EXHIBIT 10.9
OPTION AGREEMENT DATED JUNE 18,
2008
OPTION AGREEMENT
THIS OPTION AGREEMENT (this " Agreement
") is made and entered into as of this 18 th day of June, 2008 (the “ Effective
Date ”), by and between ADVANCED FIBERGLASS TECHNOLOGIES,
INC., a Wisconsin corporation (" Buyer "), and M & W
FIBERGLASS, LLC, a Wisconsin limited liability company (the "
Company ").
RECITALS
WHEREAS, the Company owns (i) certain real
estate, fixtures and improvements comprising approximately 14.263
acres of land and approximately 70,300 square feet of manufacturing
and office space located at 4400 Commerce Drive, Wisconsin Rapids,
Wisconsin, as more specifically described in Exhibit A
attached hereto (the “ Property ”);
WHEREAS, the Company and Buyer are Co-Borrowers
under that certain Bond Agreement by and between the Company,
Buyer, City of Wisconsin Rapids, Jamie L. Mancl, Jennifer Mancl,
and Nekoosa Port Edwards State Bank (the “Bank”) dated
February 28, 2007 (the “ Bond Agreement
”);
WHEREAS, the Company has agreed to grant an
option to Buyer, and Buyer has agreed to acquire an option from the
Company, for Buyer to purchase the Property from the Company on the
terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual
covenants set forth in this Agreement and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Company and Buyer agree as
follows:
ARTICLE I
GRANT OF OPTION; OPTION FEE;
PURCHASE PRICE
Section 1.1
Grant of Option . Subject to the terms set forth
in this Agreement, the Company hereby grants to Buyer, and
Buyer hereby accepts from the Company, an irrevocable and exclusive
option to purchase the Property (the " Option ") on the
terms set forth in this Agreement.
Section 1.2
Option Fee . The Company acknowledges its receipt
from Buyer of the amount of Two Thousand Five Hundred Dollars
($2,500) in cash (the " Option Fee ") as payment in full for
the Option. Buyer acknowledges and agrees that the
Option Fee shall be non-refundable to Buyer except as provided
herein. If Buyer does not exercise the Option in
accordance with Section 2.1 , then the Option Fee shall
not be refunded to Buyer, and shall be retained by the Company,
except that, if the Buyer reasonably determines, after due
diligence, that the Property has such title defects that are both
(A) not capable of being insured and (B) would be reasonably
expected to materially affect the value of Property, then the
Company promptly shall return the Option Fee to the
Buyer.
Section 1.3
Purchase Price . The purchase price for the
Property shall be Four Million Five Hundred Thousand Dollars
($4,500,000)(the " Purchase Price "). Buyer shall
receive a credit at the closing against the Purchase Price for the
Option Fee.
Section 1.4
Payment of Purchase Price . If Buyer exercises
the Option and proceeds to the closing, the Purchase Price (as
adjusted for prorations) shall be paid by Buyer in the form of: (i)
an assumption of the IRB Debt; (ii) cash at closing in the amount
of Five Hundred Thousand Dollars ($500,000); and (iii) the balance
in the form of a promissory note bearing interest at not more than
twelve-month LIBOR as of the Closing Date plus 2.75%, payable in
quarterly installments of principal and interest amortized over not
more than 15 years with the unpaid principal balance due not more
than seven years after the Closing Date, and otherwise on such
other terms and conditions as the parties may agree. For purposes
of this Agreement, “ IRB Debt ” means (i) all
Obligations (as that term is defined under the Bond Agreement) of
the Company under the Bond Agreement and (ii) all obligations of
the Company under that certain Promissory Note dated February 28,
2007 in the principal amount of $75,000 issued to the City of
Wisconsin Rapids.
Section 1.5
Assumption of IRB Debt . At closing, Buyer shall
assume and agree to perform all of the Company’s obligations
under the IRB Debt arising from and after the closing and execute
and deliver to the Company such undertaking and instruments as will
be reasonably sufficient to evidence the assumption of obligations
under this Section. Except as expressly set forth
herein, Buyer is not assuming any Liabilities of the Company, and
all such Liabilities shall remain the sole responsibility of the
Company. For purposes of this Agreement, “
Liabilities ” means and includes any direct or
indirect indebtedness, guaranty, endorsement, claim, loss, damage,
deficiency, cost, expense, obligation or responsibility, fixed or
unfixed, known or unknown, asserted or unasserted, liquidated or
unliquidated, secured or unsecured.
ARTICLE II
EXERCISE OF OPTION
Section 2.1
Exercise of Option . Buyer shall exercise the
Option, if at all, by delivering written notice thereof to the
Company during the Exercise Period (as defined
herein). Any attempt by Buyer to exercise the Option
after expiration of the Exercise Period, or by any means during the
Exercise Period other than as set forth in this Section 2.1,
shall be null and void and of no force or effect. For
purposes of this Agreement, " Exercise Period " shall mean
the period of time commencing on the Effective Date and ending no
later than 5:00 p.m. (Central Time) on the first anniversary of the
Effective Date. “ Business Day ” means any day
other than Saturday, Sunday or any federal legal
holiday.
Section 2.2
Failure to Exercise Option . Upon the expiration
of the Exercise Period, (i) this Agreement shall terminate
automatically and the Option shall be null and void and of no
further force or effect without any further action by the parties,
(ii) the Company shall retain the Option Fee and (iii) the Company
and Buyer shall have no further rights or obligations under this
Agreement.
Section 2.3
Disclosure Schedules . If Buyer validly exercises
the Option in accordance with Section 2.1, then the Company
shall deliver to Buyer within fifteen (15) days following receipt
of Buyer’s written notice of exercise schedules which
identify any disclosures that are necessary to make the
representations and warranties of the Company set forth in Article
IV of this Agreement true and correct in all material respects (the
“ Disclosure Schedules
”). Notwithstanding anything to the contrary
contained in this Agreement, it is understood and agreed that the
obligations of Buyer to consummate and effect this Agreement and
the transactions contemplated hereby shall be subject to, at or
prior to closing, Buyer’s reasonable satisfaction with the
form and substance of the Disclosure Schedules. Buyer
shall have until 5:00 p.m. (Central Standard time) on the tenth
(10th) day following Buyer’s receipt of the Disclosure
Schedules to provide written notice to the Company stating that it
is not reasonably satisfied with the form and substance of the
Disclosure Schedules and setting forth in reasonable detail the
reasons why and the changes that would be necessary to make Buyer
reasonably satisfied with the form and substance of the Disclosure
Schedules. Buyer’s failure to timely provide such
notice shall be deemed to constitute Buyer’s irrevocable
agreement that it accepts the Disclosure Schedules as initially
provided to Buyer. If Buyer timely provides such notice,
the Company shall have five (5) Business Days to revise the
Disclosure Schedules as requested by Buyer. If the
Company fails to revise the Disclosure Schedules as provided
herein, Buyer may elect to (i) accept the Disclosure Schedules
as modified, if at all, and proceed with the transaction, or
(ii) terminate this Agreement by providing written notice to
the Company. If Buyer elects to terminate this Agreement
as provided in this Section, the parties shall have no further
obligations to one another under this Agreement.
ARTICLE III
CLOSING
Section 3.1
Closing Date and Place . The date of the closing
shall be mutually determined by the parties, but in any event shall
be on or after: (i) the date that all conditions to such closing as
set forth in this Agreement have been satisfied; and (ii) October
15, 2008 (the “Closing Date”). The closing
shall occur at the offices of Buyer or at such other location as
the parties may otherwise agree in writing.
Section 3.2
Transfer of Title . At the closing, the Company
agrees to execute and deliver to Buyer a warranty deed in customary
form conveying the Property, together with all rights and
appurtenances therein, to Buyer free and clear of all liens and
encumbrances, excepting Permitted Liens. For purposes
hereof, “ Permitted Liens ” shall
mean (a) liens for taxes not yet due and payable;
(b) zoning, building codes and other land use laws regulating
the use or occupancy of the Property; (c) easements, covenants,
conditions, restrictions and other similar matters affecting title
to the Property which do not or would not reasonably be expected to
materially impair the use or occupancy of the Property; (d) any
mortgage or lien securing the IRB Debt; (e) all matters which
would be disclosed by an accurate survey of the Property which do
not or would not reasonably be expected to materially impair the
use or occupancy of the Property; and (f) liens set forth on the
Disclosure Schedules.
Section 3.3
Expenses . All expenses associated with the
Property (excluding those expenses for which Buyer is otherwise
responsible under the terms and conditions of that
certain
Lease dated August 1, 2007 by and between the
Company and Buyer), including, without limitation, expenses for
electricity, gas, water, sewer, real property taxes and such other
items that are customarily prorated in transactions of this nature,
shall be ratably prorated between Buyer and the Company as of the
Closing Date in accordance with local custom.
Section 3.4
Bank Consent . Notwithstanding anything to the
contrary contained in this Agreement, it is understood and agreed
that the obligations of the Company to consummate and effect the
transactions contemplated hereby shall be subject to, at or prior
to closing, the Company having obtained any requisite consent,
approval, and authorization of the Bank to consummate the
transactions contemplated by this Agreement.
ARTICLE IV
TITLE DOCUMENTS
Section 4.1
Title Report . The
