STOCK PURCHASE
AGREEMENT
This Stock
Purchase Agreement (“ Agreement ”) is made as of
September 13, 2007 (the “ Effective Date ”), by and among
Tower Tech Holdings Inc., a Nevada corporation (“
Buyer ”), R. B. A.
Inc., a Wisconsin corporation (the “ Company ”), Raymond L. Brickner,
III, an individual resident of Wisconsin (“ Mr. Brickner ”), Debra L.
Brickner, an individual resident of Wisconsin, (“
Mrs. Brickner
”), Michael Halla, an individual resident of Wisconsin
(“ Mr. Halla
”), James Engelbrecht, an individual resident of Wisconsin
(“ Mr. Engelbrecht
”), Donald Wergin, an individual resident of Wisconsin
(“ Mr. Donald Wergin
”), Daniel Wergin, an individual resident of Wisconsin
(“ Mr. Daniel Wergin
”), Steven Lauson, an individual resident of Wisconsin
(“ Mr. Lauson
”), Jerome Tadych, an individual resident of Wisconsin
(“ Mr. Tadych
”), William Schuh, an individual resident of Wisconsin
(“ William Schuh
”), David Courtney, an individual resident of Wisconsin
(“ Mr. Courtney
”) and Ronald Novak, an individual resident of Minnesota
(“ Mr. Novak
”) (Mr. Brickner, Mrs. Brickner, Mr. Halla, Mr. Engelbrecht,
Mr. Donald Wergin, Mr. Daniel Wergin, Mr. Lauson, Mr. Tadych,
William Schuh, Mr. Courtney and Mr. Novak collectively referred to
herein as the “ Sellers ”).
RECITALS
A.
The Company is engaged in the design, fabrication and repair of
industrial mechanical machinery (the “ Business ”).
B.
Sellers own all of the outstanding capital stock of the
Company.
C.
Sellers desire to sell, and Buyer desires to purchase, all of the
issued and outstanding shares (the “ Shares ”) of capital stock of the
Company, for the consideration and on the terms set forth in this
Agreement.
AGREEMENT
In consideration
of the foregoing and the respective representations, warranties,
covenants and agreements set forth below, and for other good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Buyer, the Company and Sellers agree as
follows:
ARTICLE 1.
DEFINITIONS
1.1
Certain Definitions . For purposes of this Agreement,
the following terms have the following meanings:
“ Adverse
Consequence ” means any loss, Liability, claim,
damage (including incidental and consequential damages), expense
(including costs of investigation and defense and reasonable
attorneys’ fees) diminution of value, or costs of cleanup,
containment, or other remediation, whether or not involving a
third-party claim.
1
“ Affiliate ” of a specified Person
means a Person who, directly or indirectly through one or more
intermediaries, controls, is controlled by, or is under common
control with, such specified Person.
“ Applicable Contract ” means any
Contract (a) under which the Company has or may acquire any rights,
(b) under which the Company has or may become subject to any
Liability, or (c) by which the Company or any of the assets owned
or used by it is or may become bound.
A “ Breach ” of a representation,
warranty, covenant, obligation, or other provision of this
Agreement or any instrument delivered pursuant to this Agreement
will be deemed to have occurred if there is or has been (a) any
inaccuracy in or breach of, or any failure to perform or comply
with, such representation, warranty, covenant, obligation, or other
provision, or (b) any claim (by any Person) or other occurrence or
circumstance that is or was inconsistent with such representation,
warranty, covenant, obligation, or other provision, and the term
“Breach” means any such inaccuracy, breach, failure,
claim, occurrence, or circumstance.
“ Buyer
Indemnified Persons ” means Buyer and its
Representatives, Related Persons and Affiliates, including, from
and after the Closing, the Company.
“ Closing Date ” means the date and
time as of which the Closing actually takes place.
“ Consent ” means any approval,
consent, ratification, waiver, or other authorization (including
any Governmental Authorization).
“ Contemplated Transactions ” means
all of the transactions contemplated by this Agreement, including:
(a) the sale of the Shares by Sellers to Buyer; (b) the performance
by Buyer and Sellers of their respective covenants and obligations
under this Agreement; and (c) Buyer’s acquisition and
ownership of the Shares and exercise of control over the
Company.
“ Contract ” means any agreement,
contract, obligation, promise, or undertaking (whether written or
oral and whether express or implied) that is legally
binding.
“ Disclosure Schedule ” means the
disclosure schedule attached hereto and delivered by Sellers to
Buyer in connection with this Agreement.
“ Encumbrance ” means any charge,
claim, community property interest, condition, equitable interest,
lien, option, pledge, security interest, hypothecation, mortgage,
right of first refusal, or similar encumbrance or restriction of
any kind, including any restriction on use, voting, transfer,
receipt of income, or exercise of any other attribute of
ownership.
2
“ Enforceability Exceptions ”
means (a) bankruptcy, insolvency, reorganization, moratorium or
other similar Laws now or hereafter in effect relating to
creditors’ rights generally, and (b) general principles of
equity (regardless of whether enforceability is considered in a
proceeding in equity or at law)
“ Environment ” means soil, land
surface or subsurface strata, surface waters (including navigable
waters, ocean waters, streams, ponds, drainage basins, and
wetlands), groundwaters, drinking water supply, stream sediments,
ambient air (including indoor air), plant and animal life, and any
other environmental medium or natural resource.
“ Environmental, Health, and Safety
Liabilities ” means any cost, damages, expense,
Liability, obligation, or other responsibility arising from or
under Environmental Law or Occupational Safety and Health Law and
consisting of or relating to: (a) any environmental, health, or
safety matters or conditions (including on-site or off-site
contamination, occupational safety and health, and regulation
of chemical substances or products); (b) fines, penalties,
judgments, awards, settlements, legal or administrative
proceedings, damages, losses, claims, demands and response,
investigative, remedial, or inspection costs and expenses arising
under Environmental Law or Occupational Safety and Health Law; (c)
financial responsibility under Environmental Law or Occupational
Safety and Health Law for cleanup costs or corrective action,
including any investigation, cleanup, removal, containment, or
other remediation or response actions (“ Cleanup ”) required by applicable
Environmental Law or Occupational Safety and Health Law (whether or
not such Cleanup has been required or requested by any Governmental
Body or any other Person) and for any natural resource damages; or
(d) any other compliance, corrective, investigative, or remedial
measures required under Environmental Law or Occupational Safety
and Health Law. The terms “removal,”
“remedial,” and “response action,” include
the types of activities covered by the United States Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C.
§ 9601 et seq., as amended (“ CERCLA ”).
“ Environmental Law ” means any
Legal Requirement that requires or relates to: (a) advising
appropriate authorities, employees, and the public of intended or
actual releases of pollutants or hazardous substances or materials,
violations of discharge limits, or other prohibitions and of the
commencements of activities, such as resource extraction or
construction, that could have significant impact on the
Environment; (b)
preventing or reducing to acceptable levels the release of
pollutants or hazardous substances or materials into the
Environment; (c) reducing the quantities, preventing the release,
or minimizing the hazardous characteristics of wastes that are
generated; (d) assuring that products are designed, formulated,
packaged, and used so that they do not present unreasonable risks
to human health or the Environment when used or disposed of; (e)
protecting resources, species, or ecological amenities; (f)
reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil, or other
potentially harmful substances; (g) cleaning up pollutants that
have been released, preventing the threat of release, or paying the
costs of such clean up or prevention; or (h) making responsible
parties pay private parties, or groups of them, for damages done
to
3
their health or the
Environment, or permitting self-appointed representatives of the
public interest to recover for injuries done to public
assets.
“ ERISA ” means the Employee
Retirement Income Security Act of 1974, as amended, or any
successor law, and regulations and rules issued pursuant to that
Act or any successor law.
“ Facilities ” means any real
property, leaseholds, or other interests currently or formerly
owned or operated by the Company and any buildings, plants,
structures, or equipment (including motor vehicles, tank cars, and
rolling stock) currently or formerly owned or operated by the
Company.
“ Financial Statements ” means,
collectively, the Unaudited Financial Statements of the Company and
the Audited Financial Statements.
“ GAAP ” means generally accepted
United States accounting principles, applied on a basis consistent
with the basis on which the Financial Statements were
prepared.
“ Governmental Authorization ”
means any approval, consent, license, permit, waiver, or other
authorization issued, granted, given, or otherwise made available
by or under the authority of any Governmental Body or pursuant to
any Legal Requirement.
“ Governmental Body ” means any
federal, state, local or other applicable authority.
“ Hazardous Activity ” means the
distribution, generation, handling, importing, management,
manufacturing, processing, production, refinement, Release,
storage, transfer, transportation, treatment, or use (including any
withdrawal or other use of groundwater) of Hazardous Materials in,
on, under, about, or from the Facilities or any part thereof into
the Environment, and any other act, business, operation, or thing
that increases the danger, or risk of danger, or poses an
unreasonable risk of harm to persons or property on or off the
Facilities, or that may affect the value of the Facilities or the
Company.
“ Hazardous Materials ” means any
waste or other substance that is listed, defined, designated, or
classified as, or otherwise determined to be, hazardous,
radioactive, or toxic or a pollutant or a contaminant under or
pursuant to any Environmental Law, including any admixture or
solution thereof, and specifically including petroleum and all
derivatives thereof or synthetic substitutes therefor, silica or
silica-containing materials and asbestos or asbestos-containing
materials.
“ Income Taxes ” means all Taxes
based upon or measured by gross or net receipts or gross or net
income, including Taxes in the nature of minimum taxes, tax
preference items, and alternative minimum taxes, and Taxes on
capital or net worth or capital stock, but excluding Taxes that are
in the nature of sales, use, property, Transfer, recording, or
similar Taxes.
4
“ Indebtedness ” of any Person
means the principal of, premium, if any, and unpaid interest on (a)
indebtedness for money borrowed from others; (b) indebtedness
guaranteed, directly or indirectly, in any manner by such Person,
or in effect guaranteed, directly or indirectly, in any manner by
such Person through an agreement, contingent or otherwise, to
supply funds to, or in any other manner invest in, the debtor, or
to purchase indebtedness, or to purchase and pay for property if
not delivered, or pay for services if not performed, primarily for
the purpose of enabling the debtor to make payment of the
indebtedness or to assure the owners of the indebtedness against
loss; (c) all indebtedness secured by any Encumbrance upon property
or assets owned by such Person, even though such Person has not in
any manner become liable for the payment of such indebtedness; (d)
all indebtedness or other liabilities of such Person created or
arising under any capitalized lease, conditional sale, lease
(intended primarily as a financing device) or other title retention
or security agreement with respect to property acquired by such
Person even though the rights and remedies of Seller, lessor or
lender under such agreement or lease in the event of default may be
limited to repossession or sale of such property; and (e) renewals,
extensions and refundings of any such
indebtedness.
“ Intellectual Property ”
means (a) patents, patent applications and inventions and
discoveries that may be patentable, (b) trademarks, service marks,
trade names, fictional business names, service marks, trade dress
and domain names, together with the goodwill associated therewith,
(c) copyrights, including copyrights in computer software, (d) all
rights in mask works, (e) confidential and proprietary information,
including trade secrets, know-how, customer lists, software,
technical information, data, process technology, plans, drawings,
and blue prints, (f) registrations and applications for
registration of the foregoing, and (g) all causes of action, if
any, for infringement, conversion or misuse of any of the
foregoing, and all rights of recovery related thereto.
“ Inventory ” means all inventories
of raw materials, work in process and finished goods (including
goods in transit from or to the locations at which the business is
conducted), office supplies, backlog, and service and repair parts,
supplies and components held for resale, including any of the
foregoing purchased subject to conditional sales or title retention
agreements in favor of any third party, together with related
packaging materials and all rights of the Company against suppliers
of such inventories.
“ IRC ” or “ Code ” means the Internal Revenue
Code of 1986, as amended, or any successor law, and regulations
issued by the IRS pursuant to the Internal Revenue Code or any
successor law.
“ IRS ” means the United States
Internal Revenue Service or any successor agency, and, to the
extent relevant, the United States Department of the
Treasury.
“ Knowledge ” means an individual
will be deemed to have “Knowledge” of a particular fact
or other matter if: (a) such individual is actually aware of such
fact or other matter; or (b) a prudent individual could be expected
to discover or otherwise become
5
aware of such fact or
other matter in the course of conducting a reasonably comprehensive
investigation concerning the existence of such fact or other
matter. A Person (other than an individual) will be deemed to
have “Knowledge” of a particular fact or other matter
if any individual who is serving, or who has at any time served, as
a director, officer, partner, executor, or trustee of such Person
(or in any similar capacity) has, or at any time had, Knowledge of
such fact or other matter.
“ Legal Requirement ” means any
federal, state, local, or other applicable, law, statute,
regulation, administrative code or ordinance.
“ Liability ” means, with respect
to any Person, any liability or obligation of such Person of any
kind, character or description, whether known or unknown, absolute
or contingent, accrued or unaccrued, disputed or undisputed,
liquidated or unliquidated, secured or unsecured, joint or several,
due to become due, vested or unvested, executory, determined,
determinable or otherwise, and whether or not the same is required
to be accrued on the financial statements of such
Person.
“ Material Adverse Effect ” means a
material adverse change in the financial condition, business,
assets, liabilities, properties, results of operations or prospects
of the Company.
“ Occupational Safety and Health Law
” means any Legal Requirement designed to provide safe and
healthful working conditions and to reduce occupational safety and
health hazards, and any program, whether governmental or private
(including those promulgated or sponsored by industry associations
and insurance companies), designed to provide safe and healthful
working conditions.
“ Ordinary Course of Business ”
means an action taken by a Person will be deemed to have been taken
in the “Ordinary Course of Business” only if: (a) such
action is consistent with the past practices of such Person and is
taken in the ordinary course of the normal day-to-day operations of
such Person; (b) such action is not required to be authorized by
the board of directors of such Person (or by any Person or group of
Persons exercising similar authority) and is not required to be
specifically authorized by the parent company (if any) of such
Person; and (c) such action is similar in nature and magnitude to
actions customarily taken, without any authorization by the board
of directors (or by any Person or group of Persons exercising
similar authority), in the ordinary course of the normal day-to-day
operations of other Persons that are in the same line of business
as such Person.
“ Organizational Documents ” means
(a) the articles or certificate of incorporation and the
bylaws of a corporation; (b) any charter or similar document
adopted or filed in connection with the creation, formation, or
organization of a corporation; (c) any agreements relating to the
ownership of the capital stock of a corporation and/or the
governance of such corporation to which shareholders of such
corporation are parties; and (d) any amendment to any of the
foregoing.
6
“ Permitted Encumbrances ” means
(a) liens for Taxes not yet due and payable or the amount or
validity of which is being contested in good faith by appropriate
proceedings and which are subject to reasonable reserves; (b)
mechanics, materialmens, and similar Encumbrances incurred in the
ordinary course of business consistent with past practice securing
amounts not yet due and payable or being contested in good faith by
appropriate proceedings and which are subject to reasonable
reserves; (c) zoning, entitlement, building and other land use
regulations that are not violated by the current use and operation
of such real property; (d) covenants, conditions, restrictions,
easements and other similar matters that appear in the title
commitments or insurance policies regarding real property that do
not, individually or in the aggregate, materially impair the
ownership, occupancy, use, or insurability of such real property as
currently owned, used and operated by the Companies and (e) those
Encumbrances listed on Section 4.7 of the Disclosure
Schedules.
“ Person ” means any individual,
corporation (including any non-profit corporation), general or
limited partnership, limited liability company, joint venture,
estate, trust, association, organization, labor union, or other
entity or Governmental Body.
“ Privacy Legislation ” means all
legal requirements that govern the collection, use and disclosure
of personal information about individuals.
“ Proceeding ” means any action,
arbitration, audit, hearing, investigation, litigation, or suit
(whether civil, criminal, administrative, investigative, or
informal) commenced, brought, conducted, or heard by or before, or
otherwise involving, any Governmental Body or
arbitrator.
“ Reference Date ” means December
31, 2004.
“ Related Person ” means, (a) with
respect to a particular individual, (i) each other member of such
individual’s Family; (ii) any Person that is directly or
indirectly controlled by such individual or one or more members of
such individual’s Family; (iii) any Person in which such
individual or members of such individual’s Family hold
(individually or in the aggregate) a Material Interest; and (iv)
any Person with respect to which such individual or one or more
members of such individual’s Family serves as a director,
officer, partner, executor, or trustee (or in a similar capacity);
(b) with respect to a specified Person other than an individual,
(i) any Person that directly or indirectly controls, is directly or
indirectly controlled by, or is directly or indirectly under common
control with such specified Person; (ii) any Person that holds a
Material Interest in such specified Person; (iii) each Person that
serves as a director, officer, partner, executor, or trustee of
such specified Person (or in a similar capacity); (iv) any Person
in which such specified Person holds a Material Interest; (v) any
Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity); and (vi)
any Related Person of any individual described in clause (ii) or
(iii). For purposes of this definition, (x) the “
Family ” of an
individual includes (i) the individual, (ii) the individual’s
spouse and children who reside with such individual, and (y)
“ Material Interest
” means direct or indirect beneficial ownership (as defined
in Rule 13d-3 under
7
the Securities Exchange
Act of 1934) of voting securities or other voting interests
representing at least 10% of the outstanding voting power of a
Person or equity securities or other equity interests representing
at least 10% of the outstanding equity securities or equity
interests in a Person.
“ Release ” means any spilling,
leaking, emitting, discharging, depositing, escaping, leaching,
dumping, or other releasing into the Environment, whether
intentional or unintentional.
“ Representative ” means with
respect to a particular Person, any director, officer, employee,
agent, consultant, advisor, or other representative of such Person,
including legal counsel, accountants, and financial
advisors.
“ Securities Act ” means the
Securities Act of 1933, as amended, or any successor law, and
regulations and rules issued pursuant to that Act or any successor
law.
“ Seller
Indemnified Persons ” means Sellers and their
Representatives, Related Persons and Affiliates, including, prior
to the Closing, the Company.
“ Subsidiary ” means with respect
to any Person (the “ Owner ”), any corporation or
other Person of which securities or other interests having the
power to elect a majority of that corporation’s or other
Person’s board of directors or similar governing body, or
otherwise having the power to direct the business and policies of
that corporation or other Person (other than securities or other
interests having such power only upon the happening of a
contingency that has not occurred) are held by the Owner or one or
more of its Subsidiaries; when used without reference to a
particular Person, “Subsidiary” means a Subsidiary of
the Company.
“ Tax ” means all taxes, charges,
fees, levies or other similar assessments or liabilities,
including, without limitation, income, gross receipts, ad valorem,
premium, value-added, excise, real property, personal property,
sales, use, services, transfer, withholding, employment, payroll
and franchise taxes imposed by the United States of America or any
state, province, government, foreign taxing authority or any agency
thereof, and any interest, fines, penalties, assessments or
additions to tax resulting from, attributable to or incurred in
connection with any tax or any contest or dispute
thereof.
“ Tax Return ” means any return
(including any information return), report, statement, schedule,
notice, form, or other document or information filed with or
submitted to, or required to be filed with or submitted to, any
Governmental Body in connection with the determination, assessment,
collection, or payment of any Tax or in connection with the
administration, implementation, or enforcement of or compliance
with any Legal Requirement relating to any Tax.
“ Threat of Release ” means a
substantial likelihood of a Release that may require action in
order to prevent or mitigate damage to the Environment that may
result from such Release.
8
“ Threatened ” means a claim,
Proceeding, dispute, action, audit or other matter will be deemed
to have been “Threatened” if any demand or statement
has been made (orally or in writing) or any notice has been given
(orally or in writing), or if any other event has occurred or any
other circumstances exist, that would lead a prudent Person to
conclude that such a claim, Proceeding, dispute, action, or other
matter is likely to be asserted, commenced, taken, or otherwise
pursued in the future.
“ Threshold Amount ” means
$25,000.
1.2
Glossary of Other Defined Terms . The following sets
forth the location of definitions of capitalized terms defined in
the body of this Agreement:
|
“Accounts
Receivable”
|
|
Section 4.8
|
|
“Agreement”
|
|
Preamble
|
|
“Audited Balance
Sheet”
|
|
Section
4.5(b)
|
|
“Audited
Financial Statements”
|
|
Section
|
|
“Buyer”
|
|
Preamble
|
|
“Buyer
Consents”
|
|
Section 5.3
|
|
“Buyer’s
Advisors”
|
|
Section 6.1
|
|
“Claim
Notice”
|
|
Section
11.6(b)
|
|
“Closing”
|
|
Section 3.1
|
|
“Company”
|
|
Recitals
|
|
“Company Benefit
Plan”
|
|
Section 4.14
|
|
“Competing
Business”
|
|
Section 4.26
|
|
“Effective
Date”
|
|
Preamble
|
|
“ERISA
Affiliate”
|
|
Section 4.14
|
|
“Foreign
Plans”
|
|
Section 4.14
|
|
“Indemnified
Party”
|
|
Section
11.6(a)
|
|
“Indemnifying
Party”
|
|
Section
11.6(a)
|
|
“Indemnity
Basket”
|
|
Section
11.4(b)
|
|
“Indemnity
Cap”
|
|
Section
11.4(a)
|
|
“Leased
Real Property”
|
|
Section
4.20(a)
|
|
“Material
Contracts”
|
|
Section
4.18(a)
|
|
“Multiemployer
Plan”
|
|
Section 4.14
|
|
“Notice of Indemnifiable
Loss”
|
|
Section
11.6(a)
|
|
“Owned
Real Property”
|
|
Section
4.20(a)
|
|
“Proprietary Rights
Agreement”
|
|
Section
4.22(c)
|
|
“Purchase
Price”
|
|
Section 2.2
|
|
“Real
Property”
|
|
Section
4.20(a)
|
|
“Scheduled
Debt”
|
|
Section 4.11
|
|
“Sellers”
|
|
Preamble
|
|
“Sellers’
Releases”
|
|
Section
3.2(a)(ii)
|
|
“Sellers’
Representative”
|
|
Section 12.5
|
|
“Shares”
|
|
Recitals
|
|
“Survival
Period”
|
|
Section
11.1(a)
|
|
“Unaudited
Balance Sheet”
|
|
Section
4.5(a)
|
|
“Unaudited Financial
Statements”
|
|
Section
4.5(a)
|
9
ARTICLE 2.
SALE AND TRANSFER OF SHARES; PURCHASE PRICE
2.1
Shares . Subject to the terms and conditions of this
Agreement, at the Closing, Sellers will sell and transfer the
Shares to Buyer, and Buyer will purchase the Shares from
Sellers.
2.2
Purchase Price . The purchase price (the “
Purchase Price ”) for
the Shares will be Five Million dollars ($5,000,000) cash.
2.3
Payment of Purchase Price . The Purchase Price shall
be paid by Buyer at the Closing by wire transfer of immediately
available funds to an account designated by each of the
Sellers. As between Sellers, the Purchase Price shall be paid
pro rata among the Sellers based on such Seller’s equity
ownership percentage of the Company immediately prior to the
Closing.
2.4
Consideration for Non-Competition . Sellers
acknowledge and agree that a portion of the Purchase Price
represents consideration for the restrictive covenants contained in
Section 7.1 of this Agreement.
ARTICLE 3.
CLOSING
3.1
Closing . The purchase and sale (the “
Closing ”) provided
for in this Agreement will take place at the offices of Fredrikson
& Byron, P.A. at 200 South Sixth Street, Minneapolis, Minnesota
55402, at 10:00 a.m. (local time) on the date that is three (3)
business days following the satisfaction or waiver of the
conditions set forth in Article 8 and Article 9
(other than delivery of items to be delivered at the Closing and
other than satisfaction of those conditions that by their nature
are to be satisfied at the Closing, it being understood that the
occurrence of the Closing shall remain subject to the delivery of
such items and satisfaction or waiver or such conditions at the
Closing), or at such other time and place as the parties may
agree. By agreement of the parties the Closing may take place
by delivery of this Agreement and the other documents to be
delivered at the Closing by facsimile or other electronic
transmission. Subject to the provisions of Article 10
, failure to consummate the purchase and sale provided for in this
Agreement on the date and time and at the place determined pursuant
to this Section 3.1 will not result in the termination of
this Agreement and will not relieve any party of any obligation
under this Agreement.
3.2
Closing Obligations . At the Closing:
(a)
Deliveries by Sellers . Sellers will deliver, or cause
to be delivered, to Buyer:
(i)
certificates representing the Shares, duly endorsed (or accompanied
by duly executed stock powers);
10
(ii)
releases executed by Sellers in forms reasonably acceptable to
Buyer (collectively, “ Sellers’ Releases ”);
(iii)
executed letters of resignation from all officers and directors of
the Company, effective upon the Closing, in forms reasonably
acceptable to Buyer;
(iv)
a certificate signed by Sellers, certifying to the fulfillment of
the conditions specified in Sections 8.1 and 8.2
;
(v)
an opinion of counsel to Sellers and the Company, each dated the
Closing Date, in forms reasonably acceptable to Buyer;
(vi)
the Audited Financial Statements; and
(vii)
such other documents as Buyer may reasonably request for the
purpose of evidencing the accuracy of any of Sellers’
representations and warranties, evidencing the performance by
Sellers of, or the compliance by Sellers with, any covenant or
obligation required to be performed or complied with by such
Seller, evidencing the satisfaction of any condition referred to in
Article 8 , or otherwise facilitating the consummation or
performance of any of the Contemplated Transactions.
(b)
Deliveries by Buyer . Buyer will deliver to
Sellers:
(i)
the payments to be made at Closing pursuant to Section 2.3
.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE
SELLERS
Each of the
Sellers and the Company jointly and severally represent and warrant
to Buyer that the statements contained in this Article 4 are
true and correct as of the date of this Agreement and as of the
Closing Date, except as set forth in the section of the Disclosure
Schedule numbered to correspond to the Section of Article 4 to
which such exception relates:
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4.1
Organization and Good Standing .
(a)
Good Standing . Section 4.1(a) of the
Disclosure Schedule contains a complete and accurate list for the
Company of its name, its jurisdiction of incorporation and its
capitalization (including the identity of each stockholder and the
number of shares held by each). The Company is a corporation
duly organized, validly existing and in good standing under the
laws of Wisconsin, with full corporate power and authority to
conduct its business as it is now being conducted, to own or use
the properties and assets that it purports to own or use, and to
perform all of its obligations under Applicable Contracts.
The Company is not required to be qualified to do business as a
foreign corporation in any states or jurisdictions outside of
Wisconsin.
(b)
Organizational Documents . Sellers have delivered to
Buyer true and complete copies of the Organizational Documents of
the Company, as currently in effect.
(c)
Subsidiaries . The Company has no subsidiaries.
Company and Sellers do not own directly or indirectly any equity
ownership interest in any other Person.
4.2
Authority; No Conflict .
(a)
Enforceability. This Agreement constitutes the legal,
valid and binding obligation of Company and Sellers, enforceable
against Company and Sellers in accordance with its terms, except
that such enforceability may be limited by the Enforceability
Exceptions. Sellers have the absolute and unrestricted right,
power, authority, and capacity to execute and deliver this
Agreement and to perform their obligations under this
Agreement.
(b)
No Conflict . Neither the execution and delivery of
this Agreement nor the consummation or performance of any of the
Contemplated Transactions will, directly or indirectly (with or
without notice or lapse of time): (i) contravene, conflict with, or
result in a violation of (A) any provision of the
Organizational Documents of the Company, or (B) any resolution
adopted by the board of directors or the stockholders of the
Company; (ii) contravene, conflict with, or result in a violation
of, or give any Governmental Body or other Person the right to
challenge any of the Contemplated Transactions or to exercise any
remedy or obtain any relief under, any Legal Requirement to which
the Company or either Seller, or any of the assets owned or used by
the Company, may be subject; (iii) contravene, conflict with, or
result in a violation of any of the terms or requirements of, or
give any Governmental Body the right to revoke, withdraw, suspend,
cancel, terminate, or modify, any Governmental Authorization that
is held by the Company or that otherwise relates to the business
of, or any of the assets owned or used by, the Company; (iv) cause
Buyer or the Company to become subject to, or to become liable for
the payment of, any Tax; (v) cause any of the assets owned by the
Company to be reassessed or revalued by any taxing authority or
other Governmental Body; (vi) contravene, conflict with, or result
in a violation or breach of any provision of, or give any Person
the right to declare a default or exercise any remedy under, or to
accelerate the maturity or performance of, or to cancel, terminate,
or modify, any Applicable
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Contract; or (vii) result in the imposition or
creation of any Encumbrance upon or with respect to any of the
assets owned or used by the Company.
4.3
Required Consents . Neither any of the Sellers nor the
Company is or will be required to give any notice to or obtain any
Consent from any Person in connection with the execution and
delivery of this Agreement or the consummation or performance of
any of the Contemplated Transactions.
4.4
Capitalization . The authorized equity securities of
the Company consist of 1,000 shares of common stock, no par value,
of which 230 shares are issued and outstanding and constitute the
Shares. Sellers are and will be on the Closing Date the sole
record and beneficial owners and holders of the Shares, free and
clear of all Encumbrances. Mr. Brickner owns 52 of the
Shares, Mrs. Brickner owns 118 of the Shares, Mr. Halla owns 6 of
the Shares, Mr. Engelbrecht owns 6 of the Shares, Mr. Donald Wergin
owns 6 of the Shares, Mr. Daniel Wergin owns 12 of the Shares, Mr.
Lauson owns 6 of the Shares, Mr. Tadych owns 6 of the Shares, Mr.
Schuh owns 6 of the Shares, Mr. Courtney owns 6 of the Shares and
Mr. Novak owns 6 of the Shares. All of the outstanding equity
securities and other securities of the Company are owned of record
and beneficially by Sellers, free and clear of all
Encumbrances. No legend or other reference to any purported
Encumbrance appears upon any certificate representing equity
securities of the Company. All of the outstanding equity
securities of the Company have been duly authorized and validly
issued and are fully paid and nonassessable. There are no
Contracts relating to the issuance, sale, or transfer of any equity
securities or other securities of the Company. There are no
options, warrants, convertible securities or other rights,
agreements, arrangements or commitments relating to the capital
stock of the Company or obligating either a Seller or the Company
to issue, sell or redeem any equity interests in the Company.
None of the outstanding equity securities or other securities of
the Company was issued in violation of the Securities Act or any
other Legal Requirement. No Company owns, or has any Contract
to acquire, any equity securities or other securities of any Person
(other than the Company) or any direct or indirect equity or
ownership interest in any other business.
4.5
Financial Statements .
(a)
Sellers have delivered to Buyer: (i) unaudited balance sheet of the
Company as of October 31, 2005 and 2006, and the related statements
of income, statements of stockholders’ equity, and cash flow
for each of the fiscal years then ended, together with the notes
thereto and the report thereon, and (ii) unaudited balance
sheets of the Company as of March 31, 2007 (the “
Unaudited Balance Sheet
”), and related statements of income for the nine month
period then ending (all financial statements referenced in this
Section 4.5(a) collectively, including the Balance Sheet, the
“ Unaudited Financial
Statements ”).
(b)
Sellers have delivered to Buyer: (a) an audited balance sheet of
the Company as of December 31, 2006 and 2005 and the related
statements of income, statements of stockholders’ equity, and
cash flow for each of the twelve-month periods then ended, together
with the notes thereto and the report thereon, prepared by a
registered independent auditing firm mutually acceptable to the
Sellers and the Buyer and which contain no material changes from
the Unaudited Financial Statements, and (ii) an
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audited balance sheet of the Company as of July
31, 2007, prepared by a registered independent auditing firm
mutually acceptable to the Sellers and the Buyer and which contain
no material changes from the Unaudited Financial Statements, (the
“ Audited Balance
Sheet ”), and related statements of income for the
nine month period then ending (all financial statements referenced
in this Section 4.5(b) collectively, including the Audited Balance
Sheet, the “ Audited
Financial Statements ”).
(c)
The Unaudited Financial Statements and the Audited Financial
Statements fairly and accurately present the financial condition
and the results of operations, stockholders’ equity and cash
flow of the Company as at the respective dates of and for the
periods referred to in such financial statements. The
Unaudited Financial Statements and the Audited Financial Statements
reflect the consistent application of such accounting principles
throughout the periods involved, except as disclosed in the notes
to such financial statements. No financial statements of any
Person other than the Company are required by GAAP to be included
in the financial statements of the Company.
4.6
Books and Records . The books of account, minute
books, stock record books, and other records of the Company, all of
which have been made available to Buyer, are complete and correct
and have been maintained in accordance with sound business
practices, including the maintenance of an adequate system of
internal controls. The minute books of the Company contain
accurate and complete records of all meetings held of, and
corporate action taken by, the stockholders, the Board of
Directors, and committees of the Board of Directors of the Company,
and no meeting of any such stockholders, Board of Directors, or
committee has been held for which minutes have not been prepared
and are not contained in such minute books. At the Closing,
all of those books and records will be in the possession of the
Company.
4.7
Title To Properties; Shares; Encumbrances . The
Company owns no real property. The Company owns, subject only
to the matters permitted by the following sentence) all of the
assets (whether tangible or intangible) that they purport to own
located in the facilities operated by the Company or reflected as
owned in the books and records of the Company, including all of the
assets reflected in the Unaudited Balance Sheet (except for
personal property sold since the date of the Unaudited Balance
Sheet in the Ordinary Course of Business). The Company has
not purchased or otherwise acquired assets in excess of the
Threshold Amount since the date of the Unaudited Balance Sheet
(except for personal property acquired and sold since the date of
the Unaudited Balance Sheet in the Ordinary Course of Business and
consistent with past practice). All material assets reflected
in the Unaudited Balance Sheet are free and clear of all
Encumbrances and are not, except, with respect to all such assets,
Permitted Encumbrances. Each Seller is the lawful record and
beneficial owner of the Shares transferred hereby. The Shares
represent all of the issued and outstanding capital stock of the
Company. Each Seller owns the Shares transferred by such Seller
hereby free and clear of all Encumbrances except for restrictions
on transfer under federal and state securities laws. Upon the
delivery of the Shares in the manner contemplated under Article 2
of this Agreement, Buyer will acquire the beneficial and legal,
valid and indefeasible title to such Shares, free and clear of all
Encumbrances except for restrictions on transfer under federal and
state securities laws.
4.8
Accounts Receivable . All accounts receivable of the
Company that are reflected on the Unaudited Balance Sheet or on the
accounting records of the Company as of the
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Closing Date
(collectively, the “ Accounts
Receivable ”) represent or will represent valid
obligations arising from sales actually made or services actually
performed in the Ordinary Course of Business. Unless paid
prior to the Closing Date, the Accounts Receivable are or will be
as of the Closing Date current net of the respective reserves shown
on the Unaudited Balance Sheet or on the accounting records of the
Company as of the Closing Date (which reserves are adequate and
calculated consistent with past practice). There is no
contest, claim, or right of set-off, other than returns in the
Ordinary Course of Business, under any Contract with any obligor of
an Accounts Receivable relating to the amount or validity of such
Accounts Receivable. Section 4.8 of the Disclosure
Schedule contains a complete and accurate list of all Accounts
Receivable as of August 29, 2007, which list sets forth the aging
of such Accounts Receivable.
4.9
Inventory . All Inventory of the Company, whether or
not reflected in the Balance Sheet, consists of a quality and
quantity usable and salable in the Ordinary Course of Business,
except for obsolete items and items of below-standard quality, all
of which have been written off or written down to net realizable
value in the Reviewed Balance Sheet or on the accounting records of
the Company as of the Closing Date, as the case may be.
4.10
No Undisclosed Liabilities . The Company has no
Liabilities except for Liabilities reflected or reserved against in
the Unaudited Balance Sheet and reflected in the notes to the
Unaudited Financial Statements, and current Liabilities incurred in
the Ordinary Course of Business since the respective dates
thereof.
4.11
Indebtedness . Section 4.11 of the Disclosure
Schedule sets forth all of the outstanding Indebtedness of the
Company (the “ Scheduled
Debt ”) as of the date hereof, together with any
prepayment or other penalties that would result from the prepayment
or refinancing of such Indebtedness. All of the Scheduled
Debt has been incurred in the Ordinary Course of Business and has
been used for valid corporate purposes and not to pay, reimburse,
or otherwise compensate any Seller or to make a distribution with
respect thereto. The Company does not have any Indebtedness
other than the Scheduled Debt.
4.12
Taxes .
(a)
Compliance . The Company and Sellers have timely filed
or will timely file with the appropriate Governmental Bodies all
Tax Returns required to have been filed by the Closing, the
information included in the Tax Returns filed is complete and
accurate in all material respects, and the Company and Sellers have
paid all Taxes shown to be due and payable on such returns.
Neither the Company nor Sellers has requested any extension of time
within which to file Tax Returns, other than with respect to Tax
Returns that thereafter were timely filed (after giving effect to
such extension). All Taxes attributable to fiscal periods
ending on or before the Closing Date (including, without
limitation, any built-in gain tax that will be incurred by the
Company as a result of the Closing and any Taxes attributable to
the portion of any fiscal period that precedes, but does not end
on, the Closing Date) have either been paid or are reflected as a
liability on the books and records of the Company. The
Company and Sellers have each, within the time and manner
prescribed by applicable law, rules and regulations, withheld and
paid over to proper taxing or other Governmental Bodies all Taxes
required to be withheld and paid over.
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(b)
Audits . No deficiencies for Taxes have been claimed,
proposed, or assessed by any Governmental Body with respect to the
Company or Sellers for any period ending before the Closing Date
that have not been resolved, and there are no pending or, to the
Knowledge of Sellers and the Company, Threatened, audits,
investigations, or claims for or relating to any liability in
respect of Taxes, and there are no matters under discussion with
any Governmental Body with respect to Taxes that are likely to
result in an additional amount of Taxes. No audits of
federal, state, and local Tax Returns by the relevant Governmental
Bodies have been initiated or completed and neither the Company nor
Sellers has been notified that any Governmental Body intends to
audit a Tax Return for any period. No extension or waiver of
a statute of limitations relating to Taxes is in effect with
respect to any of the Company. Prior to the Closing, none of
Sellers or the Company will file amended Tax Returns or take
positions inconsistent with filed Tax Returns.
(c)
Valid S Election . The Company has been a validly
electing Subchapter S corporation under Section 1362 of the Code
continuously since November 1, 1995. The Company has only one
class of stock outstanding.
(d)
Other . Neither any of the Sellers nor the Company has
applied for any Tax ruling or entered into a closing agreement as
described in Section 7121 of the Code (or any similar provision of
state, local or foreign Tax law), or any other Contract related to
Taxes with any Governmental Authority, which may be binding on any
Company following the Closing Date.
4.13
No Material Adverse Effect . Since October 31, 2006,
there has not been any Material Adverse Effect on the Company, and
no event has occurred or circumstance exists that may result in
such a Material Adverse Effect.
4.14
Employee Benefits .
(a)
List of Plans . The Company’s 401(k) plan is the
only “employee benefit plan” as defined in Section 3(3)
of the ERISA (whether or not subject to ERISA) sponsored or
maintained by the Company or to which the Company
contributes. Section 4.14(a) of the Disclosure
Schedule sets forth a complete list of each plan, policy, program
practice, agreement, understanding or arrangement (whether written
or oral) providing compensation or other benefits to any current or
former director, officer, employee or consultant (or to any
dependent or beneficiary thereof of the Company or any ERISA
Affiliate (as defined below)), which are now, or were within the
past six (6) years, maintained, sponsored or contributed to by the
Company or any ERISA Affiliate, or under which the Company or any
ERISA Affiliate has any obligation or liability, whether actual or
contingent, including, without limitation, all incentive, bonus,
deferred compensation, vacation, holiday, cafeteria, medical,
disability, stock purchase, stock option, stock appreciation,
phantom stock, restricted stock or other stock-based compensation
plans, policies, programs, practices or arrangements (each, a
“ Company Benefit
Plan ”). For purposes of this Section
4.14 , “ ERISA
Affiliate ” means any entity (whether or not
incorporated) other than the Company that, together with the
Company, is (or at the relevant time was) considered under common
control and treated as one
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