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EXHIBIT 10.9
 
OPTION AGREEMENT DATED JUNE 18, 2008

 
 
 

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OPTION AGREEMENT
 
THIS OPTION AGREEMENT (this "Agreement") is made and entered into as of this
18th 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.
 
 
 

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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.
 
 
 

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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
 
 
 

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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 Company shall furnish and deliver to Buyer
for examination within twenty (20) days of receipt of written notice of exercise
of the Option a title report written by a title insurance company licensed by
the State of Wisconsin, showing title as required under Section 3.2 of this
Agreement.  Any objections to the condition of title shall be raised by Buyer in
writing within five (5) days from delivery of the title report, following which
the Company shall have ten (10) days in which to elect in writing whether to
cure such objections to Buyer’s reasonable satisfaction.  In the event the
Company does not elect to cure such objections or affirmatively elects not to
cure the same, Buyer shall, within ten (10) days after the earlier of (a)
receipt of the Company’s written election not to cure such objections or (b)
expiration of the period within which the Company is entitled to make the
foregoing election (in either case, the “Election Deadline”), have the option,
exercisable by written notice to the Company, either to (x) terminate this
Agreement, or (y) proceed to closing, taking title to the Property subject to
the matters that the Company has elected not to cure.  The foregoing election by
Buyer must be delivered to the Company within ten (10) days after Election
Deadline.  The cost of the title report shall be paid by the Company.  In the
event the Bank requires title insurance in connection with the closing, the
Company shall, in place of the title report required pursuant to this Section,
provide to Buyer a title insurance commitment for an owner’s policy of title
insurance in an amount equal to the Purchase Price and naming the Bank as
additional proposed insured.  The cost of the title insurance commitment and the
title insurance policy issued with respect thereto, inclusive of full extended
coverage (other than the survey exception), and inclusive of any endorsements
issued with respect to title exceptions that do not constitute Permitted Liens,
but exclusive of any Buyer-requested endorsements, shall be paid by the
Company.  Any transfer fees payable in connection with the conveyances
contemplated by this Agreement shall be paid by the Company.
 
ARTICLE V
 
REPRESENTATIONS OF THE COMPANY
 
The Company hereby represents and warrants to Buyer that the statements
contained in this Article V, subject to the exceptions set forth in the
Disclosure Schedules to be delivered by
 
 
 

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the Company to Buyer as provided in Section 2.3 of this Agreement, are true and
correct as of the date of this Agreement and will be true and correct on the
Closing Date.  Each of the representations and warranties set forth herein shall
survive the closing of the transaction contemplated by this Agreement.
 
Section 5.1     Organization and Authority.  The Company is a corporation duly
organized, validly existing and in active status under the laws of the State of
Wisconsin.  The Company has the corporate power and authority to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby.  The execution and delivery of this Agreement by the Company and the
consummation by the Company of the transactions contemplated hereby have been
duly and validly authorized by all necessary action on the part of the
Company.  This Agreement has been duly and validly executed and delivered by the
Company, and, assuming this Agreement constitutes a valid and binding obligation
of Buyer, this Agreement constitutes a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms.
 
Section 5.2     No Violation.  Neither the execution and delivery of this
Agreement by the Company nor the consummation by the Company of the transactions
contemplated hereby will (i) constitute a breach or violation of any provision
of the articles of organization, bylaws or any operating agreement of the
Company, as amended, (ii) constitute a breach, violation or default (or any
event which, with notice or lapse of time or both, would constitute a default)
under, or result in the termination of or permit any other party to terminate,
require the consent from or the giving of notice to any other party to, or
accel­erate the performance required by, or result in the creation of any Lien
(other than Permitted Liens) upon the Property under, any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument to which
the Company is bound, or (iii) conflict with or violate any order, judgment or
decree, or any statute, ordinance, rule or regulation applicable to the
Com­pany.  For purposes of this Agreement, "Lien" means any lien, security
interest, pledge, charge, claim, mort­gage, easement, restriction or any other
encumbrance.
 
Section 5.3     Title to the Property.  The Company has the power and the right
to sell, assign and transfer the Property, and the Company will sell and deliver
to Buyer, and upon consummation of the trans­actions contemplated by this
Agreement, Buyer will acquire good and marketable title to the Property, free
and clear of all Liens other than Permitted Liens.
 
Section 5.4     Environmental Conditions.  The Property is not in violation of
any federal, state, or local law, ordinance or regulation relating to the
environmental conditions on, under or about the Property, including, but not
limited to, soil and ground water conditions, and the Company has not violated
any environmental law now in existence with respect to the Property.
 
Section 5.5     Hazardous Materials.   During the time in which the Company has
owned the Property, neither the Company nor, to the best of the Company’s
knowledge, any third party has used, generated, manufactured, stored, released,
or disposed of on, under, or about the Property or transported to or from the
Property any flammable, explosive, radioactive materials, hazardous wastes,
toxic substances, or related matters (“Hazardous Materials”), except in
conformity with the requirements of any and all applicable laws, rules,
regulations and ordinances regulating or governing the handling and disposal
thereof.  For the purpose of this
 
 
 
 

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Article V, Hazardous Materials shall include, but not be limited to, substances
such as friable asbestos or those defined as “hazardous substances,” “hazardous
materials,” or “toxic substances” in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et
seq.; the Hazardous Materials Transportation Act, 42 U.S.C. Section 1801, et
seq., the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq.; and in the regulations adopted and publications promulgated pursuant to
said laws and any amendments thereto.  To the best of the Company’s knowledge,
there are no Hazardous Materials stored, released, or disposed of (i) on, under,
or about the Property, except in conformity with the requirements of any and all
applicable laws, rules, regulations and ordinances regulating or governing the
handling and disposal thereof, or (ii) on, under, or about adjacent properties,
in such a manner that their migration to the Property appears reasonably likely.
 
Section 5.6     Zoning Laws; Permits.    To the best of the knowledge of the
Company, no zoning, building, or similar law or ordinance is violated by the
maintenance, operation, or use of the Property.  The Company has received no
written notice of any change contemplated in any applicable laws, ordinances, or
restriction, or any judicial or administrative action, or any action by adjacent
landowners, or natural or artificial conditions upon the Property which would
prevent, impede, limit, or render more costly in any material way Buyer’s use of
the Property consistent with the historic usage thereof.  To the best of the
knowledge of the Company, all approvals and permits necessary for the operation
of the Property consistent with the historic usage thereof have been obtained,
are in full force and effect, and are transferable to Buyer without consent or
approval of any third party or governmental entity, and the Company will
transfer and assign all such permits to Buyer at the closing.
 
Section 5.7     Eminent Domain.  There are no condemnation or eminent domain
proceedings pending or, to the best of the Company’s knowledge, contemplated
against the Property or any part thereof, and the Company has received no
written notice of the desire of any public authority or other entity to take or
use the Property or any part thereof.
 
Section 5.8     Lease.  There will be no leases or occupancy agreements for the
Property or any part thereof which will survive the closing, unless accepted by
Buyer.
 
Section 5.9     Service Contracts.  There will be no service contracts or use
agreements affecting or benefiting the Property which will survive the closing,
unless accepted by Buyer.
 
Section 5.10     Litigation.  There is no suit, claim, proceeding or
investigation pending or, to the Company's knowledge, threatened against the
Company which (i) would reasonably be ex­pected to prevent or delay the
consummation of the transactions contemplated by this Agree­ment or (ii) would
adversely affect title to the Property of any part thereof.  The Company is not
a party to or bound by any outstanding order, writ, injunction or de­cree which
would reasonably be expected to prevent or delay the consummation of the
transactions contemplated hereby.
 
 
 
 

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ARTICLE VI
 
MISCELLANEOUS PROVISIONS
 
Section 6.1     Time is of the Essence.  Time is of the essence as to all dates
and dead­lines set forth in this Agreement; provided, however, that
notwithstanding anything to the con­trary in this Agreement, if the time period
for the performance of any covenant or obligation, satisfaction of any condition
or delivery of any notice or item required under this Agreement shall expire on
a day other than a Business Day, such time period shall be extended
automati­cally to the next Business Day.
 
Section 6.2     Assignment.  Buyer shall have the right to designate an assignee
to receive title to the Property by providing written notice to the Company at
any time prior to closing; provided, however, that (i) Buyer shall not be
released from any of its liabilities and obligations under this Agreement by
reason of such designation or assignment, and (ii) such designa­tion shall not
be effective until Buyer has provided the Company with a fully executed copy of
such designation or assignment and assumption instrument, which shall be in form
and substance reasonably satisfactory to the Company.
 
Section 6.3     Notices.  All notices, demands, consents, or other
communications that are required or permitted hereunder or that are given with
respect to this Agreement shall be in writing and shall be sufficient if
personally delivered or sent by registered or certified mail, fac­simile
message, or overnight delivery service.  Any notice shall be deemed given upon
the earlier of the date when received at, or the fifth day after the date when
sent by registered or certified mail or the day after the date when sent by
overnight delivery service or facsimile to, the address or facsimile number set
forth below, unless such ad­dress or facsimile number is changed by written
notice to the other party in accordance with this Agreement:
 
(a) if to Buyer, to:
 
                Advanced Fiberglass Technologies, Inc.
                4400 Commerce Drive
                Wisconsin Rapids, WI 54494
                Attn:  Sam Fairchild
                Facsimile:  973-543-0005
 
with a copy to:
 
                Advanced Fiberglass Technologies, Inc.
                4400 Commerce Drive
                Wisconsin Rapids, WI 54494
                Attn:  Kenneth Iwinski
                Facsimile:  715-421-2048
 
 
 

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(b) if to the Company, to:
 
M & W Fiberglass, LLC
4710 Black Forest Drive
Wisconsin Rapids, WI  54494
Attn:  Jamie L. Mancl
Facsimile:  ______________

with a copy to:
 
                Haferman & Ilten
                1525 Main Street
                Stevens Point, WI  54481
                Attn:  Mark O. Ilten, Esq
                Facsimile:  715-342-9974
 
Section 6.4     Counterparts.  This Agreement may be executed in one or more
counter­parts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other parties, it being understood that all
parties need not sign the same counterpart.  Any counterpart may be executed and
delivered by facsimile signature and such facsimile signature shall be deemed an
original.
 
Section 6.5     Entire Agreement; Parties in Interest.  This Agreement and the
documents and instruments and other agreements specifically referred to herein
or deliv­ered pursuant hereto, including the Exhibits and Disclosure Schedules
(a) constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof and (b) are not intended to confer upon any third party any rights or
remedies hereunder.
 
Section 6.6     Expenses.  Except as otherwise provided in this Agreement, all
costs and expenses incurred in connection with this Agree­ment and the
transactions contemplated hereby (including, without limitation, the fees and
ex­penses of its advisers, accountants and legal counsel), shall be paid by the
party incurring such expense.
 
Section 6.7     Recording Fees.  Any fees or charges incurred in connection with
the re­cording of this Option Agreement in the office of register of deeds shall
be paid by the Buyer.
 
Section 6.8     Amendment.  This Agreement may not be amended, changed or
modified except in writing signed by the parties hereto.
 
Section 6.9     Governing Law; Jurisdiction; Waiver of Jury Trial.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of Wisconsin without re­gard to principles of conflicts of law.  EACH OF
THE PARTIES HERETO IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY SUIT,
ACTION OR OTHER PRO­CEEDING INSTITUTED BY OR AGAINST SUCH PARTY IN RESPECT OF
ITS, HIS OR HER OBLIGATIONS HEREUNDER OR THE TRANSACTIONS CONTEMPLATED HEREBY.
 
 
 

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Section 6.10     Further Actions.  Upon the terms and subject to the conditions
hereof, each of the parties hereto shall (i) execute and deliver such other
documents and in­struments and do and perform such other acts and things as may
be necessary or desirable for effecting completely the consummation of this
Agreement and the transactions contemplated hereby, and (ii) use its reasonable
best efforts to obtain any consents, licenses, permits, waivers, approvals,
au­thorizations or orders required to be obtained or made by Buyer or the
Company or any of their subsidiaries in connection with the authorization,
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement.
 

[Signature Page Follows]

 
 

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IN WITNESS WHEREOF, the Company and Buyer each have caused this Option Agreement
to be executed and delivered in their names by their respective duly authorized
offi­cers or representatives.
 

M & W FIBERGLASS, LLC     ADVANCED FIBERGLASS TECHNOLOGIES, INC.             
By:   /s/  Jamie L. Mancl                            
   
By:  /s/ Samuel Fairchild                                       
 
Name:    Jamie L. Mancl                            
   
Name:   Samuel Fairchild                                    
 
Title:   President                                         
   
Title:  Chief Executive Officer                          
           

[Signature Page to Option Agreement]

 

 

 
 

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EXHIBIT A

Lot 1 of Wood county Certified Survey Map No. 8590 recorded in Volume 29 of
Survey Maps at Page 190, being part of the SE ¼ of the NE ¼ of Section 1o,
Township 22 North, Range 6 East, City of Wisconsin Rapids, Wood County,
Wisconsin.

Tax Key No.: Part of 34-09841 and Part of 34-09852
 
 
 
 
 
 
 
 
 
 
 

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