EXHIBIT 2.2
EXECUTION COPY
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STOCK PURCHASE AGREEMENT
DATED AS OF
FEBRUARY 22, 2000
AMONG
CARICEMENT ANTILLES N.V.
AND
DEVCON INTERNATIONAL CORP.
AND
CARIBBEAN CONSTRUCTION & DEVELOPMENT, LTD.
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TABLE OF CONTENTS
PAGE
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STOCK PURCHASE AGREEMENT.......................................................1
BACKGROUND.....................................................................1
AGREEMENT......................................................................1
1. Purchase and Sale........................................................1
2. Purchase Price and Payment...............................................1
2.1 Purchase Price.......................................................1
2.2 Earn-Out.............................................................2
2.3 Working Capital......................................................3
2.4 Holdback.............................................................3
3. Representations and Warranties of Seller.................................4
3.1 Execution and Validity...............................................4
3.2 Organization and Qualification.......................................4
3.3 Capitalization of the Company and Lack of Subsidiaries...............5
3.4 Absence of Encumbrances..............................................5
3.5 Options and Warrants.................................................5
3.6 Absence of Violations................................................5
3.7 Consents.............................................................5
3.8 Financial Statements.................................................6
3.9 Absence of Undisclosed Liabilities...................................6
3.10 No Material Adverse Change..........................................7
3.11 Tax Matters.........................................................8
3.12 Indebtedness and Guarantees.........................................9
3.13 Litigation and Governmental Matters.................................9
3.14 Compliance.........................................................10
3.15 Permits and Licenses...............................................12
3.16 Environmental Compliance...........................................12
3.17 Contracts and Other Agreements.....................................13
3.18 Accounts and Notes Receivable......................................14
3.19 Real Estate........................................................15
3.20 Fixed Assets.......................................................15
3.21 Intellectual Property..............................................15
3.22 Title to Assets; Liens.............................................16
3.23 Significant Suppliers and Customers................................17
3.24 Compensation of Employees..........................................17
3.25 Employee Benefit Plans.............................................17
3.26 Employee Relations.................................................18
3.27 Labor Agreements...................................................18
3.28 Affiliate Transactions.............................................19
3.29 Commission Arrangements............................................19
3.30 Insurance..........................................................19
3.31 Improvements.......................................................20
3.32 Bank and Other Accounts............................................20
3.33 Powers of Attorney.................................................20
3.34 Records............................................................20
3.35 Accounts Payable...................................................20
3.36 Letters of Credit and Bonds........................................20
3.37 Brokers............................................................20
3.38 Absence of Misrepresentations......................................21
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4. Representations and Warranties of Buyer.................................21
4.1 Execution and Validity..............................................21
4.2 Organization and Qualification......................................21
4.3 Absence of Violations...............................................21
4.4 Consents............................................................22
4.5 Brokers.............................................................22
4.6 Absence of Misrepresentations.......................................22
5. Covenants of the Company and Seller.....................................22
5.1 Conduct of Business.................................................22
5.2 Cooperation.........................................................23
5.3 Certain Acts........................................................24
5.4 Governmental Filings................................................24
5.5 Access and Information..............................................24
5.6 Expenditures........................................................24
5.7 Taxes...............................................................24
5.8 No Shop; Standstill.................................................25
6. Covenants of Buyer......................................................25
6.1 Cooperation.........................................................25
6.2 Certain Acts........................................................25
6.3 Governmental Filings................................................25
7. Conditions Precedent to the Obligations of the Company and Sellers......25
7.1 Representations and Warranties......................................25
7.2 Performance.........................................................26
7.3 No Material Adverse Change..........................................26
7.4 Absence of Litigation...............................................26
7.5 New Legislation.....................................................26
8. Conditions Precedent to Obligations of Buyer............................26
8.1 Representations and Warranties......................................26
8.2 Performance.........................................................26
8.3 No Material Adverse Change..........................................27
8.4 Absence of Litigation...............................................27
8.5 Consents............................................................27
8.6 Due Diligence.......................................................27
8.7 Amendment to Asset Purchase Agreement...............................27
8.8 New Legislation.....................................................27
9. Closing and Post-Closing Covenants......................................27
9.1 Time and Place......................................................27
9.2 Obligations of the Company and Seller...............................28
9.3 Obligations of Buyer................................................29
9.4 Guarantee of Accounts Receivable....................................29
9.5 Non-Competition.....................................................29
9.6 Sharing of Tax Benefits.............................................30
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10. Indemnification.........................................................30
10.1 Indemnification by Seller..........................................30
10.2 Indemnification by Buyer...........................................30
10.3 Notice of Indemnification..........................................31
10.4 Hurdle Rate and Limitation.........................................31
11. Termination.............................................................32
12. Miscellaneous...........................................................32
12.1 Notices............................................................32
12.2 Entire Agreement...................................................34
12.3 Amendment..........................................................34
12.4 Binding Effect.....................................................35
12.5 Waiver.............................................................35
12.6 Captions...........................................................35
12.7 Construction.......................................................35
12.8 Section, Schedule and Exhibit References...........................35
12.9 Severability.......................................................35
12.10 Absence of Third-Party Beneficiaries..............................35
12.11 Business Day......................................................35
12.12 Assignment........................................................36
12.13 Other Documents...................................................36
12.14 Governing Law.....................................................36
12.15 Attorneys' Fees...................................................36
12.16 Public Disclosure.................................................36
12.17 Arbitration.......................................................36
12.18 Currency..........................................................37
12.19 Counterparts......................................................38
12.20 Seller's Release..................................................38
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STOCK PURCHASE AGREEMENT
Stock Purchase Agreement dated February 22, 2000 among:
A. Caribbean Construction & Development, Ltd., a private company
limited by shares organized under the laws of the Commonwealth of Dominica, West
Indies, (the "Company");
B. Devcon International Corp., a corporation organized under the laws
of Florida, ("Seller"); and
C. Caricement Antilles N.V., a corporation organized under the laws of
Curacao, Netherland Antilles, ("Buyer"), or its permitted assignee as provided
in Section 12.12 .
BACKGROUND
A. Seller is the owner of 500 shares of common stock, par value $100.00
per share (the "Common Stock"), of the Company. Seller desires to sell to Buyer
500 shares (the "Shares") of the Common Stock, representing all of the issued
and outstanding shares of the Common Stock, and Buyer desires to purchase the
Shares, on the terms and subject to the conditions set forth in this Agreement.
B. On January 19, 2000, Seller and Mapleton International B.V., trading
under the name of Caricement, ("Caricement") executed a letter of intent with
respect to this transaction (the "Letter of Intent"). This Agreement is the
definitive Stock Purchase Agreement contemplated in the Letter of Intent. The
Letter of Intent is terminated as of the effective date of this Agreement and is
of no further force or effect.
AGREEMENT
The parties agree as follows:
1. PURCHASE AND SALE. Upon and subject to the terms and conditions
contained in this Agreement, at the "Closing" (as defined in Section 9.1),
Seller shall sell to Buyer and deliver the Shares to Buyer, and Buyer shall
purchase the Shares from Seller. Seller shall transfer good and valid title to
the Shares to Buyer, free and clear of all claims, liens and encumbrances.
2. PURCHASE PRICE AND PAYMENT.
2.1 PURCHASE PRICE. The consideration to be paid by Buyer to
Seller for the Shares (the "Purchase Price") shall be US$3,167,590 [US$800,000
for the Ready Mix Business plus US$2,367,590 for the Cement Business, as set
forth in the Asset Purchase Agreement] (the "Cash Consideration") plus the
earn-out payment(s) described in Section 2.2. The Purchase Price shall be
adjusted (upward or downward) based on the working capital adjustment described
in Section 2.3. US$753,324 of the Cash Consideration has been previously paid to
Seller as part of the US$7 million down payment made by Buyer and Union Maritima
Internacional, S.A.
("UMAR") pursuant to that certain Asset Purchase Agreement among UMAR,
Caricement, Buyer, Seller and certain of Seller's subsidiaries dated as of
November 22, 1999 (the "Asset Purchase Agreement.) Subject to Sections 2.3 and
2.4, the remaining balance of the Cash Consideration shall be paid at the
Closing in immediately available funds.
2.2 EARN-OUT. Buyer shall cause the Company to pay Seller 50%
of the net profit (the "Net Profit"), if any, generated by the Company's Ready
Mix Business (as defined below) for a period of 24 months commencing with the
month immediately following the month in which the Closing occurs (unless the
Closing occurs on the first day of a month, in which event the 24 month period
will commence with the month in which the Closing occurs). In the event the
Company generates a negative Net Profit (i.e., a net loss), Seller shall pay 50%
of the amount of such negative Net Profit to the Company. The Net Profit shall
be calculated as set forth in Schedule 2.2, consistent with the Company's
historical accounting practices, to the extent such practices are not
inconsistent with United States generally accepted accounting principles
consistently applied ("GAAP"). The Net Profit shall be calculated before taxes
only if the payment of the Net Profit to Seller by the Company would be tax
deductible to the Company, Buyer or any of Buyer's Affiliates (as described in
Section 3.28); otherwise, Net Profit shall be calculated after taxes. For
purposes of calculating the Net Profit, the parties shall allocate the costs of
the Company's activities relating to the ready mix operations (the "Ready Mix
Business") and the Company's activities relating to the operation of a bulk
cement terminal and bagging of cement (the "Cement Business") as set forth on
Schedule 2.2; provided, however, for the purposes of calculating Net Profit, the
transfer price of bulk cement from the Cement Business to the Ready Mix Business
shall be calculated as established in the Supply Agreement between UMAR, certain
of UMAR's affiliates, the Company, Seller and certain of Seller's subsidiaries
dated December 29, 1999. Net Profit shall be estimated by the Company and
presented to Buyer and Seller within ten days after the end of each week, and
quarterly financial statements shall be prepared by the Company within 30 days
after the end of each calendar quarter. Within ten days after the quarterly
financial statements of the Company have been presented to Buyer by the Company,
Buyer shall make the Net Profit payment to Seller if the Net Profit for the
quarter has been positive. Within ten days after the quarterly financial
statements of the Company have been presented to Buyer, Buyer shall advise
Seller to make the Net Profit payment to Buyer if the Net Profit for the quarter
has been negative. After the Company's annual audited financial statements for
any period scheduled in the 24 month period become available, the parties shall
adjust the earn-out payments previously made pursuant to this Section to take
into account any audit or year-end or other adjustments not reflected on the
monthly or quarterly financial statements. Such adjustment may result in a
payment from Buyer to Seller or a payment from Seller to Buyer, as applicable.
Notwithstanding the foregoing, at any time during such 24 month period, in lieu
of making or receiving the payment described in the first sentence of this
Section, Buyer shall have the option of paying the higher of: (i) US$700,000 or
(ii) the sum of any accrued but unpaid earn-out payments for completed months
plus the product of (a) 50% of the average historical monthly Net Profit for all
of the then completed months of such 24 month period multiplied by (b) the
number of months remaining until the conclusion of such 24 month period
(including the month in which such election is made), and, in such event, the
obligation of Seller to pay 50% of the amount of any negative Net Profit to the
Company shall cease commencing with the month in which such election is made. In
the event Buyer elects to
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terminate the Management Agreement in the form of Exhibit 9.2.7 prior to the end
of such 24 month period, Buyer shall be deemed to have made the election set
forth in the immediately preceding sentence.
2.3 WORKING CAPITAL. The Purchase Price and the Cash
Consideration shall each be adjusted (upward or downward) by an amount equal to
the Company's "Working Capital" (as defined below) as of the date of the
Closing. If the Company's Working Capital as of the date of the Closing is
positive, the Purchase Price and the Cash Consideration shall be increased by
such amount. If the Company's Working Capital as of the date of the Closing is
negative, the Purchase Price and the Cash Consideration shall be decreased by
such amount. Since the amount of the Company's Working Capital as of the date of
the Closing cannot be accurately determined on the date of Closing, the parties
agree to estimate such amount based upon the Company's "Current Balance Sheet"
(as defined in Section 3.9) and to determine the amount of the Company's Working
Capital as of the date of the Closing as provided in Section 2.4. For purposes
of this Agreement, "Working Capital" means Total Current Assets minus Total
Liabilities, as set forth on the Current Balance Sheet.
2.4 HOLDBACK. Buyer shall hold back an amount equal to
US$100,000 of the Cash Consideration (the "Holdback Amount") for purposes of
assuring that the Working Capital adjustment made pursuant to Section 2.3 is
adequate. For purposes of determining the Company's Working Capital as of the
date of the Closing, Seller shall prepare and shall cause an accounting firm
selected by Buyer (the "Accountants") to review the unaudited balance sheet of
the Company dated as at the date of the Closing (the "Estimated Closing Balance
Sheet") and related statement of operations of the Company for the period from
January 1, 2000 through the date of the Closing, in each case prepared in
accordance with GAAP and certified by the principal financial officer of Seller
as presenting fairly in all material respects the financial condition and
results of operations of the Company for the period then ended (collectively,
the "Estimated Closing Financial Statements"). Seller will deliver the Estimated
Closing Financial Statements to the Accountants within 30 days after the
Closing. The Accountants will have 30 days following delivery of the Estimated
Closing Financial Statements to review the Estimated Closing Financial
Statements. The Estimated Closing Financial Statements will be revised as
determined by the Accountants and such revised financial statements shall
constitute the Company's Actual Closing Financial Statements, provided that if
Buyer or Seller disagrees with the accuracy of the Actual Closing Financial
Statements as determined by the Accountants, such disagreement shall be resolved
through an arbitration proceeding in accordance with Section 12.17. The Actual
Closing Financial Statements shall conclusively establish the Company's actual
Working Capital as of the date of the Closing (the "Actual Working Capital"). In
the event that the Actual Working Capital is less than the Company's Working
Capital as set forth in the Company's Current Balance Sheet (the "Estimated
Working Capital"), Buyer shall deduct the amount of such difference from the
Holdback Amount and promptly pay to Seller the remainder, if any, of the
Holdback Amount. In the event that the Estimated Working Capital is greater than
the Actual Working Capital (the "Working Capital Variance") and the Working
Capital Variance is greater than the Holdback Amount, then (i) Buyer shall be
entitled to retain the entire Holdback Amount, and (ii) Seller shall promptly
pay to Buyer an amount equal to the difference between the Working Capital
Variance and the Holdback Amount. In the event that the Actual Working Capital
is equal to the Estimated Working Capital, Buyer shall promptly pay Seller the
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entire Holdback Amount. In the event that the Actual Working Capital is greater
than the Estimated Working Capital, Buyer shall promptly pay to Seller (i) the
Holdback Amount and (ii) an amount equal to the difference between the Actual
Working Capital and the Estimated Working Capital.
3. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller makes the
representations and warranties contained in this Section (including Sections 3.1
- 3.38) to Buyer, intending that Buyer relies on each of such representations
and warranties in order to induce Buyer to enter into and complete the
transactions contemplated by this Agreement. These representations and
warranties shall survive the consummation of the transactions contemplated by
this Agreement until the expiration of two years from the date of the Closing,
except that the tax representations and warranties contained in Section 3.12
shall survive the consummation of the transactions contemplated by this
Agreement until the expiration of any applicable statute of limitations or
extension of such statute of limitations; provided, however, that in cases of
fraud these representations and warranties shall survive the consummation of
such transactions without any time limit.
3.1 EXECUTION AND VALIDITY. The execution and delivery of this
Agreement by Seller has been authorized by Seller's board of directors and, to
the extent necessary, its shareholders. The execution and delivery of this
Agreement by the Company has been authorized by the Company's board of directors
and all of its shareholders. Each of the Company and Seller has the full right,
power and authority to enter into, and the ability to perform its respective
obligations under, this Agreement and all other agreements and instruments
contemplated by this Agreement. This Agreement has been duly executed and
delivered by the Company and Seller and is, and the other agreements and
instruments to be executed and delivered by the Company and Seller will be, when
executed and delivered by each of them, legal, valid and binding agreements of
the Company and Seller, respectively, enforceable against each such party, as
applicable, in accordance with their respective terms.
3.2 ORGANIZATION AND QUALIFICATION. The Company (a) is duly
organized, validly subsisting and in good standing under the laws of the
Commonwealth of Dominica, West Indies, its jurisdiction of incorporation, and
(b) has all requisite corporate power and authority to carry on its business as
is presently conducted and to own or lease and to operate its assets and
business in the places where its business is now conducted and where its assets
are now owned, leased or operated. The Seller (a) is duly organized, validly
subsisting and in good standing under the laws of the State of Florida, its
jurisdiction of incorporation, and (b) has all requisite corporate power and
authority to carry on its business as is presently conducted and to own or lease
and to operate its assets and business in the places where its business is now
conducted and where its assets are now owned, leased or operated. Schedule 3.2
consists of the Certification of Incorporation (the "Charter") and Bylaws of the
Company and also includes a true and complete list of the jurisdictions in which
the Company is duly qualified and in good standing as a foreign corporation,
which are the only jurisdictions where the nature of the activities conducted by
the Company or the nature of the assets owned, leased or operated by the Company
requires such qualification and where the failure to so qualify would have a
material adverse effect on the business, operations, properties or assets of the
Company.
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3.3 CAPITALIZATION OF THE COMPANY AND LACK OF SUBSIDIARIES.
Schedule 3.3 sets forth the authorized capital of the Company by class,
authorized number of shares and par value; the number of issued and outstanding
shares of capital stock of each class; and the record and beneficial owners of
all issued and outstanding shares of the Company's capital stock. All of the
Shares are validly issued, fully-paid and non-assessable. Except as set forth on
Schedule 3.3, the Company (a) does not own any shares of capital stock or other
securities of any other corporation or other entity, and (b) is not a partner in
any partnership or a member of any joint venture.
3.4 ABSENCE OF ENCUMBRANCES. Except as set forth in Schedule
3.4, Seller is the record and beneficial owner of all of the issued and
outstanding Shares of the Company, free and clear of any liens, pledges, claims,
options, proxies, restrictions, agreements, charges and encumbrances of any kind
("Encumbrances"), and there are no pending or threatened claims or proceedings
which would impair or encumber any of the Shares. Any Encumbrances set forth on
Schedule 3.4 shall be paid or otherwise discharged at the Closing, and upon
consummation of the transactions contemplated by this Agreement, Buyer will own,
free and clear of any Encumbrances, title to all of the Shares.
3.5 OPTIONS AND WARRANTS. The Company does not have any
outstanding securities, options, warrants, agreements or other instruments
pursuant to which any entity, trust or individual ("Person") has or may have any
right to subscribe for or acquire any shares of the Company's capital stock or
any securities convertible into or exchangeable for shares of its capital stock.
3.6 ABSENCE OF VIOLATIONS. Except as set forth in Schedule
3.6, neither the execution nor delivery of this Agreement or of any of the other
agreements and instruments contemplated by this Agreement, nor the consummation
of the transactions contemplated by this Agreement or such other agreements and
instruments, will conflict with or result in the breach of any term or provision
of, or constitute a default under, or result in the creation of, any Encumbrance
upon any of the Shares or the assets or properties of the Company, or give any
third-party the right to accelerate any obligation under, any charter provision,
bylaw, contract, agreement, indenture, deed of trust, instrument, order, law or
regulation to which the Company or Seller is a party or by which the Company or
Seller or any of their assets or properties are in any way bound or obligated.
3.7 CONSENTS. Except as set forth in Schedule 3.7, (a) no
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any governmental authority is required
on the part of the Company or Seller in connection with the transactions
contemplated by this Agreement; and (b) no consent, approval, waiver or other
action by any Person under any contract, instrument or other document is
required or necessary for the execution, delivery and performance of this
Agreement by the Company or Seller, or the consummation by the Company and
Seller of the transactions contemplated by this Agreement. Except as set forth
in Schedule 3.7, all consents described in Schedule 3.7 have been obtained and
are in full force and effect.
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3.8 FINANCIAL STATEMENTS. The financial statements described
in Sections 3.8.1, 3.8.2, 3.8.3 and 3.8.4 are sometimes referred to in this
Agreement as the "Financial Statements."
3.8.1 Schedule 3.8.1 consists of the unaudited
balance sheet of the Company dated as of December 31, 1997 and related statement
of operations for the year ended on such date, together with and a certificate
from KPMG LLP, the Seller's certified public accountants ("KPMG"), that such
financial statements constitute a part of the audited financial statements of
Seller.
3.8.2 Schedule 3.8.2 consists of the unaudited
balance sheet of the Company dated as of December 31, 1998 and related statement
of operations for the year ended on such date, together with a certificate from
KPMG, that such financial statements constitute a part of the audited financial
statements of Seller.
3.8.3 Schedule 3.8.3 consists of the audited balance
sheet of the Company dated as of December 31, 1999 and related statements of
operations and retained earnings for the year ended on such date, together with
related notes, certified by the Accountant. Schedule 3.8.3 is not attached to
this Agreement as of the date of execution of this Agreement. Schedule 3.8.3
will be delivered no less than five business days prior to the Closing.
3.8.4 The Financial Statements were prepared in
accordance with GAAP. The balance sheets and related notes which are part of the
Financial Statements present fairly, in all material respects, the financial
condition of the Company as of the dates of such balance sheets in accordance
with GAAP. The statements of operations and accumulated deficit or retained
earnings which are part of the Financial Statements present fairly, in all
material respects, the results of operations of the Company for the periods
covered by such statements in accordance with GAAP.
3.8.5 The books and records of the Company are
complete and correct in all material respects and accurately reflect, in all
material respects, the basis for the financial position, results of operations
and operating cash flow of the Company set forth in the Financial Statements.
3.8.6 Except as set forth in Schedule 3.8.7, there
has been no change in accounting methods made by the Company since December 31,
1996.
3.9 ABSENCE OF UNDISCLOSED LIABILITIES. Except as disclosed in
Schedule 3.9, as of the date of the Current Balance Sheet (as defined below),
the Company did not have any liabilities of any nature, whether accrued,
absolute, contingent or otherwise (including, without limitation, liabilities as
guarantor or otherwise with respect to obligations of others, liabilities under
consignment agreements, liabilities under contracts previously performed or
long-term debt), required to be shown on the Company's audited balance sheet as
of December 31, 1999 (the "Current Balance Sheet") in accordance with GAAP that
were not fully and adequately reflected or reserved against on such balance
sheet. Since the date of the Current Balance Sheet,
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the Company has not incurred any such liabilities (other than liabilities
incurred in the ordinary course of its business) or incurred any long-term
liabilities.
3.10 NO MATERIAL ADVERSE CHANGE. Except as disclosed in
Schedule 3.10, since the date of the Current Balance Sheet there has not been:
3.10.1 Any material adverse change in the business,
operations, affairs, properties, assets or financial condition of the Company,
nor has any event occurred or circumstance arisen, including without limitation,
the implementation of any law or regulation, which has a reasonable likelihood
of causing such a change.
3.10.2 Any damage, destruction or loss (whether or
not covered by insurance) materially and adversely affecting the business,
operations, affairs, properties, assets or financial condition of the Company.
3.10.3 Any labor dispute, strike, work stoppage,
union activity or any threatened union activity which is likely to materially
and adversely affect the business or operations the Company.
3.10.4 Any increase in salary, wages, bonus,
commission or other compensation to any employees or agents of the Company,
other than routine increases in the ordinary course of business and consistent
with past practices, or any increase in salary, wages, bonus, commissions or
other compensation to any director or officer of the Company or Seller or any of
their relatives, including, without limitation, any relative by marriage
("Relatives").
3.10.5 Any loan or advance to Seller or any
Relatives, officers, directors, employees, consultants, agents or other
representatives of the Company or any other loan or advance by the Company.
3.10.6 Any payment or commitment to pay any severance
or termination pay to any officers or directors of the Company or Seller.
3.10.7 Any default (including, without limitation,
any event that with the giving of notice or passage of time would cause a
default), termination or threatened termination under, or amendment to, any
Contract (as defined in Section 3.17) of the Company.
3.10.8 Any theft, damage, destruction, casualty,
loss, condemnation or eminent domain proceeding materially and adversely
affecting the Company, whether or not covered by insurance.
3.10.9 Any sale, assignment or transfer of any assets
of the Company, except in the ordinary course of business and consistent with
past practices.
3.10.10 Any waiver by the Company or Seller of any
material rights relating to the Company.
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3.10.11 Any other material transaction, agreement,
contract or commitment entered into by the Company or Seller affecting the
Company, except in the ordinary course of business and consistent with past
practices.
3.10.12 Any non-cash dividend or any other non-cash
distribution of any kind declared, made or paid with respect to the capital
stock of the Company.
3.10.13 Any change in the accounting principles,
methods, estimates or practices (including, without limitation, depreciation,
amortization or inventory valuation policies or rates) followed by the Company.
3.10.14 Any agreement or understanding to do, or
which results or is reasonably likely to result in, any of the actions, events
or circumstances described in Sections 3.10.1 - 3.10.13.
3.11 TAX MATTERS.
3.11.1 Except as set forth on Schedule 3.11.1, the
Company has collected (as applicable) and paid all federal, state, county,
local, foreign and other taxes that are due, including without limitation,
income taxes, estimated taxes, excise taxes, sales taxes, use taxes, gross
receipts taxes, franchise taxes, turnover taxes, employment and payroll related
taxes, withholding taxes, property taxes and import duties, whether or not
measured in whole or in part by net income, and all deficiencies, or other
additions to tax, interest and penalties owed by the Company (individually a
"Tax" and collectively the "Taxes") required to be collected and/or paid by the
Company. Neither the Company nor Seller knows of any deficiency for Taxes or
claim for additional Taxes or interest on or penalties in connection with such
Taxes, which have been asserted, threatened to be asserted or proposed against
the Company.
3.11.2 Schedule 3.11.2 sets forth all jurisdictions
in which the Company has filed or is required to file returns and reports for
Taxes and lists the type of Tax covered by each such filing. The Company has
timely filed all returns for Taxes, federal, state, local, foreign and other
(collectively, the "Tax Returns"). The Company does not have any liability for
Taxes with respect to any period subsequent to the periods covered by the Tax
Returns other than Taxes incurred in the ordinary course of business.
3.11.3 Schedule 3.11.3A contains a true and correct
copy of all Tax Returns filed by the Company since April 1, 1996. Schedule
3.11.3B sets forth the status of federal, state, local and foreign tax audits of
the Tax Returns of the Company with respect to items of income or deduction of
the Company for each fiscal year for which the statute of limitations has not
expired, including the amounts of any deficiencies or additions to Taxes,
interest and penalties that have been made or proposed, and the amounts of any
payments made by the Company with respect to such Taxes. Except as set forth in
Schedule 3.11.3C, each of the Tax Returns filed by the Company correctly and
accurately reflects the amount of its liability for Taxes payable as reflected
on such Tax Return, and makes all disclosures required by applicable provisions
of law.
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3.11.4 Schedule 3.11.4 sets forth all federal Tax
elections or agreements under the Internal Revenue Code of 1986, as amended (the
"Code"), and all Tax-related elections or agreements made to or with any state
or foreign taxing authority that are in effect with respect to the Company. The
Company has not filed a consent under Code ss.341(f) concerning collapsible
corporations. The Company has not made any payments, is not obligated to make
any payments, and is not a party to any agreement that will not be deductible
under Code ss.280G. The Company has not been a United States real property
holding corporation within the meaning of Code ss.897(c)(2) during the
applicable period specified in Code ss.897(c)(I)(A)(ii). Except as set forth on
Schedule 3.11.4A, the Company has disclosed on its federal income Tax Returns
all positions taken in such Tax Returns that could give rise to a substantial
understatement of federal income Tax within the meaning of Code ss.6662. The
Company is not a party to any Tax allocation or sharing agreement. The Company
(A) has not been a member of an affiliated group filing a consolidated federal
income Tax Return (other than a group the common parent of which was the
Company) and (B) has no liability for the Taxes of any Person (other than the
Company) under Reg. ss.1.502-6 (or any similar provision of state, local or
foreign law), as a transferee or successor, by contract or otherwise.
3.11.5 Schedule 3.11.5 sets forth the details of any
extension of time obtained by the Company with respect to the assessment of any
Tax.
3.11.6 The Company has not agreed to, nor is required
to, make any adjustments under Codess.481(a) by reason of a change in accounting
method or otherwise.
3.11.7 Except as set forth on Schedule 3.11.7, the
provisions for Taxes on its respective Current Balance Sheet are sufficient
under GAAP for the payment of all accrued and unpaid Taxes owed by the Company,
whether or not assessed or disputed, as of the date of the Current Balance
Sheet. The Company has timely paid any estimated federal or other income Taxes
which it was required to pay.
3.12 INDEBTEDNESS AND GUARANTEES. Schedule 3.12 sets forth, as
of the date of the Current Balance Sheet, the principal amount of each item of
indebtedness owed by the Company (excluding accounts payable incurred in the
ordinary course of business). Schedule 3.12 also sets forth a description of all
guarantees with respect to any of the items of indebtedness required to be
listed on that Schedule and a list and description of all guarantees by the
Company of any indebtedness of any other Person, whether or not such
indebtedness is otherwise required to be listed on Schedule 3.12.
3.13 LITIGATION AND GOVERNMENTAL MATTERS. Except as described
in Schedule 3.13, there is no action, suit or proceeding that has been (a) filed
and served, whether or not purportedly on behalf of the Company or Seller, at
law or in equity, or before or by any federal, state, local or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which is pending, or (b) to the knowledge of the Company or
Seller, (i) filed but not served or (ii) threatened, against (including, but not
limited to, counterclaims), the Company or Seller which involves the
transactions contemplated by this Agreement or the possibility of any judgment
or liability which if determined adversely to the Company or Seller would result
in a material adverse change in the business, operations, affairs,
9
properties or assets, or in the financial condition of the Company; and neither
the Company nor Seller is in default with respect to any final judgment, writ,
injunction, decree, rule or regulation of any court or any federal, state, local
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which would have a material adverse effect
on the Company.
3.14 COMPLIANCE. Except as set forth in Schedule 3.14, neither
the Company nor its business, nor the use, operation or maintenance of any of
its assets or properties, is in or constitutes a default under, or is in
violation of or contravenes, any applicable (including, without limitation, any
Tax, health, employment, customs or interstate or international commerce)
statute, law, ordinance, decree, order, rule or regulation of any governmental
authority, domestic or foreign, except where such default, violation or
contravention would not have a material adverse effect on the Company. The
Company has not, nor has any entity or individual acting on behalf of the
Company, made any payment of funds prohibited by law, and no funds of the
Company have been set aside to be used for any such payment. The Company has
complied with all applicable laws and regulations in connection with government
contracts, if any, and, to the knowledge of the Company and Seller, no Person
has made any allegation that the Company has not so complied.
3.15 PERMITS AND LICENSES. The Company has (a) all permits,
licenses, certificates and other governmental authorizations, and (b) all
industry affiliations and memberships in industry groups necessary to conduct
its business as presently conducted (collectively (a) and (b), the "Permits"),
except where the failure to have such Permits would not have a material adverse
effect on the Company. Each of the Permits is listed on Schedule 3.15. Neither
the Company nor Seller is in violation of any regulation, right or requirement
of any industry affiliations or groups, except where such violation would not
have a material adverse effect on the Company. Each Permit is in full force and
effect and, to the knowledge of the Company and Seller, no suspension or
cancellation of any Permit is threatened and there is no reasonable basis for
believing that any Permit will not be renewable upon expiration. The
transactions contemplated by this Agreement will not materially adversely
affect, terminate or impair the validity of the Permits.
3.16 ENVIRONMENTAL COMPLIANCE. As used in this Agreement, the
term "Environmental Law" means all applicable laws, ordinances, orders,
resolutions, rules or regulations relating to "Hazardous Material" or the
environment issued or enacted by any governmental authority with jurisdiction
over any of the Company, its subsidiaries and/or real property owned, leased,
occupied or managed by the Company or any of its subsidiaries, including without
limitation, the Dominica Facility (as defined on Schedule 3.16) (collectively
the "Premises"); and the term "Hazardous Material" means any substance meeting
any one or more of the following criteria: (a) the presence or anticipated
presence of which requires investigation or remediation under any applicable
governmental statute, regulation, rule, ordinance, order, action, policy or
common law, federal, state or local, domestic or foreign; (b) which is or
becomes defined as a "hazardous waste", "hazardous substance", "pollutant" or
"contaminant" under any applicable federal, state, local or foreign statute,
regulation, rule, ordinance or law (c) which is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise
hazardous and is or becomes regulated by any applicable
10
governmental authority; (d) which contains gasoline, diesel fuel, varsol or
other petroleum hydrocarbons; (e) which contains polychlorinated bipheynols
(PCBs), asbestos or urea formaldehyde foam insulation; or (f) which contains
radon gas. Except as set forth in Schedule 3.16 and except for ordinary and
customary items found in any commercial office (e.g., ink, batteries and carbon
material relating to reproductions), (x) the Company has violated not any
Environmental Law and neither the Company nor Seller has any knowledge of any
violations of Environmental Law with respect to the Premises or any other
location at which the Company conducts or has conducted its business; (y) the
Premises do not contain any Hazardous Material to be disposed of or otherwise
handled as waste; and (z) the Company does not own or lease, nor has ever owned
or leased, fuel storage tanks or containers or any other underground or
aboveground storage tanks.
3.17 CONTRACTS AND OTHER AGREEMENTS. Schedule 3.17 sets forth
a list of all of the following written and material oral contracts and other
arrangements, options, understandings and agreements as well (collectively, the
"Contracts"), to which the Company is a party or by or to which it or any of its
assets or properties are bound or subject:
3.17.1 Contracts with any current or former officer,
director, shareholder, employee, consultant, agent or other representative of
the Company.
3.17.2 Contracts with any labor union or association
representing any employee of the Company.
3.17.3 Contracts for the sale of any of the assets or
properties of the Company other than in the ordinary course of business or for
the grant to any Person of any options, rights of first refusal, or preferential
or similar rights to purchase any of such assets or properties.
3.17.4 Partnership or joint venture agreements.
3.17.5 Contracts under which the Company agrees to
indemnify any Person against, or to share, the liability of any Person, other
than routine, non-material Contracts such as a lease of a postage machine.
3.17.6 Contracts calling for an aggregate purchase or
sale price or payments in any one year of more than US$5,000 in any one case (or
in the aggregate, in the case of any related series of contracts and other
agreements).
3.17.7 Contracts for the sharing of fees, the
rebating of charges or other similar arrangements.
3.17.8 Contracts containing obligations or
liabilities of any kind to holders of the securities of the Company.
3.17.9 Contracts containing covenants of the Company
or Seller not to compete in any line of business or with any Person or covenants
of any other Person not to compete with any Company or Seller in any line of
business.
11
3.17.10 Contracts relating to the acquisition by the
Company of any operating business or the capital stock of any other Person.
3.17.11 Contracts requiring the payment to any Person
of a commission or fee.
3.17.12 Contracts for the payment of fees or other
consideration to Seller or any officer or director of the Company or Seller or
to any other Person in which any of such Persons has an interest or to any
Relative of any such Persons.
3.17.13 Contracts relating to the borrowing of money.
3.17.14 Leases of real or personal property.
3.17.15 Consignment contracts, with contracts in
which the Company is consignor or consignee separately listed.
3.17.16 Contracts with independent agents, brokers,
dealers or distributors.
3.17.17 Advertising or marketing contracts.
3.17.18 All other material Contracts whether or not
made in the ordinary course of business.
There are available to Buyer true and complete copies of all of the Company's
Contracts (and all amendments, waivers or other modifications to such Contracts)
and a summary of all material terms for any material oral Contracts listed on
Schedule 3.17. All of the Company's Contracts are valid, binding and in full
force and effect and enforceable in accordance with their respective terms and
conditions and have been made in the ordinary course of the Company's business,
and, except as described on Schedule 3.17, there is no existing default under or
breach by the Company or, to the knowledge of the Company or Seller, by any
other party of any such Contract or condition which, with the passage of time or
notice or both, is reasonably likely to constitute such a default by the Company
or, to the knowledge of the Company or Seller, any other party to any such
instrument. Except as set forth on Schedule 3.17, there has been no termination
or, to the knowledge of the Company or Seller, threatened termination or notice
of default under the Company's Contracts, and the transactions contemplated by
this Agreement will not result in or give rise to the termination or default of
any such Contract. Except as set forth on Schedule 3.17, there has not occurred,
and the consummation of the transactions contemplated by this Agreement will not
result in, any event or circumstance with respect to which indemnification
payments are required under the Company's Contracts. The Company does not have
any Contracts other than these listed in Schedule 3.17.
3.18 ACCOUNTS AND NOTES RECEIVABLE. All accounts and other
receivables of the Company as of five business days prior to the Company's
execution of this Agreement are listed on Schedule 3.18 by debtor, date and
amount. Except as set forth on Schedule 3.18, all accounts and other receivables
reflected on the Current Balance Sheet and all accounts and other
12
receivables arising subsequent to the date of the Current Balance Sheet have
arisen in the ordinary course of the Company's business, are bona fide and
properly recorded (along with any reserves) on the books of the Company in
accordance with GAAP, and the Company has not been and is not now subject to any
set-off or counter-claim with respect to any such receivables.
3.19 REAL ESTATE. Except as set forth on Schedule 3.19, the
Company does not own or lease any real property or any buildings or other
structures or have any options or any contractual obligations to purchase or
acquire any interest in or lease any real property. None of the interests of the
Company described in Schedule 3.19 are subject to any Encumbrance, except as set
forth on such Schedule 3.19.
3.20 FIXED ASSETS. Schedule 3.20 consists of lists of all
tangible fixed assets owned by the Company in connection with the operation of
the Company's business including, without limitation, all office furniture,
office fixtures, computer equipment, communications equipment and motor vehicles
used by the Company in connection with the operation of its business
(collectively, the "Fixed Assets"). Subject to normal wear and tear and the next
sentence, all of such assets are in reasonably good operating condition and in
reasonably good working order. All appropriate repair and maintenance of all
such assets has been performed, subject only to pending maintenance calls in the
ordinary course of business. The Fixed Assets constitute all operating assets
owned and used by the Company in connection with operation of its business.
Schedule 3.20 also separately identifies any assets used in connection with the
Company's operation of its business which are leased.
3.21 INTELLECTUAL PROPERTY.
3.21.1 Schedule 3.21.1 contains a true and complete
list of all patents, trademarks, service marks, trade names, franchises, trade
secrets, know-how, technology, service manuals, inventions, copyrights and
applications for such rights and all other intellectual property (collectively,
the "Intellectual Property") in which the Company has rights, except that such
Schedule is not required to list any copyrights that have not been registered or
any trade secrets, know-how or technology which is not in writing or stored
electronically. Neither the Company nor Seller has received any notice of
infringement by the Company of any Intellectual Property of others. Except as
set forth in Schedule 3.21.1, none of the present activities of the Company or
any of its assets infringe, to the knowledge of the Company or Seller, on any
Intellectual Property of others. To the knowledge of the Company and Seller, the
Company has the right to use, free and clear of claims or rights of others, all
trade secrets, customer lists, procedures, processes and other information
required for or incident to its business as presently conducted or contemplated
to be conducted. To the knowledge of the Company and Seller, the Company is not
making unauthorized use, and has no agreements with any Person for the use, of
any confidential information or trade secrets of any past or present employees
of the Company or any other Person. None of the activities of the employees of
the Company on behalf of the Company violates, to the knowledge of the Company
or Seller, any agreements or arrangements currently in effect which any such
employees have with their former employers.
3.21.2 The current software applications used by the
Company in the operation of its business are set forth and described on Schedule
3.21.2 (the "Software"). Except
13
as set forth on Schedule 3.21.2, the Software, to the extent it is licensed from
any third-party licensor or constitutes "off-the-shelf" software, is held by the
Company legitimately and is fully transferable to Buyer without any third-party
consent. To the Company's and Seller's knowledge, all of the computer hardware
of the Company has legitimately-licensed, installed software. The Software
operates and runs in a reasonable business manner and is adequate for the
operation of the Company's business, including all applicable foreign
conversions.
3.21.3 To the knowledge of the Company and Seller,
the Company's assets are Year 2000 Compliant; i.e., the Company's software and
other information technology (the "Technology") are designed to be used before,
during and after calendar year 2000, and, to the knowledge of the Company and
Seller, the Technology, if used during each such time period, will accurately
receive, provide and process date/time data (including calculating, comparing
and sequencing) from, into and between the twentieth and twenty-first centuries,
including the years 1999 and 2000, and leap year calculations, to the extent
that other software or information technology, used in combination with the
Technology, properly exchanges date/time data with the Technology.
3.22 TITLE TO ASSETS; LIENS. Except as set forth on Schedule
3.22, the Company owns outright and has good title to all of its assets and
properties, free and clear of any Encumbrance, except for the following
"Permitted Encumbrances": (a) assets and properties disposed of, or subject to
purchase or sales orders, in the ordinary course of business subsequent to the
date of the Current Balance Sheet; (b) Encumbrances to be released at or prior
to the Closing; (c) liens for taxes, assessments or other governmental charges
not yet due and payable; (d) statutory liens of landlords, carriers,
warehousemen, mechanics, materialmen and other similar liens imposed by law for
sums not more than 30 days delinquent or which are being contested in good
faith; (e) liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security, statutory obligations, surety and appeal bonds, bids, leases,
government contracts, trade contracts, performance and return-of-money bonds and
other similar obligations (exclusive of obligations for the payment of borrowed
money); (f) deposits made in the ordinary course of business to secure liability
to insurance carriers; and (g) easements, rights-of-way, restrictions, and other
similar charges or encumbrances not interfering in any material respect with the
ordinary conduct of the Company's business.
3.23 SIGNIFICANT SUPPLIERS AND CUSTOMERS. Schedule 3.23
contains an accurate list of all significant suppliers and significant
customers, it being understood and agreed that (a) a "significant supplier", for
purposes of this Section, means a supplier to whom the Company paid an aggregate
of US$100,000 or more during 1999, and (b) a "significant customer", for
purposes of this Section, means a customer representing five percent or more of
the Company's aggregate annual revenues, in either case as of the date of the
Current Balance Sheet. Except to the extent set forth on Schedule 3.23.1, none
of the Company's significant suppliers or customers (or persons or entities that
are sources of a significant number of suppliers or customers) have canceled or
substantially reduced or, to the knowledge of the Company or Seller, are
currently attempting or threatening to cancel a contract or reduce the purchase
of the products and/or utilization of the services provided to or by the
Company.
14
3.24 COMPENSATION OF EMPLOYEES. Schedule 3.24 contains a
complete and accurate list of all current officers, employees and consultants of
the Company, together with the current job title, aggregate remuneration rate
(bonus, commission and salary) and accrued but untaken vacation for each such
individual.
3.25 EMPLOYEE BENEFIT PLANS.
3.25.1 Schedule 3.25.1 contains a true and complete
list of each pension, retirement, profit sharing, deferred compensation, stock
option, stock purchase, bonus, medical, welfare, disability, severance or
termination pay, insurance or incentive plan, and each other employee benefit
plan, program, agreement or arrangement, whether funded or unfunded, sponsored,
maintained or contributed to or required to be contributed to by the Company or
by any trade or business, whether or not incorporated.
3.25.2 True and complete copies of each of the plans
described in Section 3.25.1 (the "Plans") and related trusts have been furnished
to Buyer, along with the most recent financial statement and the most recent
actuarial report prepared with respect to any of such Plans, the most recent
Summary Plan Description and the most recent Annual Report together with a
statement setting forth any such documents which cannot be furnished.
3.25.3 All contributions required by each Plan or by
law with respect to all periods through the Closing Date shall have been made by
such date (or provided for by the Company by adequate reserves on its financial
statements) and no excise or other taxes have been incurred or are due and owing
with respect to any such Plan.
3.25.4 No claim, lawsuit, arbitration or other action
has been threatened, asserted or instituted against any Plan, any trustee or
fiduciaries of any Plan, the Company or any of the assets of any trust
maintained under any Plan.
3.25.5 The present value, determined on a termination
basis, of all accrued benefits, vested and unvested, under each Plan, determined
using the actuarial valuation assumptions and methods (including interest rates)
contained in the most recent actuarial report for such Plan, does not exceed the
assets of such Plan allocable to such benefits.
3.25.6 No welfare benefit plan provides for
continuing benefits or coverage for any participant or beneficiary of a
participant after such participant's termination of employment.
3.25.7 The Company does not maintain or contribute to
any severance pay plan.
3.25.8 No individual shall accrue or receive any
additional benefits, service or accelerated rights to payment of benefits under
any Plan as a result of the actions contemplated by this Agreement.
3.26 EMPLOYEE RELATIONS. As of January 31, 2000, the Company
had an aggregate of 47 employees. The Company generally enjoys a good
employer-employee
15
relationship and is not delinquent in payments to any of its employees or
consultants for any wages, salaries, commissions, bonuses or other direct
compensation for any services performed by them or for amounts required to be
reimbursed to such employees. Except as set forth on Schedule 3.26, upon
termination of the employment of any of its employees, the Company will not by
reason of anything done prior to the Closing, be liable to any of its employees
or consultants for severance pay or any other payments (other than accrued
salary, vacation or sick pay in accordance with the Company's normal policies).
Except as set forth on Schedule 3.26, the Company has no contracts of employment
with any employees nor any legal responsibility for the employees of any other
entity.
3.27 LABOR AGREEMENTS. Except as set forth on Schedule 3.27,
there are no contracts with labor unions binding upon the Company and the
Company has not agreed to recognize any union or other collective bargaining
unit nor has any union or other collective bargaining unit been certified as
representing any employees of the Company. Neither the Company nor Seller has
any knowledge of any organization effort currently being made or threatened by
or on behalf of any labor union with respect to employees of the Company.
3.28 AFFILIATE TRANSACTIONS. Schedule 3.28 identifies all
Contracts, transactions or arrangements involving any Person (including such
Person's officers, directors, shareholders, partners, employees and Relatives)
who is an "Affiliate" or Relative of the Company or of Seller (i.e., a Person
who or which directly or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with Seller) and lists all
amounts paid (or deemed for accounting purposes to have been paid) by the
Company to such Person (provided that payments by the Company in respect of its
standard payroll obligations and the reimbursement of expenses to employees
incurred in the ordinary course of business shall not be included on Schedule
3.28) or received by the Company from any such Person at any time since December
31, 1995 with respect to any Contracts and all products or services (including
any charge for administrative, purchasing, legal, financial or other services)
purchased, sold or leased to or by the Company. Except as set forth on Schedule
3.28, each of the Contracts involving an Affiliate, including any and all
amendments to each such Contract, contains terms and conditions which are not
less favorable than those the Company could have obtained at the time it entered
into them from one or more independent third-parties in negotiations at arm's
length. No Affiliate or Relative of the Company or Seller is the direct or
indirect owner of an interest in any Person that is a present or potential
competitor, supplier or customer of the Company, nor does any such Person
receive income from any source other than the Company that should properly
accrue to the Company.
3.29 COMMISSION ARRANGEMENTS. Except as set forth on Schedule
3.29, the Company does not have any sales or commission arrangements with any of
its officers, directors, employees or shareholders or any of their Affiliates or
Relatives.
3.30 INSURANCE. Schedule 3.30 sets forth a list of all
policies or binders of fire, liability, product liability, workmen's
compensation, vehicular, directors and officers, medical, group health, life,
disability, business interruption and other insurance held by or on behalf of
the Company. Such policies and binders are in full force and effect, are in
conformity with the requirements of all Contracts to which the Company is a
party, except where the failure to be in such conformity would not have a
material adverse effect on the Company, and, to the
16
knowledge of the Company and Seller, are valid and enforceable obligations of
the insurers in accordance with their terms. The Company is not in default with
respect to any provision contained in any such policy or binder and the Company
has not failed to give any notice or present any claim under any such policy or
binder in due and timely fashion. Except as set forth on Schedule 3.30, (a) to
the knowledge of the Company and Seller, there are no material outstanding
unpaid claims under any such policy or binder, and (b) the Company has timely
filed all claims that it may have under any of its insurance policies. The
Company has not received notice of cancellation or non-renewal of any such
policy or binder.
3.31 IMPROVEMENTS. Except as set forth on Schedule 3.31, the
Company has not received any notice which remains outstanding and unremedied
alleging, proving or contending that the location, construction, occupancy,
operation or use of any improvements attached to or placed, erected, constructed
or developed as a portion of the real property owned, leased or otherwise
utilized by the Company, violates any applicable law, statute, ordinance, rule,
regulation, policy, order or determination of any federal, state, local or other
governmental authority, domestic or foreign, or any board of fire underwriters
(or other body exercising similar functions), or any restrictive covenant or
deed restriction affecting any portion of such property, including, without
limitation, any applicable zoning ordinances and building codes, flood disaster
laws and health and Environmental Laws, rules and regulations the violation of
which would individually or in the aggregate have a material adverse effect on
the Company.
3.32 BANK AND OTHER ACCOUNTS. Schedule 3.32 sets forth a true
and complete list of all bank, savings, brokerage and other accounts of the
Company, including the name of the depositary, the account number and the
persons authorized to make deposits and withdrawals or to effect transactions in
such accounts.
3.33 POWERS OF ATTORNEY. Except as set forth on Schedule 3.33,
there are no Persons holding powers of attorney granted by the Company with
respect to any of the assets of the Company, any of the Contracts, or any other
matters related to the Company.
3.34 RECORDS. All records relating to the Company's assets are
maintained in accordance with applicable legal, regulatory and other
requirements.
3.35 ACCOUNTS PAYABLE. Each of the accounts payable of the
Company reflects bona fide indebtedness of the Company incurred in the ordinary
course of the Company's operation of its business and on terms and conditions
negotiated in good faith with independent parties at arm's length.
3.36 LETTERS OF CREDIT AND BONDS. Set forth on Schedule 3.36
is a list of all letters of credit and bonds together with their face amounts
and a description as to their character (e.g., standby, irrevocable, etc.) which
are the obligations of the Company.
3.37 BROKERS. No agent, broker, investment banker or other
Person acting on behalf of the Company or Seller under its or his authority is
or will be entitled to any broker's fee or finder's fee or any other commission
or similar fee, directly or indirectly, in connection with
17
the transactions contemplated by this Agreement for which Buyer or the Company
will become liable.
3.38 ABSENCE OF MISREPRESENTATIONS. No representation or
warranty by the Company or Seller contained in this Agreement or any Exhibit or
Schedule to this Agreement, under the circumstances made, (i) contains any
untrue statement of a material fact or omits to state a material fact required
to make the statements not false or misleading, or (ii) with respect to
statements made to the knowledge of the Company or Seller, contains to the
knowledge of the Company or Seller, any untrue statement of a material fact or,
to the knowledge of the Company or Seller, omits to state a material fact
required to make the statements not false or misleading.
4. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer makes the
representations and warranties contained in this Section (including Sections 4.1
- 4.6) to Seller intending that Seller rely on each of such representations and
warranties in order to induce Seller to enter into and complete the transactions
contemplated by this Agreement. These representations and warranties shall
survive the consummation of the transactions contemplated by this Agreement
until the expiration of two years from the date of the Closing, provided that in
cases of fraud these representations and warranties shall survive the
consummation of such transactions without any time limit.
4.1 EXECUTION AND VALIDITY. The execution and delivery by
Buyer of this Agreement has been authorized by its board of directors. Buyer has
the full right, power and authority to enter into, and the ability to perform
its obligations under, this Agreement and all other agreements and instruments
contemplated by this Agreement. This Agreement has been duly executed and
delivered by Buyer and is, and the other agreements and instruments to be
executed and delivered by Buyer will be, when executed and delivered by it,
legal, valid and binding agreements of Buyer, enforceable in accordance with
their respective terms.
4.2 ORGANIZATION AND QUALIFICATION. Buyer (a) is duly
organized, validly existing and in good standing under the laws of the
Netherland Antilles, its jurisdiction of incorporation, and (b) has all
requisite corporate power and authority to carry on its business as is presently
conducted and to own or lease and to operate its assets and business in the
places where its business is now conducted and where its assets are now owned,
leased or operated.
4.3 ABSENCE OF VIOLATIONS. Except as set forth in Schedule
4.3, neither the execution nor delivery of this Agreement or of any of the other
agreements and instruments contemplated by this Agreement, nor the consummation
of the transactions contemplated by this Agreement or such other agreements and
instruments, will conflict with or result in the breach of any term or provision
of, or constitute a default under, or result in the creation of, any Encumbrance
upon any of the assets or properties of Buyer, or give any third-party the right
to accelerate any obligation under any charter provision, bylaw, contract,
indenture, deed of trust, instrument, order, law or regulation to which Buyer is
a party or by which Buyer or any of its assets or properties are in any way
bound or obligated.
4.4 CONSENTS. Except as set forth in Schedule 4.4, (a) no
consent, approval, order or authorization of, or registration, qualification,
designation, declaration or filing with, any
18
governmental authority is required on the part of Buyer in connection with the
transactions contemplated by this Agreement; and (b) no consent, approval,
waiver or other action by any Person under any contract, instrument or other
document is required or necessary for the execution, delivery and performance of
this Agreement by Buyer, or the consummation by Buyer of the transactions
contemplated by this Agreement. Except as set forth in Schedule 4.4, all
consents described in Schedule 4.4 have been obtained and are in full force and
effect.
4.5 BROKERS. No agent, broker, investment banker or other
Person acting on behalf of Buyer or under its authority is or will be entitled
to any broker's fee or finder's fee or any other commission or similar fee,
directly or indirectly, in connection with the transactions contemplated by this
Agreement for which Seller will become liable.
4.6 ABSENCE OF MISREPRESENTATIONS. No representation or
warranty by Buyer contained in this Agreement or any Exhibit or Schedule to this
Agreement, under the circumstances made, (i) contains any untrue statement of a
material fact or omits to state a material fact required to make the statements
not false or misleading, or (ii) with respect to statements made to the
knowledge of Buyer, contains to the knowledge of Buyer, any untrue statement of
a material fact or, to the knowledge of Buyer, omits to state a material fact
required to make the statements not false or misleading.
5. COVENANTS OF THE COMPANY AND SELLER. In addition to other
obligations contained in this Agreement, between the date of this Agreement and
the Closing, unless specifically waived in writing by Buyer, the Company shall,
and Seller shall cause the Company to, as the case may be:
5.1 CONDUCT OF BUSINESS. (a) Conduct its business in the
ordinary course, consistent with prior practice; (b) keep intact its business
and goodwill; (c) comply in all material respects with all of the terms of its
Contracts; (d) use its reasonable best efforts to keep available the services of
its officers and employees; (e) use its reasonable best efforts to maintain good
relationships with Persons having business relationships with it; and (f)
promptly notify Buyer of any material event or occurrence adverse to, and not in
the ordinary and usual course of business or consistent with past practice of,
the Company. Without the prior written consent of Buyer, which shall not be
unreasonably withheld, the Company shall not, and Seller shall not permit the
Company to, take or permit any action to:
5.1.1 Change materially any aspect of its current
business.
5.1.2 Affect or change its capital structure.
5.1.3 Terminate or amend any material Contract.
5.1.4 Merge or consolidate with any Person or acquire
or sell any stock or equity interest in any other Person.
5.1.5 Sell, lease, pledge, encumber or otherwise
dispose of any of its assets, other than in the ordinary course of its business.
19
5.1.6 Change or amend its Charter or Bylaws.
5.1.7 Other than in the ordinary course of business,
incur any indebtedness, make any guarantees or make capital expenditures or
investments in excess of US$25,000 in the aggregate.
5.1.8 Increase the rate of compensation, bonuses or
other benefits provided to employees, other than in the ordinary course of
business, or to officers, directors, Seller or its Affiliates or Relatives.
5.1.9 Settle any threatened or pending material
litigation or other proceeding.
5.1.10 Effect changes in its method or practice of
reporting or paying Taxes or effect changes in the business, contractual
arrangements or structure of its relations which would have the effect of
altering its Tax treatment or Tax liabilities.
5.1.11 Redeem or make any distributions with respect
to its capital stock or pay dividends to Seller.
5.1.12 Agree or commit to do any of the actions
described in Sections 5.1.1 - 5.1.11.
5.2 COOPERATION. Not take any action with the intention of
preventing the fulfillment of any conditions upon which the obligations of the
parties to effect the transactions contemplated by this Agreement are
conditioned, including any action taken with the intention of causing the
representations and warranties made by the Company or Seller in this Agreement
not to be true and correct in all material respects as of the Closing.
5.3 CERTAIN ACTS. Use its reasonable best efforts (including,
without limitation, executing required documents and the payment of any related
fees and expenses required by Contract or otherwise) to cause to be fulfilled
the conditions precedent to Buyer's obligations to consummate the transactions
contemplated by this Agreement that are dependent upon the actions of the
Company or Seller.
5.4 GOVERNMENTAL FILINGS. Promptly make all governmental
filings or other submissions which may be necessary in order for the Company to
be able to consummate the transactions contemplated by this Agreement.
5.5 ACCESS AND INFORMATION. Permit the authorized
representatives of Buyer to have reasonable access upon reasonable notice to the
facilities, equipment, employees, agents, independent auditors, properties,
books, records and documents of the Company and shall furnish to Buyer's
representatives such information, financial records and other documents with
respect to the assets, operations and business of the Company as Buyer shall
reasonably request. The Company shall be afforded the opportunity to appoint one
or more representatives to accompany and permit the authorized representatives
of Buyer access to the offices, employees and accountants of the Company, and to
accompany the representatives of Buyer on the visits
20
described in Section 8.6, for consultation or verification of any information
reasonably necessary to Buyer's due diligence review, and shall use its
reasonable best efforts to cause such Persons to cooperate with Buyer in such
consultation and in verifying such information. Any failure of the Company to
appoint representatives or the failure of the representatives to accompany or to
cause such persons or entities to cooperate with Buyer in such consultation or
verification of such information shall allow Buyer's representatives to consult
with such Persons without being accompanied by any representative of the
Company.
5.6 EXPENDITURES. Not make any material expenditure other than
in the ordinary course of business or as contemplated by this Agreement without
the prior written approval of Buyer, which approval shall not be unreasonably
withheld.
5.7 TAXES. Prepare and timely file, in a manner consistent
with applicable laws and regulations, all Tax Returns for Taxes required to be
filed on or before the date of the Closing. Seller shall pay and be responsible
for paying any sales taxes, documentary stamp taxes, income taxes or other taxes
or fees due or owing in connection with the transfer and sale of the Shares.
5.8 NO SHOP; STANDSTILL. Subject to the fiduciary duties of
the Board of Directors of Seller, refrain from taking, directly or indirectly,
any action to encourage, initiate, solicit or continue any discussions or
negotiations with, or any other offers from, any other Person concerning a sale
of assets or stock, a merger or any similar transaction concerning the Company
which would affect the business of the Company or all or any portion of the
Shares. The provisions of this Section 5.8 shall terminate upon the earlier of
the termination of this Agreement in accordance with Section 11 or the Closing.
6. COVENANTS OF BUYER. In addition to other obligations contained in
this Agreement, between the date of this Agreement and the Closing, unless
specifically waived in writing by Seller, Buyer shall:
6.1 COOPERATION. Not take any action that would cause the
conditions upon which the obligations of the parties to effect the transactions
contemplated by this Agreement not to be fulfilled including, without
limitation, taking or causing to be taken any action that would cause the
representations and warranties made by Buyer in this Agreement not to be true
and correct in all material respects as of the Closing.
6.2 CERTAIN ACTS. Use its best efforts (including, without
limitation, the payment of any related fees and expenses required by contract or
otherwise) to cause to be fulfilled the conditions precedent to Seller's
obligations to consummate the transactions contemplated by this Agreement that
are dependent upon the actions of Buyer.
6.3 GOVERNMENTAL FILINGS. Promptly make all governmental
filings or other submissions which may be necessary in order for Buyer to be
able to consummate the transactions contemplated by this Agreement.
21
7. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF THE COMPANY AND SELLERS.
Unless each of the following conditions are satisfied or waived in writing by
Seller, the Company and Seller shall not be obligated to effect the transactions
contemplated by this Agreement:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Buyer contained in this Agreement shall be true and complete in
all material respects as at the date of this Agreement and as at the actual date
of the Closing (as if each were made at such time), subject to any actions or
changes which may have taken place after the date of this Agreement which are
expressly permitted by this Agreement, and Seller shall have received a
certificate signed by the President or a Vice President of Buyer to that effect.
7.2 PERFORMANCE. Each of the agreements, obligations,
conditions and covenants to be performed or complied with by Buyer on or before
the Closing pursuant to the terms of this Agreement shall have been fully
performed or complied with on or before the date of the Closing, including,
without limitation, each of the deliveries to be made by Buyer pursuant to
Section 9.3.
7.3 NO MATERIAL ADVERSE CHANGE. No material adverse change in
the business, properties or assets or in the financial condition of Buyer taken
as a whole shall have occurred from the date of this Agreement through the date
of the Closing.
7.4 ABSENCE OF LITIGATION. There shall be no pending or
threatened claim, action, litigation, suit or other proceeding, either judicial
or administrative, against the Company or with respect to Buyer, Seller or the
Shares for the purpose of enjoining or preventing the consummation of this
Agreement or otherwise claiming that this Agreement or its consummation is
improper or adversely affecting or which would adversely affect the benefit to
Seller of the transactions contemplated by this Agreement.
7.5 NEW LEGISLATION. No new law has been enacted or
legislation proposed which would preclude the transaction contemplated by this
Agreement or limit the business of the Company.
8. CONDITIONS PRECEDENT TO OBLIGATIONS OF BUYER. Unless each of the
following conditions are satisfied or waived in writing by Buyer, Buyer shall
not be obligated to effect the transactions contemplated by this Agreement:
8.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Seller contained in this Agreement shall be true and complete in
all material respects as at the date of this Agreement and as at the date of the
Closing (as if each were made at such time), subject to any actions or changes
which may have taken place after the date of this Agreement which are expressly
permitted by this Agreement, and Buyer shall have received a certificate signed
by the President or a Vice President of Seller to that effect.
8.2 PERFORMANCE. Each of the agreements, obligations,
conditions and covenants to be performed or complied with by the Company and/or
Seller on or before the Closing pursuant to the terms of this Agreement shall
have been fully performed or complied
22
with on or before the date of the Closing, including, without limitation, each
of the deliveries to be made by the Company and Seller pursuant to Section 9.2.
8.3 NO MATERIAL ADVERSE CHANGE. No material adverse change in
the business, properties or assets or in the financial condition of the Company
shall have occurred from the date of this Agreement through the date of the
Closing.
8.4 ABSENCE OF LITIGATION. There shall be no pending or
threatened claim, action, litigation, suit or other proceeding, either judicial
or administrative against Buyer or with respect to the Company, Seller or the
Shares for the purpose of enjoining or preventing the consummation of this
Agreement or otherwise claiming that this Agreement or its consummation is
improper or adversely affecting or which would adversely affect the benefit to
Buyer of the transactions contemplated by this Agreement.
8.5 CONSENTS. All consents, approvals, permits, estoppel
certificates and/or waivers from governmental authorities and all other Persons
necessary to effectuate the transactions contemplated by this Agreement
including, without limitation, consents permitting the continuation in effect of
all of the Contracts and the Permits have been obtained (and/or in the case of
governmental regulations, all applicable time periods shall have expired or been
terminated).
8.6 DUE DILIGENCE. Representatives of Buyer shall have been
allowed to visit with the owners and/or managers of entities which are parties
to material Contracts in a manner reasonably satisfactory to Buyer (provided
that, subject to Section 5.5, Buyer acknowledges that one or more
representatives of the Company shall have the right to accompany the
representatives of Buyer on all such visits) and all other review of and due
diligence relating to the Company and its business which Buyer elects to
undertake shall have been completed to Buyer's satisfaction and Buyer shall not
have elected in its sole discretion to terminate this Agreement.
8.7 AMENDMENT TO ASSET PURCHASE AGREEMENT. The Amendment to
Asset Purchase Agreement in the form of Exhibit 8.7 shall have been executed and
delivered by all of the parties.
8.8 NEW LEGISLATION. No new law has been enacted or
legislation proposed which would preclude the transaction contemplated by this
Agreement or limit the business of the Company.
9. CLOSING AND POST-CLOSING COVENANTS.
9.1 TIME AND PLACE. The closing under this Agreement (the
"Closing") shall take place at 10:00 a.m. on March 29, 2000, or such earlier
date as may be agreed to by Buyer and Seller, at the offices of Holland & Knight
LLP, 30th floor, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇, or such other place as
may be agreed to by Buyer and Seller. If all of the conditions set forth in
Sections 7 and 8 are not satisfied by such date, subject to extension as
provided in this Agreement, Buyer or Seller, as the case may be in connection
with the applicable condition, shall
23
have the right, but not the obligation, to postpone the Closing from time to
time, but not beyond an additional 60 days in the aggregate. Notwithstanding the
foregoing, if the failure to satisfy a condition is a breach of this Agreement,
exercise of an option provided in this Section shall not constitute a waiver of
such breach or of the right to seek damages for such breach.
9.2 OBLIGATIONS OF THE COMPANY AND SELLER. At the Closing, the
Company and/or Seller, as applicable, shall deliver to Buyer:
9.2.1 The certificate dated as of the date of the
Closing as described in Section 8.1.
9.2.2 Stock certificate(s) representing the Shares,
duly endorsed in blank by Seller.
9.2.3 Certified copies of the resolutions of the
boards of directors and the shareholders, as applicable, of the Company and
Seller authorizing the execution, delivery and performance of, and the
transactions contemplated by, this Agreement.
9.2.4 An opinion of counsel for Seller, in form and
substance reasonably satisfactory to Buyer as to the matters set forth in
Exhibit 9.2.4, and an opinion of counsel for the Company, in form and substance
reasonably satisfactory to Buyer.
9.2.5 A good standing certificate or its equivalent
with respect to the Company from the Commonwealth of Dominica, West Indies and
each of the jurisdictions identified on Schedule 3.2, in each case not more than
10 days prior to the date of the Closing.
9.2.6 All required consents, approvals, permits,
estoppel certificates and/or waivers as required by Section 3.5.
9.2.7 The Management Agreement between Seller and
Buyer in the form of Exhibit 9.2.7 executed by Seller.
9.2.8 Such other certificates, instruments and
documents of transfer, if any, as may be necessary to consummate the
transactions contemplated by this Agreement.
9.3 OBLIGATIONS OF BUYER. At the Closing, Buyer shall deliver
to Seller:
9.3.1 The unpaid balance of the Cash Consideration,
as adjusted pursuant to Section 2.3, by wire transfer of immediately available
funds.
9.3.2 The certificate dated as of the date of the
Closing as described in Section 7.1.
9.3.3 A certified copy of the resolutions of the
Board of Directors of Buyer authorizing the execution, delivery and performance
of, and the transactions contemplated by, this Agreement.
24
9.3.4 The Management Agreement in the form of Exhibit
9.2.7 executed by Buyer.
9.3.5 Such other certificates, instruments and
documents of transfer if any, as may be necessary to consummate the transactions
contemplated by this Agreement.
9.4 GUARANTEE OF NOTES AND ACCOUNTS RECEIVABLE. Seller hereby
guarantees to Buyer the collection of the accounts receivable and notes
receivable of the Company in existence as of the Closing; provided, however,
Seller shall not be liable for doubtful accounts which do not exceed,
individually or in the aggregate, US$74,125.70 (the "Doubtful Account
Allowance"). Subject to the Doubtful Account Allowance, on the second
anniversary of the date of the Closing, Seller shall pay to Buyer an amount
equal to all then outstanding accounts receivable and notes receivable which
were in existence on or before the date of the Closing. In the event the Company
collects, in respect of the Company's accounts receivable and notes receivable
as of the date of Closing, an amount in excess of such accounts receivable and
notes receivable net of the Doubtful Account Allowance by the second anniversary
of the date of the Closing, then Buyer shall pay Seller an amount equal to such
excess. Any accounts receivable and/or notes receivable in existence on the date
of the Closing that remain outstanding on the second anniversary of the date of
the Closing shall be transferred to Seller on such second anniversary for no
additional consideration. Notwithstanding the foregoing, in the event that
within six months after the date of the Closing Buyer makes the election
described in the penultimate sentence of Section 2.2 to cease the making or
receiving of the payments described in the first sentence of Section 2.2, the
parties shall have no rights or obligations under this Section 9.4, and this
Section 9.4 shall be deemed to be deleted from this Agreement.
9.5 NON-COMPETITION.
9.5.1 During the Restricted Period and in the
Restricted Area (as such terms are defined below), Seller, on behalf of itself
and its Affiliates, agrees not to (i) directly or indirectly, engage in any
business activity which is directly or indirectly in competition with the Cement
Business or Ready Mix Business or (ii) solicit any person who has a business
relationship with the Company or Buyer to discontinue or reduce the extent of
the relationship. Until the later of (x) a period of two years after the date of
the Closing and (y) the date of the termination of the Management Agreement
between UMAR and Seller and its wholly-owned subsidiaries dated February 22,
2000 (the "UMAR Management Agreement"), the Management Agreement between Buyer
and Seller in the form of Exhibit 9.2.7 or the Distributorship Agreement between
UMAR and Seller and its wholly-owned subsidiaries dated February 22, 2000 (the
"Distributorship Agreement"), whichever is later, Seller agrees not to seek to
employ or employ any person who is in the employ of the Company or Buyer. The
parties agree that Seller's activities as contemplated by the Supply Agreement,
the Distributorship Agreement, the UMAR Management Agreement and the Management
Agreement in the form of Exhibit 9.2.7 shall in no way be deemed to be
competition in violation of this provision.
9.5.2 "RESTRICTED PERIOD" means five years from the
date of the Closing. "RESTRICTED AREA" means: (i) for purposes of the Ready Mix
Business, Dominica and (ii) for
25
purposes of the Cement Business, the U.S. Virgin Islands, the Dutch Antilles,
the French West Indies, Antigua and Barbuda, Dominica and the British Virgin
Islands.
9.6 SHARING OF TAX BENEFITS. Buyer and Seller agree to work
together to structure their relationships under this Agreement and the
Management Agreement to minimize taxes payable to the extent legally
permissible. Buyer and Seller agree to share equally any tax savings arising as
result of such structuring.
10. INDEMNIFICATION.
10.1 INDEMNIFICATION BY SELLER. From and after the Closing,
Seller shall indemnify, defend and hold harmless Buyer and the Company and their
respective officers, directors, shareholders, employees and agents and their
successors and assigns against any loss, claim, damage, cost, obligation,
liability, penalty and expense, including all legal and other expenses
reasonably incurred in connection with investigating or defending against any
such loss, claim, damage or liability or action in respect of such matters
(collectively referred to as "Section 10 Damages" in the remainder of this
Agreement) occasioned by, arising out of or resulting from any breach or default
of any representation or warranty by, or covenant of, the Company or Seller
contained in this Agreement, including without limitation, non-payment, late
payment and/or underpayment of Taxes.
10.2 INDEMNIFICATION BY BUYER. From and after the Closing,
Buyer shall indemnify, defend and hold harmless Seller and its officers,
directors, shareholders, employees and agents and their successors and assigns
against any Section 10 Damages occasioned by, arising out of or resulting from
any breach or default of any representation or warranty by, or covenant of,
Buyer contained in this Agreement.
10.3 NOTICE OF INDEMNIFICATION. Upon receipt by an indemnified
party of notice of the commencement against it of any action involving a claim,
including, but not limited to, notice of a tax audit, assessment or other tax
related inquiry, investigation or claim, such indemnified party, if a claim in
respect of such action is to be made by it against any indemnifying party under
this Section 10, shall promptly notify in writing the indemnifying party of such
commencement. In case any such action is brought against any indemnified party,
and it notifies an indemnifying party of such commencement, the indemnifying
party will be entitled to participate in the defense and, to the extent that it
may wish, assume the defense of the action, with counsel reasonably satisfactory
to such indemnified party, and after notice from the indemnifying party to such
indemnified party of its election to assume the defense, the indemnifying party
will not be liable to such indemnified party under this Section 10 for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense other than reasonable costs of investigation. Any such
indemnifying party shall not be liable to any such indemnified party on account
of any settlement of any claim or action effected without the consent of such
indemnifying party unless the indemnifying party had determined not to assume
the defense of the action. The indemnifying party will not settle or compromise
any claim or action without the written consent of the indemnified party (which
consent shall not be unreasonably withheld).
26
10.4 HURDLE RATE AND LIMITATION. Except as otherwise provided
in this Agreement, neither Seller, on the one hand, nor Buyer, on the other
hand, shall have any liability for indemnification pursuant to this Section 10
unless the total Section 10 Damages for which the indemnifying party would
otherwise be liable exceeds US$25,000 (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. The Hurdle Rate shall not apply to any
breach of contract or covenant by any of the parties to this Agreement and shall
apply only to misrepresentations by the parties to this Agreement. The aggregate
amount of Section 10 Damages occasioned by, arising out of or resulting from any
breach or default of any representation or warranty by, or covenant of, the
Company or Seller contained in this Agreement, including without limitation,
non-payment, late payment and/or underpayment of taxes for which Seller shall be
liable under this Agreement shall not exceed the Purchase Price.
11. TERMINATION. This Agreement shall be terminated and the
transactions contemplated by this Agreement abandoned at any time prior to the
Closing:
11.1 By mutual written consent of Buyer and Seller.
11.2 By either Buyer or Seller, upon written notice to the
other, if without fault of such terminating party, the Closing has not taken
place by the close of business on May 28, 2000, unless Buyer, Seller and the
Company agree in writing to extend such date.
11.3 By Buyer upon written notice to Seller, if the Company
and/or Seller has violated or breached any representation, warranty or covenant
contained in this Agreement or any agreement contemplated by this Agreement;
provided that Buyer shall have given the Company and Seller 30 days' advance
written notice setting forth the basis on which Buyer is exercising its right to
terminate and such violation or breach is not cured within such 30 days.
11.4 By Seller upon written notice to Buyer, if Buyer has
violated or breached any representation, warranty or covenant contained in this
Agreement or any agreement contemplated by this Agreement; provided that Seller
shall have given Buyer 30 days' advance written notice setting forth the basis
on which Seller is exercising its right to terminate and such violation or
breach is not cured within such 30 days.
Termination by Buyer or Seller pursuant to Sections 11.3 or 11.4, respectively,
shall not constitute a waiver of the breach affording such right of termination
or of the right to seek damages for such breach.
27
12. MISCELLANEOUS.
12.1 NOTICES. All notices, demands or requests provided for or
permitted to be given pursuant to this Agreement must be in writing and shall be
delivered or sent, with the copies indicated, by personal delivery, telefax
(with confirmation and additional copy sent by overnight delivery service) or
overnight delivery service (by a reputable international carrier) to the parties
as follows (or at such other address as a party may specify by notice given
pursuant to this Section):
To the Company and/or
Sellers: c/o Devcon International Corp.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Jan Norelid
28
With a copy to: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, P.A.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Esq.
To Buyer: Caricement Antilles N.V.
Equity Trust (Curacao) N.V.
▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ Antilles
Facsimile: ▇▇▇▇▇ ▇▇▇ ▇▇▇▇
Attn: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
With a copy to: Union Maritima Internacional, ▇.▇.
▇▇▇▇▇▇▇, ▇▇ - ▇▇▇▇▇▇ ▇
▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇
Facsimile: ▇▇▇▇▇▇▇▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
With a copy to: Holland & Knight LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇., Esq.
All notices shall be deemed given and received one business day after their
delivery to the addresses for the respective party(ies), with the copies
indicated, as provided in this Section.
12.2 ENTIRE AGREEMENT. This Agreement, the documents which are
Exhibits and Schedules to this Agreement and any other contemporaneous
agreements entered into by the parties contain the sole and entire agreement
among the parties with respect to their subject matter and supersede any and all
other prior written or oral agreements among them with respect to such subject
matter. The Asset Purchase Agreement, as amended by the Amendment to Asset
Purchase Agreement, remains in full force and effect. The Letter of Intent is
terminated as of the date of this Agreement and is of no further force or
effect.
12.3 AMENDMENT. No amendment or modification of this Agreement
shall be valid unless in writing and duly executed by the parties affected by
the amendment or modification.
12.4 BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the parties and their respective representatives, heirs,
successors and permitted assigns.
29
12.5 WAIVER. Waiver by any party of any breach of any
provision of this Agreement shall not be considered as or constitute a
continuing waiver or a waiver of any other breach of the same or any other
provision of this Agreement.
12.6 CAPTIONS. The captions contained in this Agreement are
inserted only as a matter of convenience or reference and in no way define,
limit, extend or describe the scope of this Agreement or the intent of any of
its provisions.
12.7 CONSTRUCTION. In the construction of this Agreement,
whether or not so expressed, words used in the singular or in the plural,
respectively, include both the plural and the singular and the masculine,
feminine and neuter genders include all other genders. Since all parties have
engaged in the drafting of this Agreement, no presumption of construction
against any party shall apply.
12.8 SECTION, SCHEDULE AND EXHIBIT REFERENCES. All references
contained in this Agreement to Sections, Schedules and Exhibits shall be deemed
to be references to Sections of, and Schedules and Exhibits attached to, this
Agreement, except to the extent that any such reference specifically refers to
another document. All references to Sections shall be deemed to also refer to
all clauses of such Sections, if any. The definitions of terms defined in this
Agreement shall apply to the Schedules.
12.9 SEVERABILITY. In the event that any portion of this
Agreement is illegal or unenforceable, it shall affect no other provisions of
this Agreement, and the remainder of this Agreement shall be valid and
enforceable in accordance with its terms.
12.10 ABSENCE OF THIRD-PARTY BENEFICIARIES. Nothing in this
Agreement, express or implied, is intended to (a) confer upon any Person other
than the parties to this Agreement and as set forth in Sections 12.4 and 12.12
any rights or remedies under or by reason of this Agreement as a third-party
beneficiary or otherwise; or (b) authorize anyone not a party to this Agreement
to maintain an action or institute an arbitration proceeding pursuant to or
based upon this Agreement.
12.11 BUSINESS DAY. As used in this Agreement, the term
"business day" means any day other than a Saturday, Sunday or legal or bank
holiday in the City of Miami, Florida (the "City"). If any time period set forth
in this Agreement expires on other than a business day in the City, such period
shall be extended to and through the next succeeding business day in the City.
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12.12 ASSIGNMENT. Neither this Agreement nor any rights under
this Agreement may be assigned by any party without the written consent of all
other parties; provided, however, Buyer may assign this Agreement to a direct or
indirect wholly-owned subsidiary of Buyer or Buyer's direct or indirect parent
or to a purchaser of all or substantially all of Buyer's assets.
12.13 OTHER DOCUMENTS. The parties shall take all such actions
and execute all such documents which may be necessary to carry out the purposes
of this Agreement, whether or not specifically provided for in this Agreement.
12.14 GOVERNING LAW. This Agreement and the interpretation of
its terms shall be governed by the laws of the State of Florida, without
application of conflicts of law principles.
12.15 ATTORNEYS' FEES. Seller and Buyer shall pay their
respective attorneys' fees and expenses for the negotiation and preparation of
this Agreement, the Exhibits and Schedules and the other agreements contemplated
by this Agreement. Notwithstanding the foregoing, Buyer shall reimburse Seller
for up to US$12,000 for Seller's attorneys' fees and expenses for the
negotiation and preparation of this Agreement.
12.16 PUBLIC DISCLOSURE. No party to this Agreement shall make
any public disclosure or publicity release pertaining to the existence of the
subject matter contained in this Agreement without notifying and consulting with
the other parties; provided, however, that notwithstanding the foregoing, each
party shall be permitted, after notice to the other parties, to make such
disclosures to the public or to governmental agencies as its counsel shall deem
necessary to maintain compliance with, and to prevent violation of, applicable
laws, federal, state and local, domestic and foreign.
12.17 ARBITRATION.
12.17.1 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-Dade County, Florida (unless Buyer, the Company
and Seller mutually agree in writing to another location), in accordance with
the Arbitration Rules of the American Arbitration Association then in effect,
except that Buyer, the Company and Seller 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, Buyer, the Company and Seller further agree that arbitration shall
not be utilized to determine 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 the
preceding sentence shall be resolved through proceedings commenced and
prosecuted in a state or federal court in Miami-Dade County, Florida.
12.17.2 Within one week after Buyer, on the one hand,
or Seller, 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
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American Arbitration Association shall supply the parties with a list of 21
potential arbitrators, and Buyer, on the one hand, and Seller, 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.
12.17.3 Resolution of disputes, controversies or
claims shall be determined by a majority vote of the arbitration panel. Buyer,
on the one hand, and Seller, on the other hand, shall share equally the fees,
costs and expenses of the arbitration, unless the arbitrators modify the
allocation of 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
Sates 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.
12.18 CURRENCY. All monetary amounts in this Agreement are
stated in United States dollars (US$) and shall be paid in that currency. No
charges shall be made in any of such amounts based upon changes in the value of
the United States dollar against any other currency.
12.19 COUNTERPARTS. This Agreement may be executed and
delivered in two or more counterparts, each of which shall be deemed to be an
original and all of which, taken together, shall be deemed to be one agreement.
12.20 SELLER'S RELEASE. Effective as of the Closing, Seller
hereby releases the Company and all of its affiliated subsidiaries, divisions,
parents, shareholders, predecessors, successors and assigns, directors,
employees, managers, officers, representatives, agents, and attorneys, from any
and all manner of action, claim, suit, cause of action, debt, sum of money,
contract, covenant, controversy, agreement, promise, damage, judgment and demand
whatsoever, in law or in equity, whether now known or unknown, including but not
limited to any claim under the common law or statutes of the United States, or
any other jurisdiction, country or state which Seller ever had or now has
against such Persons by reason of any matter, cause or thing whatsoever.
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The parties have entered into this Stock Purchase Agreement as of the
date first set forth above.
SELLER
DEVCON INTERNATIONAL CORP.,
a corporation organized under the laws of Florida
By: /S/ JAN NORELID
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Title: Chief Financial Officer
COMPANY
Caribbean Construction & Development, Ltd., a private
company limited by shares organized under the laws of
the Commonwealth of Dominica, West Indies
By: /S/ JAN NORELID
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Title: Chief Financial Officer
BUYER
CARICEMENT ANTILLES N.V., a corporation established
under the laws of Curacao, Netherland Antilles
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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Title:
33
