International Corp, a Florida corporation, V.I. Cement &
Building Products, Inc., a Delaware corporation, Paulina Dean, an
individual, St. Thomas Concrete Inc., an entity formed and existing
under the laws of the U.S. Virgin Islands and W. Kemble Ketcham, an
individual.
EXHIBIT 2.1
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PURCHASE AGREEMENT
BY AND BETWEEN
DEVCON INTERNATIONAL CORP.,
V. I. CEMENT & BUILDING PRODUCTS, INC.,
PAULINA DEAN,
ST. THOMAS CONCRETE INC.
AND
W. KEMBLE KETCHAM
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<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
PURCHASE OF ASSETS
------------------
1.1 Purchase and Sale of Acquired Assets...............................1
1.2 Assumed Obligations................................................1
1.3 Method of Conveyance...............................................2
ARTICLE II
PURCHASE OF STOCK
-----------------
2.1 Purchase and Sale of Stock.........................................2
ARTICLE III
PURCHASE PRICE
--------------
3.1 Purchase Price.....................................................2
3.2 Note and Security Terms............................................3
3.3 Purchase Price Adjustment..........................................3
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF VICBP
---------------------------------------
4.1 Corporate Organization, Etc........................................4
4.2 Authorization, Etc.................................................4
4.3 No Violation.......................................................5
4.4 Title and Related Matters..........................................5
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE ASSET PURCHASER
-----------------------------------------------------
5.1 Corporate Organization, Etc........................................6
5.2 Authorization, Etc.................................................6
5.3 No Violation.......................................................6
5.4 Knowledgeable Purchaser............................................6
(i)
<PAGE>
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF DEVCON
----------------------------------------
6.1 Corporate Organization, Etc........................................7
6.2 Authorization, Etc.................................................7
6.3 No Violation.......................................................7
6.4 Title to Stock.....................................................7
6.5 Record Books.......................................................7
6.6 Absence of Debt....................................................8
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE STOCK PURCHASER
-----------------------------------------------------
7.1 Authorization, Etc.................................................8
7.2 No Violation.......................................................8
7.3 Knowledgeable Purchaser............................................8
7.4 Title to Devcon Shares.............................................9
ARTICLE VIII
OTHER AGREEMENTS
----------------
8.1 Further Assurances.................................................9
8.2 Deliveries After Closing...........................................9
8.3 Non-Competition....................................................9
8.4 Public Announcements..............................................10
8.5 Mariendahl Estate.................................................10
8.6 Financing.........................................................10
8.7 Easement on Real Property.........................................10
ARTICLE V
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER GROUP
----------------------------------------------------
9.1 Representations and Warranties; Performance.......................11
9.2 Consents and Approvals............................................11
9.3 Proceedings and Documents.........................................11
9.4 Additional Agreements.............................................11
9.5 Other Documents...................................................11
9.6 Financing.........................................................11
(ii)
<PAGE>
ARTICLE VI
CONDITIONS TO THE OBLIGATIONS OF VICBP AND DEVCON
-------------------------------------------------
10.1 Representations and Warranties; Performance.......................11
10.2 Consents and Approvals............................................12
10.3 Proceedings and Documents.........................................12
10.4 Insurance Coverage................................................12
10.5 Additional Agreements.............................................12
10.6 Other Documents...................................................12
ARTICLE XI
CLOSING
-------
11.1 Closing...........................................................12
ARTICLE XII
SURVIVAL OF TERMS; INDEMNIFICATION
----------------------------------
12.1 Survival..........................................................13
12.2 Limitations.......................................................13
12.3 Third-Party Claims................................................13
ARTICLE XIII
MISCELLANEOUS PROVISIONS
------------------------
13.1 Amendment and Modification........................................14
13.2 Waiver of Compliance; Consents....................................15
13.3 Certain Definitions...............................................15
13.4 Notices...........................................................16
13.5 Assignment........................................................17
13.6 Arbitration.......................................................17
13.7 Governing Law.....................................................18
13.8 Counterparts......................................................19
13.9 Headings..........................................................19
13.10 Entire Agreement..................................................19
13.11 Consent to Jurisdiction; Service of Process.......................19
13.12 Binding Effect....................................................19
13.13 Injunctive Relief.................................................19
13.14 Delays or Omissions...............................................19
13.15 Severability......................................................20
13.16 Expenses..........................................................20
13.17 Waiver of Jury Trial..............................................20
(iii)
<PAGE>
SCHEDULES AND EXHIBITS
SCHEDULE/EXHIBIT RESPONSIBILITY
("SELLERS" OR "PURCHASERS")
1.1 Acquired Assets.................................... S
1.2(a) Assumed Obligations................................ S
2.1 Description of Stock............................... S
4.1 VICBP Jurisdictions................................ S
4.3 VICBP Violations................................... S
4.4 VICBP Title........................................ S
5.1 Asset Purchaser Jurisdiction....................... P
5.3 Asset Purchaser Violations......................... P
6.1 Devcon Jurisdictions............................... S
6.3 Devcon Violations.................................. S
6.5 DMP Officers and Directors......................... S
7.2 Stock Purchaser Violations......................... P
8.3 Certain Employees.................................. S
8.7 Easement on Real Property.......................... S
9.4 Supply Agreement................................... S
(iv)
<PAGE>
PURCHASE AGREEMENT
This PURCHASE AGREEMENT, effective as of the 31st day of December,
1999, by and between Devcon International Corp., a Florida corporation,
("DEVCON"), V.I. Cement & Building Products, Inc., a Delaware corporation
("VICBP"), Paulina Dean, an individual (the "STOCK PURCHASER"), St. Thomas
Concrete, Inc., an entity formed and existing under the laws of the U.S. Virgin
Islands ("ASSET PURCHASER") and W. Kemble Ketcham, an individual ("KETCHAM").
Terms used herein and not otherwise defined shall have the meanings set forth in
Section 13.3 hereof.
This Purchase Agreement is entered into to enable (i) Devcon to sell to
the Stock Purchaser and the Stock Purchaser to purchase all of the outstanding
capital stock of Devcon Masonry Products (BVI) Ltd., an entity organized and
existing under the laws of the British Virgin Islands ("DMP") and (ii) VICBP to
sell to the Asset Purchaser and the Asset Purchaser to purchase, certain assets.
NOW, THEREFORE, in consideration of the representations and warranties,
covenants and agreements, and subject to the conditions contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
PURCHASE OF ASSETS
1.1 PURCHASE AND SALE OF ACQUIRED ASSETS. Subject to the terms and
conditions of this Agreement, VICBP hereby sells, assigns, conveys and transfers
to the Asset Purchaser, and the Asset Purchaser hereby purchases, all of the
assets specifically set forth on SCHEDULE 1.1 herein (the "ACQUIRED ASSETS1.1"),
which constitute all of the assets of VICBP utilized by it in connection with
its ready mix concrete business on the island of St. Thomas (the "BUSINESS").
1.2 ASSUMED OBLIGATIONS. The Asset Purchaser hereby assumes and agrees
to pay, satisfy, perform and discharge, as the same shall become due, as of and
after the Closing Date, all of the ordinary course business obligations of VICBP
associated with the Business, including all obligations under existing
Contracts, capital leases and operating leases of VICBP specifically set forth
on SCHEDULE 1.2(A) hereto (the "ASSUMED OBLIGATIONS"). The parties acknowledge
and agree that the Assumed Obligations shall include fulfilling orders existing
as of the date hereof for products, including those for which prepayments have
been made by the customer. Except as expressly set forth in this SECTION 1.2 and
SCHEDULE 1.2(A), the Asset Purchaser shall not assume or otherwise be
responsible at any time for any liability, obligation, debt or commitment of
VICBP, whether absolute or contingent, accrued or unaccrued, asserted or
unasserted, or otherwise, including, but not limited to, any liabilities,
obligations, debts or commitments of VICBP (a) incident to, arising out of or
incurred with respect to this Agreement and the transactions contemplated hereby
(except that any and all Taxes owing as a result of the transfer of any of the
Acquired Assets shall be borne equally between VICBP and the Asset Purchaser) or
(b) which otherwise arise or are asserted or incurred by reason of events, acts
or transactions occurring, or the operation of VICBP's business prior to or on
the Closing Date (the "EXCLUDED LIABILITIES"). VICBP agrees to satisfy and
discharge the Excluded Liabilities as the same shall
<PAGE>
become due. Any payment, debt or other ordinary course obligation covering
periods prior to as well as after the Closing Date shall be prorated between the
parties such that VICBP shall satisfy and discharge such portion relating to the
period prior to the Closing Date and the Asset Purchaser shall satisfy and
discharge all of those arising from and after the Closing Date.
1.3 METHOD OF CONVEYANCE. The sale, transfer, conveyance and assignment
by VICBP of the Acquired Assets to the Asset Purchaser in accordance with
Section 1.1 hereof shall be effected on the Closing Date each upon the execution
and delivery to the Asset Purchaser of instruments of transfer including: (a)
bills of sale in such form shall be necessary and appropriate under the laws of
the applicable jurisdiction (the "BILL OF SALE"), (b) an assignment or sublease
of VICBP's leases, or the applicable portions thereof, used in the Business, (c)
transfer documents for the certificates of title for all of VICBP's vehicles
used in the Business and (d) deed of transfer for the real property, in such
form as shall be necessary and appropriate under the laws of the jurisdiction of
location of the real property.
ARTICLE II
PURCHASE OF STOCK
2.1 PURCHASE AND SALE OF STOCK. Subject to the terms and conditions of
this Agreement, Devcon agrees to sell and the Stock Purchaser agrees to
purchase, all of the issued and outstanding capital stock of DMP (the "STOCK").
The number of shares constituting the Stock and the stock certificates
evidencing the same are described in SCHEDULE 2.1 hereto. Any and all Taxes
owing as a result of the transfer of the Stock shall be borne equally between
Devcon and the Stock Purchaser; PROVIDED, however, that in no event shall the
amount of such Taxes that Devcon will pay exceed the amount of Taxes, including
any stamp taxes due, that the Asset Purchaser is obligated to pay on the
transfer of the Acquired Assets.
ARTICLE III
PURCHASE PRICE
3.1 PURCHASE PRICE. In consideration of the conveyance of the Acquired
Assets and the Stock, and in reliance on the representations, warranties,
covenants and agreements of Devcon and VICBP contained herein and in the
documents contemplated hereby, the Asset Purchaser agrees to assume the Assumed
Obligations and the Asset Purchaser, the Stock Purchaser and Ketcham (together,
the "PURCHASER GROUP" and each of the Asset Purchaser and the Stock Purchaser
shall sometimes be referred to herein as a "PURCHASER"), as applicable, shall
pay to Devcon and VICBP (together, the "SELLER GROUP" and each individually, a
"SELLER") the following consideration:
(a) On or before December 8, 1999, a refundable deposit of $1
million, which amount has heretofore been paid and received (the "DEPOSIT");
2
<PAGE>
(b) At the Closing, an additional payment of $5 million, up to
$4 million of which may be financed;
(c) At the Closing, the transfer of 420,000 shares of the
common stock of Devcon (the "DEVCON Shares") currently held by Paulina Dean to
Devcon or its designee, which shall be deemed to be valued at $6.00 per share,
being understood that as of the date hereof, the officer of Devcon executing
this Purchase Agreement is not aware of any material change in the financial
condition of Devcon that Ketcham is not aware of; and
(d) At the Closing, execution and delivery of a promissory
note from the Asset Purchaser and DMP to Devcon in such amount as shall
represent the difference between $11.0 million and the aggregate value of the
consideration already delivered pursuant to subsections (a), (b) and (c) of this
Article 3.1 (the "NOTE").
3.2 NOTE AND SECURITY TERMS.
(a) The Note shall be payable in monthly payments of (a) principal in
an amount equal to 1/36th of the initial amount owed and (b) interest accrued on
the outstanding principal and any unpaid interest at the prime rate quoted as of
the last business day of the preceding month in the Wall Street Journal. The
payments shall begin thirty (30) days after the Closing Date. Ketcham shall
personally guarantee up to $1.5 million of the principal and interest
obligations due under the Note.
(b) The Note shall also be secured by a lien on the machinery,
equipment and accounts receivable of DMP, as well as a lien on the machinery,
equipment and accounts receivable of the Asset Purchaser. The Note and liens
shall be subordinated to any lien and debt to a financial institution that is
financing the transactions contemplated by or related to this Agreement.
(c) The Asset Purchaser and DMP hereby grant VICBP and Devcon a
security interest in the machinery, equipment and accounts receivable of the
Asset Purchaser and DMP, respectively.
3.3 PURCHASE PRICE ADJUSTMENT. The purchase price set forth herein
shall be reduced in the following event and as follows:
(a) If a Person meets the definition of a Competitor (as
defined below) in the St. Thomas ready mix concrete market, and
(i) operates as such a Competitor within 18 months of
the Closing Date, there will be a reduction of the purchase price by
$1.0 million; or
(ii) operates as such a Competitor at any time
between 18 months and 36 months after the Closing Date, and not prior
to 18 months after the Closing Date, the reduction amount of $1.0
million shall be reduced by $55,555 for each month after the 18th month
in which such competition arises.
3
<PAGE>
If Section 3.3(a)(i) or (ii) is satisfied, such competition shall be deemed to
arise on the date that such Person first meets the definition of "Competitor"
which date is the first day of the six (6) month period identified in Section
3.3(c).
(b) The purchase price reduction shall be made through a
reduction in the principal amount of the Note, effective as of the date such
Person satisfies the definition of a Competitor. Upon the passage of six months
of continuous operations of the Competitor, the applicable parties hereto agree
to amend the Note to effectuate the purchase price adjustment.
By way of example, if an unrelated company enters the market on April 1 with an
average weekly concrete volume of 100 cubic yards, and then in the months of
June 1 through November 30 such company has an average weekly concrete volume of
at least 200 cubic yards (thereby meeting the volume and duration requirements),
then, as of December 1, a retroactive adjustment shall be made to the payments
made on the Note as of June 1. The mechanism to effectuate such adjustment shall
be determined by the parties at such time.
(c) The term "COMPETITOR" as used in this Agreement, means a
bona fide competitor to the Business who is not an Affiliate of any member of
the Purchaser Group, who is not a party to any type of contractual relationship
with any member of the Purchaser Group or Affiliate thereof, who does not
otherwise have a business interest or relationship with any member of the
Purchaser Group or Affiliate thereof, who has continuously conducted such
competing business for a period longer than six (6) months, with average weekly
concrete volume of at least 200 cubic yards or operates on a full-time basis at
least four ten-yard concrete mixer trucks and a batch plant.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF VICBP
VICBP represents and warrants to the Asset Purchaser, as of the date
hereof and as of the Closing Date, if different from the date hereof, with
respect to the Acquired Assets:
4.1 CORPORATE ORGANIZATION, ETC. VICBP is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation with full corporate power and authority to carry on its business
as it is now being conducted and to own, operate and lease its properties and
assets. VICBP is duly qualified or licensed to do business and is in good
standing in every jurisdiction in which the conduct of its business and/or the
ownership or lease of its properties, require it to be so qualified or licensed.
Such jurisdictions are set forth in SCHEDULE 4.1 hereto.
4.2 AUTHORIZATION, ETC. VICBP has full power and authority to enter
into this Agreement and the agreements contemplated hereby and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and all other agreements and transactions
contemplated hereby have been duly authorized by the Board of Directors and
stockholders of VICBP and no other corporate proceedings on their part are
necessary to authorize this Agreement and the transactions contemplated hereby.
This
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Agreement and all other agreements contemplated hereby to be entered into by
VICBP each constitute a legal, valid and binding obligation of VICBP enforceable
against VICBP in accordance with its terms.
4.3 NO VIOLATION. Except as set forth in SCHEDULE 4.3 hereto, and to
the knowledge of VICBP, the execution, delivery and performance by VICBP of this
Agreement, and all other agreements contemplated hereby, and the fulfillment of
and compliance with the respective terms hereof and thereof by VICBP, do not and
will not (a) conflict with or result in a breach of the terms, conditions or
provisions of, (b) constitute a default or event of default under (with due
notice, lapse of time or both), (c) result in the creation of any Lien upon the
Acquired Assets pursuant to, (d) give any third party the right to accelerate
any obligation under, (e) result in a violation of, or (f) require any
authorization, consent, approval, exemption or other action by, notice to, or
filing with any Authority pursuant to, the charter or bylaws of VICBP or any
applicable Regulation, Order or any Contract to which VICBP or its properties or
the Acquired Assets are subject. VICBP has complied with all applicable
Regulations and Orders in connection with the execution, delivery and
performance of this Agreement and the transactions contemplated hereby.
4.4 TITLE AND RELATED MATTERS.
(a) Except as set forth in SCHEDULE 4.4 hereto, VICBP has good
and valid title to all real and personal property and other assets being sold by
it pursuant to this Agreement, free and clear of all Liens. Real property taxes
shall be paid pro-rata by VICBP and the Asset Purchaser (i.e. VICBP shall be
responsible for the portion relating to periods prior to the Closing Date and
the Asset Purchaser shall be responsible for the period starting from and
continuing after the Closing Date). Any obligation for stamp taxes due as a
result of the transfer of real property shall be divided equally between VICBP
and the Asset Purchaser.
(b) All the leases that are part of the Acquired Assets are in
full force and effect, and valid and enforceable in accordance with their
respective terms. VICBP has not received any notice of any, and there exists no
event of default or event which constitutes or would constitute (with notice or
lapse of time or both) a default by VICBP or any other Person under any lease.
All rent and other amounts due and payable with respect to the leases that are
part of the Acquired Assets have been paid through the date of this Agreement.
(c) None of the Acquired Assets is subject to any (i)
Contracts of sale or lease, except Contracts for the sale of inventory in the
ordinary and regular course of business or (ii) Liens, except for Permitted
Liens.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE ASSET PURCHASER
The Asset Purchaser represents and warrants to VICBP as of the date
hereof and as of the Closing Date, if different from the date hereof:
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5.1 CORPORATE ORGANIZATION, ETC. The Asset Purchaser is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation with full corporate power and authority to carry on its business
as it is now being conducted and to own, operate and lease its properties and
assets. The Asset Purchaser is duly qualified or licensed to do business and is
in good standing in every jurisdiction in which the conduct of its business
and/or the ownership or lease of its properties, require it to be so qualified
or licensed. Such jurisdictions are set forth in SCHEDULE 5.1 hereto.
5.2 AUTHORIZATION, ETC. The Asset Purchaser has full power and
authority to enter into this Agreement and the agreements contemplated hereby
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement and all other agreements
and transactions contemplated hereby have been duly authorized by the Board of
Directors and stockholders of the Asset Purchaser, as required by applicable
law, and no other corporate proceedings on their part are necessary to authorize
this Agreement and the transactions contemplated hereby. This Agreement and all
other agreements contemplated hereby to be entered into by the Asset Purchaser
each constitute a legal, valid and binding obligation of the Asset Purchaser
enforceable against the Asset Purchaser in accordance with its terms.
5.3 NO VIOLATION. Except as set forth in SCHEDULE 5.3 hereto, and to
the knowledge of the Asset Purchaser, the execution, delivery and performance by
the Asset Purchaser of this Agreement, and all other agreements contemplated
hereby, and the fulfillment of and compliance with the respective terms hereof
and thereof by the Asset Purchaser, do not and will not (a) conflict with or
result in a breach of the terms, conditions or provisions of, (b) constitute a
default or event of default under (with due notice, lapse of time or both), (c)
give any third party the right to accelerate any obligation under, (d) result in
a violation of, or (e) require any authorization, consent, approval, exemption
or other action by, notice to, or filing with any Authority pursuant to, the
charter or bylaws of the Asset Purchaser or any applicable Regulation, Order or
any Contract to which the Asset Purchaser or its properties are subject. The
Asset Purchaser has complied with all applicable Regulations and Orders in
connection with the execution, delivery and performance of this Agreement and
the transactions contemplated hereby.
5.4 KNOWLEDGEABLE PURCHASER. Ketcham, as the manager of the Business,
has full knowledge about and has advised the other members of the Purchaser
Group about, the business and condition, financial and otherwise, of the
Business. The members of the Purchaser Group have had an opportunity to ask
questions and to receive answers concerning the Acquired Assets and are in a
position to make an informed decision about the transactions contemplated
herein. There are no material facts regarding the Acquired Assets or the
Business (including but not limited to the condition, value or business or
financial prospects thereof) known by any member of the Purchaser Group which
such member has failed to disclose to VICBP or known by VICBP that VICBP has
failed to disclose to the Purchaser Group or Ketcham.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF DEVCON
Devcon represents and warrants to the Stock Purchaser as of the date
hereof and as of the Closing Date, if different from the date hereof:
6.1 CORPORATE ORGANIZATION, ETC. Devcon is duly organized, validly
existing and in good standing under the laws of its jurisdiction of
incorporation with full corporate power and authority to carry on its business
as it is now being conducted and to own, operate and lease its properties and
assets. Devcon is duly qualified or licensed to do business and is in good
standing in every jurisdiction in which the conduct of its business and/or the
ownership or lease of its properties, require it to be so qualified or licensed.
Such jurisdictions are set forth in SCHEDULE 6.1 hereto.
6.2 AUTHORIZATION, ETC. Devcon has full power and authority to enter
into this Agreement and the agreements contemplated hereby and to consummate the
transactions contemplated hereby and thereby. The execution, delivery and
performance of this Agreement and all other agreements and transactions
contemplated hereby have been duly authorized by the Board of Directors of
Devcon, as required by applicable law, and no other corporate proceedings on
their part are necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement and all other agreements contemplated hereby
to be entered into by Devcon each constitute a legal, valid and binding
obligation of Devcon enforceable against Devcon in accordance with its terms.
6.3 NO VIOLATION. Except as set forth in SCHEDULE 6.3 hereto, and to
the knowledge of Devcon, the execution, delivery and performance by Devcon of
this Agreement, and all other agreements contemplated hereby, and the
fulfillment of and compliance with the respective terms hereof and thereof by
Devcon, do not and will not (a) conflict with or result in a breach of the
terms, conditions or provisions of, (b) constitute a default or event of default
under (with due notice, lapse of time or both), (c) result in the creation of
any Lien upon the Stock pursuant to, (d) give any third party the right to
accelerate any obligation under, (e) result in a violation of, or (f) require
any authorization, consent, approval, exemption or other action by, notice to,
or filing with any Authority pursuant to, the charter or bylaws of Devcon or any
applicable Regulation, Order or any Contract to which Devcon or its properties
or the Acquired Assets are subject. Devcon has complied with all applicable
Regulations and Orders in connection with the execution, delivery and
performance of this Agreement and the transactions contemplated hereby.
6.4 TITLE TO STOCK. The Stock represents all of the issued and
outstanding capital stock of DMP. Upon payment of the purchase price to Devcon
at the Closing, Devcon will convey good and valid title to the Stock, free and
clear of all Liens, Contracts or other limitations.
6.5 RECORD BOOKS. The stock record books of DMP that have been made
available to the Stock Purchaser for inspection prior to the date hereof are
complete and correct in all material respects. There are no shares of capital
stock of DMP currently reserved for issuance for any purpose or upon the
occurrence of any event or condition. The corporate minute books of DMP
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that have been made available to the Stock Purchaser for inspection are complete
and correct in all material respects and contain all of the proceedings of the
shareholders and directors of DMP. A true and complete list of the incumbent
directors and officers of DMP is set forth in SCHEDULE 6.5 hereto.
6.6 ABSENCE OF DEBT. As of the Closing Date, the Stock shall be free
and clear of all Liens. Other than ordinary course obligations, DMP will not, as
of the Closing Date, have any debt to any financial institution. There shall
exist no intercompany obligations between DMP and Devcon or any of its
subsidiaries.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF THE STOCK PURCHASER
The Stock Purchaser represents and warrants to Devcon as of the date
hereof and as of the Closing Date, if different from the date hereof:
7.1 AUTHORIZATION, ETC. The Stock Purchaser has full power and
authority to enter into this Agreement and the agreements contemplated hereby
and to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance of this Agreement and all other agreements
and transactions contemplated hereby have been duly authorized by the Board of
Directors and stockholders of the Stock Purchaser, as required by applicable
law, and no other corporate proceedings on their part are necessary to authorize
this Agreement and the transactions contemplated hereby. This Agreement and all
other agreements contemplated hereby to be entered into by the Stock Purchaser
each constitute a legal, valid and binding obligation of the Stock Purchaser
enforceable against the Stock Purchaser in accordance with its terms.
7.2 NO VIOLATION. Except as set forth in SCHEDULE 7.2 hereto, the
execution, delivery and performance by the Stock Purchaser of this Agreement,
and all other agreements contemplated hereby, and the fulfillment of and
compliance with the respective terms hereof and thereof by the Stock Purchaser,
do not and will not (a) conflict with or result in a breach of the terms,
conditions or provisions of, (b) constitute a default or event of default under
(with due notice, lapse of time or both), (c) give any third party the right to
accelerate any obligation under, (d) result in a violation of, or (e) require
any authorization, consent, approval, exemption or other action by, notice to,
or filing with any Authority pursuant to, the charter or bylaws of the Stock
Purchaser or any applicable Regulation, Order or any Contract to which the Stock
Purchaser or its properties are subject. The Stock Purchaser has complied with
all applicable Regulations and Orders in connection with the execution, delivery
and performance of this Agreement and the transactions contemplated hereby.
7.3 KNOWLEDGEABLE PURCHASER. Ketcham, as the manager of DMP, has full
knowledge about and has advised the other members of the Purchaser Group about,
the business and condition, financial and otherwise of DMP. Each member of the
Purchaser Group have had an opportunity to ask questions and to receive answers
concerning the Stock and DMP and are in a position to make an informed decision
about the transactions contemplated herein. There are no
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material facts regarding DMP (including but not limited to the condition, value,
or business or financial prospects thereof) known by any member of the Purchaser
Group which such member has failed to disclose to Devcon or known by Devcon that
Devcon has failed to disclose to the Purchaser Group or Ketcham.
7.4 TITLE TO DEVCON SHARES. The Devcon Shares are owned by the Stock
Purchaser, free and clear of all Liens, Contracts or other limitations
whatsoever.
ARTICLE VIII
OTHER AGREEMENTS
The parties further agree as follows:
8.1 FURTHER ASSURANCES. Subject to the terms and conditions of this
Agreement, the parties hereto shall use their best efforts to take, or cause to
be taken, all action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable Regulations and Orders to consummate and
make effective as promptly as possible the transactions contemplated by this
Agreement, and to cooperate with each other in connection with the foregoing.
8.2 DELIVERIES AFTER CLOSING. From time to time after the Closing, at
either Purchaser's request and without further consideration from either
Purchaser, VICBP and/or Devcon shall execute and deliver such other instruments
of conveyance and transfer and take such other action as either Purchaser
reasonably may require to convey, transfer to and vest in such Purchaser and to
put the Purchaser in possession of any rights or property to be sold, conveyed,
transferred and delivered hereunder.
8.3 NON-COMPETITION.
(a) During the Restricted Period, each member of the Seller
Group agrees not to (i) directly or indirectly, engage in any business activity
which is directly or indirectly in competition with the ready-mix concrete
business of the Purchaser Group in St. Thomas and Tortola or with the aggregate
material business of the Purchaser Group in Tortola, (ii) solicit any person who
has a business relationship with any member of the Purchaser Group to
discontinue or reduce the extent of the relationship or (iii) allow, to the
extent it may legally prevent the same, a ready mix concrete plant to be
established on any property owned or leased by it in St. Thomas. For a period of
two years after the date hereof, each member of the Seller Group agrees not to
seek to employ any person who is in the employ of any member of the Purchaser
Group.
(b) During the Restricted Period and in the Restricted Area,
each member of the Purchaser Group agrees not to (i) directly or indirectly,
engage in any business activity which is directly or indirectly in competition
with the ready-mix business being conducted by Devcon or any of its Subsidiaries
as of the Closing Date or (ii) solicit any person who has a business
relationship with either member of the Seller Group to discontinue to reduce the
extent of their relationship. For the Restricted Period and in St. Thomas, each
member of the Purchaser Group agrees not to engage in any business which is
directly or indirectly in competition with the
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quarry and construction materials business of Devcon or its Subsidiaries;
provided, however, that this restriction shall not be deemed to apply to the
ready-mix business in St. Thomas, the assets for which are being transferred
herein. Except for the individuals listed in SCHEDULE 8.3, for a period of two
years after the date hereof, the members of the Purchaser Group agree not to
seek to employ any person who is in the employ of either member of the Seller
Group.
(c) "RESTRICTED PERIOD" means five years from the date hereof.
"RESTRICTED AREA" means the U.S. Virgin Islands, the Dutch Antilles, the French
West Indies, Antigua and Barbuda, Dominica and the British Virgin Islands.
8.4 PUBLIC ANNOUNCEMENTS. None of the parties hereto nor any Affiliate,
representative or shareholder of any of such persons, shall disclose any of the
terms of this Agreement to any third party without the other parties' prior
written consent, except as may be required by law. The form, content and timing
of all press releases, public announcements or publicity statements with respect
to this Agreement and transactions contemplated hereby shall be subject to the
prior approval of Devcon and Ketcham, which approval shall not be unreasonably
withheld. No press releases, public announcements or publicity statements shall
be released by either party without such prior mutual agreement, expect as may
be required by law. Each party shall be entitled to rely on the advice of its
counsel regarding applicable legal disclosure requirements.
8.5 MARIENDAHL ESTATE. In the event that VICBP removes the existing
block plant and other removable improvements from parcel No. 6 Estate
Mariendahl, VICBP will, upon obtaining the consent of the Landlord to do so,
give the Asset Purchaser the right of first refusal to be the assignee of such
lease, for such consideration as shall be offered by any third party or, if
VICBP has not been approached by or solicited a third party, for such
consideration as shall be negotiated by the parties at such time.
8.6 FINANCING. The Purchaser Group shall make its good faith best
efforts to obtain such financing as shall be required for it to consummate the
transactions contemplated in this Agreement.
8.7 EASEMENT ON REAL PROPERTY. The parties agree that the Seller Group,
or Affiliates thereof, as appropriate, shall be granted an easement to cross or
otherwise make reasonable use of the real property conveyed to the Purchaser
Group pursuant to this Agreement and as set forth on SCHEDULE 8.7 hereto, all as
shall be reasonably necessary or helpful for the business of the Seller Group.
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER GROUP
Each and every obligation of each member of the Purchaser Group under
this Agreement shall be subject to the satisfaction of each of the following
conditions unless waived in writing by each member of the Purchaser Group:
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9.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The representations
and warranties of VICBP and Devcon contained in Article IV and Article VI and
elsewhere in this Agreement and all information contained in any exhibit or
schedule hereto delivered by, or on behalf of, VICBP and Devcon, to the
Purchaser Group, shall be true and correct except as expressly provided herein.
VICBP and Devcon shall have performed and complied with all agreements,
covenants and conditions required by this Agreement to be performed and complied
with by them according to the terms hereof.
9.2 CONSENTS AND APPROVALS. The parties hereto shall have obtained,
except as otherwise set forth in this Agreement, any and all consents,
approvals, Orders, qualifications, licenses, Permits or other authorizations
required by all applicable Regulations, Orders and Contracts of VICBP and Devcon
or binding on their properties and assets, with respect to the execution,
delivery and performance of the Agreement and consummation of the transactions
contemplated herein.
9.3 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
form and substance to the Purchaser Group and their counsel, and the Seller
Group shall have made available to the Purchaser Group for examination the
originals or true, complete and correct copies of all records and documents
relating to the business and affairs of VICBP that the applicable Purchaser may
reasonably request in connection with said transaction.
9.4 ADDITIONAL AGREEMENTS. VICBP shall have executed and delivered the
Supply Agreement in substantially the form attached hereto as Exhibit 9.4.
9.5 OTHER DOCUMENTS. VICBP and Devcon shall have furnished the
applicable Purchaser with such other and further documents and certificates,
including certificates of the Sellers' officers and others, as such Purchaser
shall reasonably request to evidence compliance with the conditions set forth in
this Agreement, including but not limited to secretary's certificate(s) as to
all necessary corporate action having been taken to authorize this Agreement and
the VICBP Supply Agreement as well as indicating incumbent officers authorized
to execute such and all related documents.
9.6 FINANCING. Purchaser Group shall have obtained financing in the
minimum amount of $4.0 million.
ARTICLE X
CONDITIONS TO THE OBLIGATIONS OF VICBP AND DEVCON
Each and every obligation of VICBP and Devcon under this Agreement
shall be subject to the satisfaction of each of the following conditions unless
waived in writing by Devcon:
10.1 REPRESENTATIONS AND WARRANTIES; PERFORMANCE. The representations
and warranties of the Purchaser Group contained in Article V and Article VII and
elsewhere in this Agreement
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and all information contained in any exhibit or schedule hereto delivered by, or
on behalf of, the Purchaser Group to the applicable Seller, shall be true and
correct except as expressly provided herein. The Purchaser Group shall have
performed and complied with all agreements, covenants and conditions required by
this Agreement to be performed and complied with according to the terms hereof.
10.2 CONSENTS AND APPROVALS. Each member of the Purchaser Group shall
have obtained any and all material consents, approvals, Orders, qualifications,
licenses, permits or other authorizations required by all applicable Regulations
or Orders, with respect to the execution, delivery and performance of the
Agreement, and the consummation of the transactions contemplated herein.
10.3 PROCEEDINGS AND DOCUMENTS. All corporate and other proceedings in
connection with the transactions contemplated hereby and all documents and
instruments incident to such transactions shall be reasonably satisfactory in
form and substance to VICBP, Devcon and their counsel, and the Purchaser Group
shall have made available to VICBP, Devcon and their counsel for examination the
originals or true, complete and correct copies of all records and documents
relating to the business and affairs of the Purchaser Group that they may
reasonably request in connection with said transaction.
10.4 INSURANCE COVERAGE. The Purchaser Group shall have obtained all
risk insurance coverage, effective as of the Closing Date, in amounts that are
customary in the industry to cover DMP as well as the Acquired Assets. The
Purchaser Group shall have also obtained, effective as of the Closing Date,
public liability insurance with coverages of at least $1 million per incident
and $3 million in the aggregate.
10.5 ADDITIONAL AGREEMENTS. STC and DMP shall have executed and
delivered the Supply Agreement substantially in the form attached hereto as
Exhibit 9.4.
10.6 OTHER DOCUMENTS. Members of the Purchaser Group shall have
furnished the Seller Group with such other and further documents and
certificates, including certificates of members of the Purchaser Group officers
and others, as the Seller Group shall reasonably request to evidence compliance
with the conditions set forth in this Agreement, including but not limited to
secretary's certificate(s) as to all necessary corporate action having been
taken to authorize this Agreement and the Supply Agreements, as well as
indicating incumbent officers authorized to execute such and all related
documents.
ARTICLE XI
CLOSING
11.1 CLOSING. The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place on the date hereof (the "CLOSING
DATE") or such other Closing Date as shall be agreed upon by the parties hereto;
provided, however, that in no event shall the Closing occur after January 20,
2000 unless consented to in writing by Devcon and Ketcham. If the
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Closing does not occur by January 20, 2000 or another agreed-upon Closing Date,
then the Deposit, together with interest thereon, shall immediately be refunded
to Ketcham.
ARTICLE XII
SURVIVAL OF TERMS; INDEMNIFICATION
12.1 SURVIVAL. All of the terms and conditions of this Agreement,
together with the representations, warranties and covenants contained herein or
in any instrument or document delivered or to be delivered pursuant to this
Agreement, shall survive the execution of this Agreement until all obligations
set forth therein shall have been performed and satisfied notwithstanding any
investigation heretofore or hereafter made by or on behalf of any party hereto;
provided, however, that all representations and warranties, and the agreements
of the Seller Group and the Purchaser Group to indemnify each other set forth in
this Article XII, shall survive and continue for, and all claims with respect
thereto shall be made prior to the end of, six months from the Closing Date,
except for (i) the representations and warranties set forth in Section 8.3 and
the covenants contained therein which shall survive until, and all claims with
respect thereto shall be made within, the Restricted Period, and (ii)
representations, warranties and indemnities for which an indemnification claim
shall be pending as of the end of the applicable period referred to above, in
which event such indemnities shall survive with respect to such claim until the
final disposition thereof. For the purposes of this Article, the Seller Group
shall together be deemed to be one party and the Purchaser Group shall together
be deemed to be another party.
12.2 LIMITATIONS.
(a) Neither party shall be required to indemnify the other
party until the indemnifiable damages, individually or in the aggregate, exceed
$50,000 (the "HURDLE RATE"), at which point such indemnifying party shall be
responsible for all indemnifiable damages that may arise in excess of the Hurdle
Rate.
(b) Notwithstanding any other provision hereof, after the
Closing, the aggregate amount of indemnifiable damages for which the Sellers
Group shall be liable under this Article XII shall not exceed $5,000,000.
12.3 THIRD-PARTY CLAIMS.
(a) Except as otherwise provided in this Agreement, the
following procedures shall be applicable with respect to indemnification for
third-party Claims. Promptly after receipt by the party seeking indemnification
hereunder (hereinafter referred to as the "INDEMNITEE") of notice of the
commencement of any Claim, or assertion of any Claim, liability or obligation by
a third party (whether by legal process or otherwise), against which Claim,
liability or obligation the other party to this Agreement (hereinafter the
"INDEMNITOR") is, or may be, required under this Agreement to indemnify such
Indemnitee, the Indemnitee will, if a Claim thereon is to be, or may be, made
against the Indemnitor, notify the Indemnitor in writing of the commencement or
assertion thereof and give the Indemnitor a copy of such Claim, process and all
legal pleadings.
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The Indemnitor shall have the right to assume the defense of such action with
counsel of reputable standing. The Indemnitor and the Indemnitee shall cooperate
in the defense of such Claims. In the case that the Indemnitor shall assume or
participate in the defense of such audit, assessment or other proceeding as
provided herein, the Indemnitee shall make available to the Indemnitor all
relevant records and take such other action and sign such documents as are
reasonable necessary to defend such audit, assessment or other proceeding in a
timely manner. If the Indemnitee shall be required by judgment or a settlement
agreement to pay any amount in respect of any obligation or liability against
which the Indemnitor has agreed to indemnify the Indemnitee under this
Agreement, the Indemnitor shall promptly reimburse the Indemnitee in an amount
equal to the amount of such payment plus all reasonable expenses (including
legal fees and expenses) incurred by such Indemnitee in connection with such
obligation or liability subject to this Article XII. No Indemnitor, in the
defense of any such Claim, shall, except with the consent of the Indemnitee,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnitee of a release from all liability with respect to such Claim.
In the event that the Indemnitor does not accept the defense of any matter for
which it is entitled to assume such defense as provided above, the Indemnitee
shall have the full right to defend against any such Claim, and shall be
entitled to settle or agree to pay in full such claim or demand, in its sole
discretion. The Indemnitee shall not enter into any settlement for which an
indemnification claim will be made hereunder without the approval of the
Indemnitor, which will not be unreasonably withheld.
(b) Prior to paying or settling any Claim against which an
Indemnitor is, or may be, obligated under this Agreement to indemnify an
Indemnitee, the Indemnitee must first supply the Indemnitor with a copy of a
final court judgment or decree holding the Indemnitee liable on such Claim or
failing such judgment or decree, must first receive the written approval of the
terms and conditions of such settlement from the Indemnitor. An Indemnitor or
Indemnitee shall have the right to settle any Claim against it, subject to the
prior written approval of the other, which approval shall not be unreasonably
withheld.
(c) An Indemnitee shall have the right to employ its own
counsel in any case, but the fees and expenses of such counsel shall be at the
expense of the Indemnitee unless (i) the employment of such counsel shall have
been authorized in writing by the Indemnitor in connection with the defense of
such action or claim, (ii) the Indemnitor shall not have employed counsel in the
defense of such action or claim, or (iii) such Indemnitee shall have reasonably
concluded that there may be defenses available to it which are contrary to, or
inconsistent with, those available to the Indemnitor, in any of which events
such fees and expenses of not more than one additional counsel for the
indemnified parties shall be borne by the Indemnitor.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 AMENDMENT AND MODIFICATION. Subject to applicable law, this
Agreement may be amended, modified and supplemented only by written agreement of
Devcon and Ketcham.
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13.2 WAIVER OF COMPLIANCE; CONSENTS. Any failure of any party hereto to
comply with any obligation, covenant, agreement or condition herein may be
waived in writing by the other parties hereto, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. Whenever this Agreement requires or permits consent
by or on behalf of any party hereto, such consent shall be given in writing.
13.3 CERTAIN DEFINITIONS.
"AFFILIATE" means, with regard to any Person, (a) any Person,
directly or indirectly, controlled by, under common control of, or controlling
such Person, (b) any Person, directly or indirectly, in which such Person holds,
of record or beneficially, five percent or more of the equity or voting
securities, (c) any Person that holds, of record or beneficially, five percent
or more of the equity or voting securities of such Person, (d) any Person that,
through Contract, relationship or otherwise, exerts a substantial influence on
the management of such Person's affairs, (e) any Person that, through Contract,
relationship or otherwise, is influenced substantially in the management of
their affairs by such Person, or (f) any director, officer, partner or
individual holding a similar position in respect of such Person.
"AUTHORITY" means any federal, state, local or foreign
governmental, regulatory or administrative body, agency, commission, board,
arbitrator or authority, any court or judicial authority, any public, private or
industry regulatory authority, whether foreign, federal, state or local.
"CLAIM" means any action, claim, lawsuit, demand, suit,
inquiry, hearing, investigation, notice of a violation, litigation, proceeding,
arbitration, appeals or other dispute, whether civil, criminal, administrative
or otherwise.
"CONTRACT" means any agreement, contract, commitment,
instrument or other binding arrangement or understanding, whether written or
oral.
"LIEN" means any security interest, lien, mortgage, pledge,
hypothecation, encumbrance, Claim, easement, charge, restriction on transfer or
otherwise, or interest of another Person of any kind or nature.
"MARKET PRICE" means the average of the daily market prices
for 5 consecutive business days commencing 7 days prior to the Closing Date. The
daily market price for each such business day shall be (i) the last sale price
on such day on the principal stock exchange or the NASD Automated Quotation
National Market System ("NASDAQ-NMS") on which such common stock is then listed
or admitted to trading or (ii) if no sale takes place on such day on any such
exchange or NASDAQ-NMS, the average of the last reported closing bid and ask
prices on such day as officially quoted on any such exchange.
"ORDER" means any decree, order, judgment, injunction, rule,
ruling, Lien, voting right, consent of or by an Authority.
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"PERMITS" means all permits, licenses, registrations,
certificates, Orders or approvals from any Authority or other Person (including
without limitation those relating to the occupancy or use of owned or leased
real property) issued to or held by either of the Seller.
"PERMITTED LIENS" means (i) statutory Liens not yet
delinquent, (ii) such imperfections or irregularities of title or Liens as do
not materially detract from or interfere with the present use of the properties
or assets subject thereto or affected thereby, otherwise impair present business
operations at such properties, or do not detract from the value of such
properties and assets, (iii) the rights of customers of each Seller with respect
to inventory, orders or Contracts entered into by each Seller in the ordinary
course of business, (iv) mechanics', carriers', workers', repairmen's,
warehousemen's, or other similar Liens arising in the ordinary course of
business in respect of obligations not overdue or which are being contested in
good faith and covered by a bond in an amount at least equal to the amount of
the Lien, (v) deposits or pledges to secure workmen's compensation, unemployment
insurance, old age benefits or other social security obligations in connection
with, or to secure the performance of, bids, tenders, trade contracts not for
the payment of money or leases, or to secure statutory obligations or surety or
appeal bonds or other pledges or deposits for purposes of like nature in the
ordinary course of business.
"PERSON" means any corporation, partnership, joint venture,
organization, entity, Authority or natural person.
"PROPERTY" shall mean any real property and improvements owned
(directly, indirectly, or beneficially), leased, used, operated or occupied by
any party and/or its Subsidiaries.
"REGULATION" means any rule, law, code, statute, regulation,
ordinance, requirement, announcement or other binding action of or by an
Authority.
"SUBSIDIARY" any Person in which any party has (i) an
ownership interest, whether direct or indirect, (ii) advanced funds or provided
financial accommodations to which, in each case, is secured by an ownership
interest in or has an Option to acquire an ownership interest in such Person.
"TAXES" means including without limitation income, gross
receipts, net proceeds, alternative or add-on minimum, ad valorem, value added,
turnover, sales, use, property, personal property (tangible and intangible),
stamp, leasing, lease, user, excise, duty, franchise, transfer, license,
withholding, payroll, employment, foreign, fuel, excess profits, occupational
and interest equalization, windfall profits, severance, and other charges
(including interest and penalties).
13.4 NOTICES. All notices, requests, demands and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given when delivered by hand, sent by telecopy (with confirmation of
transmission) or by overnight receipted courier service:
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(a) If to VICBP or Devcon to: c/o Devcon International Corp.
1350 E. Newport Center Drive
Suite #201
Deerfield Beach, Florida 33442
Attn: Jan Norelid
with a copy to: Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attn: Bob Grossman, Esq.
or to such other Person or address as VICBP or Devcon shall furnish by
notice to the Purchaser Group in writing.
(b) If to the Purchaser
Group, to:
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Attn: Mr. W. Kemble Ketcham
with a copy to:
Dudley Clark & Chan
9720 Estate Thomas, Suite 1
St. Thomas, U.S. Virgin Islands 00801
Attn: Elizabeth A. Clark, Esq.
or to such other Person or address as the Purchaser shall furnish by
notice to the Seller Group in writing.
13.5 ASSIGNMENT. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns, but neither this Agreement nor any
of the rights, interests or obligations hereunder shall be assigned by any of
the parties hereto without the prior written consent of the other parties,
except that any member of the Purchaser Group may, without the prior approval of
VICBP and Devcon, assign its rights, interests and obligations hereunder to any
Affiliate, and may grant Liens in respect of its rights and interests hereunder
to its lenders (and any agent for the lenders), and the parties hereto consent
to any exercise by such lenders (and such agent) of their rights and remedies
with respect to such collateral.
13.6 ARBITRATION.
(a) Any dispute, controversy or claim arising out of or
relating to this Agreement, or the breach, termination or validity of this
Agreement, which has not been resolved by a non-binding procedure, shall be
settled by arbitration in Miami, Florida (unless the
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Purchaser Group and the Seller Group mutually agree in writing to another
location), in accordance with the Arbitration Rules of the American Arbitration
Association then in effect, except that the Purchaser Group and the Seller Group
agree under any circumstances they shall be permitted reasonable discovery of
documents and depositions of an adequate number of witnesses. Notwithstanding
anything to the contrary in this Agreement, the Purchaser Group and the Seller
Group further agree that arbitration shall not be utilized to determine: (i) any
dispute arising out of or relating to the non-competition provisions set forth
in Section 8.4 of this Agreement (although such non-competition provisions may
be modified, voided or rescinded in an arbitration proceeding in connection with
the modification, voiding or rescission of all of the other transaction
agreements) or (ii) any dispute, controversy or claim which requires a third
party's presence either as the co-respondent or as an indemnifier, unless the
third party agrees to be bound by the arbitration. Disputes described in clauses
(i) and (ii) of the preceding sentence shall be resolved through proceedings
commenced and prosecuted in a state or federal court in Miami, Florida.
(b) Within one week after the Purchaser Group, on the one
hand, or the Seller Group, on the other hand, requests arbitration and the other
party receives notice of such request, both parties shall supply the American
Arbitration Association with a list of qualifications for the arbitrators.
Within two weeks after receipt of the parties' lists of qualifications for the
arbitrators, the American Arbitration Association shall supply the parties with
a list of 21 potential arbitrators, and the Purchaser Group, on the one hand,
and the Seller Group, on the other hand, shall each be permitted to strike up to
nine proposed arbitrators and shall notify in writing the American Arbitration
Association of the party's decisions. Within two weeks after receipt of the
parties' decisions as to the acceptable potential arbitrators, the American
Arbitration Association shall appoint the three arbitrators from the group of
arbitrators which has not been stricken by either party.
(c) Resolution of disputes, controversies or claims shall be
determined by a majority vote of the arbitration panel. The Purchaser Group, on
the one hand, and the Seller Group, on the other hand, shall share equally the
fees, costs and expenses of the arbitration, unless the arbitrators modify the
allocation of such fees, costs and expenses because they have determined that
fairness dictates other than an equal allocation between the parties. Each party
shall be responsible for its own attorneys' fees, costs of its experts and
expenses of its witnesses, unless the arbitrators provide otherwise because they
have determined that fairness so dictates. Any award rendered shall be final,
binding and conclusive (without the right to an appeal, unless such appeal is
based on fraud by the other party in connection with the arbitration process)
upon the parties and any judgment on such award may be enforced in any court
having jurisdiction, unless otherwise provided by law. The party submitting such
dispute to arbitration shall inform the American Arbitration Association that
the parties have agreed: (i) to reasonable discovery pursuant to the rules then
in effect under the Federal Rules of Civil Procedure (as used in the United
States District Court for the Southern District of Florida) for a period not to
exceed 120 days prior to such arbitration and (ii) to require that the testimony
at the arbitration hearing be transcribed.
13.7 GOVERNING LAW. The Agreement shall be governed by the internal
laws of the State of Florida as to all matters, including but not limited to
matters of validity, construction,
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effect and performance, except where the laws of the jurisdiction of the
location of Acquired Asset governs.
13.8 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Facsimile signature pages
shall be acceptable as originals.
13.9 HEADINGS. The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
13.10 ENTIRE AGREEMENT. This Agreement, including the schedules and
exhibits hereto and the documents, certificates and instruments referred to
herein (including but not limited to the Supply Agreements), embodies the entire
agreement and understanding of the parties hereto in respect of the transactions
contemplated by this Agreement and supersedes all prior agreements,
representations, warranties, promises, covenants, arrangements, communications
and understandings, oral or written, express or implied, between the parties
with respect to such transactions. There are no agreements, representations,
warranties, promises, covenants, arrangements or understandings between the
parties with respect to such transactions, other than those expressly set forth
or referred to herein.
13.11 CONSENT TO JURISDICTION; SERVICE OF PROCESS. The Purchaser Group
hereby irrevocably submits to the jurisdiction of the state or federal courts
located in Broward County, Florida in connection with any suit, action or other
proceeding arising out of or relating to this Agreement and the transactions
contemplated hereby, and hereby agree not to assert, by way of motion, as a
defense, or otherwise in any such suit, action or proceeding that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that this Agreement or the subject
matter hereof may not be enforced by such courts.
13.12 BINDING EFFECT. This Agreement shall not be construed so as to
confer any right or benefit upon any Person other than the signatories to this
Agreement and each of their respective successors and permitted assigns.
13.13 INJUNCTIVE RELIEF. The parties hereto agree that in the event of
a breach of any provision of this Agreement, the aggrieved party or parties may
be without an adequate remedy at law. The parties therefore agree that in the
event of a breach of any provision of this Agreement, the aggrieved party or
parties may elect to institute and prosecute proceedings in any court of
competent jurisdiction to enforce specific performance or to enjoin the
continuing breach of such provision, as well as to obtain damages for breach of
this Agreement. By seeking or obtaining any such relief, the aggrieved party
shall not be precluded from seeking or obtaining any other relief to which it
may be entitled.
13.14 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any party hereto, upon any breach or default of any
other party under this Agreement, shall impair any such right, power or remedy
of such party nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
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deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of any party hereto of any breach or default under this Agreement, or
any waiver on the part of any party of any provisions or conditions of this
Agreement must be made in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to any party, shall be cumulative and
not alternative.
13.15 SEVERABILITY. Unless otherwise provided herein, if any provision
of this Agreement shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
13.16 EXPENSES. The Purchaser Group shall bear its own expenses,
including without limitation, legal fees and expenses, with respect to this
Agreement and the transactions contemplated hereby. The Seller Group shall bear
its own expenses, including without limitation, legal fees and expenses, with
respect to this Agreement and the transactions contemplated hereby.
13.17 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY EXHIBIT HERETO, OR ANY COURSE OF CONDUCT,
COURSE OF DEALING OR STATEMENTS (WHETHER VERBAL OR WRITTEN) RELATING TO THE
FOREGOING. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES HERETO TO
ENTER INTO THIS AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have made and entered into this
Purchase Agreement effective as of December 31, 1999.
DEVCON INTERNATIONAL CORP., A FLORIDA
CORPORATION
By: /s/ Jan Norelid
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Title: VP Finance
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V.I. CEMENT & BUILDING PRODUCTS, INC.,
AN ENTITY FORMED AND EXISTING
UNDER THE LAWS OF THE U.S. VIRGIN ISLANDS
By: /s/ Jan Norelid
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Title: VP Finance
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ST. THOMAS CONCRETE, INC., AN ENTITY
FORMED AND EXISTING UNDER THE
LAWS OF THE U.S. VIRGIN ISLANDS
By: /s/ W. Kemble Ketcham
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Title: President
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/s/ Paulina Dean
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Paulina Dean, an individual
/s/ W. Kemble Ketcham
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W. Kemble Ketcham, an individual
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