Document:

exh10-8_securityagmt.htm

     

    
      

      

    

     

     

     

     

     

     

    EXHIBIT 10.8

     

    INDUSTRIAL DEVELOPMENT REVENUE BONDS,

    SECURITY AGREEMENT DATED FEBRUARY 28, 2007

     

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    

    

    

    

    SECURITY
AGREEMENT

    

    Dated as
of February 28, 2007

    

    By

    

    ADVANCED
FIBERGLASS TECHNOLOGIES, INC.

    

    AND

    

    M
& W FIBERGLASS, LLC

    

    In Favor
Of:

    

    NEKOOSA
PORT EDWARDS STATE BANK

    

    

    

    

    

    Relating
to:

    

    $4,000,000

    City
of Wisconsin Rapids, Wisconsin

    Industrial
Development Revenue Bonds, Series 2007A, 2007B and 2007C

    (Advanced
Fiberglass Technologies Project)

    

    

    

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

      

    

    SECURITY
AGREEMENT

    

     

    THIS SECURITY AGREEMENT, dated as of
February 28, 2007 (this “Agreement”), is made
by and among ADVANCED FIBERGLASS TECHNOLOGIES, INC., a Wisconsin corporation
(the “Corporation”) and M
& W FIBERGLASS, LLC, a Wisconsin limited liability company (the “LLC,” and together
with the Corporation, are referred to herein individually as a “Debtor” or
collectively, “Debtors”), in favor
of NEKOOSA PORT EDWARDS STATE BANK, as Trustee and as Original Purchaser (“Bank” or “Secured
Party”).

    

    RECITALS

     

    A.           The
City of Wisconsin Rapids, Wisconsin (the “Issuer”), will issue
its Industrial Development Revenue Bonds, Series 2007A, 2007B and 2007C
(Advanced Fiberglass Technologies Project) in the aggregate principal amount of
Four Million Dollars ($4,000,000) (the “Bonds”), pursuant to
a Bond Agreement dated as of February 28, 2007 (the “Bond Agreement”), by
and between the Issuer, the Debtors, the Individual Borrowers (collectively, the
Debtors and the Individual Borrowers are referred to herein as the “Borrowers”), Nekoosa
Port Edwards State Bank, as trustee (the “Trustee”) and Nekoosa
Port Edwards State Bank, as original purchaser (“Original
Purchaser”).

     

    B.           The
proceeds derived from the issuance of the Bonds will be loaned to the Borrowers
pursuant to the Bond Agreement, and used to finance a project consisting of (i)
the construction of an approximately 70,000 square foot manufacturing facility
to be located at 4400 Commerce Drive in the City of Wisconsin Rapids, Wisconsin
(the “Facility”) to be
owned by the LLC and operated by the Corporation; and (ii) the acquisition and
installation of equipment at the Facility (collectively (i) and (ii) are
referred to herein as the “Project”).

     

    C.           To
provide the funds to be loaned to the Borrowers for payment of the costs of the
Project, the Issuer has contracted for the sale of the Bonds to the Original
Purchaser, and the Original Purchaser has agreed to purchase such Bonds in
reliance on Borrowers’ agreement to the terms and conditions set forth in that
certain Credit Agreement dated as of February 28, 2007 by and among the
Borrowers and the Original Purchaser (the “Credit
Agreement”).

     

    D.           It
is a condition precedent to the Original Purchaser’s obligation to purchase the
Bonds that the Debtors shall have executed and delivered this Security Agreement
to the Bank to secure the Obligations (as defined in the Credit Agreement) and
all other indebtedness (whether presently existing or hereafter arising) of the
Borrowers to the Bank.

    

    AGREEMENT

     

    NOW, THEREFORE in consideration of the
mutual agreements herein contained, the parties hereto agree as
follows:

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    ARTICLE
I

    DEFINITIONS

     

    1.01               Definitions.  All
capitalized terms used herein and not otherwise defined below, shall have
meanings assigned to them in the Credit Agreement.  The following
terms used herein have the meanings defined below:

     

    “Accounts” shall mean
“accounts” as defined in Section 9-102 of the UCC, “instruments” and
“chattel paper” as defined in Section 9-102 of the UCC, and, without limiting
the generality of the foregoing, shall include:  (a) any and all
rights to the payment of money or other forms of consideration of any kind now
or hereafter owing or to be owing to Debtor (whether classified under the UCC as
accounts, chattel paper, instruments, general intangibles, or otherwise)
including, but not limited to, accounts receivable, letters of credit and the
right to receive payment thereunder, chattel paper, tax refunds, insurance
proceeds, contract rights, notes, drafts, instruments, documents, acceptances,
and all other debts, obligations and liabilities in whatever form now or
hereafter owing to Debtor, all guarantees, security and liens which secure
payment of any of the foregoing, all of Debtor’s rights to goods, now owned or
hereafter acquired by Debtor, sold (delivered, undelivered, in transit or
returned) which may be represented thereby; and (b) all proceeds of any of the
foregoing.

     

    “Architect’s
Contract”:  shall mean any contract for architectural services
between Debtor and an architect or architectural firm for the design of the
Project.

     

    “Chattel Paper”: shall
mean “chattel paper” as defined in Section 9-102(11) of the UCC.

     

    “Collateral” shall
mean and include all of Debtor’s respective right, title, and interest in and to
the following, whether now owned or hereafter acquired and wherever
located:

    

    
      	
              (a)  
        

            	
              Accounts;

            

    

    

    
      	
              (b)  
        

            	
              Chattel
      Paper;

            

    

    

    
      	
              (c)  
        

            	
              Commercial
      Tort Claims;

            

    

    

    
      	
              (d)  
        

            	
              Deposit
      Accounts;

            

    

    

    
      	
              (e)  
        

            	
              Documents;

            

    

    

    
      	
              (f)  
        

            	
              Equipment;

            

    

    

    
      	
              (g)  
        

            	
              Fixtures;

            

    

    

    
      	
              (h)  
        

            	
              General
      Intangibles;

            

    

    

    
      	
              (i)  
        

            	
              Goods;

            

    

     

    
 

    
      
        
        

      

      
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              (j)  
        

            	
              Intellectual
      Property;

            

    

    

    
      	
              (k)  
        

            	
              Inventory;

            

    

    

    
      	
              (l)  
        

            	
              Investment
      Property;

            

    

    

    
      	
              (m) 
        

            	
              Letter-of-Credit
      Rights;

            

    

    

    
      	
              (n)  
        

            	
              All
      Debtor’s right, title and interest in and to all goods and other property,
      whether or not delivered (i) the sale or lease of which gives or purports
      to give rise to any Account including, but not limited to, all merchandise
      returned or rejected by or repossessed from customers or (ii) securing any
      Account, including all Debtor’s respective rights as an unpaid vendor or
      lienor, including stoppage in transit, replevin and reclamation with
      respect to such goods and other
properties;

            

    

    

    
      	
              (o)  
        

            	
              All
      guaranties, mortgages on, or security interests in real or personal
      property, leases or other agreements or property securing or relating to
      any Account or other Collateral, or acquired for the purpose of securing
      and enforcing any item thereof;

            

    

    

    
      	
              (p)  
        

            	
              All
      documents of title, policies and certificates of insurance, securities, or
      other documents or instruments;

            

    

    

    
      	
              (q)  
        

            	
              All
      files, correspondence, computer programs, tapes, discs and related data
      processing software (owned by Debtor or in which Debtor has an interest)
      which contain information identifying or pertaining to any of the
      Collateral or any account debtor, or showing the amounts thereof or
      payments thereon or otherwise necessary or helpful in the realization
      thereon or the collection thereof;

            

    

    

    
      	
              (r)  
        

            	
              Any
      and all products and proceeds of any item of the foregoing (including, but
      not limited to, any claims to any items referred to in this definition,
      and any claims of Debtor against third parties for loss of, damage to,
      destruction of, or infringement of any or all the Collateral or for
      proceeds payable under or unearned premiums with respect to policies of
      insurance) in whatever form, including cash, negotiable instruments and
      other instruments for the payment of money, chattel paper, security
      agreements or other documents; and

            

    

    

    
      	
              (s)  
        

            	
              The
      Construction Collateral.

            

    

     

    “Commercial Tort
Claims” shall mean a “commercial tort claim” as defined under Section
9-102(13) of the UCC.

     

    
      
        
        

      

      
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    “Construction
Collateral” shall mean Debtor’s respective right, title, and interest in
and under: (a) the Construction Contract, and all modifications, amendments, and
additions thereto; (b) the Architect’s Contract, and all modifications,
amendments, and additions thereto; (c) the Plans and Specifications; and (d) all
permits, licenses, easements, approvals, surety bonds, contracts and agreements
relating to the Project, to the extent assignable.

     

    “Construction
Contract” shall mean any construction contract between Debtor and
any construction firm for the construction of the Project.

     

    “Copyrights” shall
mean all of the following now or hereafter owned by Debtor:  (i) all
copyright rights in any work subject to the copyright laws of the United States
or any other country, whether as author, assignee, transferee or otherwise; and
(ii) all registrations and applications for registration or any such
copyright in the United States or any other country, including registrations,
recordings, supplemental registrations and pending applications for registration
in the United States Copyright Office.

     

    “Deposit Accounts”
shall mean a “deposit account” as defined under Section 9-102(29) of the
UCC.

     

    “Document” shall mean
a “document” as defined under Section 9-102(30) of the UCC.

     

    “Equipment” shall mean
“equipment” as defined in Section 9-102(33) of the UCC and, without limiting the
generality of the foregoing, shall include: (a) all motor vehicles; (b) all
accessions, attachments, substitutions and replacements (including spare parts)
for any item described herein; (c) any other goods now owned or hereafter
acquired by Debtor that do not constitute Inventory and which are used or bought
for use primarily in business; and (d) all proceeds of any of the
foregoing.

     

    “Event of Default”
shall have the meaning assigned to it in Section 7.01 of the Credit
Agreement.

     

    “Fixtures” shall mean
“fixtures,” as defined in Section 9-102(41) of the UCC, installed on, or affixed
to, the real property described on Schedule 1.01
attached hereto, or to the buildings or improvements situated thereon, and all
proceeds of the foregoing.

     

    “General Intangibles”
shall mean “general intangibles” as defined in Section 9-102(42) of the UCC
relating to any other Collateral, and shall include, without limiting the
generality of the foregoing, all goodwill, inventions, designs, copyrights,
trademarks, tradenames, patents, licenses, applications for any of the
foregoing, government approvals, permits or authorizations for any of the
foregoing, all contract rights, including all rights under the Construction
Contract, the Architect’s Contract, or any other contract, permit, or other
document or agreement pertaining to the construction of the
Project.

     

    “Goods” shall mean
“goods” as defined in Section 9-102(44) of the UCC.

     

    “Intellectual
Property” shall mean all Patents, Trademarks, Copyrights, and
Licenses.

     

    
      
        
        

      

      
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    “Inventory” shall mean
“inventory” as defined in Section 9-102(48) of the UCC and, without
limiting the generality of the foregoing, shall include: (a) all goods held or
intended for sale or lease by Debtor; (b) all documents evidencing and general
intangibles relating to such goods; and (c) all proceeds of any of the
foregoing.

     

    “Investment Property”
shall mean “investment property” as defined in Section 9-102(49) of the UCC and
all dividends, distributions and rights in connection therewith and proceeds
thereof.

     

    “Letter-of-Credit
Rights” shall mean a “Letter-of-credit right” as defined under Section
9-102(51) of the UCC.

     

    “Licenses” shall mean
any written agreement, now or hereafter in effect, granting to any third party
any right to use any Patent, Copyright or Trademark now or hereafter owned by
Debtor or which Debtor has the right to license, or any written agreement, now
or hereafter in effect granting to Debtor any right to use any Patent, Copyright
or Trademark owned by a third party.

     

    “Obligations” shall
mean: (a) all existing and future indebtedness of Borrowers to Secured Party,
and any promissory notes taken in renewal, exchange or substitution thereof or
therefor, including interest and premium on all the foregoing and all costs of
collecting the same; (b) all of Borrower’s obligations and liabilities under the
Credit Agreement and the other Related Documents, as the same may be amended
from time to time; (c) all of Debtors’ obligations and liabilities hereunder;
(d) all other debts, obligations and liabilities of Borrowers’ to or in favor of
Secured Party, whether now existing or hereafter incurred or arising; and (e)
all of Borrowers’ obligations and liabilities under the Bond Documents, as the
same may be amended from time to time.

     

    “Patents” shall mean
all of the following now or hereafter owned by the Debtor:  (i) all
letters patent of the United States or any other country, all registrations and
records thereof, and all applications for letters patent of the United States or
any other country, including registrations, records and pending applications in
the United States Patent and Trademark Office or any similar offices in any
other country; and (ii) all reissues, continuations, divisions,
continuations-in-part, renewals or extensions thereof, and the inventions
disclosed or claimed therein, including the right to make, use and/or sell the
inventions disclosed or claimed therein.

     

    “Permitted Liens”
shall have the same meaning assigned to it in the Credit Agreement.

     

    “Plans and
Specifications” shall mean the drawings and specifications for the
construction of the Project, and all revisions or amendments
thereto.

     

    “Trademarks” shall
mean all of the following now or hereafter owned by Debtor:  (i) all
trademarks, service marks, trade names, corporate names, company names, business
names, fictitious business names, trade styles, trade dress, logos, other source
or business identifiers, designs, and general intangibles of like nature, now
existing or hereafter adopted or acquired, all registrations and recordings
thereof, and all registration and recording applications filed in connection
therewith, including registrations and registration applications in the United
States Patent and Trademark Office, any State of the United States or any
similar offices in any other 

     

     

    
      
        
        

      

      
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      country
or any political subdivision thereof, and all extensions or renewals thereof;
(ii) all goodwill associated therewith or symbolized thereby; and (iii) all
other assets, rights and interests that uniquely reflect or embody such
goodwill.

    

     

    “UCC” shall mean the
Uniform Commercial Code as adopted by, and as in effect in, the State of
Wisconsin, as the same may be amended from time to time.

    

    ARTICLE
II

    GRANT OF SECURITY
INTEREST

     

    2.01             
Security
Interest.   To secure the payment and performance of the
Obligations and for other good and valuable consideration, receipt of which is
hereby acknowledged, Debtor hereby mortgages, pledges and assigns all the
Collateral to Secured Party, and grants to Secured Party a continuing security
interest in all the Collateral.

     

    2.02             
Assignment.  To
secure the payment and performance of the Obligations and for other good and
valuable consideration, receipt of which is hereby acknowledged, Debtor assigns
unto the Secured Party all of its right, title and interest in and to the
Construction Collateral.  The Debtor agrees that the Secured Party
does not assume any of the obligations or duties of Debtor under or with respect
to the Construction Collateral unless and until the Secured Party shall have
given any party thereto written notice that it has affirmatively exercised its
right to complete or cause the completion of construction of the Project
following the occurrence of an Event of Default.  In the event that
the Secured Party does not personally undertake to complete construction of the
Project, the Secured Party shall have no liability whatsoever for the
performance of any of such obligations and duties.  For the purpose of
completing the Project, the Secured Party may, in its absolute discretion,
reassign its right, title and interest in the Construction Collateral upon
notice to Debtor but without any requirement for Debtor’s
consent.  The Debtor agrees that no material change in the terms of
the Architect’s Contract or the Construction Contract shall be valid without the
written approval of the Secured Party.

    

    ARTICLE
III

    DEBTOR’S REPRESENTATIONS AND
WARRANTIES

    

    Each Debtor represents and warrants
that:

     

    3.01               Location of Chief Executive
Offices and Principal Places of Business.  Each Debtor’s chief
executive office and principal place of business and the books and records
relating to the Collateral are located at the locations set forth on Schedule
3.01.

     

    3.02               Location of
Collateral.  All Equipment and Fixtures are, or will be,
located at the locations set forth on Schedule
3.02.

     

    3.03               Ownership of
Collateral.  The Collateral owned by each Debtor is owned free
of all encumbrances and security interests, except Permitted
Liens.  Chattel paper constituting Collateral evidences a perfected
security interest in the goods covered by it, free from all other encumbrances
and security interests.  No financing statement (other than that filed
by any secured party with 

     

     

    
      
        
        

      

      
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      respect
to Permitted Liens) is on file covering the Collateral or any of
it.  Debtor may grant the Security Interest in the Collateral owned by
such Debtor.

    

     

    3.04               Accounts.  Each
Account and chattel paper constituting Collateral as of this date arose from the
performance of services by such Debtor from a bona fide sale or lease of
goods, which have been delivered or shipped to the account debtor, and for which
such Debtor has genuine invoices, shipping documents or
receipts.  Each Account constituting Collateral as of this date is
genuine and enforceable against the account debtor according to its
terms.  It, and the transaction out of which it arose, comply with all
applicable laws and regulations.  The amount represented by such
Debtor to Secured Party as owing by each account debtor is the amount actually
owing and is not subject to setoff, credit, allowance or adjustment, except
discount for prompt payment, nor has any account debtor returned the goods or
disputed its liability.

     

    3.05               No Defaults under
Collateral.  There has been no default as of this date
according to the terms of any Collateral and no step has been taken to foreclose
the security interest it evidences or otherwise to enforce its payment, and as
of this date, Debtor has no notice or knowledge which might impair the credit
standing of any account debtor.

     

    3.06               Filings.  Debtor
shall ensure and warrant that fully executed (if applicable) financing
statements containing a description of the Collateral will be filed of record in
every governmental, municipal or other office in every jurisdiction located
within the United States and its respective territories and possessions or such
other analogous documents in other countries as are necessary to publish notice
of and protect the validity of and to establish a valid and perfected security
interest in favor of the Secured Party in respect of the Collateral in which a
security interest may be perfected by filing a financing statement or analogous
document in the United States and its political subdivisions, territories and
possessions pursuant to the UCC or other applicable law in such jurisdictions or
pursuant to applicable law in other countries, and no further or subsequent
filing, refiling, recording, rerecording, registration or reregistration is
necessary in any such jurisdiction, except as provided under applicable law with
respect to the filing of continuation statements or other documents of similar
effect.

     

    3.07               Validity of Security
Interests.  The Security Interest constitutes a valid and
perfected security interest in all the Collateral in which a security interest
may be perfected by filing a financing statement or analogous document in the
United States and its political subdivisions, territories and possessions
pursuant to the UCC or other applicable law in such jurisdictions.

    

    ARTICLE
IV

    DEBTOR’S
COVENANTS

     

    From the date hereof, and thereafter
until the Obligations are satisfied in full and Secured Party terminates the
Security Interest, each Debtor covenants to Secured Party as
follows:

     

    4.01               Filing; Notification;
Re-Filing. Debtor shall, at its sole cost and expense, take or cause to
be taken all action which Secured Party may reasonably request and which may be
necessary or desirable in order to ensure that the Security Interest will
at all times remain a properly perfected, first-priority security interest
(subject only to Permitted Liens) and to enable Secured 

     

     

    
      
        
        

      

      
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    Party to
exercise or enforce rights hereunder, including, but not limited
to:  (a) delivering to Secured Party, endorsed or accompanied by
such instruments of assignment as Secured Party may specify, and stamping and
marking, in such manner as Secured Party may specify, any and all chattel paper,
instruments, letters and advices of credit, title certificates and documents
evidencing or forming a part of the Collateral; and (b) executing and
delivering or authorizing (as applicable) such financing statements, pledges,
designations, hypothecations, notices and assignments, in each case in form and
substance satisfactory to Secured Party, relating to the creation, validity,
perfection, maintenance or continuation of the Security Interest under the UCC
or other laws of the State of Wisconsin, the laws of such other state or states
as Secured Party may from time to time reasonably request, and the laws of the
United States of America.  In the event that any rerecording or
refiling (or the filing of any statement of continuation or assignment of any
financing statement) or any repledge or reassignment, or any other action, is
required at any time to protect, preserve or maintain the Security Interest,
Debtor shall, at its sole cost and expense, cause the same to be done or taken
at such time and in such manner as may be necessary and as may be reasonably
requested by Secured Party.

     

    4.02               Ownership of
Collateral. Debtor shall at all times be the sole owner of each and every
item of Collateral owned by such Debtor, and shall defend the Security Interest
and Debtor’s title to the Collateral at Debtor’s own expense.

     

    4.03               Records and
Inspections. Debtor shall at all times keep accurate and complete records
of the Collateral owned by such Debtor, and permit Secured Party to enter upon
the Debtor’s place or places of business at any time and from time to time
during reasonable business hours, and without hindrance or delay, to inspect the
Collateral and to inspect, audit, check and make extracts from and copies of the
books, records, journals, orders, receipts and correspondence which relate to
the Collateral or other transactions between the parties hereto and the
respective general financial conditions of Debtor.

     

    4.04               Change in Location,
Name. Without giving Secured Party not less than thirty days’ prior
written notice thereof, Debtor shall not: (a) move its chief executive office or
the books and records relating to the Collateral from the location specified on
Schedule 3.01;
(b) except as permitted under Section 4.06, move any Equipment or Fixtures
to a location other than those specified in Section 3.02; or (c) change its
name, identity or organizational structure.

     

    4.05               Maintenance of Collateral;
Insurance. Debtor shall maintain all tangible items of Collateral in good
repair and working condition.  Debtor shall procure and maintain
insurance against loss, theft, destruction or damage to the Collateral for the
full replacement value thereof, and business interruption, with such insurers as
are acceptable to Secured Party, plus other insurance thereon in the amounts and
against such risks as Secured Party may specify, and promptly deliver an
original copy of each policy to Secured Party, with a standard lender’s loss
payable clause in favor of Secured Party, as well as a clause requiring the
insurer to provide Secured Party at least thirty days’ prior written notice of
the cancellation, expiration, termination or any change in the coverage afforded
under any such policy.

     

    4.06               Disposition of
Collateral. Debtor shall not sell, assign, transfer or otherwise dispose
of any Collateral to anyone other than Secured Party, provided that,
notwithstanding the foregoing, 

     

    
      
        
        

      

      
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    so long
as no Event of Default has occurred, Equipment may be sold or disposed of if
(a) in the reasonable judgment of Debtor it is obsolete or no longer useful
in the conduct of Debtor’s business; or (b) in the ordinary course of
business, provided that in each
case the proceeds are used to acquire Equipment in substitution or replacement
therefor and the Debtor provides the Secured Party with evidence satisfactory to
the Secured Party that the Secured Party has a valid and enforceable first
priority perfected lien with respect to each such replacement
Equipment.

     

    4.07               Compromise of
Accounts.  Debtor shall not, except in the ordinary course of
business and prior to an Event of Default, grant any extension of time for
payment of any Account or compromise, compound or settle the same for less than
the full amount thereof, or release wholly or partly any person liable for the
payment thereof, or allow any credit or discount whatsoever
thereon.

     

    4.08               Liens.  Debtor
shall not pledge, grant any liens on, or grant security interests in the
Collateral, other than the Security Interest and Permitted Liens.  The
Collateral shall not at any time be subject to any lien that is prior to, on a
parity with, or junior to the Security Interest, other than Permitted
Liens.

     

    4.09               Covenants Regarding Patent,
Trademark and Copyright Collateral.

     

            (a)    Debtor
will, for each Patent, not do any act, or omit to do any act, whereby any Patent
which is material to the conduct of Debtor’s business may become invalidated or
dedicated to the public, and shall continue to mark any products covered by a
Patent with the relevant patent number as necessary and sufficient to establish
and preserve its maximum rights under applicable patent laws.

     

            (b)    Debtor
will, for each Trademark material to the conduct of Debtor’s business, (i)
maintain such Trademark in full force free from any claim of abandonment or
invalidity for non-use, (ii) maintain the quality of products and services
offered under such Trademark, (iii) display such Trademark with notice of
federal or foreign registration to the extent necessary and sufficient to
establish and preserve its maximum rights under applicable law and (iv) not
knowingly use or knowingly permit the use of such Trademark in violation of any
third party rights.

            (c)    Debtor
will, for each work covered by a material Copyright, continue to publish,
reproduce, display, adopt and distribute the work as necessary and sufficient to
establish and preserve its maximum rights under applicable copyright
laws.

            (d)    Debtor
shall notify the Secured Party immediately if Debtor knows or has reason to know
that any Patent, Trademark or Copyright material to the conduct of any business
of Debtor may become abandoned, lost or dedicated to the public, or of any
adverse determination or development (including the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, United States Copyright Office or any court or similar office
of any country) regarding Debtor’s ownership or any Patent, Trademark or
Copyright, its right to register the same, or to keep and maintain the
same.

    
      
        
        

      

      
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            (e)    In no
event shall Debtor, either itself or through any agent, employee, licensee or
designee, file an application for any Patent, Trademark or Copyright (or for the
registration of any Trademark or Copyright) with the United States Patent and
Trademark Office, United States Copyright Office or any office or agency in any
political subdivision of the United States or in any other country or any
political subdivision thereof, unless it promptly informs the Secured Party,
and, upon request of the Secured Party, executes and delivers any and all
agreements, instruments, documents and papers as the Collateral Agent may
request to evidence the Secured Party’s security interest in such Patent,
Trademark or Copyright of Debtor relating thereto or represented thereby, and
Debtor hereby appoints the Secured Party its attorney-in-fact to execute and
file such writings for the foregoing purposes, all acts of such attorney being
hereby ratified and confirmed; such power, being coupled with an interest, is
irrevocable until the Obligations are paid in full.

            (f)    Debtor
will take all necessary steps that are consistent with the practice in any
proceeding before the United States Patent and Trademark Office, United States
Copyright Office or any office or agency in any political subdivision of the
United States or in any other country or any political subdivision thereof, to
maintain and pursue each material application relating to the Patents,
Trademarks and/or Copyrights (and to obtain the relevant grant or registration)
and to maintain each issued Patent and each registration of the Trademarks and
Copyrights which is material to the conduct of the Debtor’s business, including
timely filings of applications for renewal, affidavits of use, affidavits of
incontestability and payment of maintenance fees, and, if consistent with good
business judgment, to initiate opposition, interference and cancellation
proceedings against third parties.

            (g)    In the
event that any Collateral consisting of a Patent, Trademark or Copyright
material to the conduct of Debtor’s business is believed infringed,
misappropriated or diluted by a third party, the Debtor promptly shall notify
the Secured Party after Debtor learns thereof and shall, if consistent with good
business judgment, promptly sue for infringement, misappropriation, or dilution
and to recover any and all damages for such infringement, misappropriation or
dilution, and take such other actions as are appropriate under the circumstances
to protect such Collateral.

    ARTICLE
V

    SECURED PARTY’S
REMEDIES

     

    Upon the occurrence of an Event of
Default:

     

    5.01               UCC.  Secured
Party shall have all rights provided to a secured party following a default
under the UCC.

     

    5.02               Setoff.  Secured
Party may, without prior notice or demand, set off against any credit balance or
other money held by or deposited with Secured Party, all or any part of the
Obligations.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

    5.03               Possession of
Collateral.  Secured Party may, at any time and from time to
time, with or without judicial process or the aid or assistance of others, enter
upon any premises in which Collateral may be located and, without resistance or
interference by either Debtor, take physical possession of any items of
Collateral and maintain such possession on either Debtor’s premises or move the
Collateral or any part thereof to such other places as Secured Party shall
choose without being liable to either Debtor on account of any losses, damage or
depreciation that may occur as a result thereof so long as Secured Party shall
not breach the peace, dispose of all or any part of the Collateral on the
premises of such Debtor, require such Debtor to assemble and make available to
Secured Party at the expense of Debtors all or any part of the Collateral at any
place and time designated by Secured Party, or to remove all or any part of the
Collateral from any premises in which any part may be located for the purpose of
effecting sale or other disposition thereof.

     

    5.04               Notice to Account Debtors or
Obligors.  Secured Party may:

     

            (a)    Notify, or require
either Debtor or Debtors to notify, in writing any account debtor or other
obligor with respect to any one or more of the Accounts to make payment to
Secured Party or any agent or designee of Secured Party, at such address as may
be specified by Secured Party;

            (b)    Direct
any Debtor to hold all payments which they or it receives with respect to any
one or more of the Accounts in trust for Secured Party, and Debtor shall so hold
such funds without commingling them with other funds of Debtor and shall, in
accordance with the direction of Secured Party, either (i) deliver the same to
Secured Party, or any agent or designee of Secured Party, immediately upon
receipt by Debtor in the identical form received, together with any necessary
endorsements or (ii) immediately deposit them in a separate account maintained
by Secured Party, or any agent or designee of Secured Party, in which only such
payments and other proceeds of Collateral shall be deposited.  When
any notice to make payments directly to Secured Party, or any such agent or
designee, shall have been given pursuant to clause (i) above, Debtor shall no
longer have any right to collect the affected Accounts.  If,
notwithstanding the giving of any notice, any account debtor or other obligor
shall make payment to Debtor, Debtor shall hold all such payments it receives in
trust for Secured Party, without commingling the same with other funds of
Debtor, and shall deliver the same to Secured Party, or any such agent or
designee, immediately upon receipt by Debtor in the identical form received,
together with any necessary endorsements.  Secured Party may settle or
adjust disputes and claims directly with account debtors and other obligors of
Debtor for amounts and on terms which Secured Party considers
advisable.  Nothing herein contained shall be construed as requiring
or obligating Secured Party, or any such agent or designee, to make any demand,
or to make an inquiry as to the nature or sufficiency of any payment received by
it, or to present or file any claim or notice or take any action with respect to
any Accounts or the monies due or to become due thereunder or to take any steps
necessary to preserve any rights against prior parties.  Secured Party
shall not have any liability to any Debtor for actions taken in good faith
pursuant to this Section 5.04.  All amounts received or deposited with
Secured Party pursuant to this Section representing the proceeds of Accounts
shall be applied to the payment of the Obligations, in such order as is set
forth in Section 5.10 hereof.  Secured Party may, but shall not
be obligated to, deliver any amounts received or deposited pursuant to this
Section to a Debtor 

     

     

    
      
        
        

      

      
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    for use
by such Debtor in the ordinary course of its business, but the Security Interest
in any such proceeds delivered to such Debtor shall continue and shall not be
affected by such delivery and such Debtor shall not commingle any proceeds so
delivered with any of its other funds.

    5.05               Appointment to Act for
Debtors After an Event of Default.  Debtors, effective
immediately upon the occurrence thereof and without the necessity of further
action on the part of Secured Party, and until the Event of Default is waived in
writing or cured to the sole satisfaction of Secured Party:

     

            (a)    Irrevocably authorize
Secured Party, or any agent or designee of Secured Party, to perform any and all
the acts that Secured Party is permitted to perform under any provision of this
Agreement;

            (b)    Constitute
and appoint Secured Party, or any agent or designee of Secured Party, as
Debtors’ true and lawful attorney and agent, with full power of substitution, in
the place and stead of Debtors and either in its own name or in the name of
either Debtor:

     

    
      	
               
      

            	
              (i)

            	
              to
      endorse either Debtor’s name on any checks, notes, acceptances, money
      orders, drafts or other forms of payment or security that may come into
      Secured Party’s possession;

            

    

    

    
      	
               
      

            	
              (ii)

            	
              to
      sign either Debtor’s name on any invoice or bill of lading relating to any
      Accounts, on drafts against customers, on schedules and assignments of
      Accounts, on notices of assignment, financing and continuation statements
      and other public records, on verifications of accounts, on notices to or
      from customers and on any and all documents necessary to effectuate
      drawings under letters of credit;

            

    

    

    
      	
               
      

            	
              (iii)

            	
              to
      notify the post office authorities to change the address for delivery of
      either Debtor’s mail to an address designated by Secured
      Party;

            

    

    

    
      	
               
      

            	
              (iv)

            	
              to
      receive, open and dispose of all mail addressed to either Debtor;
      and

            

    

    

    
      	
               
      

            	
              (v)

            	
              to
      send requests for verification of Accounts to customers or account
      debtors.

            

    

    
    

     

           
and

            (c)    Ratifies
and approves all actions taken pursuant to the foregoing power of attorney
whether taken by Secured Party or by any other person or persons designated by
Secured Party, and Secured Party will not be liable for any acts or omissions or
for any error of judgment or mistake of fact or law other than those occasioned
by Secured Party’s gross negligence or willful misconduct.  This power
shall be deemed coupled with an interest and shall be irrevocable until the
Obligations have been fully satisfied.  Secured Party may appoint such
persons, firms or corporations as, in its sole discretion, it may determine, for

     

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    the
purpose of exercising any powers and taking any action permitted to be exercised
or taken by Secured Party under or pursuant to any of the provisions of this
Agreement.

     

    5.06               No Election of
Remedies. In addition to the foregoing remedies, Secured Party shall have
all of the rights and remedies provided to the Secured Party by the Credit
Agreement and the Related Documents.  No remedy herein conferred upon
Secured Party is intended to be exclusive of any other remedy and each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given hereunder or now or hereafter existing at law or in equity or by statute
or otherwise.

     

    5.07               No
Marshalling.  Secured Party shall not be required to make any
demand upon or pursue or exhaust any of its rights or remedies against either
Debtor or others with respect to the payment of the Obligations, and shall not
be required to marshall the Collateral or to resort to the Collateral in any
particular order and all of the rights of Secured Party hereunder shall be
cumulative.  To the extent that they lawfully may, each Debtor hereby
agrees to waive and does hereby absolutely and irrevocably waive and relinquish
the benefit and advantage of, and does hereby covenant not to assert against
Secured Party, any valuation, stay, appraisement, extension or redemption laws
now existing or which may hereafter exist which, but for this provision, might
be applicable to any sale made under the judgment, order or decree of any court,
or privately under the power of sale conferred by this Agreement or in respect
of the Collateral.  To the extent they lawfully may, without limiting
the generality of the foregoing, each Debtor hereby agrees that it will not
invoke or utilize any law which might cause delay in, or impede, the enforcement
of Secured Party’s rights under this Agreement, and hereby waives the
same.

     

    5.08               Assembly of
Collateral.  Secured Party may, at its option, demand that
either Debtor forthwith assemble at places selected by Secured Party, whether at
such Debtor’s premises or elsewhere, and each Debtor hereby covenants forthwith
so to assemble at its own expense, such items of the Collateral comprising part
of the Collateral as are designated by Secured Party, and Secured Party shall
have the right to enter upon the premises where such Collateral is located and
take possession of all such Collateral or any part thereof and thereupon such
Debtor’s rights to possession thereof shall absolutely cease and
terminate.  Secured Party may proceed by appropriate court action or
actions either at law or in equity to enforce performance by Debtors of the
applicable covenants and provisions of this Agreement or to recover damages for
the breach thereof.

     

    5.09               Sale.  Any
item of the Collateral may be sold for cash or other value in any number of lots
at public auction or private sale without demand or notice (excepting only that
the Secured Party shall give the Debtor owning such Collateral ten days’ prior
written notice of the time and place of any public sale, or of the time after
which a private sale may be made, which notice each Debtor and Secured Party
hereby agree to be reasonable).  At any sale or sales of the
Collateral (except at private sale) Secured Party may bid for and purchase the
whole or any part of the property and rights so sold and, upon compliance with
the terms of such sale, may hold, exploit and dispose of such property and
rights without further accountability to such Debtor except for the proceeds of
such sale or sales.  Debtor will execute and deliver, or cause to be
executed and delivered, such instruments, documents, registration statements,
assignments, waivers, certificates and affidavits, and supply or cause to be
supplied such further information and take such further action as Secured Party
shall require in connection with such sale.

     

    
      
        
        

      

      
        -13-

        
          

        

      

      
        
        

      

    

    5.10             Application of
Proceeds.  The proceeds of all sales and collections hereunder,
and any other moneys (including any cash contained in the Collateral), the
application of which is not otherwise herein provided for, shall be applied as
follows:

    

    
      	
               
      

            	
                                   First, to the payment of
      the reasonable costs and expenses of such collection, sale or other
      realization, and all expenses, and advances made or incurred by Secured
      Party in connection therewith;

            

    

    

    
      	
               
      

            	
                                   Second, to the payment in full
      of the Obligations; and

            

    

    

    
      	
               
      

            	
                                  
      Third, to the payment to
      the Debtors, or its successors or assigns, or as a court of competent
      jurisdiction may direct, of any surplus then remaining from such proceeds
      which relate to the Collateral.

            

    

    

    As used
in this Section 5.10, “proceeds” of Collateral shall mean cash, securities and
other property realized in respect of, and distributions in kind of, Collateral,
including any thereof received under any reorganization, liquidation or
adjustment of debt of a Debtor or any issuer of or obligor on any of the
Collateral.

     

    5.11               Costs of
Collection.  Debtors shall pay all costs and expenses which may
be incurred by Secured Party with respect thereto, including reasonable
attorneys’ fees, and all such sums shall be and become a part of the
Obligations.

     

    5.12               Grant of License to Use
Patent, Trademark and Copyright Collateral.  For the purpose of
enabling the Secured Party to exercise rights and remedies under Article V
hereof at such time as the Secured Party shall be lawfully entitled to exercise
such rights and remedies, each Debtor hereby grants to the Secured Party an
irrevocable, non-exclusive license (exercisable without payment of royalty or
other compensation to either Debtor) to use, license or sub-license any of the
Collateral now owned or hereafter acquired by each Debtor, and wherever the same
may be located, and including in such license reasonable access to all media in
which any of the licensed items may be recorded or stored and to all computer
software and programs used for the compilation or printout
thereof.  The use of such license by the Secured Party shall be
exercised, at the option of the Secured Party, upon the occurrence and the
continuation of an Event of Default; provided that any
license, sub-license or other transaction entered into by the Secured Party in
accordance herewith shall be binding upon each Debtor notwithstanding any
subsequent cure of an Event of Default.  The Secured Party agrees to
apply the net proceeds received from any license as provided in Section 5.10
hereof.

    

    ARTICLE
VI

    MISCELLANEOUS

     

    6.01               Other
Remedies.  In addition to and not in lieu of any other right or
remedy Secured Party might have, Secured Party at any time and from time to time
at its election may (but shall not be required to) do or perform or comply with
or cause to be done or performed or complied with anything which Debtors may be
required to do or comply with and Debtors shall reimburse Secured 

     

    
      
        
        

      

      
        -14-

        
          

        

      

      
        
        

      

    

     

     

    Party
upon demand for any cost or expense which Secured Party may incur in such
respect, together with interest thereon at the Default Rate.

     

    6.02               Course of
Dealing.  No course of dealing between either Debtor or Debtors
and Secured Party shall operate as a waiver of any rights of it under this
Agreement or in respect of the Collateral or the Obligations.  No
delay or omission on the part of Secured Party in exercising any right under
this Agreement in respect of the Collateral or any Obligations shall operate as
a waiver of such right or any other right hereunder.  A waiver on any
one occasion shall not be construed as a bar to waiver of any right and/or
remedy on any future occasion.  No waiver, amendment to, or other
modification of this Agreement shall be effective unless it is in writing and
signed by Secured Party.

     

    6.03               Discharge.  If
Debtors shall absolutely and irrevocably pay in full and satisfy the Obligations
and if all financial arrangements between Debtors and Secured Party shall have
been terminated, then this Agreement and the rights hereby granted shall cease
and be void, and at the request of Debtors, and at its expense, Secured Party
shall release and discharge all the Collateral without recourse against Secured
Party and to that end shall execute and deliver to Debtors, at Debtors’ own
expense, such releases, reassignments, and other documents (or cause the same to
be done) as Debtors shall reasonably request, and Secured Party shall pay over
to Debtors any money and deliver to it any other property then held by it as
Collateral (or cause the same to be done).  The receipt by Debtors of
the Collateral so delivered shall be a complete and full acquittance therefor,
and Secured Party shall thereafter be discharged from any liability or
responsibility therefor.

     

    6.04               Appointment as Attorney and
Agent for Debtors with Respect to Security Interest.  Debtors
hereby irrevocably appoint Secured Party, or any agent or designee of Secured
Party, as their lawful attorney and agent, with full power of substitution, to
execute and deliver, on behalf of and in the name of each Debtor, such financing
statements, assignments, notices, and other documents and agreements as Secured
Party may deem necessary for the purpose of the creation, perfection,
maintenance, continuation, or enforcement of the Security Interest, under any
applicable law.  Secured Party is hereby authorized to file on behalf
of and in the name of  each Debtor, at Debtors’ expense, such financing
statements, assignments, mortgages, notices, pledges and other documents and
agreements in any appropriate governmental office.  The right is
expressly granted to Secured Party, in its discretion, in those jurisdictions
where the same is permitted, to file one or more financing statements under the
UCC or the comparable uniform commercial code of any other jurisdiction signed
only by Secured Party, naming Debtors as debtor and naming Secured Party, as
secured party and indicating therein the types, or describing the items, of the
Collateral.

     

    6.05               Governing Law, etc.
This Agreement shall be deemed to have been made in the State of Wisconsin and
shall be governed by the internal laws of the State of Wisconsin, except to the
extent that the UCC or the law of state in which the Collateral is located or
deemed located shall apply to the perfection and enforcement of the Security
Interest.  All terms which are used in this Agreement which are
defined in the UCC shall have the same meanings herein as those terms do in the
UCC unless this Agreement shall otherwise specifically provide.  The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning of any provision hereof.

     

    
      
        
        

      

      
        -15-

        
          

        

      

      
        
        

      

    

    6.06               Notices. All notices,
demands and communications provided for herein or made hereunder shall be
delivered or mailed in the manner, and to the address for Debtors and Secured
Party set forth in Section 8.06 of the Credit Agreement.

     

    6.07               Savings Clause. In
the event that any provision hereof shall be deemed to be invalid by reason of
the operation of any law or by reason of the interpretation placed thereon by
any court, this Agreement shall be construed as not containing such provision,
but only as to such locations where such law or interpretation is operative, and
the invalidity of such provision shall not affect the validity of any remaining
provision hereof, and any and all other provisions hereof which are otherwise
lawful and valid shall remain in full force and effect.

    

    

    

    

    

    

    

    

    [Signature
page follows]

    
      
        
           

        

         

      

      
        -16-

        
          

        

      

      
         

      

    

    IN WITNESS WHEREOF, the parties hereto
have executed this Agreement on the day and year first above
written.

     

    
       

      
        
          	 	ADVANCED FIBERGLASS TECHOLOGIES,
      INC., a Wisconsin
      Corporation	 
	 	 	 	 
	
                   

                	
                  By:
      

                	/s/ Jamie
      L. Mancl	 
	 	 	Jamie
      L. Mancl, President	 

        

         

        
           

          
            
              	 	M & W FIBERGLASS, LLC, a Wisconsin Limited Liability
      Company	 
	 	 	 	 
	
                       

                    	
                      By:
      

                    	/s/ Jamie
      L. Mancl	 
	 	 	Jamie
      L. Mancl, its sole member	 

            

             

            
              

              The foregoing Agreement is hereby
confirmed and accepted as of the date
thereof.

            

          

        

      

      
         

        
          
            
              
                
                  
                    	 	NEKOOSA PORT EDWARDS STATE BANK	 
	 	 	 	 
	
                             

                          	
                            By:
      

                          	/s/ Robb
      N. Sigler	 
	 	 	Robb
      N. Sigler, President	 

                  

                

              

            

          

        

      

       

       

       

       

       

       

       

      

        
          
            
              [Signature
Page Security Agreement] 

            

             

          

          
             

            
              

            

          

          
             

          

        

    

    SCHEDULE
1.01

    

    Legal
Description

    

    

    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 1⁄4 of the NE 1⁄4 of Section 10, 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

    

    

    

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
3.01

    

    Location of Chief Executive
Offices and Principal Places of Business

    

    

    

    2330
South 16th Street

    Wisconsin
Rapids, WI  54495

    

    4400
Commerce Drive

    Wisconsin
Rapids, WI  54495

    

    
      
        
           

        

         

      

      
         

        
          

        

      

      
         

      

    

    SCHEDULE
3.02

    

    Location of
Collateral

    

    2330
South 16th
Street

    Wisconsin
Rapids, WI  54495

    

    4400
Commerce Drive

    Wisconsin
Rapids, WI  54495exh10-9_optagmt.htm

     

    
      

      

    

     

     

     

     

     

     

    EXHIBIT 10.9

     

    OPTION AGREEMENT DATED JUNE 18, 2008

    
 

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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 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 

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

      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 

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

       

      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.

     

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    (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.

     

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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]

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    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]

                  

          

           

          

           

          

        

         

      

      
         

        
          

        

      

      
         

      

    

    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 1⁄4 of the NE 1⁄4 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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