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Forbearance And Amendment Agreement

This is an actual contract by Devcon International.

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Sectors: Materials and Construction
Governing Law: New York, View New York State Laws
Effective Date: March 30, 2007
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Exhibit 10.2

FORBEARANCE AND AMENDMENT AGREEMENT

This FORBEARANCE AND AMENDMENT AGREEMENT (this " Agreement" ), dated as of March 30, 2007 (the " Effective Time" ) is entered into between Devcon International Corp. (the " Company" ) and CS Equity II LLC (the " Investor" ).

RECITALS

WHEREAS , in connection with the Securities Purchase Agreement by and among the parties hereto dated as of February 10, 2006 (the " Securities Purchase Agreement" ), the Company had agreed, upon the terms and subject to the conditions set forth in the Securities Purchase Agreement, to issue and sell to the Investor and each other buyer set forth therein (collectively, the " Buyers" ) (i) at the Initial Closing (as defined in the Securities Purchase Agreement) warrants (the " Warrants" ) which were to be exercisable to purchase shares of Common Stock at an exercise price equal to $11.925 per share (as exercised collectively, the " Warrant Shares" ) and (ii) at the Additional Closing (as defined in the Securities Purchase Agreement), subject to the satisfaction of certain terms and conditions, preferred shares of the Company designated as Series A Convertible Preferred Stock, the terms of which were set forth in that certain Certificate of Designations for such series of preferred shares (the " Certificate of Designations" ), dated as of October 16, 2006 (the " Preferred Shares" ) which, among other things, were contemplated to be convertible into shares of the Company' s common stock, par value $0.10 per share (the " Common Stock" ) (as converted, the " Conversion Shares" ), in accordance with the terms of the Certificate of Designations;

WHEREAS , the Preferred Shares may be entitled to dividends (the " Dividends" ), which the Company, subject to certain conditions, may pay in shares of Common Stock (the " Dividend Shares" ); WHEREAS , to induce the Buyers to execute and deliver the Securities Purchase Agreement, the Company provided certain registration rights under the Securities Act of 1933, as amended, and the rules and regulations thereunder, or any similar successor statute (collectively, the " 1933 Act" ), and applicable state securities laws by entering into that certain Registration Rights Agreement, dated as of February 10, 2006 (the " Registration Rights Agreement" ), by and among the Company and the Buyers;

WHEREAS , under the terms of the Registration Rights Agreement, the Company agreed to use its best efforts to cause a Registration Statement (the " Registration Statement" ) registering the resale of the shares (the " Registrable Shares" ) of the Company' s common stock, par value $.10 (the " Common Stock" ), issuable upon conversion of the Preferred Shares, exercise of the Warrants and in payment of certain dividend obligations under the Certificate of Designations to be declared effective by the Securities and Exchange Commission (the " SEC" ) no later than January 25, 2007 (the " Effectiveness Deadline" );

FORBEARANCE AGREEMENT

WHEREAS, the Company has filed a Registration Statement to register the resale of the Registrable Shares, but has not caused such Registration Statement to be declared effective by the SEC (the " Effectiveness Failure" ) due to comments from the SEC the Company has received with respect thereto, which comments the Company believes make compliance with the current terms of the Registration Rights Agreement impossible;

WHEREAS , the Securities Purchase Agreement, the Registration Rights Agreement and the Certificate of Designations each provide that provisions of the respective agreements and instruments may be amended and the observance thereof may be waived, with the written consent of the Company and Buyers holding at least a majority of the Registrable Securities (the " Required Holders" );

WHEREAS , the Certificate of Designations allows that, with the consent of the Required Holders, the Company may, whether or not prohibited by the terms of the Preferred Shares, waive right of the Preferred Shares; WHEREAS , the Registration Rights Agreement further provides that all consents and other determinations required to be made by the Buyers pursuant to the Registration Rights Agreement shall be made by the Required Holders;

WHEREAS , concurrently herewith, the Company has also requested that the Buyers (other than the Investor) enter into agreements in the form of this Agreement (the " Other Agreements" , and together with this Agreement, the " Forbearance Agreements" ); WHEREAS , as a result of the Effectiveness Failure, the Company and the Buyers are in discussions regarding certain potential amendments to and waivers of (the " Amendments" ) certain terms of the Securities Purchase Agreement, the Registration Rights Agreement and the Certificate of Designations; and WHEREAS , the Investor and each other Buyer is negotiating the terms of the Amendments independently and, accordingly, such negotiations are anticipated to take an indeterminable amount of time to complete;

WHEREAS , notwithstanding the Company' s belief that it has not currently breached any of the terms of the Transaction Documents, the Company desires to ensure that, during the pendency of such negotiations, no Buyer will seek to exercise certain remedies or other rights they may have under the Transaction Documents resulting solely from the effects of the circumstances causing the Effectiveness Failure;

WHEREAS , capitalized terms used but not defined herein shall have the meaning ascribed thereto in the Securities Purchase Agreement.


FORBEARANCE AGREEMENT

NOW, THEREFORE , in consideration of the foregoing, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Forbearance Effective as of the Effective Time (as defined below), the Investor hereby agrees to forbear (the " Forbearance" ) from (a) taking any remedial action with respect to the Effectiveness Failure, (b) declaring the occurrence of any Triggering Event with respect to the Effectiveness Failure having occurred and from delivering any Notice of Redemption at Option of Holder with respect to thereto or (c) demanding any amounts due and payable with respect to the Effectiveness Failure, including without limitation, any Registration Delay Payments payable with respect to the Preferred Shares, until the earlier of (the " Forbearance Expiration Date" and the period commencing on the Effective Time and ending on the Forbearance Expiration Date, the " Forbearance Period" ):

(i) 5:00 p.m. prevailing New York city time on January 2, 2008.

(ii) the occurrence of an event of default described in either of Sections 3(a)(viii) or 3(a)(ix) of the Certificate of Designations;

(iii) such date the Investor reasonably determines that the Company either (u) is not negotiating the Amendments in good faith, (v) is not using its best efforts to promptly negotiate and enter into the Amendments with the Buyers, (w) has failed to execute such Amendments as soon as practicable, (x) has breached any covenant or other agreement set forth in any Forbearance Agreement, or (y) failed to obtain the Shareholder Approval by the Shareholder Meeting Deadline, provided that in the case of the Investor making any of the determinations described in (u) (y) above, the Company shall have first failed to use its best efforts to remedy the same within two (2) Business Days after receiving written notice thereof from the Investor; and (iv) the Amendments Closing Date (as defined in Section 2(B)(iii) below). Notwithstanding anything set forth herein to the contrary, the Forbearance is conditioned upon the Company' s agreement not to, and not to cause any of its Subsidiaries to, issue, in one or a series of transactions, any debt or equity securities that are senior to the Preferred Shares, or any debt or equity securities that are junior to the Preferred Shares, in the latter case, in an amount resulting in net proceeds to the Company in excess of $5 million, except Excluded Securities (as defined in the Certificate of Designations) without the prior wri
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